Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks, 43961-43965 [2018-18685]

Download as PDF 43961 Rules and Regulations Federal Register Vol. 83, No. 168 Wednesday, August 29, 2018 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 4 [Docket ID OCC–2018–0014] RIN 1557–AE37 FEDERAL RESERVE SYSTEM 12 CFR Parts 208 and 211 [Docket No. R–1615] RIN 7100–AF09 FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Parts 337 and 347 RIN 3064–AE76 Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks Office of the Comptroller of the Currency (OCC), Treasury; Board of Governors of the Federal Reserve System (Board); and Federal Deposit Insurance Corporation (FDIC). ACTION: Joint interim final rules and request for comments. AGENCY: The OCC, Board, and FDIC (collectively, the agencies) are jointly issuing and requesting public comment on interim final rules to implement section 210 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act), which was enacted on May 24, 2018. Section 210 of the Economic Growth Act amends section 10(d) of the Federal Deposit Insurance Act (FDI Act) to permit the agencies to examine qualifying insured depository institutions (IDIs) with under $3 billion in total assets not less than once during each 18-month period. Prior to enactment of the Economic Growth Act, sradovich on DSK3GMQ082PROD with RULES SUMMARY: VerDate Sep<11>2014 16:05 Aug 28, 2018 Jkt 244001 qualifying IDIs with under $1 billion in total assets were eligible for an 18month on-site examination cycle. The interim final rules generally would allow qualifying IDIs with under $3 billion in total assets to benefit from the extended 18-month examination schedule. In addition, the interim final rules make parallel changes to the agencies’ regulations governing the onsite examination cycle for U.S. branches and agencies of foreign banks, consistent with the International Banking Act of 1978 (IBA). DATES: These interim final rules are effective on August 29, 2018. Comments on the rules must be received by October 29, 2018. ADDRESSES: OCC: You may submit comments to the OCC by any of the methods set forth below. Commenters are encouraged to submit comments by the Federal eRulemaking Portal or email, if possible. Please use the title ‘‘Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks’’ to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods: • Federal eRulemaking Portal— ‘‘Regulations.gov’’: Go to https:// www.regulations.gov. Enter ‘‘Docket ID OCC–2018–0014’’ in the Search Box and click ‘‘Search.’’ Click on ‘‘Comment Now’’ to submit public comments. • Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments. • Email: regs.comments@ occ.treas.gov. • Mail: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Hand Delivery/Courier: 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Fax: (571) 465–4326. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘Docket ID OCC–2018–0014’’ in your comment. In general, the OCC will enter all comments received into the docket and publish the comments on the Regulations.gov website without change, including any business or PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 personal information that you provide, such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, 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 review comments and other related materials that pertain to this rulemaking action by any of the following methods: • Viewing Comments Electronically: Go to https://www.regulations.gov. Enter ‘‘Docket ID OCC–2018–0014’’ in the Search box and click ‘‘Search.’’ Click on ‘‘Open Docket Folder’’ on the right side of the screen. Comments and supporting materials can be viewed and filtered by clicking on ‘‘View all documents and comments in this docket’’ and then using the filtering tools on the left side of the screen. • Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov. The docket may be viewed after the close of the comment period in the same manner as during the comment period. • Viewing Comments Personally: You may personally inspect comments at the OCC, 400 7th Street SW, Washington, DC. For security reasons, the OCC requires visitors to make an appointment to inspect comments. You may do so by calling (202) 649–6700 or, for persons who are deaf or hearing impaired, TTY, (202) 649–5597. Upon arrival, visitors will be required to present a valid government-issued photo identification and to submit to security screening in order to inspect comments. Board: You may submit comments, identified by Docket No. R–1615 and RIN 7100–AF09, by any of the following methods: • Agency Website: https:// www.federalreserve.gov. Follow the instructions for submitting comments at https://www.federalreserve.gov/apps/ foia/proposedregs.aspx. • Email: regs.comments@ federalreserve.gov. Include docket number and RIN in the subject line of the message. • FAX: (202) 452–3819 or (202) 452– 3102. • Mail: Ann E. Misback, Secretary, Board of Governors of the Federal E:\FR\FM\29AUR1.SGM 29AUR1 sradovich on DSK3GMQ082PROD with RULES 43962 Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / Rules and Regulations Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 20551. All public comments are available from the Board’s website at https:// www.federalreserve.gov/generalinfo/ foia/ProposedRegs.cfm as submitted, unless modified for technical reasons or to remove sensitive personally identifiable information at the commenter’s request. Public comments may also be viewed electronically or in paper form in Room 3515, 1801 K Street NW, Washington, DC 20006 between 9:00 a.m. and 5:00 p.m. on weekdays. FDIC: You may submit comments, identified by RIN 3064–AE76, by any of the following methods: • Agency Website: https:// www.FDIC.gov/regulations/laws/ Federal/. Follow the instructions for submitting comments on the Agency website. • Email: comments@fdic.gov. Include the RIN 3064–AE76 in the subject line of the message. • Mail: Robert E. Feldman, Executive Secretary, Attention: Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. • Hand Delivery/Courier: Comments may be hand-delivered to the guard station at the rear of the 550 17th Street NW, Building (located on F Street) on business days between 7:00 a.m. and 5:00 p.m. Instructions: Comments submitted must include ‘‘FDIC’’ and ‘‘RIN 3064– AE76.’’ Comments received will be posted without change to https:// www.FDIC.gov/regulations/laws/ Federal/, including any personal information provided. FOR FURTHER INFORMATION CONTACT: OCC: Enice Thomas, Senior Advisor to Senior Deputy Comptroller, Midsize and Community Bank Supervision, (202) 649–5420; and Deborah Katz, Assistant Director, Melissa J. Lisenbee, Senior Attorney, or Christopher Rafferty, Attorney, Legislative and Regulatory Activities Division, (202) 649–5490; for persons who are deaf or hearing impaired, TTY, (202) 649–5597. Board: Division of Supervision and Regulation—Richard Naylor, Associate Director, (202) 728–5854; Jonathan Rono, Manager, (202) 721–4568; Assetou Traore, Supervisory Financial Analyst, (202) 974–7066; Virginia Gibbs, Manager, (202) 452–2521; or Alexander Kobulsky, Supervisory Financial Analyst, (202) 452–2031; and Legal Division—Laurie Schaffer, Associate General Counsel, (202) 452–2277; Mary Watkins, Attorney, (202) 452–3722; or Alyssa O’Connor, Attorney, (202) 452– 3886. VerDate Sep<11>2014 16:05 Aug 28, 2018 Jkt 244001 FDIC: Policy Branch Division of Risk Management and Supervision—Thomas F. Lyons, Chief, Policy and Program Development, (202) 898–6850, tlyons@ FDIC.gov; Karen J. Currie, Senior Examination Specialist, (202) 898–3981, Policy and Program Development, Division of Risk Management Supervision; Legal Division—Suzanne J. Dawley, Counsel, (202) 898–6509. SUPPLEMENTARY INFORMATION: I. Background Enacted on May 24, 2018, section 210 of the Economic Growth Act 1 amended section 10(d) of the FDI Act 2 to permit the agencies to examine qualifying IDIs (generally those IDIs that are well capitalized and well managed) with under $3 billion in total assets not less than once during each 18-month period, rather than not less than once during each 12-month period. Prior to the enactment of the Economic Growth Act, qualifying IDIs with under $1 billion in total assets were eligible for an 18month on-site examination cycle.3 More specifically, the agencies are issuing interim final rules to implement the Economic Growth Act’s amendments to sections 10(d)(4) and 10(d)(10) of the FDI Act 4 that allow qualifying IDIs with under $3 billion in total assets to benefit from the extended 18-month examination schedule. In addition, the interim final rules make parallel changes to the agencies’ regulations governing the on-site examination cycle for U.S. branches and agencies of foreign banks, consistent with the IBA.5 Section 10(d)(1) of the FDI Act 6 generally requires the appropriate Federal banking agency for an IDI 7 to conduct a full-scope, on-site examination of an IDI at least once during each 12-month period. With the enactment of section 210 of the Economic Growth Act, section 10(d)(4) of the FDI Act authorizes the appropriate Federal banking agency to extend the on-site examination cycle for 1 Public Law 115–174, 132 Stat. 1296 (2018). U.S.C. 1820(d). 3 See section 83001 of the Fixing America’s Surface Transportation Act (the FAST) Act, enacted on December 4, 2015. Public Law 114–94, 129 Stat. 1312 (permitting the agencies to examine qualifying IDIs with under $1 billion in total assets not less than once during each 18-month period). The agencies published interim final rules implementing the FAST Act amendments in February 2016, and final rules in December 2016. See 81 FR 10069 (Feb. 29, 2016) and 81 FR 90949 (Dec. 16. 2016), respectively, codified at 12 CFR 4.6 and 4.7 (OCC), 12 CFR 208.64 and 211.26 (Board), 12 CFR 337.12 and 347.211 (FDIC). 4 12 U.S.C. 1820(d)(4) and 1820(d)(10). 5 12 U.S.C. 3105(c)(1)(C). 6 12 U.S.C. 1820(d)(1). 7 The Board, FDIC, or OCC. See 12 U.S.C. 1813(q). 2 12 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 an IDI to at least once during an 18month period if the IDI (1) has total assets of less than $3 billion; (2) is well capitalized (as defined in 12 U.S.C.1831o (prompt corrective action)); (3) was found, at its most recent examination, to be well managed 8 and to have a composite condition of ‘‘outstanding’’ or, in the case of an IDI with total assets of not more than $200 million, ‘‘outstanding’’ or ‘‘good;’’ (4) is not subject to a formal enforcement proceeding or order by the FDIC or its appropriate Federal banking agency; and (5) has not undergone a change in control during the previous 12-month period in which a full-scope, on-site examination otherwise would have been required. Section 10(d)(10) of the FDI Act gives each appropriate Federal banking agency discretionary authority to extend eligibility for an 18-month examination cycle, by regulation, to qualifying IDIs with an ‘‘outstanding’’ or ‘‘good’’ composite condition and total assets not greater than $3 billion, if the agency determines that this amount would be consistent with the principles of safety and soundness for IDIs.9 In addition, section 7(c)(1)(C) of the IBA provides that a Federal or a State branch or agency of a foreign bank shall be subject to on-site examination by its appropriate Federal banking agency or State bank supervisor as frequently as a national or State bank would be subject to such an examination by the agency. II. Description of the Interim Final Rules The agencies are adopting interim final rules to implement the Economic Growth Act’s amendments to sections 10(d)(4) and 10(d)(10) of the FDI Act. The rules implement section 10(d)(4) of the FDI Act to increase, from $1 billion to $3 billion, the total asset threshold under which an agency may apply an 8 IDIs are evaluated under the Uniform Financial Institutions Rating System (commonly referred to as ‘‘CAMELS’’). CAMELS is an acronym that is drawn from the first letters of the individual components of the rating system: Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk. CAMELS ratings of ‘‘1’’ and ‘‘2’’ correspond with ratings of ‘‘outstanding’’ and ‘‘good.’’ In addition to having a CAMELS composite rating of ‘‘1’’ or ‘‘2,’’ an IDI is considered to be ‘‘well managed’’ for the purposes of section 10(d) of the FDI Act only if the IDI also received a rating of ‘‘1’’ or ‘‘2’’ for the management component of the CAMELS rating at its most recent examination. See 72 FR 17798 (Apr. 10, 2007). 9 The Board and the FDIC, as the appropriate Federal banking agencies for State-chartered insured banks and savings associations, are permitted to conduct on-site examinations of such IDIs on alternating 12-month or 18-month periods with an IDI’s State supervisor, if the Board or FDIC, as appropriate, determines that the alternating examination conducted by the State carries out the purposes of section 10(d) of the FDI Act. 12 U.S.C. 1820(d)(3). E:\FR\FM\29AUR1.SGM 29AUR1 sradovich on DSK3GMQ082PROD with RULES Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / Rules and Regulations 18-month on-site examination cycle for qualified IDIs that have an ‘‘outstanding’’ composite rating. The agencies also are exercising their discretionary authority under section 10(d)(10) of the FDI Act to extend eligibility for an 18-month examination cycle, by regulation, to qualifying IDIs with an ‘‘outstanding’’ or ‘‘good’’ composite rating with total assets under $3 billion. The agencies have determined that increasing the maximum asset amount limitation for qualifying IDIs with less than $3 billion in total assets is consistent with the principles of safety and soundness. In determining whether the reduction in examination frequency is consistent with the principles of safety and soundness for such IDIs, the agencies considered the following factors. The agencies agree that extending the examination cycle could make it more likely that there will be a delay in an agency’s ability to detect deterioration in an IDI’s performance. However, the agencies believe that extending the examination cycle from 12 months to 18 months for these small IDIs with relatively simple risk profiles should not appreciably increase their risk of financial deterioration or failure. In addition, the agencies will continue their off-site monitoring activities and have the ability to examine IDIs more frequently as necessary or appropriate. The agencies also note that, in order to qualify for an 18-month examination cycle, any IDI with total assets under $3 billion—including one with a composite rating of ‘‘good’’—must meet the other capital, managerial, and supervisory criteria set forth in section 10(d) of the FDI Act and the agencies’ implementing regulations. Considering the agencies’ off-site monitoring activities; their discretion to examine IDIs more frequently as necessary; and the capital, managerial, and supervisory criteria in section 10(d) of the FDI Act, the agencies believe that increasing the maximum asset amount limitation for IDIs from less than $1 billion to less than $3 billion is consistent with the principles of safety and soundness. Additionally, the agencies believe this increase will allow the agencies to better focus their supervisory resources on the IDIs and U.S. branches and agencies of foreign banks (collectively, financial institutions) that may present capital, managerial, or other issues of supervisory concern, and therefore has the ability to enhance safety and soundness collectively for all financial institutions. The agencies will continue to monitor financial institutions in this VerDate Sep<11>2014 16:05 Aug 28, 2018 Jkt 244001 asset range and the impact of the extended examination cycle. In accordance with section 7(c)(1)(C) of the IBA, the agencies also are making conforming changes to their regulations governing the on-site examination cycle for the U.S. branches and agencies of foreign banks. For the same reasons as discussed above, the agencies believe that extending similar treatment to qualifying U.S. branches and agencies of foreign banks is consistent with the principles of safety and soundness. The agencies estimate that the interim final rules will increase the number of banks and savings associations that may qualify for an extended 18-month examination cycle by approximately 420 (227 of which are supervised by the FDIC, 100 by the OCC, and 93 by the Board), bringing the total number to 4,798 banks and savings associations.10 Approximately 33 U.S. branches and agencies of foreign banks would be eligible for the extended examination cycle based on the interim final rules (2 of which are supervised by the FDIC, 9 by the OCC, and 22 by the Board).11 Effective Date/Request for Comment The agencies are issuing the interim final rules without prior notice and the opportunity for public comment and the 30-day delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA).12 Pursuant to section 553(b)(B) of the APA, general notice and the opportunity for public comment are not required with respect to a rulemaking when an ‘‘agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.’’ 13 The interim final rules implement the provisions in section 210 of the Economic Growth Act, which was enacted on May 24, 2018. In particular, the interim final rules adopt the statutory increase in the total asset threshold, from under $1 billion to under $3 billion, for qualifying IDIs with an ‘‘outstanding’’ composite rating, and also make available, pursuant to statutory authority, the 18-month examination cycle for qualifying IDIs with an ‘‘outstanding’’ or ‘‘good’’ composite rating and total assets under $3 billion. The interim final rules also make conforming amendments to the agencies’ regulations governing the onsite examination cycle for U.S. branches 10 Call and agencies of foreign banks, as required by statute. The agencies believe that the public interest is best served by implementing the statutorily amended thresholds as soon as possible. Immediate implementation will reduce regulatory burden on small, well capitalized, and well managed financial institutions while also allowing the agencies to better focus their supervisory resources on those financial institutions that may present capital, managerial, or other issues of supervisory concern. Because the affected financial institutions and agencies must plan and prepare for examinations in advance, the agencies believe issuing interim final rules will provide the certainty necessary to allow the financial institutions and agencies to begin scheduling for examinations according to the new examination cycle period. In addition, the agencies believe that providing a notice and comment period prior to issuance of the interim final rules is unnecessary because the agencies do not expect public objection to the regulations being promulgated as they merely provide the relief that Congress intended. Moreover, because the interim final rules will permit an agency to conduct an on-site examination of financial institutions more frequently than once every 18 months, the agencies retain the ability to maintain the current—or a more frequent—on-site examination schedule for a financial institution if the relevant agency determines it would be necessary or appropriate. For these reasons, the agencies find there is good cause consistent with the public interest to issue the rules without advance notice and comment.14 The APA also requires a 30-day delayed effective date, except for (1) substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause.15 The agencies conclude that, because the rules recognize an exemption, the interim final rules are exempt from the APA’s delayed effective date requirement.16 Additionally, the agencies find good cause to publish the interim final rules with an immediate effective date for the same reasons set forth above under the discussion of section 553(b)(B) of the APA. While the agencies believe there is good cause to issue the rules without advance notice and comment and with Report data, Mar. 31, 2018. 11 Id. 14 5 12 5 15 5 U.S.C. 553(b)(B); 553(d)(3). U.S.C. 553(d). 16 5 U.S.C. 553(d)(1). U.S.C. 553. 13 5 U.S.C. 553(b)(B). PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 43963 E:\FR\FM\29AUR1.SGM 29AUR1 43964 Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / Rules and Regulations an immediate effective date, the agencies are interested in the views of the public and request comment on all aspects of the interim final rules. III. Solicitation of Comments on Use of Plain Language Section 722 of the Gramm-LeachBliley Act 17 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The agencies invite your comments on how to make these interim final rules easier to understand. For example: • Have the agencies presented the material in an organized manner that meets your needs? If not, how could this material be better organized? • Are the requirements in the interim final rules clearly stated? If not, how could the interim final rules be more clearly stated? • Do the interim final rules contain 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 interim final rules easier to understand? If so, what changes to the format would make the interim final rules easier to understand? • What else could the agencies do to make the regulation easier to understand? IV. Regulatory Flexibility Act sradovich on DSK3GMQ082PROD with RULES The Regulatory Flexibility Act (RFA) 18 requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities.19 The RFA applies only to rules for which an agency publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed previously, consistent with section 553(b)(B) of the APA, the agencies have determined for good cause that general notice and opportunity for public comment is unnecessary, and therefore the agencies are not issuing a notice of proposed rulemaking. Accordingly, the agencies have concluded that the RFA’s requirements relating to initial and final regulatory flexibility analysis do not apply. Further, the agencies note that no small entities, as defined by the Small Business Administration’s rules 17 Public Law 106–102, section 722, 113 Stat. 1338, 1471 (1999). 18 5 U.S.C. 601 et seq. 19 Under regulations issued by the Small Business Administration, a small entity includes a depository institution, bank holding company, or savings and loan holding company with total assets of $550 million or less and trust companies with total assets of $38.5 million or less. VerDate Sep<11>2014 16:05 Aug 28, 2018 Jkt 244001 implementing the RFA, will be affected by the interim final rule’s increased asset thresholds. V. Paperwork Reduction Act The Paperwork Reduction Act of 1995 20 states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. Because the interim final rules do not create a new, or revise an existing, collection of information, no information collection request submission needs to be made to the OMB. VI. Riegle Community Development and Regulatory Improvement Act Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),21 in determining the effective date and administrative compliance requirements for a new regulation that imposes additional reporting, disclosure, or other requirements on IDIs, each Federal banking agency must consider any administrative burdens that such regulation would place on IDIs and the benefits of such regulation. In addition, section 302(b) of the RCDRIA requires such new regulation to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form, with certain exceptions, including for good cause. Because the interim final rules expand eligibility for an 18-month, rather than 12-month, onsite examination schedule and are burden-reducing in nature, the interim final rules do not impose additional reporting, disclosure, or other requirements on IDIs, and section 302 of the RCDRIA therefore does not apply. Nevertheless, the agencies have considered the administrative burdens that such regulations would place on depository institutions and the benefits of such regulations in determining the effective date and compliance requirements. In addition, for the same reasons set forth previously under the discussion of section 553(b)(B) of the APA, the agencies find good cause would exist under section 302 of RCDRIA to publish these interim final rules with an immediate effective date. VII. OCC Unfunded Mandates Reform Act of 1995 Determination Consistent with section 202 of the Unfunded Mandates Reform Act of 1995 20 44 21 12 PO 00000 Fmt 4700 List of Subjects 12 CFR Part 4 Administrative practice and procedure, Freedom of information, Individuals with disabilities, Minority businesses, Organization and functions (Government agencies), Reporting and recordkeeping requirements, Women. 12 CFR Part 208 Accounting, Agriculture, Banks, banking, Confidential business information, Crime, Currency, Federal Reserve System, Flood insurance, Mortgages, Reporting and recordkeeping requirements, Safety and soundness, Securities. 12 CFR Part 211 Exports, Federal Reserve System, Foreign banking, Holding companies, Investments, Reporting and recordkeeping requirements. 12 CFR Part 337 Banks, banking, Reporting and recordkeeping requirements, Savings Associations. 12 CFR Part 347 Authority delegations (Government agencies), Bank deposit insurance, Banks, banking, Credit, Foreign banking, Investments, Reporting and recordkeeping requirements, U.S. investments abroad. Office of the Comptroller of the Currency 12 CFR Chapter I For the reasons set forth in the joint preamble, the OCC amends part 4 of chapter I of title 12 of the Code of Federal Regulations as follows: PART 4—ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT RESTRICTIONS FOR SENIOR EXAMINERS 1. The authority citation for part 4 continues to read as follows: ■ Authority: 5 U.S.C. 301, 552; 12 U.S.C. 1, 93a, 161, 481, 482, 484(a), 1442, 1462a, 1463, U.S.C. 3501–3521. U.S.C. 4802(a). Frm 00004 (UMRA), before promulgating any final rule for which a general notice of proposed rulemaking was published, the OCC prepares an economic analysis of the final rule. As discussed previously, the OCC has determined that the publication of a general notice of proposed rulemaking is unnecessary. Accordingly, the OCC has not prepared an economic analysis of the joint interim final rules under UMRA. Sfmt 4700 E:\FR\FM\29AUR1.SGM 29AUR1 Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / Rules and Regulations 1464 1817(a), 1818, 1820, 1821, 1831m, 1831p–1, 1831o, 1833e, 1867, 1951 et seq., 2601 et seq., 2801 et seq., 2901 et seq., 3101 et seq., 3401 et seq., 5321, 5412, 5414; 15 U.S.C. 77uu(b), 78q(c)(3); 18 U.S.C. 641, 1905, 1906; 29 U.S.C. 1204; 31 U.S.C. 5318(g)(2), 9701; 42 U.S.C. 3601; 44 U.S.C. 3506, 3510; E.O. 12600 (3 CFR, 1987 Comp., p. 235). 2. Section 4.6 is amended by revising paragraph (b)(1) to read as follows: ■ § 4.6 Frequency of examination of national banks and Federal savings associations. * * * * * (b) * * * (1) The bank or Federal savings association has total assets of less than $3 billion; * * * * * 3. Section 4.7 is amended by revising paragraph (b)(1)(i) to read as follows: ■ PART 211—INTERNATIONAL BANKING OPERATIONS (REGULATION K) (i) Has total assets of less than $3 billion; * * * * * 6. The authority citation for part 211 continues to read as follows: Dated: August 20, 2018. Joseph M. Otting, Comptroller of the Currency. ■ Authority: 12 U.S.C. 221 et seq., 1818, 1835a, 1841 et seq., 3101 et seq., 3901 et seq., and 5101 et seq.; 15 U.S.C. 1681s, 1681w, 6801 and 6805. 7. Amend § 211.26 by revising paragraph (c)(2)(i)(A) to read as follows: ■ § 211.26 Examinations of offices and affiliates of foreign banks. * * * * * (c) * * * (2) * * * (i) * * * (A) Has total assets of less than $3 billion; * * * * * Federal Deposit Insurance Corporation § 4.7 Frequency of examination of Federal agencies and branches. * * * * (b) * * * (1) * * * (i) Has total assets of less than $3 billion; * * * * * PART 337—UNSAFE AND UNSOUND BANK PRACTICES Federal Reserve System 8. The authority citation for part 337 continues to read as follows: ■ 12 CFR Chapter II For the reasons set forth in the joint preamble, the Board amends parts 208 and 211 of chapter II of title 12 of the Code of Federal Regulations as follows: Authority: 12 U.S.C. 375a(4), 375b, 1463(a)(1), 1816, 1818(a), 1818(b), 1819, 1820(d), 1828(j)(2), 1831, 1831f, 5412. PART 208—MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL RESERVE SYSTEM (REGULATION H) § 337.12 4. The authority citation for part 208 continues to read as follows: ■ Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321–338a, 371d, 461, 481–486, 601, 611, 1814, 1816, 1818, 1820(d)(9), 1833(j), 1828(o), 1831, 1831o, 1831p–1, 1831r–1, 1831w, 1831x, 1835a, 1882, 2901– 2907, 3105, 3310, 3331–3351, 3353, and 3906–3909; 15 U.S.C. 78b, 781(b), 78l(i), 780– 4(c)(5), 78q, 78q–1, 78w, 1681s, 1681w, 6801 and 6805, 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104b, 4106, and 4128. 5. Amend § 208.64 by revising paragraph (b)(1) to read as follows: ■ sradovich on DSK3GMQ082PROD with RULES 12 CFR Chapter III For the reasons set forth in the joint preamble, the Board of Directors of the FDIC amends parts 337 and 347 of chapter III of title 12 of the Code of Federal Regulations as follows: * § 208.64 Frequency of examination. * * * * * (b) * * * (1) The bank has total assets of less than $3 billion; * * * * * VerDate Sep<11>2014 16:05 Aug 28, 2018 Jkt 244001 43965 9. Amend § 337.12 by revising paragraph (b)(1) to read as follows: ■ Frequency of examination. * * * * * (b) * * * (1) The institution has total assets of less than $3 billion; * * * * * PART 347—INTERNATIONAL BANKING 10. The authority citation for part 347 continues to read as follows: ■ Authority: 12 U.S.C. 1813, 1815, 1817, 1819, 1820, 1828, 3103, 3104, 3105, 3108, 3109; Pub. L. 111–203, section 939A, 124 Stat. 1376, 1887 (July 21, 2010) (codified 15 U.S.C. 78o–7 note). 11. Amend § 347.211 by revising paragraph (b)(1)(i) to read as follows: ■ § 347.211 Examination of branches of foreign banks. * * * (b) * * * (1) * * * PO 00000 Frm 00005 * Fmt 4700 * Sfmt 4700 Board of Governors of the Federal Reserve System, August 22, 2018. Ann E. Misback, Secretary to the Board. Dated at Washington, DC, on August 22, 2018. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. 2018–18685 Filed 8–28–18; 8:45 am] BILLING CODE 4810–33–P FEDERAL HOUSING FINANCE AGENCY 12 CFR Parts 1209, 1217, and 1250 RIN 2590–AA93 Rules of Practice and Procedure; Civil Money Penalty Inflation Adjustment Federal Housing Finance Agency. ACTION: Final rule. AGENCY: The Federal Housing Finance Agency (FHFA) is issuing this final rule amending its Rules of Practice and Procedure and other agency regulations to adjust each civil money penalty within its jurisdiction to account for inflation, pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. DATES: Effective date: September 28, 2018. SUMMARY: FOR FURTHER INFORMATION CONTACT: Stephen E. Hart, Deputy General Counsel, at (202) 649–3053, Stephen.Hart@fhfa.gov, or Frank R. Wright, Assistant General Counsel, at (202) 649–3087, Frank.Wright@fhfa.gov (not toll-free numbers); Federal Housing Finance Agency, 400 7th Street SW, Washington, DC 20219. The telephone number for the Telecommunications Device for the Hearing Impaired is: (800) 877–8339 (TDD only). SUPPLEMENTARY INFORMATION: I. Background FHFA is an independent agency of the Federal government, and the financial safety and soundness regulator of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie E:\FR\FM\29AUR1.SGM 29AUR1

Agencies

[Federal Register Volume 83, Number 168 (Wednesday, August 29, 2018)]
[Rules and Regulations]
[Pages 43961-43965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18685]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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


Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / 
Rules and Regulations

[[Page 43961]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 4

[Docket ID OCC-2018-0014]
RIN 1557-AE37

FEDERAL RESERVE SYSTEM

12 CFR Parts 208 and 211

[Docket No. R-1615]
RIN 7100-AF09

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 337 and 347

RIN 3064-AE76


Expanded Examination Cycle for Certain Small Insured Depository 
Institutions and U.S. Branches and Agencies of Foreign Banks

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury; 
Board of Governors of the Federal Reserve System (Board); and Federal 
Deposit Insurance Corporation (FDIC).

ACTION: Joint interim final rules and request for comments.

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

SUMMARY: The OCC, Board, and FDIC (collectively, the agencies) are 
jointly issuing and requesting public comment on interim final rules to 
implement section 210 of the Economic Growth, Regulatory Relief, and 
Consumer Protection Act (Economic Growth Act), which was enacted on May 
24, 2018. Section 210 of the Economic Growth Act amends section 10(d) 
of the Federal Deposit Insurance Act (FDI Act) to permit the agencies 
to examine qualifying insured depository institutions (IDIs) with under 
$3 billion in total assets not less than once during each 18-month 
period. Prior to enactment of the Economic Growth Act, qualifying IDIs 
with under $1 billion in total assets were eligible for an 18-month on-
site examination cycle. The interim final rules generally would allow 
qualifying IDIs with under $3 billion in total assets to benefit from 
the extended 18-month examination schedule. In addition, the interim 
final rules make parallel changes to the agencies' regulations 
governing the on-site examination cycle for U.S. branches and agencies 
of foreign banks, consistent with the International Banking Act of 1978 
(IBA).

DATES: These interim final rules are effective on August 29, 2018. 
Comments on the rules must be received by October 29, 2018.

ADDRESSES: 
    OCC: You may submit comments to the OCC by any of the methods set 
forth below. Commenters are encouraged to submit comments by the 
Federal eRulemaking Portal or email, if possible. Please use the title 
``Expanded Examination Cycle for Certain Small Insured Depository 
Institutions and U.S. Branches and Agencies of Foreign Banks'' to 
facilitate the organization and distribution of the comments. You may 
submit comments by any of the following methods:
     Federal eRulemaking Portal--``Regulations.gov'': Go to 
https://www.regulations.gov. Enter ``Docket ID OCC-2018-0014'' in the 
Search Box and click ``Search.'' Click on ``Comment Now'' to submit 
public comments.
     Click on the ``Help'' tab on the Regulations.gov home page 
to get information on using Regulations.gov, including instructions for 
submitting public comments.
     Email: [email protected].
     Mail: Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-
218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
     Fax: (571) 465-4326.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2018-0014'' in your comment. In general, the OCC will 
enter all comments received into the docket and publish the comments on 
the Regulations.gov website without change, including any business or 
personal information that you provide, such as name and address 
information, email addresses, or phone numbers. Comments received, 
including attachments and other supporting materials, 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 review comments and other related materials that pertain to 
this rulemaking action by any of the following methods:
     Viewing Comments Electronically: Go to https://www.regulations.gov. Enter ``Docket ID OCC-2018-0014'' in the Search 
box and click ``Search.'' Click on ``Open Docket Folder'' on the right 
side of the screen. Comments and supporting materials can be viewed and 
filtered by clicking on ``View all documents and comments in this 
docket'' and then using the filtering tools on the left side of the 
screen.
     Click on the ``Help'' tab on the Regulations.gov home page 
to get information on using Regulations.gov. The docket may be viewed 
after the close of the comment period in the same manner as during the 
comment period.
     Viewing Comments Personally: You may personally inspect 
comments at the OCC, 400 7th Street SW, Washington, DC. For security 
reasons, the OCC requires visitors to make an appointment to inspect 
comments. You may do so by calling (202) 649-6700 or, for persons who 
are deaf or hearing impaired, TTY, (202) 649-5597. Upon arrival, 
visitors will be required to present a valid government-issued photo 
identification and to submit to security screening in order to inspect 
comments.
    Board: You may submit comments, identified by Docket No. R-1615 and 
RIN 7100-AF09, by any of the following methods:
     Agency Website: https://www.federalreserve.gov. Follow the 
instructions for submitting comments at https://www.federalreserve.gov/apps/foia/proposedregs.aspx.
     Email: [email protected]. Include docket 
number and RIN in the subject line of the message.
     FAX: (202) 452-3819 or (202) 452-3102.
     Mail: Ann E. Misback, Secretary, Board of Governors of the 
Federal

[[Page 43962]]

Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 
20551.

All public comments are available from the Board's website at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, 
unless modified for technical reasons or to remove sensitive personally 
identifiable information at the commenter's request. Public comments 
may also be viewed electronically or in paper form in Room 3515, 1801 K 
Street NW, Washington, DC 20006 between 9:00 a.m. and 5:00 p.m. on 
weekdays.
    FDIC: You may submit comments, identified by RIN 3064-AE76, by any 
of the following methods:
     Agency Website: https://www.FDIC.gov/regulations/laws/Federal/. Follow the instructions for submitting comments on the Agency 
website.
     Email: [email protected]. Include the RIN 3064-AE76 in the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th 
Street NW, Washington, DC 20429.
     Hand Delivery/Courier: Comments may be hand-delivered to 
the guard station at the rear of the 550 17th Street NW, Building 
(located on F Street) on business days between 7:00 a.m. and 5:00 p.m.
    Instructions: Comments submitted must include ``FDIC'' and ``RIN 
3064-AE76.'' Comments received will be posted without change to https://www.FDIC.gov/regulations/laws/Federal/, including any personal 
information provided.

FOR FURTHER INFORMATION CONTACT: 
    OCC: Enice Thomas, Senior Advisor to Senior Deputy Comptroller, 
Midsize and Community Bank Supervision, (202) 649-5420; and Deborah 
Katz, Assistant Director, Melissa J. Lisenbee, Senior Attorney, or 
Christopher Rafferty, Attorney, Legislative and Regulatory Activities 
Division, (202) 649-5490; for persons who are deaf or hearing impaired, 
TTY, (202) 649-5597.
    Board: Division of Supervision and Regulation--Richard Naylor, 
Associate Director, (202) 728-5854; Jonathan Rono, Manager, (202) 721-
4568; Assetou Traore, Supervisory Financial Analyst, (202) 974-7066; 
Virginia Gibbs, Manager, (202) 452-2521; or Alexander Kobulsky, 
Supervisory Financial Analyst, (202) 452-2031; and Legal Division--
Laurie Schaffer, Associate General Counsel, (202) 452-2277; Mary 
Watkins, Attorney, (202) 452-3722; or Alyssa O'Connor, Attorney, (202) 
452-3886.
    FDIC: Policy Branch Division of Risk Management and Supervision--
Thomas F. Lyons, Chief, Policy and Program Development, (202) 898-6850, 
[email protected]; Karen J. Currie, Senior Examination Specialist, (202) 
898-3981, Policy and Program Development, Division of Risk Management 
Supervision; Legal Division--Suzanne J. Dawley, Counsel, (202) 898-
6509.

SUPPLEMENTARY INFORMATION: 

I. Background

    Enacted on May 24, 2018, section 210 of the Economic Growth Act \1\ 
amended section 10(d) of the FDI Act \2\ to permit the agencies to 
examine qualifying IDIs (generally those IDIs that are well capitalized 
and well managed) with under $3 billion in total assets not less than 
once during each 18-month period, rather than not less than once during 
each 12-month period. Prior to the enactment of the Economic Growth 
Act, qualifying IDIs with under $1 billion in total assets were 
eligible for an 18-month on-site examination cycle.\3\
---------------------------------------------------------------------------

    \1\ Public Law 115-174, 132 Stat. 1296 (2018).
    \2\ 12 U.S.C. 1820(d).
    \3\ See section 83001 of the Fixing America's Surface 
Transportation Act (the FAST) Act, enacted on December 4, 2015. 
Public Law 114-94, 129 Stat. 1312 (permitting the agencies to 
examine qualifying IDIs with under $1 billion in total assets not 
less than once during each 18-month period). The agencies published 
interim final rules implementing the FAST Act amendments in February 
2016, and final rules in December 2016. See 81 FR 10069 (Feb. 29, 
2016) and 81 FR 90949 (Dec. 16. 2016), respectively, codified at 12 
CFR 4.6 and 4.7 (OCC), 12 CFR 208.64 and 211.26 (Board), 12 CFR 
337.12 and 347.211 (FDIC).
---------------------------------------------------------------------------

    More specifically, the agencies are issuing interim final rules to 
implement the Economic Growth Act's amendments to sections 10(d)(4) and 
10(d)(10) of the FDI Act \4\ that allow qualifying IDIs with under $3 
billion in total assets to benefit from the extended 18-month 
examination schedule. In addition, the interim final rules make 
parallel changes to the agencies' regulations governing the on-site 
examination cycle for U.S. branches and agencies of foreign banks, 
consistent with the IBA.\5\
---------------------------------------------------------------------------

    \4\ 12 U.S.C. 1820(d)(4) and 1820(d)(10).
    \5\ 12 U.S.C. 3105(c)(1)(C).
---------------------------------------------------------------------------

    Section 10(d)(1) of the FDI Act \6\ generally requires the 
appropriate Federal banking agency for an IDI \7\ to conduct a full-
scope, on-site examination of an IDI at least once during each 12-month 
period. With the enactment of section 210 of the Economic Growth Act, 
section 10(d)(4) of the FDI Act authorizes the appropriate Federal 
banking agency to extend the on-site examination cycle for an IDI to at 
least once during an 18-month period if the IDI (1) has total assets of 
less than $3 billion; (2) is well capitalized (as defined in 12 
U.S.C.1831o (prompt corrective action)); (3) was found, at its most 
recent examination, to be well managed \8\ and to have a composite 
condition of ``outstanding'' or, in the case of an IDI with total 
assets of not more than $200 million, ``outstanding'' or ``good;'' (4) 
is not subject to a formal enforcement proceeding or order by the FDIC 
or its appropriate Federal banking agency; and (5) has not undergone a 
change in control during the previous 12-month period in which a full-
scope, on-site examination otherwise would have been required. Section 
10(d)(10) of the FDI Act gives each appropriate Federal banking agency 
discretionary authority to extend eligibility for an 18-month 
examination cycle, by regulation, to qualifying IDIs with an 
``outstanding'' or ``good'' composite condition and total assets not 
greater than $3 billion, if the agency determines that this amount 
would be consistent with the principles of safety and soundness for 
IDIs.\9\
---------------------------------------------------------------------------

    \6\ 12 U.S.C. 1820(d)(1).
    \7\ The Board, FDIC, or OCC. See 12 U.S.C. 1813(q).
    \8\ IDIs are evaluated under the Uniform Financial Institutions 
Rating System (commonly referred to as ``CAMELS''). CAMELS is an 
acronym that is drawn from the first letters of the individual 
components of the rating system: Capital adequacy, Asset quality, 
Management, Earnings, Liquidity, and Sensitivity to market risk. 
CAMELS ratings of ``1'' and ``2'' correspond with ratings of 
``outstanding'' and ``good.'' In addition to having a CAMELS 
composite rating of ``1'' or ``2,'' an IDI is considered to be 
``well managed'' for the purposes of section 10(d) of the FDI Act 
only if the IDI also received a rating of ``1'' or ``2'' for the 
management component of the CAMELS rating at its most recent 
examination. See 72 FR 17798 (Apr. 10, 2007).
    \9\ The Board and the FDIC, as the appropriate Federal banking 
agencies for State-chartered insured banks and savings associations, 
are permitted to conduct on-site examinations of such IDIs on 
alternating 12-month or 18-month periods with an IDI's State 
supervisor, if the Board or FDIC, as appropriate, determines that 
the alternating examination conducted by the State carries out the 
purposes of section 10(d) of the FDI Act. 12 U.S.C. 1820(d)(3).
---------------------------------------------------------------------------

    In addition, section 7(c)(1)(C) of the IBA provides that a Federal 
or a State branch or agency of a foreign bank shall be subject to on-
site examination by its appropriate Federal banking agency or State 
bank supervisor as frequently as a national or State bank would be 
subject to such an examination by the agency.

II. Description of the Interim Final Rules

    The agencies are adopting interim final rules to implement the 
Economic Growth Act's amendments to sections 10(d)(4) and 10(d)(10) of 
the FDI Act. The rules implement section 10(d)(4) of the FDI Act to 
increase, from $1 billion to $3 billion, the total asset threshold 
under which an agency may apply an

[[Page 43963]]

18-month on-site examination cycle for qualified IDIs that have an 
``outstanding'' composite rating.
    The agencies also are exercising their discretionary authority 
under section 10(d)(10) of the FDI Act to extend eligibility for an 18-
month examination cycle, by regulation, to qualifying IDIs with an 
``outstanding'' or ``good'' composite rating with total assets under $3 
billion. The agencies have determined that increasing the maximum asset 
amount limitation for qualifying IDIs with less than $3 billion in 
total assets is consistent with the principles of safety and soundness.
    In determining whether the reduction in examination frequency is 
consistent with the principles of safety and soundness for such IDIs, 
the agencies considered the following factors. The agencies agree that 
extending the examination cycle could make it more likely that there 
will be a delay in an agency's ability to detect deterioration in an 
IDI's performance. However, the agencies believe that extending the 
examination cycle from 12 months to 18 months for these small IDIs with 
relatively simple risk profiles should not appreciably increase their 
risk of financial deterioration or failure. In addition, the agencies 
will continue their off-site monitoring activities and have the ability 
to examine IDIs more frequently as necessary or appropriate. The 
agencies also note that, in order to qualify for an 18-month 
examination cycle, any IDI with total assets under $3 billion--
including one with a composite rating of ``good''--must meet the other 
capital, managerial, and supervisory criteria set forth in section 
10(d) of the FDI Act and the agencies' implementing regulations.
    Considering the agencies' off-site monitoring activities; their 
discretion to examine IDIs more frequently as necessary; and the 
capital, managerial, and supervisory criteria in section 10(d) of the 
FDI Act, the agencies believe that increasing the maximum asset amount 
limitation for IDIs from less than $1 billion to less than $3 billion 
is consistent with the principles of safety and soundness. 
Additionally, the agencies believe this increase will allow the 
agencies to better focus their supervisory resources on the IDIs and 
U.S. branches and agencies of foreign banks (collectively, financial 
institutions) that may present capital, managerial, or other issues of 
supervisory concern, and therefore has the ability to enhance safety 
and soundness collectively for all financial institutions. The agencies 
will continue to monitor financial institutions in this asset range and 
the impact of the extended examination cycle.
    In accordance with section 7(c)(1)(C) of the IBA, the agencies also 
are making conforming changes to their regulations governing the on-
site examination cycle for the U.S. branches and agencies of foreign 
banks. For the same reasons as discussed above, the agencies believe 
that extending similar treatment to qualifying U.S. branches and 
agencies of foreign banks is consistent with the principles of safety 
and soundness.
    The agencies estimate that the interim final rules will increase 
the number of banks and savings associations that may qualify for an 
extended 18-month examination cycle by approximately 420 (227 of which 
are supervised by the FDIC, 100 by the OCC, and 93 by the Board), 
bringing the total number to 4,798 banks and savings associations.\10\ 
Approximately 33 U.S. branches and agencies of foreign banks would be 
eligible for the extended examination cycle based on the interim final 
rules (2 of which are supervised by the FDIC, 9 by the OCC, and 22 by 
the Board).\11\
---------------------------------------------------------------------------

    \10\ Call Report data, Mar. 31, 2018.
    \11\ Id.
---------------------------------------------------------------------------

Effective Date/Request for Comment

    The agencies are issuing the interim final rules without prior 
notice and the opportunity for public comment and the 30-day delayed 
effective date ordinarily prescribed by the Administrative Procedure 
Act (APA).\12\ Pursuant to section 553(b)(B) of the APA, general notice 
and the opportunity for public comment are not required with respect to 
a rulemaking when an ``agency for good cause finds (and incorporates 
the finding and a brief statement of reasons therefor in the rules 
issued) that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest.'' \13\ The interim 
final rules implement the provisions in section 210 of the Economic 
Growth Act, which was enacted on May 24, 2018. In particular, the 
interim final rules adopt the statutory increase in the total asset 
threshold, from under $1 billion to under $3 billion, for qualifying 
IDIs with an ``outstanding'' composite rating, and also make available, 
pursuant to statutory authority, the 18-month examination cycle for 
qualifying IDIs with an ``outstanding'' or ``good'' composite rating 
and total assets under $3 billion. The interim final rules also make 
conforming amendments to the agencies' regulations governing the on-
site examination cycle for U.S. branches and agencies of foreign banks, 
as required by statute.
---------------------------------------------------------------------------

    \12\ 5 U.S.C. 553.
    \13\ 5 U.S.C. 553(b)(B).
---------------------------------------------------------------------------

    The agencies believe that the public interest is best served by 
implementing the statutorily amended thresholds as soon as possible. 
Immediate implementation will reduce regulatory burden on small, well 
capitalized, and well managed financial institutions while also 
allowing the agencies to better focus their supervisory resources on 
those financial institutions that may present capital, managerial, or 
other issues of supervisory concern. Because the affected financial 
institutions and agencies must plan and prepare for examinations in 
advance, the agencies believe issuing interim final rules will provide 
the certainty necessary to allow the financial institutions and 
agencies to begin scheduling for examinations according to the new 
examination cycle period. In addition, the agencies believe that 
providing a notice and comment period prior to issuance of the interim 
final rules is unnecessary because the agencies do not expect public 
objection to the regulations being promulgated as they merely provide 
the relief that Congress intended. Moreover, because the interim final 
rules will permit an agency to conduct an on-site examination of 
financial institutions more frequently than once every 18 months, the 
agencies retain the ability to maintain the current--or a more 
frequent--on-site examination schedule for a financial institution if 
the relevant agency determines it would be necessary or appropriate. 
For these reasons, the agencies find there is good cause consistent 
with the public interest to issue the rules without advance notice and 
comment.\14\
---------------------------------------------------------------------------

    \14\ 5 U.S.C. 553(b)(B); 553(d)(3).
---------------------------------------------------------------------------

    The APA also requires a 30-day delayed effective date, except for 
(1) substantive rules which grant or recognize an exemption or relieve 
a restriction; (2) interpretative rules and statements of policy; or 
(3) as otherwise provided by the agency for good cause.\15\ The 
agencies conclude that, because the rules recognize an exemption, the 
interim final rules are exempt from the APA's delayed effective date 
requirement.\16\ Additionally, the agencies find good cause to publish 
the interim final rules with an immediate effective date for the same 
reasons set forth above under the discussion of section 553(b)(B) of 
the APA.
---------------------------------------------------------------------------

    \15\ 5 U.S.C. 553(d).
    \16\ 5 U.S.C. 553(d)(1).
---------------------------------------------------------------------------

    While the agencies believe there is good cause to issue the rules 
without advance notice and comment and with

[[Page 43964]]

an immediate effective date, the agencies are interested in the views 
of the public and request comment on all aspects of the interim final 
rules.

III. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \17\ requires the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The agencies invite your comments on 
how to make these interim final rules easier to understand. For 
example:
---------------------------------------------------------------------------

    \17\ Public Law 106-102, section 722, 113 Stat. 1338, 1471 
(1999).
---------------------------------------------------------------------------

     Have the agencies presented the material in an organized 
manner that meets your needs? If not, how could this material be better 
organized?
     Are the requirements in the interim final rules clearly 
stated? If not, how could the interim final rules be more clearly 
stated?
     Do the interim final rules contain 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 interim final rules easier to 
understand? If so, what changes to the format would make the interim 
final rules easier to understand?
     What else could the agencies do to make the regulation 
easier to understand?

IV. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \18\ requires an agency to 
consider whether the rules it proposes will have a significant economic 
impact on a substantial number of small entities.\19\ The RFA applies 
only to rules for which an agency publishes a general notice of 
proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed 
previously, consistent with section 553(b)(B) of the APA, the agencies 
have determined for good cause that general notice and opportunity for 
public comment is unnecessary, and therefore the agencies are not 
issuing a notice of proposed rulemaking. Accordingly, the agencies have 
concluded that the RFA's requirements relating to initial and final 
regulatory flexibility analysis do not apply. Further, the agencies 
note that no small entities, as defined by the Small Business 
Administration's rules implementing the RFA, will be affected by the 
interim final rule's increased asset thresholds.
---------------------------------------------------------------------------

    \18\ 5 U.S.C. 601 et seq.
    \19\ Under regulations issued by the Small Business 
Administration, a small entity includes a depository institution, 
bank holding company, or savings and loan holding company with total 
assets of $550 million or less and trust companies with total assets 
of $38.5 million or less.
---------------------------------------------------------------------------

V. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 \20\ states that no agency may 
conduct or sponsor, nor is the respondent required to respond to, an 
information collection unless it displays a currently valid Office of 
Management and Budget (OMB) control number. Because the interim final 
rules do not create a new, or revise an existing, collection of 
information, no information collection request submission needs to be 
made to the OMB.
---------------------------------------------------------------------------

    \20\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

VI. Riegle Community Development and Regulatory Improvement Act

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA),\21\ in determining the effective 
date and administrative compliance requirements for a new regulation 
that imposes additional reporting, disclosure, or other requirements on 
IDIs, each Federal banking agency must consider any administrative 
burdens that such regulation would place on IDIs and the benefits of 
such regulation. In addition, section 302(b) of the RCDRIA requires 
such new regulation to take effect on the first day of a calendar 
quarter that begins on or after the date on which the regulations are 
published in final form, with certain exceptions, including for good 
cause. Because the interim final rules expand eligibility for an 18-
month, rather than 12-month, on-site examination schedule and are 
burden-reducing in nature, the interim final rules do not impose 
additional reporting, disclosure, or other requirements on IDIs, and 
section 302 of the RCDRIA therefore does not apply. Nevertheless, the 
agencies have considered the administrative burdens that such 
regulations would place on depository institutions and the benefits of 
such regulations in determining the effective date and compliance 
requirements. In addition, for the same reasons set forth previously 
under the discussion of section 553(b)(B) of the APA, the agencies find 
good cause would exist under section 302 of RCDRIA to publish these 
interim final rules with an immediate effective date.
---------------------------------------------------------------------------

    \21\ 12 U.S.C. 4802(a).
---------------------------------------------------------------------------

VII. OCC Unfunded Mandates Reform Act of 1995 Determination

    Consistent with section 202 of the Unfunded Mandates Reform Act of 
1995 (UMRA), before promulgating any final rule for which a general 
notice of proposed rulemaking was published, the OCC prepares an 
economic analysis of the final rule. As discussed previously, the OCC 
has determined that the publication of a general notice of proposed 
rulemaking is unnecessary. Accordingly, the OCC has not prepared an 
economic analysis of the joint interim final rules under UMRA.

List of Subjects

12 CFR Part 4

    Administrative practice and procedure, Freedom of information, 
Individuals with disabilities, Minority businesses, Organization and 
functions (Government agencies), Reporting and recordkeeping 
requirements, Women.

12 CFR Part 208

    Accounting, Agriculture, Banks, banking, Confidential business 
information, Crime, Currency, Federal Reserve System, Flood insurance, 
Mortgages, Reporting and recordkeeping requirements, Safety and 
soundness, Securities.

12 CFR Part 211

    Exports, Federal Reserve System, Foreign banking, Holding 
companies, Investments, Reporting and recordkeeping requirements.

12 CFR Part 337

    Banks, banking, Reporting and recordkeeping requirements, Savings 
Associations.

12 CFR Part 347

    Authority delegations (Government agencies), Bank deposit 
insurance, Banks, banking, Credit, Foreign banking, Investments, 
Reporting and recordkeeping requirements, U.S. investments abroad.

Office of the Comptroller of the Currency

12 CFR Chapter I

    For the reasons set forth in the joint preamble, the OCC amends 
part 4 of chapter I of title 12 of the Code of Federal Regulations as 
follows:

PART 4--ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF 
INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT 
RESTRICTIONS FOR SENIOR EXAMINERS

0
1. The authority citation for part 4 continues to read as follows:

    Authority:  5 U.S.C. 301, 552; 12 U.S.C. 1, 93a, 161, 481, 482, 
484(a), 1442, 1462a, 1463,

[[Page 43965]]

1464 1817(a), 1818, 1820, 1821, 1831m, 1831p-1, 1831o, 1833e, 1867, 
1951 et seq., 2601 et seq., 2801 et seq., 2901 et seq., 3101 et 
seq., 3401 et seq., 5321, 5412, 5414; 15 U.S.C. 77uu(b), 78q(c)(3); 
18 U.S.C. 641, 1905, 1906; 29 U.S.C. 1204; 31 U.S.C. 5318(g)(2), 
9701; 42 U.S.C. 3601; 44 U.S.C. 3506, 3510; E.O. 12600 (3 CFR, 1987 
Comp., p. 235).


0
2. Section 4.6 is amended by revising paragraph (b)(1) to read as 
follows:

Sec.  4.6  Frequency of examination of national banks and Federal 
savings associations.

* * * * *
    (b) * * *
    (1) The bank or Federal savings association has total assets of 
less than $3 billion;
* * * * *

0
3. Section 4.7 is amended by revising paragraph (b)(1)(i) to read as 
follows:

Sec.  4.7  Frequency of examination of Federal agencies and branches.

* * * * *
    (b) * * *
    (1) * * *
    (i) Has total assets of less than $3 billion;
* * * * *

Federal Reserve System

12 CFR Chapter II

    For the reasons set forth in the joint preamble, the Board amends 
parts 208 and 211 of chapter II of title 12 of the Code of Federal 
Regulations as follows:

PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL 
RESERVE SYSTEM (REGULATION H)

0
4. The authority citation for part 208 continues to read as follows:

    Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a, 
371d, 461, 481-486, 601, 611, 1814, 1816, 1818, 1820(d)(9), 1833(j), 
1828(o), 1831, 1831o, 1831p-1, 1831r-1, 1831w, 1831x, 1835a, 1882, 
2901-2907, 3105, 3310, 3331-3351, 3353, and 3906-3909; 15 U.S.C. 
78b, 781(b), 78l(i), 780-4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w, 
6801 and 6805, 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104b, 4106, and 
4128.


0
5. Amend Sec.  208.64 by revising paragraph (b)(1) to read as follows:


Sec.  208.64   Frequency of examination.

* * * * *
    (b) * * *
    (1) The bank has total assets of less than $3 billion;
* * * * *

PART 211--INTERNATIONAL BANKING OPERATIONS (REGULATION K)

0
6. The authority citation for part 211 continues to read as follows:

    Authority: 12 U.S.C. 221 et seq., 1818, 1835a, 1841 et seq., 
3101 et seq., 3901 et seq., and 5101 et seq.; 15 U.S.C. 1681s, 
1681w, 6801 and 6805.


0
7. Amend Sec.  211.26 by revising paragraph (c)(2)(i)(A) to read as 
follows:


Sec.  211.26   Examinations of offices and affiliates of foreign banks.

* * * * *
    (c) * * *
    (2) * * *
    (i) * * *
    (A) Has total assets of less than $3 billion;
* * * * *

Federal Deposit Insurance Corporation

12 CFR Chapter III

    For the reasons set forth in the joint preamble, the Board of 
Directors of the FDIC amends parts 337 and 347 of chapter III of title 
12 of the Code of Federal Regulations as follows:

PART 337--UNSAFE AND UNSOUND BANK PRACTICES

0
8. The authority citation for part 337 continues to read as follows:

    Authority: 12 U.S.C. 375a(4), 375b, 1463(a)(1), 1816, 1818(a), 
1818(b), 1819, 1820(d), 1828(j)(2), 1831, 1831f, 5412.


0
9. Amend Sec.  337.12 by revising paragraph (b)(1) to read as follows:


Sec.  337.12  Frequency of examination.

* * * * *
    (b) * * *
    (1) The institution has total assets of less than $3 billion;
* * * * *

PART 347--INTERNATIONAL BANKING

0
10. The authority citation for part 347 continues to read as follows:

    Authority: 12 U.S.C. 1813, 1815, 1817, 1819, 1820, 1828, 3103, 
3104, 3105, 3108, 3109; Pub. L. 111-203, section 939A, 124 Stat. 
1376, 1887 (July 21, 2010) (codified 15 U.S.C. 78o-7 note).


0
11. Amend Sec.  347.211 by revising paragraph (b)(1)(i) to read as 
follows:


Sec.  347.211   Examination of branches of foreign banks.

* * * * *
    (b) * * *
    (1) * * *
    (i) Has total assets of less than $3 billion;
* * * * *

    Dated: August 20, 2018.
Joseph M. Otting,
Comptroller of the Currency.

    Board of Governors of the Federal Reserve System, August 22, 
2018.
Ann E. Misback,
Secretary to the Board.

    Dated at Washington, DC, on August 22, 2018.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2018-18685 Filed 8-28-18; 8:45 am]
 BILLING CODE 4810-33-P
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