Transferred OTS Regulations Regarding Fiduciary Powers of State Savings Associations and Consent Requirements for the Exercise of Trust Powers, 15327-15332 [2018-07227]
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15327
Proposed Rules
Federal Register
Vol. 83, No. 69
Tuesday, April 10, 2018
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 Parts 303, 333, and 390
RIN 3064–AE23
Transferred OTS Regulations
Regarding Fiduciary Powers of State
Savings Associations and Consent
Requirements for the Exercise of Trust
Powers
Federal Deposit Insurance
Corporation.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Federal Deposit
Insurance Corporation (FDIC) proposes
to rescind and remove from the Code of
Federal Regulations the part entitled
Fiduciary Powers of State Savings
Associations and to amend current FDIC
regulations regarding consent to
exercise trust powers to reflect the
applicability of these parts to both State
savings associations and State
nonmember banks.
DATES: Comments must be received on
or before June 11, 2018.
ADDRESSES: You may submit comments,
identified by RIN 3064–AE23, by any of
the following methods:
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/
propose.html. Follow instructions for
submitting comments on the Agency
website.
• Email: Comments@fdic.gov. Include
the RIN 3064–AE23 on the subject line
of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, Room
F–1054, 550 17th Street NW,
Washington, DC 20429.
• Hand Delivery: 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 7:00 a.m. and 5:00 p.m.
Please Note: All comments received
must include the agency name and RIN
3064–AE23 for this rulemaking. All
comments received will be posted
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SUMMARY:
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without change to https://www.fdic.gov/
regulations/laws/federal/, including any
personal information provided. Paper
copies of public comments may be
requested from the Public Information
Center by telephone at 877–275–3342 or
703–562–2200.
FOR FURTHER INFORMATION CONTACT:
Michael W. Orange, Trust Examination
Specialist, Division of Risk Management
and Supervision, ph. (678) 916–2289 or
morange@fdic.gov; or Annmarie H.
Boyd, Counsel, Legal Division, ph. (202)
898–3714 or aboyd@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Act
The Dodd-Frank Act provided for a
substantial reorganization of the
regulation of State and Federal savings
associations and their holding
companies.1 Beginning July 21, 2011,
the transfer date established by section
311 of the Dodd-Frank Act,2 the powers,
duties, and functions formerly
performed by the Office of Thrift
Supervision (OTS) were divided among
the FDIC, as to State savings
associations, the Office of the
Comptroller of the Currency (OCC), as to
Federal savings associations, and the
Board of Governors of the Federal
Reserve System (Federal Reserve Board),
as to savings and loan holding
companies. Section 316(b) of the DoddFrank Act 3 provides the manner of
treatment for all orders, resolutions,
determinations, regulations, and
advisory materials that had been issued,
made, prescribed, or allowed to become
effective by the OTS. The section
provides that if such materials were in
effect on the day before the transfer
date, they continue to be in effect and
are enforceable by or against the
appropriate successor agency until they
are modified, terminated, set aside, or
superseded in accordance with
applicable law by such successor
agency, by any court of competent
jurisdiction, or by operation of law.
Section 316(c) of the Dodd-Frank
Act 4 further directed the FDIC and OCC
to consult with one another and to
1 Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, 12 U.S.C. 5301
et seq. (2010).
2 12 U.S.C. 5411.
3 12 U.S.C. 5414(b).
4 12 U.S.C. 5414(c).
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publish a list of the continued OTS
regulations that would be enforced by
the FDIC and the OCC, respectively. On
June 14, 2011, the FDIC’s Board of
Directors approved a ‘‘List of OTS
Regulations to be enforced by the OCC
and the FDIC Pursuant to the DoddFrank Wall Street Reform and Consumer
Protection Act.’’ This list was published
by the FDIC and the OCC as a Joint
Notice in the Federal Register on July
6, 2011.5
Although section 312(b)(2)(B)(i)(II) of
the Dodd-Frank Act 6 granted the OCC
rulemaking authority relating to both
State and Federal savings associations,
nothing in the Dodd-Frank Act affected
the FDIC’s existing authority to issue
regulations under the FDI Act and other
laws as the ‘‘appropriate Federal
banking agency’’ or under similar
statutory terminology. Section 312(c) of
the Dodd-Frank Act amended the
definition of ‘‘appropriate Federal
banking agency’’ contained in section
3(q) of the FDI Act 7 to add State savings
associations to the list of entities for
which the FDIC is designated as the
‘‘appropriate Federal banking agency.’’
As a result, when the FDIC acts as the
designated ‘‘appropriate Federal
banking agency’’ (or under similar
terminology) for State savings
associations and State nonmember
banks, as it does here, the FDIC is
authorized to issue, modify, and rescind
regulations involving such institutions,
as well as insured branches of foreign
banks.
As noted, on June 14, 2011, pursuant
to this authority, the FDIC’s Board of
Directors reissued and redesignated
certain transferring regulations of the
former OTS. These transferred OTS
regulations were published as new FDIC
regulations in the Federal Register on
August 5, 2011.8 When it republished
the transferred OTS regulations as new
FDIC regulations, the FDIC specifically
noted that it would evaluate the
transferred OTS regulations and might
later incorporate the transferred OTS
regulations into other FDIC rules,
amend them, or rescind them, as
appropriate.
One of the regulations transferred to
the FDIC governed the fiduciary powers
(also known as trust powers) of State
5 76
FR 39247 (July 6, 2011).
U.S.C. 5412(b)(2)(B)(i)(II).
7 12 U.S.C. 1813(q).
8 76 FR 47652 (August 5, 2011).
6 12
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savings associations. The OTS
regulation, formerly found at 12 CFR
550.10(b)(1), was transferred to the FDIC
with only nominal changes and is now
found in the FDIC’s rules at 12 CFR part
390 subpart J.
II. Part 390 Subpart J: Fiduciary Powers
of State Savings Associations
12 CFR part 390 subpart J provides
that a State savings association must
conduct its fiduciary (trust) operations
in accordance with applicable State law
and must exercise its fiduciary powers
in a safe and sound manner. Subpart J
was derived from former OTS rule 12
CFR 550.10(b)(1) regarding fiduciary
operations of Federal savings
associations,9 which was added
originally in order to recognize the
OTS’s interest in ensuring that State
savings associations conduct their trust
operations in a safe and sound manner
and in accordance with State law.10
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III. State Nonmember Banks and Trust
Powers
Unlike the explicit requirement
applicable to State savings associations
in subpart J, there is no express rule that
requires State nonmember banks to
conduct fiduciary operations in
accordance with applicable State law
and to exercise their fiduciary powers in
a safe and sound manner. However, the
FDIC has long recognized that State
nonmember banks, like State savings
associations, must comply with State
law when exercising trust or fiduciary
powers.11 This reflects a widely
understood industry principle that the
trust powers of State chartered
institutions are granted under State law
and are primarily administered by the
State chartering authority.12
State nonmember banks approved for
Federal deposit insurance after
December 1, 1950, are generally
required to file an application for
consent to exercise trust powers.13
9 Generally, section 5(n) of HOLA authorizes the
OCC (previously, the OTS) to grant special permits
to Federal savings associations for the right to act
as trustee, executor, administrator, guardian, or in
any other fiduciary capacity in which State banks,
trust companies, or other corporations which
compete with Federal savings associations are
permitted to act under the laws of the State in
which the Federal savings association is located. 12
U.S.C. 1464(n).
10 Office of Thrift Supervision, Final Rule, 62 FR
67696–01 (Dec. 30, 1997).
11 FDIC Trust Examination Manual, available at:
https://www.fdic.gov/regulations/examinations/
trustmanual/section_10/section_x.html#B1 (The
trust powers of State nonmember banks are granted
under State law and that the administration of trust
powers primarily goes to the State as the State
nonmember bank’s chartering authority.)
12 Id.
13 Banks granted trust powers by statute or charter
prior to December 1, 1950, are considered
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Therefore, if a State nonmember bank
seeks to change the nature of its current
business to include trust activities,
section 333.2 requires the bank to obtain
the FDIC’s prior written consent.14
Under section 333.101(b), however,
prior written consent is not required
when a State nonmember bank seeks to
act as trustee or custodian of certain
qualified retirement, education, and
health savings accounts, or other similar
accounts in which the bank’s duties are
essentially custodial or ministerial in
nature and the acceptance of such
accounts without trust powers is not
contrary to applicable State law.15
Section 303.242 of the FDIC rules
contains application procedures that a
State nonmember bank must follow to
obtain the FDIC’s prior written consent
before engaging in trust activities. Prior
to granting such consent, the FDIC
considers whether the bank will
conduct trust operations in a safe and
sound manner, consistent with State
law.
IV. The Proposal
After careful review, the FDIC has
concluded that the retention of part 390
subpart J is unnecessary and that
rescission of subpart J in its entirety
would streamline the FDIC rules and
regulations.
Consistent with its legal authority to
issue and modify regulations as the
appropriate Federal banking agency
under section 3(q) of the Federal
Deposit Insurance Act, the FDIC also
proposes to amend and revise certain
provisions of parts 333 and 303 to
clarify and state explicitly that both
State savings associations and State
nonmember banks are required to obtain
the FDIC’s prior written consent to
exercise trust powers. The FDIC, as the
appropriate Federal banking agency for
State savings associations and State
nonmember banks, is responsible for
ensuring that they engage in the safe
and sound exercise of their trust powers
and in accordance with applicable state
law.16 State nonmember banks and State
savings associations are required to
grandfathered from the requirement to obtain
consent to exercise trust powers.
14 12 CFR 333.2 requires the FDIC’s prior written
consent for a change in the general character or type
of business exercised by a state nonmember bank.
15 These accounts include Individual Retirement
Accounts (IRAs), Self-Employed Retirement Plans,
Roth IRAs, Coverdell Education Savings Accounts,
Health Savings Accounts, and other accounts in
which: (1) The bank’s duties are essentially
custodial or ministerial in nature; (2) the bank is
required to invest the funds from such plans only
in its own time or savings deposits or in any other
assets at the direction of the customer; and (3) the
bank’s acceptance of such accounts without trust
powers is not contrary to applicable State law.
16 12 U.S.C. 1813(q).
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comply with State laws governing the
administration of trusts, such as State
law implementation of the Uniform
Trust Code, Uniform Prudent Investor
Act, and Uniform Probate Code, as well
as applicable Federal laws, such as the
Employee Retirement Income Security
Act of 1974. Moreover, State savings
associations and State nonmember
banks are subject to potential liability
for breaches of fiduciary duty as
provided for under State law.
Accordingly, the proposed rule will
further ensure the consistent exercise of
the FDIC’s supervisory authority with
regard to trust activities of both State
savings associations and State
nonmember banks and provide for the
safe and sound exercise of trust powers
in accordance with the applicable law.17
The proposed revisions would add a
new section 333.3 to clarify that State
savings associations and State
nonmember banks must seek prior
written consent from the FDIC to
exercise trust powers. For State
nonmember banks, § 333.3 would make
explicit the FDIC’s existing requirement
that State nonmember banks must
receive FDIC’s consent before exercising
trust powers as a change in the general
character of business under 12 CFR
333.2. However, § 333.3 would
represent a change for State savings
associations, which are not currently
required to receive FDIC’s consent
before exercising trust powers granted
by their chartering authorities. Section
333.3 would explicitly state that both
State nonmember banks and State
savings associations would be required
to follow the application procedures set
forth in section 303.242. Section
333.101(b) also would be revised to
permit State savings associations to act
as custodians of certain qualifying
accounts without obtaining prior
written consent from the FDIC, in the
same manner as is permitted for State
nonmember banks.
As noted above, the proposed rule
would make section 303.242 applicable
to State savings associations in addition
to State nonmember banks. Similar to
State nonmember banks, under the
proposed rule, State savings
associations would not be required to
receive the FDIC’s prior written consent
to exercise trust powers in the following
circumstances:
(1) Where the institution received
authority to exercise trust powers from
its chartering authority prior to
December 1, 1950; or
(2) Where the institution continues to
conduct trust activities pursuant to
17 12 U.S.C. 1819(a) (Tenth); 12 U.S.C. 1818; 12
U.S.C. 1831p–1.
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authority granted by its chartering
authority subsequent to a charter
conversion or withdrawal from
membership in the Federal Reserve
System.
In order to provide more information
to State nonmember banks and State
savings associations, section 303.242
would also be amended to provide a
more complete description of the
application’s required documentation.
V. Alternatives
The FDIC considered alternatives to
the proposed rule but believes that the
proposed amendments represent the
most appropriate option. As discussed
previously, the Dodd-Frank Act
transferred certain powers, duties, and
functions formerly performed by the
OTS to the FDIC. The FDIC’s Board of
Directors reissued and redesignated
certain transferred regulations from the
OTS, but noted that it would evaluate
them and might later incorporate them
into other FDIC rules, amend them, or
rescind them, as appropriate. The FDIC
has evaluated the existing regulations
regarding fiduciary trust operations of
covered entities, including sections 303,
333, and 390, subpart J. The FDIC
considered the status quo alternative of
retaining the current, bifurcated
regulations but determined that it would
be unnecessarily complex and
potentially confusing to maintain
substantively similar regulations
regarding fiduciary trust powers of State
non-member banks and State savings
associations in different locations
within the Code of Federal Regulations.
Therefore, the FDIC proposes to amend
the regulations and make them
consistent for both State savings
associations and State nonmember
banks.
VI. Request for Comments
The FDIC invites comments on all
aspects of this proposed rulemaking. In
particular, the FDIC requests comments
on the following questions:
1. Should part 390 subpart J
pertaining to the fiduciary powers of
State savings associations be retained in
whole or in part? Please substantiate
your response.
2. What positive or negative impacts,
if any, can you foresee in the FDIC’s
proposal to revise parts 333 and 303 of
the Code of Federal Regulations,
including the impact on State savings
associations not currently exercising
trust powers, who would need to obtain
FDIC consent if they choose to do so in
the future?
VII. Regulatory Analysis and Procedure
A. The Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act (PRA)
of 1995 (44 U.S.C. 3501–3521), the FDIC
may not conduct or sponsor, and the
respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Type of burden
Estimated
number of
respondents
Estimated
hours per
response
Management and Budget (OMB) control
number.
This rule proposes to amend part 333
and 303 to clarify the existing consent
and application requirements for State
nonmember banks and to incorporate
references to State savings associations
into those parts. The revision of parts
333 and 303 to include State savings
associations would add additional
burden to the FDIC’s current
information collection under OMB
control number 3064–0025,18
Application for Consent to Exercise
Trust Powers, as State savings
associations would be required to
complete the designated application and
submit required documentation to
comply with parts 333 and 303.
Currently, there are a total of 47 State
savings associations. There is only one
State savings association currently
exercising trust powers, and there are 46
additional State savings associations
that would potentially need to seek the
FDIC’s consent pursuant to the
proposed revision to parts 333 and 303
if they choose to exercise trust powers.19
The FDIC proposes to revise this
information collection as follows:
Title: Application for Consent to
Exercise Trust Powers.
OMB Number: 3064–0025.
Form Number: FDIC 6200/09.
Affected Public: Insured State
nonmember banks and insured State
savings associations wishing to exercise
trust powers.
Frequency of response
Total annual
estimated
burden
(hours)
Reporting ..............................
Reporting ..............................
9
4
8
24
On Occasion .........................
On Occasion .........................
72
96
Totals ..............................
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Eligible depository institutions
Not-eligible depository institutions.
...............................................
13
........................
...............................................
168
In the chart above, eligible depository
institutions are those that satisfy the
criteria for expedited processing in 12
CFR 303.2(r) and not-eligible depository
institutions are those that do not meet
the expedited processing criteria. The
numbers of respondents are estimated
based on the number of filers annually,
and the numbers of hours per response
are estimated based on the supporting
information typically requested of filers
(which may include additional
supporting financial projections for
applicants ineligible for expedited
processing). Because the proposed rule
will affect State savings associations as
described above, and most filers are
eligible for expedited processing, the
FDIC is proposing to increase the
estimated number of respondents in the
eligible category from eight to nine.
Comments are invited on: (a) Whether
the collection of information is
necessary for the proper performance of
the FDIC’s functions, including whether
the information has practical utility; (b)
the accuracy of the estimates of the
brden of the information collection,
including the validity of the
methodology and assumptions used and
18 The information collection for Application for
Consent to Exercise Trust Powers, OMB No. 3064–
0025, was renewed by OMB on August 30, 2017 and
now expires on August 31, 2020.
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the proposed change to require state
savings associations to obtain consent
before exercising trust powers granted
by their state chartering authorities; (c)
ways to enhance the quality, utility, and
clarity of the information to be
collected; (d) ways to minimize the
burden of the information collection on
respondents, including through the use
of automated collection techniques or
other forms of information technology;
and (e) estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
19 CALL
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to provide information. All comments
will become a matter of public record.
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act
(RFA) 20 requires that, in connection
with a notice of proposed rulemaking,
an agency prepare and make available
for public comment an initial regulatory
flexibility analysis that describes the
impact of the proposed rule on small
entities (defined in regulations
promulgated by the Small Business
Administration to include banking
organizations with total assets of less
than or equal to $550 million). However,
a regulatory flexibility analysis is not
required if the agency certifies that the
rule will not have a significant
economic impact on a substantial
number of small entities and publishes
its certification and a short explanatory
statement in the Federal Register
together with the rule. As discussed in
Section I. of this proposal, the FDIC has
authority to issue, modify and rescind
regulations as the appropriate Federal
banking agency for State savings
associations and State nonmember
banks. The FDIC also considered
alternatives as outlined in Section V of
this proposal, including maintaining the
status quo or amending the regulations
to be consistent for both State savings
associations and State non-member
banks.
The FDIC supervises 3,674
institutions, of which 2,950 are ‘‘small
entities’’ according to the terms of RFA.
There are 2,907 small state non-member
banks and 44 small state savings
associations.21
The proposed rule amends section
333 to state that both State savings
associations and State nonmember
banks that seek to exercise trust powers
need to obtain FDIC consent. The
proposed rule is not expected to have
any effect on State nonmember banks.
With respect to State nonmember banks,
the proposed rule includes no
substantive changes and only includes
clarifying changes to explicitly state the
longstanding requirement that State
nonmember banks receive FDIC’s
consent before newly exercising trust
powers granted by their chartering
authorities as a change in the character
of business under 12 CFR 333.2. As
discussed above, the proposed
amendments to section 333 would
represent a new requirement for State
savings associations to receive FDIC’s
consent before exercising trust powers
granted by their chartering authorities.
The application to seek consent to
20 5
U.S.C. 601 et seq.
Report Data, September 2017.
21 CALL
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exercise trust powers would be a onetime process that is not anticipated to
create a significant economic impact for
State savings associations. The
information requested in the application
would require an applicant State
savings association to identify the type
of trust power it wishes to exercise and
to provide documentation that includes
proof of the adoption of the FDIC’s
Statement of Principles of Trust
Department Management, identification
of the applicable trust officer, trust
committee, and trust counsel, servicing
arrangements, proof of the requisite
approvals by the appropriate State
authority, a projection of the proposed
trust activity’s three-year performance,
and a statement of its impact on the
applicant.22 Based on the FDIC’s
supervisory experience, most of the
documentation required, such as
requisite State approval, servicing
arrangements, and designation of
personnel to serve as appropriate trust
counsel, trust officer, and trust
committee directors, is based on
information and resources that an
applicant State savings association
would already possess or have to
establish in order to exercise trust
powers, regardless of whether it seeks
the FDIC’s prior written consent.
Submitting already existing information
is not expected to create significant,
additional expenses for a State savings
association seeking the FDIC’s prior
written consent to exercise trust powers.
The FDIC also estimates that it will
receive relatively few applications,
given the small overall number of State
savings associations (47), which would
be affected only if they propose to
exercise trust powers.
For these reasons, the FDIC certifies
that the Proposed Rule, if adopted in
final form, would not have a significant
economic impact on a substantial
number of small entities, within the
meaning of those terms as used in the
RFA. Accordingly, a regulatory
flexibility analysis is not required.
The FDIC invites any comments that
will further inform the FDIC’s
consideration of RFA.
C. Plain Language
Section 722 of the Gramm-LeachBliley Act 23 requires each Federal
banking agency to use plain language in
all of its proposed and final rules
published after January 1, 2000. As a
Federal banking agency subject to the
provisions of this section, the FDIC has
sought to present the proposed rule to
rescind part 390 subpart J and revise
D. Riegle Community Development and
Regulatory Improvement Act of 1994
The Riegle Community Development
and Regulatory Improvement Act of
1994 (RCDRIA) requires that each
Federal banking agency, in determining
the effective date and administrative
compliance requirements for new
regulations that impose additional
reporting, disclosure, or other
requirements on insured depository
institutions, consider, consistent with
principles of safety and soundness and
the public interest, any administrative
burdens that such regulations would
place on depository institutions,
including small depository institutions,
and customers of depository
institutions, as well as the benefits of
such regulations. In addition, new
regulations and amendments to
regulations that impose additional
reporting, disclosure, or other new
requirements on insured depository
institutions generally must 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.24
The FDIC notes that comment on
these matters have been solicited in
other sections of this Supplementary
Information section, and that the
requirements of RCDRIA will be
considered as part of the overall
rulemaking process. In addition, the
FDIC also invites any other comments
22 FDIC
23 12
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U.S.C. 4809.
parts 333 and 303 of the FDIC rules in
a simple and straightforward manner.
The FDIC invites comments on whether
the proposal is clearly stated and
effectively organized, and how the FDIC
might make the proposal easier to
understand.
• Has the FDIC organized the material
to inform your needs? If not, how could
the FDIC present the rule more clearly?
• Are the requirements in the rule
clearly stated? If not, how could the rule
be more clearly stated?
• Do the regulations contain technical
language or jargon that is not clear? If
so, which language requires
clarification?
• Would a different format (grouping
and order of sections, use of headings,
paragraphing) make the regulation
easier to understand? If so, what
changes would achieve that?
• Is this section format adequate? If
not, which of the sections should be
changed and how?
• What other changes can the FDIC
incorporate to make the regulation
easier to understand?
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that further will inform its consideration
of RCDRIA.
E. The Economic Growth and Regulatory
Paperwork Reduction Act
Under section 2222 of the Economic
Growth and Regulatory Paperwork
Reduction Act of 1996 (‘‘EGRPRA’’), the
FDIC is required to review all of its
regulations, at least once every 10 years,
in order to identify any outdated or
otherwise unnecessary regulations
imposed on insured institutions.25 The
FDIC, along with the other federal
banking agencies, submitted a Joint
Report to Congress on March 21, 2017
(‘‘EGRPRA Report’’) discussing how the
review was conducted, what has been
done to date to address regulatory
burden, and further measures we will
take to address issues that were
identified. As noted in the EGRPRA
Report, the FDIC is continuing to
streamline and clarify its regulations
through the OTS rule integration
process. By removing outdated or
unnecessary regulations, such as
subpart J, and amending parts 333 and
303, this rule complements other
actions the FDIC has taken, separately
and with the other federal banking
agencies, to further the EGRPRA
mandate.
List of Subjects
12 CFR Part 303
Administrative practice and
procedure; Bank deposit insurance;
Banks, banking; Reporting and
recordkeeping requirements; Savings
associations.
12 CFR Part 333
Banks, banking.
12 CFR Part 390
Administrative practice and
procedure; Advertising; Aged; Civil
rights; Conflict of interests; Credit;
Crime; Equal employment opportunity;
Fair housing; Government employees;
Individuals with disabilities; Reporting
and recordkeeping requirements;
Savings associations.
jstallworth on DSKBBY8HB2PROD with PROPOSALS
Authority and Issuance
For the reasons stated in the
preamble, the Board of Directors of the
Federal Deposit Insurance Corporation
proposes to amend 12 CFR parts 308,
333, and 390 as follows:
PART 303—FILING PROCEDURES
1. The authority citation for part 303
is revised to read as follows:
■
25 Public
Law 104–208, 110 Stat. 3009 (1996).
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14:55 Apr 09, 2018
Jkt 244001
Authority: 12 U.S.C. 378, 1464, 1601–
1607, 1813, 1815, 1817, 1818, 1819(a)
(Seventh and Tenth), 1820, 1823, 1828,
1831a, 1831e, 1831o, 1831p–1, 1831w, 1835a,
1843(l), 3104, 3105, 3108, 3207, 5414, 5415,
and 15 U.S.C. 1601–1607.
Subpart M—Other Filings
■
2. Revise § 303.242 to read as follows:
§ 303.242
Exercise of trust powers.
(a) Scope. This section contains the
procedures to be followed by a state
nonmember bank or state savings
association that seeks to obtain the
FDIC’s prior written consent to exercise
trust powers. The FDIC’s prior written
consent to exercise trust powers is not
required in the following circumstances:
(1) Where a state nonmember bank or
state savings association received
authority to exercise trust powers from
its chartering authority prior to
December 1, 1950; or
(2) Where the institution continues to
conduct trust activities pursuant to
authority granted by its chartering
authority subsequent to a charter
conversion or withdrawal from
membership in the Federal Reserve
System.
(b) Where to file. Applicants shall
submit to the appropriate FDIC office a
completed form, ‘‘Application for
Consent to Exercise Trust Powers.’’ This
form may be obtained from any FDIC
regional director.
(c) Content of filing. The filing shall
consist of the completed trust
application form indicating whether the
respective state nonmember bank or
state savings association will exercise
full or limited trust powers and all
required documentation as provided in
the application instructions, including:
(1) A certified copy of the resolution
of the applicant’s board of directors
certifying the extent of the institution’s
compliance with applicable FDIC
guidance;
(2) Information regarding the trust
powers granted by the state authority;
(3) Information on the individual
designated as the primary Trust Officer;
(4) Servicing arrangements, if any;
(5) A list of proposed members of the
Trust Committee;
(6) Information on the individual or
law firm designated to serve as trust
counsel;
(7) Projection of trust accounts, assets,
and profitability for the first three
calendar years after the trust department
begins operations and analysis of any
adverse impact of potential net
operating losses of the applicant
institution arising from the offering of
trust services.
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
15331
(d) Additional information. The FDIC
may request additional information at
any time during processing of the filing.
(e) Expedited processing for eligible
depository institutions. An application
filed under this section by an eligible
depository institution as defined in
§ 303.2(r) will be acknowledged in
writing by the FDIC and will receive
expedited processing, unless the
applicant is notified in writing to the
contrary and provided with the basis for
that decision. The FDIC may remove an
application from expedited processing
for any of the reasons set forth in
§ 303.11(c)(2). Absent such removal, an
application processed under expedited
procedures will be deemed approved 30
days after the FDIC’s receipt of a
substantially complete application.
(f) Standard processing. For those
applications that are not processed
pursuant to the expedited procedures,
the FDIC will provide the applicant
with written notification of the final
action when the decision is rendered.
PART 333—EXTENSION OF
CORPORATE POWERS
3. The authority citation for part 333
is revised to read as follows:
■
Authority: 12 U.S.C. 1816, 1817(i), 1818,
1819(a) (Seventh, Eighth, and Tenth), 1828,
1828(m), 1831p–1(c), 5414, and 5415.
■
4. Add § 333.3 to read as follows:
§ 333.3 Consent Required for Exercise of
Trust Powers.
Except as provided in § 303.242(a), a
State nonmember bank or State savings
association seeking to exercise trust
powers must obtain prior written
consent from the FDIC. Procedures for
obtaining the FDIC’s prior written
consent are set forth in § 303.242 of this
part.
■ 5. Revise § 333.101 paragraph (b) to
read as follows:
§ 333.101
Prior consent not required.
*
*
*
*
*
(b) An insured State nonmember bank
or State savings association, not
exercising trust powers, may act as
trustee or custodian of Individual
Retirement Accounts established
pursuant to the Employee Retirement
Income Security Act of 1974 (26 U.S.C.
408), Self-Employed Retirement Plans
established pursuant to the SelfEmployed Individuals Retirement Act of
1962 (26 U.S.C. 401), Roth Individual
Retirement Accounts and Coverdell
Education Savings Accounts established
pursuant to the Taxpayer Relief Act of
1997 (26 U.S.C. 408A and 530
respectively), Health Savings Accounts
established pursuant to the Medicare
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Federal Register / Vol. 83, No. 69 / Tuesday, April 10, 2018 / Proposed Rules
Prescription Drug Improvement and
Modernization Act of 2003 (26 U.S.C.
223), and other similar accounts without
the prior written consent of the
Corporation provided:
(1) The bank’s or savings association’s
duties as trustee or custodian are
essentially custodial or ministerial in
nature,
(2) The bank or savings association is
required to invest the funds from such
plans only
(i) In its own time or savings deposits,
or
(ii) In any other assets at the direction
of the customer, provided the bank or
savings association does not exercise
any investment discretion or provide
any investment advice with respect to
such account assets, and
(3) The bank’s or savings association’s
acceptance of such accounts without
trust powers is not contrary to
applicable State law.
PART 390—REGULATIONS
TRANSFERRED FROM THE OFFICE OF
THRIFT SUPERVISION
6. The authority citation for part 390
is revised to read as follows:
■
Authority: 12 U.S.C. 1819.
Subpart J—[Removed and Reserved]
■
7. Remove and reserve subpart J.
Dated at Washington, DC, on March 20,
2018.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Valerie Best,
Assistant Executive Secretary.
[FR Doc. 2018–07227 Filed 4–9–18; 8:45 am]
BILLING CODE 6714–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 135
[Docket No.: FAA–2018–0279; Notice No.
18–01]
RIN 2120–AK94
IFR Operations at Locations Without
Weather Reporting
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Notice of proposed rulemaking
(NPRM).
jstallworth on DSKBBY8HB2PROD with PROPOSALS
AGENCY:
The proposed rule would
allow helicopter air ambulance (HAA)
operators to conduct instrument flight
rules (IFR) departure and approach
SUMMARY:
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14:55 Apr 09, 2018
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procedures at airports and heliports that
do not have an approved weather
reporting source in HAA aircraft
without functioning severe weather
detection equipment (airborne radar or
lightning strike detection equipment),
when there is no reasonable expectation
of severe weather at the destination, the
alternate, or along the route of flight.
This rule would also update
requirements to address the
discontinuance of area forecasts,
currently used as flight planning and
pilot weather briefing aids.
Additionally, this rulemaking proposes
to update requirements regarding HAA
departure procedures to include
additional types of departure
procedures that are currently acceptable
for use.
DATES: Send comments on or before
May 10, 2018.
ADDRESSES: Send comments identified
by docket number FAA–2018–0279
using any of the following methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov and follow
the online instructions for sending your
comments electronically.
• Mail: Send comments to Docket
Operations, M–30; U.S. Department of
Transportation (DOT), 1200 New Jersey
Avenue SE, Room W12–140, West
Building Ground Floor, Washington, DC
20590–0001.
• Hand Delivery or Courier: Take
comments to Docket Operations in
Room W12–140 of the West Building
Ground Floor at 1200 New Jersey
Avenue SE, Washington, DC, between 9
a.m. and 5 p.m., Monday through
Friday, except Federal holidays.
• Fax: Fax comments to Docket
Operations at 202–493–2251.
Privacy: In accordance with 5 U.S.C.
553(c), DOT solicits comments from the
public to better inform its rulemaking
process. DOT posts these comments,
without edit, including any personal
information the commenter provides, to
www.regulations.gov, as described in
the system of records notice (DOT/ALL–
14 FDMS), which can be reviewed at
www.dot.gov/privacy.
Docket: Background documents or
comments received may be read at
https://www.regulations.gov at any time.
Follow the online instructions for
accessing the docket or go to the Docket
Operations in Room W12–140 of the
West Building Ground Floor at 1200
New Jersey Avenue SE, Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: Tom
Luipersbeck, Air Transportation
Division, 135 Air Carrier Operations
Branch, Federal Aviation
PO 00000
Frm 00006
Fmt 4702
Sfmt 4702
Administration, 800 Independence
Avenue SW, Washington, DC 20591;
telephone 202–267–8166; email:
Thomas.A.Luipersbeck@faa.gov.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
This rulemaking would amend 14
CFR 135.611(b) to allow helicopter air
ambulance (HAA) operators using
aircraft without functioning severe
weather detection equipment (airborne
radar or lightning strike detection
equipment), to conduct IFR departure
and approach procedures at airports and
heliports that do not have an approved
weather reporting source. In conducting
these operations, the pilot in command
must not reasonably expect to encounter
severe weather at the destination, the
alternate, or along the route of flight.
This action would encourage utilization
of the IFR infrastructure to the fullest
extent possible, thus increasing the
overall safety of HAA Operations.
This rulemaking also proposes to
update certain provisions in
§ 135.611(a)(1) to address the
discontinuance of area forecasts,
currently used as flight planning and
pilot weather briefing aids, and the
transition to digital and graphical
alternatives already being produced by
the U.S. National Weather Service
(NWS). Additionally, this rulemaking
proposes to update requirements in
§ 135.611(a)(3) regarding HAA departure
procedures to include additional types
of departure procedures that are
currently acceptable for use.
II. Authority for This Rulemaking
The FAA’s authority to issue rules on
aviation safety is found in Title 49 of the
United States Code. This rulemaking is
promulgated under the general authority
described in 49 U.S.C. 106(f), 44701(a),
and 44730.
III. Background
Section 135.611 contains provisions
to allow certificate holders to conduct
HAA IFR operations at airports with an
instrument approach procedure and at
which a weather report is not available
from the NWS, a source approved by the
NWS, or a source approved by the FAA.
Each aircraft operated under § 135.611
must be equipped with functioning
equipment to detect severe weather,
even when weather reports and
forecasts indicate no foreseeable severe
weather conditions will exist along the
route to be flown.
A. Statement of the Problem
Section 135.611(b) unnecessarily
limits the ability of certain HAA
operators to conduct IFR departure and
E:\FR\FM\10APP1.SGM
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]]>Agencies
[Federal Register Volume 83, Number 69 (Tuesday, April 10, 2018)]
[Proposed Rules]
[Pages 15327-15332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07227]
========================================================================
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. 83, No. 69 / Tuesday, April 10, 2018 /
Proposed Rules
[[Page 15327]]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 303, 333, and 390
RIN 3064-AE23
Transferred OTS Regulations Regarding Fiduciary Powers of State
Savings Associations and Consent Requirements for the Exercise of Trust
Powers
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Federal Deposit Insurance Corporation (FDIC) proposes to
rescind and remove from the Code of Federal Regulations the part
entitled Fiduciary Powers of State Savings Associations and to amend
current FDIC regulations regarding consent to exercise trust powers to
reflect the applicability of these parts to both State savings
associations and State nonmember banks.
DATES: Comments must be received on or before June 11, 2018.
ADDRESSES: You may submit comments, identified by RIN 3064-AE23, by any
of the following methods:
Agency Website: https://www.fdic.gov/regulations/laws/federal/propose.html. Follow instructions for submitting comments on
the Agency website.
Email: [email protected]. Include the RIN 3064-AE23 on the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, Room F-1054, 550 17th
Street NW, Washington, DC 20429.
Hand Delivery: 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 7:00 a.m. and 5:00 p.m.
Please Note: All comments received must include the agency name and
RIN 3064-AE23 for this rulemaking. All comments received will be posted
without change to https://www.fdic.gov/regulations/laws/federal/,
including any personal information provided. Paper copies of public
comments may be requested from the Public Information Center by
telephone at 877-275-3342 or 703-562-2200.
FOR FURTHER INFORMATION CONTACT: Michael W. Orange, Trust Examination
Specialist, Division of Risk Management and Supervision, ph. (678) 916-
2289 or [email protected]; or Annmarie H. Boyd, Counsel, Legal Division,
ph. (202) 898-3714 or [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Act
The Dodd-Frank Act provided for a substantial reorganization of the
regulation of State and Federal savings associations and their holding
companies.\1\ Beginning July 21, 2011, the transfer date established by
section 311 of the Dodd-Frank Act,\2\ the powers, duties, and functions
formerly performed by the Office of Thrift Supervision (OTS) were
divided among the FDIC, as to State savings associations, the Office of
the Comptroller of the Currency (OCC), as to Federal savings
associations, and the Board of Governors of the Federal Reserve System
(Federal Reserve Board), as to savings and loan holding companies.
Section 316(b) of the Dodd-Frank Act \3\ provides the manner of
treatment for all orders, resolutions, determinations, regulations, and
advisory materials that had been issued, made, prescribed, or allowed
to become effective by the OTS. The section provides that if such
materials were in effect on the day before the transfer date, they
continue to be in effect and are enforceable by or against the
appropriate successor agency until they are modified, terminated, set
aside, or superseded in accordance with applicable law by such
successor agency, by any court of competent jurisdiction, or by
operation of law.
---------------------------------------------------------------------------
\1\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203, 12 U.S.C. 5301 et seq. (2010).
\2\ 12 U.S.C. 5411.
\3\ 12 U.S.C. 5414(b).
---------------------------------------------------------------------------
Section 316(c) of the Dodd-Frank Act \4\ further directed the FDIC
and OCC to consult with one another and to publish a list of the
continued OTS regulations that would be enforced by the FDIC and the
OCC, respectively. On June 14, 2011, the FDIC's Board of Directors
approved a ``List of OTS Regulations to be enforced by the OCC and the
FDIC Pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act.'' This list was published by the FDIC and the OCC as a
Joint Notice in the Federal Register on July 6, 2011.\5\
---------------------------------------------------------------------------
\4\ 12 U.S.C. 5414(c).
\5\ 76 FR 39247 (July 6, 2011).
---------------------------------------------------------------------------
Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act \6\
granted the OCC rulemaking authority relating to both State and Federal
savings associations, nothing in the Dodd-Frank Act affected the FDIC's
existing authority to issue regulations under the FDI Act and other
laws as the ``appropriate Federal banking agency'' or under similar
statutory terminology. Section 312(c) of the Dodd-Frank Act amended the
definition of ``appropriate Federal banking agency'' contained in
section 3(q) of the FDI Act \7\ to add State savings associations to
the list of entities for which the FDIC is designated as the
``appropriate Federal banking agency.'' As a result, when the FDIC acts
as the designated ``appropriate Federal banking agency'' (or under
similar terminology) for State savings associations and State nonmember
banks, as it does here, the FDIC is authorized to issue, modify, and
rescind regulations involving such institutions, as well as insured
branches of foreign banks.
---------------------------------------------------------------------------
\6\ 12 U.S.C. 5412(b)(2)(B)(i)(II).
\7\ 12 U.S.C. 1813(q).
---------------------------------------------------------------------------
As noted, on June 14, 2011, pursuant to this authority, the FDIC's
Board of Directors reissued and redesignated certain transferring
regulations of the former OTS. These transferred OTS regulations were
published as new FDIC regulations in the Federal Register on August 5,
2011.\8\ When it republished the transferred OTS regulations as new
FDIC regulations, the FDIC specifically noted that it would evaluate
the transferred OTS regulations and might later incorporate the
transferred OTS regulations into other FDIC rules, amend them, or
rescind them, as appropriate.
---------------------------------------------------------------------------
\8\ 76 FR 47652 (August 5, 2011).
---------------------------------------------------------------------------
One of the regulations transferred to the FDIC governed the
fiduciary powers (also known as trust powers) of State
[[Page 15328]]
savings associations. The OTS regulation, formerly found at 12 CFR
550.10(b)(1), was transferred to the FDIC with only nominal changes and
is now found in the FDIC's rules at 12 CFR part 390 subpart J.
II. Part 390 Subpart J: Fiduciary Powers of State Savings Associations
12 CFR part 390 subpart J provides that a State savings association
must conduct its fiduciary (trust) operations in accordance with
applicable State law and must exercise its fiduciary powers in a safe
and sound manner. Subpart J was derived from former OTS rule 12 CFR
550.10(b)(1) regarding fiduciary operations of Federal savings
associations,\9\ which was added originally in order to recognize the
OTS's interest in ensuring that State savings associations conduct
their trust operations in a safe and sound manner and in accordance
with State law.\10\
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\9\ Generally, section 5(n) of HOLA authorizes the OCC
(previously, the OTS) to grant special permits to Federal savings
associations for the right to act as trustee, executor,
administrator, guardian, or in any other fiduciary capacity in which
State banks, trust companies, or other corporations which compete
with Federal savings associations are permitted to act under the
laws of the State in which the Federal savings association is
located. 12 U.S.C. 1464(n).
\10\ Office of Thrift Supervision, Final Rule, 62 FR 67696-01
(Dec. 30, 1997).
---------------------------------------------------------------------------
III. State Nonmember Banks and Trust Powers
Unlike the explicit requirement applicable to State savings
associations in subpart J, there is no express rule that requires State
nonmember banks to conduct fiduciary operations in accordance with
applicable State law and to exercise their fiduciary powers in a safe
and sound manner. However, the FDIC has long recognized that State
nonmember banks, like State savings associations, must comply with
State law when exercising trust or fiduciary powers.\11\ This reflects
a widely understood industry principle that the trust powers of State
chartered institutions are granted under State law and are primarily
administered by the State chartering authority.\12\
---------------------------------------------------------------------------
\11\ FDIC Trust Examination Manual, available at: https://www.fdic.gov/regulations/examinations/trustmanual/section_10/section_x.html#B1 (The trust powers of State nonmember banks are
granted under State law and that the administration of trust powers
primarily goes to the State as the State nonmember bank's chartering
authority.)
\12\ Id.
---------------------------------------------------------------------------
State nonmember banks approved for Federal deposit insurance after
December 1, 1950, are generally required to file an application for
consent to exercise trust powers.\13\ Therefore, if a State nonmember
bank seeks to change the nature of its current business to include
trust activities, section 333.2 requires the bank to obtain the FDIC's
prior written consent.\14\ Under section 333.101(b), however, prior
written consent is not required when a State nonmember bank seeks to
act as trustee or custodian of certain qualified retirement, education,
and health savings accounts, or other similar accounts in which the
bank's duties are essentially custodial or ministerial in nature and
the acceptance of such accounts without trust powers is not contrary to
applicable State law.\15\
---------------------------------------------------------------------------
\13\ Banks granted trust powers by statute or charter prior to
December 1, 1950, are considered grandfathered from the requirement
to obtain consent to exercise trust powers.
\14\ 12 CFR 333.2 requires the FDIC's prior written consent for
a change in the general character or type of business exercised by a
state nonmember bank.
\15\ These accounts include Individual Retirement Accounts
(IRAs), Self-Employed Retirement Plans, Roth IRAs, Coverdell
Education Savings Accounts, Health Savings Accounts, and other
accounts in which: (1) The bank's duties are essentially custodial
or ministerial in nature; (2) the bank is required to invest the
funds from such plans only in its own time or savings deposits or in
any other assets at the direction of the customer; and (3) the
bank's acceptance of such accounts without trust powers is not
contrary to applicable State law.
---------------------------------------------------------------------------
Section 303.242 of the FDIC rules contains application procedures
that a State nonmember bank must follow to obtain the FDIC's prior
written consent before engaging in trust activities. Prior to granting
such consent, the FDIC considers whether the bank will conduct trust
operations in a safe and sound manner, consistent with State law.
IV. The Proposal
After careful review, the FDIC has concluded that the retention of
part 390 subpart J is unnecessary and that rescission of subpart J in
its entirety would streamline the FDIC rules and regulations.
Consistent with its legal authority to issue and modify regulations
as the appropriate Federal banking agency under section 3(q) of the
Federal Deposit Insurance Act, the FDIC also proposes to amend and
revise certain provisions of parts 333 and 303 to clarify and state
explicitly that both State savings associations and State nonmember
banks are required to obtain the FDIC's prior written consent to
exercise trust powers. The FDIC, as the appropriate Federal banking
agency for State savings associations and State nonmember banks, is
responsible for ensuring that they engage in the safe and sound
exercise of their trust powers and in accordance with applicable state
law.\16\ State nonmember banks and State savings associations are
required to comply with State laws governing the administration of
trusts, such as State law implementation of the Uniform Trust Code,
Uniform Prudent Investor Act, and Uniform Probate Code, as well as
applicable Federal laws, such as the Employee Retirement Income
Security Act of 1974. Moreover, State savings associations and State
nonmember banks are subject to potential liability for breaches of
fiduciary duty as provided for under State law. Accordingly, the
proposed rule will further ensure the consistent exercise of the FDIC's
supervisory authority with regard to trust activities of both State
savings associations and State nonmember banks and provide for the safe
and sound exercise of trust powers in accordance with the applicable
law.\17\
---------------------------------------------------------------------------
\16\ 12 U.S.C. 1813(q).
\17\ 12 U.S.C. 1819(a) (Tenth); 12 U.S.C. 1818; 12 U.S.C. 1831p-
1.
---------------------------------------------------------------------------
The proposed revisions would add a new section 333.3 to clarify
that State savings associations and State nonmember banks must seek
prior written consent from the FDIC to exercise trust powers. For State
nonmember banks, Sec. 333.3 would make explicit the FDIC's existing
requirement that State nonmember banks must receive FDIC's consent
before exercising trust powers as a change in the general character of
business under 12 CFR 333.2. However, Sec. 333.3 would represent a
change for State savings associations, which are not currently required
to receive FDIC's consent before exercising trust powers granted by
their chartering authorities. Section 333.3 would explicitly state that
both State nonmember banks and State savings associations would be
required to follow the application procedures set forth in section
303.242. Section 333.101(b) also would be revised to permit State
savings associations to act as custodians of certain qualifying
accounts without obtaining prior written consent from the FDIC, in the
same manner as is permitted for State nonmember banks.
As noted above, the proposed rule would make section 303.242
applicable to State savings associations in addition to State nonmember
banks. Similar to State nonmember banks, under the proposed rule, State
savings associations would not be required to receive the FDIC's prior
written consent to exercise trust powers in the following
circumstances:
(1) Where the institution received authority to exercise trust
powers from its chartering authority prior to December 1, 1950; or
(2) Where the institution continues to conduct trust activities
pursuant to
[[Page 15329]]
authority granted by its chartering authority subsequent to a charter
conversion or withdrawal from membership in the Federal Reserve System.
In order to provide more information to State nonmember banks and
State savings associations, section 303.242 would also be amended to
provide a more complete description of the application's required
documentation.
V. Alternatives
The FDIC considered alternatives to the proposed rule but believes
that the proposed amendments represent the most appropriate option. As
discussed previously, the Dodd-Frank Act transferred certain powers,
duties, and functions formerly performed by the OTS to the FDIC. The
FDIC's Board of Directors reissued and redesignated certain transferred
regulations from the OTS, but noted that it would evaluate them and
might later incorporate them into other FDIC rules, amend them, or
rescind them, as appropriate. The FDIC has evaluated the existing
regulations regarding fiduciary trust operations of covered entities,
including sections 303, 333, and 390, subpart J. The FDIC considered
the status quo alternative of retaining the current, bifurcated
regulations but determined that it would be unnecessarily complex and
potentially confusing to maintain substantively similar regulations
regarding fiduciary trust powers of State non-member banks and State
savings associations in different locations within the Code of Federal
Regulations. Therefore, the FDIC proposes to amend the regulations and
make them consistent for both State savings associations and State
nonmember banks.
VI. Request for Comments
The FDIC invites comments on all aspects of this proposed
rulemaking. In particular, the FDIC requests comments on the following
questions:
1. Should part 390 subpart J pertaining to the fiduciary powers of
State savings associations be retained in whole or in part? Please
substantiate your response.
2. What positive or negative impacts, if any, can you foresee in
the FDIC's proposal to revise parts 333 and 303 of the Code of Federal
Regulations, including the impact on State savings associations not
currently exercising trust powers, who would need to obtain FDIC
consent if they choose to do so in the future?
VII. Regulatory Analysis and Procedure
A. The Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
(PRA) of 1995 (44 U.S.C. 3501-3521), the FDIC may not conduct or
sponsor, and the respondent is not required to respond to, an
information collection unless it displays a currently valid Office of
Management and Budget (OMB) control number.
This rule proposes to amend part 333 and 303 to clarify the
existing consent and application requirements for State nonmember banks
and to incorporate references to State savings associations into those
parts. The revision of parts 333 and 303 to include State savings
associations would add additional burden to the FDIC's current
information collection under OMB control number 3064-0025,\18\
Application for Consent to Exercise Trust Powers, as State savings
associations would be required to complete the designated application
and submit required documentation to comply with parts 333 and 303.
Currently, there are a total of 47 State savings associations. There is
only one State savings association currently exercising trust powers,
and there are 46 additional State savings associations that would
potentially need to seek the FDIC's consent pursuant to the proposed
revision to parts 333 and 303 if they choose to exercise trust
powers.\19\ The FDIC proposes to revise this information collection as
follows:
---------------------------------------------------------------------------
\18\ The information collection for Application for Consent to
Exercise Trust Powers, OMB No. 3064-0025, was renewed by OMB on
August 30, 2017 and now expires on August 31, 2020.
\19\ CALL Report Data, September 2017.
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Title: Application for Consent to Exercise Trust Powers.
OMB Number: 3064-0025.
Form Number: FDIC 6200/09.
Affected Public: Insured State nonmember banks and insured State
savings associations wishing to exercise trust powers.
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Estimated Estimated Total annual
Type of burden number of hours per Frequency of estimated
respondents response response burden (hours)
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Eligible depository Reporting....... 9 8 On Occasion.... 72
institutions.
Not-eligible depository Reporting....... 4 24 On Occasion.... 96
institutions.
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Totals................... ................ 13 .............. ............... 168
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In the chart above, eligible depository institutions are those that
satisfy the criteria for expedited processing in 12 CFR 303.2(r) and
not-eligible depository institutions are those that do not meet the
expedited processing criteria. The numbers of respondents are estimated
based on the number of filers annually, and the numbers of hours per
response are estimated based on the supporting information typically
requested of filers (which may include additional supporting financial
projections for applicants ineligible for expedited processing).
Because the proposed rule will affect State savings associations as
described above, and most filers are eligible for expedited processing,
the FDIC is proposing to increase the estimated number of respondents
in the eligible category from eight to nine.
Comments are invited on: (a) Whether the collection of information
is necessary for the proper performance of the FDIC's functions,
including whether the information has practical utility; (b) the
accuracy of the estimates of the brden of the information collection,
including the validity of the methodology and assumptions used and the
proposed change to require state savings associations to obtain consent
before exercising trust powers granted by their state chartering
authorities; (c) ways to enhance the quality, utility, and clarity of
the information to be collected; (d) ways to minimize the burden of the
information collection on respondents, including through the use of
automated collection techniques or other forms of information
technology; and (e) estimates of capital or start-up costs and costs of
operation, maintenance, and purchase of services
[[Page 15330]]
to provide information. All comments will become a matter of public
record.
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \20\ requires that, in
connection with a notice of proposed rulemaking, an agency prepare and
make available for public comment an initial regulatory flexibility
analysis that describes the impact of the proposed rule on small
entities (defined in regulations promulgated by the Small Business
Administration to include banking organizations with total assets of
less than or equal to $550 million). However, a regulatory flexibility
analysis is not required if the agency certifies that the rule will not
have a significant economic impact on a substantial number of small
entities and publishes its certification and a short explanatory
statement in the Federal Register together with the rule. As discussed
in Section I. of this proposal, the FDIC has authority to issue, modify
and rescind regulations as the appropriate Federal banking agency for
State savings associations and State nonmember banks. The FDIC also
considered alternatives as outlined in Section V of this proposal,
including maintaining the status quo or amending the regulations to be
consistent for both State savings associations and State non-member
banks.
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\20\ 5 U.S.C. 601 et seq.
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The FDIC supervises 3,674 institutions, of which 2,950 are ``small
entities'' according to the terms of RFA. There are 2,907 small state
non-member banks and 44 small state savings associations.\21\
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\21\ CALL Report Data, September 2017.
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The proposed rule amends section 333 to state that both State
savings associations and State nonmember banks that seek to exercise
trust powers need to obtain FDIC consent. The proposed rule is not
expected to have any effect on State nonmember banks. With respect to
State nonmember banks, the proposed rule includes no substantive
changes and only includes clarifying changes to explicitly state the
longstanding requirement that State nonmember banks receive FDIC's
consent before newly exercising trust powers granted by their
chartering authorities as a change in the character of business under
12 CFR 333.2. As discussed above, the proposed amendments to section
333 would represent a new requirement for State savings associations to
receive FDIC's consent before exercising trust powers granted by their
chartering authorities. The application to seek consent to exercise
trust powers would be a one-time process that is not anticipated to
create a significant economic impact for State savings associations.
The information requested in the application would require an applicant
State savings association to identify the type of trust power it wishes
to exercise and to provide documentation that includes proof of the
adoption of the FDIC's Statement of Principles of Trust Department
Management, identification of the applicable trust officer, trust
committee, and trust counsel, servicing arrangements, proof of the
requisite approvals by the appropriate State authority, a projection of
the proposed trust activity's three-year performance, and a statement
of its impact on the applicant.\22\ Based on the FDIC's supervisory
experience, most of the documentation required, such as requisite State
approval, servicing arrangements, and designation of personnel to serve
as appropriate trust counsel, trust officer, and trust committee
directors, is based on information and resources that an applicant
State savings association would already possess or have to establish in
order to exercise trust powers, regardless of whether it seeks the
FDIC's prior written consent. Submitting already existing information
is not expected to create significant, additional expenses for a State
savings association seeking the FDIC's prior written consent to
exercise trust powers. The FDIC also estimates that it will receive
relatively few applications, given the small overall number of State
savings associations (47), which would be affected only if they propose
to exercise trust powers.
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\22\ FDIC 6200/09 (10-05).
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For these reasons, the FDIC certifies that the Proposed Rule, if
adopted in final form, would not have a significant economic impact on
a substantial number of small entities, within the meaning of those
terms as used in the RFA. Accordingly, a regulatory flexibility
analysis is not required.
The FDIC invites any comments that will further inform the FDIC's
consideration of RFA.
C. Plain Language
Section 722 of the Gramm-Leach-Bliley Act \23\ requires each
Federal banking agency to use plain language in all of its proposed and
final rules published after January 1, 2000. As a Federal banking
agency subject to the provisions of this section, the FDIC has sought
to present the proposed rule to rescind part 390 subpart J and revise
parts 333 and 303 of the FDIC rules in a simple and straightforward
manner. The FDIC invites comments on whether the proposal is clearly
stated and effectively organized, and how the FDIC might make the
proposal easier to understand.
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\23\ 12 U.S.C. 4809.
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Has the FDIC organized the material to inform your needs?
If not, how could the FDIC present the rule more clearly?
Are the requirements in the rule clearly stated? If not,
how could the rule be more clearly stated?
Do the regulations contain technical language or jargon
that is not clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand? If so, what changes would achieve that?
Is this section format adequate? If not, which of the
sections should be changed and how?
What other changes can the FDIC incorporate to make the
regulation easier to understand?
D. Riegle Community Development and Regulatory Improvement Act of 1994
The Riegle Community Development and Regulatory Improvement Act of
1994 (RCDRIA) requires that each Federal banking agency, in determining
the effective date and administrative compliance requirements for new
regulations that impose additional reporting, disclosure, or other
requirements on insured depository institutions, consider, consistent
with principles of safety and soundness and the public interest, any
administrative burdens that such regulations would place on depository
institutions, including small depository institutions, and customers of
depository institutions, as well as the benefits of such regulations.
In addition, new regulations and amendments to regulations that impose
additional reporting, disclosure, or other new requirements on insured
depository institutions generally must 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.\24\
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\24\ 12 U.S.C. 4802.
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The FDIC notes that comment on these matters have been solicited in
other sections of this Supplementary Information section, and that the
requirements of RCDRIA will be considered as part of the overall
rulemaking process. In addition, the FDIC also invites any other
comments
[[Page 15331]]
that further will inform its consideration of RCDRIA.
E. The Economic Growth and Regulatory Paperwork Reduction Act
Under section 2222 of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (``EGRPRA''), the FDIC is required to review all
of its regulations, at least once every 10 years, in order to identify
any outdated or otherwise unnecessary regulations imposed on insured
institutions.\25\ The FDIC, along with the other federal banking
agencies, submitted a Joint Report to Congress on March 21, 2017
(``EGRPRA Report'') discussing how the review was conducted, what has
been done to date to address regulatory burden, and further measures we
will take to address issues that were identified. As noted in the
EGRPRA Report, the FDIC is continuing to streamline and clarify its
regulations through the OTS rule integration process. By removing
outdated or unnecessary regulations, such as subpart J, and amending
parts 333 and 303, this rule complements other actions the FDIC has
taken, separately and with the other federal banking agencies, to
further the EGRPRA mandate.
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\25\ Public Law 104-208, 110 Stat. 3009 (1996).
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List of Subjects
12 CFR Part 303
Administrative practice and procedure; Bank deposit insurance;
Banks, banking; Reporting and recordkeeping requirements; Savings
associations.
12 CFR Part 333
Banks, banking.
12 CFR Part 390
Administrative practice and procedure; Advertising; Aged; Civil
rights; Conflict of interests; Credit; Crime; Equal employment
opportunity; Fair housing; Government employees; Individuals with
disabilities; Reporting and recordkeeping requirements; Savings
associations.
Authority and Issuance
For the reasons stated in the preamble, the Board of Directors of
the Federal Deposit Insurance Corporation proposes to amend 12 CFR
parts 308, 333, and 390 as follows:
PART 303--FILING PROCEDURES
0
1. The authority citation for part 303 is revised to read as follows:
Authority: 12 U.S.C. 378, 1464, 1601-1607, 1813, 1815, 1817,
1818, 1819(a) (Seventh and Tenth), 1820, 1823, 1828, 1831a, 1831e,
1831o, 1831p-1, 1831w, 1835a, 1843(l), 3104, 3105, 3108, 3207, 5414,
5415, and 15 U.S.C. 1601-1607.
Subpart M--Other Filings
0
2. Revise Sec. 303.242 to read as follows:
Sec. 303.242 Exercise of trust powers.
(a) Scope. This section contains the procedures to be followed by a
state nonmember bank or state savings association that seeks to obtain
the FDIC's prior written consent to exercise trust powers. The FDIC's
prior written consent to exercise trust powers is not required in the
following circumstances:
(1) Where a state nonmember bank or state savings association
received authority to exercise trust powers from its chartering
authority prior to December 1, 1950; or
(2) Where the institution continues to conduct trust activities
pursuant to authority granted by its chartering authority subsequent to
a charter conversion or withdrawal from membership in the Federal
Reserve System.
(b) Where to file. Applicants shall submit to the appropriate FDIC
office a completed form, ``Application for Consent to Exercise Trust
Powers.'' This form may be obtained from any FDIC regional director.
(c) Content of filing. The filing shall consist of the completed
trust application form indicating whether the respective state
nonmember bank or state savings association will exercise full or
limited trust powers and all required documentation as provided in the
application instructions, including:
(1) A certified copy of the resolution of the applicant's board of
directors certifying the extent of the institution's compliance with
applicable FDIC guidance;
(2) Information regarding the trust powers granted by the state
authority;
(3) Information on the individual designated as the primary Trust
Officer;
(4) Servicing arrangements, if any;
(5) A list of proposed members of the Trust Committee;
(6) Information on the individual or law firm designated to serve
as trust counsel;
(7) Projection of trust accounts, assets, and profitability for the
first three calendar years after the trust department begins operations
and analysis of any adverse impact of potential net operating losses of
the applicant institution arising from the offering of trust services.
(d) Additional information. The FDIC may request additional
information at any time during processing of the filing.
(e) Expedited processing for eligible depository institutions. An
application filed under this section by an eligible depository
institution as defined in Sec. 303.2(r) will be acknowledged in
writing by the FDIC and will receive expedited processing, unless the
applicant is notified in writing to the contrary and provided with the
basis for that decision. The FDIC may remove an application from
expedited processing for any of the reasons set forth in Sec.
303.11(c)(2). Absent such removal, an application processed under
expedited procedures will be deemed approved 30 days after the FDIC's
receipt of a substantially complete application.
(f) Standard processing. For those applications that are not
processed pursuant to the expedited procedures, the FDIC will provide
the applicant with written notification of the final action when the
decision is rendered.
PART 333--EXTENSION OF CORPORATE POWERS
0
3. The authority citation for part 333 is revised to read as follows:
Authority: 12 U.S.C. 1816, 1817(i), 1818, 1819(a) (Seventh,
Eighth, and Tenth), 1828, 1828(m), 1831p-1(c), 5414, and 5415.
0
4. Add Sec. 333.3 to read as follows:
Sec. 333.3 Consent Required for Exercise of Trust Powers.
Except as provided in Sec. 303.242(a), a State nonmember bank or
State savings association seeking to exercise trust powers must obtain
prior written consent from the FDIC. Procedures for obtaining the
FDIC's prior written consent are set forth in Sec. 303.242 of this
part.
0
5. Revise Sec. 333.101 paragraph (b) to read as follows:
Sec. 333.101 Prior consent not required.
* * * * *
(b) An insured State nonmember bank or State savings association,
not exercising trust powers, may act as trustee or custodian of
Individual Retirement Accounts established pursuant to the Employee
Retirement Income Security Act of 1974 (26 U.S.C. 408), Self-Employed
Retirement Plans established pursuant to the Self-Employed Individuals
Retirement Act of 1962 (26 U.S.C. 401), Roth Individual Retirement
Accounts and Coverdell Education Savings Accounts established pursuant
to the Taxpayer Relief Act of 1997 (26 U.S.C. 408A and 530
respectively), Health Savings Accounts established pursuant to the
Medicare
[[Page 15332]]
Prescription Drug Improvement and Modernization Act of 2003 (26 U.S.C.
223), and other similar accounts without the prior written consent of
the Corporation provided:
(1) The bank's or savings association's duties as trustee or
custodian are essentially custodial or ministerial in nature,
(2) The bank or savings association is required to invest the funds
from such plans only
(i) In its own time or savings deposits, or
(ii) In any other assets at the direction of the customer, provided
the bank or savings association does not exercise any investment
discretion or provide any investment advice with respect to such
account assets, and
(3) The bank's or savings association's acceptance of such accounts
without trust powers is not contrary to applicable State law.
PART 390--REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT
SUPERVISION
0
6. The authority citation for part 390 is revised to read as follows:
Authority: 12 U.S.C. 1819.
Subpart J--[Removed and Reserved]
0
7. Remove and reserve subpart J.
Dated at Washington, DC, on March 20, 2018.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Valerie Best,
Assistant Executive Secretary.
[FR Doc. 2018-07227 Filed 4-9-18; 8:45 am]
BILLING CODE 6714-01-P
