Thresholds Increase for the Major Assets Prohibition of the Depository Institution Management Interlocks Act Rules, 604-612 [2018-28038]
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Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 26
[Docket ID OCC–2018–0011]
RIN 1557–AE22
FEDERAL RESERVE SYSTEM
12 CFR Parts 212 and 238
[Docket No. R–1641]
RIN 7100–AF31
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 348
RIN 3064–AE57
Thresholds Increase for the Major
Assets Prohibition of the Depository
Institution Management Interlocks Act
Rules
Office of the Comptroller of the
Currency (OCC); Board of Governors of
the Federal Reserve System (Board); and
Federal Deposit Insurance Corporation
(FDIC).
ACTION: Notice of proposed rulemaking
and request for public comment.
AGENCY:
The OCC, the Board, and the
FDIC (collectively, the agencies) are
inviting comment on a proposed rule
that would increase the major assets
prohibition thresholds for management
interlocks in the agencies’ rules
implementing the Depository Institution
Management Interlocks Act (DIMIA).
The DIMIA major assets prohibition
prohibits a management official of a
depository organization with total assets
exceeding $2.5 billion (or any affiliate of
such an organization) from serving at
the same time as a management official
of an unaffiliated depository
organization with total assets exceeding
$1.5 billion (or any affiliate of such an
organization). DIMIA provides that the
agencies may adjust, by regulation, the
major assets prohibition thresholds in
order to allow for inflation or market
changes. The agencies propose to raise
the major assets prohibition thresholds
to $10 billion to account for changes in
the United States banking market since
the current thresholds were established
in 1996. The agencies also propose three
alternative approaches for increasing the
thresholds based on market changes or
inflation. Increasing the major assets
prohibition thresholds would relieve
certain depository organizations below
the adjusted thresholds from having to
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SUMMARY:
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ask the agencies for an exemption from
the major assets prohibition. The
agencies do not expect the proposal to
materially increase anticompetitive risk.
DATES: Comments must be received on
or before April 1, 2019.
ADDRESSES: Comments should be
directed to:
OCC: Because paper mail in the
Washington, DC area and at the OCC is
subject to delay, commenters are
encouraged to submit comments
through the Federal eRulemaking Portal
or email, if possible. Please use the title
‘‘Thresholds Increase for the Major
Assets Prohibition of the Depository
Institution Management Interlocks Act
Rules’’ 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
www.regulations.gov. Enter ‘‘Docket ID
OCC–201X–0011’’ 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–201X–0011’’ in your comment.
In general, 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
include 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 www.regulations.gov. Enter
‘‘Docket ID OCC–201X–0011’’ in the
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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 20219. For security reasons, the OCC
requires that visitors make an
appointment to inspect comments. You
may do so by calling (202) 649–6700 or,
for persons who are deaf or hearingimpaired, TTY, (202) 649–5597. Upon
arrival, visitors will be required to
present valid government-issued photo
identification and submit to security
screening in order to inspect comments.
Board: When submitting comments,
please consider submitting your
comments by email or fax because paper
mail in the Washington, DC area and at
the Board may be subject to delay. You
may submit comments, identified by
Docket No. R–1641 and RIN 7100–AF31,
by any of the following methods:
• Agency Website: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Email: regs.comments@
federalreserve.gov. Include docket
number 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
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments will be made
available on the Board’s website at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons or to remove personally
identifiable information at the
commenter’s request. Otherwise,
comments will not be edited to remove
any identifying or contact information.
Public comments also may be viewed
electronically or in paper in Room 3515,
1801 K Street NW (between 18th and
19th Streets NW), between 9:00 a.m. and
5:00 p.m. on weekdays.
FDIC: You may submit comments,
identified by RIN 3064–AE57, by any of
the following methods:
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Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/.
Follow instructions for submitting
comments on the Agency website.
• Email: Comments@fdic.gov. Include
the RIN 3064–AE57 on the subject line
of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
• Hand Delivery: Comments may be
hand delivered to the guard station at
the rear of the 550 17th Street Building
(located on F Street) on business days
between 7:00 a.m. and 5:00 p.m.
Instructions: All comments received
must include the agency name and RIN
3064–AE57 for this rulemaking. All
comments received will be posted
without change to https://www.fdic.gov/
regulations/laws/federal/, including any
personal information provided. Paper
copies of public comments may be
ordered from the FDIC Public
Information Center, 3501 North Fairfax
Drive, Room E–1002, Arlington, VA
22226 by telephone at (877) 275–3342 or
(703) 562–2200.
FOR FURTHER INFORMATION CONTACT:
OCC: Daniel Perez, Attorney,
Christopher Rafferty, Attorney, Chief
Counsel’s Office, (202) 649–5490; or for
persons who are deaf or hearingimpaired, TTY, (202) 649–5597; Office
of the Comptroller of the Currency, 400
7th Street SW, Washington, DC 20219.
Board: Michelle Kidd, Senior
Counsel, (202) 736–5554; Claudia Von
Pervieux, Senior Counsel, (202) 452–
2552; or Andrew Hartlage, Counsel,
(202) 452–6483, of the Legal Division;
Katie Cox, Manager, (202) 452–2721; or
Melissa Clark, Senior Supervisory
Financial Analyst, (202) 452–2277, of
the Division of Supervision and
Regulation, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551. For the hearing impaired
only, Telecommunication Device for the
Deaf, (202) 263–4869, Board of
Governors of the Federal Reserve
System, 20th Street and Constitution
Avenue NW, Washington, DC 20551.
FDIC: Karen J. Currie, Senior
Examination Specialist, Division of Risk
Management Supervision, (202) 898–
3981; Mark Mellon, Counsel, Legal
Division, (202) 898–3884; Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Summary of Proposed Rule and Policy
Objectives
B. Background
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II. Description of Proposed Rule
A. Proposal To Increase Asset Thresholds
to $10 Billion
B. Expected Impact
C. Future Adjustments to the Thresholds
III. Alternative Approaches To Adjust the
Asset Thresholds
A. Thresholds Adjustment Based on
Percentage of the Number of Banking
Organizations Covered by Prohibition
B. Thresholds Adjustment Based on Asset
Growth
C. Thresholds Adjustment Increased Based
on Inflation
IV. FDIC Technical Amendments
V. Request for Comment
VI. Regulatory Analysis
I. Introduction
A. Summary of Proposed Rule and
Policy Objectives
The Office of the Comptroller of the
Currency (OCC), the Board of Governors
of the Federal Reserve System (Board),
and the Federal Deposit Insurance
Corporation (FDIC) (collectively, the
agencies) are inviting comment on a
notice of proposed rulemaking
(proposed rule or proposal) that would
increase the major assets prohibition
thresholds for management interlocks in
the agencies’ rules implementing the
Depository Institution Management
Interlocks Act (DIMIA).1 The proposed
increase in the thresholds would
account for changes in the United States
banking market since Congress
established the current thresholds in
1996. Under the major assets
prohibition of the current rules, a
management official 2 of a depository
organization 3 (or any affiliate of such
1 12
U.S.C. 3201 et seq.
the agencies’ rules, ‘‘management official’’ is
defined to include directors; advisory or honorary
directors of a depository institution with total assets
of $100 million or more; ‘‘senior executive officers,’’
as that term is defined in the agencies’ rules
regarding notice of addition or change of directors
and senior executive officers; branch managers;
trustees of depository organizations under the
control of trustees; and any persons who have a
representative or nominee as defined in the
agencies’ rules on management interlocks, serving
in any of the capacities described above. 12 CFR
26.2(j)(1) (OCC); 12 CFR 212.2(j)(1) and 238.92(j)(1)
(Board); and 12 CFR 348.2(k)(1) (FDIC).
3 In the agencies’ rules, the term ‘‘depository
organization’’ means a depository institution or a
depository holding company. ‘‘Depository
institution’’ means a commercial bank (including a
private bank), a savings bank, a trust company, a
savings and loan association, a building and loan
association, a homestead association, a cooperative
bank, an industrial bank, or a credit union,
chartered under the laws of the United States and
having a principal office located in the United
States. Additionally, a United States office of a
foreign commercial bank, including a branch or
agency, is a depository institution. ‘‘Depository
holding company’’ means a bank holding company
or a savings and loan holding company (as more
fully defined in section 202 of the Interlocks Act (12
U.S.C. 3201)) having its principal office located in
the United States. 12 CFR 26.2 (OCC); 12 CFR 212.2
and 238.92 (Board); and 12 CFR 348.2 (FDIC).
2 In
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605
organization) with total assets exceeding
$2.5 billion may not serve as a
management official of an unaffiliated
depository organization (or any affiliate
of such organization) with total assets
exceeding $1.5 billion without seeking
an exemption. The proposed rule would
increase both thresholds to $10 billion.
In addition, the agencies are
proposing three alternative approaches
for increasing the asset thresholds,
described below.
By increasing the major assets
prohibition thresholds, the proposed
rule and proposed alternative
approaches would reduce the number of
depository organizations subject to the
major assets prohibition and reduce
burden by relieving depository
organizations below the increased
thresholds from having to ask the
agencies for an exemption from the
major assets prohibition. The agencies
anticipate that raising the thresholds
will facilitate small depository
organizations in finding qualified
directors by eliminating the need to file
a request for an exemption from the
major assets prohibition.
B. Background
DIMIA—implemented through the
agencies’ rules at 12 CFR parts 26, 212,
238 subpart J, and 348—fosters
competition by prohibiting a
management official from serving at the
same time as a management official of
an unaffiliated depository organization
in situations where the management
interlock may have an anticompetitive
effect.4 DIMIA and the agencies’ rules
achieve this purpose through three
restrictions.
The first, the community prohibition,
prohibits a management official of a
depository organization from serving at
the same time as a management official
of an unaffiliated depository
organization if the involved depository
organizations (or a depository
institution affiliate thereof) have offices
in the same community.5 The second,
the relevant metropolitan statistical area
(RMSA) prohibition, prohibits a
management official of a depository
organization from serving at the same
time as a management official of an
unaffiliated depository organization if
the involved depository organizations
(or a depository institution affiliate
thereof) have offices in the same
4 12 CFR 26.1(b) (OCC); 12 CFR 212.1(b) and
238.91(b) (Board); and 12 CFR 348.1(b) (FDIC).
5 In the agencies’ rules, ‘‘community’’ means a
city, town, or village, and contiguous and adjacent
cities, towns, or villages. 12 CFR 26.2(c) (OCC); 12
CFR 212.2(c) and 238.92(c) (Board); and 12 CFR
348.2(c) (FDIC).
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RMSA 6 and each depository
organization has total assets of $50
million or more. The third, the major
assets prohibition, prohibits a
management official of a depository
organization with total assets exceeding
$2.5 billion (or any affiliate of such an
organization) from serving at the same
time as a management official of an
unaffiliated depository organization
with total assets exceeding $1.5 billion
(or any affiliate of such an organization),
regardless of the location of the two
depository organizations. While the first
two prohibitions capture the risk of
anticompetitive effects from
management interlocks between
depository organizations that operate
within overlapping geographical areas,
the major assets prohibition addresses
management interlocks between
depository organizations that are large
enough that a management interlock
may present anticompetitive concerns
despite the fact that the involved
organizations may not have offices in
the same community or RMSA.
DIMIA allows the agencies to
prescribe regulations that permit
otherwise prohibited interlocks under
certain circumstances.7 Pursuant to the
general exemption provision of the
agencies’ regulations, the appropriate
agency may exempt a prohibited
interlock in response to an application
by a depository organization if the
appropriate agency finds that the
interlock would not result in a
monopoly or substantial lessening of
competition and would not present
safety and soundness concerns.8
The $1.5 billion and $2.5 billion
thresholds for the DIMIA major assets
prohibition were enacted through
amendments to DIMIA in the Economic
Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA).9
During hearings for EGRPRA, it was
noted that the increase of the asset
thresholds to $1.5 billion and $2.5
6 In the agencies’ rules, ‘‘RMSA’’ means an MSA,
a primary MSA, or a consolidated MSA that is not
comprised of designated Primary MSAs to the
extent that these terms are defined and applied by
the Office of Management and Budget. 12 CFR
26.2(m) (OCC); 12 CFR 212.2(m) and 238.92(m)
(Board); and 12 CFR 348.2(c) (FDIC).
7 12 U.S.C. 3207.
8 12 CFR 26.6(a) (OCC); 12 CFR 212.6(a) and
238.96(a) (Board); and 12 CFR 348.6(a) (FDIC). The
agencies have published an interagency
interpretation that explains which agency is the
appropriate agency for purposes of filing a request
for a general exemption under the agencies’ rules.
See Permissible Interlocks—Regulatory Exceptions;
Agency Approval, 1 Fed. Res. Reg. Serv. (Bd. of
Governors of the Fed. Reserve Sys.) § 3–831 (Nov.
18, 1992), 2006 WL 3928616.
9 See Economic Growth and Regulatory
Paperwork Reduction Act of 1996, Pub. L. 104–208,
Title II, 110 Stat. 3009–9, § 2210(a).
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billion was made because the previous
asset threshold numbers did not
‘‘realistically reflect the size of large
institutions in today’s market.’’ 10
DIMIA, as amended, provides that the
agencies may adjust the thresholds as
necessary ‘‘to allow for inflation or
market changes.’’ 11 The current major
assets thresholds have not been adjusted
since 1996, do not reflect the growth
and consolidation among U.S.
depository organizations that has
occurred in the intervening years, and
do not realistically reflect the size of
large institutions in today’s market. For
instance, total assets at depository
organizations have grown nearly 250
percent between the fourth quarter of
1996 and the fourth quarter of 2017.
Moreover, in a March 2017 report to
Congress mandated by EGRPRA, the
agencies committed to reducing
regulatory burden by adjusting the
major assets thresholds in the agencies’
DIMIA regulations.12
II. Description of Proposed Rule
A. Proposal To Increase Asset
Thresholds to $10 Billion
The agencies are proposing to raise
the major assets prohibition thresholds
from $1.5 billion and $2.5 billion to $10
billion each. As proposed, the major
assets prohibition would restrict
management interlocks between
unaffiliated depository organizations
with total assets exceeding $10 billion
(or any affiliates of such organizations).
The proposed threshold increase, and
applying the major assets prohibition to
larger depository organizations rather
than small institutions (i.e., community
banks), is consistent with the purpose of
DIMIA.13 A $10 billion major assets
prohibition threshold would prohibit
interlocks between larger depository
organizations, which could present a
risk of anticompetitive conduct at the
national banking market level, while
exempting smaller or communitybanking-organization-sized depository
organizations, which do not present the
10 The Economic Growth and Regulatory
Paperwork Reduction Act—S. 650: Hearings Before
the Subcomm. on Fin. Insts. and Regulatory Relief
of the S. Comm. on Banking, Hous., & Urban
Affairs, 104 Cong. 90 (1995) (statement of Eugene
A. Ludwig, Comptroller of the Currency).
11 12 U.S.C. 3203.
12 Federal Financial Institutions Examination
Council, Joint Report to Congress: Economic
Growth and Regulatory Paperwork Reduction Act,
82 FR 15900, 15903 (Mar. 30, 2017), https://
www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_JointReport_to_Congress.pdf.
13 Legislative history indicates that Congress
intended for the major assets prohibition to apply
to ‘‘larger’’ organizations. See H.R. Rep. No. 95–
1383, at 5 (1978); S. Rep. No. 95–323, at 13 (1977).
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same competitive risks at the national
banking market level.
In addition, the proposal is consistent
with the current thresholds that
Congress and the agencies have used to
distinguish between small institutions
and larger institutions. For example,
section 201 and 203 of the Economic
Growth, Regulatory Relief, and
Consumer Protection Act provide
certain procedural burden relief for
institutions with less than $10 billion in
total consolidated assets.14
Additionally, the Dodd-Frank Wall
Street Reform and Consumer Protection
Act uses a $10 billion threshold to
distinguish between large banks subject
to supervision by the Bureau of
Consumer Financial Protection and
small banks subject to prudential
regulator supervision.15 A $10 billion
threshold also is consistent with the
asset threshold used by the Board to
distinguish between community
banking organizations and larger
banking organizations for supervisory
and regulatory purposes,16 the asset
threshold used by the FDIC to
distinguish between ‘‘small’’ and
‘‘large’’ institutions for purposes of its
assessment regulations,17 and the asset
threshold used by the OCC to
distinguish community banks from
midsize and large banks.18
Further, having a single, consistent
asset threshold would simplify the
agencies’ DIMIA regulations and enable
depository organizations to identify
more easily whether they may be subject
to the major assets prohibition.
14 Economic Growth, Regulatory Relief, and
Consumer Protection Act, Public Law 115–174,
§ 201, 203, 132 Stat. 1296, 1306, 1309 (2018)
(enacting a ‘‘Community Bank Leverage Ratio’’
capital simplification framework that is generally
available to depository institutions and depository
institution holding companies with $10 billion or
less in total consolidated assets and exempting
generally from the prohibitions of section 13 of the
Bank Holding Company Act of 1956, also known as
the ‘‘Volcker Rule,’’ certain entities with $10 billion
or less in total consolidated assets).
15 Public Law 111–203, § 1025 & 1026, 124 Stat.
1376, 1990–95 (2010).
16 Bd. of Governors of the Fed. Reserve Sys.,
Commercial Bank Examination Manual (rev. Jan.
2018), https://www.federalreserve.gov/publications/
files/cbem.pdf.
17 See 12 CFR 327.8(e) and (f). For the purposes
of the FDIC’s assessment regulations, a ‘‘small
institution’’ generally is an insured depository
institution with less than $10 billion in total assets.
Generally, a ‘‘large institution’’ is an insured
depository institution with more than $10 billion in
total assets or that is treated as a large institution
for assessment purposes under section 327.16(f).
18 Comptroller’s Handbook, ‘‘OCC Community
Bank Supervision’’ (June 2018), https://
www.occ.gov/publications/publications-by-type/
comptrollers-handbook/community-banksupervision/pub-ch-community-banksupervision.pdf.
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B. Expected Impact
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The proposed rule would increase the
number of depository organizations that
would no longer be subject to the major
assets prohibition and therefore reduce
the number of institutions that need to
seek an exemption from the major assets
prohibition from the appropriate
agency.
As of December 31, 2017, 1,021
depository organizations had total assets
of more than $1.5 billion and were
subject to the major assets prohibition.19
In addition, 698 depository
organizations with total assets of more
than the $2.5 billion threshold were
subject to restrictions on management
interlocks with unaffiliated depository
organizations with total assets
exceeding the $1.5 billion threshold. If
the agencies raise the $1.5 billion asset
threshold to $10 billion, they would
exempt 764 depository organizations
from the major assets prohibition as of
December 31, 2017. Of these 764
depository organizations, 224 are FDICsupervised depository institutions, 113
are OCC-supervised depository
institutions, 91 are Board-supervised
depository institutions, and 336 are
Board-supervised depository holding
companies. As of December 31, 2017,
257 depository organizations reported
total assets greater than $10 billion and
would remain subject to the major assets
prohibition.
Increasing the thresholds of the major
assets prohibition would allow smaller
depository organizations to form
management interlocks with other
smaller depository organizations and
would relieve the depository
organization seeking to add a
management official from the associated
burden of seeking a general exemption
from the appropriate agency with
respect to such a management interlock
(unless the interlock would be
prohibited by the community or RMSA
prohibitions). The agencies believe that
with fewer depository organizations
subject to the major assets prohibition
thresholds, the proposed rule would
expand the pool of available
management officials for smaller
19 The analysis in this preamble reflecting
changes in the number of depository organizations
exempted does not incorporate credit unions
because this proposed rule does not apply to credit
unions. Data used in this analysis were drawn from
the December 31, 1996, and December 31, 2017,
Consolidated Reports of Condition and Income (Call
Reports), Consolidated Financial Statements for
Holding Companies, Parent Company Only
Financial Statements for Large Holding Companies,
Parent Company Only Financial Statements for
Small Holding Companies, and Reports of Assets
and Liabilities of U.S. Branches and Agencies of
Foreign Banks.
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depository organizations no longer
covered by the major assets prohibition.
The agencies do not expect the
proposal to materially increase
anticompetitive risk. The increase to the
major assets prohibition thresholds is
insufficient to materially increase the
risk of anticompetitive interlocks
between depository organizations at the
national banking market level, and the
proposal does not affect DIMIA
prohibitions against interlocks within
overlapping geographical areas.
C. Future Adjustments to the Thresholds
Following adjustment of the
thresholds by this proposed rule, if
adopted, the agencies would make
further adjustments to the thresholds to
account for inflation through direct final
rule without notice and comment
pursuant to 12 CFR 26.3(c), 212.3(c),
238.93(c), and 348.3(c). If the agencies
determine that further adjustments to
the thresholds are warranted for reasons
other than inflation, the agencies then
would propose another adjustment
through a subsequent notice of proposed
rulemaking with the opportunity to
comment.
III. Alternative Approaches To Adjust
the Asset Thresholds
As described above, in order to
account for market changes since the
agencies’ DIMIA regulations were last
updated, the agencies propose to
increase the major assets prohibition
thresholds to $10 billion. The agencies
also invite comment on three alternative
approaches discussed below. Consistent
with the agencies’ authority under
DIMIA, two of the alternative
approaches, like the proposed approach,
are based on market changes, and the
third alternative approach is based on
inflation.20 Because the proposal and
the alternative approaches all would
raise the major assets prohibition
thresholds, the agencies expect that the
impact for each proposal would be
similar (i.e., each approach would result
in a greater number of depository
organizations exempted from the major
assets prohibition), varying only in the
degree of the impact (i.e., the number of
depository organizations exempted).
A. Thresholds Adjustment Based on
Percentage of the Number of Banking
Organizations Covered by Prohibition
Under the first alternative approach,
the agencies would adjust the major
assets prohibition thresholds so that
approximately the same percentage of
the total number of banking
20 See
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607
organizations 21 that were covered by
the thresholds as of the fourth quarter of
1996—the year in which the $1.5 billion
and $2.5 billion major assets prohibition
thresholds were established by statute—
would be covered as of fourth quarter
2017. By adjusting the major assets
prohibition thresholds so that they
cover the same percentage of the total
number of banking organizations as was
covered in 1996, this alternative
approach accounts for changes in the
U.S. banking market and seeks to
maintain the prohibition’s initial scope
and impact—which was limited to only
relatively large depository
organizations—as well as the
protections it provides against
anticompetitive risk. This approach
would increase the current thresholds of
$1.5 billion and $2.5 billion to $7.9
billion and $11.8 billion, respectively.
As of the fourth quarter of 1996, the
major assets prohibition thresholds
covered the top 1.9 percent and 1.3
percent of banking organizations by
asset size. By the fourth quarter of 2017,
the percentage of banking organizations
covered by the thresholds had increased
to 6.83 percent and 4.44 percent.
Adjusting the major assets prohibition
thresholds to account for this market
change would result in adjusted asset
thresholds of $7.9 billion and $11.8
billion.
Raising the current $1.5 billion
threshold to $7.9 billion would result in
an additional 702 depository
organizations being exempted from the
major assets prohibition. Of these 702
depository organizations, 207 are FDICsupervised depository institutions, 102
are OCC-supervised depository
institutions, 82 are Board-supervised
depository institutions, and 311 are
Board-supervised depository holding
companies. As of December 31, 2017, 78
depository organizations reported total
assets greater than $7.9 billion but less
than $11.8 billion. Finally, 241
depository organizations reported total
assets greater than $11.8 billion and
would remain subject to the major assets
prohibition.
21 The agencies’ analysis, and resulting
percentages and thresholds, for this approach relies
on ‘‘banking organizations’’ instead of ‘‘depository
organizations’’ to avoid double-counting the assets
of depository institutions held by depository
holding companies that reported consolidated
holding company assets. As used here, the term
‘‘banking organization’’ includes all depository
holding companies, as defined by the agencies’
DIMIA regulations, that reported consolidated
assets greater than zero and all depository
institutions, as defined by the agencies’ DIMIA
regulations, with reported assets greater than zero
that are not consolidated under a holding company.
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B. Thresholds Adjustment Based on
Asset Growth
Under this second alternative
approach, the agencies would propose
to adjust the major assets prohibition
thresholds to reflect the rate of asset
growth for depository organizations over
the period between the fourth quarter of
1996 and the fourth quarter of 2017.
This approach seeks to replicate the
major assets prohibition’s coverage of
the 1996 banking market by using total
asset growth as a measure of market
change. Total assets at depository
organizations have grown by $15.6
trillion between the fourth quarter of
1996 and the fourth quarter of 2017.
This growth represents an increase of
three and one-half times the amount of
total assets in the fourth quarter of 1996.
Under this approach, the current major
assets prohibition thresholds would be
multiplied by the aforementioned rate of
asset growth (3.5) to account for market
changes for depository organizations. As
a result, the current assets thresholds
would be raised from $1.5 billion and
$2.5 billion to $5.3 billion and $8.8
billion, respectively.
Raising the $1.5 billion asset
threshold to $5.3 billion would result in
an additional 616 depository
organizations being exempted from the
major assets prohibition. Of these 616
depository organizations, 182 are FDICsupervised depository institutions, 89
are OCC-supervised depository
institutions, 74 are Board-supervised
depository institutions, and 271 are
Board-supervised depository holding
companies. As of December 31, 2017,
109 depository organizations reported
total assets greater than $5.3 billion, but
less than $8.8 billion. Finally, 296
depository organizations reported total
assets greater than $8.8 billion and
would remain subject to the major assets
prohibition.
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C. Thresholds Adjustment Increased
Based on Inflation
Under the third alternative approach,
the agencies would adjust the major
assets prohibition thresholds based on
the year-to-year change in the average of
the Consumer Price Index for Urban
Wage Earners and Clerical Workers
(CPI–W). Adjusting the asset thresholds
based on inflation from the fourth
quarter of 1996 to the fourth quarter of
2017 would increase the major assets
prohibition thresholds from $1.5 billion
and $2.5 billion to $2.3 billion and $3.9
billion, respectively. Although the
agencies’ current rules allow an
adjustment for inflation based on the
CPI–W to be published as a final rule
without notice and comment, the
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agencies believe it is appropriate to seek
comment on an inflation-based
approach given the length of time that
has passed without change to the
thresholds and given the extent to
which the banking market has changed
during that time.
Raising the $1.5 billion asset
threshold to $2.3 billion would exempt
an additional 288 depository
organizations from the major assets
prohibition. Of these 288 depository
organizations, 83 are FDIC-supervised
depository institutions, 45 are OCCsupervised depository institutions, 36
are Board-supervised depository
institutions, and 124 are Boardsupervised depository holding
companies. As of December 31, 2017,
219 depository organizations reported
total assets greater than $2.3 billion but
less than $3.9 billion. Finally, 514
depository organizations reported total
assets greater than $3.9 billion and
would remain subject to the major assets
prohibition.
IV. FDIC Technical Amendments
In addition to the proposed
adjustment of the thresholds for the
major assets prohibition, the FDIC
intends to make two purely technical
corrections to FDIC regulations, both
pertaining to DIMIA implementation, by
means of a separate final rule without
notice and comment. The first
correction pertains to 12 CFR 303.249
and would remove an erroneous
statement. The second pertains to 12
CFR 348.4(i) and would correct a
citation. Both technical corrections will
be explained in further detail in the
FDIC final rule.
V. Request for Comment
The agencies invite comment on all
aspects of this proposal, including the
specific questions enumerated below.
Question 1: Are depository
organizations the appropriate unit for
measuring market change for purposes
of the agencies’ proposal? In addition,
are banking organizations the
appropriate unit for measuring market
change for purposes of the agencies’
alternative approach based on the
percentage of the number of banking
organizations covered by the
prohibition? For all of the proposed
approaches, would another unit of
measurement be more appropriate? If
so, what unit of measurement and why?
Question 2: Is the proposed $10
billion asset threshold appropriate to
carry out the purposes of the major
assets prohibition? Would one of the
other alternative approaches proposed
to adjust the thresholds be more
appropriate to meet the purposes of the
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major assets prohibition? Would some
other dollar amount, or some
combination of asset thresholds or
factors, be more appropriate? If so, what
threshold, factor, or combination thereof
would be appropriate, and why?
Question 3: Is the measurement
period of the fourth quarter of 1996
through the fourth quarter of 2017, as
used in the agencies’ alternative
approaches, appropriate for purposes of
measuring market change? Should the
agencies shorten or extend this
measurement period? If so, why?
Question 4: Are there any other
approaches to adjusting the major
assets prohibition thresholds that would
be more appropriate than the
approaches proposed by the agencies? If
so, what approach would be more
appropriate and why?
VI. Regulatory Analysis
A. Paperwork Reduction Act of 1995
Certain provisions of the proposed
rule contain ‘‘collection of information’’
requirements within the meaning of the
Paperwork Reduction Act (PRA) of 1995
(44 U.S.C. 3501–3521). In accordance
with the requirements of the PRA, the
agencies may not conduct or sponsor,
and the respondent is not required to
respond to, an information collection
unless it displays a currently valid
Office of Management and Budget
(OMB) control number. The OMB
control number for the OCC is 1557–
0014; the Board’s is 7100–0134; and the
FDIC’s is 3064–0118. These information
collections will be extended for three
years, with revision. The information
collection requirements contained in
this proposed rulemaking have been
submitted by the OCC and FDIC to OMB
for review and approval under section
3507(d) of the PRA (44 U.S.C. 3507(d))
and section 1320.11 of the OMB’s
implementing regulations (5 CFR 1320).
The Board reviewed the proposed rule
under the authority delegated to the
Board by OMB.
Comments are invited on:
a. Whether the collections of
information are necessary for the proper
performance of the agencies’ functions,
including whether the information has
practical utility;
b. The accuracy or the estimate of the
burden of the information collections,
including the validity of the
methodology and assumptions used;
c. Ways to enhance the quality,
utility, and clarity of the information to
be collected;
d. Ways to minimize the burden of the
information collections on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and
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e. Estimates of capital or startup costs
and costs of operation, maintenance,
and purchase of services to provide
information.
All comments will become a matter of
public record. Comments on aspects of
this notice that may affect reporting,
recordkeeping, or disclosure
requirements and burden estimates
should be sent to the addresses listed in
the ADDRESSES section of this document.
A copy of the comments may also be
submitted to the OMB desk officer by
mail to U.S. Office of Management and
Budget, 725 17th Street NW, #10235,
Washington, DC 20503; facsimile to
(202) 395–6974; or email to oira_
submission@omb.eop.gov, Attention,
Federal Banking Agency Desk Officer.
Proposed Information Collection
Title of Information Collection:
Management Official Interlocks.
Frequency: Annual, event driven.
Affected Public: Businesses or other
for-profit.
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Respondents
OCC: National banks, Federal savings
associations, and U.S. offices of foreign
commercial banks, including Federal
branches and agencies.
Board: State member banks (SMBs),
bank holding companies (BHCs),
savings and loan holding companies
(SLHCs), and their affiliates; and U.S.
offices of foreign commercial banks,
including state-licensed branches and
agencies.
FDIC: State nonmember banks, state
savings associations, and certain
subsidiaries of those entities; and U.S.
offices of foreign commercial banks,
including insured branches and
agencies.
Current Actions: The proposed rule
would revise section ll.3,
‘‘Prohibitions,’’ of the agencies’ DIMIA
rules 22 by increasing the major asset
prohibition thresholds from $2.5 billion
and $1.5 billion to $10 billion each.
Section ll.6, ‘‘General Exemption,’’ 23
contains a process for applying for an
exemption from the prohibitions in
section ll.3. With the increase in the
major assets prohibition thresholds in
section ll.3, it is likely that fewer
applications will be filed under section
ll.6. Therefore, the agencies have
reduced their respondent counts for
section ll.6 accordingly. Also, in
order to be consistent across the
agencies, the agencies are applying a
conforming methodology for calculating
22 See
12 CFR 26.3 (OCC); 12 CFR 212.3 and 238.3
(Board); 12 CFR 348.3 (FDIC).
23 See 12 CFR 26.6 (OCC); 12 CFR 212.6 and 238.6
(Board); 12 CFR 348.6 (FDIC).
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the burden estimates for the reporting
and recordkeeping requirements.
PRA Burden Estimates
OCC
OMB control number: 1557–0014.
Estimated number of respondents: 2.
Estimated average hours per response:
Reporting Sections 26.4(h)(1)(i) and
26.6(b)—4.
Recordkeeping Section 26.5(b)—3.
Estimated annual burden hours: 14.
Board
OMB control number: 7100–NEW
(The current management official
interlocks reporting and recordkeeping
requirements are housed under OMB
control number 7100–0134 and will be
separated out in a new OMB control
number).
Estimated number of respondents: 4.
Estimated average hours per response:
Reporting Sections 212.4(h)(1)(i) and
212.6(b)—4.
Recordkeeping Section 212.5(b)—3.
Estimated annual burden hours: 28.
FDIC
OMB control number: 3064–0118.
Estimated number of respondents: 6.
Estimated average hours per response:
Reporting Sections 348.4(h)(1)(i) and
348.6(b)—4.
Recordkeeping Section 348.5(b)—3.
Estimated annual burden hours: 42.
B. 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. The
SBA has defined ‘‘small entities’’ to
include certain organizations with total
assets less than or equal to $550
million.24 Under 5 U.S.C. 605(b), 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
publishes its certification and a brief
explanatory statement in the Federal
Register along with its rule.
OCC: The OCC currently supervises
approximately 886 small entities.25
24 13
CFR 121.201.
OCC bases its estimate of the number of
small entities on the SBA’s size thresholds for
commercial banks and savings institutions, and
trust companies, which are $550 million and $38.5
million, respectively. Consistent with the General
Principles of Affiliation 13 CFR 121.103(a), the OCC
counts the assets of affiliated financial institutions
when determining if it should classify an OCCsupervised institution as a small entity. The OCC
uses December 31, 2017, to determine size because
a ‘‘financial institution’s assets are determined by
25 The
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609
Because the major assets prohibition of
DIMIA prevents a management official
of a depository organization with total
assets exceeding $2.5 billion (depository
organization threshold) or any affiliate
of such organization from serving as a
management official of an unaffiliated
depository organization with total assets
exceeding $1.5 billion (unaffiliated
organization threshold) it is unlikely to
affect any OCC-supervised small
institutions. Therefore, the OCC certifies
that the proposed rule would not have
a significant economic impact on a
substantial number of OCC-supervised
small entities.
Board: The Board is providing an
initial regulatory flexibility analysis
with respect to this proposed rule. The
Regulatory Flexibility Act, 5 U.S.C. 601
et seq. (RFA), requires an agency to
consider whether the rules it proposes
will have a significant economic impact
on a substantial number of small
entities. In connection with a proposed
rule, the RFA requires an agency to
prepare an Initial Regulatory Flexibility
Analysis describing the impact of the
rule on small entities or to certify that
the proposed rule would not have a
significant economic impact on a
substantial number of small entities. An
initial regulatory flexibility analysis
must contain (1) a description of the
reasons why action by the agency is
being considered; (2) a succinct
statement of the objectives of, and legal
basis for, the proposed rule; (3) a
description of, and, where feasible, an
estimate of the number of small entities
to which the proposed rule will apply;
(4) a description of the projected
reporting, recordkeeping, and other
compliance requirements of the
proposed rule, including an estimate of
the classes of small entities that will be
subject to the requirement and the type
of professional skills necessary for
preparation of the report or record; (5)
an identification, to the extent
practicable, of all relevant Federal rules
which may duplicate, overlap with, or
conflict with the proposed rule; and (6)
a description of any significant
alternatives to the proposed rule which
accomplish its stated objectives.26
The Board has considered the
potential impact of the proposed rule on
small entities in accordance with the
RFA. Based on its analysis and for the
reasons stated below, the Board believes
that this proposed rule will not have a
significant economic impact on a
averaging the assets reported on its four quarterly
financial statements for the preceding year.’’ See
footnote 8 of the U.S. Small Business
Administration’s Table of Size Standards.
26 5 U.S.C. 603.
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substantial number of small entities.
Nevertheless, the Board is publishing
and inviting comment on this initial
regulatory flexibility analysis. A final
regulatory flexibility analysis will be
conducted after comments received
during the public comment period have
been considered.
1. Reasons for the Proposal
As discussed in the Supplementary
Information, the proposed rule would
adjust the major assets prohibition
thresholds for management interlocks in
the Board’s rules implementing DIMIA.
Under the current major assets
prohibition, a management official of a
depository organization with total assets
exceeding $2.5 billion (or any affiliate of
such an organization) from serving at
the same time as a management official
of an unaffiliated depository
organization with total assets exceeding
$1.5 billion (or any affiliate of such an
organization), regardless of the location
of the two depository organizations. For
these purposes, the term ‘‘depository
organization’’ means a depository
institution or a depository holding
company. ‘‘Depository institution’’
means a commercial bank (including a
private bank), a savings bank, a trust
company, a savings and loan
association, a building and loan
association, a homestead association, a
cooperative bank, an industrial bank, or
a credit union, chartered under the laws
of the United States and having a
principal office located in the United
States. Additionally, a United States
office, including a branch or agency, of
a foreign commercial bank is a
depository institution. ‘‘Depository
holding company’’ means a bank
holding company or a savings and loan
holding company (as more fully defined
in section 202 of DIMIA) having its
principal office located in the United
States.27 The primary benefit of the
proposed rule would be to exclude from
the major assets prohibition
management interlocks involving
depository organizations with total
assets in excess of the current asset
thresholds but below the proposed asset
thresholds. Raising the thresholds will
help to facilitate small banks in finding
qualified directors by eliminating the
need to file a request for an exemption
from the major assets prohibition.
2. Statement of Objectives and Legal
Basis
As discussed above, the Board’s
objective in proposing this rule would
be to reduce the number of depository
organizations subject to the major assets
27 12
CFR 212.2 and 231.92.
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prohibition. The Board has authority
under DIMIA to prescribe regulations to
carry out DIMIA with respect to state
banks that are members of the Federal
Reserve System, bank holding
companies, and savings and loan
holding companies.28
3. Description of Small Entities To
Which the Regulation Applies
The Board’s proposal would apply to
state member banks, bank holding
companies, and savings and loan
holding companies having their
principal offices in the United States.
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. As of June 30, 2018,
there were approximately 3,053 small
bank holding companies, 184 small
savings and loan holding companies,
and 541 small state member banks. The
proposed rule would increase the total
asset level at which depository
organizations and their affiliates become
subject to the major assets prohibition
from $1.5 billion and $2.5 billion to $10
billion and $10 billion, respectively.
4. Projected Reporting, Recordkeeping,
and Other Compliance Requirements
To the extent that a small entity is
subject to the major assets prohibition
by virtue of its affiliation with a banking
organization that has total assets
exceeding $10 billion, the proposed rule
would not impose any additional
requirements on those small entities
because they were already subject to the
major assets prohibition. The proposed
changes to the major assets prohibition
would not impose any new reporting,
recordkeeping, and other compliance
requirements. Accordingly, the Board
believes that the proposed rule will not
have a significant economic impact on
small banking organizations supervised
by the Board.
5. Identification of Duplicative,
Overlapping, or Conflicting Federal
Regulations
The Board is aware of no other
Federal rules that duplicate, overlap, or
conflict with the proposed changes to
the major assets prohibition thresholds.
6. Discussion of Significant Alternatives
The Board believes that the proposed
rule will not have a significant
economic impact on small entities
supervised by the Board and therefore
28 12
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believes that there are no significant
alternatives to the proposed rule that
would reduce the economic impact on
small entities supervised by the Board.
The Board welcomes comment on all
aspects of its analysis. In particular, the
Board requests that commenters
describe the nature of any impact on
small entities and provide empirical
data to illustrate and support the extent
of the impact.
FDIC: The Regulatory Flexibility Act
(RFA) generally requires that, in
connection with a proposed rule, an
agency prepare and make available for
public comment an initial regulatory
flexibility analysis describing the
impact of the rulemaking on small
entities.29 A regulatory flexibility
analysis is not required, however, if the
agency certifies that the rule will not
have a significant economic impact on
a substantial number of small entities.
The Small Business Administration
(SBA) has defined ‘‘small entities’’ to
include banking organizations with total
assets less than or equal to $550
million.30 The FDIC supervises 3,643
depository institutions,31 of which
2,840 are defined as small banking
entities by the terms of the RFA.32
The proposed rule will only affect
institutions with total consolidated
assets between the current thresholds of
$1.5 billion and $2.5 billion and the
proposed threshold of $10 billion.
Therefore, the proposed rule will likely
affect zero small entities.
Accordingly, the FDIC believes that
the proposed rule will not have a
significant impact on a substantial
number of small entities. For the
reasons described above and pursuant to
5 U.S.C. 605(b), the FDIC certifies that
the proposed rule will not have a
significant economic impact on a
substantial number of small entities.
The FDIC invites comments on all
aspects of the supporting information
provided in this RFA section. In
particular, would this rule have any
significant effects on small entities that
the FDIC has not identified?
29 5
U.S.C. 601 et seq.
SBA defines a small banking organization
as having $550 million or less in assets, where ‘‘a
financial institution’s assets are determined by
averaging the assets reported on its four quarterly
financial statements for the preceding year.’’ 13 CFR
121.201 n.8 (2018). ‘‘SBA counts the receipts,
employees, or other measure of size of the concern
whose size is at issue and all of its domestic and
foreign affiliates . . . .’’ 13 CFR 121.103(a)(6) (2018).
Following these regulations, the FDIC uses a
covered entity’s affiliated and acquired assets,
averaged over the preceding four quarters, to
determine whether the covered entity is ‘‘small’’ for
the purposes of RFA.
31 FDIC-supervised institutions are set forth in 12
U.S.C. 1813(q)(2).
32 Call Report, December 31, 2017.
30 The
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C. OCC Unfunded Mandates Reform Act
of 1995 Determination
The OCC analyzed the proposed rule
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
the proposed rule includes 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 proposed rule does not impose new
mandates. Therefore, the OCC
concludes that the proposed rule will
not result in an expenditure of $100
million or more annually by state, local,
and tribal governments or by the private
sector.
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D. Riegle Community Development and
Regulatory Improvement Act
The Riegle Community Development
and Regulatory Improvement Act of
1994 requires that each Federal banking
agency, in determining the effective date
and administrative compliance
requirements for new regulations that
impose additional reporting, disclosure,
or other requirements on insured
depository institutions (IDIs), consider,
consistent with principles of safety and
soundness and the public interest, any
administrative burdens that such
regulations would place on depository
institutions, including small depository
institutions, and customers of
depository institutions, as well as the
benefits of such regulations. In addition,
new regulations that impose additional
reporting, disclosures, or other new
requirements on insured depository
institutions generally must take effect
on the first day of a calendar quarter
that begins on or after the date on which
the regulations are published in final
form.
The proposed rule would reduce
burden and imposes no additional
reporting, disclosure, or other
requirements on IDIs, including small
depository institutions, nor on the
customers of depository institutions.
Nonetheless, in connection with
determining an effective date for the
proposed rule, the agencies invite
comment on any administrative burdens
that the proposed rule would place on
depository institutions, including small
depository institutions, and customers
of depository institutions.
E. Plain Language
Section 722 of the Gramm-LeachBliley Act requires the Federal banking
agencies to use plain language in all
proposed and final rules published after
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January 1, 2000. The agencies have
sought to present the proposed rule in
a simple and straightforward manner,
and invite comment on the use of plain
language. For example:
• Have the agencies organized the
material to inform your needs? If not,
how could the agencies present the
proposed rule more clearly?
• Are the requirements in the
proposed rule clearly stated? If not, how
could the proposed rule be more clearly
stated?
• Does the proposed rule contain
technical language or jargon that is not
clear? If so, which language requires
clarification?
• Would a different format (grouping
and order of sections, use of headings,
paragraphing) make the proposed rule
easier to understand? If so, what
changes would achieve that?
• Is this section format adequate? If
not, which of the sections should be
changed and how?
• What other changes can the
agencies incorporate to make the
proposed rule easier to understand?
List of Subjects
12 CFR Part 26
Antitrust, Banks, banking, Holding
companies, Management official
interlocks, National banks.
12 CFR Part 212
Antitrust, Banks, banking, Holding
companies, Management official
interlocks.
12 CFR Part 238
Administrative practice and
procedure, Banks, banking, Holding
companies, Reporting and
recordkeeping requirements, Securities.
12 CFR Part 348
Antitrust, Banks, banking, Holding
companies.
Authority and Issuance
For the reasons stated in the
preamble, the OCC proposes to amend
12 CFR part 26, the Board proposes to
amend 12 CFR parts 212 and 238, and
the FDIC proposes to amend 12 CFR
part 348 as follows:
2. Section 26.3 is amended by revising
the first sentence of paragraph (c) to
read as follows:
■
§ 26.3
Prohibitions.
*
*
*
*
*
(c) Major assets. A management
official of a depository organization
with total assets exceeding $10 billion
(or any affiliate of such an organization)
may not serve at the same time as a
management official of an unaffiliated
depository organization with total assets
exceeding $10 billion (or any affiliate of
such an organization), regardless of the
location of the two depository
organizations. * * *
*
*
*
*
*
FEDERAL RESERVE SYSTEM
PART 212—MANAGEMENT OFFICIAL
INTERLOCKS (REGULATION L)
3. The authority citation for part 212
continues to read as follows:
■
Authority: 12 U.S.C. 3201–3208; 15 U.S.C.
19.
4. Section 212.3 is amended by
revising the first sentence of paragraph
(c) to read as follows:
■
§ 212.3
*
*
*
*
(c) Major assets. A management
official of a depository organization
with total assets exceeding $10 billion
(or any affiliate of such an organization)
may not serve at the same time as a
management official of an unaffiliated
depository organization with total assets
exceeding $10 billion (or any affiliate of
such an organization), regardless of the
location of the two depository
organizations. * * *
PART 238—SAVINGS AND LOAN
HOLDING COMPANIES (REGULATION
LL)
5. The authority citation for part 238
is revised to read as follows:
■
Authority: 5 U.S.C. 552, 559; 12 U.S.C.
1462, 1462a, 1463, 1464, 1467, 1467a, 1468,
1813, 1817, 1829e, 1831i, 1972, 3201–3208;
15 U.S.C. 78 l.
6. Section 238.93 is amended by
revising the first sentence of paragraph
(c) to read as follows:
■
§ 238.93
Office of the Comptroller of the
Currency
*
1. The authority citation for part 26
continues to read as follows:
■
Authority: 12 U.S.C. 1, 93a, 1462a, 1463,
1464, 3201–3208, 5412(b)(2)(B).
PO 00000
Frm 00040
Fmt 4702
Sfmt 4702
Prohibitions.
*
DEPARTMENT OF THE TREASURY
PART 26—MANAGEMENT OFFICIAL
INTERLOCKS
611
Prohibitions.
*
*
*
*
(c) Major assets. A management
official of a depository organization
with total assets exceeding $10 billion
(or any affiliate of such an organization)
may not serve at the same time as a
management official of an unaffiliated
depository organization with total assets
exceeding $10 billion (or any affiliate of
such an organization), regardless of the
E:\FR\FM\31JAP1.SGM
31JAP1
612
Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules
location of the two depository
organizations. * * *
FEDERAL DEPOSIT INSURANCE
CORPORATION
PART 348—MANAGEMENT OFFICIAL
INTERLOCKS
7. The authority citation for part 348
continues to read as follows:
■
Authority: 12 U.S.C. 3207, 12 U.S.C.
1823(k).
8. Section 348.3 is amended by
revising the first sentence of paragraph
(c) to read as follows:
■
§ 348.3
Prohibitions.
(c) Major assets. A management
official of a depository organization
with total assets exceeding $10 billion
(or any affiliate of such an organization)
may not serve at the same time as a
management official of an unaffiliated
depository organization with total assets
exceeding $10 billion (or any affiliate of
such an organization), regardless of the
location of the two depository
organizations. * * *
*
*
*
*
*
Dated: December 18, 2018.
William A. Rowe,
Chief Risk Officer.
By order of the Board of Governors of the
Federal Reserve System, December 14, 2018.
Ann E. Misback,
Secretary of the Board.
Dated at Washington, DC, this 18th day of
December 2018.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2018–28038 Filed 1–30–19; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P
NATIONAL MEDIATION BOARD
29 CFR Parts 1203 and 1206
[Docket No. C–7198]
RIN 3140–AA01
Decertification of Representatives
National Mediation Board.
Proposed rule with requests for
comments.
AGENCY:
khammond on DSKBBV9HB2PROD with PROPOSALS
ACTION:
The National Mediation
Board (NMB or Board) is proposing to
amend its regulations to provide a
straightforward procedure for the
decertification of representatives. The
Board believes this change is necessary
to fulfill the statutory mission of the
Railway Labor Act, protecting
employees’ right to select their
SUMMARY:
VerDate Sep<11>2014
17:23 Jan 30, 2019
Jkt 247001
representative. This change will ensure
that each employee has a say in their
representative and eliminate
unnecessary hurdles for employees who
no longer wish to be represented.
DATES: Submit comments on or before
April 1, 2019. A public hearing will be
held at 10 a.m. in Washington, DC at a
date and location to be announced later.
ADDRESSES: You may submit comments,
identified by Docket No. C–7198, by any
of the following methods:
—Federal eRulemaking Portal: https://
regulations.gov. Follow the
instructions for submitting comments.
—Agency Website: https://www.nmb.gov.
Follow the instructions for submitting
comments.
—Email: legal@nmb.gov. Include Docket
No. C–7198 in the subject line of the
message.
—Fax: (202) 692–5085.
—Mail and Hand Delivery: National
Mediation Board, 1301 K Street NW,
Ste. 250E, Washington, DC 20005.
Instructions: All submissions received
must include the agency name and
docket number. All comments received
will be posted without change to https://
www.nmb.gov, including any personal
information provided.
Docket: For access to the docket to
read background documents or
comments received, go to https://
www.nmb.gov.
FOR FURTHER INFORMATION CONTACT:
Mary Johnson, General Counsel,
National Mediation Board, (202) 692–
5040, legal@nmb.gov.
SUPPLEMENTARY INFORMATION: The
Railway Labor Act (RLA), 45 U.S.C. 151
et seq. establishes the NMB whose
functions, among others, are to
administer certain provisions of the
RLA with respect to investigating
disputes as to the representative of a
craft or class. In accordance with its
authority under 45 U.S.C. 152, Ninth,
the Board has considered changes to its
rules to better facilitate the statutory
mission to investigate representation
disputes ‘‘among a carrier’s employees
as to who are the representatives of such
employees.’’
Currently, while employees have the
ability to decertify a representative
under the RLA, the process to decertify
is unnecessarily complex and
convoluted. By failing to have in place
a straight-forward process for
decertification of a representative, the
Board is maintaining an unjustifiable
hurdle for employees who no longer
wish to be represented and failing to
fulfill the statutory purpose of ‘‘freedom
of association among employees.’’ 45
U.S.C. 151a(2).
PO 00000
Frm 00041
Fmt 4702
Sfmt 4702
Unlike the National Labor Relations
Act, the RLA has no statutory provision
for decertification of a bargaining
representative. The Supreme Court,
however, has held that, under Section 2,
Fourth, 45 U.S.C. 152, Fourth,
employees of the craft or class ‘‘have the
right to determine who shall be the
representative of the group or, indeed,
whether they shall have any
representation at all.’’ Bhd. of Railway
and Steamship Clerks v. Assoc. for the
Benefit of Non-Contract Employees, 380
US 650, 670 (1965)(ABNE). In ABNE,
the Court further noted that the
legislative history of the RLA supports
the view that employees have the option
of rejecting collective representation. Id.
at 669. citing Hearings on H.R. 7650,
House Committee on Interstate and
Foreign Commerce, 73d Cong., 2d Sess.,
34–35. In International Brotherhood of
Teamsters v. Bhd. of Railway, Airline
and Steamship Clerks, the United States
Court of Appeals for the District of
Columbia (D.C. Circuit), stated that ‘‘it
is inconceivable that the right to reject
collective representation vanishes
entirely if the employees of a unit once
choose collective representation. On its
face that is a most unlikely rule,
especially taking into account the
inevitability of substantial turnover of
personnel within the unit.’’ 402 F.2d
196, 202 (1968), See also Russell v.
National Mediation Board, 714 F.2d
1332 (1983).
Under its current procedures, the
NMB allows indirect rather than direct
decertification. The Board does not
allow an employee or a group of
employees of a craft or class to apply for
an election to vote for their current
representative or for no union.
Employees who wish to become
unrepresented must follow a more
convoluted path to an election because
of the Board’s requirement of the ‘‘straw
man.’’ This straw man requirement
means that if a craft or class of
employees want to decertify, they must
find a person willing to put their name
up, i.e. ‘‘John Smith,’’ and then explain
to at least fifty percent of the workforce
that John Smith does not want to
represent them, but if they want to
decertify they have to sign the card
authorizing him to represent them.
Thus, in order to become unrepresented,
employees are required to first sign an
authorization card to have a strawman
step in to represent them. In the
resulting election, the ballot options
will include the names of the current
representative; John Smith, the
strawman applicant; ‘‘no union;’’ and an
option to write in the name of another
E:\FR\FM\31JAP1.SGM
31JAP1
]]>Agencies
[Federal Register Volume 84, Number 21 (Thursday, January 31, 2019)]
[Proposed Rules]
[Pages 604-612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28038]
[[Page 604]]
=======================================================================
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 26
[Docket ID OCC-2018-0011]
RIN 1557-AE22
FEDERAL RESERVE SYSTEM
12 CFR Parts 212 and 238
[Docket No. R-1641]
RIN 7100-AF31
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 348
RIN 3064-AE57
Thresholds Increase for the Major Assets Prohibition of the
Depository Institution Management Interlocks Act Rules
AGENCY: Office of the Comptroller of the Currency (OCC); Board of
Governors of the Federal Reserve System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Notice of proposed rulemaking and request for public comment.
-----------------------------------------------------------------------
SUMMARY: The OCC, the Board, and the FDIC (collectively, the agencies)
are inviting comment on a proposed rule that would increase the major
assets prohibition thresholds for management interlocks in the
agencies' rules implementing the Depository Institution Management
Interlocks Act (DIMIA). The DIMIA major assets prohibition prohibits a
management official of a depository organization with total assets
exceeding $2.5 billion (or any affiliate of such an organization) from
serving at the same time as a management official of an unaffiliated
depository organization with total assets exceeding $1.5 billion (or
any affiliate of such an organization). DIMIA provides that the
agencies may adjust, by regulation, the major assets prohibition
thresholds in order to allow for inflation or market changes. The
agencies propose to raise the major assets prohibition thresholds to
$10 billion to account for changes in the United States banking market
since the current thresholds were established in 1996. The agencies
also propose three alternative approaches for increasing the thresholds
based on market changes or inflation. Increasing the major assets
prohibition thresholds would relieve certain depository organizations
below the adjusted thresholds from having to ask the agencies for an
exemption from the major assets prohibition. The agencies do not expect
the proposal to materially increase anticompetitive risk.
DATES: Comments must be received on or before April 1, 2019.
ADDRESSES: Comments should be directed to:
OCC: Because paper mail in the Washington, DC area and at the OCC
is subject to delay, commenters are encouraged to submit comments
through the Federal eRulemaking Portal or email, if possible. Please
use the title ``Thresholds Increase for the Major Assets Prohibition of
the Depository Institution Management Interlocks Act Rules'' 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
www.regulations.gov. Enter ``Docket ID OCC-201X-0011'' 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-201X-0011'' in your comment. In general, 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 include 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
www.regulations.gov. Enter ``Docket ID OCC-201X-0011'' 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 20219. For
security reasons, the OCC requires that visitors 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 valid government-issued
photo identification and submit to security screening in order to
inspect comments.
Board: When submitting comments, please consider submitting your
comments by email or fax because paper mail in the Washington, DC area
and at the Board may be subject to delay. You may submit comments,
identified by Docket No. R-1641 and RIN 7100-AF31, by any of the
following methods:
Agency Website: https://www.federalreserve.gov. Follow the
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Email: regs.comments@federalreserve.gov. Include docket
number 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 Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments will be made available on the Board's website
at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons or to remove
personally identifiable information at the commenter's request.
Otherwise, comments will not be edited to remove any identifying or
contact information. Public comments also may be viewed electronically
or in paper in Room 3515, 1801 K Street NW (between 18th and 19th
Streets NW), between 9:00 a.m. and 5:00 p.m. on weekdays.
FDIC: You may submit comments, identified by RIN 3064-AE57, by any
of the following methods:
[[Page 605]]
Agency Website: https://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the Agency
website.
Email: Comments@fdic.gov. Include the RIN 3064-AE57 on the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW,
Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street Building (located on F
Street) on business days between 7:00 a.m. and 5:00 p.m.
Instructions: All comments received must include the agency name
and RIN 3064-AE57 for this rulemaking. All comments received will be
posted without change to https://www.fdic.gov/regulations/laws/federal/
, including any personal information provided. Paper copies of public
comments may be ordered from the FDIC Public Information Center, 3501
North Fairfax Drive, Room E-1002, Arlington, VA 22226 by telephone at
(877) 275-3342 or (703) 562-2200.
FOR FURTHER INFORMATION CONTACT:
OCC: Daniel Perez, Attorney, Christopher Rafferty, Attorney, Chief
Counsel's Office, (202) 649-5490; or for persons who are deaf or
hearing-impaired, TTY, (202) 649-5597; Office of the Comptroller of the
Currency, 400 7th Street SW, Washington, DC 20219.
Board: Michelle Kidd, Senior Counsel, (202) 736-5554; Claudia Von
Pervieux, Senior Counsel, (202) 452-2552; or Andrew Hartlage, Counsel,
(202) 452-6483, of the Legal Division; Katie Cox, Manager, (202) 452-
2721; or Melissa Clark, Senior Supervisory Financial Analyst, (202)
452-2277, of the Division of Supervision and Regulation, Board of
Governors of the Federal Reserve System, 20th Street and Constitution
Avenue NW, Washington, DC 20551. For the hearing impaired only,
Telecommunication Device for the Deaf, (202) 263-4869, Board of
Governors of the Federal Reserve System, 20th Street and Constitution
Avenue NW, Washington, DC 20551.
FDIC: Karen J. Currie, Senior Examination Specialist, Division of
Risk Management Supervision, (202) 898-3981; Mark Mellon, Counsel,
Legal Division, (202) 898-3884; Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Summary of Proposed Rule and Policy Objectives
B. Background
II. Description of Proposed Rule
A. Proposal To Increase Asset Thresholds to $10 Billion
B. Expected Impact
C. Future Adjustments to the Thresholds
III. Alternative Approaches To Adjust the Asset Thresholds
A. Thresholds Adjustment Based on Percentage of the Number of
Banking Organizations Covered by Prohibition
B. Thresholds Adjustment Based on Asset Growth
C. Thresholds Adjustment Increased Based on Inflation
IV. FDIC Technical Amendments
V. Request for Comment
VI. Regulatory Analysis
I. Introduction
A. Summary of Proposed Rule and Policy Objectives
The Office of the Comptroller of the Currency (OCC), the Board of
Governors of the Federal Reserve System (Board), and the Federal
Deposit Insurance Corporation (FDIC) (collectively, the agencies) are
inviting comment on a notice of proposed rulemaking (proposed rule or
proposal) that would increase the major assets prohibition thresholds
for management interlocks in the agencies' rules implementing the
Depository Institution Management Interlocks Act (DIMIA).\1\ The
proposed increase in the thresholds would account for changes in the
United States banking market since Congress established the current
thresholds in 1996. Under the major assets prohibition of the current
rules, a management official \2\ of a depository organization \3\ (or
any affiliate of such organization) with total assets exceeding $2.5
billion may not serve as a management official of an unaffiliated
depository organization (or any affiliate of such organization) with
total assets exceeding $1.5 billion without seeking an exemption. The
proposed rule would increase both thresholds to $10 billion.
---------------------------------------------------------------------------
\1\ 12 U.S.C. 3201 et seq.
\2\ In the agencies' rules, ``management official'' is defined
to include directors; advisory or honorary directors of a depository
institution with total assets of $100 million or more; ``senior
executive officers,'' as that term is defined in the agencies' rules
regarding notice of addition or change of directors and senior
executive officers; branch managers; trustees of depository
organizations under the control of trustees; and any persons who
have a representative or nominee as defined in the agencies' rules
on management interlocks, serving in any of the capacities described
above. 12 CFR 26.2(j)(1) (OCC); 12 CFR 212.2(j)(1) and 238.92(j)(1)
(Board); and 12 CFR 348.2(k)(1) (FDIC).
\3\ In the agencies' rules, the term ``depository organization''
means a depository institution or a depository holding company.
``Depository institution'' means a commercial bank (including a
private bank), a savings bank, a trust company, a savings and loan
association, a building and loan association, a homestead
association, a cooperative bank, an industrial bank, or a credit
union, chartered under the laws of the United States and having a
principal office located in the United States. Additionally, a
United States office of a foreign commercial bank, including a
branch or agency, is a depository institution. ``Depository holding
company'' means a bank holding company or a savings and loan holding
company (as more fully defined in section 202 of the Interlocks Act
(12 U.S.C. 3201)) having its principal office located in the United
States. 12 CFR 26.2 (OCC); 12 CFR 212.2 and 238.92 (Board); and 12
CFR 348.2 (FDIC).
---------------------------------------------------------------------------
In addition, the agencies are proposing three alternative
approaches for increasing the asset thresholds, described below.
By increasing the major assets prohibition thresholds, the proposed
rule and proposed alternative approaches would reduce the number of
depository organizations subject to the major assets prohibition and
reduce burden by relieving depository organizations below the increased
thresholds from having to ask the agencies for an exemption from the
major assets prohibition. The agencies anticipate that raising the
thresholds will facilitate small depository organizations in finding
qualified directors by eliminating the need to file a request for an
exemption from the major assets prohibition.
B. Background
DIMIA--implemented through the agencies' rules at 12 CFR parts 26,
212, 238 subpart J, and 348--fosters competition by prohibiting a
management official from serving at the same time as a management
official of an unaffiliated depository organization in situations where
the management interlock may have an anticompetitive effect.\4\ DIMIA
and the agencies' rules achieve this purpose through three
restrictions.
---------------------------------------------------------------------------
\4\ 12 CFR 26.1(b) (OCC); 12 CFR 212.1(b) and 238.91(b) (Board);
and 12 CFR 348.1(b) (FDIC).
---------------------------------------------------------------------------
The first, the community prohibition, prohibits a management
official of a depository organization from serving at the same time as
a management official of an unaffiliated depository organization if the
involved depository organizations (or a depository institution
affiliate thereof) have offices in the same community.\5\ The second,
the relevant metropolitan statistical area (RMSA) prohibition,
prohibits a management official of a depository organization from
serving at the same time as a management official of an unaffiliated
depository organization if the involved depository organizations (or a
depository institution affiliate thereof) have offices in the same
[[Page 606]]
RMSA \6\ and each depository organization has total assets of $50
million or more. The third, the major assets prohibition, prohibits a
management official of a depository organization with total assets
exceeding $2.5 billion (or any affiliate of such an organization) from
serving at the same time as a management official of an unaffiliated
depository organization with total assets exceeding $1.5 billion (or
any affiliate of such an organization), regardless of the location of
the two depository organizations. While the first two prohibitions
capture the risk of anticompetitive effects from management interlocks
between depository organizations that operate within overlapping
geographical areas, the major assets prohibition addresses management
interlocks between depository organizations that are large enough that
a management interlock may present anticompetitive concerns despite the
fact that the involved organizations may not have offices in the same
community or RMSA.
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\5\ In the agencies' rules, ``community'' means a city, town, or
village, and contiguous and adjacent cities, towns, or villages. 12
CFR 26.2(c) (OCC); 12 CFR 212.2(c) and 238.92(c) (Board); and 12 CFR
348.2(c) (FDIC).
\6\ In the agencies' rules, ``RMSA'' means an MSA, a primary
MSA, or a consolidated MSA that is not comprised of designated
Primary MSAs to the extent that these terms are defined and applied
by the Office of Management and Budget. 12 CFR 26.2(m) (OCC); 12 CFR
212.2(m) and 238.92(m) (Board); and 12 CFR 348.2(c) (FDIC).
---------------------------------------------------------------------------
DIMIA allows the agencies to prescribe regulations that permit
otherwise prohibited interlocks under certain circumstances.\7\
Pursuant to the general exemption provision of the agencies'
regulations, the appropriate agency may exempt a prohibited interlock
in response to an application by a depository organization if the
appropriate agency finds that the interlock would not result in a
monopoly or substantial lessening of competition and would not present
safety and soundness concerns.\8\
---------------------------------------------------------------------------
\7\ 12 U.S.C. 3207.
\8\ 12 CFR 26.6(a) (OCC); 12 CFR 212.6(a) and 238.96(a) (Board);
and 12 CFR 348.6(a) (FDIC). The agencies have published an
interagency interpretation that explains which agency is the
appropriate agency for purposes of filing a request for a general
exemption under the agencies' rules. See Permissible Interlocks--
Regulatory Exceptions; Agency Approval, 1 Fed. Res. Reg. Serv. (Bd.
of Governors of the Fed. Reserve Sys.) Sec. 3-831 (Nov. 18, 1992),
2006 WL 3928616.
---------------------------------------------------------------------------
The $1.5 billion and $2.5 billion thresholds for the DIMIA major
assets prohibition were enacted through amendments to DIMIA in the
Economic Growth and Regulatory Paperwork Reduction Act of 1996
(EGRPRA).\9\ During hearings for EGRPRA, it was noted that the increase
of the asset thresholds to $1.5 billion and $2.5 billion was made
because the previous asset threshold numbers did not ``realistically
reflect the size of large institutions in today's market.'' \10\
---------------------------------------------------------------------------
\9\ See Economic Growth and Regulatory Paperwork Reduction Act
of 1996, Pub. L. 104-208, Title II, 110 Stat. 3009-9, Sec. 2210(a).
\10\ The Economic Growth and Regulatory Paperwork Reduction
Act--S. 650: Hearings Before the Subcomm. on Fin. Insts. and
Regulatory Relief of the S. Comm. on Banking, Hous., & Urban
Affairs, 104 Cong. 90 (1995) (statement of Eugene A. Ludwig,
Comptroller of the Currency).
---------------------------------------------------------------------------
DIMIA, as amended, provides that the agencies may adjust the
thresholds as necessary ``to allow for inflation or market changes.''
\11\ The current major assets thresholds have not been adjusted since
1996, do not reflect the growth and consolidation among U.S. depository
organizations that has occurred in the intervening years, and do not
realistically reflect the size of large institutions in today's market.
For instance, total assets at depository organizations have grown
nearly 250 percent between the fourth quarter of 1996 and the fourth
quarter of 2017. Moreover, in a March 2017 report to Congress mandated
by EGRPRA, the agencies committed to reducing regulatory burden by
adjusting the major assets thresholds in the agencies' DIMIA
regulations.\12\
---------------------------------------------------------------------------
\11\ 12 U.S.C. 3203.
\12\ Federal Financial Institutions Examination Council, Joint
Report to Congress: Economic Growth and Regulatory Paperwork
Reduction Act, 82 FR 15900, 15903 (Mar. 30, 2017), https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.
---------------------------------------------------------------------------
II. Description of Proposed Rule
A. Proposal To Increase Asset Thresholds to $10 Billion
The agencies are proposing to raise the major assets prohibition
thresholds from $1.5 billion and $2.5 billion to $10 billion each. As
proposed, the major assets prohibition would restrict management
interlocks between unaffiliated depository organizations with total
assets exceeding $10 billion (or any affiliates of such organizations).
The proposed threshold increase, and applying the major assets
prohibition to larger depository organizations rather than small
institutions (i.e., community banks), is consistent with the purpose of
DIMIA.\13\ A $10 billion major assets prohibition threshold would
prohibit interlocks between larger depository organizations, which
could present a risk of anticompetitive conduct at the national banking
market level, while exempting smaller or community-banking-
organization-sized depository organizations, which do not present the
same competitive risks at the national banking market level.
---------------------------------------------------------------------------
\13\ Legislative history indicates that Congress intended for
the major assets prohibition to apply to ``larger'' organizations.
See H.R. Rep. No. 95-1383, at 5 (1978); S. Rep. No. 95-323, at 13
(1977).
---------------------------------------------------------------------------
In addition, the proposal is consistent with the current thresholds
that Congress and the agencies have used to distinguish between small
institutions and larger institutions. For example, section 201 and 203
of the Economic Growth, Regulatory Relief, and Consumer Protection Act
provide certain procedural burden relief for institutions with less
than $10 billion in total consolidated assets.\14\ Additionally, the
Dodd-Frank Wall Street Reform and Consumer Protection Act uses a $10
billion threshold to distinguish between large banks subject to
supervision by the Bureau of Consumer Financial Protection and small
banks subject to prudential regulator supervision.\15\ A $10 billion
threshold also is consistent with the asset threshold used by the Board
to distinguish between community banking organizations and larger
banking organizations for supervisory and regulatory purposes,\16\ the
asset threshold used by the FDIC to distinguish between ``small'' and
``large'' institutions for purposes of its assessment regulations,\17\
and the asset threshold used by the OCC to distinguish community banks
from midsize and large banks.\18\
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\14\ Economic Growth, Regulatory Relief, and Consumer Protection
Act, Public Law 115-174, Sec. 201, 203, 132 Stat. 1296, 1306, 1309
(2018) (enacting a ``Community Bank Leverage Ratio'' capital
simplification framework that is generally available to depository
institutions and depository institution holding companies with $10
billion or less in total consolidated assets and exempting generally
from the prohibitions of section 13 of the Bank Holding Company Act
of 1956, also known as the ``Volcker Rule,'' certain entities with
$10 billion or less in total consolidated assets).
\15\ Public Law 111-203, Sec. 1025 & 1026, 124 Stat. 1376,
1990-95 (2010).
\16\ Bd. of Governors of the Fed. Reserve Sys., Commercial Bank
Examination Manual (rev. Jan. 2018), https://www.federalreserve.gov/publications/files/cbem.pdf.
\17\ See 12 CFR 327.8(e) and (f). For the purposes of the FDIC's
assessment regulations, a ``small institution'' generally is an
insured depository institution with less than $10 billion in total
assets. Generally, a ``large institution'' is an insured depository
institution with more than $10 billion in total assets or that is
treated as a large institution for assessment purposes under section
327.16(f).
\18\ Comptroller's Handbook, ``OCC Community Bank Supervision''
(June 2018), https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/community-bank-supervision/pub-ch-community-bank-supervision.pdf.
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Further, having a single, consistent asset threshold would simplify
the agencies' DIMIA regulations and enable depository organizations to
identify more easily whether they may be subject to the major assets
prohibition.
[[Page 607]]
B. Expected Impact
The proposed rule would increase the number of depository
organizations that would no longer be subject to the major assets
prohibition and therefore reduce the number of institutions that need
to seek an exemption from the major assets prohibition from the
appropriate agency.
As of December 31, 2017, 1,021 depository organizations had total
assets of more than $1.5 billion and were subject to the major assets
prohibition.\19\ In addition, 698 depository organizations with total
assets of more than the $2.5 billion threshold were subject to
restrictions on management interlocks with unaffiliated depository
organizations with total assets exceeding the $1.5 billion threshold.
If the agencies raise the $1.5 billion asset threshold to $10 billion,
they would exempt 764 depository organizations from the major assets
prohibition as of December 31, 2017. Of these 764 depository
organizations, 224 are FDIC-supervised depository institutions, 113 are
OCC-supervised depository institutions, 91 are Board-supervised
depository institutions, and 336 are Board-supervised depository
holding companies. As of December 31, 2017, 257 depository
organizations reported total assets greater than $10 billion and would
remain subject to the major assets prohibition.
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\19\ The analysis in this preamble reflecting changes in the
number of depository organizations exempted does not incorporate
credit unions because this proposed rule does not apply to credit
unions. Data used in this analysis were drawn from the December 31,
1996, and December 31, 2017, Consolidated Reports of Condition and
Income (Call Reports), Consolidated Financial Statements for Holding
Companies, Parent Company Only Financial Statements for Large
Holding Companies, Parent Company Only Financial Statements for
Small Holding Companies, and Reports of Assets and Liabilities of
U.S. Branches and Agencies of Foreign Banks.
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Increasing the thresholds of the major assets prohibition would
allow smaller depository organizations to form management interlocks
with other smaller depository organizations and would relieve the
depository organization seeking to add a management official from the
associated burden of seeking a general exemption from the appropriate
agency with respect to such a management interlock (unless the
interlock would be prohibited by the community or RMSA prohibitions).
The agencies believe that with fewer depository organizations subject
to the major assets prohibition thresholds, the proposed rule would
expand the pool of available management officials for smaller
depository organizations no longer covered by the major assets
prohibition.
The agencies do not expect the proposal to materially increase
anticompetitive risk. The increase to the major assets prohibition
thresholds is insufficient to materially increase the risk of
anticompetitive interlocks between depository organizations at the
national banking market level, and the proposal does not affect DIMIA
prohibitions against interlocks within overlapping geographical areas.
C. Future Adjustments to the Thresholds
Following adjustment of the thresholds by this proposed rule, if
adopted, the agencies would make further adjustments to the thresholds
to account for inflation through direct final rule without notice and
comment pursuant to 12 CFR 26.3(c), 212.3(c), 238.93(c), and 348.3(c).
If the agencies determine that further adjustments to the thresholds
are warranted for reasons other than inflation, the agencies then would
propose another adjustment through a subsequent notice of proposed
rulemaking with the opportunity to comment.
III. Alternative Approaches To Adjust the Asset Thresholds
As described above, in order to account for market changes since
the agencies' DIMIA regulations were last updated, the agencies propose
to increase the major assets prohibition thresholds to $10 billion. The
agencies also invite comment on three alternative approaches discussed
below. Consistent with the agencies' authority under DIMIA, two of the
alternative approaches, like the proposed approach, are based on market
changes, and the third alternative approach is based on inflation.\20\
Because the proposal and the alternative approaches all would raise the
major assets prohibition thresholds, the agencies expect that the
impact for each proposal would be similar (i.e., each approach would
result in a greater number of depository organizations exempted from
the major assets prohibition), varying only in the degree of the impact
(i.e., the number of depository organizations exempted).
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\20\ See 12 U.S.C. 3203.
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A. Thresholds Adjustment Based on Percentage of the Number of Banking
Organizations Covered by Prohibition
Under the first alternative approach, the agencies would adjust the
major assets prohibition thresholds so that approximately the same
percentage of the total number of banking organizations \21\ that were
covered by the thresholds as of the fourth quarter of 1996--the year in
which the $1.5 billion and $2.5 billion major assets prohibition
thresholds were established by statute--would be covered as of fourth
quarter 2017. By adjusting the major assets prohibition thresholds so
that they cover the same percentage of the total number of banking
organizations as was covered in 1996, this alternative approach
accounts for changes in the U.S. banking market and seeks to maintain
the prohibition's initial scope and impact--which was limited to only
relatively large depository organizations--as well as the protections
it provides against anticompetitive risk. This approach would increase
the current thresholds of $1.5 billion and $2.5 billion to $7.9 billion
and $11.8 billion, respectively.
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\21\ The agencies' analysis, and resulting percentages and
thresholds, for this approach relies on ``banking organizations''
instead of ``depository organizations'' to avoid double-counting the
assets of depository institutions held by depository holding
companies that reported consolidated holding company assets. As used
here, the term ``banking organization'' includes all depository
holding companies, as defined by the agencies' DIMIA regulations,
that reported consolidated assets greater than zero and all
depository institutions, as defined by the agencies' DIMIA
regulations, with reported assets greater than zero that are not
consolidated under a holding company.
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As of the fourth quarter of 1996, the major assets prohibition
thresholds covered the top 1.9 percent and 1.3 percent of banking
organizations by asset size. By the fourth quarter of 2017, the
percentage of banking organizations covered by the thresholds had
increased to 6.83 percent and 4.44 percent. Adjusting the major assets
prohibition thresholds to account for this market change would result
in adjusted asset thresholds of $7.9 billion and $11.8 billion.
Raising the current $1.5 billion threshold to $7.9 billion would
result in an additional 702 depository organizations being exempted
from the major assets prohibition. Of these 702 depository
organizations, 207 are FDIC-supervised depository institutions, 102 are
OCC-supervised depository institutions, 82 are Board-supervised
depository institutions, and 311 are Board-supervised depository
holding companies. As of December 31, 2017, 78 depository organizations
reported total assets greater than $7.9 billion but less than $11.8
billion. Finally, 241 depository organizations reported total assets
greater than $11.8 billion and would remain subject to the major assets
prohibition.
[[Page 608]]
B. Thresholds Adjustment Based on Asset Growth
Under this second alternative approach, the agencies would propose
to adjust the major assets prohibition thresholds to reflect the rate
of asset growth for depository organizations over the period between
the fourth quarter of 1996 and the fourth quarter of 2017. This
approach seeks to replicate the major assets prohibition's coverage of
the 1996 banking market by using total asset growth as a measure of
market change. Total assets at depository organizations have grown by
$15.6 trillion between the fourth quarter of 1996 and the fourth
quarter of 2017. This growth represents an increase of three and one-
half times the amount of total assets in the fourth quarter of 1996.
Under this approach, the current major assets prohibition thresholds
would be multiplied by the aforementioned rate of asset growth (3.5) to
account for market changes for depository organizations. As a result,
the current assets thresholds would be raised from $1.5 billion and
$2.5 billion to $5.3 billion and $8.8 billion, respectively.
Raising the $1.5 billion asset threshold to $5.3 billion would
result in an additional 616 depository organizations being exempted
from the major assets prohibition. Of these 616 depository
organizations, 182 are FDIC-supervised depository institutions, 89 are
OCC-supervised depository institutions, 74 are Board-supervised
depository institutions, and 271 are Board-supervised depository
holding companies. As of December 31, 2017, 109 depository
organizations reported total assets greater than $5.3 billion, but less
than $8.8 billion. Finally, 296 depository organizations reported total
assets greater than $8.8 billion and would remain subject to the major
assets prohibition.
C. Thresholds Adjustment Increased Based on Inflation
Under the third alternative approach, the agencies would adjust the
major assets prohibition thresholds based on the year-to-year change in
the average of the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W). Adjusting the asset thresholds based on
inflation from the fourth quarter of 1996 to the fourth quarter of 2017
would increase the major assets prohibition thresholds from $1.5
billion and $2.5 billion to $2.3 billion and $3.9 billion,
respectively. Although the agencies' current rules allow an adjustment
for inflation based on the CPI-W to be published as a final rule
without notice and comment, the agencies believe it is appropriate to
seek comment on an inflation-based approach given the length of time
that has passed without change to the thresholds and given the extent
to which the banking market has changed during that time.
Raising the $1.5 billion asset threshold to $2.3 billion would
exempt an additional 288 depository organizations from the major assets
prohibition. Of these 288 depository organizations, 83 are FDIC-
supervised depository institutions, 45 are OCC-supervised depository
institutions, 36 are Board-supervised depository institutions, and 124
are Board-supervised depository holding companies. As of December 31,
2017, 219 depository organizations reported total assets greater than
$2.3 billion but less than $3.9 billion. Finally, 514 depository
organizations reported total assets greater than $3.9 billion and would
remain subject to the major assets prohibition.
IV. FDIC Technical Amendments
In addition to the proposed adjustment of the thresholds for the
major assets prohibition, the FDIC intends to make two purely technical
corrections to FDIC regulations, both pertaining to DIMIA
implementation, by means of a separate final rule without notice and
comment. The first correction pertains to 12 CFR 303.249 and would
remove an erroneous statement. The second pertains to 12 CFR 348.4(i)
and would correct a citation. Both technical corrections will be
explained in further detail in the FDIC final rule.
V. Request for Comment
The agencies invite comment on all aspects of this proposal,
including the specific questions enumerated below.
Question 1: Are depository organizations the appropriate unit for
measuring market change for purposes of the agencies' proposal? In
addition, are banking organizations the appropriate unit for measuring
market change for purposes of the agencies' alternative approach based
on the percentage of the number of banking organizations covered by the
prohibition? For all of the proposed approaches, would another unit of
measurement be more appropriate? If so, what unit of measurement and
why?
Question 2: Is the proposed $10 billion asset threshold appropriate
to carry out the purposes of the major assets prohibition? Would one of
the other alternative approaches proposed to adjust the thresholds be
more appropriate to meet the purposes of the major assets prohibition?
Would some other dollar amount, or some combination of asset thresholds
or factors, be more appropriate? If so, what threshold, factor, or
combination thereof would be appropriate, and why?
Question 3: Is the measurement period of the fourth quarter of 1996
through the fourth quarter of 2017, as used in the agencies'
alternative approaches, appropriate for purposes of measuring market
change? Should the agencies shorten or extend this measurement period?
If so, why?
Question 4: Are there any other approaches to adjusting the major
assets prohibition thresholds that would be more appropriate than the
approaches proposed by the agencies? If so, what approach would be more
appropriate and why?
VI. Regulatory Analysis
A. Paperwork Reduction Act of 1995
Certain provisions of the proposed rule contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with
the requirements of the PRA, the agencies may not conduct or sponsor,
and the respondent is not required to respond to, an information
collection unless it displays a currently valid Office of Management
and Budget (OMB) control number. The OMB control number for the OCC is
1557-0014; the Board's is 7100-0134; and the FDIC's is 3064-0118. These
information collections will be extended for three years, with
revision. The information collection requirements contained in this
proposed rulemaking have been submitted by the OCC and FDIC to OMB for
review and approval under section 3507(d) of the PRA (44 U.S.C.
3507(d)) and section 1320.11 of the OMB's implementing regulations (5
CFR 1320). The Board reviewed the proposed rule under the authority
delegated to the Board by OMB.
Comments are invited on:
a. Whether the collections of information are necessary for the
proper performance of the agencies' functions, including whether the
information has practical utility;
b. The accuracy or the estimate of the burden of the information
collections, including the validity of the methodology and assumptions
used;
c. Ways to enhance the quality, utility, and clarity of the
information to be collected;
d. Ways to minimize the burden of the information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
[[Page 609]]
e. Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on
aspects of this notice that may affect reporting, recordkeeping, or
disclosure requirements and burden estimates should be sent to the
addresses listed in the ADDRESSES section of this document. A copy of
the comments may also be submitted to the OMB desk officer by mail to
U.S. Office of Management and Budget, 725 17th Street NW, #10235,
Washington, DC 20503; facsimile to (202) 395-6974; or email to
oira_submission@omb.eop.gov, Attention, Federal Banking Agency Desk
Officer.
Proposed Information Collection
Title of Information Collection: Management Official Interlocks.
Frequency: Annual, event driven.
Affected Public: Businesses or other for-profit.
Respondents
OCC: National banks, Federal savings associations, and U.S. offices
of foreign commercial banks, including Federal branches and agencies.
Board: State member banks (SMBs), bank holding companies (BHCs),
savings and loan holding companies (SLHCs), and their affiliates; and
U.S. offices of foreign commercial banks, including state-licensed
branches and agencies.
FDIC: State nonmember banks, state savings associations, and
certain subsidiaries of those entities; and U.S. offices of foreign
commercial banks, including insured branches and agencies.
Current Actions: The proposed rule would revise section __.3,
``Prohibitions,'' of the agencies' DIMIA rules \22\ by increasing the
major asset prohibition thresholds from $2.5 billion and $1.5 billion
to $10 billion each. Section __.6, ``General Exemption,'' \23\ contains
a process for applying for an exemption from the prohibitions in
section __.3. With the increase in the major assets prohibition
thresholds in section __.3, it is likely that fewer applications will
be filed under section __.6. Therefore, the agencies have reduced their
respondent counts for section __.6 accordingly. Also, in order to be
consistent across the agencies, the agencies are applying a conforming
methodology for calculating the burden estimates for the reporting and
recordkeeping requirements.
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\22\ See 12 CFR 26.3 (OCC); 12 CFR 212.3 and 238.3 (Board); 12
CFR 348.3 (FDIC).
\23\ See 12 CFR 26.6 (OCC); 12 CFR 212.6 and 238.6 (Board); 12
CFR 348.6 (FDIC).
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PRA Burden Estimates
OCC
OMB control number: 1557-0014.
Estimated number of respondents: 2.
Estimated average hours per response:
Reporting Sections 26.4(h)(1)(i) and 26.6(b)--4.
Recordkeeping Section 26.5(b)--3.
Estimated annual burden hours: 14.
Board
OMB control number: 7100-NEW (The current management official
interlocks reporting and recordkeeping requirements are housed under
OMB control number 7100-0134 and will be separated out in a new OMB
control number).
Estimated number of respondents: 4.
Estimated average hours per response:
Reporting Sections 212.4(h)(1)(i) and 212.6(b)--4.
Recordkeeping Section 212.5(b)--3.
Estimated annual burden hours: 28.
FDIC
OMB control number: 3064-0118.
Estimated number of respondents: 6.
Estimated average hours per response:
Reporting Sections 348.4(h)(1)(i) and 348.6(b)--4.
Recordkeeping Section 348.5(b)--3.
Estimated annual burden hours: 42.
B. 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. The SBA has
defined ``small entities'' to include certain organizations with total
assets less than or equal to $550 million.\24\ Under 5 U.S.C. 605(b),
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 publishes its certification and a brief explanatory
statement in the Federal Register along with its rule.
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\24\ 13 CFR 121.201.
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OCC: The OCC currently supervises approximately 886 small
entities.\25\ Because the major assets prohibition of DIMIA prevents a
management official of a depository organization with total assets
exceeding $2.5 billion (depository organization threshold) or any
affiliate of such organization from serving as a management official of
an unaffiliated depository organization with total assets exceeding
$1.5 billion (unaffiliated organization threshold) it is unlikely to
affect any OCC-supervised small institutions. Therefore, the OCC
certifies that the proposed rule would not have a significant economic
impact on a substantial number of OCC-supervised small entities.
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\25\ The OCC bases its estimate of the number of small entities
on the SBA's size thresholds for commercial banks and savings
institutions, and trust companies, which are $550 million and $38.5
million, respectively. Consistent with the General Principles of
Affiliation 13 CFR 121.103(a), the OCC counts the assets of
affiliated financial institutions when determining if it should
classify an OCC-supervised institution as a small entity. The OCC
uses December 31, 2017, to determine size because a ``financial
institution's assets are determined by averaging the assets reported
on its four quarterly financial statements for the preceding year.''
See footnote 8 of the U.S. Small Business Administration's Table of
Size Standards.
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Board: The Board is providing an initial regulatory flexibility
analysis with respect to this proposed rule. The Regulatory Flexibility
Act, 5 U.S.C. 601 et seq. (RFA), requires an agency to consider whether
the rules it proposes will have a significant economic impact on a
substantial number of small entities. In connection with a proposed
rule, the RFA requires an agency to prepare an Initial Regulatory
Flexibility Analysis describing the impact of the rule on small
entities or to certify that the proposed rule would not have a
significant economic impact on a substantial number of small entities.
An initial regulatory flexibility analysis must contain (1) a
description of the reasons why action by the agency is being
considered; (2) a succinct statement of the objectives of, and legal
basis for, the proposed rule; (3) a description of, and, where
feasible, an estimate of the number of small entities to which the
proposed rule will apply; (4) a description of the projected reporting,
recordkeeping, and other compliance requirements of the proposed rule,
including an estimate of the classes of small entities that will be
subject to the requirement and the type of professional skills
necessary for preparation of the report or record; (5) an
identification, to the extent practicable, of all relevant Federal
rules which may duplicate, overlap with, or conflict with the proposed
rule; and (6) a description of any significant alternatives to the
proposed rule which accomplish its stated objectives.\26\
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\26\ 5 U.S.C. 603.
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The Board has considered the potential impact of the proposed rule
on small entities in accordance with the RFA. Based on its analysis and
for the reasons stated below, the Board believes that this proposed
rule will not have a significant economic impact on a
[[Page 610]]
substantial number of small entities. Nevertheless, the Board is
publishing and inviting comment on this initial regulatory flexibility
analysis. A final regulatory flexibility analysis will be conducted
after comments received during the public comment period have been
considered.
1. Reasons for the Proposal
As discussed in the Supplementary Information, the proposed rule
would adjust the major assets prohibition thresholds for management
interlocks in the Board's rules implementing DIMIA. Under the current
major assets prohibition, a management official of a depository
organization with total assets exceeding $2.5 billion (or any affiliate
of such an organization) from serving at the same time as a management
official of an unaffiliated depository organization with total assets
exceeding $1.5 billion (or any affiliate of such an organization),
regardless of the location of the two depository organizations. For
these purposes, the term ``depository organization'' means a depository
institution or a depository holding company. ``Depository institution''
means a commercial bank (including a private bank), a savings bank, a
trust company, a savings and loan association, a building and loan
association, a homestead association, a cooperative bank, an industrial
bank, or a credit union, chartered under the laws of the United States
and having a principal office located in the United States.
Additionally, a United States office, including a branch or agency, of
a foreign commercial bank is a depository institution. ``Depository
holding company'' means a bank holding company or a savings and loan
holding company (as more fully defined in section 202 of DIMIA) having
its principal office located in the United States.\27\ The primary
benefit of the proposed rule would be to exclude from the major assets
prohibition management interlocks involving depository organizations
with total assets in excess of the current asset thresholds but below
the proposed asset thresholds. Raising the thresholds will help to
facilitate small banks in finding qualified directors by eliminating
the need to file a request for an exemption from the major assets
prohibition.
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\27\ 12 CFR 212.2 and 231.92.
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2. Statement of Objectives and Legal Basis
As discussed above, the Board's objective in proposing this rule
would be to reduce the number of depository organizations subject to
the major assets prohibition. The Board has authority under DIMIA to
prescribe regulations to carry out DIMIA with respect to state banks
that are members of the Federal Reserve System, bank holding companies,
and savings and loan holding companies.\28\
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\28\ 12 U.S.C. 3207(2).
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3. Description of Small Entities To Which the Regulation Applies
The Board's proposal would apply to state member banks, bank
holding companies, and savings and loan holding companies having their
principal offices in the United States. 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. As of June 30, 2018, there were
approximately 3,053 small bank holding companies, 184 small savings and
loan holding companies, and 541 small state member banks. The proposed
rule would increase the total asset level at which depository
organizations and their affiliates become subject to the major assets
prohibition from $1.5 billion and $2.5 billion to $10 billion and $10
billion, respectively.
4. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
To the extent that a small entity is subject to the major assets
prohibition by virtue of its affiliation with a banking organization
that has total assets exceeding $10 billion, the proposed rule would
not impose any additional requirements on those small entities because
they were already subject to the major assets prohibition. The proposed
changes to the major assets prohibition would not impose any new
reporting, recordkeeping, and other compliance requirements.
Accordingly, the Board believes that the proposed rule will not have a
significant economic impact on small banking organizations supervised
by the Board.
5. Identification of Duplicative, Overlapping, or Conflicting Federal
Regulations
The Board is aware of no other Federal rules that duplicate,
overlap, or conflict with the proposed changes to the major assets
prohibition thresholds.
6. Discussion of Significant Alternatives
The Board believes that the proposed rule will not have a
significant economic impact on small entities supervised by the Board
and therefore believes that there are no significant alternatives to
the proposed rule that would reduce the economic impact on small
entities supervised by the Board.
The Board welcomes comment on all aspects of its analysis. In
particular, the Board requests that commenters describe the nature of
any impact on small entities and provide empirical data to illustrate
and support the extent of the impact.
FDIC: The Regulatory Flexibility Act (RFA) generally requires that,
in connection with a proposed rule, an agency prepare and make
available for public comment an initial regulatory flexibility analysis
describing the impact of the rulemaking on small entities.\29\ A
regulatory flexibility analysis is not required, however, if the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities. The Small Business
Administration (SBA) has defined ``small entities'' to include banking
organizations with total assets less than or equal to $550 million.\30\
The FDIC supervises 3,643 depository institutions,\31\ of which 2,840
are defined as small banking entities by the terms of the RFA.\32\
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\29\ 5 U.S.C. 601 et seq.
\30\ The SBA defines a small banking organization as having $550
million or less in assets, where ``a financial institution's assets
are determined by averaging the assets reported on its four
quarterly financial statements for the preceding year.'' 13 CFR
121.201 n.8 (2018). ``SBA counts the receipts, employees, or other
measure of size of the concern whose size is at issue and all of its
domestic and foreign affiliates . . . .'' 13 CFR 121.103(a)(6)
(2018). Following these regulations, the FDIC uses a covered
entity's affiliated and acquired assets, averaged over the preceding
four quarters, to determine whether the covered entity is ``small''
for the purposes of RFA.
\31\ FDIC-supervised institutions are set forth in 12 U.S.C.
1813(q)(2).
\32\ Call Report, December 31, 2017.
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The proposed rule will only affect institutions with total
consolidated assets between the current thresholds of $1.5 billion and
$2.5 billion and the proposed threshold of $10 billion. Therefore, the
proposed rule will likely affect zero small entities.
Accordingly, the FDIC believes that the proposed rule will not have
a significant impact on a substantial number of small entities. For the
reasons described above and pursuant to 5 U.S.C. 605(b), the FDIC
certifies that the proposed rule will not have a significant economic
impact on a substantial number of small entities.
The FDIC invites comments on all aspects of the supporting
information provided in this RFA section. In particular, would this
rule have any significant effects on small entities that the FDIC has
not identified?
[[Page 611]]
C. OCC Unfunded Mandates Reform Act of 1995 Determination
The OCC analyzed the proposed rule 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 the proposed rule includes 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 proposed
rule does not impose new mandates. Therefore, the OCC concludes that
the proposed rule will not result in an expenditure of $100 million or
more annually by state, local, and tribal governments or by the private
sector.
D. Riegle Community Development and Regulatory Improvement Act
The Riegle Community Development and Regulatory Improvement Act of
1994 requires that each Federal banking agency, in determining the
effective date and administrative compliance requirements for new
regulations that impose additional reporting, disclosure, or other
requirements on insured depository institutions (IDIs), consider,
consistent with principles of safety and soundness and the public
interest, any administrative burdens that such regulations would place
on depository institutions, including small depository institutions,
and customers of depository institutions, as well as the benefits of
such regulations. In addition, new regulations that impose additional
reporting, disclosures, or other new requirements on insured depository
institutions generally must take effect on the first day of a calendar
quarter that begins on or after the date on which the regulations are
published in final form.
The proposed rule would reduce burden and imposes no additional
reporting, disclosure, or other requirements on IDIs, including small
depository institutions, nor on the customers of depository
institutions. Nonetheless, in connection with determining an effective
date for the proposed rule, the agencies invite comment on any
administrative burdens that the proposed rule would place on depository
institutions, including small depository institutions, and customers of
depository institutions.
E. Plain Language
Section 722 of the Gramm-Leach-Bliley Act requires the Federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The agencies have sought to present
the proposed rule in a simple and straightforward manner, and invite
comment on the use of plain language. For example:
Have the agencies organized the material to inform your
needs? If not, how could the agencies present the proposed rule more
clearly?
Are the requirements in the proposed rule clearly stated?
If not, how could the proposed rule be more clearly stated?
Does the proposed rule contain technical language or
jargon that is not clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the proposed rule easier to
understand? If so, what changes would achieve that?
Is this section format adequate? If not, which of the
sections should be changed and how?
What other changes can the agencies incorporate to make
the proposed rule easier to understand?
List of Subjects
12 CFR Part 26
Antitrust, Banks, banking, Holding companies, Management official
interlocks, National banks.
12 CFR Part 212
Antitrust, Banks, banking, Holding companies, Management official
interlocks.
12 CFR Part 238
Administrative practice and procedure, Banks, banking, Holding
companies, Reporting and recordkeeping requirements, Securities.
12 CFR Part 348
Antitrust, Banks, banking, Holding companies.
Authority and Issuance
For the reasons stated in the preamble, the OCC proposes to amend
12 CFR part 26, the Board proposes to amend 12 CFR parts 212 and 238,
and the FDIC proposes to amend 12 CFR part 348 as follows:
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
PART 26--MANAGEMENT OFFICIAL INTERLOCKS
0
1. The authority citation for part 26 continues to read as follows:
Authority: 12 U.S.C. 1, 93a, 1462a, 1463, 1464, 3201-3208,
5412(b)(2)(B).
0
2. Section 26.3 is amended by revising the first sentence of paragraph
(c) to read as follows:
Sec. 26.3 Prohibitions.
* * * * *
(c) Major assets. A management official of a depository
organization with total assets exceeding $10 billion (or any affiliate
of such an organization) may not serve at the same time as a management
official of an unaffiliated depository organization with total assets
exceeding $10 billion (or any affiliate of such an organization),
regardless of the location of the two depository organizations. * * *
* * * * *
FEDERAL RESERVE SYSTEM
PART 212--MANAGEMENT OFFICIAL INTERLOCKS (REGULATION L)
0
3. The authority citation for part 212 continues to read as follows:
Authority: 12 U.S.C. 3201-3208; 15 U.S.C. 19.
0
4. Section 212.3 is amended by revising the first sentence of paragraph
(c) to read as follows:
Sec. 212.3 Prohibitions.
* * * * *
(c) Major assets. A management official of a depository
organization with total assets exceeding $10 billion (or any affiliate
of such an organization) may not serve at the same time as a management
official of an unaffiliated depository organization with total assets
exceeding $10 billion (or any affiliate of such an organization),
regardless of the location of the two depository organizations. * * *
PART 238--SAVINGS AND LOAN HOLDING COMPANIES (REGULATION LL)
0
5. The authority citation for part 238 is revised to read as follows:
Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1462, 1462a, 1463,
1464, 1467, 1467a, 1468, 1813, 1817, 1829e, 1831i, 1972, 3201-3208;
15 U.S.C. 78 l.
0
6. Section 238.93 is amended by revising the first sentence of
paragraph (c) to read as follows:
Sec. 238.93 Prohibitions.
* * * * *
(c) Major assets. A management official of a depository
organization with total assets exceeding $10 billion (or any affiliate
of such an organization) may not serve at the same time as a management
official of an unaffiliated depository organization with total assets
exceeding $10 billion (or any affiliate of such an organization),
regardless of the
[[Page 612]]
location of the two depository organizations. * * *
FEDERAL DEPOSIT INSURANCE CORPORATION
PART 348--MANAGEMENT OFFICIAL INTERLOCKS
0
7. The authority citation for part 348 continues to read as follows:
Authority: 12 U.S.C. 3207, 12 U.S.C. 1823(k).
0
8. Section 348.3 is amended by revising the first sentence of paragraph
(c) to read as follows:
Sec. 348.3 Prohibitions.
(c) Major assets. A management official of a depository
organization with total assets exceeding $10 billion (or any affiliate
of such an organization) may not serve at the same time as a management
official of an unaffiliated depository organization with total assets
exceeding $10 billion (or any affiliate of such an organization),
regardless of the location of the two depository organizations. * * *
* * * * *
Dated: December 18, 2018.
William A. Rowe,
Chief Risk Officer.
By order of the Board of Governors of the Federal Reserve
System, December 14, 2018.
Ann E. Misback,
Secretary of the Board.
Dated at Washington, DC, this 18th day of December 2018.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2018-28038 Filed 1-30-19; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P
