Community Reinvestment Act Regulations, 79278-79286 [2010-31818]

Agencies

• FEDERAL DEPOSIT INSURANCE CORPORATION
• FEDERAL RESERVE SYSTEM
• Office of the Comptroller of the Currency
• DEPARTMENT OF THE TREASURY
• Office of Thrift Supervision
• Comptroller of the Currency

[Federal Register Volume 75, Number 243 (Monday, December 20, 2010)]
[Rules and Regulations]
[Pages 79278-79286]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31818]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 25

[Docket ID OCC-2010-0021]
RIN 1557-AD34

FEDERAL RESERVE SYSTEM

12 CFR Part 228

[Docket No. R-1387]
RIN 7100-AD50

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 345

RIN 3064-AD60

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563e

[Docket ID OTS-2010-0031]
RIN 1550-AC42


Community Reinvestment Act Regulations

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, 
Treasury (OTS).

ACTION: Joint final rule.

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SUMMARY: The OCC, the Board, the FDIC, and the OTS (collectively, ``the 
agencies'') are adopting revisions to our rules implementing the 
Community Reinvestment Act (CRA). The agencies are revising the term 
``community development'' to include loans, investments, and services 
by financial institutions that support, enable, or facilitate projects 
or activities that meet the ``eligible uses'' criteria described in 
Section 2301(c) of the Housing and Economic Recovery Act of 2008 
(HERA), as amended, and are conducted in designated target areas 
identified in plans approved by the United States Department of Housing 
and Urban Development (HUD) under the Neighborhood Stabilization 
Program (NSP). The final rule provides favorable CRA consideration of 
such activities that, pursuant to the requirements of the program, 
benefit low-, moderate-, and middle-income individuals and geographies 
in NSP target areas designated as ``areas of greatest need.'' Covered 
activities are considered both within an institution's assessment 
area(s) and outside of its assessment area(s), as long as the 
institution has adequately addressed the community development needs of 
its assessment area(s). Favorable consideration under the revised rule 
will be available until no later than two years after the last date 
appropriated funds for the program are required to be spent by the 
grantees. The agencies will provide reasonable advance notice to 
institutions in the Federal Register regarding termination of the rule 
once a date certain has been identified.

DATES: Effective Date: This joint final rule is effective January 19, 
2011.

FOR FURTHER INFORMATION CONTACT: OCC: Michael S. Bylsma, Director, or 
Margaret Hesse, Special Counsel, Community and Consumer Law Division, 
(202) 874-5750; or Greg Nagel or Brian Borkowicz, National Bank 
Examiners, Compliance Policy, (202) 874-4428; Office of the Comptroller 
of the Currency, 250 E Street, SW., Washington, DC 20219.
    Board: Paul J. Robin, Manager, Reserve Bank Oversight and Policy, 
(202) 452-3140; or Jamie Z. Goodson, Attorney, (202) 452-3667; Division 
of Consumer and Community Affairs, Board of Governors of the Federal 
Reserve System, 20th Street and Constitution Avenue, NW., Washington, 
DC 20551.
    FDIC: Janet Gordon, Senior Policy Analyst, Division of Supervision 
and Consumer Protection, (202) 898-3850 or Richard Schwartz, Counsel, 
Legal Division, (202) 898-7424; Federal Deposit Insurance Corporation, 
550 17th Street, NW., Washington, DC 20429.
    OTS: Stephanie M. Caputo, Senior Compliance Program Analyst, 
Compliance and Consumer Protection, (202) 906-6549; or Richard Bennett, 
Senior Compliance Counsel, Regulations and Legislation Division, (202) 
906-7409; Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552.

SUPPLEMENTARY INFORMATION:

Background

    The Community Reinvestment Act (CRA) requires the Federal banking 
and thrift regulatory agencies to assess the record of each insured 
depository institution in helping to meet the credit needs of its 
entire community, including low- and moderate-income neighborhoods, 
consistent with the safe and sound operation of the institution, and to 
take that record into account when the agency evaluates an application 
by the institution for a deposit facility.\1\ The agencies have 
promulgated substantially similar regulations to implement the 
requirements of the CRA.\2\
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    \1\ 12 U.S.C. 2903.
    \2\ See 12 CFR parts 25, 228, 345, and 563e.
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    There is a pressing need to provide housing-related assistance to 
stabilize communities affected by high levels of foreclosures. High 
levels of foreclosures have devastated communities and are projected to 
continue into 2012 and beyond with damaging spillover effects for low- 
and moderate-income census tracts, as well as middle-income census 
tracts, affected by high levels of loan delinquencies and foreclosures. 
Among the many consequences of high levels of foreclosures are growing 
inventories of vacant foreclosed properties and institution ``other 
real estate owned'' (OREO) properties, depreciating home values, 
declining property tax bases, and destabilization of communities 
directly affected by high levels of foreclosures and of adjacent and 
surrounding neighborhoods.

Neighborhood Stabilization Program (NSP)

    Congress recognized the need to provide emergency assistance to 
address these problems with the establishment of the Neighborhood 
Stabilization Program (NSP) through Division B, Title III, of the 
Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289 
(2008). Under HERA, emergency funds (``NSP1'') totaling nearly $4 
billion for the redevelopment of abandoned and foreclosed properties 
were distributed to States and localities with the greatest need for 
such funds according to a formula based on the number and percentage of 
home foreclosures, the number and percentage of homes financed by a 
subprime mortgage-related loan, and the number and percentage of homes 
in default or delinquency in each State or unit of general local 
government. Under NSP1, each of the 50 States and Puerto Rico received 
a minimum award of $19.6 million and 254 local areas received

[[Page 79279]]

grants totaling $1.86 billion ranging from $2.0 million to $62.2 
million.\3\
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    \3\ See ``Neighborhood Stabilization Grants,'' https://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/nsp1.cfm.
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    Using similar criteria, the American Recovery and Reinvestment Act 
of 2009 (ARRA), Public Law 111-5 (2009), provided supplementary NSP 
funding (``NSP2'') to be awarded as grants, through a competitive 
bidding process, to State and local governments, as well as to non-
profit organizations and consortia of non-profit entities. On January 
14, 2010, HUD awarded a combined total of nearly $2 billion in NSP2 
grants.\4\ To receive NSP funding, each grantee was required to submit 
an action plan or application, including any amendments thereto, to HUD 
according to specific alternative requirements set out by HUD in 2008 
and 2009.\5\
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    \4\ See ``Neighborhood Stabilization Program 2,'' https://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/arrafactsheet.cfm.
    \5\ 74 FR 21377 (May 7, 2009); 73 FR 58330 (Oct. 6, 2008).
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    The Dodd-Frank Wall Street Reform and Consumer Protection Act (the 
Dodd-Frank Act), Public Law 111-203, enacted July 21, 2010, provided $1 
billion in additional NSP funding to be allocated by a funding formula 
to be established by HUD within 30 days after enactment. Under the 
Dodd-Frank Act, HUD's funding formula will continue to consider the 
same criteria regarding foreclosure rates, subprime mortgages, and home 
mortgage defaults and delinquencies and each State will receive not 
less than 0.5 percent of the new funds. Each State or local government 
grantee must establish procedures to create preferences for the 
development of affordable rental housing for properties assisted with 
the funds made available under the Dodd-Frank Act.\6\ On September 8, 
2010, HUD announced the allocation of $970 million in NSP3 funding to 
283 grantees nationwide and has issued guidance to grantees on the 
preparation and submission of action plans.
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    \6\ HUD published formula allocations and program requirements 
for NSP3 grants on October 19, 2010. See 75 FR 64322 (Oct. 19, 
2010).
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    Section 2301(c) of HERA, as amended, establishes five activities 
that are ``eligible uses'' of NSP funds (for purposes of this rule, 
designated as ``NSP-eligible activities''). NSP-eligible activities are 
projects or activities that use the NSP funds to: (1) Establish 
financing mechanisms for purchase and redevelopment of foreclosed upon 
homes and residential properties, including such mechanisms as soft-
seconds, loan loss reserves, and shared equity loans for low- and 
moderate-income homebuyers; (2) purchase and rehabilitate homes and 
residential properties that have been abandoned or foreclosed upon, in 
order to sell, rent, or redevelop such homes and properties; (3) 
establish and operate land banks for homes and residential properties 
that have been foreclosed upon; (4) demolish blighted structures; and 
(5) redevelop demolished or vacant properties.\7\ In addition, Section 
2301(f)(3)(A) of HERA, as amended, provides that all NSP funds must be 
used with respect to individuals and families whose income does not 
exceed 120 percent of the area median income, and not less than 25 
percent of funds must be used to house individuals and families whose 
incomes do not exceed 50 percent of area median income.\8\
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    \7\ NSP2 and NSP3 funds for redevelopment of demolished or 
vacant properties may be used only for housing.
    \8\ Section 1497 of the Dodd-Frank Act amended Section 
2301(f)(3)(A) of HERA. Prior to this amendment, applicable to NSP1 
and NSP2, not less than 25 percent of funds had to be used ``for the 
purchase and redevelopment of abandoned or foreclosed homes and 
residential properties that will be used'' to house individuals and 
families whose incomes do not exceed 50 percent of area median 
income.
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    HUD approves NSP action plans and applications, including 
amendments thereto (hereinafter referred to as ``NSP plans'' or 
``plans''), for all NSP grantees. These public documents must designate 
``areas of greatest need'' for targeting NSP-eligible activities, 
consistent with statutory criteria. The vast majority of NSP-targeted 
areas are listed on a map database located on HUD's Web site at: https://www.hud.gov/nspmaps. However, there may be a few NSP-targeted 
geographies in HUD-approved State NSP1 plans that are not identified in 
the HUD census tract database. Information about these targeted areas 
may be found in the individual plans. NSP3 targeting data will 
periodically be added to these maps in a timely manner following 
approval of grantee action plans.
    HUD has allocated NSP funds in a way that assists communities with 
the greatest need to address the adverse consequences of elevated 
foreclosure levels, consistent with Congressional intent. Allowing 
institutions to receive CRA consideration for NSP-eligible activities 
in NSP-targeted areas creates an opportunity to leverage government 
funding targeted to areas with high foreclosure or vacancy rates.

Proposed Rule

    The definition of ``community development'' is a key definition in 
the agencies' CRA regulations. Financial institutions receive positive 
consideration in their CRA examinations for community development 
loans, qualified investments, and community development services which 
have a primary purpose of ``community development.''
    The agencies proposed to revise the interagency CRA regulations by 
adding to the definition of ``community development'' loans, 
investments, and services that support, enable, or facilitate NSP-
eligible activities in designated target areas identified in plans 
approved by HUD under the NSP.\9\ For example, under the proposed 
revised definition of ``community development,'' a financial 
institution would receive favorable CRA consideration for a donation of 
OREO properties to non-profit housing organizations in eligible middle-
income, as well as low- and moderate-income, geographies. In addition, 
under the proposal, institutions would receive favorable CRA 
consideration if they provided financing for the purchase and 
rehabilitation of foreclosed, abandoned, or vacant properties in 
targeted areas. Other examples of activities that would receive 
favorable CRA consideration under the proposal are loans, investments, 
and services that support the redevelopment of demolished or vacant 
properties in such areas, consistent with eligible uses for NSP funds.
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    \9\ 75 FR 36016 (Jun. 24, 2010).
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    Although the CRA rules expressly encourage activities that benefit 
low- or moderate-income individuals or geographies, the agencies have 
created limited exceptions to address certain adverse circumstances 
that may affect middle-income individuals and geographies.\10\ The 
agencies believe that the purposes of CRA can be served by providing 
CRA incentives to institutions to engage in community development 
loans, investments and services that meet the narrowly tailored 
requirements of the NSP. First, HUD has stated that its funding of 
these programs was designed to satisfy Congressional intent that the 
funds have maximum impact and be targeted to States and local 
communities with the greatest needs.\11\ In addition, while, by its 
statutory terms, the NSP may benefit middle-income individuals, 
grantees must use at least 25 percent of their funds to

[[Page 79280]]

house low-income individuals and families.
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    \10\ 70 FR 44256 (Aug. 2, 2005), and 71 FR 18614 (Apr. 12, 
2006).
    \11\ See HUD, NSP Frequently Asked Questions, https://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/pdf/nsp_faq_formula_allocation.pdf.
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    Under the current CRA rules, an institution is evaluated primarily 
on how well it helps meet the credit and community development needs of 
its CRA assessment area(s). However, the agencies note that many 
foreclosed residential properties owned by an institution may be 
located in areas that are outside of the institution's CRA assessment 
area(s). Restricting CRA consideration of NSP-eligible activities to an 
institution's assessment area(s) may not fully help to promote 
Congress's objectives for the NSP. Therefore, the proposed rule 
provided that an institution that has adequately addressed the 
community development needs of its assessment area(s) may receive 
favorable consideration for NSP-eligible activities under this 
provision that are outside of its assessment area(s).
    There is precedent for allowing greater flexibility concerning the 
CRA focus on assessment area(s) in certain temporary and exigent 
circumstances. For example, in 2006, the agencies issued a supervisory 
policy statement providing that an institution would receive favorable 
CRA consideration for engaging in activities that helped revitalize or 
stabilize areas affected by Hurricanes Katrina and Rita, even if such 
areas were not in the institution's assessment area(s), provided the 
institution had adequately met the CRA-related needs of its assessment 
area(s).
    Finally, the agencies stated their intention that the proposed rule 
be generally tied to the duration of the NSP. As described more fully 
below, the NSP does not have a ``sunset'' date. Therefore, a specific 
termination date for the regulatory provision was not proposed. 
Instead, the proposed rule provided that NSP-eligible activities would 
receive favorable consideration under the new rule if conducted no 
later than two years after the last date appropriated funds for the 
program are required to be spent by the grantees. The proposal 
indicated that the agencies will provide reasonable advance notice to 
institutions in the Federal Register regarding termination of the rule 
once a date certain has been identified.
    The proposed rule would have imposed no new requirements on 
institutions. It simply would have expanded the categories of 
activities that qualify for CRA consideration as ``community 
development.'' No institution would be required to provide loans, 
investments, or services pursuant to the proposed expanded definition. 
In addition, any community development loans that may be made by large 
institutions under the proposed new provision would be covered under 
existing loan reporting requirements. As such, no new reporting 
requirements and negligible, if any, administrative costs would result 
from the proposed rule if adopted. The agencies anticipated that the 
proposal, if finalized, would provide an incentive for institutions to 
engage in activities that stabilize foreclosure affected communities 
approved for NSP projects. Thus, the proposed rule would create an 
opportunity to leverage government funded projects with complementary 
private financing in areas targeted for assistance with minimal, if 
any, regulatory burden or costs.

Review of Comments on the Proposed Rule and Agencies' Final Rule

    Together, the agencies received 34 comments addressing the proposed 
revision that would expand the definition of ``community development.'' 
\12\ The commenters represented a variety of industry, consumer, 
community development, and governmental entities. The commenters 
generally supported expanding the definition of ``community 
development'' to encourage housing-related assistance to stabilize 
communities affected by high levels of foreclosures and delinquencies.
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    \12\ The Board also received over 650 other comments that stated 
that banks should not receive an ``outstanding'' rating if they 
contributed to economic decline and should assist their communities, 
should not be allowed to pick the geographic area or affiliates 
considered, and should get a ``failing'' rating if they discriminate 
against African-American and Latino communities.
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    In addition to a request for comments generally, the agencies asked 
for and received comment on five specific issues in connection with the 
proposal.
    Activities Eligible for CRA Consideration: Virtually all of the 
commenters supported the intent of the proposed rule to permit CRA 
consideration, as a component of the regulatory ``community 
development'' definition, of loans, investments, and services that 
support activities that are NSP-eligible and are conducted in NSP-
targeted areas. In particular, the agencies requested comment on 
whether favorable CRA consideration should be limited to support of 
those activities specified in a HUD-approved NSP plan for the relevant 
area or support of specific activities that have been funded by the 
NSP. The commenters that specifically addressed the question opposed 
limiting CRA consideration to such activities. For example, a community 
development organization stated that so limiting covered activities 
would unduly burden banks and examiners by requiring them to verify 
that an activity was covered by a plan.
    A few industry and government commenters suggested that the 
agencies adopt a broader rule that provides express CRA consideration 
for activities that are not NSP-eligible and/or are outside of 
geographies covered in NSP-targeted areas. Several other commenters 
stated that the agencies should provide consideration for activities 
that are NSP-eligible, but are not specifically covered in the 
underlying NSP plans. By contrast, six community development 
organizations that target low- and moderate-income communities stated 
that donations of OREO in poor condition can carry associated costs and 
liability for a receiving organization. These organizations recommended 
providing favorable CRA consideration for such donations only if they 
are consistent with local and/or regional government or nonprofit plans 
and the donor institutions fund associated costs, such as demolition 
and environmental remediation costs. The agencies will consider the 
credit given to donations of OREO as part of their general regulatory 
review of CRA regulations.
    The agencies have considered the comments on the scope of the 
``community development'' definition and are adopting the revision to 
the definition as proposed, with only minor changes to statutory 
references. This revision to the definition of ``community 
development'' is narrowly tailored to encourage financial institutions 
to support stabilization efforts in targeted areas identified by the 
Federal government as having greater need for assistance as a result of 
the foreclosure crisis. Commenters opposed limiting favorable CRA 
consideration to those NSP-eligible activities expressly described in 
NSP plans or to those funded by NSP programs, as discussed above. The 
agencies note that the final rule allows institutions to receive CRA 
consideration for supporting, enabling, or facilitating NSP-eligible 
activities in the geographic areas targeted in NSP program plans.
    As noted above, the agencies believe that allowing institutions to 
receive CRA consideration for supporting, enabling, or facilitating 
NSP-eligible activities in NSP-targeted areas will help to leverage 
scarce government funding to those designated areas with the greatest 
need for such activities. Finalization of this rule will provide an 
immediate incentive for institutions to undertake activities that will 
support the stabilization of areas targeted for NSP-initiatives.

[[Page 79281]]

    In addition, the agencies note that, under the current CRA rules 
and interagency guidance, CRA consideration is already available for 
some neighborhood stabilization activities. First, revitalization and 
stabilization activities in low- and moderate-income geographies or in 
distressed or underserved nonmetropolitan middle-income geographies 
receive positive consideration under the existing CRA rules, regardless 
of whether these areas are targeted areas under the NSP.\13\ Similarly, 
foreclosure prevention programs may also receive positive CRA 
consideration, for example, if they are part of a loan program that is 
designed to provide sustainable relief to homeowners facing foreclosure 
on their primary residences or if they help to revitalize or stabilize 
low- or moderate-income geographies.\14\ In addition, below-market 
sales and donations of OREO properties to nonprofit organizations, 
consistent with safe and sound banking operations, also may receive 
positive consideration under the existing CRA rules. The CRA rules 
provide favorable consideration for grants, which would include an in-
kind donation of property. If these grants have a primary purpose of 
community development, such as to provide affordable housing to low- 
and moderate-income individuals, they also would already receive 
positive CRA consideration as a qualified investment.\15\ Further, 
favorable CRA consideration is given for technical assistance about 
financial services to community-based groups, local or Tribal 
government agencies, or intermediaries that help to meet the credit 
needs of low- and moderate-income individuals or small businesses and 
farms.\16\
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    \13\ 12 CFR 25.12(g)(4), 228.12(g)(4), 345.12(g)(4), and 
563e.12(g)(4).
    \14\ Interagency Questions and Answers Regarding Community 
Reinvestment (Questions and Answers), 75 FR 11642, 11647, 11650-51, 
11654-55 (Mar. 11, 2010) (Q&As Sec.  ----.12(g)(4)(i)-1, Sec.  --
--.12(i)-3, and Sec.  ----.22(a)-1).
    \15\ Questions and Answers, 75 FR at 11652-53 (Q&A Sec.  --
--.12(t)-5).
    \16\ Questions and Answers, 75 FR at 11650-51, 11657 (Q&As Sec.  
----.12(i)-1, Sec.  ----.12(i)-3, and Sec.  ----.22(b)(5)-1).
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    Favorable CRA consideration also is available for certain 
activities involving multifamily housing.\17\ In addition, economic 
development activities not directly related to housing may qualify for 
favorable CRA consideration. For example, ``qualified investments'' for 
which favorable CRA consideration may be given include investments, 
grants, deposits, or shares in or to organizations supporting 
activities essential to the capacity of low- and moderate-income 
individuals or geographies to utilize credit or to sustain economic 
development.\18\
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    \17\ Under the agencies' current CRA regulations, ``community 
development'' includes activities related to affordable multifamily 
housing, and a ``community development loan'' includes construction 
and permanent financing of multifamily rental property serving low- 
and moderate-income persons. 12 CFR 25.12(g)(1), 228.12(g)(1), 
345.12(g)(1), and 563e.12(g)(1); Questions and Answers, 75 FR at 
11648 (Q&A Sec.  ----.12(h)-1). Further, a ``home mortgage loan'' 
includes a multifamily dwelling loan, and a ``qualified investment'' 
includes an investment, grant, deposit, or share in organizations 
engaged in rehabilitating or constructing affordable multifamily 
rental housing. Questions and Answers, 75 FR at 11651-52 (Q&As Sec.  
----.12(l)-1 and Sec.  ----.12(t)-4).
    \18\ Questions and Answers, 75 FR at 11652 (Q&A Sec.  --
--.12(t)-4).
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    Finally, the agencies note that they have begun a regulatory review 
of the CRA rules generally, and as part of that regulatory review, the 
agencies will carefully consider any comments received through this 
rulemaking that may recommend further changes to the definition of 
``community development.''\19\
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    \19\ See 75 FR 35686 (Jun. 23, 2010).
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    Reference to Statutes Appropriating Funds to NSP: In the proposal, 
the regulatory text specifically referred to the two statutes that 
authorized funds under NSP1 and NSP2, the HERA and the American 
Recovery and Reinvestment Act of 2009, respectively. As stated above, 
since the agencies issued their proposal, Congress provided an 
additional $1 billion to the NSP under the Dodd-Frank Act. Based on 
this additional authorization and the fact that the rule's reference to 
the NSP now covers any of that program's iterations (thus far NSP1, 
NSP2, and NSP3), the agencies need to amend the final regulatory 
language to account for these funds. Rather than add a reference to the 
Dodd-Frank Act, and thereafter amend the rule whenever a statute 
provides additional funds, the agencies have revised Sec.  --
--.12(g)(5)(i) to refer solely to HERA.\20\
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    \20\ In the proposed rule text, the agencies referred to Section 
2301(c)(3) of the HERA with regard to that provision's NSP 
``eligible uses'' definition. Section 2301(c)(3) was changed to 
2301(c)(4) in the Helping Families Save Their Homes Act of 2009, 
Public Law 111-22, Sec.  105(a) (2009). Rather than change the 
reference in the regulatory text, and risk having to change that 
reference in the future, the agencies are using the term ``eligible 
uses'' and referring to Section 2301(c) generally.
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    Sunset: The duration of the agencies' proposed rule was generally 
linked to the duration of the NSP. Under NSP1, grantees must expend NSP 
funds within four years of the date the grant is awarded. Under NSP2, 
grantees have three years from that date to fully spend the grant, and 
HUD was required to obligate all funds appropriated for NSP2 in 
February 2010. The funds appropriated in the Dodd-Frank Act also must 
be fully expended by grantees within three years after they receive 
their grants, and HUD is required to obligate all funds appropriated by 
the Dodd-Frank Act by July 2011. Since the NSP does not have a 
termination date, Congress could appropriate additional funds for the 
program in future years. Therefore, a specific termination date for the 
regulatory provision was not proposed. Instead, the proposed rule 
provided that NSP-eligible activities would receive favorable 
consideration under the new rule if conducted no later than two years 
after the last date appropriated funds for the program are required to 
be spent by the grantees.
    Most commenters supported the proposal to allow CRA consideration 
of qualifying loans, investments, and services that are provided no 
later than two years after the last date appropriated funds for the 
program are required to be spent by grantees. A few commenters stated 
that there should be no ``sunset'' date. These commenters asserted that 
need for NSP-eligible activities will remain even after Federal funding 
is no longer available; continuing CRA consideration would encourage 
financial institutions to help to meet those needs.
    The agencies carefully considered these comments and are adopting 
the revision as proposed. The agencies believe that two years after the 
last date appropriated funds for the program are required to be spent 
by grantees generally allows sufficient time for institutions to engage 
in meaningful community development activities in NSP-targeted areas. 
As indicated in the proposal, the agencies will provide reasonable 
advance notice to institutions in the Federal Register regarding 
termination of the rule once a certain date has been identified.
    Benefit to Low-, Moderate-, and Middle-Income Communities: As noted 
above, the CRA rules expressly encourage activities that benefit low- 
or moderate-income individuals or geographies. Nevertheless, to address 
certain adverse circumstances, the agencies have created limited 
exceptions to permit favorable consideration of activities that benefit 
middle-income individuals and geographies in addition to low- and 
moderate-income individuals and geographies.\21\
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    \21\ 70 FR 44256 (Aug. 2, 2005) and 71 FR 18614 (Apr. 12, 2006).
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    Most commenters supported the expansion to permit CRA consideration 
of activities that may benefit middle-

[[Page 79282]]

income individuals and communities, consistent with the NSP program. 
Although a few of these commenters emphasized that the focus of CRA 
should continue to be on low- and moderate-income households and 
neighborhoods, the commenters supported the proposal to redefine 
``community development'' to align with NSP-eligible activities in 
designated areas identified in plans approved by HUD.
    After careful review of these comments and as proposed, the 
agencies are including activities that benefit middle-income 
individuals and geographies among the activities for which the agencies 
may provide favorable CRA consideration under the final rule.
    Recognition of NSP-Eligible Activities Outside of Assessment 
Area(s): Under the current CRA rules, an institution is evaluated 
primarily on how it helps meet the credit and community development 
needs of its CRA assessment area(s). However, many foreclosed 
properties owned by an institution may be located in areas that are 
outside of the institution's CRA assessment area(s). As noted in the 
proposal, restricting CRA consideration of NSP-eligible activities to 
an institution's assessment area(s) may not fully help to promote 
Congress's objectives for the NSP. Therefore, the proposed rule 
provided that an institution that has adequately addressed the 
community development needs of its assessment area(s) may receive 
favorable consideration for NSP-eligible activities under this 
provision that are outside of its assessment area(s). The agencies also 
specifically asked for comment on this aspect of the proposal.
    The commenters that addressed this issue unanimously supported 
allowing CRA consideration for NSP projects outside of an institution's 
assessment area(s), provided the institution has met the community 
development needs within its assessment area(s). Several commenters 
suggested that the agencies should issue additional guidance on, for 
example, how financial institutions may demonstrate that they have 
adequately met the needs in their assessment area(s) and how outside-
the-assessment area activities will be allocated toward an 
institution's State-wide and overall CRA ratings. One financial 
institution trade association suggested that community banks receive 
favorable CRA consideration for NSP-eligible activities in the banks' 
assessment areas whether or not the area is in an NSP-targeted area.
    The agencies carefully considered these comments and are adopting 
the rule as proposed. The final rule, like the proposal, allows 
institutions to receive favorable consideration for activities that 
benefit low-, moderate-, and middle-income individuals and geographies 
in the institution's assessment area(s) or areas outside the bank's 
assessment area(s) provided the institution has adequately addressed 
the community development needs of its assessment area(s). To the 
extent additional guidance may be needed on this provision, the 
agencies will consider it in connection with a future revision of the 
Interagency Questions and Answers Regarding Community Reinvestment or 
examination procedures.
    Potential Costs and Benefits: Only five commenters directly 
responded to the agencies' request for comment on the potential costs 
and benefits of the proposed rule, if adopted. Most of these commenters 
predicted there would be only negligible costs associated with the 
proposed revision, typically in the form of additional administrative 
costs, including capturing loan data, and training. These commenters 
generally thought that the rule would result in some benefit to 
communities affected by the foreclosure crisis. A trade association of 
community banks and a financial institution stated that they anticipate 
additional administrative costs for loan documentation and reporting 
and for staff training if the proposed rule is adopted but did not 
estimate those costs.
    Effect on an Institution's Decisions about Community Development 
Activities: The agencies also asked for specific comment about whether 
and the extent to which the proposed rule, if adopted, would affect an 
institution's decisions about the amount, type, and location of 
community development loans, investments, and services it will provide. 
Four of the five commenters that addressed this request for comment 
believed that the rule would affect positively an institution's 
decisions about the types and amount of community development 
activities it will provide. The other commenter stated that the rule 
would provide an incentive for institutions to engage in NSP-eligible 
activities, but might not substantially alter institutions' general CRA 
decision-making.

Effective Date

    The final rule becomes effective 30 days after publication in the 
Federal Register. That effective date is consistent with section 553 of 
the Administrative Procedure Act, which provides that a substantive 
rule may not be made effective until 30 days after publication in the 
Federal Register, with specified exceptions. 5 U.S.C. 553(d). Section 
302 of the Riegle Community Development and Regulatory Improvement Act 
of 1994 (CDRI) provides that regulations prescribed by a Federal 
banking agency that contain additional reporting, disclosure, or other 
new requirements on insured depository institutions shall take effect 
on the first day of a calendar quarter that begins on or after the date 
on which the regulations are published in final form, with certain 
exceptions. 12 U.S.C. 4802(b). Section 302 of the CDFR does not apply 
to this final rule because the final rule does not prescribe additional 
reporting, disclosures, or other new requirements on insured depository 
institutions. As discussed in detail above in the SUPPLEMENTARY 
INFORMATION, the final rule instead expands the types of activities for 
which such institutions may receive favorable CRA consideration.

Regulatory Analysis

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Ch. 3506; 5 CFR part 1320 Appendix A.1), each agency reviewed its final 
rule and determined that there are no collections of information. The 
final rule would expand the types of activities that qualify for CRA 
consideration, if an institution chooses to engage in them, but it 
would not impose any new requirements, including paperwork 
requirements. The overall cost of this final rule is expected to be 
negligible, at most. The amendments could have a negligible effect on 
burden estimates for existing information collections, including 
recordkeeping requirements for community development loans.

 Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires agencies 
that are issuing a final rule to prepare and make available for public 
comment a regulatory flexibility analysis that describes the impact of 
the final rule on small entities.\22\ The RFA provides that agencies 
are not required to prepare and publish a regulatory flexibility act 
analysis if the agencies certify that the final rule will not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities.\23\ The Small Business Administration (SBA) has 
defined ``small entities'' for banking purposes as a bank or savings 
association with $175 million or less in

[[Page 79283]]

assets.\24\ 13 CFR 121.201. Each agency has reviewed the impact of this 
final rule on the small entities subject to its regulation and 
supervision and addresses the RFA requirements, as appropriate, below.
---------------------------------------------------------------------------

    \22\ See 5 U.S.C. 603(a).
    \23\ See 5 U.S.C. 605(b).
    \24\ A financial institution's assets are determined by 
averaging the assets reported on its four immediately preceding full 
quarterly financial statements.
---------------------------------------------------------------------------

    OCC: The OCC has reviewed the final amendments to Part 25. The 
final rule would expand the definition of the term ``community 
development,'' which is applied in the CRA regulations' performance 
tests. However, the final rule does not impose new requirements on 
small entities because the CRA performance test for small entities (as 
defined above) does not require community development activities. 
Rather, the final rule reduces burden by expanding the types of 
community development activities for which institutions may receive CRA 
consideration. Only 605 national banks are small entities based on the 
SBA's general principles of affiliation (13 CFR 121.103(a)) and the 
size threshold for commercial banks and trust companies. The OCC 
reviewed national banks with assets of less than $175 million that are 
evaluated under the lending, investment, and service tests, which are 
normally applicable to large banks, the community development test, 
which is applicable to wholesale and limited purpose banks, and the 
community development performance factor applicable to intermediate 
small banks. As of June 30, 2010, only 13 of the 605 national banks 
that are small entities would be evaluated on their community 
development activities under these examination types. The rest would be 
evaluated under the small bank examination procedures, which do not 
require consideration of community development activities. The OCC has 
determined and therefore certifies, pursuant to section 605(b) of the 
RFA, that the final rule will not have a significant economic impact on 
a substantial number of small entities.
    OTS: The OTS has reviewed the final amendments to Part 563e. The 
final rule would expand the definition of the term ``community 
development,'' which is applied in the CRA regulations' performance 
tests. However, the final rule does not impose new requirements on 
small entities because the CRA performance test for small entities (as 
defined above) does not require community development activities. 
Rather, the final rule reduces burden by expanding the types of 
community development activities for which institutions may receive CRA 
consideration. The Small Business Administration (SBA) has defined 
``small entities'' for banking purposes as a savings association with 
$175 million or less in assets. See 13 CFR 121.201. As of September 23, 
2010, only 361 OTS-regulated thrifts are small entities with assets of 
$175 million or less. However, also as of that date, only three of 
those small savings associations are wholesale or limited purpose 
savings associations whose community development activities would be 
evaluated as an automatic part of the CRA examination process. Another 
three are special purpose savings associations not subject to CRA. The 
OTS has determined and therefore certifies, pursuant to section 605(b) 
of the RFA, that the final rule will not have a significant economic 
impact on a substantial number of small entities.
    FDIC: The FDIC has reviewed the proposed amendments to part 345. 
The proposal does not impose new requirements on small entities because 
the CRA performance test for small entities (as defined above) does not 
require community development activities. Rather, the proposed rule 
reduces burden by expanding the types of community development 
activities for which institutions may receive CRA consideration. As of 
June 30, 2010, FDIC regulated entities under the SBA's size criteria, 
with assets of less than $175 million, totaled 2840. However, also as 
of that date, only 5 of those banks that are small entities would be 
required to engage in community development activities under the 
examination types that include such consideration. The FDIC has 
determined and therefore certifies, pursuant to section 605(b) of the 
RFA, that the final rule will not have a significant economic impact on 
a substantial number of small entities.
    Board: The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) 
requires an agency to perform an initial and final regulatory 
flexibility analysis on the impact a rule is expected to have on small 
entities. The Small Business Administration has defined ``small 
entities'' for banking purposes as a banking organization with $175 
million or less in assets. See 13 CFR 121.201. The Board received no 
comments directly addressing the initial regulatory flexibility 
analysis. The Board has prepared the following final regulatory 
flexibility analysis pursuant to section 604 of the RFA.
    1. Statement of the need for, and objectives of, the final rule. As 
explained above in the supplementary information, the Board believes 
that it is desirable to expand eligibility for favorable CRA 
consideration to NSP-eligible activities and areas, in order to provide 
financial institutions incentives to leverage NSP funding by providing 
loans, investments, and services in areas with high foreclosure or 
vacancy rates. The final rule expands the definition of the term 
``community development,'' which is applied in the CRA regulations' 
performance tests. However, it does not impose new requirements on 
small entities because the CRA performance test for small entities does 
not require community development activities. Rather, the final rule 
expands the types of community development activities for which 
institutions may receive CRA consideration.
    2. Summary of the significant issues raised by public comment in 
response to the Board's initial analysis, the Board's assessment of 
such issues, and a statement of any changes made as a result of such 
comments. The Board published an initial regulatory flexibility 
analysis in connection with the proposed rule and requested comment on 
the effect of the proposed rule on small entities. See 75 FR 36016, 
36020 (Jun. 24, 2010). The Board received no comments specifically 
addressing the Board's initial regulatory flexibility analysis. A 
financial institution trade association and a bank stated that 
institutions that seek CRA consideration for covered activities under a 
final rule would incur administrative costs, such as costs for 
documentation of activities and training. Those commenters did not 
estimate those costs or indicate that they especially affect small 
entities. The Board made no changes to the proposed rule based on 
public comment regarding costs associated with the final rule, because 
entities are not required to seek CRA consideration for covered 
activities under the final rule. Rather, entities may continue to seek 
CRA consideration for activities included in the definition of 
``community development'' prior to the expansion of that definition by 
this final rule.
    3. Small entities affected by the final rule. As of June 2010, the 
Board supervised 392 banking organizations that meet the definition of 
small entities, all of which are subject to the final rule.
    4. Recordkeeping, reporting, and compliance requirements. The final 
rule does not impose any new recordkeeping or reporting requirements, 
as the final rule does not require supervised banking organizations to 
engage in community development activities. Institutions that elect to 
seek credit for community development activities

[[Page 79284]]

under the expanded ``community development'' definition under the final 
rule will need to maintain documentation regarding those activities.
    5. Significant alternatives to the final revisions. Given that the 
final rule does not require institutions to fund NSP-eligible 
activities and reduces burdens and restrictions on CRA funding in 
general, the Board does not believe any other alternatives would 
accomplish the stated objectives while minimizing burden of the final 
rule. The legal basis of the final rule is in CRA Section 806, 12 
U.S.C. 2905. The final rule expands the definition of the term 
``community development,'' which is applied in the CRA regulations' 
performance tests. However, it does not impose new requirements on 
small entities because the CRA performance test for small entities does 
not require community development activities. Rather, the final rule 
expands the types of community development activities for which 
institutions may receive CRA consideration.

OTS Executive Order 12866 Consideration

    Pursuant to Executive Order 12866, OMB's Office of Information and 
Regulatory Affairs (OIRA) designated the proposed rule to be 
significant but did not determine whether the proposal would have an 
annual effect on the economy of $100 million or more. OTS solicited 
comment on the costs and benefits of the proposed rule, if adopted.
    As summarized elsewhere in the SUPPLEMENTARY INFORMATION, five 
commenters directly addressed the issue. In general, these commenters 
predicted there would be only negligible costs associated with the 
proposed revision, typically in the form of additional administrative 
costs, including capturing loan data and training. A trade association 
of community banks and a financial institution stated that they 
anticipate additional administrative costs for loan documentation and 
reporting and for staff training if the proposed rule is adopted but 
did not estimate those costs. Another financial institution indicated 
that since no new reporting requirements would be imposed, it did not 
foresee any incremental costs beyond the cost of doing business. 
Similarly, a trade association for home builders indicated the costs 
would be negligible since the rule would not place any new requirements 
on financial institutions. A State banking department said there 
appears to be few, if any, costs.
    Even the potential negligible costs would only apply to those 
savings associations that choose to seek CRA consideration for engaging 
in NSP-eligible activities under the new provision promulgated in 
today's final rule. As discussed elsewhere in the SUPPLEMENTARY 
INFORMATION, including the Regulatory Flexibility Act Analysis, many 
savings associations are not evaluated for community development 
activities. Small savings associations (currently defined as those with 
under $274 million in assets, 12 CFR 563e.12(u)(1)) are only evaluated 
for community development under the small institution test ``as 
appropriate,'' in other words, when it is necessary to determine if 
they meet or exceed the standards for a satisfactory rating or at their 
request. 12 CFR part 563e; Questions and Answers, 75 FR at 11662 (Q&A 
Sec.  ----.26(b)-2). Currently, 471 of the 741 savings associations are 
small.
    Further, as discussed elsewhere in the SUPPLEMENTARY INFORMATION, 
even without the new provision in today's final rule, CRA consideration 
has already been available for some neighborhood stabilization 
activities under the pre-existing CRA rules and interagency guidance. 
Revitalization and stabilization activities in low- and moderate-income 
geographies or in distressed or underserved nonmetropolitan middle-
income geographies receive positive consideration under the existing 
CRA rules, regardless of whether these areas are targeted areas under 
the NSP. Foreclosure prevention programs may also receive positive CRA 
consideration, for example, if they are part of a loan program that is 
designed to provide sustainable relief to homeowners facing foreclosure 
on their primary residences or if they help to revitalize or stabilize 
low- or moderate-income geographies. Below-market sales and donations 
of OREO properties to nonprofit organizations, consistent with safe and 
sound banking operations, also may receive positive consideration under 
the existing CRA rules. The CRA rules provide favorable consideration 
for grants, which would include an in-kind donation of property; if 
these grants have a primary purpose of community development, such as 
to provide affordable housing to low- and moderate-income individuals, 
they also would already receive positive CRA consideration as a 
qualified investment. Favorable CRA consideration is given for 
technical assistance about financial services to community-based 
groups, local or Tribal government agencies, or intermediaries that 
help to meet the credit needs of low- and moderate-income individuals 
or small businesses and farms. Favorable CRA consideration is available 
for certain activities involving multifamily housing. Economic 
development activities not directly related to housing may qualify for 
favorable CRA consideration.
    These commenters generally thought that the rule would result in 
some benefit to communities affected by the foreclosure crisis. Four of 
the five commenters that addressed the issue believed that the rule 
would affect positively an institution's decisions about the types and 
amount of community development activities it will provide. These 
comments were from a trade association for State banking supervisors, a 
State banking department, a trade association for home builders, and a 
financial institution. The other commenter, another financial 
institution, indicated that the rule would provide an incentive for 
institutions to engage in NSP-eligible activities, but might not 
substantially alter institutions' general CRA decision-making.
    As discussed elsewhere in the SUPPLEMENTARY INFORMATION, the 
duration of the final rule is generally linked to the duration of the 
NSP. Under NSP1, grantees must expend NSP funds within four years of 
the date the grant is awarded. Under NSP2, grantees have three years 
from that date to fully spend the grant, and HUD was required to 
obligate all funds appropriated for NSP2 in February 2010. The funds 
appropriated in the Dodd-Frank Act also must be fully expended by 
grantees within three years after they receive their grants, and HUD is 
required to obligate all funds appropriated by the Dodd-Frank Act by 
July 2011. The final rule provides that NSP-eligible activities will 
receive favorable consideration under the new rule if conducted no 
later than two years after the last date appropriated funds for the 
program are required to be spent by the grantees. After that date, the 
rule will cease to apply.
    In light of the foregoing, OIRA has designated the final rule to be 
significant but not to have an annual effect on the economy of $100 
million or more.

OCC and OTS Unfunded Mandates Reform Act of 1995 Determination

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act) (2 U.S.C. 1532) requires that covered agencies prepare a 
budgetary impact statement before promulgating a rule that includes any 
Federal mandate that may result in

[[Page 79285]]

the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector, of $100 million or more in any one 
year. If a budgetary impact statement is required, section 205 of the 
Unfunded Mandates Act also requires covered agencies to identify and 
consider a reasonable number of regulatory alternatives before 
promulgating a rule. The OCC and the OTS have determined that this 
final rule will not result in expenditures by State, local, and Tribal 
governments, or by the private sector, of $100 million or more in any 
one year. Accordingly, neither agency has prepared a budgetary impact 
statement or specifically addressed the regulatory alternatives 
considered.

The Treasury and General Government Appropriations Act, 1999--
Assessment of Impact of Federal Regulation on Families

    The FDIC has determined that this final rule will not affect family 
well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, enacted as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act of 1999, 
Public Law 105-277 (5 U.S.C. 601 note).

List of Subjects

12 CFR Part 25

    Community development, Credit, Investments, National banks, 
Reporting and recordkeeping requirements.

12 CFR Part 228

    Banks, Banking, Community development, Credit, Investments, 
Reporting and recordkeeping requirements.

12 CFR Part 345

    Banks, Banking, Community development, Credit, Investments, 
Reporting and recordkeeping requirements.

12 CFR Part 563e

    Community development, Credit, Investments, Reporting and 
recordkeeping requirements, Savings associations.

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons discussed in the joint preamble, the Office of the 
Comptroller of the Currency amends part 25 of chapter I of title 12 of 
the Code of Federal Regulations as follows:

PART 25--COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT 
PRODUCTION REGULATIONS

0
1. The authority citation for part 25 continues to read as follows:

    Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215, 
215a, 481, 1814, 1816, 1828(c), 1835a, 2901 through 2907, and 3101 
through 3111.


0
2. In Sec.  25.12:
0
a. Republish the introductory text of paragraph (g);
0
b. Remove the word ``or'' at the end of paragraph (g)(3);
0
c. Remove the period at the end of paragraph (g)(4)(iii)(B) and add ``; 
or'' in its place; and
0
d. Add a new paragraph (g)(5).

The republication and addition read as follows:


Sec.  25.12  Definitions.

* * * * *
    (g) Community development means:
* * * * *
    (5) Loans, investments, and services that--
    (i) Support, enable or facilitate projects or activities that meet 
the ``eligible uses'' criteria described in Section 2301(c) of the 
Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289, 
122 Stat. 2654, as amended, and are conducted in designated target 
areas identified in plans approved by the United States Department of 
Housing and Urban Development in accordance with the Neighborhood 
Stabilization Program (NSP);
    (ii) Are provided no later than two years after the last date funds 
appropriated for the NSP are required to be spent by grantees; and
    (iii) Benefit low-, moderate-, and middle-income individuals and 
geographies in the bank's assessment area(s) or areas outside the 
bank's assessment area(s) provided the bank has adequately addressed 
the community development needs of its assessment area(s).
* * * * *

Federal Reserve System

12 CFR Chapter II

Authority and Issuance

0
For the reasons set forth in the joint preamble, the Board of Governors 
of the Federal Reserve System amends part 228 of chapter II of title 12 
of the Code of Federal Regulations as follows:

PART 228--COMMUNITY REINVESTMENT (REGULATION BB)

0
1. The authority citation for part 228 continues to read as follows:

    Authority: 12 U.S.C. 321, 325, 1828(c), 1842, 1843, 1844, and 
2901 et seq.

0
2. In Sec.  228.12:
0
a. Republish the introductory text of paragraph (g);
0
b. Remove the word ``or'' at the end of paragraph (g)(3);
0
c. Remove the period at the end of paragraph (g)(4)(iii)(B) and add ``; 
or'' in its place; and
0
d. Add a new paragraph (g)(5).

The republication and addition read as follows:


Sec.  228.12  Definitions.

* * * * *
    (g) Community development means:
* * * * *
    (5) Loans, investments, and services that--
    (i) Support, enable or facilitate projects or activities that meet 
the ``eligible uses'' criteria described in Section 2301(c) of the 
Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289, 
122 Stat. 2654, as amended, and are conducted in designated target 
areas identified in plans approved by the United States Department of 
Housing and Urban Development in accordance with the Neighborhood 
Stabilization Program (NSP);
    (ii) Are provided no later than two years after the last date funds 
appropriated for the NSP are required to be spent by grantees; and
    (iii) Benefit low-, moderate-, and middle-income individuals and 
geographies in the bank's assessment area(s) or areas outside the 
bank's assessment area(s) provided the bank has adequately addressed 
the community development needs of its assessment area(s).
* * * * *

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

0
For the reasons set forth in the joint preamble, the Board of Directors 
of the Federal Deposit Insurance Corporation amends part 345 of chapter 
III of title 12 of the Code of Federal Regulations as follows:

PART 345--COMMUNITY REINVESTMENT

0
1. The authority citation for part 345 continues to read as follows:


[[Page 79286]]


    Authority: 12 U.S.C. 1814-1817, 1819-1920, 1828, 1831u and 2901-
2907, 3103-3104, and 3108(a).

0
2. In Sec.  345.12:
0
a. Republish the introductory text of paragraph (g);
0
b. Remove the word ``or'' at the end of paragraph (g)(3);
0
c. Remove the period at the end of paragraph (g)(4)(iii)(B) and add ``; 
or'' in its place; and
0
d. Add a new paragraph (g)(5).

The republication and addition read as follows:


Sec.  345.12  Definitions.

* * * * *
    (g) Community development means:
* * * * *
    (5) Loans, investments, and services that--
    (i) Support, enable or facilitate projects or activities that meet 
the ``eligible uses'' criteria described in Section 2301(c) of the 
Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289, 
122 Stat. 2654, as amended, and are conducted in designated target 
areas identified in plans approved by the United States Department of 
Housing and Urban Development in accordance with the Neighborhood 
Stabilization Program (NSP);
    (ii) Are provided no later than two years after the last date funds 
appropriated for the NSP are required to be spent by grantees; and
    (iii) Benefit low-, moderate-, and middle-income individuals and 
geographies in the bank's assessment area(s) or areas outside the 
bank's assessment area(s) provided the bank has adequately addressed 
the community development needs of its assessment area(s).
* * * * *

Department of the Treasury

Office of Thrift Supervision

12 CFR Chapter V

0
For the reasons set forth in the joint preamble, the Office of Thrift 
Supervision amends part 563e of chapter V of title 12 of the Code of 
Federal Regulations as follows:

PART 563e--COMMUNITY REINVESTMENT

0
1. The authority citation for part 563e continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1814, 1816, 
1828(c), and 2901 through 2907.

0
2. In Sec.  563e.12:
0
a. Republish the introductory text of paragraph (g);
0
b. Remove the word ``or'' at the end of paragraph (g)(3);
0
c. Remove the period at the end of paragraph (g)(4)(iii)(B) and add ``; 
or'' in its place; and
0
d. Add a new paragraph (g)(5).

The republication and addition read as follows:


Sec.  563e.12  Definitions.

* * * * *
    (g) Community development means:
* * * * *
    (5) Loans, investments, and services that--
    (i) Support, enable or facilitate projects or activities that meet 
the ``eligible uses'' criteria described in Section 2301(c) of the 
Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289, 
122 Stat. 2654, as amended, and are conducted in designated target 
areas identified in plans approved by the United States Department of 
Housing and Urban Development in accordance with the Neighborhood 
Stabilization Program (NSP);
    (ii) Are provided no later than two years after the last date funds 
appropriated for the NSP are required to be spent by grantees; and
    (iii) Benefit low-, moderate-, and middle-income individuals and 
geographies in the savings association's assessment area(s) or areas 
outside the savings association's assessment area(s) provided the 
savings association has adequately addressed the community development 
needs of its assessment area(s).
* * * * *

    Dated: December 8, 2010.
John Walsh,
Acting Comptroller of the Currency.
    By order of the Board of Governors of the Federal Reserve 
System, December 13, 2010.

Robert deV. Frierson,
Deputy Secretary of the Board.
    Dated at Washington, DC, this 14th day of December 2010.
Federal Deposit Insurance Corporation.

Valerie J. Best,
Assistant Executive Secretary.
    Dated: December 9, 2010.

    By the Office of Thrift Supervision.

John E. Bowman,
Acting Director.
[FR Doc. 2010-31818 Filed 12-17-10; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P