OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches; Technical Amendments, 66604-66607 [2018-27952]

Download as PDF 66604 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Rules and Regulations Dated: December 18, 2018. Bao Nguyen, Acting Senior Deputy Comptroller and Chief Counsel. By order of the Board of Governors of the Federal Reserve System, acting through the Secretary of the Board under delegated authority, December 17, 2018. Ann E. Misback, Secretary of the Board. By order of the Board of Directors. Dated at Washington, DC, this 13th day of December, 2018. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. 2018–27791 Filed 12–26–18; 8:45 am] BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 30 [Docket ID OCC–2018–0028] RIN 1557–AE51 OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches; Technical Amendments Office of the Comptroller of the Currency, Treasury. ACTION: Final guidelines. AGENCY: The Office of the Comptroller of the Currency (OCC) is amending its enforceable guidelines relating to recovery planning standards for insured national banks, insured federal savings associations, and insured federal branches (Guidelines) by increasing the average total consolidated assets threshold for applying the Guidelines from $50 billion to $250 billion. In addition, the OCC is changing the Guidelines to decrease from 18 months to 12 months the time within which a bank should comply with the Guidelines after the bank becomes subject to them. Finally, the OCC is making technical amendments to remove outdated compliance dates. DATES: The final guidelines are effective on January 28, 2019. FOR FURTHER INFORMATION CONTACT: Andra Shuster, Senior Counsel or Rima Kundnani, Attorney, Chief Counsel’s Office, (202) 649–5490; or, for persons who are deaf or hard of hearing, TTY, (202) 649–5597, 400 7th Street SW, Washington, DC 20219. khammond on DSK30JT082PROD with RULES SUMMARY: VerDate Sep<11>2014 16:19 Dec 26, 2018 Jkt 247001 SUPPLEMENTARY INFORMATION: I. Background The 2008 financial crisis provided valuable lessons about the need for financial institutions to have strong risk governance frameworks, including plans for how to respond to and recover from the financial effects of severe stress. This was particularly true for larger, more complex banks given the potential they pose for systemic risk. In response to these lessons, on September 29, 2016, the OCC published the Guidelines establishing minimum standards for recovery planning by insured national banks, insured federal savings associations, and insured federal branches of foreign banks (banks) with average total consolidated assets 1 equal to or greater than $50 billion (covered banks).2 The Guidelines state that a recovery plan should identify (1) quantitative or qualitative indicators of the risk or existence of severe stress that reflect a covered bank’s particular vulnerabilities and (2) a wide range of credible options that a covered bank could undertake in response to the stress to restore its financial strength and viability. Under the Guidelines, a recovery plan should also address: (1) Procedures for escalating decision-making to senior management or the board of directors, (2) management reports, and (3) communication procedures. In addition, the Guidelines explain how a bank should calculate its average total consolidated assets and reserve the OCC’s authority to apply the Guidelines to a bank below the $50 billion threshold if the agency determines a bank is highly complex or otherwise presents a heightened risk. Finally, the Guidelines set out phased-in compliance dates based on bank size. II. Description of the Proposal, Comments Received, and Final Guidelines The OCC received three comments on the proposal. One comment came from an individual, one from a trade association (Trade Association Comment), and the other from four regional national banks (Banks Comment). 1 Average total consolidated assets is defined in the Guidelines and means the average total consolidated assets of the bank or covered bank as reported on the bank’s or covered bank’s Consolidated Reports of Condition and Income for the four most recent consecutive quarters. See 12 CFR part 30, appendix E, paragraph I.E.1. 2 81 FR 66791 (Sep. 29, 2016). The Guidelines were issued pursuant to section 39 of the Federal Deposit Insurance Act, 12 U.S.C. 1831p-1, which authorizes the OCC to prescribe enforceable safety and soundness standards. PO 00000 Frm 00048 Fmt 4700 Sfmt 4700 Asset Threshold. The OCC noted in the SUPPLEMENTARY INFORMATION section of the Guidelines that large, complex institutions should undertake recovery planning to be able to respond quickly to and recover from the financial effects of severe stress on the institution. Based on its experience to date in reviewing recovery plans, the OCC believes that it is appropriate to raise the threshold for the Guidelines to focus on those institutions that present greater risk to the banking system. These larger, more complex, or potentially more interconnected banks present the types of risks that could benefit most from having the types of governance and planning processes that identify and assist in responding to significant stress events. In addition, at the time the Guidelines were published, the $50 billion recovery planning threshold was consistent with the scope of Federal Deposit Insurance Corporation and Board of Governors of the Federal Reserve System regulations 3 that require certain entities to prepare resolution plans under section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.4 On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (Act) was enacted to promote economic growth, provide tailored economic relief, and enhance consumer protections.5 Section 401 of the Act raises from $50 billion to $250 billion the section 165 resolution planning threshold. Accordingly, the OCC proposed to increase from $50 billion to $250 billion the average total consolidated assets threshold at which the Guidelines apply to banks.6 This change would reduce the number of covered banks to which the Guidelines apply from 25 to 8, based on the most recent data available. All three of the comments received addressed the threshold change. The individual commenter expressed concern that raising the Guidelines’ asset threshold would provide too much leniency for banks in light of the 2008 financial crisis. The Trade Association Comment strongly supported the OCC’s proposal to raise the threshold for the Guidelines from $50 billion to $250 billion in average total consolidated assets because it provides burden relief to the affected banks and permits the OCC to allocate its resources over a smaller number of banks. The Banks 3 See 12 CFR 381.2(f) and 243.2(f), respectively. See also 12 CFR 360.10. 4 Public Law 111–203, 124 Stat. 1376 (July 21, 2010). 5 Public Law 115–174, 132 Stat. 1296 (May 24, 2018). 6 83 FR 47313 (Sep. 19, 2018). E:\FR\FM\27DER1.SGM 27DER1 khammond on DSK30JT082PROD with RULES Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Rules and Regulations Comment suggested that the OCC replace the threshold with a risksensitive alternative that more accurately reflects a bank’s business model and risk profile, like the systemic indicator score, which was described as a more useful and better-calibrated measure of the complexity and risk inherent in a bank’s business model. The OCC believes this threshold change is consistent with providing necessary and appropriate burden relief to the affected banks while retaining the requirements for the largest, most complex institutions. Furthermore, the increased threshold is consistent with section 401 of the Act’s increase in the section 165 resolution planning threshold applicable to systemically important bank holding companies. Therefore, the OCC is adopting as final the proposed Guidelines’ $250 billion average total consolidated assets threshold. Tailoring Approach for Banks Subject to the Guidelines. Both the Trade Association Comment and the Banks Comment requested that the OCC consider a tailored approach to the application of the Guidelines to covered banks in order to focus recovery planning on issues that are most relevant to the bank based on its risk profile and business model. The trade association also requested that the OCC consider whether the Guidelines should be applicable to all covered banks given the varying degree of riskiness and complexity of these banks. The Guidelines already recognize that each covered bank is unique and expressly permit a bank to tailor its recovery plan so that it is ‘‘specific to that covered bank and appropriate for its individual size, risk profile, activities, and complexity, including the complexity of its organizational and legal entity structure.’’ 7 Therefore, a covered bank that is less complex or has less risk may tailor its recovery plan under the Guidelines accordingly. Given this flexibility, the OCC does not think it is necessary to specifically tailor the Guidelines based on different business models and risk profiles of the covered banks nor do we think it is appropriate to further reduce the number of banks subject to the Guidelines. In fact, it may be even more important for a covered bank that is less complex or has less risk due to fewer interconnections to have a robust recovery plan. Such a bank may have identified fewer options for recovery and therefore may be 7 Appendix E to part 30, II.A. See also Comptroller’s Handbook for Recovery Planning, version 1.0 April 2018 at p. 6. VerDate Sep<11>2014 16:19 Dec 26, 2018 Jkt 247001 constrained in its ability to restore financial strength in severe stress. Biennial Cycle. Both the Trade Association Comment and the Banks Comment suggested that the OCC should consider moving from an annual to a biennial recovery plan cycle. The Trade Association Comment noted that as was the case with resolution planning, this would give the OCC more time to provide feedback and would give the covered banks more time to prepare the plans, likely resulting in a better quality plan. Both commenters also requested that the OCC allow each covered bank to elect the timing of its two-year recovery plan cycle. This would permit each bank to make a determination of whether or not to align the preparation of its recovery plan with the preparation of its resolution plan. Further, the Trade Association Comment requested that the OCC not require re-approval of the recovery plan by the board of directors if there has been no material change or event that has had a fundamental and major impact on the covered bank’s recovery plan since the board previously approved the recovery plan. The recovery plan and the recovery planning framework are important to a bank’s safety and soundness and enterprise governance and, thus, the OCC believes that covered banks should review and revise the recovery plan as necessary at least annually. With regard to electing the timing of the recovery plan cycle, the preamble to the Guidelines noted that ‘‘management should have flexibility to conduct its annual reviews on its preferred schedule’’ and that ‘‘OCC examiners will assess the appropriateness and adequacy of the covered bank’s ongoing recovery planning process as part of the agency’s regular supervisory activities . . . [to] provide covered banks with the flexibility they need.’’ 8 In addition to this flexibility, the Guidelines already permit an appropriate committee of the board, rather than the entire board, to review and approve the recovery plan.9 Therefore, no change has been made to this part of the Guidelines. Transparency of Standards and Horizontal Review. The Trade Association Comment suggested that recovery planning standards should be more transparent in the future and that a supervisory horizontal review of recovery plans may be difficult and less meaningful given the differences in risk profiles and business models among the covered banks. The OCC believes that the current process, which includes 8 81 FR 66797 (Sept. 29, 2016). E to part 30, III.B. 9 Appendix PO 00000 Frm 00049 Fmt 4700 Sfmt 4700 66605 discussion between the examiners and the covered banks, provides the necessary transparency for recovery planning standards. While other agencies may use horizontal review for resolution planning purposes, the OCC does not intend to use such reviews in connection with recovery planning. Clarification for Banks under $250 Billion. The Trade Association Comment requested that the OCC immediately clarify that no recovery plans are expected of banks on or after January 1, 2019 if they do not meet the $250 billion average total consolidated assets threshold in order to avoid the significant and needless burden associated with preparing the recovery plan. Given that these revised final Guidelines will be effective in a short period of time, the OCC would not expect banks with less than $250 billion in average total consolidated assets to complete the annual process for review by management and review and approval by the board of their 2018 recovery plans or to begin preparing a 2019 recovery plan. Compliance Date. Under the current Guidelines, a bank with less than $50 billion in average total consolidated assets that subsequently becomes a covered bank is required to comply with the Guidelines within 18 months. The OCC proposed amending this provision so that a bank that has less than $250 billion in average total consolidated assets on the effective date of the final rule and subsequently becomes a covered bank should comply with the Guidelines within 12 months. Based upon supervisory experience, the OCC has observed that 12 months is a sufficient period of time for any bank that becomes a covered bank to comply with the Guidelines. Finally, the OCC proposed technical amendments to remove the compliance dates listed in the current Guidelines, as the dates have all passed. The OCC did not receive any comments on these changes. Therefore, these amendments will be adopted as proposed. Regulatory Analysis Regulatory Flexibility Act In general, the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) requires that in connection with a rulemaking, an agency prepare and make available for public comment a regulatory flexibility analysis that describes the impact of the rule on small entities. Under section 605(b) of the RFA, this analysis is not required if an agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and E:\FR\FM\27DER1.SGM 27DER1 66606 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Rules and Regulations publishes its certification and a brief explanatory statement in the Federal Register along with its rule. As part of its analysis, the OCC considered whether these revised final Guidelines will have a significant economic impact on a substantial number of small entities, pursuant to the RFA. Because these revised final Guidelines will generally have no impact on banks with less than $50 billion in total consolidated assets, no OCC-supervised small entities will be affected. Therefore, the OCC certifies that these revised final Guidelines will not have a significant economic impact on a substantial number of small entities. khammond on DSK30JT082PROD with RULES Paperwork Reduction Act of 1995 These revised final Guidelines include changes to an approved collection of information pursuant to the provisions of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). In accordance with the PRA, the OCC may not conduct or sponsor, and an organization is not required to respond to, an information collection unless the information collection displays a currently valid Office of Management and Budget (OMB) control number. The OCC submitted the information collection requirements contained in the rule to the OMB at the proposed rule stage. Pursuant to 5 CFR 1320.11(c), the OMB filed a comment on the submission directing the OCC to examine any public comment in response to the information collection requirements, prepare a description of how the OCC has responded to the comments (including comments on maximizing the practical utility of the collection and minimizing the burden), and resubmit the information collection requirements in connection with these revised final Guidelines. The Guidelines found in 12 CFR part 30, appendix E, sections II.B., II.C., and III contain information collection requirements previously approved by the OMB. Section II.B. specifies the elements of the recovery plan, including an overview of the covered bank; triggers; options for recovery; impact assessments; escalation procedures; management reports; and communication procedures. Section II.C. addresses the relationship of the plan to other covered bank processes and coordination with other plans, including the processes and plans of its bank holding company. Section III outlines management’s and the board’s responsibilities. The threshold triggering these requirements is being VerDate Sep<11>2014 16:19 Dec 26, 2018 Jkt 247001 changed under these revised final Guidelines, resulting in a reduction in the number of respondents under this collection. The following revised information collection was submitted to OMB for review. Title: OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches OMB Control No.: 1557–0333. Frequency of Response: On occasion. Affected Public: Businesses or other for-profit organizations. Burden Estimates: Total Number of Respondents: 8 National Banks. Total Burden per Respondent: 7,543 hours. Total Burden for Collection: 60,344 hours. Comments were invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the OCC’s functions, including whether the information has practical utility; (2) the accuracy of the OCC’s estimate of the burden of the proposed information collection, including the cost of compliance; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. We received no comments on the proposed information collection. Unfunded Mandates Reform Act of 1995 The OCC analyzed these revised final Guidelines under the factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the OCC considered whether these revised final Guidelines include a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted for inflation). The OCC has determined that these revised final Guidelines do not impose new mandates. Therefore, we conclude that these revised final Guidelines will not result in an expenditure of $100 million or more annually by State, local, and tribal governments, or by the private sector. Effective Date The Administrative Procedure Act (APA) requires that a substantive rule must be published not less than 30 days PO 00000 Frm 00050 Fmt 4700 Sfmt 4700 before its effective date, unless, among other things, the rule grants or recognizes an exemption or relieves a restriction. Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA) requires that regulations imposing additional reporting, disclosure, or other requirements on insured depository institutions take effect on the first day of the calendar quarter after publication of the final rule, unless, among other things, the agency determines for good cause that the regulations should become effective before such time. These revised final Guidelines will be effective 30 days after publication in the Federal Register, which meets the APA effective date requirements. Given that these revised final Guidelines do not impose any additional reporting, disclosure, or other requirements on insured depository institutions, but rather reduce reporting requirements, the effective date of 30 days after publication in the Federal Register, rather than the first day of the calendar quarter following publication, is consistent with RCDRIA. Section 302 of RCDRIA also requires the OCC to consider, consistent with the principles of safety and soundness and the public interest, any administrative burdens these revised final Guidelines would place on insured depository institutions, including small depository institutions, and their customers as well as the benefits of such regulations when determining the effective date and administrative compliance requirements of new regulations that impose new reporting, disclosure, or other requirements on insured depository institutions. The OCC has considered the changes made by these revised final Guidelines and believes that the effective date of 30 days after publication in the Federal Register is appropriate. Plain Language Section 722 of the Gramm-LeachBliley Act (12 U.S.C. 4809(a)), requires the OCC to use plain language in all proposed and final rules published after January 1, 2000. The OCC received no comment on these matters and believes that these revised final Guidelines are written plainly and clearly. List of Subjects in 12 CFR Part 30 Banks, Banking, Consumer protection, National banks, Privacy, Safety and soundness, Reporting and recordkeeping requirements. E:\FR\FM\27DER1.SGM 27DER1 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Rules and Regulations Office of the Comptroller of the Currency DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 12 CFR Chapter I Authority and Issuance 14 CFR Part 23 For the reasons set forth in the preamble, and under the authority of 12 U.S.C. 93a and 12 U.S.C. 1831p–1, chapter I of title 12 of the Code of Federal Regulations is amended as follows: [Docket No.FAA–2018–0918; Notice No. 23– 291–SC] PART 30—SAFETY AND SOUNDNESS STANDARDS AGENCY: 1. The authority citation for part 30 continues to read as follows: ■ 2. Appendix E to part 30 is amended by: ■ a. Removing the phrase ‘‘$50 billion’’ and adding in its place the phrase ‘‘$250 billion’’ everywhere that it appears; ■ b. Revising section I.B.1; ■ c. Removing section I.B.2 and I.B.3; ■ d. Redesignating section I.B.4 as section I.B.2; ■ e. In newly redesignated section I.B.2: ■ i. Removing ‘‘January 1, 2017’’ and adding in its place the words‘‘January 28, 2019’’; and ■ ii. Removing the phrase ‘‘18 months’’ and adding in its place the phrase ‘‘12 months’’. The revision reads as follows: ■ Appendix E to Part 30—OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches * * * * I. * * * B. * * * 1. A covered bank with average total consolidated assets, calculated according to paragraph I.E.1. of this appendix, equal to or greater than $250 billion as of January 28, 2019 should be in compliance with this appendix on January 28, 2019. khammond on DSK30JT082PROD with RULES * * * * * Dated: December 18, 2018. William A. Rowe, Chief Risk Officer. [FR Doc. 2018–27952 Filed 12–26–18; 8:45 am] BILLING CODE 4810–33–P VerDate Sep<11>2014 16:19 Dec 26, 2018 Jkt 247001 Federal Aviation Administration (FAA), DOT. ACTION: Final special conditions. These special conditions are issued for Textron Aviation, Inc. B200series airplanes. These airplanes as modified by Innovative Solutions & Support, Inc., will have a novel or unusual design feature associated with an autothrust system. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. DATES: These special conditions are effective December 27, 2018. FOR FURTHER INFORMATION CONTACT: Jeff Pretz, AIR–691, Regulations & Policy Section, Small Airplane Standards Branch, Policy & Innovation Division, Aircraft Certification Service, Federal Aviation Administration, 901 Locust; Kansas City, Missouri 64106; telephone (816) 329–3239; facsimile (816) 329– 4090; email Jeff.Pretz@faa.gov. SUPPLEMENTARY INFORMATION: SUMMARY: Authority: 12 U.S.C. 1, 93a, 371, 1462a, 1463, 1464, 1467a, 1818, 1828, 1831p–1, 1881–1884, 3102(b) and 5412(b)(2)(B); 15 U.S.C. 1681s, 1681w, 6801, and 6805(b)(1). * Special Conditions: Innovative Solutions & Support, Inc.; Textron Aviation, Inc. Model B200-Series Airplanes; Autothrust Functions Background On December 14, 2017, Innovative Solutions & Support, Inc. (Innovative Solutions), applied for a supplemental type certificate for installation of an autothrust system (ATS)—also known as an autothrottle system—in Textron Aviation, Inc., (Textron) B200-series airplanes. The B200-series airplanes are powered by two Pratt & Whitney PT6A turbo-propeller engines—depending on airplane model—that can carry thirteen passengers, including two flightcrew members. These airplanes have a service ceiling up to 35,000-feet and a maximum takeoff weight of up to 12,500 pounds in the normal category. These airplanes are approved for single-pilot operation. The installation of an ATS in Textron B200-series airplanes is intended to reduce pilot workload. The ATS is useable in all phases of flight except PO 00000 Frm 00051 Fmt 4700 Sfmt 4700 66607 below decision height on approach. The system includes torque control and airspeed modes along with monitors to prevent the system from exceeding critical engine or airspeed limits. Throttle movement is provided by a stepper motor acting through a linear actuator, which acts as a link between the stepper motor and throttle. The liner actuator can be overridden by pilot movement of the throttle and automatically disengages upon disagreement in the expected throttle position versus its actual position. Section 23.1329, amendment 23–49, only contained requirements for automatic pilot systems that act on the airplane flight controls. Autothrust systems are automatic systems that act on the thrust controls. These systems provide enhanced automation and safety, but may also introduce pilot confusion, countering the safety benefit. Transport Airplane regulation 14 CFR 25.1329, amendment 25–119, addresses these concerns. Therefore, these special conditions are based on § 25.1329 and provide additional requirements to standardize the pilot interface and system behavior and enhance pilot awareness of system active and armed modes. Type Certification Basis Under the provisions of § 21.101, Innovative Solutions must show that B200-series airplanes, as changed, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate (TC) No. A24CE 2 or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the ‘‘original type certification basis.’’ The regulations incorporated by reference in TC No. A24CE are as follows: 14 CFR part 23, amendments 23–1 through 23–9, plus various later part 23 amendments— depending on the model and serial number of the airplane—as noted on Type Certification Data Sheet A24CE. If the Administrator finds the applicable airworthiness regulations (i.e., 14 CFR part 23) do not contain adequate or appropriate safety standards for B200-series airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16. Special conditions are initially applicable to the model(s) for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on 2 See E:\FR\FM\27DER1.SGM https://rgl.faa.gov/. 27DER1

Agencies

[Federal Register Volume 83, Number 247 (Thursday, December 27, 2018)]
[Rules and Regulations]
[Pages 66604-66607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27952]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 30

[Docket ID OCC-2018-0028]
RIN 1557-AE51


OCC Guidelines Establishing Standards for Recovery Planning by 
Certain Large Insured National Banks, Insured Federal Savings 
Associations, and Insured Federal Branches; Technical Amendments

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final guidelines.

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

SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
amending its enforceable guidelines relating to recovery planning 
standards for insured national banks, insured federal savings 
associations, and insured federal branches (Guidelines) by increasing 
the average total consolidated assets threshold for applying the 
Guidelines from $50 billion to $250 billion. In addition, the OCC is 
changing the Guidelines to decrease from 18 months to 12 months the 
time within which a bank should comply with the Guidelines after the 
bank becomes subject to them. Finally, the OCC is making technical 
amendments to remove outdated compliance dates.

DATES: The final guidelines are effective on January 28, 2019.

FOR FURTHER INFORMATION CONTACT: Andra Shuster, Senior Counsel or Rima 
Kundnani, Attorney, Chief Counsel's Office, (202) 649-5490; or, for 
persons who are deaf or hard of hearing, TTY, (202) 649-5597, 400 7th 
Street SW, Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Background

    The 2008 financial crisis provided valuable lessons about the need 
for financial institutions to have strong risk governance frameworks, 
including plans for how to respond to and recover from the financial 
effects of severe stress. This was particularly true for larger, more 
complex banks given the potential they pose for systemic risk. In 
response to these lessons, on September 29, 2016, the OCC published the 
Guidelines establishing minimum standards for recovery planning by 
insured national banks, insured federal savings associations, and 
insured federal branches of foreign banks (banks) with average total 
consolidated assets \1\ equal to or greater than $50 billion (covered 
banks).\2\ The Guidelines state that a recovery plan should identify 
(1) quantitative or qualitative indicators of the risk or existence of 
severe stress that reflect a covered bank's particular vulnerabilities 
and (2) a wide range of credible options that a covered bank could 
undertake in response to the stress to restore its financial strength 
and viability.
---------------------------------------------------------------------------

    \1\ Average total consolidated assets is defined in the 
Guidelines and means the average total consolidated assets of the 
bank or covered bank as reported on the bank's or covered bank's 
Consolidated Reports of Condition and Income for the four most 
recent consecutive quarters. See 12 CFR part 30, appendix E, 
paragraph I.E.1.
    \2\ 81 FR 66791 (Sep. 29, 2016). The Guidelines were issued 
pursuant to section 39 of the Federal Deposit Insurance Act, 12 
U.S.C. 1831p-1, which authorizes the OCC to prescribe enforceable 
safety and soundness standards.
---------------------------------------------------------------------------

    Under the Guidelines, a recovery plan should also address: (1) 
Procedures for escalating decision-making to senior management or the 
board of directors, (2) management reports, and (3) communication 
procedures. In addition, the Guidelines explain how a bank should 
calculate its average total consolidated assets and reserve the OCC's 
authority to apply the Guidelines to a bank below the $50 billion 
threshold if the agency determines a bank is highly complex or 
otherwise presents a heightened risk. Finally, the Guidelines set out 
phased-in compliance dates based on bank size.

II. Description of the Proposal, Comments Received, and Final 
Guidelines

    The OCC received three comments on the proposal. One comment came 
from an individual, one from a trade association (Trade Association 
Comment), and the other from four regional national banks (Banks 
Comment).
    Asset Threshold. The OCC noted in the SUPPLEMENTARY INFORMATION 
section of the Guidelines that large, complex institutions should 
undertake recovery planning to be able to respond quickly to and 
recover from the financial effects of severe stress on the institution. 
Based on its experience to date in reviewing recovery plans, the OCC 
believes that it is appropriate to raise the threshold for the 
Guidelines to focus on those institutions that present greater risk to 
the banking system. These larger, more complex, or potentially more 
interconnected banks present the types of risks that could benefit most 
from having the types of governance and planning processes that 
identify and assist in responding to significant stress events.
    In addition, at the time the Guidelines were published, the $50 
billion recovery planning threshold was consistent with the scope of 
Federal Deposit Insurance Corporation and Board of Governors of the 
Federal Reserve System regulations \3\ that require certain entities to 
prepare resolution plans under section 165 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act.\4\ On May 24, 2018, the 
Economic Growth, Regulatory Relief, and Consumer Protection Act (Act) 
was enacted to promote economic growth, provide tailored economic 
relief, and enhance consumer protections.\5\ Section 401 of the Act 
raises from $50 billion to $250 billion the section 165 resolution 
planning threshold.
---------------------------------------------------------------------------

    \3\ See 12 CFR 381.2(f) and 243.2(f), respectively. See also 12 
CFR 360.10.
    \4\ Public Law 111-203, 124 Stat. 1376 (July 21, 2010).
    \5\ Public Law 115-174, 132 Stat. 1296 (May 24, 2018).
---------------------------------------------------------------------------

    Accordingly, the OCC proposed to increase from $50 billion to $250 
billion the average total consolidated assets threshold at which the 
Guidelines apply to banks.\6\ This change would reduce the number of 
covered banks to which the Guidelines apply from 25 to 8, based on the 
most recent data available.
---------------------------------------------------------------------------

    \6\ 83 FR 47313 (Sep. 19, 2018).
---------------------------------------------------------------------------

    All three of the comments received addressed the threshold change. 
The individual commenter expressed concern that raising the Guidelines' 
asset threshold would provide too much leniency for banks in light of 
the 2008 financial crisis. The Trade Association Comment strongly 
supported the OCC's proposal to raise the threshold for the Guidelines 
from $50 billion to $250 billion in average total consolidated assets 
because it provides burden relief to the affected banks and permits the 
OCC to allocate its resources over a smaller number of banks. The Banks

[[Page 66605]]

Comment suggested that the OCC replace the threshold with a risk-
sensitive alternative that more accurately reflects a bank's business 
model and risk profile, like the systemic indicator score, which was 
described as a more useful and better-calibrated measure of the 
complexity and risk inherent in a bank's business model.
    The OCC believes this threshold change is consistent with providing 
necessary and appropriate burden relief to the affected banks while 
retaining the requirements for the largest, most complex institutions. 
Furthermore, the increased threshold is consistent with section 401 of 
the Act's increase in the section 165 resolution planning threshold 
applicable to systemically important bank holding companies. Therefore, 
the OCC is adopting as final the proposed Guidelines' $250 billion 
average total consolidated assets threshold.
    Tailoring Approach for Banks Subject to the Guidelines. Both the 
Trade Association Comment and the Banks Comment requested that the OCC 
consider a tailored approach to the application of the Guidelines to 
covered banks in order to focus recovery planning on issues that are 
most relevant to the bank based on its risk profile and business model. 
The trade association also requested that the OCC consider whether the 
Guidelines should be applicable to all covered banks given the varying 
degree of riskiness and complexity of these banks.
    The Guidelines already recognize that each covered bank is unique 
and expressly permit a bank to tailor its recovery plan so that it is 
``specific to that covered bank and appropriate for its individual 
size, risk profile, activities, and complexity, including the 
complexity of its organizational and legal entity structure.'' \7\ 
Therefore, a covered bank that is less complex or has less risk may 
tailor its recovery plan under the Guidelines accordingly. Given this 
flexibility, the OCC does not think it is necessary to specifically 
tailor the Guidelines based on different business models and risk 
profiles of the covered banks nor do we think it is appropriate to 
further reduce the number of banks subject to the Guidelines. In fact, 
it may be even more important for a covered bank that is less complex 
or has less risk due to fewer interconnections to have a robust 
recovery plan. Such a bank may have identified fewer options for 
recovery and therefore may be constrained in its ability to restore 
financial strength in severe stress.
---------------------------------------------------------------------------

    \7\ Appendix E to part 30, II.A. See also Comptroller's Handbook 
for Recovery Planning, version 1.0 April 2018 at p. 6.
---------------------------------------------------------------------------

    Biennial Cycle. Both the Trade Association Comment and the Banks 
Comment suggested that the OCC should consider moving from an annual to 
a biennial recovery plan cycle. The Trade Association Comment noted 
that as was the case with resolution planning, this would give the OCC 
more time to provide feedback and would give the covered banks more 
time to prepare the plans, likely resulting in a better quality plan. 
Both commenters also requested that the OCC allow each covered bank to 
elect the timing of its two-year recovery plan cycle. This would permit 
each bank to make a determination of whether or not to align the 
preparation of its recovery plan with the preparation of its resolution 
plan. Further, the Trade Association Comment requested that the OCC not 
require re-approval of the recovery plan by the board of directors if 
there has been no material change or event that has had a fundamental 
and major impact on the covered bank's recovery plan since the board 
previously approved the recovery plan.
    The recovery plan and the recovery planning framework are important 
to a bank's safety and soundness and enterprise governance and, thus, 
the OCC believes that covered banks should review and revise the 
recovery plan as necessary at least annually. With regard to electing 
the timing of the recovery plan cycle, the preamble to the Guidelines 
noted that ``management should have flexibility to conduct its annual 
reviews on its preferred schedule'' and that ``OCC examiners will 
assess the appropriateness and adequacy of the covered bank's ongoing 
recovery planning process as part of the agency's regular supervisory 
activities . . . [to] provide covered banks with the flexibility they 
need.'' \8\ In addition to this flexibility, the Guidelines already 
permit an appropriate committee of the board, rather than the entire 
board, to review and approve the recovery plan.\9\ Therefore, no change 
has been made to this part of the Guidelines.
---------------------------------------------------------------------------

    \8\ 81 FR 66797 (Sept. 29, 2016).
    \9\ Appendix E to part 30, III.B.
---------------------------------------------------------------------------

    Transparency of Standards and Horizontal Review. The Trade 
Association Comment suggested that recovery planning standards should 
be more transparent in the future and that a supervisory horizontal 
review of recovery plans may be difficult and less meaningful given the 
differences in risk profiles and business models among the covered 
banks. The OCC believes that the current process, which includes 
discussion between the examiners and the covered banks, provides the 
necessary transparency for recovery planning standards. While other 
agencies may use horizontal review for resolution planning purposes, 
the OCC does not intend to use such reviews in connection with recovery 
planning.
    Clarification for Banks under $250 Billion. The Trade Association 
Comment requested that the OCC immediately clarify that no recovery 
plans are expected of banks on or after January 1, 2019 if they do not 
meet the $250 billion average total consolidated assets threshold in 
order to avoid the significant and needless burden associated with 
preparing the recovery plan. Given that these revised final Guidelines 
will be effective in a short period of time, the OCC would not expect 
banks with less than $250 billion in average total consolidated assets 
to complete the annual process for review by management and review and 
approval by the board of their 2018 recovery plans or to begin 
preparing a 2019 recovery plan.
    Compliance Date. Under the current Guidelines, a bank with less 
than $50 billion in average total consolidated assets that subsequently 
becomes a covered bank is required to comply with the Guidelines within 
18 months. The OCC proposed amending this provision so that a bank that 
has less than $250 billion in average total consolidated assets on the 
effective date of the final rule and subsequently becomes a covered 
bank should comply with the Guidelines within 12 months. Based upon 
supervisory experience, the OCC has observed that 12 months is a 
sufficient period of time for any bank that becomes a covered bank to 
comply with the Guidelines. Finally, the OCC proposed technical 
amendments to remove the compliance dates listed in the current 
Guidelines, as the dates have all passed. The OCC did not receive any 
comments on these changes. Therefore, these amendments will be adopted 
as proposed.

Regulatory Analysis

Regulatory Flexibility Act

    In general, the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et 
seq.) requires that in connection with a rulemaking, an agency prepare 
and make available for public comment a regulatory flexibility analysis 
that describes the impact of the rule on small entities. Under section 
605(b) of the RFA, this analysis is not required if an agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities and

[[Page 66606]]

publishes its certification and a brief explanatory statement in the 
Federal Register along with its rule.
    As part of its analysis, the OCC considered whether these revised 
final Guidelines will have a significant economic impact on a 
substantial number of small entities, pursuant to the RFA. Because 
these revised final Guidelines will generally have no impact on banks 
with less than $50 billion in total consolidated assets, no OCC-
supervised small entities will be affected. Therefore, the OCC 
certifies that these revised final Guidelines will not have a 
significant economic impact on a substantial number of small entities.

Paperwork Reduction Act of 1995

    These revised final Guidelines include changes to an approved 
collection of information pursuant to the provisions of the Paperwork 
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). In accordance 
with the PRA, the OCC may not conduct or sponsor, and an organization 
is not required to respond to, an information collection unless the 
information collection displays a currently valid Office of Management 
and Budget (OMB) control number.
    The OCC submitted the information collection requirements contained 
in the rule to the OMB at the proposed rule stage. Pursuant to 5 CFR 
1320.11(c), the OMB filed a comment on the submission directing the OCC 
to examine any public comment in response to the information collection 
requirements, prepare a description of how the OCC has responded to the 
comments (including comments on maximizing the practical utility of the 
collection and minimizing the burden), and resubmit the information 
collection requirements in connection with these revised final 
Guidelines.
    The Guidelines found in 12 CFR part 30, appendix E, sections II.B., 
II.C., and III contain information collection requirements previously 
approved by the OMB. Section II.B. specifies the elements of the 
recovery plan, including an overview of the covered bank; triggers; 
options for recovery; impact assessments; escalation procedures; 
management reports; and communication procedures. Section II.C. 
addresses the relationship of the plan to other covered bank processes 
and coordination with other plans, including the processes and plans of 
its bank holding company. Section III outlines management's and the 
board's responsibilities. The threshold triggering these requirements 
is being changed under these revised final Guidelines, resulting in a 
reduction in the number of respondents under this collection.
    The following revised information collection was submitted to OMB 
for review.
    Title: OCC Guidelines Establishing Standards for Recovery Planning 
by Certain Large Insured National Banks, Insured Federal Savings 
Associations, and Insured Federal Branches
    OMB Control No.: 1557-0333.
    Frequency of Response: On occasion.
    Affected Public: Businesses or other for-profit organizations.
    Burden Estimates:
    Total Number of Respondents: 8 National Banks.
    Total Burden per Respondent: 7,543 hours.
    Total Burden for Collection: 60,344 hours.
    Comments were invited on: (1) Whether the proposed collection of 
information is necessary for the proper performance of the OCC's 
functions, including whether the information has practical utility; (2) 
the accuracy of the OCC's estimate of the burden of the proposed 
information collection, including the cost of compliance; (3) ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and (4) ways to minimize the burden of information 
collection on respondents, including through the use of automated 
collection techniques or other forms of information technology. We 
received no comments on the proposed information collection.

Unfunded Mandates Reform Act of 1995

    The OCC analyzed these revised final Guidelines under the factors 
set forth in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 
1532). Under this analysis, the OCC considered whether these revised 
final Guidelines include a Federal mandate that may result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year 
(adjusted for inflation). The OCC has determined that these revised 
final Guidelines do not impose new mandates. Therefore, we conclude 
that these revised final Guidelines will not result in an expenditure 
of $100 million or more annually by State, local, and tribal 
governments, or by the private sector.

Effective Date

    The Administrative Procedure Act (APA) requires that a substantive 
rule must be published not less than 30 days before its effective date, 
unless, among other things, the rule grants or recognizes an exemption 
or relieves a restriction. Section 302 of the Riegle Community 
Development and Regulatory Improvement Act of 1994 (RCDRIA) requires 
that regulations imposing additional reporting, disclosure, or other 
requirements on insured depository institutions take effect on the 
first day of the calendar quarter after publication of the final rule, 
unless, among other things, the agency determines for good cause that 
the regulations should become effective before such time. These revised 
final Guidelines will be effective 30 days after publication in the 
Federal Register, which meets the APA effective date requirements. 
Given that these revised final Guidelines do not impose any additional 
reporting, disclosure, or other requirements on insured depository 
institutions, but rather reduce reporting requirements, the effective 
date of 30 days after publication in the Federal Register, rather than 
the first day of the calendar quarter following publication, is 
consistent with RCDRIA.
    Section 302 of RCDRIA also requires the OCC to consider, consistent 
with the principles of safety and soundness and the public interest, 
any administrative burdens these revised final Guidelines would place 
on insured depository institutions, including small depository 
institutions, and their customers as well as the benefits of such 
regulations when determining the effective date and administrative 
compliance requirements of new regulations that impose new reporting, 
disclosure, or other requirements on insured depository institutions. 
The OCC has considered the changes made by these revised final 
Guidelines and believes that the effective date of 30 days after 
publication in the Federal Register is appropriate.

Plain Language

    Section 722 of the Gramm-Leach-Bliley Act (12 U.S.C. 4809(a)), 
requires the OCC to use plain language in all proposed and final rules 
published after January 1, 2000. The OCC received no comment on these 
matters and believes that these revised final Guidelines are written 
plainly and clearly.

List of Subjects in 12 CFR Part 30

    Banks, Banking, Consumer protection, National banks, Privacy, 
Safety and soundness, Reporting and recordkeeping requirements.

[[Page 66607]]

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons set forth in the preamble, and under the authority 
of 12 U.S.C. 93a and 12 U.S.C. 1831p-1, chapter I of title 12 of the 
Code of Federal Regulations is amended as follows:

PART 30--SAFETY AND SOUNDNESS STANDARDS

0
1. The authority citation for part 30 continues to read as follows:

    Authority: 12 U.S.C. 1, 93a, 371, 1462a, 1463, 1464, 1467a, 
1818, 1828, 1831p-1, 1881-1884, 3102(b) and 5412(b)(2)(B); 15 U.S.C. 
1681s, 1681w, 6801, and 6805(b)(1).


0
2. Appendix E to part 30 is amended by:
0
a. Removing the phrase ``$50 billion'' and adding in its place the 
phrase ``$250 billion'' everywhere that it appears;
0
b. Revising section I.B.1;
0
c. Removing section I.B.2 and I.B.3;
0
d. Redesignating section I.B.4 as section I.B.2;
0
e. In newly redesignated section I.B.2:
0
i. Removing ``January 1, 2017'' and adding in its place the 
words``January 28, 2019''; and
0
ii. Removing the phrase ``18 months'' and adding in its place the 
phrase ``12 months''.
    The revision reads as follows:

Appendix E to Part 30--OCC Guidelines Establishing Standards for 
Recovery Planning by Certain Large Insured National Banks, Insured 
Federal Savings Associations, and Insured Federal Branches

* * * * *
    I. * * *
    B. * * *
    1. A covered bank with average total consolidated assets, 
calculated according to paragraph I.E.1. of this appendix, equal to 
or greater than $250 billion as of January 28, 2019 should be in 
compliance with this appendix on January 28, 2019.
* * * * *

    Dated: December 18, 2018.
William A. Rowe,
Chief Risk Officer.
[FR Doc. 2018-27952 Filed 12-26-18; 8:45 am]
 BILLING CODE 4810-33-P

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