12 Cfr 701.38

§ 701.37

12 CFR Ch. VII (1–1–19 Edition)

(3) All transactions with business associates or family members not specifically prohibited by this section must
be conducted at arm’s length and in
the interest of the federal credit union.
(4) To seek a waiver from any of the
prohibitions in this paragraph (d), a
federal credit union must submit a
written request to its Regional Office
and fully explain why it needs the
waiver. Within 45 days of the receipt of
the waiver request or all necessary documentation, whichever is later, the Regional Director will provide the federal
credit union a written response, either
approving or disapproving its request.
The Regional Director’s decision will
be based on safety and soundness considerations and a determination as to
whether a conflict of interest exists.
[78 FR 57252, Sept. 18, 2013, as amended at 80
FR 45850, Aug. 3, 2015; 81 FR 93580, Dec. 21,
2016]

§ 701.37 Treasury tax and loan depositaries; depositaries and financial
agents of the Government.
(a) Definitions. (1) Treasury Tax and
Loan (TT&L) Remittance Account means
a nondividend-paying account, the balance of which is subject to the right of
immediate withdrawal, established for
receipt of payments of Federal taxes
and certain United States obligations
under United States Treasury Department regulations.
(2) TT&L Note Account means an account subject to the right of immediate
call, evidencing funds held by depositaries electing the note option under
United States Treasury Department
regulations.
(3) Treasury General Account means an
account, established under United
States Treasury Department regulations, in which a zero balance may be
maintained and from which the entire
balance may be withdrawn by the depositor immediately under all circumstances except closure of the credit
union.
(4) U.S. Treasury Time Deposit—Open
Account means a nondividend-bearing
account, established under United
States Treasury Department regulations, which generally may not be
withdrawn until the expiration of 14
days after the date of the United

States Treasury Department’s written
notice of intent to withdraw.
(b) Subject to regulation of the
United States Treasury Department, a
Federal credit union may serve as a
Treasury tax and loan depositary, a depositary of Federal taxes, a depositary
of public money, and a financial agent
of the United States Government. In
serving in these capacities, a Federal
credit union may maintain the accounts defined in subsection (a), pledge
collateral, and perform the services described under United States Treasury
Department regulations for institutions acting in these capacities.
(c) Funds held in a TT&L Remittance
Account, a TT&L Note Account, a
Treasury General Account, and a U.S.
Treasury Time Deposit—Open Account
shall be considered deposits of public
funds. Funds held in a TT&L Remittance Account and a TT&L Note Account shall be added together and insured up to a maximum of $250,000 in
the aggregate. Funds held in a Treasury General Account and a U.S. Treasury Time Deposit—Open Account shall
be added together and insured up to a
maximum of $250,000 in the aggregate.
(d) Funds held in a TT&L Remittance
Account, a TT&L Note Account, a
Treasury General Account, and U.S.
Treasury Time Deposit—Open Account
are not subject to the 60-day notice requirement of Article III, section 5(a) of
the Federal Credit Union Bylaws.
[54 FR 18471, May 1, 1989, as amended at 78
FR 4030, Jan. 18, 2013]

§ 701.38 Borrowed funds from natural
persons.
(a) Federal credit unions may borrow
from a natural person, provided:
(1) The borrowing is evidenced by a
signed promissory note which sets
forth the terms and conditions regarding maturity, prepayment, interest
rate, method of computation, and
method of payment;
(2) The promissory note and any advertisement for such funds contains
conspicuous langauge indicating that:
(i) The note represents money borrowed by the credit union;
(ii) The note does not represent
shares and, therefore, is not insured by
the National Credit Union Share Insurance Fund.

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National Credit Union Administration

Pt. 701, App. A

(b) Federal credit unions must comply with the maximum borrowing authority of § 741.2 of this chapter.
[45 FR 29271, May 2, 1980, as amended at 47
FR 17979, Apr. 27, 1982; 72 FR 30246, May 31,
2007]

§ 701.39

Statutory lien.

(a) Definitions. Within this section,
each of the following terms has the
meaning prescribed below:
(1) Except as otherwise provided by law
or except as otherwise provided by federal
law is a qualifying phrase referring to a
federal and/or state law, as the case
may be, which supersedes a requirement of this section. It is the responsibility of the credit union to ascertain
whether such statutory or case law exists and is applicable;
(2) Impress means to attach to a member’s account and is the act which
makes the lien enforceable against
that account;
(3) Member means any member who is
primarily, secondarily or otherwise responsible for an outstanding financial
obligation to the credit union, including without limitation an obligor,
maker, co-maker, guarantor, co-signer,
endorser, surety or accommodation
party;
(4) Notice means written notice to a
member disclosing, in plain language,
that the credit union has the right to
impress and enforce a statutory lien
against the member’s shares and dividends in the event of failure to satisfy
a financial obligation, and may enforce
the right without further notice to the
member. Such notice must be given at
the time, or at any time before, the
member incurs the financial obligation;
(5) Statutory lien means the right
granted by section 107(11) of the Federal Credit Union Act, 12 U.S.C.
1757(11), to a federal credit union to establish a right in or claim to a member’s shares and dividends equal to the
amount of that member’s outstanding
financial obligation to the credit
union, as that amount varies from time
to time.
(b) Superior claim. Except as otherwise provided by law, a statutory lien
gives the federal credit union priority
over other creditors when claims are

asserted against a member’s account(s).
(c) Impressing a statutory lien. Except
as otherwise provided by federal law, a
credit union can impress a statutory
lien on a member’s account(s)—
(1) Account records. By giving notice
thereof in the member’s account agreement(s) or other account opening documentation; or
(2) Loan documents. In the case of a
loan, by giving notice thereof in a loan
document signed or otherwise acknowledged by the member(s); or
(3) By-Law or policy. Through a duly
adopted credit union by-law or policy
of the board of directors, of which the
member is given notice.
(d) Enforcing a statutory lien—(1) Application of funds. Except as otherwise
provided by federal law, a federal credit union may enforce its statutory lien
against a member’s account(s) by debiting funds in the account and applying
them to the extent of any of the member’s outstanding financial obligations
to the credit union.
(2) Default required. A federal credit
union may enforce its statutory lien
against a member’s account(s) only
when the member fails to satisfy an
outstanding financial obligation due
and payable to the credit union.
(3) Neither judgment nor set-off required. A federal credit union need not
obtain a court judgment on the member’s debt, nor exercise the equitable
right of set-off, prior to enforcing its
statutory lien against the member’s
account.
[64 FR 56956, Oct. 22, 1999]

APPENDIX A TO PART 701—FEDERAL
CREDIT UNION BYLAWS
INTRODUCTION
A. Effective date. After consideration of
public comment, the National Credit Union
Administration (NCUA) Board adopted these
Bylaws and incorporated them as appendix A
to part 701 of NCUA’s regulations on November 30, 2007. Unless a federal credit union has
adopted bylaws before November 30, 2007, it
must adopt these revised bylaws.
B. Adoption of all or part of these bylaws. Although federal credit unions may retain any
previously approved version of the bylaws,
the NCUA Board encourages federal credit
unions to adopt the revised bylaws because it
believes they provide greater clarity and

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