Calculation of Maximum Obligation Limitation, 72645-72650 [2011-29993]

Download as PDF 72645 Proposed Rules Federal Register Vol. 76, No. 227 Friday, November 25, 2011 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 380 RIN 3064–AD84 DEPARTMENT OF THE TREASURY Please note: All comments received will be posted generally without change to http:// www.fdic.gov/regulations/laws/federal/ propose.html, including any personal information provided. 31 CFR Part 149 RIN 1505–AC36 Calculation of Maximum Obligation Limitation Federal Deposit Insurance Corporation; Departmental Offices, Department of the Treasury. ACTION: Notice of proposed rulemaking. AGENCY: This notice of proposed rulemaking is published jointly by the Federal Deposit Insurance Corporation (the ‘‘FDIC’’) and the Departmental Offices of the Department of the Treasury (the ‘‘Treasury’’) (collectively, the ‘‘Agencies’’) and proposes rules to implement applicable provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (‘‘Dodd-Frank Act’’).1 In accordance with the requirements of the Dodd-Frank Act, the proposed rules govern the calculation of the maximum obligation limitation (‘‘MOL’’), as specified in section 210(n)(6) of the Dodd-Frank Act. The MOL limits the aggregate amount of outstanding obligations that the FDIC may issue or incur in connection with the orderly liquidation of a covered financial company. DATES: Comments must be received on or before January 24, 2012. ADDRESSES: You may submit comments by any of the following methods: wreier-aviles on DSK7SPTVN1PROD with PROPOSALS SUMMARY: FDIC You may submit comments by any of the following methods: • FDIC Web Site: http:// www.fdic.gov/regulations/laws/federal/ 1 Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111–203, 12 U.S.C. 5301 et seq. (2010). VerDate Mar<15>2010 13:22 Nov 23, 2011 Jkt 226001 propose.html. Follow instructions for submitting comments on the agency Web site. • FDIC Email: Comments@fdic.gov. Include RIN # [insert] on the subject line of the message. • FDIC Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429. • Hand Delivery to FDIC: Comments may be hand-delivered to the guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7 a.m. and 5 p.m. Please include your name, affiliation, address, email address and telephone number(s) in your comment. Where appropriate, comments should include a short Executive Summary (no more than five single-spaced pages). All statements received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. You should submit only information that you wish to make available publicly. Treasury Federal eRulemaking Portal— ‘‘Regulations.gov.’’ You are encouraged to submit comments electronically through the Federal eRulemaking Portal—‘‘Regulations.gov.’’ Go to http:// www.regulations.gov to submit or view public comments. The Regulations.gov home page provides information on using Regulations.gov, including instructions for submitting or viewing public comments, viewing other supporting and related materials, and viewing the docket. Mail: Department of the Treasury, Office of Financial Institutions Policy, Room 1310, Main Treasury Building, 1500 Pennsylvania Avenue NW., Washington, DC 20220. Instructions: In general, the Treasury will enter all comments received into the docket and make them available without change, including any business or personal information that you provide such as name and address information, email addresses, or phone numbers. Comments, including attachments and other supporting PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 materials, received are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. You may view comments and other related materials by any of the following methods: Viewing Comments Electronically: Go to http://www.regulations.gov and follow the instructions on the Web site. Viewing Comments Personally: You may personally inspect and photocopy comments at the Department of the Treasury Library, Room 1428, Main Treasury Building, 1500 Pennsylvania Avenue NW., Washington, DC. You can make an appointment to inspect comments by calling (202) 622–0990. Commenters are requested to submit copies of comments to both Agencies. FOR FURTHER INFORMATION CONTACT: FDIC Arthur D. Murphy, Senior Financial Analyst, Division of Finance (703) 562– 6177 or amurphy@fdic.gov; Henry R.F. Griffin, Assistant General Counsel, Legal Division (202) 898–8700 or hgriffin@ fdic.gov; Michelle Borzillo, Senior Counsel, Legal Division (202) 898–7400 or mborzillo@fdic.gov; or Claude A. Rollin, Counsel, Legal Division (202) 898–8741 or crollin@fdic.gov. Treasury Lance Auer, Deputy Assistant Secretary (Financial Institution Policy), at (202) 622–1262; Felton Booker, Acting Director, Office of Financial Institutions Policy, at (202) 622–0293; Peter A. Bieger, Acting Assistant General Counsel (Banking and Finance), at (202) 622–0480; and Steven D. Laughton, Senior Counsel, Office of General Counsel, at (202) 622–8413. SUPPLEMENTARY INFORMATION: I. Background The Dodd-Frank Act Title II of the Dodd-Frank Act establishes an Orderly Liquidation Authority (‘‘OLA’’) to resolve a large interconnected financial company upon a determination that its failure and resolution under otherwise applicable law would have serious adverse effects on financial stability in the United States and the use of OLA would avoid or mitigate such adverse effects. Under the systemic risk determination process E:\FR\FM\25NOP1.SGM 25NOP1 72646 Federal Register / Vol. 76, No. 227 / Friday, November 25, 2011 / Proposed Rules wreier-aviles on DSK7SPTVN1PROD with PROPOSALS set forth in the Dodd-Frank Act, certain designated Federal agencies,2 on their own initiative or at the request of the Secretary of the Treasury (‘‘Secretary’’), may recommend that the Secretary appoint the FDIC as receiver of a financial company. Any written recommendation from the designated Federal agencies to the Secretary to make a systemic risk determination must include a number of specific findings, which are enumerated in section 203(a)(2) of the Dodd-Frank Act.3 Then, based on the written recommendation of the appropriate agencies, the Secretary, in consultation with the President, must determine whether the conditions in section 203(b) of the Dodd-Frank Act have been satisfied so that the covered financial company can be placed into receivership. In making that determination, the Secretary must document any determination and retain such documentation.4 This procedure is 2 The Board of Governors of the Federal Reserve System (‘‘FRB’’) and the Securities and Exchange Commission (‘‘SEC’’) will make the recommendation if the company or its largest U.S. subsidiary is a broker or a dealer. The FRB and the Director of the Treasury’s Federal Insurance Office will make the recommendation and provide affirmative approval, respectively, if the company or its largest U.S. subsidiary is an insurance company, and the FRB and the FDIC will make the recommendation in all other cases. In cases involving the FRB and FDIC, the systemic risk recommendation must be approved by at least 2⁄3 of the members of the Federal Reserve Board then serving and at least 2⁄3 of the members of the FDIC Board of Directors then serving. 3 Section 203(a)(2) of the Dodd-Frank Act provides that all written recommendations from the designated Federal agencies to the Secretary to make a systemic risk determination must include the following: (1) An evaluation of whether the financial company is in default or in danger of default; (2) A description of the effect that the default of the financial company would have on financial stability in the United States; (3) A description of the effect that the default of the financial company would have on economic conditions or financial stability for low income, minority, or underserved communities; (4) A recommendation regarding the nature and the extent of actions to be taken under Title II of Dodd-Frank regarding the financial company; (5) An evaluation of the likelihood of a private sector alternative to prevent the default of the financial company; (6) An evaluation of why a case under the Bankruptcy Code is not appropriate for the financial company; (7) An evaluation of the effects on creditors, counterparties, and shareholders of the financial company and other market participants; and (8) An evaluation of whether the company satisfies the definition of a financial company under section 201 of the Dodd-Frank Act. 4 Section 203(b) of the Dodd-Frank Act requires the Secretary of Treasury to determine that: (1) The financial company is in default or in danger of default; (2) The failure of the financial company and its resolution under otherwise applicable Federal or VerDate Mar<15>2010 13:22 Nov 23, 2011 Jkt 226001 very similar to the way that systemic risk determinations are made under section 13 of the Federal Deposit Insurance Act (the ‘‘FDIA’’).5 Under section 201(a)(8) of the Dodd-Frank Act, a ‘‘covered financial company’’ is a ‘‘financial company’’ 6 for which a systemic risk determination has been made pursuant to section 203(b) of the Dodd-Frank Act but does not include an insured depository institution. Once the Secretary makes a systemic risk determination, the FDIC can be appointed as receiver of the covered financial company. If the board of directors (or similar governing body) of the company consents to the appointment, the Secretary shall State law would have serious adverse effects on financial stability in the United States; (3) No viable private sector alternative is available to prevent the default of the financial company; (4) Any effect on the claims or interests of creditors, counterparties, and shareholders of the financial company and other market participants as a result of actions taken under this title is appropriate, given the impact that any action taken under this title would have on financial stability in the United States; (5) Any action under section 204 would avoid or mitigate such adverse effects, taking into consideration the effectiveness of the action in mitigating potential adverse effects on the financial system, the cost to the general fund of the Treasury, and the potential to increase excessive risk taking on the part of creditors, counterparties and shareholders in the financial company; (6) A Federal regulatory agency has ordered the financial company to convert all of its convertible debt instruments that are subject to the regulatory order; and (7) The company satisfies the definition of a financial company under section 201. 5 12 U.S.C. 1823(c)(4). 6 Section 201(a)(11) of the Dodd Frank Act defines the term ‘‘financial company’’ to mean any company that: (A) Is incorporated or organized under any provision of Federal law or the laws of any State; (B) Is— (i) A bank holding company, as defined in section 2(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)); (ii) A nonbank financial company supervised by the Board of Governors; (iii) Any company that is predominantly engaged in activities that the Board of Governors has determined are financial in nature or incidental thereto for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) other than a company described in clause (i) or (ii); or (iv) Any subsidiary of any company described in any of clauses (i) through (iii) that is predominantly engaged in activities that the Board of Governors has determined are financial in nature or incidental thereto for purposes of section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) (other than a subsidiary that is an insured depository institution or an insurance company); and (C) Is not a Farm Credit System institution chartered under and subject to the provisions of the Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et seq.), a governmental entity, or a regulated entity, as defined under section 1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502(20)). PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 appoint the FDIC as receiver. If the company’s governing body does not consent, section 202 of the Dodd-Frank Act requires the Secretary to petition the United States District Court for the District of Columbia for an order authorizing the Secretary to appoint the FDIC as receiver. In determining whether to grant the petition, the court will determine whether two of the Secretary’s seven determinations—that the covered financial company is in default or in danger of default and that it meets the definition of financial company under Title II—are arbitrary and capricious.7 If the court upholds the two reviewable determinations of the Secretary, the court will issue an order authorizing the Secretary to appoint the FDIC as receiver. If the court does not make a determination within twentyfour hours of receiving the Secretary’s petition, then the appointment of the FDIC as receiver takes effect by operation of law. The OLA in the Dodd-Frank Act is intended as a limited exception to bankruptcy or other applicable insolvency laws for purposes of ensuring that the resolution of a failing non-depository financial company does not have serious adverse effects on U.S. financial stability. Section 204(a) of the Dodd-Frank Act expressly provides that the purpose of OLA is to provide the means ‘‘to liquidate failing financial companies that pose a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard.’’ Section 214(a) expressly provides that ‘‘[a]ll financial companies put into receivership under this title shall be liquidated. No taxpayer funds shall be used to prevent the liquidation of any financial company under this title.’’ Moreover, section 214(b) provides that ‘‘[a]ll funds expended in the liquidation of a financial company under this title shall be recovered from the disposition of assets of such financial company, or shall be the responsibility of the financial sector, through assessments.’’ Finally, section 214(c) provides that, ‘‘[t]axpayers shall bear no losses from the exercise of any authority under this title.’’ To achieve the orderly liquidation of systemically important financial companies, the FDIC is given broad authority under the Dodd-Frank Act to: Transfer assets or liabilities to a bridge financial company, operate or liquidate businesses, sell assets, and resolve the liabilities of a covered financial company just after the FDIC’s appointment as receiver or as soon as 7 Dodd-Frank E:\FR\FM\25NOP1.SGM Act § 202(a)(1)(A)(iii). 25NOP1 Federal Register / Vol. 76, No. 227 / Friday, November 25, 2011 / Proposed Rules wreier-aviles on DSK7SPTVN1PROD with PROPOSALS conditions make this appropriate.8 This authority enables the FDIC to act immediately to sell any assets and liabilities of the covered financial company to another entity, or if that is not possible or consistent with maximizing the value of the assets of the covered financial company, to transfer assets and liabilities to a bridge financial company established by the FDIC and either sell the assets or liabilities over time while maintaining critical functions. Oftentimes, in administering a receivership, it is necessary to continue key operations, services, and transactions that will maximize the value of the firm’s assets and avoid a disorderly collapse in the marketplace. Section 210(n) of the Dodd-Frank Act establishes an Orderly Liquidation Fund (‘‘OLF’’) in the U.S. Treasury that will be available to the FDIC to carry out its responsibilities as receiver of a covered financial company and pay the costs of actions authorized under Title II of the Dodd-Frank Act, including: The orderly liquidation of covered financial companies, payment of administrative expenses, and the payment of principal and interest by the FDIC on obligations issued under section 210(n)(5) of the Dodd-Frank Act. The OLF will be comprised of amounts received by the FDIC, including: The proceeds of obligations issued to Treasury pursuant to section 210(n)(5), assessments received under section 210(o), interest and other earnings from investments, and repayments to the FDIC by covered financial companies.9 In order for the FDIC to fulfill its obligations as receiver of a covered financial company, it may be necessary for the FDIC to borrow funds from the Treasury. Under section 210(n)(5) of the 8 Section 210 of the Dodd-Frank Act prescribes the FDIC’s powers and duties once it is appointed as receiver of a covered financial company, including, inter alia, its powers and duties to: (1) Succeed to all rights, titles, powers and privileges of the covered financial company and its assets, and of any stockholder, member, officer or director of such company; (2) take over the assets and operate the company with all the powers of the shareholders, members, directors and officers, and conduct all business of the company; (3) liquidate the company through the sale of assets or transfer of assets to a bridge financial company, as provided under section 210(h) of the Dodd-Frank Act; (4) merge the company with another company or transfer assets or liabilities; (5) pay valid obligations that come due, to the extent that funds are available; (6) exercise subpoena powers; (7) use private sector services to manage and dispose of assets; (8) terminate rights and claims of stockholders and creditors (except for the right to payment of claims consistent with the priority of claims provision); and (9) determine and pay claims. However, a receivership of an insurance company would generally be conducted in accordance with state law. 9 Dodd-Frank Act § 210(n)(2). VerDate Mar<15>2010 13:22 Nov 23, 2011 Jkt 226001 Dodd-Frank Act, the FDIC is authorized to issue obligations to Treasury upon the FDIC’s appointment as receiver, and Treasury may purchase any such obligations, ‘‘upon such terms and conditions as to yield a return at a rate determined by the Secretary, taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturity, plus an interest rate surcharge to be determined by the Secretary, which shall be greater than the difference between—(i) the current average rate on an index of corporate obligations of comparable maturity; and (ii) the current average rate on outstanding marketable obligations of the United States of comparable maturity.’’ Section 210(n)(9) of the Dodd-Frank Act provides that the FDIC must develop an Orderly Liquidation Plan (‘‘OLP’’) that is acceptable to the Secretary for each covered financial company for which the FDIC is appointed receiver, prior to funds in the OLF being made available to the FDIC with regard to such covered financial company. The FDIC may amend any OLP at any time with the concurrence of the Secretary. Section 210(n)(9) further requires that a mandatory repayment plan between the FDIC and Treasury be agreed to and in effect before Treasury may provide certain amounts to the FDIC within the limits defined in subparagraph (B) of section 210(n)(6) of the Dodd-Frank Act. The Maximum Obligation Limitation (‘‘MOL’’), as set forth in section 210(n)(6) of the Dodd-Frank Act, limits the aggregate amount of outstanding obligations that the FDIC may issue or incur in connection with the orderly liquidation of a covered financial company. Specifically, the MOL provides as follows: The [FDIC] may not, in connection with the orderly liquidation of a covered financial company, issue or incur any obligation, if, after issuing or incurring the obligation, the aggregate amount of such obligations outstanding under this subsection, for each covered financial company would exceed— (A) an amount that is equal to 10 percent of the total consolidated assets of the covered financial company, based on the most recent financial statement available, during the 30day period immediately following the date of appointment of the FDIC as receiver (or a shorter time period if the [FDIC] has calculated the amount described under subparagraph (B)); and (B) the amount that is equal to 90 percent of the fair value of the total consolidated assets of each covered financial company that are available for repayment, after the time period described in subparagraph (A). PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 72647 II. The Proposed Rule Section 210(n)(7) of the Dodd-Frank Act requires the Agencies, in consultation with the Financial Stability Oversight Council (‘‘FSOC’’), to jointly prescribe regulations governing the calculation of the MOL. In accordance with this section, the Agencies have consulted with the FSOC, and have determined that it would be most appropriate to adopt regulations that closely follow the statutory language for calculating the MOL, while defining certain terms referenced in the statute and seeking comment on those definitions. The terms in this proposed rule are defined solely for the purpose of calculating the MOL and are not applicable to any other statutory or regulatory requirements. The Dodd-Frank Act does not define the term ‘‘obligation.’’ The proposed rule includes a definition of the term ‘‘obligation’’ that is derived from the definition of the term ‘‘obligation’’ in section 15(c) the FDIA (12 U.S.C. 1825(c)). Section 15(c) of the FDIA contains an MOL that limits the amount of obligations the FDIC may issue or incur in connection with the resolution of failed insured depository institutions. A comparison of the two MOLs reveals that the MOL under section 210(n)(6) of the Dodd-Frank Act is modeled after the FDIA MOL. The Agencies thus believe that defining the term ‘‘obligation’’ in a manner similar to the definition of such term in the FDIA is appropriate. More specifically, the proposed rule provides that in calculating the MOL, the term ‘‘obligation’’ means— (i) Any guarantee issued by the FDIC on behalf of each covered financial company; (ii) Any amount borrowed pursuant to Section 210(n)(5) in connection with each covered financial company; and (iii) Any other obligation with respect to a covered financial company for which the FDIC has a direct or contingent liability to pay any amount. For purposes of calculating the MOL, the FDIC shall value any contingent liabilities with respect to each covered financial company, including any guarantee issued by the FDIC, at their expected cost to the FDIC.10 Section 210(n)(6)(A) of the DoddFrank Act provides that, in calculating the MOL, the amount of the total consolidated assets for each covered financial company shall be ‘‘based on the most recent financial statement available.’’ The Dodd-Frank Act does not define this term. Under the proposed rule, the term ‘‘most recent 10 Dodd-Frank E:\FR\FM\25NOP1.SGM 25NOP1 Act § 210(n)(8)(B). wreier-aviles on DSK7SPTVN1PROD with PROPOSALS 72648 Federal Register / Vol. 76, No. 227 / Friday, November 25, 2011 / Proposed Rules financial statement available’’ means: (1) The covered financial company’s most recent financial statement filed with the SEC or any other regulatory body; (2) the covered financial company’s most recent financial statement audited by an independent CPA firm; or (3) other available financial statements of the covered financial company. The Agencies will jointly determine which of the three types of financial statements is, in the judgment of the FDIC and the Secretary, most pertinent, taking into consideration the timeliness and reliability of the statements being considered. Generally, the Agencies intend to use financial statements filed with a regulatory body or financial statements audited by an independent CPA firm when they are available and timely as under most circumstances they would be considered to be reliable. However, if the covered financial company is both privately held and unregulated, statements filed with a regulatory body would not exist. In addition, financial statements audited by an independent CPA firm may not also exist or may not be as timely or relevant as unaudited financial statements. Accordingly, the Agencies propose to use the financial statements that they believe are most pertinent taking into consideration the timeliness and reliability of the statements being considered. Section 210(n)(6)(B) of the DoddFrank Act provides that the total consolidated assets of each covered financial company be measured at their ‘‘fair value.’’ The Dodd-Frank Act does not define the term ‘‘fair value’’ for this purpose. The proposed rule defines ‘‘fair value’’ as the expected total aggregate value of each asset, or group of assets that are managed within a portfolio, of a covered financial company if such asset, or group of assets, was sold or otherwise disposed of in an orderly transaction. The Agencies initially considered a fair value definition based on a forced liquidation value or distressed sale basis, such as a liquidation under chapter 7 of the Bankruptcy Code. However, the Agencies determined that defining the term ‘‘fair value’’ based on a forced liquidation value would not accurately reflect the FDIC’s responsibilities and authorities as receiver. For example, Section 210(a)(1)(B)(i) of the Dodd-Frank Act allows the FDIC as receiver to take over the assets of and operate the covered financial company with all the powers of the members or shareholders, the directors, and the officers of the covered financial company, and conduct all VerDate Mar<15>2010 13:22 Nov 23, 2011 Jkt 226001 business of the covered financial company during the period of orderly liquidation. Section 210(a)(1)(B)(iv) of the Dodd-Frank Act requires the FDIC as receiver to manage the assets and property of the covered financial company, consistent with the maximization of the value of the assets in the context of an orderly liquidation. Section 202(d) gives the FDIC a threeyear period to liquidate the covered financial company, which period may be extended for up to two additional years to maximize the net present value return from the sale of the assets of the covered financial company. Hence, the Agencies believe that the term ‘‘fair value’’ should be based on an orderly liquidation value using valuation analysis consisting of relevant factors estimating asset prices commensurate with the characteristics of the assets held by the covered financial company. Such measures are consistent with the authority of the FDIC to conduct an orderly liquidation in a manner that maximizes the value of the assets of the covered financial company over a threeto five-year period. The Agencies also believe that the proposed rule reflects this mandate by recognizing that fair value measurement is context dependant and the result of numerous variables, including the attributes of the specific asset; the period of time and the circumstances the asset is allowed to be marketed; and the presence of willing and able third-party buyers. Finally, with respect to the term ‘‘total consolidated assets of each covered financial company that are available for repayment’’ in section 210(n)(6)(B) of the Dodd-Frank Act, the proposed rule defines this term to mean the difference between: (1) The total consolidated assets of the covered financial company that are available for liquidation during the operation of the receivership; and (2) to the extent included in (1), all assets that are separated from, or made unavailable to, the covered financial company by a statutory or regulatory barrier that prevents the covered financial company from possessing or selling and using the proceeds from the sale of such assets. The Agencies are proposing to define the term ‘‘assets * * * available for repayment’’ in a manner consistent with the FDIC’s broad authority as receiver regarding the liquidation of assets of a covered financial company. Under Title II, all of the assets on the books of the covered financial company would generally be available for sale and liquidation and, thereby, available as proceeds for repayment. It should be noted, for example, section 210(a)(1)(A)(i) provides that the FDIC as PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 receiver succeeds to all rights, titles, powers, and privileges of the covered financial company and its assets. Section 210(a)(1)(D) further provides that the FDIC as receiver shall liquidate the covered financial company’s assets and wind-up its affairs in such manner as the FDIC deems appropriate, including through the sale of assets, the transfer of assets to a bridge financial company, or the exercise of any other rights or privileges granted, but subject to all legally enforceable and perfected security interests and all legally enforceable security entitlements. Moreover, section 210(a)(1)(M) provides that notwithstanding any other provision of law, the FDIC’s appointment as receiver terminates all rights and claims that shareholders and creditors of the covered financial company may have against the assets of the covered financial company, except for their right to payment or other satisfactory resolution of their underlying claims as provided by the Dodd-Frank Act. Congress thus directed the FDIC as receiver to manage and liquidate the assets of a covered financial company, including assets that may be released from lien encumbrances by payment in the ordinary course of business, with a view toward maximizing the value of such assets over the course of the orderly liquidation. The Agencies believe that the FDIC’s broad authority to liquidate the covered financial company’s assets (including assets encumbered by liens), to pay secured creditors and to pay the FDIC’s administrative expenses and other claimants in accordance with the priority of claims provisions, to the extent of available proceeds, renders those ‘‘assets * * * available for repayment.’’ However, the Agencies also recognize that there may be assets of a covered financial company that are not ‘‘assets * * * available for repayment.’’ For example, to the extent that the assets of a covered financial company’s wholly-owned foreign subsidiary are ‘‘ring-fenced’’ by the subsidiary’s foreign regulator, pursuant to valid statutory or regulatory authority, they would not be available for repayment. Other assets may not be on the balance sheet of a covered financial company and thus not available for repayment, such as customer name securities at a covered broker or dealer.11 11 Moreover, even if customer name securities were on a covered financial company’s balance sheet, they would not constitute ‘‘assets * * * available for repayment’’ because section 205(f) of the Dodd-Frank Act requires such customer name securities to be delivered to the customer. E:\FR\FM\25NOP1.SGM 25NOP1 Federal Register / Vol. 76, No. 227 / Friday, November 25, 2011 / Proposed Rules III. Request for Comments The Agencies invite comments on all aspects of the proposed rulemaking. In particular, the Agencies request comments on the following questions: Is the proposed definition of ‘‘obligation’’ appropriate? Are there alternative definitions that should be considered? In determining what constitutes ‘‘the most recent financial statement available,’’ is it appropriate to allow the Agencies to rely on financial statements that may have been provided internally to the covered financial company’s management, Board of Directors, or both if the Agencies consider them more pertinent, after taking into consideration timeliness and reliability, than a publicly available financial statement filed with the SEC or other regulatory body or a financial statement audited by an independent CPA firm? Is the proposed definition of ‘‘fair value’’ appropriate? Are there other standards or definitions that may be more appropriate in general or for certain types of assets? What risks should be considered in the assessment of ‘‘fair value?’’ Should ‘‘fair value’’ be determined differently for different asset classes? Given that many assets may have to be liquidated, should expected transaction costs be explicitly considered for the calculation of fair value? Should the definition of the term ‘‘total consolidated assets of each covered financial company that are available for repayment’’ be limited to certain categories of assets (such as unencumbered assets) or should it extend to all assets available for repayment in the ordinary course of business? Written comments must be received by the Agencies no later than January 24, 2012. IV. Regulatory Analysis and Procedure wreier-aviles on DSK7SPTVN1PROD with PROPOSALS A. The Paperwork Reduction Act The proposed rule provides, in part, the manner in which the Agencies would implement the maximum obligation limitation for FDIC borrowings from the Treasury to fund the Orderly Liquidation Fund in the event that one or more covered financial companies are placed into receivership. It will not involve any new collections of information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). Consequently, no information collection has been submitted to the Office of Management and Budget for review. VerDate Mar<15>2010 13:22 Nov 23, 2011 Jkt 226001 72649 B. The Regulatory Flexibility Act In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) the Agencies hereby certify that this rule will not have a significant economic impact on a substantial number of small entities. The rule governs the manner in which the FDIC would calculate the maximum obligation limitation for obligations incurred or issued by the FDIC in connection with the orderly liquidation of a covered financial company under Title II of the DoddFrank Act. Small entities will not be affected by this proposed rule. Moreover, under Small Business Administration size standards defining small entities, financial companies are generally considered small entities if their annual receipts do not exceed $7 million or their total assets do not exceed $175 million.12 The Agencies do not expect that the OLA in the DoddFrank Act will be used to resolve financial companies that qualify as small entities, because the failure of such companies would be unlikely to have serious adverse effects on financial stability in the United States. Notwithstanding this certification, the Agencies invite comments on the impact of this rule on small entities. and of promoting flexibility. This rule has been designated a ‘‘significant regulatory action’’ although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget. C. Plain Language Each Federal banking agency, such as the FDIC, is required to use plain language in all proposed and final rules published after January 1, 2000. 12 U.S.C. 4809. In addition, in 1998, the President issued a memorandum directing each agency in the Executive branch, such as Treasury, to use plain language for all new proposed and final rulemaking documents issued on or after January 1, 1999. The Agencies have sought to present the proposed rule in a simple and straightforward manner. The Agencies invite comments on whether the proposal is clearly stated and effectively organized, and how the Agencies might make the proposed text easier to understand. § 380.10 D. Executive Order 12866 Executive Orders 13563 and 12866 directs Treasury to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, 12 13 PO 00000 CFR 121.201. Frm 00005 Fmt 4702 Sfmt 4702 List of Subjects in 12 CFR Part 380 and 31 CFR Part 149 Accounting, Administrative practice and procedure, Finance, and Loan programs. Federal Deposit Insurance Corporation Authority and Issuance For the reasons stated in the preamble, the Board of Directors of the Federal Deposit Insurance Corporation proposes to amend part 380 of title 12 of the Code of Federal Regulations as follows: PART 380—ORDERLY LIQUIDATION AUTHORITY 1. The authority citation for part 380 continues to read as follows: Authority: 12 U.S.C. 5301 et seq. 2. Add § 380.10 to read as follows: Maximum obligation limitation. (a) General Rule. The FDIC shall not, in connection with the orderly liquidation of a covered financial company, issue or incur any obligation, if, after issuing or incurring the obligation, the aggregate amount of such obligations outstanding for each covered financial company would exceed— (1) An amount that is equal to 10 percent of the total consolidated assets of the covered financial company, based on the most recent financial statement available, during the 30-day period immediately following the date of appointment of the FDIC as receiver (or a shorter time period if the FDIC has calculated the amount described under paragraph (2)); and (2) The amount that is equal to 90 percent of the fair value of the total consolidated assets of each covered financial company that are available for repayment, after the time period described in paragraph (a)(1) of this section. (b) Definitions. For purposes of paragraph (a) of this section: (1) The term ‘‘fair value’’ means the expected total aggregate value of each asset, or group of assets that are managed within a portfolio, of a covered financial company on a consolidated basis if such asset, or group of assets, was sold or otherwise disposed of in an orderly transaction. E:\FR\FM\25NOP1.SGM 25NOP1 72650 Federal Register / Vol. 76, No. 227 / Friday, November 25, 2011 / Proposed Rules (2) The term ‘‘most recent financial statement available’’ means a covered financial company’s: (i) Most recent financial statement filed with the Securities and Exchange Commission or any other regulatory body; (ii) Most recent financial statement audited by an independent CPA firm; or (iii) Other available financial statements. The FDIC and the Treasury will jointly determine the most pertinent of the above financial statements, taking into consideration the timeliness and reliability of the statements being considered. (3) The term ‘‘obligation’’ means, with respect to any covered financial company: (i) Any guarantee issued by the FDIC on behalf of the covered financial company; (ii) Any amount borrowed pursuant to section 210(n)(5)(A) of the Dodd-Frank Act; and (iii) Any other obligation with respect to the covered financial company for which the FDIC has a direct or contingent liability to pay any amount. (4) The term ‘‘total consolidated assets of each covered financial company that are available for repayment’’ means the difference between: (i) The total assets of the covered financial company on a consolidated basis that are available for liquidation during the operation of the receivership; and (ii) To the extent included in paragraph (b)(4)(i) of this section, all assets that are separated from, or made unavailable to, the covered financial company by a statutory or regulatory barrier that prevents the covered financial company from possessing or selling assets and using the proceeds from the sale of such assets. Department of the Treasury Authority and Issuance For the reasons set forth in the preamble, Treasury proposes to amend Title 31, Chapter I of the Code of Federal Regulations by adding a new part 149 as set forth below: wreier-aviles on DSK7SPTVN1PROD with PROPOSALS PART 149—CALCULATION OF MAXIMUM OBLIGATION LIMIT Sec. 149.1 149.2 149.3 Authority and purpose. Definitions. Maximum obligation limitation. Authority: 31 U.S.C. 321 and 12 U.S.C. 5390. § 149.1 Authority and purpose. (a) Authority. This part is issued by the Federal Deposit Insurance VerDate Mar<15>2010 13:22 Nov 23, 2011 Jkt 226001 Corporation (FDIC) and the Secretary of the Department of the Treasury (Treasury) under section 210(n)(7) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Act). (b) Purpose. The purpose of this part is to issue implementing regulations as required by the Act. The part governs the calculation of the maximum obligation limitation which limits the aggregate amount of outstanding obligations the FDIC may issue or incur in connection with the orderly liquidation of a covered financial company. § 149.2 Definitions. As used in this part: Fair value. The term ‘‘fair value’’ means the expected total aggregate value of each asset, or group of assets that are managed within a portfolio of a covered financial company on a consolidated basis if such asset, or group of assets, was sold or otherwise disposed of in an orderly transaction. Most recent financial statement available. (1) The term ‘‘most recent financial statement available’’ means a covered financial company’s— (i) Most recent financial statement filed with the Securities and Exchange Commission or any other regulatory body; (ii) Most recent financial statement audited by an independent CPA firm; or (iii) Other available financial statements. (2) The FDIC and the Treasury will jointly determine the most pertinent of the above financial statements, taking into consideration the timeliness and reliability of the statements being considered. Obligation. The term ‘‘obligation’’ means, with respect to any covered financial company— (1) Any guarantee issued by the FDIC on behalf of the covered financial company; (2) Any amount borrowed pursuant to section 210(n)(5)(A) of the Act; and (3) Any other obligation with respect to the covered financial company for which the FDIC has a direct or contingent liability to pay any amount. Total consolidated assets of each covered financial company that are available for repayment. The term ‘‘total consolidated assets of each covered financial company that are available for repayment’’ means the difference between: (1) The total assets of the covered financial company on a consolidated basis that are available for liquidation during the operation of the receivership; and (2) To the extent included in paragraph (1) of this definition, all PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 assets that are separated from, or made unavailable to, the covered financial company by a statutory or regulatory barrier that prevents the covered financial company from possessing or selling assets and using the proceeds from the sale of such assets. § 149.3 Maximum obligation limitation. The FDIC shall not, in connection with the orderly liquidation of a covered financial company, issue or incur any obligation, if, after issuing or incurring the obligation, the aggregate amount of such obligations outstanding for each covered financial company would exceed— (a) An amount that is equal to 10 percent of the total consolidated assets of the covered financial company, based on the most recent financial statement available, during the 30-day period immediately following the date of appointment of the FDIC as receiver (or a shorter time period if the FDIC has calculated the amount described under paragraph (b) of this section); and (b) The amount that is equal to 90 percent of the fair value of the total consolidated assets of each covered financial company that are available for repayment, after the time period described in paragraph (a) of this section. Dated at Washington, DC, this 6th day of July 2011. By order of the Board of Directors. Federal Deposit Insurance Corporation. Valerie J. Best, Assistant Executive Secretary. Dated: November 14, 2011. By the Department of the Treasury. Alastair Fitzpayne, Deputy Chief of Staff and Executive Secretary. [FR Doc. 2011–29993 Filed 11–23–11; 8:45 am] BILLING CODE 6714–01–P; 4810–25–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2011–0959; Directorate Identifier 2011–NE–25–AD] RIN 2120–AA64 Airworthiness Directives; Rolls-Royce plc (RR) RB211 Trent 800 Series Turbofan Engines Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking (NPRM). AGENCY: We propose to adopt a new airworthiness directive (AD) for the SUMMARY: E:\FR\FM\25NOP1.SGM 25NOP1

Agencies

[Federal Register Volume 76, Number 227 (Friday, November 25, 2011)]
[Proposed Rules]
[Pages 72645-72650]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29993]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 76, No. 227 / Friday, November 25, 2011 / 
Proposed Rules

[[Page 72645]]



FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 380

RIN 3064-AD84

DEPARTMENT OF THE TREASURY

31 CFR Part 149

RIN 1505-AC36


Calculation of Maximum Obligation Limitation

AGENCY: Federal Deposit Insurance Corporation; Departmental Offices, 
Department of the Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This notice of proposed rulemaking is published jointly by the 
Federal Deposit Insurance Corporation (the ``FDIC'') and the 
Departmental Offices of the Department of the Treasury (the 
``Treasury'') (collectively, the ``Agencies'') and proposes rules to 
implement applicable provisions of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (``Dodd-Frank Act'').\1\ In accordance with 
the requirements of the Dodd-Frank Act, the proposed rules govern the 
calculation of the maximum obligation limitation (``MOL''), as 
specified in section 210(n)(6) of the Dodd-Frank Act. The MOL limits 
the aggregate amount of outstanding obligations that the FDIC may issue 
or incur in connection with the orderly liquidation of a covered 
financial company.
---------------------------------------------------------------------------

    \1\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 12 U.S.C. 5301 et seq. (2010).

---------------------------------------------------------------------------
DATES: Comments must be received on or before January 24, 2012.

ADDRESSES: You may submit comments by any of the following methods:

FDIC

    You may submit comments by any of the following methods:
     FDIC Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow instructions for submitting comments on 
the agency Web site.
     FDIC Email: Comments@fdic.gov. Include RIN  
[insert] on the subject line of the message.
     FDIC Mail: Robert E. Feldman, Executive Secretary, 
Attention: Comments, Federal Deposit Insurance Corporation, 550 17th 
Street NW., Washington, DC 20429.
     Hand Delivery to FDIC: Comments may be hand-delivered to 
the guard station at the rear of the 550 17th Street Building (located 
on F Street) on business days between 7 a.m. and 5 p.m.

    Please note:  All comments received will be posted generally 
without change to http://www.fdic.gov/regulations/laws/federal/propose.html, including any personal information provided.

    Please include your name, affiliation, address, email address and 
telephone number(s) in your comment. Where appropriate, comments should 
include a short Executive Summary (no more than five single-spaced 
pages). All statements received, including attachments and other 
supporting materials, are part of the public record and subject to 
public disclosure. You should submit only information that you wish to 
make available publicly.

Treasury

    Federal eRulemaking Portal--``Regulations.gov.'' You are encouraged 
to submit comments electronically through the Federal eRulemaking 
Portal--``Regulations.gov.'' Go to http://www.regulations.gov to submit 
or view public comments. The Regulations.gov home page provides 
information on using Regulations.gov, including instructions for 
submitting or viewing public comments, viewing other supporting and 
related materials, and viewing the docket.
    Mail: Department of the Treasury, Office of Financial Institutions 
Policy, Room 1310, Main Treasury Building, 1500 Pennsylvania Avenue 
NW., Washington, DC 20220.
    Instructions: In general, the Treasury will enter all comments 
received into the docket and make them available without change, 
including any business or personal information that you provide such as 
name and address information, email addresses, or phone numbers. 
Comments, including attachments and other supporting materials, 
received are part of the public record and subject to public 
disclosure. Do not enclose any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.
    You may view comments and other related materials by any of the 
following methods:
    Viewing Comments Electronically: Go to http://www.regulations.gov 
and follow the instructions on the Web site.
    Viewing Comments Personally: You may personally inspect and 
photocopy comments at the Department of the Treasury Library, Room 
1428, Main Treasury Building, 1500 Pennsylvania Avenue NW., Washington, 
DC. You can make an appointment to inspect comments by calling (202) 
622-0990.
    Commenters are requested to submit copies of comments to both 
Agencies.

FOR FURTHER INFORMATION CONTACT:

FDIC

    Arthur D. Murphy, Senior Financial Analyst, Division of Finance 
(703) 562-6177 or amurphy@fdic.gov; Henry R.F. Griffin, Assistant 
General Counsel, Legal Division (202) 898-8700 or hgriffin@fdic.gov; 
Michelle Borzillo, Senior Counsel, Legal Division (202) 898-7400 or 
mborzillo@fdic.gov; or Claude A. Rollin, Counsel, Legal Division (202) 
898-8741 or crollin@fdic.gov.

Treasury

    Lance Auer, Deputy Assistant Secretary (Financial Institution 
Policy), at (202) 622-1262; Felton Booker, Acting Director, Office of 
Financial Institutions Policy, at (202) 622-0293; Peter A. Bieger, 
Acting Assistant General Counsel (Banking and Finance), at (202) 622-
0480; and Steven D. Laughton, Senior Counsel, Office of General 
Counsel, at (202) 622-8413.

SUPPLEMENTARY INFORMATION:

I. Background

The Dodd-Frank Act

    Title II of the Dodd-Frank Act establishes an Orderly Liquidation 
Authority (``OLA'') to resolve a large interconnected financial company 
upon a determination that its failure and resolution under otherwise 
applicable law would have serious adverse effects on financial 
stability in the United States and the use of OLA would avoid or 
mitigate such adverse effects. Under the systemic risk determination 
process

[[Page 72646]]

set forth in the Dodd-Frank Act, certain designated Federal 
agencies,\2\ on their own initiative or at the request of the Secretary 
of the Treasury (``Secretary''), may recommend that the Secretary 
appoint the FDIC as receiver of a financial company. Any written 
recommendation from the designated Federal agencies to the Secretary to 
make a systemic risk determination must include a number of specific 
findings, which are enumerated in section 203(a)(2) of the Dodd-Frank 
Act.\3\ Then, based on the written recommendation of the appropriate 
agencies, the Secretary, in consultation with the President, must 
determine whether the conditions in section 203(b) of the Dodd-Frank 
Act have been satisfied so that the covered financial company can be 
placed into receivership. In making that determination, the Secretary 
must document any determination and retain such documentation.\4\ This 
procedure is very similar to the way that systemic risk determinations 
are made under section 13 of the Federal Deposit Insurance Act (the 
``FDIA'').\5\ Under section 201(a)(8) of the Dodd-Frank Act, a 
``covered financial company'' is a ``financial company'' \6\ for which 
a systemic risk determination has been made pursuant to section 203(b) 
of the Dodd-Frank Act but does not include an insured depository 
institution.
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    \2\ The Board of Governors of the Federal Reserve System 
(``FRB'') and the Securities and Exchange Commission (``SEC'') will 
make the recommendation if the company or its largest U.S. 
subsidiary is a broker or a dealer. The FRB and the Director of the 
Treasury's Federal Insurance Office will make the recommendation and 
provide affirmative approval, respectively, if the company or its 
largest U.S. subsidiary is an insurance company, and the FRB and the 
FDIC will make the recommendation in all other cases. In cases 
involving the FRB and FDIC, the systemic risk recommendation must be 
approved by at least \2/3\ of the members of the Federal Reserve 
Board then serving and at least \2/3\ of the members of the FDIC 
Board of Directors then serving.
    \3\ Section 203(a)(2) of the Dodd-Frank Act provides that all 
written recommendations from the designated Federal agencies to the 
Secretary to make a systemic risk determination must include the 
following:
    (1) An evaluation of whether the financial company is in default 
or in danger of default;
    (2) A description of the effect that the default of the 
financial company would have on financial stability in the United 
States;
    (3) A description of the effect that the default of the 
financial company would have on economic conditions or financial 
stability for low income, minority, or underserved communities;
    (4) A recommendation regarding the nature and the extent of 
actions to be taken under Title II of Dodd-Frank regarding the 
financial company;
    (5) An evaluation of the likelihood of a private sector 
alternative to prevent the default of the financial company;
    (6) An evaluation of why a case under the Bankruptcy Code is not 
appropriate for the financial company;
    (7) An evaluation of the effects on creditors, counterparties, 
and shareholders of the financial company and other market 
participants; and
    (8) An evaluation of whether the company satisfies the 
definition of a financial company under section 201 of the Dodd-
Frank Act.
    \4\ Section 203(b) of the Dodd-Frank Act requires the Secretary 
of Treasury to determine that:
    (1) The financial company is in default or in danger of default;
    (2) The failure of the financial company and its resolution 
under otherwise applicable Federal or State law would have serious 
adverse effects on financial stability in the United States;
    (3) No viable private sector alternative is available to prevent 
the default of the financial company;
    (4) Any effect on the claims or interests of creditors, 
counterparties, and shareholders of the financial company and other 
market participants as a result of actions taken under this title is 
appropriate, given the impact that any action taken under this title 
would have on financial stability in the United States;
    (5) Any action under section 204 would avoid or mitigate such 
adverse effects, taking into consideration the effectiveness of the 
action in mitigating potential adverse effects on the financial 
system, the cost to the general fund of the Treasury, and the 
potential to increase excessive risk taking on the part of 
creditors, counterparties and shareholders in the financial company;
    (6) A Federal regulatory agency has ordered the financial 
company to convert all of its convertible debt instruments that are 
subject to the regulatory order; and
    (7) The company satisfies the definition of a financial company 
under section 201.
    \5\ 12 U.S.C. 1823(c)(4).
    \6\ Section 201(a)(11) of the Dodd Frank Act defines the term 
``financial company'' to mean any company that:
    (A) Is incorporated or organized under any provision of Federal 
law or the laws of any State;
    (B) Is--
    (i) A bank holding company, as defined in section 2(a) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841(a));
    (ii) A nonbank financial company supervised by the Board of 
Governors;
    (iii) Any company that is predominantly engaged in activities 
that the Board of Governors has determined are financial in nature 
or incidental thereto for purposes of section 4(k) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1843(k)) other than a company 
described in clause (i) or (ii); or
    (iv) Any subsidiary of any company described in any of clauses 
(i) through (iii) that is predominantly engaged in activities that 
the Board of Governors has determined are financial in nature or 
incidental thereto for purposes of section 4(k) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(k)) (other than a subsidiary 
that is an insured depository institution or an insurance company); 
and
    (C) Is not a Farm Credit System institution chartered under and 
subject to the provisions of the Farm Credit Act of 1971, as amended 
(12 U.S.C. 2001 et seq.), a governmental entity, or a regulated 
entity, as defined under section 1303(20) of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 
4502(20)).
---------------------------------------------------------------------------

    Once the Secretary makes a systemic risk determination, the FDIC 
can be appointed as receiver of the covered financial company. If the 
board of directors (or similar governing body) of the company consents 
to the appointment, the Secretary shall appoint the FDIC as receiver. 
If the company's governing body does not consent, section 202 of the 
Dodd-Frank Act requires the Secretary to petition the United States 
District Court for the District of Columbia for an order authorizing 
the Secretary to appoint the FDIC as receiver. In determining whether 
to grant the petition, the court will determine whether two of the 
Secretary's seven determinations--that the covered financial company is 
in default or in danger of default and that it meets the definition of 
financial company under Title II--are arbitrary and capricious.\7\ If 
the court upholds the two reviewable determinations of the Secretary, 
the court will issue an order authorizing the Secretary to appoint the 
FDIC as receiver. If the court does not make a determination within 
twenty-four hours of receiving the Secretary's petition, then the 
appointment of the FDIC as receiver takes effect by operation of law.
---------------------------------------------------------------------------

    \7\ Dodd-Frank Act Sec.  202(a)(1)(A)(iii).
---------------------------------------------------------------------------

    The OLA in the Dodd-Frank Act is intended as a limited exception to 
bankruptcy or other applicable insolvency laws for purposes of ensuring 
that the resolution of a failing non-depository financial company does 
not have serious adverse effects on U.S. financial stability. Section 
204(a) of the Dodd-Frank Act expressly provides that the purpose of OLA 
is to provide the means ``to liquidate failing financial companies that 
pose a significant risk to the financial stability of the United States 
in a manner that mitigates such risk and minimizes moral hazard.'' 
Section 214(a) expressly provides that ``[a]ll financial companies put 
into receivership under this title shall be liquidated. No taxpayer 
funds shall be used to prevent the liquidation of any financial company 
under this title.'' Moreover, section 214(b) provides that ``[a]ll 
funds expended in the liquidation of a financial company under this 
title shall be recovered from the disposition of assets of such 
financial company, or shall be the responsibility of the financial 
sector, through assessments.'' Finally, section 214(c) provides that, 
``[t]axpayers shall bear no losses from the exercise of any authority 
under this title.''
    To achieve the orderly liquidation of systemically important 
financial companies, the FDIC is given broad authority under the Dodd-
Frank Act to: Transfer assets or liabilities to a bridge financial 
company, operate or liquidate businesses, sell assets, and resolve the 
liabilities of a covered financial company just after the FDIC's 
appointment as receiver or as soon as

[[Page 72647]]

conditions make this appropriate.\8\ This authority enables the FDIC to 
act immediately to sell any assets and liabilities of the covered 
financial company to another entity, or if that is not possible or 
consistent with maximizing the value of the assets of the covered 
financial company, to transfer assets and liabilities to a bridge 
financial company established by the FDIC and either sell the assets or 
liabilities over time while maintaining critical functions. Oftentimes, 
in administering a receivership, it is necessary to continue key 
operations, services, and transactions that will maximize the value of 
the firm's assets and avoid a disorderly collapse in the marketplace.
---------------------------------------------------------------------------

    \8\ Section 210 of the Dodd-Frank Act prescribes the FDIC's 
powers and duties once it is appointed as receiver of a covered 
financial company, including, inter alia, its powers and duties to: 
(1) Succeed to all rights, titles, powers and privileges of the 
covered financial company and its assets, and of any stockholder, 
member, officer or director of such company; (2) take over the 
assets and operate the company with all the powers of the 
shareholders, members, directors and officers, and conduct all 
business of the company; (3) liquidate the company through the sale 
of assets or transfer of assets to a bridge financial company, as 
provided under section 210(h) of the Dodd-Frank Act; (4) merge the 
company with another company or transfer assets or liabilities; (5) 
pay valid obligations that come due, to the extent that funds are 
available; (6) exercise subpoena powers; (7) use private sector 
services to manage and dispose of assets; (8) terminate rights and 
claims of stockholders and creditors (except for the right to 
payment of claims consistent with the priority of claims provision); 
and (9) determine and pay claims. However, a receivership of an 
insurance company would generally be conducted in accordance with 
state law.
---------------------------------------------------------------------------

    Section 210(n) of the Dodd-Frank Act establishes an Orderly 
Liquidation Fund (``OLF'') in the U.S. Treasury that will be available 
to the FDIC to carry out its responsibilities as receiver of a covered 
financial company and pay the costs of actions authorized under Title 
II of the Dodd-Frank Act, including: The orderly liquidation of covered 
financial companies, payment of administrative expenses, and the 
payment of principal and interest by the FDIC on obligations issued 
under section 210(n)(5) of the Dodd-Frank Act. The OLF will be 
comprised of amounts received by the FDIC, including: The proceeds of 
obligations issued to Treasury pursuant to section 210(n)(5), 
assessments received under section 210(o), interest and other earnings 
from investments, and repayments to the FDIC by covered financial 
companies.\9\
---------------------------------------------------------------------------

    \9\ Dodd-Frank Act Sec.  210(n)(2).
---------------------------------------------------------------------------

    In order for the FDIC to fulfill its obligations as receiver of a 
covered financial company, it may be necessary for the FDIC to borrow 
funds from the Treasury. Under section 210(n)(5) of the Dodd-Frank Act, 
the FDIC is authorized to issue obligations to Treasury upon the FDIC's 
appointment as receiver, and Treasury may purchase any such 
obligations, ``upon such terms and conditions as to yield a return at a 
rate determined by the Secretary, taking into consideration the current 
average yield on outstanding marketable obligations of the United 
States of comparable maturity, plus an interest rate surcharge to be 
determined by the Secretary, which shall be greater than the difference 
between--(i) the current average rate on an index of corporate 
obligations of comparable maturity; and (ii) the current average rate 
on outstanding marketable obligations of the United States of 
comparable maturity.'' Section 210(n)(9) of the Dodd-Frank Act provides 
that the FDIC must develop an Orderly Liquidation Plan (``OLP'') that 
is acceptable to the Secretary for each covered financial company for 
which the FDIC is appointed receiver, prior to funds in the OLF being 
made available to the FDIC with regard to such covered financial 
company. The FDIC may amend any OLP at any time with the concurrence of 
the Secretary. Section 210(n)(9) further requires that a mandatory 
repayment plan between the FDIC and Treasury be agreed to and in effect 
before Treasury may provide certain amounts to the FDIC within the 
limits defined in subparagraph (B) of section 210(n)(6) of the Dodd-
Frank Act.
    The Maximum Obligation Limitation (``MOL''), as set forth in 
section 210(n)(6) of the Dodd-Frank Act, limits the aggregate amount of 
outstanding obligations that the FDIC may issue or incur in connection 
with the orderly liquidation of a covered financial company. 
Specifically, the MOL provides as follows:

    The [FDIC] may not, in connection with the orderly liquidation 
of a covered financial company, issue or incur any obligation, if, 
after issuing or incurring the obligation, the aggregate amount of 
such obligations outstanding under this subsection, for each covered 
financial company would exceed--
    (A) an amount that is equal to 10 percent of the total 
consolidated assets of the covered financial company, based on the 
most recent financial statement available, during the 30-day period 
immediately following the date of appointment of the FDIC as 
receiver (or a shorter time period if the [FDIC] has calculated the 
amount described under subparagraph (B)); and
    (B) the amount that is equal to 90 percent of the fair value of 
the total consolidated assets of each covered financial company that 
are available for repayment, after the time period described in 
subparagraph (A).

II. The Proposed Rule

    Section 210(n)(7) of the Dodd-Frank Act requires the Agencies, in 
consultation with the Financial Stability Oversight Council (``FSOC''), 
to jointly prescribe regulations governing the calculation of the MOL. 
In accordance with this section, the Agencies have consulted with the 
FSOC, and have determined that it would be most appropriate to adopt 
regulations that closely follow the statutory language for calculating 
the MOL, while defining certain terms referenced in the statute and 
seeking comment on those definitions. The terms in this proposed rule 
are defined solely for the purpose of calculating the MOL and are not 
applicable to any other statutory or regulatory requirements.
    The Dodd-Frank Act does not define the term ``obligation.'' The 
proposed rule includes a definition of the term ``obligation'' that is 
derived from the definition of the term ``obligation'' in section 15(c) 
the FDIA (12 U.S.C. 1825(c)). Section 15(c) of the FDIA contains an MOL 
that limits the amount of obligations the FDIC may issue or incur in 
connection with the resolution of failed insured depository 
institutions. A comparison of the two MOLs reveals that the MOL under 
section 210(n)(6) of the Dodd-Frank Act is modeled after the FDIA MOL. 
The Agencies thus believe that defining the term ``obligation'' in a 
manner similar to the definition of such term in the FDIA is 
appropriate. More specifically, the proposed rule provides that in 
calculating the MOL, the term ``obligation'' means--
    (i) Any guarantee issued by the FDIC on behalf of each covered 
financial company;
    (ii) Any amount borrowed pursuant to Section 210(n)(5) in 
connection with each covered financial company; and
    (iii) Any other obligation with respect to a covered financial 
company for which the FDIC has a direct or contingent liability to pay 
any amount.
    For purposes of calculating the MOL, the FDIC shall value any 
contingent liabilities with respect to each covered financial company, 
including any guarantee issued by the FDIC, at their expected cost to 
the FDIC.\10\
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    \10\ Dodd-Frank Act Sec.  210(n)(8)(B).
---------------------------------------------------------------------------

    Section 210(n)(6)(A) of the Dodd-Frank Act provides that, in 
calculating the MOL, the amount of the total consolidated assets for 
each covered financial company shall be ``based on the most recent 
financial statement available.'' The Dodd-Frank Act does not define 
this term. Under the proposed rule, the term ``most recent

[[Page 72648]]

financial statement available'' means: (1) The covered financial 
company's most recent financial statement filed with the SEC or any 
other regulatory body; (2) the covered financial company's most recent 
financial statement audited by an independent CPA firm; or (3) other 
available financial statements of the covered financial company. The 
Agencies will jointly determine which of the three types of financial 
statements is, in the judgment of the FDIC and the Secretary, most 
pertinent, taking into consideration the timeliness and reliability of 
the statements being considered. Generally, the Agencies intend to use 
financial statements filed with a regulatory body or financial 
statements audited by an independent CPA firm when they are available 
and timely as under most circumstances they would be considered to be 
reliable. However, if the covered financial company is both privately 
held and unregulated, statements filed with a regulatory body would not 
exist. In addition, financial statements audited by an independent CPA 
firm may not also exist or may not be as timely or relevant as 
unaudited financial statements. Accordingly, the Agencies propose to 
use the financial statements that they believe are most pertinent 
taking into consideration the timeliness and reliability of the 
statements being considered.
    Section 210(n)(6)(B) of the Dodd-Frank Act provides that the total 
consolidated assets of each covered financial company be measured at 
their ``fair value.'' The Dodd-Frank Act does not define the term 
``fair value'' for this purpose. The proposed rule defines ``fair 
value'' as the expected total aggregate value of each asset, or group 
of assets that are managed within a portfolio, of a covered financial 
company if such asset, or group of assets, was sold or otherwise 
disposed of in an orderly transaction. The Agencies initially 
considered a fair value definition based on a forced liquidation value 
or distressed sale basis, such as a liquidation under chapter 7 of the 
Bankruptcy Code. However, the Agencies determined that defining the 
term ``fair value'' based on a forced liquidation value would not 
accurately reflect the FDIC's responsibilities and authorities as 
receiver. For example, Section 210(a)(1)(B)(i) of the Dodd-Frank Act 
allows the FDIC as receiver to take over the assets of and operate the 
covered financial company with all the powers of the members or 
shareholders, the directors, and the officers of the covered financial 
company, and conduct all business of the covered financial company 
during the period of orderly liquidation. Section 210(a)(1)(B)(iv) of 
the Dodd-Frank Act requires the FDIC as receiver to manage the assets 
and property of the covered financial company, consistent with the 
maximization of the value of the assets in the context of an orderly 
liquidation. Section 202(d) gives the FDIC a three-year period to 
liquidate the covered financial company, which period may be extended 
for up to two additional years to maximize the net present value return 
from the sale of the assets of the covered financial company. Hence, 
the Agencies believe that the term ``fair value'' should be based on an 
orderly liquidation value using valuation analysis consisting of 
relevant factors estimating asset prices commensurate with the 
characteristics of the assets held by the covered financial company. 
Such measures are consistent with the authority of the FDIC to conduct 
an orderly liquidation in a manner that maximizes the value of the 
assets of the covered financial company over a three- to five-year 
period. The Agencies also believe that the proposed rule reflects this 
mandate by recognizing that fair value measurement is context dependant 
and the result of numerous variables, including the attributes of the 
specific asset; the period of time and the circumstances the asset is 
allowed to be marketed; and the presence of willing and able third-
party buyers.
    Finally, with respect to the term ``total consolidated assets of 
each covered financial company that are available for repayment'' in 
section 210(n)(6)(B) of the Dodd-Frank Act, the proposed rule defines 
this term to mean the difference between: (1) The total consolidated 
assets of the covered financial company that are available for 
liquidation during the operation of the receivership; and (2) to the 
extent included in (1), all assets that are separated from, or made 
unavailable to, the covered financial company by a statutory or 
regulatory barrier that prevents the covered financial company from 
possessing or selling and using the proceeds from the sale of such 
assets. The Agencies are proposing to define the term ``assets * * * 
available for repayment'' in a manner consistent with the FDIC's broad 
authority as receiver regarding the liquidation of assets of a covered 
financial company.
    Under Title II, all of the assets on the books of the covered 
financial company would generally be available for sale and liquidation 
and, thereby, available as proceeds for repayment. It should be noted, 
for example, section 210(a)(1)(A)(i) provides that the FDIC as receiver 
succeeds to all rights, titles, powers, and privileges of the covered 
financial company and its assets. Section 210(a)(1)(D) further provides 
that the FDIC as receiver shall liquidate the covered financial 
company's assets and wind-up its affairs in such manner as the FDIC 
deems appropriate, including through the sale of assets, the transfer 
of assets to a bridge financial company, or the exercise of any other 
rights or privileges granted, but subject to all legally enforceable 
and perfected security interests and all legally enforceable security 
entitlements. Moreover, section 210(a)(1)(M) provides that 
notwithstanding any other provision of law, the FDIC's appointment as 
receiver terminates all rights and claims that shareholders and 
creditors of the covered financial company may have against the assets 
of the covered financial company, except for their right to payment or 
other satisfactory resolution of their underlying claims as provided by 
the Dodd-Frank Act.
    Congress thus directed the FDIC as receiver to manage and liquidate 
the assets of a covered financial company, including assets that may be 
released from lien encumbrances by payment in the ordinary course of 
business, with a view toward maximizing the value of such assets over 
the course of the orderly liquidation. The Agencies believe that the 
FDIC's broad authority to liquidate the covered financial company's 
assets (including assets encumbered by liens), to pay secured creditors 
and to pay the FDIC's administrative expenses and other claimants in 
accordance with the priority of claims provisions, to the extent of 
available proceeds, renders those ``assets * * * available for 
repayment.'' However, the Agencies also recognize that there may be 
assets of a covered financial company that are not ``assets * * * 
available for repayment.'' For example, to the extent that the assets 
of a covered financial company's wholly-owned foreign subsidiary are 
``ring-fenced'' by the subsidiary's foreign regulator, pursuant to 
valid statutory or regulatory authority, they would not be available 
for repayment. Other assets may not be on the balance sheet of a 
covered financial company and thus not available for repayment, such as 
customer name securities at a covered broker or dealer.\11\
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    \11\ Moreover, even if customer name securities were on a 
covered financial company's balance sheet, they would not constitute 
``assets * * * available for repayment'' because section 205(f) of 
the Dodd-Frank Act requires such customer name securities to be 
delivered to the customer.

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[[Page 72649]]

III. Request for Comments

    The Agencies invite comments on all aspects of the proposed 
rulemaking. In particular, the Agencies request comments on the 
following questions:
    Is the proposed definition of ``obligation'' appropriate? Are there 
alternative definitions that should be considered?
    In determining what constitutes ``the most recent financial 
statement available,'' is it appropriate to allow the Agencies to rely 
on financial statements that may have been provided internally to the 
covered financial company's management, Board of Directors, or both if 
the Agencies consider them more pertinent, after taking into 
consideration timeliness and reliability, than a publicly available 
financial statement filed with the SEC or other regulatory body or a 
financial statement audited by an independent CPA firm?
    Is the proposed definition of ``fair value'' appropriate? Are there 
other standards or definitions that may be more appropriate in general 
or for certain types of assets? What risks should be considered in the 
assessment of ``fair value?'' Should ``fair value'' be determined 
differently for different asset classes? Given that many assets may 
have to be liquidated, should expected transaction costs be explicitly 
considered for the calculation of fair value?
    Should the definition of the term ``total consolidated assets of 
each covered financial company that are available for repayment'' be 
limited to certain categories of assets (such as unencumbered assets) 
or should it extend to all assets available for repayment in the 
ordinary course of business?
    Written comments must be received by the Agencies no later than 
January 24, 2012.

IV. Regulatory Analysis and Procedure

A. The Paperwork Reduction Act

    The proposed rule provides, in part, the manner in which the 
Agencies would implement the maximum obligation limitation for FDIC 
borrowings from the Treasury to fund the Orderly Liquidation Fund in 
the event that one or more covered financial companies are placed into 
receivership. It will not involve any new collections of information 
pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). 
Consequently, no information collection has been submitted to the 
Office of Management and Budget for review.

B. The Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) the Agencies hereby certify that this rule will not have a 
significant economic impact on a substantial number of small entities. 
The rule governs the manner in which the FDIC would calculate the 
maximum obligation limitation for obligations incurred or issued by the 
FDIC in connection with the orderly liquidation of a covered financial 
company under Title II of the Dodd-Frank Act. Small entities will not 
be affected by this proposed rule. Moreover, under Small Business 
Administration size standards defining small entities, financial 
companies are generally considered small entities if their annual 
receipts do not exceed $7 million or their total assets do not exceed 
$175 million.\12\ The Agencies do not expect that the OLA in the Dodd-
Frank Act will be used to resolve financial companies that qualify as 
small entities, because the failure of such companies would be unlikely 
to have serious adverse effects on financial stability in the United 
States. Notwithstanding this certification, the Agencies invite 
comments on the impact of this rule on small entities.
---------------------------------------------------------------------------

    \12\ 13 CFR 121.201.
---------------------------------------------------------------------------

C. Plain Language

    Each Federal banking agency, such as the FDIC, is required to use 
plain language in all proposed and final rules published after January 
1, 2000. 12 U.S.C. 4809. In addition, in 1998, the President issued a 
memorandum directing each agency in the Executive branch, such as 
Treasury, to use plain language for all new proposed and final 
rulemaking documents issued on or after January 1, 1999. The Agencies 
have sought to present the proposed rule in a simple and 
straightforward manner. The Agencies invite comments on whether the 
proposal is clearly stated and effectively organized, and how the 
Agencies might make the proposed text easier to understand.

D. Executive Order 12866

    Executive Orders 13563 and 12866 directs Treasury to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has been designated a ``significant regulatory action'' 
although not economically significant, under section 3(f) of Executive 
Order 12866. Accordingly, the rule has been reviewed by the Office of 
Management and Budget.

List of Subjects in 12 CFR Part 380 and 31 CFR Part 149

    Accounting, Administrative practice and procedure, Finance, and 
Loan programs.

Federal Deposit Insurance Corporation

Authority and Issuance

    For the reasons stated in the preamble, the Board of Directors of 
the Federal Deposit Insurance Corporation proposes to amend part 380 of 
title 12 of the Code of Federal Regulations as follows:

PART 380--ORDERLY LIQUIDATION AUTHORITY

    1. The authority citation for part 380 continues to read as 
follows:

    Authority: 12 U.S.C. 5301 et seq.

    2. Add Sec.  380.10 to read as follows:


Sec.  380.10  Maximum obligation limitation.

    (a) General Rule. The FDIC shall not, in connection with the 
orderly liquidation of a covered financial company, issue or incur any 
obligation, if, after issuing or incurring the obligation, the 
aggregate amount of such obligations outstanding for each covered 
financial company would exceed--
    (1) An amount that is equal to 10 percent of the total consolidated 
assets of the covered financial company, based on the most recent 
financial statement available, during the 30-day period immediately 
following the date of appointment of the FDIC as receiver (or a shorter 
time period if the FDIC has calculated the amount described under 
paragraph (2)); and
    (2) The amount that is equal to 90 percent of the fair value of the 
total consolidated assets of each covered financial company that are 
available for repayment, after the time period described in paragraph 
(a)(1) of this section.
    (b) Definitions. For purposes of paragraph (a) of this section:
    (1) The term ``fair value'' means the expected total aggregate 
value of each asset, or group of assets that are managed within a 
portfolio, of a covered financial company on a consolidated basis if 
such asset, or group of assets, was sold or otherwise disposed of in an 
orderly transaction.

[[Page 72650]]

    (2) The term ``most recent financial statement available'' means a 
covered financial company's:
    (i) Most recent financial statement filed with the Securities and 
Exchange Commission or any other regulatory body;
    (ii) Most recent financial statement audited by an independent CPA 
firm; or
    (iii) Other available financial statements. The FDIC and the 
Treasury will jointly determine the most pertinent of the above 
financial statements, taking into consideration the timeliness and 
reliability of the statements being considered.
    (3) The term ``obligation'' means, with respect to any covered 
financial company:
    (i) Any guarantee issued by the FDIC on behalf of the covered 
financial company;
    (ii) Any amount borrowed pursuant to section 210(n)(5)(A) of the 
Dodd-Frank Act; and
    (iii) Any other obligation with respect to the covered financial 
company for which the FDIC has a direct or contingent liability to pay 
any amount.
    (4) The term ``total consolidated assets of each covered financial 
company that are available for repayment'' means the difference 
between:
    (i) The total assets of the covered financial company on a 
consolidated basis that are available for liquidation during the 
operation of the receivership; and
    (ii) To the extent included in paragraph (b)(4)(i) of this section, 
all assets that are separated from, or made unavailable to, the covered 
financial company by a statutory or regulatory barrier that prevents 
the covered financial company from possessing or selling assets and 
using the proceeds from the sale of such assets.

Department of the Treasury

Authority and Issuance

    For the reasons set forth in the preamble, Treasury proposes to 
amend Title 31, Chapter I of the Code of Federal Regulations by adding 
a new part 149 as set forth below:

PART 149--CALCULATION OF MAXIMUM OBLIGATION LIMIT

Sec.
149.1 Authority and purpose.
149.2 Definitions.
149.3 Maximum obligation limitation.

    Authority: 31 U.S.C. 321 and 12 U.S.C. 5390.


Sec.  149.1  Authority and purpose.

    (a) Authority. This part is issued by the Federal Deposit Insurance 
Corporation (FDIC) and the Secretary of the Department of the Treasury 
(Treasury) under section 210(n)(7) of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (Act).
    (b) Purpose. The purpose of this part is to issue implementing 
regulations as required by the Act. The part governs the calculation of 
the maximum obligation limitation which limits the aggregate amount of 
outstanding obligations the FDIC may issue or incur in connection with 
the orderly liquidation of a covered financial company.


Sec.  149.2  Definitions.

    As used in this part:
    Fair value. The term ``fair value'' means the expected total 
aggregate value of each asset, or group of assets that are managed 
within a portfolio of a covered financial company on a consolidated 
basis if such asset, or group of assets, was sold or otherwise disposed 
of in an orderly transaction.
    Most recent financial statement available. (1) The term ``most 
recent financial statement available'' means a covered financial 
company's--
    (i) Most recent financial statement filed with the Securities and 
Exchange Commission or any other regulatory body;
    (ii) Most recent financial statement audited by an independent CPA 
firm; or
    (iii) Other available financial statements.
    (2) The FDIC and the Treasury will jointly determine the most 
pertinent of the above financial statements, taking into consideration 
the timeliness and reliability of the statements being considered.
    Obligation. The term ``obligation'' means, with respect to any 
covered financial company--
    (1) Any guarantee issued by the FDIC on behalf of the covered 
financial company;
    (2) Any amount borrowed pursuant to section 210(n)(5)(A) of the 
Act; and
    (3) Any other obligation with respect to the covered financial 
company for which the FDIC has a direct or contingent liability to pay 
any amount.
    Total consolidated assets of each covered financial company that 
are available for repayment. The term ``total consolidated assets of 
each covered financial company that are available for repayment'' means 
the difference between:
    (1) The total assets of the covered financial company on a 
consolidated basis that are available for liquidation during the 
operation of the receivership; and
    (2) To the extent included in paragraph (1) of this definition, all 
assets that are separated from, or made unavailable to, the covered 
financial company by a statutory or regulatory barrier that prevents 
the covered financial company from possessing or selling assets and 
using the proceeds from the sale of such assets.


Sec.  149.3  Maximum obligation limitation.

    The FDIC shall not, in connection with the orderly liquidation of a 
covered financial company, issue or incur any obligation, if, after 
issuing or incurring the obligation, the aggregate amount of such 
obligations outstanding for each covered financial company would 
exceed--
    (a) An amount that is equal to 10 percent of the total consolidated 
assets of the covered financial company, based on the most recent 
financial statement available, during the 30-day period immediately 
following the date of appointment of the FDIC as receiver (or a shorter 
time period if the FDIC has calculated the amount described under 
paragraph (b) of this section); and
    (b) The amount that is equal to 90 percent of the fair value of the 
total consolidated assets of each covered financial company that are 
available for repayment, after the time period described in paragraph 
(a) of this section.

    Dated at Washington, DC, this 6th day of July 2011.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
    Dated: November 14, 2011.

    By the Department of the Treasury.
Alastair Fitzpayne,
Deputy Chief of Staff and Executive Secretary.
[FR Doc. 2011-29993 Filed 11-23-11; 8:45 am]
BILLING CODE 6714-01-P; 4810-25-P