Permissible Activities of Savings and Loan Holding Companies, 14246-14251 [E7-5453]
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Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules
chattel only secured debt that was
estimated to be secured but upon final
liquidation was found to be unsecured,
and up to 90 days after the date of
discharge on the portion of real estate
secured debt that was estimated to be
secured but was found to be unsecured
upon final disposition.
(ii) The Agency will pay the lender
interest which accrues during and up to
90 days after the time period the lender
in unable to dispose of acquired
property due to state imposed
redemption rights on any unsecured
portion of the loan during the
redemption period, if an estimated loss
claim was paid by the Agency during
the liquidation action.
*
*
*
*
*
(i) Final loss claims. (1) Lenders must
submit a final loss claim when the
security has been liquidated and all
proceeds have been received and
applied to the account. All proceeds
shall be applied to principal first and
then toward accrued interest if the
interest is still accruing. The application
of the loss claim payment to the account
does not automatically release the
borrower of liability for any portion of
the borrower’s debt to the lender. The
lender will continue to be responsible
for collecting the full amount of the debt
and sharing these future recoveries with
the Agency in accordance with
paragraph (j) of this section.
*
*
*
*
*
(5) The Agency will notify the lender
of any discrepancies in the final loss
claim or, approve or reject the claim
within 40 days. Failure to do so will
result in additional interest being paid
to the lender for the number of days
over 40 taken to process the claim.
*
*
*
*
*
Signed at Washington, DC, on March 9,
2007.
Teresa C. Lasseter,
Administrator, Farm Service Agency.
[FR Doc. E7–5511 Filed 3–26–07; 8:45 am]
BILLING CODE 3410–05–P
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 584
[OTS–2007–0007]
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RIN 1550–AC10
Permissible Activities of Savings and
Loan Holding Companies
Office of Thrift Supervision,
Treasury.
ACTION: Notice of proposed rulemaking.
AGENCY:
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SUMMARY: The Office of Thrift
Supervision (OTS) is proposing to revise
its regulations, at 12 CFR 584.2 and
584.2–2, to expand the permissible
activities of savings and loan holding
companies (SLHCs) to the full extent
permitted under the Home Owners’
Loan Act (HOLA). In addition, OTS
proposes to amend 12 CFR 584.4 to
conform the regulation to the statute
that it is intended to implement by
replacing the absolute prohibition on
certain SLHC transactions that is
currently in the regulation with a prior
approval requirement. The proposed
regulation sets forth standards that OTS
will use to evaluate applications
submitted pursuant to the application
requirement.
DATES: Comments must be received by
April 26, 2007.
ADDRESSES: You may submit comments,
identified by OTS–2007–0007, by any of
the following methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. select
‘‘Office of Thrift Supervision’’ from the
agency drop-down menu, then click
submit. Select Docket ID ‘‘OTS–2007–
0007’’ to submit or view public
comments and to view supporting and
related materials for this interim rule.
The ‘‘User Tips’’ link at the top of the
page provides information on using
Regulations.gov, including instructions
for submitting or viewing public
comments, viewing other supporting
and related materials, and viewing the
docket after the close of the comment
period.
• Mail: Regulation Comments, Chief
Counsel’s Office, Office Of Thrift
Supervision, 1700 G Street, NW.,
Washington, DC 20552, Attention: OTS–
2007–0007.
• Hand Delivery/Courier: Guard’s
Desk, East Lobby Entrance, 1700 G
Street, NW., from 9 a.m. to 4 p.m. on
business days, Attention: Regulation
Comments, Chief Counsel’s Office,
OTS–2007–0007.
Instructions: All submissions received
must include the agency name and
docket number for this rulemaking. All
comments received will be entered into
the docket and posted on
Regulations.gov without change,
including any personal information
provided. Comments, including
attachments and other supporting
materials received are part of the public
record and subject to public disclosure.
Do not enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
Viewing Comments Electronically: Go
to https://www.regulations.gov, select
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‘‘Office of Thrift Supervision’’ from the
agency drop-down menu, then click
‘‘Submit.’’ Select Docket ID ‘‘OTS–
2007–0007’’ to view public comments
for this notice of proposed rulemaking.
View Comments On-Site: You may
inspect comments in the Public Reading
Room, 1700 G Street, NW., by
appointment. To make an appointment,
call (202) 906–5922, send an e-mail to
public.info@ots.treas.gov, or send a
facsimile transmission to (202) 906–
6518. (Prior notice identifying the
materials you will be requesting will
assist us in serving you.) We schedule
appointments on business days between
10 a.m. and 4 p.m. In most cases,
appointments will be available the next
business day following the date we
receive a request.
FOR FURTHER INFORMATION CONTACT:
Donald W. Dwyer, Director,
Applications, Examination and
Supervision-Operations, (202) 906–
6414; or Kevin A. Corcoran, (202) 906–
6962, Deputy Chief Counsel for
Business Transactions, Office of Chief
Counsel; Office of Thrift Supervision,
1700 G Street, NW., Washington, DC
20552.
SUPPLEMENTARY INFORMATION:
I. Holding Company Activities
A. Background
Under section 10(c)(9) of the HOLA,1
SLHCs 2 generally are permitted to
engage only in activities that are
permissible for financial holding
companies under section 4(k) of the
Bank Holding Company Act,3 or
activities that are listed in section
10(c)(2) of the HOLA.4 The activities
listed in section 10(c)(2) of the HOLA
include certain specific activities.5 In
1 12
U.S.C. 1467a(c)(9).
SLHC generally is any company that directly
or indirectly controls a savings association, or that
controls any other company that is a savings and
loan holding company. See 12 CFR 583.20 and 12
U.S.C. 1467a(a)(1)(D).
3 12 U.S.C. 1843(k).
4 12 U.S.C. 1467a(c)(2). SLHCs that were SLHCs
on May 4, 1999, and meet certain other
requirements, are excepted from the activities
limitations of section 10(c)(9) of the HOLA. See 12
U.S.C. 1467a(c)(9)(C). The following discussion of
activities limitations applies only to SLHCs that are
not excepted from the activities limitations of
section 10(c)(9).
5 These activities include furnishing or
performing management services for a savings
association subsidiary of such company (section
10(c)(2)(A)); conducting an insurance agency or
escrow business (section 10(c)(2)(B)); holding,
managing, or liquidating assets owned or acquired
from a savings association subsidiary of such
company (section 10(c)(2)(C)); holding or managing
properties used or occupied by a savings
association subsidiary of such company (section
10(c)(2)(D)); acting as trustee under a deed of trust
(section 10(c)(2)(E)); and purchasing, holding or
disposing of stock acquired in a qualified stock
2 An
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addition, section 10(c)(2)(F) sets forth
two lists of activities in which all
SLHCs may engage. Section
10(c)(2)(F)(ii) permits SLHCs to engage
in activities in which multiple savings
associations were authorized by
regulation to engage directly on March
5, 1987.6 Section 10(c)(2)(F)(i) permits
SLHCs to engage in activities:
which the Board of Governors of the Federal
Reserve System, by regulation, has
determined to be permissible for bank
holding companies under section 1843(c) of
this title, unless the Director, by regulation,
prohibits or limits any such activity for
savings and loan holding companies.* * * 7
As authorized by the statute, OTS has
limited the activities permitted for
SLHCs under section 10(c)(2)(F)(i) of the
HOLA. Although SLHCs potentially
could engage in all activities that the
Board of Governors of the Federal
Reserve System (FRB) has permitted
under its regulations for bank holding
companies under section 4(c) of the
Bank Holding Company Act (BHCA),
OTS regulations implementing section
10(c)(2)(F)(i) limit the activities that are
permissible under this authority to
activities that the FRB has permitted for
bank holding companies under
regulations implementing section 4(c)(8)
of the BHCA, specifically 12 CFR 225.24
and 12 CFR 225.28.8 Section 225.28 is
a list of non-banking activities that the
FRB approved pursuant to section
4(c)(8) of the BHCA.9 Section 225.24
sets forth a regulatory procedure under
which the FRB has approved nonbanking activities, under the authority
of section 4(c)(8) of the BHCA.10
In summary, the OTS Holding
Company Regulations implementing
section 10(c)(2)(F)(i) of HOLA provide
authority for SLHCs to only engage in
activities that the FRB has permitted
under section 4(c)(8) of the BHCA, and
do not provide authority for SLHCs to
engage in activities listed in other
subsections of section 4(c) of the
BHCA.11
Certain activities described in other
subsections of section 4(c) are already
14247
permissible for SLHCs under other
authority. For example, section 4(c)(1)
of the BHCA permits bank holding
companies to, among other things, hold
or operate properties used wholly or
substantially by any banking subsidiary
of such bank holding company, and to
liquidate assets acquired from a bank
subsidiary.12 SLHCs may engage in
these activities (with regard to savings
association subsidiaries) without prior
OTS approval, under sections
10(c)(2)(D) and (C) of the HOLA.
Other activities described in other
subsections of section 4(c) are generally
not currently permissible for SLHCs to
engage in. For example, the foreign
activities that the FRB has authorized by
regulation for bank holding companies
pursuant to section 4(c)(9) of the
BHCA 13 are not currently permissible
for SLHCs.14
Current authority for nongrandfathered SLHCs to engage in nonthrift activities is summarized in the
following table.
Statutory source
of authority
HOLA sec. 10(c)(2)(A)–(E)
and (G)
HOLA sec. 10(c)(2)(F)(i)
HOLA sec. 10(c)(2)(F)(ii)
HOLA sec. 10(c)(9)
Description .........................
Specific activities ...............
Activities FHLBB permitted
for multiple SLHCs as of
March 5, 1987.
OTS Regulation Cite .........
12 CFR 584.2(b) ...............
Activities permitted for
bank holding companies
under section 4(c)(8) of
BHCA.
12 CFR 584.2–2 ...............
Activities permissible for financial holding companies under section
4(k)(4) of the BHCA.
None.
B. Proposed Regulatory Changes
12 CFR 584.2–1 ...............
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OTS believes that it is appropriate to
consider whether to continue to limit
the activities that OTS authorizes under
section 10(c)(2)(F)(i) of HOLA to
activities that the FRB has authorized
under section 4(c)(8) of the BHCA. The
existing regulations have not changed
substantively since they were first
promulgated in 1987.15
The regulatory scheme for SLHCs has
changed significantly since the
regulations were first promulgated. In
1987, most SLHCs were excepted from
activities restrictions. Until the passage
of the Gramm-Leach-Bliley Act 16 (GLB
Act) in 1999, SLHCs that controlled
only one savings association were
excepted from activities limitations,
provided that the subsidiary savings
issuance under section 10(q) of the HOLA (section
10(c)(2)(G)).
6 12 U.S.C. 1467a(c)(2)(F)(ii). These activities are
listed at 12 CFR 584.2–1(2006).
7 12 U.S.C. 1467a(c)(2)(F)(i). Section 10(c)(2)(F)(i)
of the HOLA originally was enacted as part of the
Competitive Equality Banking Act of 1987 (Pub. L.
100–86, 101 Stat. 552 (Aug. 10, 1987)) and amended
section 408(c) of the National Housing Act. The
Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (Pub. L. 101–73 103 Stat.
184 (Aug. 9, 1989)) moved section 408 of the NHA
to section 10 of the HOLA.
8 See 12 CFR 584.2(b)(6)(i) and 584.2–2(a) (2006).
9 12 U.S.C. 1843(c)(8). When the Federal Home
Loan Bank Board (FHLBB) originally promulgated
regulations implementing the section 10(c)(2)(F)(i)
provision, it limited the activities to those
permitted under section 4(c)(8). 53 FR 312 (Jan. 6,
1988). Although the FHLBB did not state why it did
not authorize SLHCs to engage in activities the FRB
approved under other subsections of section 4(c),
the FHLBB stated that, based on its subsequent
experience, it may ‘‘expand the list of permissible
nonbanking activities for S&L holding companies to
include those activities approved by the FRB under
other provisions of section 4(c) of the BHC Act.’’ 53
FR 319 (Jan. 6, 1988).
10 Activities that the FRB previously approved
under this section are set forth at 12 CFR
225.86(a)(2)(2006).
11 Section 10(c)(9) of HOLA, which, as described
above, is a separate source of authority for SLHCs
to engage in activities, permits SLHCs to engage in
any activity permissible for financial holding
companies pursuant to section 4(k) of the BHCA.
While the financial holding company activities are
generally broader than the bank holding company
activities described in section 4(c) of the BHCA,
section 4(k) does not include all of the activities
described in the various subsections of section 4(c)
(such as the foreign activities described in
subsection 4(c)(9)). However, section 4(k)(4)(F) of
the BHCA permits financial holding companies to
engage in section 4(c)(8) activities, and section
4(k)(4)(G) permits financial holding companies to
engage, in the United States, in certain activities
that the FRB has permitted under section 4(c)(13).
See 12 CFR 225.86(b)(2006).
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association met the qualified thrift
lender test (QTL test).17 In addition,
SLHCs that controlled more than one
savings association were excepted from
activities limitations, provided that the
SLHC acquired all or all but one of its
savings association subsidiaries in
certain types of supervisory
transactions, and all the subsidiary
savings associations met the QTL test.18
12 See
12 U.S.C. 1843(c)(1)(A) and (D).
12 CFR part 211, subpart B (2006).
14 Activities described in certain other
subsections of section 4(c) of the BHCA are not
applicable to SLHCs, even if OTS amends the
Holding Company Regulations as proposed, because
the provisions relate to shares acquired by a bank
holding company prior to May 9, 1956 (the date of
the enactment of the BHCA) (12 U.S.C. 1843(c)(10))
and companies that became bank holding
companies as a result of the Bank Holding Company
Act Amendments of 1970 (12 U.S.C. 1843(c)(12)).
15 When OTS recodified the former regulations of
the FHLBB in 1989, OTS did not change the
provisions of the Holding Company Regulations
that implemented section 10(c)(2)(F)(i). 54 FR
49411, 49711 (Nov. 30, 1989).
16 Pub. L. 106–102, 113 Stat. 338, section 401.
17 See section 10(c)(3) of HOLA. The QTL test is
set forth at section 10(m) of HOLA, 12 U.S.C.
1467a(m).
18 Id.
13 See
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Accordingly, the limitation of
permissible activities to those the FRB
had approved under section 4(c)(8) of
the BHCA was relevant only to a small
number of SLHCs.
The GLB Act, however, provided that,
notwithstanding the previously existing
exemption at section 10(c)(3), which
had significantly limited the number of
SLHCs subject to activities restrictions,
all new SLHCs would be, with limited
exceptions,19 subject to activities
restrictions. Accordingly, for several
years, all new SLHC structures have
been subject to activities limitations.
Rather than affecting only a small
minority of SLHCs, the regulatory
limitation in question is now applicable
to every new SLHC structure.
In addition, for many years, bank
holding companies have been permitted
to engage in the activities described in
section 4(c) of the BHCA, consistent
with the regulations of the FRB. OTS is
not aware of any safety and soundness
or other reason why SLHCs should not
be permitted to engage in the same
activities.
Finally, in 1987, few SLHCs had
foreign operations. Since then, however,
many foreign entities have acquired, or
have expressed interest in acquiring, a
savings association. To the extent that
sections 4(c)(9) and 4(c)(13) of the
BHCA, and regulations that the FRB has
promulgated thereunder, authorize bank
holding companies with foreign
operations to engage in certain
activities, it would appear appropriate
to provide the same authority to SLHCs.
The regulations limiting the section
4(c) activities to those authorized under
section 4(c)(8) are 12 CFR 584.2(b)(6)
and 584.2–2(a). OTS proposes to revise
these regulations to replace the
references to 12 CFR 225.24 and 225.28
with general references to regulations
promulgated by the FRB under the
authority of section 4(c) of the BHCA.
These changes would enable SLHCs to
engage in activities that the FRB has
permitted under any regulation that the
FRB has promulgated under section 4(c)
of the BHCA.
Section 10(c)(4) of the HOLA
generally requires prior OTS approval
with respect to the activities described
in section 10(c)(2)(F)(i) of the HOLA.
Certain of these activities are already
permitted under OTS regulations
without prior OTS approval, or are
permitted under FRB regulations
without prior FRB approval.
Accordingly, in order to avoid imposing
19 The exceptions include the ‘‘grandfathering’’
exception, at section 10(c)(9)(C), discussed earlier,
the reorganization exception, set forth at section
10(c)(9)(D), and the family trust exception, set forth
at section 10(c)(9)(E).
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additional restrictions on currently
permissible activities, and provide for
parity between bank holding companies
and SLHCs to the extent possible, OTS
proposes to state in the regulation that
activities that are authorized under
section 10(c)(2)(F)(i) of HOLA, but are
also permissible under other provisions
of section 10(c) of the HOLA or under
FRB regulations without prior FRB
approval are preapproved.
II. Approval Requirement for Certain
Acquisitions by SLHCs
Section 10(e)(1)(A)(iii) of HOLA
includes two different restrictions on
the activities of SLHCs. First, the statute
prohibits SLHCs from directly or
indirectly acquiring, without OTS
approval, more than five percent of the
voting shares of a savings association
that is not a subsidiary of the acquiring
SLHC, or more than five percent of the
voting shares of a SLHC that is not a
subsidiary of the acquiring SLHC.20
Second, the statute prohibits multiple
SLHCs from acquiring or retaining more
than five percent of the voting shares of
any company not a subsidiary that is
engaged in any business activity other
than the activities specified in section
10(c)(2) of HOLA.
The Holding Company Regulations, at
12 CFR 584.4, implement these statutory
requirements. Section 584.4, however,
has not been amended since OTS
recodified the FHLBB regulations in
1989,21 and therefore, no longer
accurately reflects the provisions of the
statute. Specifically, the American
Homeownership and Economic
Opportunity Act of 200022 (AHEO Act)
amended section 10(e)(1)(A)(iii) to
replace the former absolute prohibition
on SLHCs acquiring more than five
percent of the voting shares of a savings
association or SLHC not a subsidiary of
the acquiring SLHC (subject to the
exceptions noted above), with a
regulatory approval requirement.23 The
regulation continues to contain an
absolute prohibition, without providing
for a regulatory approval requirement.
Accordingly, OTS proposes to amend
the regulation to make it consistent with
the statute.
In addition, although the AHEO Act
established a regulatory approval
requirement for the acquisitions in
question, the statute did not establish
20 12 U.S.C. 1467a(e)(1)(A)(iii). The statute
establishes eight exceptions from the approval
requirement. See 12 U.S.C. 1467a(e)(1)(A)(iii)(I)(VIII).
21 54 FR 49411, 49712.
22 Pub. L. 106–569 (Dec. 27, 2000), at section
1202, 114 Stat. 3032.
23 The AHEO amendments left in place the
absolute prohibition relating to multiple SLHCs.
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approval standards for applications
submitted as a result of the approval
requirement. OTS proposes to amend
the regulation to set forth approval
standards for applications submitted
under section 10(e)(1)(A)(iii) and 584.4.
When OTS recommended that
Congress amend section 10(e)(1)(A)(iii)
to eliminate the prohibition on SLHCs
acquiring more than five percent of the
voting shares of a non-subsidiary
savings association or SLHC, OTS noted
that the prohibition was inconsistent
with the rules applicable to bank
holding companies. Section 3(a) of the
BHCA allows bank holding companies
to acquire more than five percent of the
voting shares of non-subsidiary banks,
with FRB approval.24 In addition, bank
holding companies, including those that
control savings associations, are
permitted, with prior FRB approval, to
acquire voting stock of savings
associations (including, but not limited
to, non-controlling investments
exceeding five percent).25
Given that OTS sought the
amendment to section 10(e)(1)(A)(iii) to
provide SLHCs parity with bank holding
companies, OTS believes that it is
appropriate to look to the requirements
applicable to bank holding companies
in similar situations in establishing
approval criteria. In this regard, section
3(c) of the BHCA sets forth the
standards for bank holding company
acquisitions under section 3(a). The
statute requires that the FRB: (i) Not
approve an acquisition if it has certain
anticompetitive effects; (ii) consider the
financial and managerial resources and
future prospects of the companies and
banks involved, and the convenience
and needs of the community to be
served; (iii) not approve an application
if the company fails to provide adequate
assurance that it will make available
such information as the FRB determines
appropriate to determine and enforce
compliance with applicable
requirements; and (iv) in the case of a
foreign bank, not approve an application
if the foreign bank is not subject to
comprehensive supervision or
regulation on a consolidated basis in the
bank’s home country.26
These approval standards are, in all
material respects, identical to the
approval standards for acquisitions by
SLHCs under section 10(e)(2) of the
HOLA and OTS regulations thereunder
at 12 CFR 574.7(c). Accordingly, OTS
proposes to amend section 584.4 to
24 See
also, 12 CFR 225.11(c)(2006).
12 CFR 225.24 and 12 CFR
225.28(b)(4)(2006).
26 12 U.S.C. 1842(c).
25 See
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cross-reference the standards in section
10(e)(2) of HOLA and 12 CFR 574.7(c).
In addition, the Community
Reinvestment Act (CRA) requires that
OTS take into account a savings
association’s CRA record in reviewing
any application for a deposit facility.27
The CRA defines an ‘‘application for a
deposit facility’’ as including, among
other things, the ‘‘acquisition of shares
in, or the assets of, a regulated financial
institution requiring approval under
[section 10(e) of the HOLA].’’ 28 The
OTS regulations implementing the CRA
include a corresponding requirement.29
Accordingly, OTS believes that it is
appropriate to consider the CRA record
of any depository institution subsidiary
of the acquiring SLHC when considering
an application under section
10(e)(1)(A)(iii) and 12 CFR 584.4.
Given that CRA performance of any
subsidiary depository institution of the
acquiring SLHC would be a factor in
OTS’s consideration of applications
under 584.4, OTS believes it is
appropriate to obtain public comment in
connection with such applications.
Accordingly, the proposed regulation
includes a cross-reference to the public
notice and comment procedures in 12
CFR part 516.
Finally, in light of the amendments to
584.4 proposed above, OTS proposes to
reorganize 584.4 as set forth herein. The
additional proposed changes would not
affect the substance of the regulation.
III. Findings and Certifications
A. Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of 1995,
OTS may not conduct or sponsor, and
the respondent is not required to
respond to, an information collection
unless it displays a currently valid
Office of Management and Budget
(OMB) control number. OTS is
requesting comment on a proposed
information collection. OTS also gives
notice that the proposed collection of
information was submitted to OMB for
review and approval (44 U.S.C.
3507(d)). At the end of the comment
period, the comments and
recommendations received will be
analyzed to determine whether the
information collection should be
modified. Any material modifications
will be submitted to OMB for review
and approval. All comments will
become a matter of public record.
Send comments, referring to the
collection by title of the proposal or by
‘‘SLHC Activities (1550–NEW),’’ to
OMB and OTS at these addresses: Office
of Information and Regulatory Affairs,
Attention: Desk Officer for OTS, U.S.
Office of Management and Budget, 725
- 17th Street, NW., Room 10235,
Washington, DC 20503, or by fax to
(202) 395–6974; and Information
Collection Comments, Chief Counsel’s
Office, Office of Thrift Supervision,
1700 G Street, NW., Washington, DC
20552, by fax to (202) 906–6518, or by
e-mail to
infocollection.comments@ots.treas.gov.
OTS will post comments and the related
index on the OTS Internet Site at
https://www.ots.treas.gov. In addition,
interested persons may inspect
comments at the Public Reading Room,
1700 G Street, NW., by appointment. To
make an appointment, call (202) 906–
5922, send an e-mail to
public.info@ots.treas.gov, or send a
facsimile transmission to (202) 906–
7755. To obtain a copy of the
submission to OMB, contact Marilyn K.
Burton at marilyn.burton@ots.treas.gov,
(202) 906–6467, or facsimile number
(202) 906–6518, Litigation Division,
Chief Counsel’s Office, Office of Thrift
Supervision, 1700 G Street, NW.,
Washington, DC 20552.
Comments are invited on:
Subject
584.2–2 .............
584.4 .................
Application to engage in certain activities ........................
Application by SLHC to acquire non-controlling interest
exceeding five percent of non-subsidiary savings association or SLHC.
jlentini on PROD1PC65 with PROPOSAL
B. Executive Order 12866
The Director of OTS has determined
that this proposed rule does not
constitute a significant regulatory action
27 12
U.S.C. 2903(a)(2).
U.S.C. 2902(3)(E). Although the statutory
reference is to section 408(e) of the National
28 12
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16:55 Mar 26, 2007
Jkt 211001
Number of
responses per
respondent
Number of
respondents
Rule section
Housing Act, which was repealed in FIRREA, OTS
has interpreted the provision as referring to the
successor provision, section 10(e) of the HOLA.
Frm 00006
Fmt 4702
Sfmt 4702
Average
annual burden
hours per
response
Annual
disclosure &
recordkeeping
burden
1
1
2
2
4
4
2
2
for the purposes of Executive Order
12866.
PO 00000
(a) Whether the collection of
information is necessary for the proper
performance of the Agency’s functions,
including whether the information has
practical utility;
(b) The accuracy of the estimates of
the burden of the information
collection, including the validity of the
methodology and assumptions used;
(c) Ways to enhance the quality,
utility, and clarity of the information to
be collected;
(d) Ways to minimize the burden of
the information collection on
respondents, including through the use
of automated collection techniques or
other forms of information technology;
and
(e) Estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to provide information.
In this proposed rule, OTS is
soliciting comments concerning the
following information collection.
Title: Savings and Loan Holding
Companies Activities.
OMB Control Number: 1550–NEW.
Type of Review: New collection.
Frequency of Response: On occasion.
Affected Public: Savings and loan
holding companies.
Abstract: The proposed expansion of
permissible activities for SLHCs under
section 10(c)(2)(F)(i) of HOLA will
result in the collection of additional
information. Section 10(c)(4) of HOLA
requires SLHCs to obtain OTS approval
prior to commencing any activity
described in section 10(c)(2)(F)(i) of
HOLA. Additionally, the amendment of
12 CFR 584.4 to conform with the
statute by including an approval process
for covered acquisitions is a new
collection of information.
Estimated Number of Respondents: 4.
Estimated Burden Hours per
Response: 2 hours.
Estimated Total Burden: 8 hours.
C. Regulatory Flexibility Act
In accordance with section 605(b) of
the Regulatory Flexibility Act (RFA), the
Director of OTS has certified that this
29 See
E:\FR\FM\27MRP1.SGM
12 CFR 563e.29(a)(5).
27MRP1
14250
Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules
proposed rule will not have a significant
impact on a substantial number of small
entities within the meaning of the RFA.
5 U.S.C. 603.
D. Unfunded Mandates Act of 1995
Section 202 of the Unfunded
Mandates Reform Act of 1995 requires
an agency to prepare a budgetary impact
statement before promulgating a rule
that includes a Federal mandate that
may result in expenditure by state,
local, and tribal governments, in the
aggregate, or by the private sector, of
$100 million or more in any one year.
2 U.S.C. 1532. OTS has determined that
this proposed rule would not have such
an impact. Rather, the rule would
provide that nonexempt SLHCs have
broader authority to engage in activities
than are specified under current
regulations. Accordingly, OTS has not
prepared a budgetary impact statement
for this rule or specifically addressed
the regulatory alternatives considered.
List of Subjects in 12 CFR Part 584
Administrative practice and
procedure, Holding companies,
Reporting and recordkeeping
requirements, Savings associations,
Securities.
For the reasons stated in the
preamble, the Office of Thrift
Supervision proposes to amend 12 CFR
part 584 as follows:
PART 584—SAVINGS AND LOAN
HOLDING COMPANIES
1. Revise the part heading for part 584
to read as shown above.
2. The authority citation for part 584
continues to read as follows:
Authority: 12 U.S.C. 1462, 1462a, 1463,
1464, 1467a, 1468.
3. Revise § 584.2(b)(6)(i) to read as
follows:
584.2
Prohibited activities.
jlentini on PROD1PC65 with PROPOSAL
*
*
*
*
*
(b) * * *
(6) * * *
(i) That the Board of Governors of the
Federal Reserve System has permitted
for bank holding companies pursuant to
regulations promulgated under section
4(c) of the Bank Holding Company Act;
or
*
*
*
*
*
4. Amend § 584.2–2(a) by revising the
first sentence and adding a new
sentence at the end to read as follows:
(a) General. For purposes of
§ 584.2(b)(6)(i) of this part, the services
and activities permissible for bank
holding companies pursuant to
regulations that the Board of Governors
of the Federal Reserve System has
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16:55 Mar 26, 2007
Jkt 211001
a savings association or of a savings and
loan holding company—
(1) Held as a bona fide fiduciary
(whether with or without the sole
discretion to vote such shares);
(2) Held temporarily pursuant to an
underwriting commitment in the normal
course of an underwriting business;
(3) Held in an account solely for
trading purposes or over which no
control is held other than control of
voting rights acquired in the normal
course of a proxy solicitation;
(4) Acquired in securing or collecting
a debt previously contracted in good
faith, for two years after the date of
acquisition or for such additional time
(not exceeding three years) as the Office
may permit if, in the Office’s judgment,
§ 584.4 Certain acquisitions by savings
and loan holding companies.
such an extension would not be
(a) Acquisitions by a savings and loan detrimental to the public interest;
holding company of more than five
(5) Acquired under section
percent of a non-subsidiary savings
13(k)(1)(A)(i) of the Federal Deposit
association or savings and loan holding Insurance Act (or section 408(m) of the
company. No savings and loan holding
National Housing Act as in effect
company, directly or indirectly, or
immediately prior to the enactment of
through one or more subsidiaries or
the Financial Institutions Reform,
through one or more transactions, shall, Recovery and Enforcement Act of 1989);
without prior written OTS approval,
(6) Held by any insurance companies
acquire by purchase or otherwise, or
as defined in section 2(a)(17) of the
retain, more than five percent of the
Investment Company Act of 1940:
voting stock or shares of a savings
Provided, That all shares held by all
association not a subsidiary, or of a
insurance company affiliates of such
savings and loan holding company not
savings association or savings and loan
a subsidiary. A savings and loan holding holding company may not, in the
company seeking approval of an
aggregate, exceed five percent of all
acquisition under this section must file
outstanding shares or of the voting
an application under 12 CFR part 516,
power of the savings association or
subpart A. Applications filed under this savings and loan holding company, and
section are subject to the publication,
such shares are not acquired or retained
public comment, and meeting
with a view to acquiring, exercising, or
provisions of 12 CFR part 516, subparts
transferring control of the savings
B, C, and D. OTS will review
association or savings and loan holding
applications filed under this section
company; and
under the review standards set forth for
(7) Acquired pursuant to a qualified
savings and loan holding company
stock issuance if such a purchase is
applications in section 10(e)(2) of the
approved pursuant to § 574.8 of this
HOLA, § 574.7(c) of this chapter, and
chapter.
§ 563e.29(a) of this chapter.
The aggregate amount of shares held
(b) Certain acquisitions by multiple
under this subparagraph (c) (other than
savings and loan holding companies.
pursuant to subparagraphs (c)(1), (c)(2),
No multiple savings and loan holding
(c)(3), (c)(4) and (c)(6)) may not exceed
company (other than a savings and loan
15 percent of all outstanding shares or
holding company described in
the voting power of a savings
§ 584.2a(a)(1)(ii) of this part) may,
association or savings and loan holding
directly or indirectly, or through one or
company.
more subsidiaries or through one or
(d) Acquisitions of uninsured
more transactions, acquire or retain
institutions. No savings and loan
more than five percent of the voting
holding company may, directly or
shares of any company that is not a
indirectly, or through one or more
subsidiary that is engaged in any
subsidiaries or through one or more
business activity other than those
transactions, acquire control of an
specified in § 584.2(b) of this part.
uninsured institution or retain, for more
(c) Exception for certain acquisitions
than one year after the date any savings
of voting shares of savings associations
association subsidiary becomes
and savings and loan holding
companies. Paragraphs (a) and (b) of this uninsured, control of such association.
section do not apply to voting shares of
Dated: March 20, 2007.
promulgated pursuant to section 4(c) of
the Bank Holding Company Act are
permissible for savings and loan holding
companies, or subsidiaries thereof that
are neither savings associations nor
service corporation subsidiaries of
subsidiary savings associations: * * *
Activities that are permissible under
other provisions of section 10(c) of the
HOLA without prior OTS notice or
approval, and activities that are
permissible without prior notice or
approval under regulations that the
Board of Governors of the Federal
Reserve System has promulgated
pursuant to section 4(c) of the Bank
Holding Company Act are preapproved.
5. Revise § 584.4 to read as follows:
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Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules
By the Office of Thrift Supervision.
John M. Reich,
Director.
[FR Doc. E7–5453 Filed 3–26–07; 8:45 am]
BILLING CODE 6720–01–P
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR PARTS 748 and 749
RIN 3133–AD24
Records Preservation Program and
Appendices—Record Retention
Guidelines; Catastrophic Act
Preparedness Guidelines
National Credit Union
Administration (NCUA).
ACTION: Proposed rule.
jlentini on PROD1PC65 with PROPOSAL
AGENCY:
SUMMARY: NCUA proposes to amend its
regulations to address a federallyinsured credit union’s obligation to
maintain a records preservation
program. The proposed rule draws from
existing guidance to clarify
requirements for preserving vital
records and to suggest important items
for consideration in restoring vital
member services. NCUA believes the
revised language and new appendix will
facilitate the recovery of essential
operations after a catastrophic act
resulting in continued member
confidence in the credit union system.
The agency also proposes to amend its
regulations to clarify the meaning of
catastrophic act.
DATES: Comments must be received on
or before May 11, 2007.
ADDRESSES: You may submit comments
by any of the following methods (Please
send comments by one method only):
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• NCUA Web Site: https://
www.ncua.gov/
RegulationsOpinionsLaws/
proposed_regs/proposed_regs. html.
Follow the instructions for submitting
comments.
• E-mail: Address to
regcomments@ncua.gov. Include ‘‘[Your
name] Comments on Proposed Rule
Parts 748 and 749,’’ in the e-mail subject
line.
• Fax: (703) 518–6319. Use the
subject line described above for e-mail.
• Mail: Address to Mary F. Rupp,
Secretary of the Board, National Credit
Union Administration, 1775 Duke
Street, Alexandria, Virginia 22314–
3428.
• Hand Delivery/Courier: Same as
mail address.
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16:55 Mar 26, 2007
Jkt 211001
Public inspection: All public
comments are available on the agency’s
Web site at https://www.ncua.gov/
RegulationsOpinionsLaws/comments as
submitted, except as may not be
possible for technical reasons. Public
comments will not be edited to remove
any identifying or contact information.
Paper copies of comments may be
inspected in NCUA’s law library, at
1775 Duke Street, Alexandria, Virginia
22314, by appointment weekdays
between 9 a.m. and 3 p.m. To make an
appointment, call (703) 518–6540 or
send an e-mail to OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT:
Andrew Healey, Program Officer,
Division of Supervision, Office of
Examination and Insurance, at (703)
518–6360 or Linda K. Dent, Staff
Attorney, Office of General Counsel, at
(703) 518–6540.
SUPPLEMENTARY INFORMATION:
Background
Lessons learned from previous
catastrophic acts, including the
dramatic effects of the Katrina and Rita
hurricanes, indicate the importance of
preserving vital records and swiftly
restoring vital member services. In
particular, NCUA’s review of events in
the hurricanes’ aftermath demonstrates
the need for advance planning and
preparation in successfully responding
to a catastrophic act.
Challenges such as providing
members with access to funds and
account information, loss of, or lack of,
access to facilities, and locating and
communicating with staff were some of
the immediate issues credit unions
faced. Fortunately, affected credit
unions did not face these challenges
alone. Help came from NCUA, other
credit unions, trade organizations, and
service providers. For example, NCUA
operated a call center to assist credit
union members in contacting their
institutions. Agency field staff checked
on credit union facilities, helped locate
staff, assisted credit unions with
equipment needs, and helped credit
unions restore share and loan data
where necessary. Other credit unions
mobilized to send needed cash,
provided operating space, made staff
available, and sent needed equipment to
affected credit unions. Trade
organizations served as a clearinghouse
to match those with resources with
those in need. Shared branch facilities
signed on institutions enabling them to
service displaced members.
In reviewing these experiences, the
Board determined credit unions, which
had considered potential threats and
identified critical functions necessary
PO 00000
Frm 00008
Fmt 4702
Sfmt 4702
14251
for the retrieval of vital records, were
able to address anticipated challenges
and unforeseen difficulties and restore
vital member services. These
institutions were able to provide
members with access to their funds and
handle member inquiries in a relatively
short time period. The proposed
amendments draw from these
experiences to identify program
elements the Board considers essential
to restoring vital records and member
services.
Many of these elements are covered in
previous NCUA guidance issued to
federally-insured credit unions (FICUs)
on disaster recovery planning. Despite
the existence of this guidance, the Board
is concerned that some credit unions
may not be maintaining sufficient plans
and safeguards to respond to events
causing the destruction of vital records
or catastrophic acts. The Board believes
this proposal is necessary to ensure
credit unions address these critical
issues in the paramount interest of
maintaining services to members and
confidence in the credit union system if
a catastrophic act occurs.
Proposed Changes
The proposed changes specifically
address the Board’s concerns regarding
restoration of vital member records and
services. The proposed changes
establish minimum standards for
preserving vital records and include
recommendations concerning restoring
member services considered vital to a
credit union’s continued operation.
Part 748
The Board proposes to revise the
definition of catastrophic act to clarify
that any event causing an interruption
in vital member services for more than
two business days is a qualifying event.
Part 749
Several of the proposed changes
pertain to format and grammar and are
made to clarify the rule’s language. For
example, the Board proposes to
eliminate the question format currently
used in the section headings and replace
these with language simply describing
each section’s contents. Section 749.1
includes two changes of note. Changes
to the vital records definition clarify
that share, deposit, and loan balances
for each member’s account should be
available as of the most recent business
day, while a financial report of the
credit union’s asset and liability
accounts and bank reconcilements
should be available as of the most recent
month’s end. All other vital records
should be updated as changes occur. A
new paragraph (d) is added requiring
E:\FR\FM\27MRP1.SGM
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]]>Agencies
[Federal Register Volume 72, Number 58 (Tuesday, March 27, 2007)]
[Proposed Rules]
[Pages 14246-14251]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-5453]
=======================================================================
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DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 584
[OTS-2007-0007]
RIN 1550-AC10
Permissible Activities of Savings and Loan Holding Companies
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Office of Thrift Supervision (OTS) is proposing to revise
its regulations, at 12 CFR 584.2 and 584.2-2, to expand the permissible
activities of savings and loan holding companies (SLHCs) to the full
extent permitted under the Home Owners' Loan Act (HOLA). In addition,
OTS proposes to amend 12 CFR 584.4 to conform the regulation to the
statute that it is intended to implement by replacing the absolute
prohibition on certain SLHC transactions that is currently in the
regulation with a prior approval requirement. The proposed regulation
sets forth standards that OTS will use to evaluate applications
submitted pursuant to the application requirement.
DATES: Comments must be received by April 26, 2007.
ADDRESSES: You may submit comments, identified by OTS-2007-0007, by any
of the following methods:
Federal eRulemaking Portal: Go to https://
www.regulations.gov. select ``Office of Thrift Supervision'' from the
agency drop-down menu, then click submit. Select Docket ID ``OTS-2007-
0007'' to submit or view public comments and to view supporting and
related materials for this interim rule. The ``User Tips'' link at the
top of the page provides information on using Regulations.gov,
including instructions for submitting or viewing public comments,
viewing other supporting and related materials, and viewing the docket
after the close of the comment period.
Mail: Regulation Comments, Chief Counsel's Office, Office
Of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552,
Attention: OTS-2007-0007.
Hand Delivery/Courier: Guard's Desk, East Lobby Entrance,
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention:
Regulation Comments, Chief Counsel's Office, OTS-2007-0007.
Instructions: All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
entered into the docket and posted on Regulations.gov without change,
including any personal information provided. Comments, including
attachments and other supporting materials received are part of the
public record and subject to public disclosure. Do not enclose any
information in your comment or supporting materials that you consider
confidential or inappropriate for public disclosure.
Viewing Comments Electronically: Go to https://www.regulations.gov,
select ``Office of Thrift Supervision'' from the agency drop-down menu,
then click ``Submit.'' Select Docket ID ``OTS-2007-0007'' to view
public comments for this notice of proposed rulemaking.
View Comments On-Site: You may inspect comments in the Public
Reading Room, 1700 G Street, NW., by appointment. To make an
appointment, call (202) 906-5922, send an e-mail to
public.info@ots.treas.gov, or send a facsimile transmission to (202)
906-6518. (Prior notice identifying the materials you will be
requesting will assist us in serving you.) We schedule appointments on
business days between 10 a.m. and 4 p.m. In most cases, appointments
will be available the next business day following the date we receive a
request.
FOR FURTHER INFORMATION CONTACT: Donald W. Dwyer, Director,
Applications, Examination and Supervision-Operations, (202) 906-6414;
or Kevin A. Corcoran, (202) 906-6962, Deputy Chief Counsel for Business
Transactions, Office of Chief Counsel; Office of Thrift Supervision,
1700 G Street, NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
I. Holding Company Activities
A. Background
Under section 10(c)(9) of the HOLA,\1\ SLHCs \2\ generally are
permitted to engage only in activities that are permissible for
financial holding companies under section 4(k) of the Bank Holding
Company Act,\3\ or activities that are listed in section 10(c)(2) of
the HOLA.\4\ The activities listed in section 10(c)(2) of the HOLA
include certain specific activities.\5\ In
[[Page 14247]]
addition, section 10(c)(2)(F) sets forth two lists of activities in
which all SLHCs may engage. Section 10(c)(2)(F)(ii) permits SLHCs to
engage in activities in which multiple savings associations were
authorized by regulation to engage directly on March 5, 1987.\6\
Section 10(c)(2)(F)(i) permits SLHCs to engage in activities:
---------------------------------------------------------------------------
\1\ 12 U.S.C. 1467a(c)(9).
\2\ An SLHC generally is any company that directly or indirectly
controls a savings association, or that controls any other company
that is a savings and loan holding company. See 12 CFR 583.20 and 12
U.S.C. 1467a(a)(1)(D).
\3\ 12 U.S.C. 1843(k).
\4\ 12 U.S.C. 1467a(c)(2). SLHCs that were SLHCs on May 4, 1999,
and meet certain other requirements, are excepted from the
activities limitations of section 10(c)(9) of the HOLA. See 12
U.S.C. 1467a(c)(9)(C). The following discussion of activities
limitations applies only to SLHCs that are not excepted from the
activities limitations of section 10(c)(9).
\5\ These activities include furnishing or performing management
services for a savings association subsidiary of such company
(section 10(c)(2)(A)); conducting an insurance agency or escrow
business (section 10(c)(2)(B)); holding, managing, or liquidating
assets owned or acquired from a savings association subsidiary of
such company (section 10(c)(2)(C)); holding or managing properties
used or occupied by a savings association subsidiary of such company
(section 10(c)(2)(D)); acting as trustee under a deed of trust
(section 10(c)(2)(E)); and purchasing, holding or disposing of stock
acquired in a qualified stock issuance under section 10(q) of the
HOLA (section 10(c)(2)(G)).
\6\ 12 U.S.C. 1467a(c)(2)(F)(ii). These activities are listed at
12 CFR 584.2-1(2006).
which the Board of Governors of the Federal Reserve System, by
regulation, has determined to be permissible for bank holding
companies under section 1843(c) of this title, unless the Director,
by regulation, prohibits or limits any such activity for savings and
loan holding companies.* * * \7\
---------------------------------------------------------------------------
\7\ 12 U.S.C. 1467a(c)(2)(F)(i). Section 10(c)(2)(F)(i) of the
HOLA originally was enacted as part of the Competitive Equality
Banking Act of 1987 (Pub. L. 100-86, 101 Stat. 552 (Aug. 10, 1987))
and amended section 408(c) of the National Housing Act. The
Financial Institutions Reform, Recovery and Enforcement Act of 1989
(Pub. L. 101-73 103 Stat. 184 (Aug. 9, 1989)) moved section 408 of
the NHA to section 10 of the HOLA.
As authorized by the statute, OTS has limited the activities
permitted for SLHCs under section 10(c)(2)(F)(i) of the HOLA. Although
SLHCs potentially could engage in all activities that the Board of
Governors of the Federal Reserve System (FRB) has permitted under its
regulations for bank holding companies under section 4(c) of the Bank
Holding Company Act (BHCA), OTS regulations implementing section
10(c)(2)(F)(i) limit the activities that are permissible under this
authority to activities that the FRB has permitted for bank holding
companies under regulations implementing section 4(c)(8) of the BHCA,
specifically 12 CFR 225.24 and 12 CFR 225.28.\8\ Section 225.28 is a
list of non-banking activities that the FRB approved pursuant to
section 4(c)(8) of the BHCA.\9\ Section 225.24 sets forth a regulatory
procedure under which the FRB has approved non-banking activities,
under the authority of section 4(c)(8) of the BHCA.\10\
---------------------------------------------------------------------------
\8\ See 12 CFR 584.2(b)(6)(i) and 584.2-2(a) (2006).
\9\ 12 U.S.C. 1843(c)(8). When the Federal Home Loan Bank Board
(FHLBB) originally promulgated regulations implementing the section
10(c)(2)(F)(i) provision, it limited the activities to those
permitted under section 4(c)(8). 53 FR 312 (Jan. 6, 1988). Although
the FHLBB did not state why it did not authorize SLHCs to engage in
activities the FRB approved under other subsections of section 4(c),
the FHLBB stated that, based on its subsequent experience, it may
``expand the list of permissible nonbanking activities for S&L
holding companies to include those activities approved by the FRB
under other provisions of section 4(c) of the BHC Act.'' 53 FR 319
(Jan. 6, 1988).
\10\ Activities that the FRB previously approved under this
section are set forth at 12 CFR 225.86(a)(2)(2006).
---------------------------------------------------------------------------
In summary, the OTS Holding Company Regulations implementing
section 10(c)(2)(F)(i) of HOLA provide authority for SLHCs to only
engage in activities that the FRB has permitted under section 4(c)(8)
of the BHCA, and do not provide authority for SLHCs to engage in
activities listed in other subsections of section 4(c) of the BHCA.\11\
---------------------------------------------------------------------------
\11\ Section 10(c)(9) of HOLA, which, as described above, is a
separate source of authority for SLHCs to engage in activities,
permits SLHCs to engage in any activity permissible for financial
holding companies pursuant to section 4(k) of the BHCA. While the
financial holding company activities are generally broader than the
bank holding company activities described in section 4(c) of the
BHCA, section 4(k) does not include all of the activities described
in the various subsections of section 4(c) (such as the foreign
activities described in subsection 4(c)(9)). However, section
4(k)(4)(F) of the BHCA permits financial holding companies to engage
in section 4(c)(8) activities, and section 4(k)(4)(G) permits
financial holding companies to engage, in the United States, in
certain activities that the FRB has permitted under section
4(c)(13). See 12 CFR 225.86(b)(2006).
---------------------------------------------------------------------------
Certain activities described in other subsections of section 4(c)
are already permissible for SLHCs under other authority. For example,
section 4(c)(1) of the BHCA permits bank holding companies to, among
other things, hold or operate properties used wholly or substantially
by any banking subsidiary of such bank holding company, and to
liquidate assets acquired from a bank subsidiary.\12\ SLHCs may engage
in these activities (with regard to savings association subsidiaries)
without prior OTS approval, under sections 10(c)(2)(D) and (C) of the
HOLA.
---------------------------------------------------------------------------
\12\ See 12 U.S.C. 1843(c)(1)(A) and (D).
---------------------------------------------------------------------------
Other activities described in other subsections of section 4(c) are
generally not currently permissible for SLHCs to engage in. For
example, the foreign activities that the FRB has authorized by
regulation for bank holding companies pursuant to section 4(c)(9) of
the BHCA \13\ are not currently permissible for SLHCs.\14\
---------------------------------------------------------------------------
\13\ See 12 CFR part 211, subpart B (2006).
\14\ Activities described in certain other subsections of
section 4(c) of the BHCA are not applicable to SLHCs, even if OTS
amends the Holding Company Regulations as proposed, because the
provisions relate to shares acquired by a bank holding company prior
to May 9, 1956 (the date of the enactment of the BHCA) (12 U.S.C.
1843(c)(10)) and companies that became bank holding companies as a
result of the Bank Holding Company Act Amendments of 1970 (12 U.S.C.
1843(c)(12)).
---------------------------------------------------------------------------
Current authority for non-grandfathered SLHCs to engage in non-
thrift activities is summarized in the following table.
----------------------------------------------------------------------------------------------------------------
HOLA sec.
Statutory source of authority 10(c)(2)(A)-(E) HOLA sec. HOLA sec. HOLA sec. 10(c)(9)
and (G) 10(c)(2)(F)(i) 10(c)(2)(F)(ii)
----------------------------------------------------------------------------------------------------------------
Description..................... Specific Activities Activities FHLBB Activities
activities. permitted for permitted for permissible for
bank holding multiple SLHCs as financial holding
companies under of March 5, 1987. companies under
section 4(c)(8) section 4(k)(4)
of BHCA. of the BHCA.
OTS Regulation Cite............. 12 CFR 584.2(b)... 12 CFR 584.2-2.... 12 CFR 584.2-1.... None.
----------------------------------------------------------------------------------------------------------------
B. Proposed Regulatory Changes
OTS believes that it is appropriate to consider whether to continue
to limit the activities that OTS authorizes under section
10(c)(2)(F)(i) of HOLA to activities that the FRB has authorized under
section 4(c)(8) of the BHCA. The existing regulations have not changed
substantively since they were first promulgated in 1987.\15\
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\15\ When OTS recodified the former regulations of the FHLBB in
1989, OTS did not change the provisions of the Holding Company
Regulations that implemented section 10(c)(2)(F)(i). 54 FR 49411,
49711 (Nov. 30, 1989).
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The regulatory scheme for SLHCs has changed significantly since the
regulations were first promulgated. In 1987, most SLHCs were excepted
from activities restrictions. Until the passage of the Gramm-Leach-
Bliley Act \16\ (GLB Act) in 1999, SLHCs that controlled only one
savings association were excepted from activities limitations, provided
that the subsidiary savings association met the qualified thrift lender
test (QTL test).\17\ In addition, SLHCs that controlled more than one
savings association were excepted from activities limitations, provided
that the SLHC acquired all or all but one of its savings association
subsidiaries in certain types of supervisory transactions, and all the
subsidiary savings associations met the QTL test.\18\
[[Page 14248]]
Accordingly, the limitation of permissible activities to those the FRB
had approved under section 4(c)(8) of the BHCA was relevant only to a
small number of SLHCs.
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\16\ Pub. L. 106-102, 113 Stat. 338, section 401.
\17\ See section 10(c)(3) of HOLA. The QTL test is set forth at
section 10(m) of HOLA, 12 U.S.C. 1467a(m).
\18\ Id.
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The GLB Act, however, provided that, notwithstanding the previously
existing exemption at section 10(c)(3), which had significantly limited
the number of SLHCs subject to activities restrictions, all new SLHCs
would be, with limited exceptions,\19\ subject to activities
restrictions. Accordingly, for several years, all new SLHC structures
have been subject to activities limitations. Rather than affecting only
a small minority of SLHCs, the regulatory limitation in question is now
applicable to every new SLHC structure.
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\19\ The exceptions include the ``grandfathering'' exception, at
section 10(c)(9)(C), discussed earlier, the reorganization
exception, set forth at section 10(c)(9)(D), and the family trust
exception, set forth at section 10(c)(9)(E).
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In addition, for many years, bank holding companies have been
permitted to engage in the activities described in section 4(c) of the
BHCA, consistent with the regulations of the FRB. OTS is not aware of
any safety and soundness or other reason why SLHCs should not be
permitted to engage in the same activities.
Finally, in 1987, few SLHCs had foreign operations. Since then,
however, many foreign entities have acquired, or have expressed
interest in acquiring, a savings association. To the extent that
sections 4(c)(9) and 4(c)(13) of the BHCA, and regulations that the FRB
has promulgated thereunder, authorize bank holding companies with
foreign operations to engage in certain activities, it would appear
appropriate to provide the same authority to SLHCs.
The regulations limiting the section 4(c) activities to those
authorized under section 4(c)(8) are 12 CFR 584.2(b)(6) and 584.2-2(a).
OTS proposes to revise these regulations to replace the references to
12 CFR 225.24 and 225.28 with general references to regulations
promulgated by the FRB under the authority of section 4(c) of the BHCA.
These changes would enable SLHCs to engage in activities that the FRB
has permitted under any regulation that the FRB has promulgated under
section 4(c) of the BHCA.
Section 10(c)(4) of the HOLA generally requires prior OTS approval
with respect to the activities described in section 10(c)(2)(F)(i) of
the HOLA. Certain of these activities are already permitted under OTS
regulations without prior OTS approval, or are permitted under FRB
regulations without prior FRB approval. Accordingly, in order to avoid
imposing additional restrictions on currently permissible activities,
and provide for parity between bank holding companies and SLHCs to the
extent possible, OTS proposes to state in the regulation that
activities that are authorized under section 10(c)(2)(F)(i) of HOLA,
but are also permissible under other provisions of section 10(c) of the
HOLA or under FRB regulations without prior FRB approval are
preapproved.
II. Approval Requirement for Certain Acquisitions by SLHCs
Section 10(e)(1)(A)(iii) of HOLA includes two different
restrictions on the activities of SLHCs. First, the statute prohibits
SLHCs from directly or indirectly acquiring, without OTS approval, more
than five percent of the voting shares of a savings association that is
not a subsidiary of the acquiring SLHC, or more than five percent of
the voting shares of a SLHC that is not a subsidiary of the acquiring
SLHC.\20\
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\20\ 12 U.S.C. 1467a(e)(1)(A)(iii). The statute establishes
eight exceptions from the approval requirement. See 12 U.S.C.
1467a(e)(1)(A)(iii)(I)-(VIII).
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Second, the statute prohibits multiple SLHCs from acquiring or
retaining more than five percent of the voting shares of any company
not a subsidiary that is engaged in any business activity other than
the activities specified in section 10(c)(2) of HOLA.
The Holding Company Regulations, at 12 CFR 584.4, implement these
statutory requirements. Section 584.4, however, has not been amended
since OTS recodified the FHLBB regulations in 1989,\21\ and therefore,
no longer accurately reflects the provisions of the statute.
Specifically, the American Homeownership and Economic Opportunity Act
of 2000\22\ (AHEO Act) amended section 10(e)(1)(A)(iii) to replace the
former absolute prohibition on SLHCs acquiring more than five percent
of the voting shares of a savings association or SLHC not a subsidiary
of the acquiring SLHC (subject to the exceptions noted above), with a
regulatory approval requirement.\23\ The regulation continues to
contain an absolute prohibition, without providing for a regulatory
approval requirement. Accordingly, OTS proposes to amend the regulation
to make it consistent with the statute.
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\21\ 54 FR 49411, 49712.
\22\ Pub. L. 106-569 (Dec. 27, 2000), at section 1202, 114 Stat.
3032.
\23\ The AHEO amendments left in place the absolute prohibition
relating to multiple SLHCs.
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In addition, although the AHEO Act established a regulatory
approval requirement for the acquisitions in question, the statute did
not establish approval standards for applications submitted as a result
of the approval requirement. OTS proposes to amend the regulation to
set forth approval standards for applications submitted under section
10(e)(1)(A)(iii) and 584.4.
When OTS recommended that Congress amend section 10(e)(1)(A)(iii)
to eliminate the prohibition on SLHCs acquiring more than five percent
of the voting shares of a non-subsidiary savings association or SLHC,
OTS noted that the prohibition was inconsistent with the rules
applicable to bank holding companies. Section 3(a) of the BHCA allows
bank holding companies to acquire more than five percent of the voting
shares of non-subsidiary banks, with FRB approval.\24\ In addition,
bank holding companies, including those that control savings
associations, are permitted, with prior FRB approval, to acquire voting
stock of savings associations (including, but not limited to, non-
controlling investments exceeding five percent).\25\
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\24\ See also, 12 CFR 225.11(c)(2006).
\25\ See 12 CFR 225.24 and 12 CFR 225.28(b)(4)(2006).
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Given that OTS sought the amendment to section 10(e)(1)(A)(iii) to
provide SLHCs parity with bank holding companies, OTS believes that it
is appropriate to look to the requirements applicable to bank holding
companies in similar situations in establishing approval criteria. In
this regard, section 3(c) of the BHCA sets forth the standards for bank
holding company acquisitions under section 3(a). The statute requires
that the FRB: (i) Not approve an acquisition if it has certain
anticompetitive effects; (ii) consider the financial and managerial
resources and future prospects of the companies and banks involved, and
the convenience and needs of the community to be served; (iii) not
approve an application if the company fails to provide adequate
assurance that it will make available such information as the FRB
determines appropriate to determine and enforce compliance with
applicable requirements; and (iv) in the case of a foreign bank, not
approve an application if the foreign bank is not subject to
comprehensive supervision or regulation on a consolidated basis in the
bank's home country.\26\
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\26\ 12 U.S.C. 1842(c).
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These approval standards are, in all material respects, identical
to the approval standards for acquisitions by SLHCs under section
10(e)(2) of the HOLA and OTS regulations thereunder at 12 CFR 574.7(c).
Accordingly, OTS proposes to amend section 584.4 to
[[Page 14249]]
cross-reference the standards in section 10(e)(2) of HOLA and 12 CFR
574.7(c).
In addition, the Community Reinvestment Act (CRA) requires that OTS
take into account a savings association's CRA record in reviewing any
application for a deposit facility.\27\ The CRA defines an
``application for a deposit facility'' as including, among other
things, the ``acquisition of shares in, or the assets of, a regulated
financial institution requiring approval under [section 10(e) of the
HOLA].'' \28\ The OTS regulations implementing the CRA include a
corresponding requirement.\29\ Accordingly, OTS believes that it is
appropriate to consider the CRA record of any depository institution
subsidiary of the acquiring SLHC when considering an application under
section 10(e)(1)(A)(iii) and 12 CFR 584.4.
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\27\ 12 U.S.C. 2903(a)(2).
\28\ 12 U.S.C. 2902(3)(E). Although the statutory reference is
to section 408(e) of the National Housing Act, which was repealed in
FIRREA, OTS has interpreted the provision as referring to the
successor provision, section 10(e) of the HOLA.
\29\ See 12 CFR 563e.29(a)(5).
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Given that CRA performance of any subsidiary depository institution
of the acquiring SLHC would be a factor in OTS's consideration of
applications under 584.4, OTS believes it is appropriate to obtain
public comment in connection with such applications. Accordingly, the
proposed regulation includes a cross-reference to the public notice and
comment procedures in 12 CFR part 516.
Finally, in light of the amendments to 584.4 proposed above, OTS
proposes to reorganize 584.4 as set forth herein. The additional
proposed changes would not affect the substance of the regulation.
III. Findings and Certifications
A. Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995, OTS may not conduct or sponsor, and the respondent is not
required to respond to, an information collection unless it displays a
currently valid Office of Management and Budget (OMB) control number.
OTS is requesting comment on a proposed information collection. OTS
also gives notice that the proposed collection of information was
submitted to OMB for review and approval (44 U.S.C. 3507(d)). At the
end of the comment period, the comments and recommendations received
will be analyzed to determine whether the information collection should
be modified. Any material modifications will be submitted to OMB for
review and approval. All comments will become a matter of public
record.
Send comments, referring to the collection by title of the proposal
or by ``SLHC Activities (1550-NEW),'' to OMB and OTS at these
addresses: Office of Information and Regulatory Affairs, Attention:
Desk Officer for OTS, U.S. Office of Management and Budget, 725 - 17th
Street, NW., Room 10235, Washington, DC 20503, or by fax to (202) 395-
6974; and Information Collection Comments, Chief Counsel's Office,
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552,
by fax to (202) 906-6518, or by e-mail to
infocollection.comments@ots.treas.gov. OTS will post comments and the
related index on the OTS Internet Site at https://www.ots.treas.gov. In
addition, interested persons may inspect comments at the Public Reading
Room, 1700 G Street, NW., by appointment. To make an appointment, call
(202) 906-5922, send an e-mail to public.info@ots.treas.gov, or send a
facsimile transmission to (202) 906-7755. To obtain a copy of the
submission to OMB, contact Marilyn K. Burton at
marilyn.burton@ots.treas.gov, (202) 906-6467, or facsimile number (202)
906-6518, Litigation Division, Chief Counsel's Office, Office of Thrift
Supervision, 1700 G Street, NW., Washington, DC 20552.
Comments are invited on:
(a) Whether the collection of information is necessary for the
proper performance of the Agency's functions, including whether the
information has practical utility;
(b) The accuracy of the estimates of the burden of the information
collection, including the validity of the methodology and assumptions
used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
In this proposed rule, OTS is soliciting comments concerning the
following information collection.
Title: Savings and Loan Holding Companies Activities.
OMB Control Number: 1550-NEW.
Type of Review: New collection.
Frequency of Response: On occasion.
Affected Public: Savings and loan holding companies.
Abstract: The proposed expansion of permissible activities for
SLHCs under section 10(c)(2)(F)(i) of HOLA will result in the
collection of additional information. Section 10(c)(4) of HOLA requires
SLHCs to obtain OTS approval prior to commencing any activity described
in section 10(c)(2)(F)(i) of HOLA. Additionally, the amendment of 12
CFR 584.4 to conform with the statute by including an approval process
for covered acquisitions is a new collection of information.
Estimated Number of Respondents: 4.
Estimated Burden Hours per Response: 2 hours.
Estimated Total Burden: 8 hours.
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Average Annual
Number of Number of annual burden disclosure &
Rule section Subject respondents responses per hours per recordkeeping
respondent response burden
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584.2-2................... Application to 2 1 2 4
engage in certain
activities.
584.4..................... Application by SLHC 2 1 2 4
to acquire non-
controlling
interest exceeding
five percent of non-
subsidiary savings
association or SLHC.
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B. Executive Order 12866
The Director of OTS has determined that this proposed rule does not
constitute a significant regulatory action for the purposes of
Executive Order 12866.
C. Regulatory Flexibility Act
In accordance with section 605(b) of the Regulatory Flexibility Act
(RFA), the Director of OTS has certified that this
[[Page 14250]]
proposed rule will not have a significant impact on a substantial
number of small entities within the meaning of the RFA. 5 U.S.C. 603.
D. Unfunded Mandates Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 requires an
agency to prepare a budgetary impact statement before promulgating a
rule that includes a Federal mandate that may result in expenditure by
state, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more in any one year. 2 U.S.C. 1532.
OTS has determined that this proposed rule would not have such an
impact. Rather, the rule would provide that nonexempt SLHCs have
broader authority to engage in activities than are specified under
current regulations. Accordingly, OTS has not prepared a budgetary
impact statement for this rule or specifically addressed the regulatory
alternatives considered.
List of Subjects in 12 CFR Part 584
Administrative practice and procedure, Holding companies, Reporting
and recordkeeping requirements, Savings associations, Securities.
For the reasons stated in the preamble, the Office of Thrift
Supervision proposes to amend 12 CFR part 584 as follows:
PART 584--SAVINGS AND LOAN HOLDING COMPANIES
1. Revise the part heading for part 584 to read as shown above.
2. The authority citation for part 584 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468.
3. Revise Sec. 584.2(b)(6)(i) to read as follows:
584.2 Prohibited activities.
* * * * *
(b) * * *
(6) * * *
(i) That the Board of Governors of the Federal Reserve System has
permitted for bank holding companies pursuant to regulations
promulgated under section 4(c) of the Bank Holding Company Act; or
* * * * *
4. Amend Sec. 584.2-2(a) by revising the first sentence and adding
a new sentence at the end to read as follows:
(a) General. For purposes of Sec. 584.2(b)(6)(i) of this part, the
services and activities permissible for bank holding companies pursuant
to regulations that the Board of Governors of the Federal Reserve
System has promulgated pursuant to section 4(c) of the Bank Holding
Company Act are permissible for savings and loan holding companies, or
subsidiaries thereof that are neither savings associations nor service
corporation subsidiaries of subsidiary savings associations: * * *
Activities that are permissible under other provisions of section
10(c) of the HOLA without prior OTS notice or approval, and activities
that are permissible without prior notice or approval under regulations
that the Board of Governors of the Federal Reserve System has
promulgated pursuant to section 4(c) of the Bank Holding Company Act
are preapproved.
5. Revise Sec. 584.4 to read as follows:
Sec. 584.4 Certain acquisitions by savings and loan holding
companies.
(a) Acquisitions by a savings and loan holding company of more than
five percent of a non-subsidiary savings association or savings and
loan holding company. No savings and loan holding company, directly or
indirectly, or through one or more subsidiaries or through one or more
transactions, shall, without prior written OTS approval, acquire by
purchase or otherwise, or retain, more than five percent of the voting
stock or shares of a savings association not a subsidiary, or of a
savings and loan holding company not a subsidiary. A savings and loan
holding company seeking approval of an acquisition under this section
must file an application under 12 CFR part 516, subpart A. Applications
filed under this section are subject to the publication, public
comment, and meeting provisions of 12 CFR part 516, subparts B, C, and
D. OTS will review applications filed under this section under the
review standards set forth for savings and loan holding company
applications in section 10(e)(2) of the HOLA, Sec. 574.7(c) of this
chapter, and Sec. 563e.29(a) of this chapter.
(b) Certain acquisitions by multiple savings and loan holding
companies.
No multiple savings and loan holding company (other than a savings
and loan holding company described in Sec. 584.2a(a)(1)(ii) of this
part) may, directly or indirectly, or through one or more subsidiaries
or through one or more transactions, acquire or retain more than five
percent of the voting shares of any company that is not a subsidiary
that is engaged in any business activity other than those specified in
Sec. 584.2(b) of this part.
(c) Exception for certain acquisitions of voting shares of savings
associations and savings and loan holding companies. Paragraphs (a) and
(b) of this section do not apply to voting shares of a savings
association or of a savings and loan holding company--
(1) Held as a bona fide fiduciary (whether with or without the sole
discretion to vote such shares);
(2) Held temporarily pursuant to an underwriting commitment in the
normal course of an underwriting business;
(3) Held in an account solely for trading purposes or over which no
control is held other than control of voting rights acquired in the
normal course of a proxy solicitation;
(4) Acquired in securing or collecting a debt previously contracted
in good faith, for two years after the date of acquisition or for such
additional time (not exceeding three years) as the Office may permit
if, in the Office's judgment, such an extension would not be
detrimental to the public interest;
(5) Acquired under section 13(k)(1)(A)(i) of the Federal Deposit
Insurance Act (or section 408(m) of the National Housing Act as in
effect immediately prior to the enactment of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989);
(6) Held by any insurance companies as defined in section 2(a)(17)
of the Investment Company Act of 1940: Provided, That all shares held
by all insurance company affiliates of such savings association or
savings and loan holding company may not, in the aggregate, exceed five
percent of all outstanding shares or of the voting power of the savings
association or savings and loan holding company, and such shares are
not acquired or retained with a view to acquiring, exercising, or
transferring control of the savings association or savings and loan
holding company; and
(7) Acquired pursuant to a qualified stock issuance if such a
purchase is approved pursuant to Sec. 574.8 of this chapter.
The aggregate amount of shares held under this subparagraph (c)
(other than pursuant to subparagraphs (c)(1), (c)(2), (c)(3), (c)(4)
and (c)(6)) may not exceed 15 percent of all outstanding shares or the
voting power of a savings association or savings and loan holding
company.
(d) Acquisitions of uninsured institutions. No savings and loan
holding company may, directly or indirectly, or through one or more
subsidiaries or through one or more transactions, acquire control of an
uninsured institution or retain, for more than one year after the date
any savings association subsidiary becomes uninsured, control of such
association.
Dated: March 20, 2007.
[[Page 14251]]
By the Office of Thrift Supervision.
John M. Reich,
Director.
[FR Doc. E7-5453 Filed 3-26-07; 8:45 am]
BILLING CODE 6720-01-P
