Deposit Insurance Requirements After Certain Conversions; Definition of “Corporate Reorganization;” Optional Conversions (“Oakar Transactions”); Additional Grounds for Disapproval of Changes in Control; and Disclosure of Certain Supervisory Information, 55432-55435 [E8-22327]

Download as PDF 55432 Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Rules and Regulations and sound manner and comply with applicable law. The FDIC received three comments on the Interim Rule from trade- and research-based organizations. Generally, the commenters supported the Interim Rule, and lauded the FDIC for recognizing the importance of financial education programs, particularly for those individuals with little or no experience using bank-provided services. The commenters expressed no concerns regarding the Interim Rule, and they proposed no substantive or technical revisions. However, the FDIC has made a technical, nonsubstantive change to paragraph (a) of 12 CFR 303.41, which involved moving the reference to the financial education program exception provided in 12 CFR 303.46 to the sentence that lists the other exceptions to the definition of branch. Except for this change, the final rule is identical to the Interim Rule. 2. Final Rule The final rule excludes from the definition of branch any financial education program operated on school premises or a facility used by a school, where, in connection with the program, deposits are received, checks are paid, or money is lent, subject to certain conditions.6 As provided in this rule, the principal purpose of the program must be financial education, and not for the purpose of profit-making. Further, any banking services provided in connection with the program must be provided at the discretion of the school. The FDIC expects that such services would be limited in nature; available only to students, parents, and faculty; and accessible on a part-time basis or designated school days. The program must be conducted in a safe and sound manner and comply with applicable law. Regulatory Analysis and Procedure erowe on PROD1PC64 with RULES A. Administrative Procedure Act Section 553(d) of the Administrative Procedure Act (APA) requires the FDIC to publish a substantive rule at least 30 days before its effective date unless, under subsection (d)(1), the rule establishes or recognizes an exemption or relieves a restriction.7 This final rule establishes an exemption from the definition of branch provided in 12 CFR part 303, subpart C, which has the effect of permitting state nonmember banks to 6 This exemption is consistent with a regulation promulgated by the Office of the Comptroller of the Currency in 2001 which exempts from the definition of branch a national bank’s participation in a financial literacy program conducted on school premises. 12 CFR 7.1021. 7 See 5 U.S.C. 553(d). VerDate Aug<31>2005 15:11 Sep 24, 2008 Jkt 214001 participate in certain financial education programs conducted on school premises without having to submit a branch application to, and receive prior approval from, the FDIC. Therefore, the FDIC is not required to publish this final rule in the Federal Register at least 30 days before its effective date. B. Regulatory Flexibility Analysis The Regulatory Flexibility Act (RFA) requires an agency that is issuing a proposed rule to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of a proposed rule on small entities.8 Because this rulemaking does not involve the issuance of a notice of proposed rulemaking, the requirements of the RFA for a final regulatory flexibility analysis do not apply.9 C. Paperwork Reduction Act The FDIC has determined that this final rule does not involve a collection of information pursuant to the provisions of the Paperwork Reduction Act of 1995.10 List of Subjects in 12 CFR Part 303 Banks, Banking, State nonmember banks, Filing procedures, Establishment and relocation of domestic branches and offices, Financial education programs. Authority and Issuance For the reasons set forth in the preamble, part 303 of chapter III of title 12 of the Code of Federal Regulations is amended as follows: ■ PART 303—FILING PROCEDURES 1. The authority citation for part 303 continues to read as follows: ■ Authority: 12 U.S.C. 378, 1813, 1815, 1817, 1818, 1823, 1819 (Seventh and Tenth), 1820, 1823, 1828, 1831a, 1831e, 1831o, 1831p–1, 1831w, 1835a, 1843(1), 3104, 3105, 3108, 3207, 15 U.S.C. 1601–1607.2. Virgin Islands, and the Northern Mariana Islands at which deposits are received or checks paid or money lent. A branch does not include an automated teller machine, an automated loan machine, a remote service unit, or a facility described in section 303.46. The term branch also includes the following: * * * * * ■ 3. A new § 303.46 is added to subpart C to read as follows: § 303.46 Financial Education Programs that Include the Provision of Bank Products and Services. No branch application or prior approval is required in order for a state nonmember bank to participate in one or more financial education programs that involve receiving deposits, paying withdrawals, or lending money if: (a) Such service or services are provided on school premises, or a facility used by the school; (b) Such service or services are provided at the discretion of the school; (c) The principal purpose of each program is financial education. For example, the principal purpose of a program would be considered to be financial education if the program is designed to teach students the principles of personal financial management, banking operations, or the benefits of saving for the future, and is not designed for the purpose of profitmaking; and (d) Each program is conducted in a manner that is consistent with safe and sound banking practices and complies with applicable law. By Order of the Board of Directors. Dated at Washington, DC, the 18th day of September, 2008. Federal Deposit Insurance Corporation. Valerie J. Best, Assistant Executive Secretary. [FR Doc. E8–22326 Filed 9–24–08; 8:45 am] BILLING CODE 6714–01–P 2. In § 303.41, revise paragraph (a) to read as follows: FEDERAL DEPOSIT INSURANCE CORPORATION § 303.41 12 CFR Parts 303, 308, and 309 ■ Definitions. * * * * * (a) Branch, except as provided in this paragraph, includes any branch bank, branch office, additional office, or any branch place of business located in any State of the United States or in any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the RIN 3064–AD25 Deposit Insurance Requirements After Certain Conversions; Definition of ‘‘Corporate Reorganization;’’ Optional Conversions (‘‘Oakar Transactions’’); Additional Grounds for Disapproval of Changes in Control; and Disclosure of Certain Supervisory Information Federal Deposit Insurance Corporation. ACTION: Final rule. AGENCY: 8 See 5 U.S.C. 603(a). 9 See 5 U.S.C. 604. 10 44 U.S.C. 3501 et seq. PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\25SER1.SGM 25SER1 Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Rules and Regulations SUMMARY: The FDIC is issuing a final rule that amends certain of its regulations by conforming them to Federal statutes amended by the Financial Services Regulatory Relief Act of 2006, the Federal Deposit Insurance Reform Act of 2005 and the Federal Deposit Insurance Reform Conforming Amendments Act of 2005. On January 14, 2008, the FDIC adopted, an interim rule and requested public comment on, amendments to its regulations to implement such changes. Having received no comments on the interim rule, the FDIC is confirming the interim rule as final without change. Effective September 25, 2008, the interim rule published January 14, 2008 (73 FR 2143) is confirmed as final without change. DATES: FOR FURTHER INFORMATION CONTACT: Brett A. McCallister, Review Examiner (816) 234–8099 x4223, in the Division of Supervision and Consumer Protection; or Ryan K. Clougherty, Attorney, (202) 898–3843, Richard Bogue, Counsel, (202) 898–3726, or Robert C. Fick, Counsel, (202) 898–8962, in the Legal Division. SUPPLEMENTARY INFORMATION: I. Background erowe on PROD1PC64 with RULES On October 13, 2006, the President signed into law the Financial Services Regulatory Relief Act of 2006 (‘‘FSRRA’’).1 The stated purpose of FSRRA is to reduce regulatory burden and improve productivity for financial institutions. Several provisions of FSRRA amend statutes that the FDIC has implemented through its Rules and Regulations (‘‘Rules’’).2 Additionally, Congress enacted the Federal Deposit Insurance Reform Act of 2005 (‘‘Reform Act’’) 3 and the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 (‘‘Amendments Act’’),4 which consolidated the two former deposit insurance funds into a single deposit insurance fund. In January of 2008, the FDIC adopted an interim rule, and requested public comment on, amendments to its rules to conform them to Federal statutes as amended by the FSRRA, the Reform Act and the Amendments Act. Having received no comments, the FDIC is now issuing a final rule that is identical to the interim rule. 1 Pub. L. 109–351, 12 STAT. 1966 (Oct. 13, 2006). III of Title 12 of the Code of Federal Regulations. 3 Pub. L. 109–171, 120 STAT. 9 (Feb. 8, 2006). 4 Pub. L. 109–173, 119 STAT. 3601 (Feb. 15, 2006). 2 Chapter VerDate Aug<31>2005 15:11 Sep 24, 2008 Jkt 214001 II. Regulatory Amendments A. Deposit Insurance Requirements After Certain Conversions Section 5(i)(5) of the Home Owners’ Loan Act (‘‘HOLA’’) 5 generally authorizes any Federal savings association that was chartered and in operation before November 12, 1999 and that had branches in one or more states, to convert into one or more national or state banks, each of which may encompass one or more of the existing branches. Section 608(a) of FSRRA amended section 5(i)(5) of the HOLA to require that if such a conversion results in more than one national or state bank, each resulting bank must obtain deposit insurance from the FDIC pursuant to section 5(a) of the Federal Deposit Insurance Act (‘‘FDI Act’’).6 Subpart B of Part 303 of the FDIC’s Rules sets forth the procedures for applying for deposit insurance. Section 303.20 describes the scope of subpart B to include applications for deposit insurance for, among other institutions, proposed depository institutions. The final rule amends section 303.20 to expressly confirm the applicability of subpart B of Part 303 to banks that result from conversions of Federal savings associations under section 5(i)(5) of the HOLA. B. Definition of Corporate Reorganization Section 606 of the FSRRA made two changes to the Bank Merger Act 7 with respect to mergers that solely involve an insured depository institution and one or more of its affiliates (‘‘Affiliate Mergers’’). First, for Affiliate Mergers, section 606 amended section 18(c)(4) of the FDI Act 8 by eliminating the requirement that the appropriate Federal banking agency request competitive factors reports from either the other Federal banking agencies or the Attorney General of the United States.9 Prior to FSRRA the responsible Federal banking agency had to request competitive factors reports for Affiliate Mergers. Second, section 606 revised section 18(c)(6) of the FDI Act 10 by eliminating the post-approval waiting period for Affiliate Mergers. Prior to FSRRA the applicant in an Affiliate Merger had to wait up to thirty days after obtaining the agency’s approval 5 12 U.S.C. 1464(i)(5). U.S.C. 1815(a). 7 12 U.S.C. 1828(c). 8 12 U.S.C. 1828(c)(4). 9 Notwithstanding this change, the responsible Federal banking agency retains the ability to request competitive factors reports if the circumstances warrant. 10 12 U.S.C. 1828(c)(6). 6 12 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 55433 before it could consummate the transaction. The FDIC’s regulations at 12 CFR 303.61(b), formerly provided a definition of ‘‘corporate reorganization’’ that identified a class of mergers that generally do not raise competitive concerns and, therefore, do not require the same level of competitive analysis as other mergers subject to the Bank Merger Act. Such mergers are less burdensome on applicants. 12 CFR 303.61(b) defined ‘‘corporate reorganization’’ to include (i) mergers between an insured institution and its subsidiary or its holding company and (ii) mergers between institutions and entities that were ‘‘commonly-owned.’’ Institutions were ‘‘commonly-owned’’ if more than 50% of the voting stock of each is owned by the same entity. The changes made by section 606 of the FSRRA, however, indicate that there are no competitive concerns for a class of mergers that is broader than the class identified by the FDIC’s Rule as corporate reorganizations. Specifically, FSRRA indicates that there are no competitive concerns for mergers that solely involve an insured depository institution and one or more affiliates. While the term ‘‘corporate reorganization’’ is only used in subpart D as one of several illustrative examples of the types of mergers covered by the Bank Merger Act, the definition could cause confusion as to how it relates to Affiliate Mergers. The final rule amends the definition of ‘‘corporate reorganization’’ found at 12 CFR 303.61(b) in order to conform it to the changes made by FSRRA and to avoid confusion about the need for competitive analyses and post-approval waiting periods for any merger that solely involves an insured depository institution and one or more of its affiliates. C. Optional Conversions Before it was repealed, the former section 5(d)(3) of the FDI Act 11 generally authorized a member of one insurance fund to merge with a member of the other fund without changing the funds that insured the deposits of the two institutions. This type of merger was referred to as an ‘‘Optional Conversion’’ in both section 5(d)(3) of the FDI Act and in section 303.63(d) of the FDIC’s Rules; it was also commonly known as an ‘‘Oakar Transaction.’’ Section 303.63(d) of the FDIC’s Rules formerly required the applicant in an Optional Conversion to identify the 11 12 E:\FR\FM\25SER1.SGM U.S.C. 1815(d)(3) (repealed 2006). 25SER1 55434 Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Rules and Regulations merger as an ‘‘Optional Conversion’’ in its application. On March 31, 2006, pursuant to the Reform Act and the Amendments Act, the former Savings Association Insurance Fund (‘‘SAIF’’) and the former Bank Insurance Fund (‘‘BIF’’) were consolidated into a single fund, the Deposit Insurance Fund. In addition, the Amendments Act repealed section 5(d)(3) of the FDI Act effective with the merger of the two funds.12 Following the consolidation of the two funds into one by the Reform Act and the repeal of section 5(d)(3) of the FDI Act by the Amendments Act, Optional Conversions are no longer possible. The final rule amends section 303.63 by removing paragraph (d) Optional conversions. The removed paragraph formerly read as follows: (d) Optional conversions. If the proposed merger transaction is an optional conversion, the merger application shall include a statement that the proposed merger transaction is a transaction covered by section 5(d)(3) of the FDI Act (12 U.S.C. 1815(d)(3). erowe on PROD1PC64 with RULES D. Additional Grounds for Disapproval of a Change in Control Section 705 of FSRRA amended section 7(j)(7) of the FDI Act 13 by adding an additional ground for the disapproval of a proposed acquisition of control of a bank. The additional ground for disapproval is if the future prospects of the institution might jeopardize the financial stability of the bank or prejudice the interests of the depositors of the bank. Section 308.111 of the FDIC’s Rules lists the statutory grounds for disapproval of a proposed acquisition of control of an insured state nonmember bank. The final rule amends section 308.111(c) to reflect the addition of unfavorable future prospects of the institution as a ground for disapproval of a proposed acquisition under the FSRRA. E. Disclosure of Certain Supervisory Information Section 707 of FSRRA amended section 7(a)(2) of the FDI Act 14 by adding a new subsection (C) that expanded the authority of the Federal banking agencies to furnish examination reports and other confidential supervisory information to (1) any other Federal and State agencies with supervisory or regulatory authority over the depository institution or entity, (2) officers, directors and receivers of such 12 See section 8(a)(4) of the Amendments Act, Pub. L. 109–173 (2006). 13 12 U.S.C. 1817(j)(7). 14 12 U.S.C. 1817(a)(2). VerDate Aug<31>2005 15:11 Sep 24, 2008 Jkt 214001 depository institution or entity, and (3) any other person that the Federal banking agency determines to be appropriate. Part 309 of the FDIC’s Rules governs the disclosure of confidential information. Paragraph (b)(3) of section 309.6 entitled ‘‘Disclosure of exempt records,’’ previously authorized the disclosure of exempt records to Federal financial institution supervisory agencies and certain other agencies. Since section 707 of FSRRA authorized additional disclosures of certain supervisory information, the final rule amends section 309.6(b)(3) to add those additional disclosures to the disclosures previously authorized. III. Regulatory Analysis and Procedure A. Solicitation of Comments on Use of Plain Language Section 722 of the Gramm-LeachBliley Act (‘‘GLBA’’) 15 requires the FDIC to use ‘‘plain language’’ in all proposed and final rules published after January 1, 2000. The FDIC invited comments on whether the interim rule is clearly stated and effectively organized, and how the FDIC might make the text easier to understand. The FDIC received no comments addressing how the proposed rule might be changed to reflect the requirements of GLBA. B. Administrative Procedure Act The final rule takes effect upon publication in the Federal Register. The final rule conforms the FDIC’s regulations to several statutory provisions that were amended by FSRRA on October 13, 2006 and by the Reform Act and the Amendments Act effective on March 31, 2006. The statutory amendments made by FSRRA, the Reform Act, and the Amendments Act continue in effect. The amendments to the FDIC’s regulations made by the final rule are identical to those made by the interim rule, effective January 14, 2008. The amendments to the FDIC’s regulations made by the interim rule, and adopted in this final rule, generally reflect the language contained in the amended statutes without interpretation. The amendments made by the final rule effect no substance changes beyond those already effected by Federal statute. Although solicitation of public comment prior to the effectiveness of these regulatory amendments was unnecessary, the FDIC nonetheless requested public comment on the interim rule. The FDIC received no comments. C. Regulatory Flexibility Act The Regulatory Flexibility Act (‘‘RFA’’) requires that each Federal agency either certify that a proposed rule would not, if adopted in final form, have a significant economic impact on a substantial number of small entities or prepare an initial regulatory flexibility analysis of the proposal and publish the analysis for comment.16 However, pursuant to section 603(a) of the RFA a regulatory flexibility analysis is only required when an agency is required to publish a notice of proposed rulemaking for a proposed rule. Since the regulatory amendments made by the final rule are effective upon publication in the Federal Register, and since no notice of proposed rulemaking is required to be published, no regulatory flexibility analysis is required. D. Paperwork Reduction Act No new collections of information pursuant to the Paperwork Reduction Act 17 are contained in the final rule. List of Subjects 12 CFR Part 303 Administrative practice and procedure, Bank deposit insurance, Banks, Banking, Reporting and recordkeeping requirements, Savings associations. 12 CFR Part 308 Administrative practice and procedure, Bank deposit insurance, Banks, Banking, Claims, Crime, Equal access to justice, Fraud, Investigations, Lawyers, Penalties. 12 CFR Part 309 Banks, Banking, Credit, Freedom of information, Privacy. PARTS 303, 308, 309—[AMENDED] Authority and Issuance For the reasons set forth in the preamble, under the authority of 12 U.S.C. 1820 G, the interim rule amending parts 303, 308, and 309 of Chapter III of the title 12 of the Code of Federal Regulations which was published at 73 FR 2143 on January 14, 2008, is adopted as a final rule without change. ■ By Order of the Board of Directors. Dated at Washington, DC, the 18th day of September 2008. 16 See 15 12 PO 00000 U.S.C. 4809. Frm 00004 Fmt 4700 17 44 Sfmt 4700 E:\FR\FM\25SER1.SGM 5 U.S.C. 603. U.S.C. 3501. 25SER1 Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Rules and Regulations Federal Deposit Insurance Corporation. Valerie J. Best, Assistant Executive Secretary. [FR Doc. E8–22327 Filed 9–24–08; 8:45 am] This regulation is within the scope of that authority because it updates the existing regulations for aircraft engine pressurized static parts. BILLING CODE 6714–01–P Summary of the NPRM A Notice of Proposed Rulemaking (NPRM) was published on September 6, 2007 (72 FR 18136) that proposed changes to requirements for pressurized engine static parts in Title 14 Code of Federal Regulations part 33. The comment period for the NPRM closed on December 5, 2007. DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 33 [Docket No.: FAA–2007–28501; Amendment No. 33–26] RIN 2120–AJ05 Airworthiness Standards; Aircraft Engine Standards for Pressurized Engine Static Parts Federal Aviation Administration (FAA), DOT. ACTION: Final rule. AGENCY: SUMMARY: The FAA is amending the aircraft engine type certification standards by adding standards for pressurized engine static parts that are equivalent to those already adopted by the European Aviation Safety Agency. This rule establishes uniform standards for the certification of these parts in the United States and in Europe. U.S. manufacturers already meet the European requirements. DATES: This amendment becomes effective November 24, 2008. FOR FURTHER INFORMATION CONTACT: Tim Mouzakis, Engine and Propeller Directorate Standards Staff, ANE–110, Engine and Propeller Directorate, Aircraft Certification Service, FAA, New England Region, 12 New England Executive Park, Burlington, Massachusetts 01803–5299; telephone (781) 238–7114; fax (781) 238–7199, e-mail: timoleon.mouzakis@faa.gov. SUPPLEMENTARY INFORMATION: erowe on PROD1PC64 with RULES Authority for This Rulemaking The FAA’s authority to issue rules on aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency’s authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, ‘‘General Requirements.’’ Under that section, the FAA is charged with prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce, including minimum safety standards for aircraft engines. VerDate Aug<31>2005 15:11 Sep 24, 2008 Jkt 214001 Summary of the Final Rule This final rule on requirements for pressurized engine static parts contains minor changes from the NPRM. We made changes to two sections, §§ 33.71 and 33.91, in response to the comments we received and our own review of the proposed rule. This final rule harmonizes FAA and EASA regulations for part 33 requirements related to pressurized engine static parts. Summary of Comments There were five commenters. RollsRoyce, General Aviation Manufacturers Association (GAMA), and Airbus supported the rule and suggested minor changes, which are discussed below. General Electric and an individual supported the rule and did not suggest changes. The comments relate to the following general areas: • Component tests; and • Examples of static parts. Discussion of the Final Rule Component Tests Pressurized engine static parts operate at significant pressures and § 33.64 prescribes tests for these parts at maximum working and operating pressures. Rolls-Royce and GAMA commented that § 33.91, Engine component tests, should be modified as there was an inconsistency between proposed § 33.64 and existing § 33.91(c), which prescribes testing of pressurized hydraulic fluid tanks. Rolls-Royce and GAMA noted that depending on the maximum possible and maximum working pressures, as described in § 33.64, and the maximum operating pressure as described in § 33.91, the two rules could result in two different testing requirements for a given component. The FAA agrees that the two rules could be interpreted as separate and distinct test requirements, and that testing pressurized hydraulic fluid tanks falls under the requirements of the new § 33.64. We have also determined that proposed § 33.64 and § 33.71, PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 55435 Lubrication system, could be interpreted as two distinct testing requirements for a single component. Section 33.71(c)(9) prescribes testing for maximum operating temperature and pressure for pressurized oil tanks. These tanks should be tested under the requirements of the new § 33.64. In the final rule, therefore, we are modifying §§ 33.71(c)(9) and 33.91(c) by replacing existing testing requirements for pressurized tanks with a reference to meeting the requirements of § 33.64. This change is consistent with EASA regulations for pressurized hydraulic fluid and oil tanks. Examples of Static Parts In the NPRM discussion, we noted examples of pressurized engine static parts which include compressor, combustion, diffuser, and turbine cases; heat exchangers; bleed valve solenoids; starter motors; and fuel, oil and hydraulic system components. Airbus commented that the examples of pressurized static parts included in the preamble of the NPRM should be expanded to include associated ducts and fittings. The purpose of this NPRM discussion was to provide examples to help the applicant identify the type of parts affected by this rule. The examples provided in the NPRM do not represent a complete list of pressurized static parts. It is the applicant’s responsibility to ensure all applicable pressurized engine parts are identified. We have made no changes to the rule in response to this comment. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. We have determined that there is no current or new requirement for information collection associated with this amendment. International Compatibility In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to comply with International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these regulations. E:\FR\FM\25SER1.SGM 25SER1

Agencies

[Federal Register Volume 73, Number 187 (Thursday, September 25, 2008)]
[Rules and Regulations]
[Pages 55432-55435]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-22327]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 303, 308, and 309

RIN 3064-AD25


Deposit Insurance Requirements After Certain Conversions; 
Definition of ``Corporate Reorganization;'' Optional Conversions 
(``Oakar Transactions''); Additional Grounds for Disapproval of Changes 
in Control; and Disclosure of Certain Supervisory Information

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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[[Page 55433]]

SUMMARY: The FDIC is issuing a final rule that amends certain of its 
regulations by conforming them to Federal statutes amended by the 
Financial Services Regulatory Relief Act of 2006, the Federal Deposit 
Insurance Reform Act of 2005 and the Federal Deposit Insurance Reform 
Conforming Amendments Act of 2005. On January 14, 2008, the FDIC 
adopted, an interim rule and requested public comment on, amendments to 
its regulations to implement such changes. Having received no comments 
on the interim rule, the FDIC is confirming the interim rule as final 
without change.

DATES: Effective September 25, 2008, the interim rule published January 
14, 2008 (73 FR 2143) is confirmed as final without change.

FOR FURTHER INFORMATION CONTACT: Brett A. McCallister, Review Examiner 
(816) 234-8099 x4223, in the Division of Supervision and Consumer 
Protection; or Ryan K. Clougherty, Attorney, (202) 898-3843, Richard 
Bogue, Counsel, (202) 898-3726, or Robert C. Fick, Counsel, (202) 898-
8962, in the Legal Division.

SUPPLEMENTARY INFORMATION:

I. Background

    On October 13, 2006, the President signed into law the Financial 
Services Regulatory Relief Act of 2006 (``FSRRA'').\1\ The stated 
purpose of FSRRA is to reduce regulatory burden and improve 
productivity for financial institutions. Several provisions of FSRRA 
amend statutes that the FDIC has implemented through its Rules and 
Regulations (``Rules'').\2\ Additionally, Congress enacted the Federal 
Deposit Insurance Reform Act of 2005 (``Reform Act'') \3\ and the 
Federal Deposit Insurance Reform Conforming Amendments Act of 2005 
(``Amendments Act''),\4\ which consolidated the two former deposit 
insurance funds into a single deposit insurance fund.
---------------------------------------------------------------------------

    \1\ Pub. L. 109-351, 12 STAT. 1966 (Oct. 13, 2006).
    \2\ Chapter III of Title 12 of the Code of Federal Regulations.
    \3\ Pub. L. 109-171, 120 STAT. 9 (Feb. 8, 2006).
    \4\ Pub. L. 109-173, 119 STAT. 3601 (Feb. 15, 2006).
---------------------------------------------------------------------------

    In January of 2008, the FDIC adopted an interim rule, and requested 
public comment on, amendments to its rules to conform them to Federal 
statutes as amended by the FSRRA, the Reform Act and the Amendments 
Act. Having received no comments, the FDIC is now issuing a final rule 
that is identical to the interim rule.

II. Regulatory Amendments

A. Deposit Insurance Requirements After Certain Conversions

    Section 5(i)(5) of the Home Owners' Loan Act (``HOLA'') \5\ 
generally authorizes any Federal savings association that was chartered 
and in operation before November 12, 1999 and that had branches in one 
or more states, to convert into one or more national or state banks, 
each of which may encompass one or more of the existing branches. 
Section 608(a) of FSRRA amended section 5(i)(5) of the HOLA to require 
that if such a conversion results in more than one national or state 
bank, each resulting bank must obtain deposit insurance from the FDIC 
pursuant to section 5(a) of the Federal Deposit Insurance Act (``FDI 
Act'').\6\
---------------------------------------------------------------------------

    \5\ 12 U.S.C. 1464(i)(5).
    \6\ 12 U.S.C. 1815(a).
---------------------------------------------------------------------------

    Subpart B of Part 303 of the FDIC's Rules sets forth the procedures 
for applying for deposit insurance. Section 303.20 describes the scope 
of subpart B to include applications for deposit insurance for, among 
other institutions, proposed depository institutions. The final rule 
amends section 303.20 to expressly confirm the applicability of subpart 
B of Part 303 to banks that result from conversions of Federal savings 
associations under section 5(i)(5) of the HOLA.

B. Definition of Corporate Reorganization

    Section 606 of the FSRRA made two changes to the Bank Merger Act 
\7\ with respect to mergers that solely involve an insured depository 
institution and one or more of its affiliates (``Affiliate Mergers''). 
First, for Affiliate Mergers, section 606 amended section 18(c)(4) of 
the FDI Act \8\ by eliminating the requirement that the appropriate 
Federal banking agency request competitive factors reports from either 
the other Federal banking agencies or the Attorney General of the 
United States.\9\ Prior to FSRRA the responsible Federal banking agency 
had to request competitive factors reports for Affiliate Mergers. 
Second, section 606 revised section 18(c)(6) of the FDI Act \10\ by 
eliminating the post-approval waiting period for Affiliate Mergers. 
Prior to FSRRA the applicant in an Affiliate Merger had to wait up to 
thirty days after obtaining the agency's approval before it could 
consummate the transaction.
---------------------------------------------------------------------------

    \7\ 12 U.S.C. 1828(c).
    \8\ 12 U.S.C. 1828(c)(4).
    \9\ Notwithstanding this change, the responsible Federal banking 
agency retains the ability to request competitive factors reports if 
the circumstances warrant.
    \10\ 12 U.S.C. 1828(c)(6).
---------------------------------------------------------------------------

    The FDIC's regulations at 12 CFR 303.61(b), formerly provided a 
definition of ``corporate reorganization'' that identified a class of 
mergers that generally do not raise competitive concerns and, 
therefore, do not require the same level of competitive analysis as 
other mergers subject to the Bank Merger Act. Such mergers are less 
burdensome on applicants. 12 CFR 303.61(b) defined ``corporate 
reorganization'' to include (i) mergers between an insured institution 
and its subsidiary or its holding company and (ii) mergers between 
institutions and entities that were ``commonly-owned.'' Institutions 
were ``commonly-owned'' if more than 50% of the voting stock of each is 
owned by the same entity. The changes made by section 606 of the FSRRA, 
however, indicate that there are no competitive concerns for a class of 
mergers that is broader than the class identified by the FDIC's Rule as 
corporate reorganizations. Specifically, FSRRA indicates that there are 
no competitive concerns for mergers that solely involve an insured 
depository institution and one or more affiliates. While the term 
``corporate reorganization'' is only used in subpart D as one of 
several illustrative examples of the types of mergers covered by the 
Bank Merger Act, the definition could cause confusion as to how it 
relates to Affiliate Mergers.
    The final rule amends the definition of ``corporate 
reorganization'' found at 12 CFR 303.61(b) in order to conform it to 
the changes made by FSRRA and to avoid confusion about the need for 
competitive analyses and post-approval waiting periods for any merger 
that solely involves an insured depository institution and one or more 
of its affiliates.

C. Optional Conversions

    Before it was repealed, the former section 5(d)(3) of the FDI Act 
\11\ generally authorized a member of one insurance fund to merge with 
a member of the other fund without changing the funds that insured the 
deposits of the two institutions. This type of merger was referred to 
as an ``Optional Conversion'' in both section 5(d)(3) of the FDI Act 
and in section 303.63(d) of the FDIC's Rules; it was also commonly 
known as an ``Oakar Transaction.'' Section 303.63(d) of the FDIC's 
Rules formerly required the applicant in an Optional Conversion to 
identify the

[[Page 55434]]

merger as an ``Optional Conversion'' in its application.
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    \11\ 12 U.S.C. 1815(d)(3) (repealed 2006).
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    On March 31, 2006, pursuant to the Reform Act and the Amendments 
Act, the former Savings Association Insurance Fund (``SAIF'') and the 
former Bank Insurance Fund (``BIF'') were consolidated into a single 
fund, the Deposit Insurance Fund. In addition, the Amendments Act 
repealed section 5(d)(3) of the FDI Act effective with the merger of 
the two funds.\12\ Following the consolidation of the two funds into 
one by the Reform Act and the repeal of section 5(d)(3) of the FDI Act 
by the Amendments Act, Optional Conversions are no longer possible. The 
final rule amends section 303.63 by removing paragraph (d) Optional 
conversions. The removed paragraph formerly read as follows:
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    \12\ See section 8(a)(4) of the Amendments Act, Pub. L. 109-173 
(2006).

    (d) Optional conversions. If the proposed merger transaction is 
an optional conversion, the merger application shall include a 
statement that the proposed merger transaction is a transaction 
covered by section 5(d)(3) of the FDI Act (12 U.S.C. 1815(d)(3).

D. Additional Grounds for Disapproval of a Change in Control

    Section 705 of FSRRA amended section 7(j)(7) of the FDI Act \13\ by 
adding an additional ground for the disapproval of a proposed 
acquisition of control of a bank. The additional ground for disapproval 
is if the future prospects of the institution might jeopardize the 
financial stability of the bank or prejudice the interests of the 
depositors of the bank.
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    \13\ 12 U.S.C. 1817(j)(7).
---------------------------------------------------------------------------

    Section 308.111 of the FDIC's Rules lists the statutory grounds for 
disapproval of a proposed acquisition of control of an insured state 
nonmember bank. The final rule amends section 308.111(c) to reflect the 
addition of unfavorable future prospects of the institution as a ground 
for disapproval of a proposed acquisition under the FSRRA.

E. Disclosure of Certain Supervisory Information

    Section 707 of FSRRA amended section 7(a)(2) of the FDI Act \14\ by 
adding a new subsection (C) that expanded the authority of the Federal 
banking agencies to furnish examination reports and other confidential 
supervisory information to (1) any other Federal and State agencies 
with supervisory or regulatory authority over the depository 
institution or entity, (2) officers, directors and receivers of such 
depository institution or entity, and (3) any other person that the 
Federal banking agency determines to be appropriate.
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    \14\ 12 U.S.C. 1817(a)(2).
---------------------------------------------------------------------------

    Part 309 of the FDIC's Rules governs the disclosure of confidential 
information. Paragraph (b)(3) of section 309.6 entitled ``Disclosure of 
exempt records,'' previously authorized the disclosure of exempt 
records to Federal financial institution supervisory agencies and 
certain other agencies.
    Since section 707 of FSRRA authorized additional disclosures of 
certain supervisory information, the final rule amends section 
309.6(b)(3) to add those additional disclosures to the disclosures 
previously authorized.

III. Regulatory Analysis and Procedure

A. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act (``GLBA'') \15\ requires 
the FDIC to use ``plain language'' in all proposed and final rules 
published after January 1, 2000. The FDIC invited comments on whether 
the interim rule is clearly stated and effectively organized, and how 
the FDIC might make the text easier to understand. The FDIC received no 
comments addressing how the proposed rule might be changed to reflect 
the requirements of GLBA.
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    \15\ 12 U.S.C. 4809.
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B. Administrative Procedure Act

    The final rule takes effect upon publication in the Federal 
Register. The final rule conforms the FDIC's regulations to several 
statutory provisions that were amended by FSRRA on October 13, 2006 and 
by the Reform Act and the Amendments Act effective on March 31, 2006. 
The statutory amendments made by FSRRA, the Reform Act, and the 
Amendments Act continue in effect. The amendments to the FDIC's 
regulations made by the final rule are identical to those made by the 
interim rule, effective January 14, 2008.
    The amendments to the FDIC's regulations made by the interim rule, 
and adopted in this final rule, generally reflect the language 
contained in the amended statutes without interpretation. The 
amendments made by the final rule effect no substance changes beyond 
those already effected by Federal statute. Although solicitation of 
public comment prior to the effectiveness of these regulatory 
amendments was unnecessary, the FDIC nonetheless requested public 
comment on the interim rule. The FDIC received no comments.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires that each Federal 
agency either certify that a proposed rule would not, if adopted in 
final form, have a significant economic impact on a substantial number 
of small entities or prepare an initial regulatory flexibility analysis 
of the proposal and publish the analysis for comment.\16\ However, 
pursuant to section 603(a) of the RFA a regulatory flexibility analysis 
is only required when an agency is required to publish a notice of 
proposed rulemaking for a proposed rule. Since the regulatory 
amendments made by the final rule are effective upon publication in the 
Federal Register, and since no notice of proposed rulemaking is 
required to be published, no regulatory flexibility analysis is 
required.
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    \16\ See 5 U.S.C. 603.
---------------------------------------------------------------------------

D. Paperwork Reduction Act

    No new collections of information pursuant to the Paperwork 
Reduction Act \17\ are contained in the final rule.
---------------------------------------------------------------------------

    \17\ 44 U.S.C. 3501.
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List of Subjects

12 CFR Part 303

    Administrative practice and procedure, Bank deposit insurance, 
Banks, Banking, Reporting and recordkeeping requirements, Savings 
associations.

12 CFR Part 308

    Administrative practice and procedure, Bank deposit insurance, 
Banks, Banking, Claims, Crime, Equal access to justice, Fraud, 
Investigations, Lawyers, Penalties.

12 CFR Part 309

    Banks, Banking, Credit, Freedom of information, Privacy.

PARTS 303, 308, 309--[AMENDED]

Authority and Issuance

0
For the reasons set forth in the preamble, under the authority of 12 
U.S.C. 1820 G, the interim rule amending parts 303, 308, and 309 of 
Chapter III of the title 12 of the Code of Federal Regulations which 
was published at 73 FR 2143 on January 14, 2008, is adopted as a final 
rule without change.

    By Order of the Board of Directors.

    Dated at Washington, DC, the 18th day of September 2008.

[[Page 55435]]

Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E8-22327 Filed 9-24-08; 8:45 am]
BILLING CODE 6714-01-P