Removal of Transferred OTS Regulations Regarding Lending and Investment; and Conforming Amendments to Other Regulation, 1653-1661 [2018-28084]
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Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules
of proposed rulemaking for test
procedures and energy conservations
standards. That notification also
solicited nominations for membership
to the working group. (83 FR 15514)
This notification announces the next
round of meetings for this working
group.
DOE will host a public meeting and
webinar on Thursday, February 21, 2019
from 9:00 a.m. to 5:00 p.m. and on
Friday, February 22, 2019 from 9:00
a.m. to 1:00 p.m. in Washington, DC.
The purpose of these meetings will be
to negotiate in an attempt to reach
consensus on proposed Federal test
procedures and energy conservation
standards for VRF multi-split systems.
Public Participation
Attendance at the Public Meeting
The time, date, and location of the
public meeting are listed in the DATES
and ADDRESSES sections of this
document. If you plan to attend the
public meeting, please notify the
ASRAC staff at asrac@ee.doe.gov.
Due to the REAL ID Act implemented
by the Department of Homeland
Security (DHS), there have been recent
changes regarding ID requirements for
individuals wishing to enter Federal
buildings from specific States and U.S.
territories. DHS maintains an updated
website identifying the State and
territory driver’s licenses that currently
are acceptable for entry into DOE
facilities at https://www.dhs.gov/real-idenforcement-brief. A driver’s license
from a State or territory identified as not
compliant by DHS will not be accepted
for building entry, and one of the
alternate forms of ID listed below will
be required. Acceptable alternate forms
of Photo-ID include U.S. Passport or
Passport Card; an Enhanced Driver’s
License or Enhanced ID-Card issued by
States and territories as identified on the
DHS website (Enhanced licenses issued
by these States and territories are clearly
marked Enhanced or Enhanced Driver’s
License); a military ID or other Federal
government-issued Photo-ID card.
In addition, you can attend the public
meeting via webinar. Webinar
registration information, participant
instructions, and information about the
capabilities available to webinar
participants will be published on DOE’s
website: https://energy.gov/eere/
buildings/appliance-standards-andrulemaking-federal-advisory-committee.
Participants are responsible for ensuring
their systems are compatible with the
webinar software.
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Procedure for Submitting Prepared
General Statements for Distribution
FEDERAL DEPOSIT INSURANCE
CORPORATION
Any person who has plans to present
a prepared general statement may
request that copies of his or her
statement be made available at the
public meeting. Such persons may
submit requests, along with an advance
electronic copy of their statement in
PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file
format, to the appropriate address
shown in the FOR FURTHER INFORMATION
CONTACT section of this notification. The
request and advance copy of statements
must be received at least one week
before the public meeting and may be
emailed, hand-delivered, or sent by
postal mail. DOE prefers to receive
requests and advance copies via email.
Please include a telephone number to
enable DOE staff to make a follow-up
contact, if needed.
12 CFR Parts 365 and 390
Conduct of the Public Meeting
ASRAC’s Designated Federal Officer
will preside at the public meeting and
may also use a professional facilitator to
aid discussion. The meeting will not be
a judicial or evidentiary-type public
hearing, but DOE will conduct it in
accordance with section 336 of EPCA
(42 U.S.C. 6306). A court reporter will
be present to record the proceedings and
prepare a transcript. A transcript of the
public meeting will be included on
DOE’s website: https://energy.gov/eere/
buildings/appliance-standards-andrulemaking-federal-advisory-committee.
In addition, any person may buy a copy
of the transcript from the transcribing
reporter. Public comment and
statements will be allowed prior to the
close of the meeting.
Docket
The docket is available for review at
https://www.regulations.gov/
docket?D=EERE-2018-BT-STD-0003,
including Federal Register notices,
public meeting attendee lists and
transcripts, comments, and other
supporting documents/materials. All
documents in the docket are listed in
the https://regulations.gov index.
However, not all documents listed in
the index may be publically available,
such as information that is exempt from
public disclosure.
Signed in Washington, DC, on January 18,
2019.
Steven Chalk,
Acting Deputy Assistant Secretary for Energy
Efficiency and Renewable Energy.
[FR Doc. 2019–00885 Filed 2–4–19; 8:45 am]
BILLING CODE 6450–01–P
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1653
RIN 3064–AE22
Removal of Transferred OTS
Regulations Regarding Lending and
Investment; and Conforming
Amendments to Other Regulation
Federal Deposit Insurance
Corporation.
ACTION: Notice of proposed rulemaking.
AGENCY:
In order to streamline FDIC
regulations and reduce regulatory
burden, the FDIC proposes to rescind
and remove from the Code of Federal
Regulations rules entitled ‘‘Lending and
Investment’’ (part 390, subpart P) that
were transferred to the FDIC from the
Office of Thrift Supervision (OTS) on
July 21, 2011, in connection with the
implementation of Title III of the DoddFrank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act); amend
certain sections of existing FDIC
regulations governing real estate lending
standards to make it clear that such
rules apply to all insured depository
institutions for which the FDIC is the
appropriate Federal banking agency;
and amend part 365 by rescinding in its
entirety the subpart concerning
registration requirements for residential
mortgage loan originators because
supervision and rulemaking authority in
this area was transferred to the Bureau
of Consumer Financial Protection
(Bureau) by the Dodd-Frank Act.
DATES: Comments must be received on
or before April 8, 2019.
ADDRESSES: You may submit comments
by any of the following methods:
• FDIC Website: https://www.fdic.gov/
regulations/laws/federal/ Follow
instructions for submitting comments
on the agency website.
• FDIC Email: Comments@fdic.gov.
Include RIN 3064–AE22 on the subject
line of the message.
• FDIC Mail: Robert E. Feldman,
Executive Secretary, Attention:
Comments, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC 20429.
• Hand Delivery to FDIC: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7 a.m. and 5 p.m.
Please include your name, affiliation,
address, email address, and telephone
number(s) in your comment. All
statements received, including
attachments and other supporting
materials, are part of the public record
SUMMARY:
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Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules
and are subject to public disclosure.
You should submit only information
that you wish to make publicly
available.
Please note: All comments received will be
posted generally without change to https://
www.fdic.gov/regulations/laws/federal/,
including any personal information
provided.
FOR FURTHER INFORMATION CONTACT:
Karen J. Currie, Senior Examination
Specialist, (202) 898–3981, email
address kcurrie@fdic.gov, Division of
Risk Management Supervision;
Cassandra Duhaney, Senior Policy
Analyst, (202) 898–6804, Division of
Depositor and Consumer Protection;
Rodney D. Ray, Counsel, Legal Division,
(202) 898–3556 or Linda Hubble Ku,
Counsel, Legal Division, (202) 898–
6634.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
The policy objectives of the proposed
rule are twofold. The first is to simplify
the FDIC’s regulations by removing
unnecessary regulations, or realigning
existing regulations in order to improve
the public’s understanding and to
improve the ease of reference. The
second is to promote parity between
State savings associations and State
nonmember banks by making both
classes of institutions subject to the
same requirements regarding real estate
lending standards. Thus, as further
detailed in this SUPPLEMENTARY
INFORMATION Section, the FDIC proposes
to rescind and remove from the CFR
rules entitled ‘‘Lending and Investment’’
(part 390, subpart P) that were
transferred to the FDIC from OTS in
connection with the implementation of
Title III the Dodd-Frank Act. The FDIC
takes the view that other existing
regulations that concern permissible
activities, safety and soundness
standards, and real estate lending
standards replicate the current
requirements in part 390, subpart P. In
addition, the proposal would amend
certain sections of part 365 of the FDIC’s
existing regulations on real estate
lending standards to make it clear that
part 365, subpart A, applies to all
insured depository institutions for
which the FDIC is the appropriate
Federal banking agency. Not only would
this approach simplify the FDIC’s
regulations by removing unnecessary
provisions, but it would have the added
benefit of creating parity between state
savings associations and state
nonmenber banks by ensuring that both
classes of institutions are subject to the
same requirements regarding safety and
soundness and real estate lending
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standards. Finally, the FDIC proposes to
amend part 365 by rescinding in its
entirety subpart B concerning
registration requirements for residential
mortgage loan originators because
supervision and rulemaking authority in
this area was transferred to the Bureau
by the Dodd-Frank Act and the Bureau
has issued its own regulation,
Regulation G.
II. Background
A. The Dodd-Frank Act
The Dodd-Frank Act, signed into law
on July 21, 2010, provided for a
substantial reorganization of the
regulation of State and Federal savings
associations and their holding
companies.1 Beginning July 21, 2011,
the transfer date established by section
311 of the Dodd-Frank Act,2 the powers,
duties, and functions formerly
performed by the OTS were divided
among the FDIC, as to State savings
associations, the Office of the
Comptroller of the Currency (OCC), as to
Federal savings associations, and the
Board of Governors of the Federal
Reserve System (FRB), as to savings and
loan holding companies. Section 316(b)
of the Dodd-Frank Act 3 provides the
manner of treatment for all orders,
resolutions, determinations, regulations,
and other advisory materials that have
been issued, made, prescribed, or
allowed to become effective by the OTS.
The section provides that if such
materials were in effect on the day
before the transfer date, they continue in
effect and are enforceable by or against
the appropriate successor agency until
they are modified, terminated, set aside,
or superseded in accordance with
applicable law by such successor
agency, by any court of competent
jurisdiction, or by operation of law.
Pursuant to section 316(c) of the
Dodd-Frank Act,4 on June 14, 2011, the
FDIC’s Board of Directors approved a
‘‘List of OTS Regulations to be Enforced
by the OCC and the FDIC Pursuant to
the Dodd-Frank Wall Street Reform and
Consumer Protection Act.’’ This list was
published by the FDIC and the OCC as
a Joint Notice in the Federal Register on
July 6, 2011.5
Although section 312(b)(2)(B)(i)(II) of
the Dodd-Frank Act,6 granted the OCC
rulemaking authority relating to both
State and Federal savings associations,
nothing in the Dodd-Frank Act affected
the FDIC’s existing authority to issue
Law 111–203, 124 Stat. 1376 (2010).
at 12 U.S.C. 5411.
3 Codified at 12 U.S.C. 5414(b).
4 Codified at 12 U.S.C. 5414(c).
5 76 FR 39246 (July 6, 2011).
6 Codified at 12 U.S.C. 5412(b)(2)(B)(i)(II).
regulations under the Federal Deposit
Insurance Act (FDI Act) 7 and other laws
as the ‘‘appropriate Federal banking
agency’’ or under similar statutory
terminology. Section 312(c)(1) of the
Dodd-Frank Act 8 revised the definition
of ‘‘appropriate Federal banking
agency’’ contained in section 3(q) of the
FDI Act,9 to add State savings
associations to the list of entities for
which the FDIC is designated as the
‘‘appropriate Federal banking agency.’’
As a result, when the FDIC acts as the
designated ‘‘appropriate Federal
banking agency’’ (or under similar
terminology) for State savings
associations, as it does here, the FDIC is
authorized to issue, modify, and rescind
regulations involving such associations,
as well as for State nonmember banks
and insured branches of foreign banks.
As noted above, on June 14, 2011,
operating pursuant to this authority, the
FDIC’s Board of Directors (Board) issued
a list of regulations of the former OTS
that the FDIC would enforce with
respect to State savings associations.
Also on June 14, 2011, the FDIC’s Board
reissued and redesignated certain
regulations transferred from the former
OTS. These transferred OTS regulations
were published as new FDIC regulations
in the Federal Register on August 5,
2011.10 When the FDIC republished the
transferred OTS regulations as new
FDIC regulations, it specifically noted
that its staff would evaluate the
transferred OTS rules and might later
recommend incorporating the
transferred OTS regulations into other
FDIC regulations, amending them, or
rescinding them, as appropriate.11
B. Transferred OTS Regulations
(Transferred to the FDIC’s Part 390,
Subpart P)
A subset of the regulations transferred
to the FDIC from the OTS concern
lending and investment provisions
applicable to State savings associations.
The OTS regulations, formerly found at
12 CFR part 560, sections 560.1, 560.3,
560.100, 560.101, 560.120, 560.121,
560.130, 560.160, 560.170, and 560.172,
were transferred to the FDIC with only
nomenclature changes and now
comprise part 390, subpart P. Each
provision of part 390, subpart P is
discussed in Part III of this
SUPPLEMENTARY INFORMATION section,
below.
The FDIC has conducted a careful
review and comparison of part 390,
1 Public
2 Codified
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7 12
U.S.C. 1811 et seq.
at 12 U.S.C. 5412(c)(1).
9 12 U.S.C. 1813(q).
10 76 FR 47652 (Aug. 5, 2011).
11 See 76 FR at 47653.
8 Codified
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Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules
subpart P and other FDIC regulations
concerning permissible activities for
State savings associations (12 CFR part
362, subpart C (part 362, subpart C)),
activities implicating safety and
soundness (12 CFR part 364 (part 364
and its appendix A)), and activities
implicating real estate lending standards
(part 365, subpart A and its appendix
A). As discussed in Part III of this
SUPPLEMENTARY INFORMATION section, the
FDIC proposes to rescind part 390,
subpart P because the FDIC considers
the provisions contained in part 390,
subpart P to be unnecessary because of
the applicability of other FDIC
regulations.
C. Part 365, Subpart A, Real Estate
Lending Standards
The FDIC proposes to further
effectuate the transfer of supervisory
authority for State savings associations
from the former OTS to the FDIC by
amending certain parts of part 365 of the
FDIC’s regulations to clarify that part
365, subpart A applies to all insured
depository institutions, including State
savings associations, for which the FDIC
is the appropriate Federal banking
agency. As discussed in Part IV of this
SUPPLEMENTARY INFORMATION section, the
FDIC proposes to amend part 365,
subpart A in order to make part 365,
subpart A applicable to all insured
depository institutions, including State
savings associations, for which the FDIC
is the appropriate Federal banking
agency.
D. Part 365, Subpart B, Registration of
Residential Mortgage Loan Originators
Simultaneously, the FDIC proposes to
take the opportunity to rescind, in its
entirety, subpart B of part 365, which
relates to registration requirements for
residential mortgage loan originators,
due to the Bureau’s issuance of its 12
regulation, Regulation G, pursuant to
the Bureau’s authority under the DoddFrank Act.13 As discussed in Part V of
this SUPPLEMENTARY INFORMATION
section, the FDIC considers the
provisions contained in part 365,
12 The Secure and Fair Mortgage Licensing Act of
2008 (S.A.F.E. Act) was enacted as part of the
Housing and Economic Recovery Act of 2008,
Public Law 110–289, 122 Stat. 2654, sections 1501–
17 (codified at 12 U.S.C. 5101–16) as amended by
Title X of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act) (Pub. L.
111–203, 124 Stat. 1376). The S.A.F.E. Act requires
residential mortgage loan originators employed by
depository institutions, subsidiaries that are owned
and controlled by a depository institution and
regulated by a federal banking agency, and
institutions regulated by the Farm Credit
Administration to register with the Nationwide
Mortgage Licensing System and Registry, obtain a
unique identifier, and maintain such registration.
13 See 81 FR 25323 (April 28, 2016).
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subpart B to be unnecessary, redundant,
or otherwise duplicative of the Bureau
regulation governing this area.
III. Comparison of FDIC Regulations
With the Transferred OTS Regulations
To Be Rescinded
A. Permissible Activities for State
Savings Associations
1. FDIC’s 12 CFR Part 362, Subpart C—
Activities of Insured State Savings
Associations
Part 362 of the FDIC’s regulations
governs the activities and investments
in which insured State banks and
insured State savings associations may
engage as principals. Subpart C of part
362 implements section 28 of the FDI
Act.14 Subpart C specifically addresses
insured State savings associations and
restricts their activities and investments
to those permissible for a Federal
savings association under any statute,
including the Home Owners’ Loan
Act 15 (HOLA), and to those recognized
as permissible for a Federal savings
association by the OCC (or former OTS)
or in bulletins, orders, or written
interpretations of either the OCC or
former OTS.16 The FDIC has indicated
that it will allow State savings
associations and their service
corporations to ‘‘undertake only safe
and sound activities and investments
that do not present significant risks to
the Deposit Insurance Fund and that are
consistent with the purposes of Federal
deposit insurance and other applicable
law.’’ 17
2. Former OTS Part 560, Sections
560.120 and 560.121 (Transferred to the
FDIC as Sections 390.267 and 390.268)
a. Section 390.267—Letters of Credit
and Other Independent Undertakings To
Pay Against Documents
As part of a regulatory reorganization
and modernization initiative, section
560.120 was promulgated by the OTS in
1996. At that time, the OTS
incorporated the substance of former
section 545.48 (authorizing Federal
savings associations to issue letters of
credit) into new section 560.120 that
applied to both Federal and State
savings associations.18 Section 560.120
was designed to provide uniform
authority, standards and restrictions for
all savings associations to consider
before issuing a letter of credit or
entering into another independent
undertaking that had been recognized in
law or approved by the OTS.19 The
former OTS rule largely mirrored the
approach taken by the OCC for national
banks, which incorporated market
standards and international conventions
applicable to letters of credit.20
Section 560.120 was transferred to the
FDIC and redesignated as section
390.267 to cover letters of credit and
other independent undertakings to pay
against documents issued by or entered
into by State savings associations, and it
was also transferred to the OCC and
redesignated as section 160.120 to cover
Federal savings associations that issue
letters of credit and enter into other
independent undertakings.21
Sections 390.267 and 160.120 provide
that subject to safety and soundness
considerations, ‘‘a [State/Federal]
savings association may issue and
commit to issue letters of credit within
the scope of applicable laws or rules of
practice recognized by law. It may also
issue other independent undertakings
within the scope of such laws or rules
of practice recognized by law, that have
been approved by the [FDIC/OCC]
(approved undertaking).’’ 22
As noted above in Part III.A.1 of this
SUPPLEMENTARY INFORMATION section,
part 362, subpart C of the FDIC’s
regulations prohibits insured State
savings associations and their service
corporations from engaging in activities
and investments of a type that are not
permissible for a Federal savings
association and their service
corporations.
Under subpart C of part 362, the
phrase ‘‘activities and investments of a
type that are not permissible for a
Federal savings association’’ generally
means any activity not authorized
expressly by HOLA and activities not
recognized as permissible by OCC
regulation or other written supervisory
directive from the OCC or from the OTS
to the extent not modified, terminated,
set aside, or superseded by the OCC.23
Federal savings associations are
permitted to issue letters of credit and
may issue other independent
undertakings pursuant to 12 CFR
160.50, as transferred by the OCC from
the OTS, subject to standards and
restrictions found in 12 CFR 160.120,
discussed above.
Because 12 CFR 362.9 allows State
savings associations to exercise the
power permitted to Federal savings
associations by 12 CFR 160.50 and must
19 12
CFR 560.120.
FR at 50958.
21 See 76 FR 48950 (Aug. 9, 2011).
22 12 CFR 390.267 (a). A footnote lists examples
of laws or rules of practice applicable to letters of
credit and other independent undertakings.
23 12 CFR 362.9(a).
20 61
14 12
U.S.C. 1831e.
12 U.S.C. 1461 et seq.
16 12 CFR 362.9(a).
17 12 CFR 362.9(c).
18 61 FR 50951, 50958 (Sept. 30, 1996).
15 See
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Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules
follow State law, the standards and
restrictions applicable to Federal
savings associations that issue letters of
credit and engage in other independent
undertakings set forth in 12 CFR
160.120, and considerations of safety
and soundness, the FDIC considers
section 390.267 to be unnecessary and
proposes that it be rescinded.
b. Section 390.268—Investment in State
Housing Corporations
Section 390.268 of part 390, subpart
P, formerly designated as OTS section
560.121, applies to all savings
associations and addresses investments
in or loans to State housing
corporations.
Under subpart C of part 362, State
savings associations generally are
permitted to invest in State housing
corporations because Federal savings
associations are expressly authorized to
invest in State housing corporations
pursuant to section 5(c)(1)(P) of
HOLA.24 Because such investments are
expressly permissible for Federal
savings associations to make under
HOLA, State savings associations may
rely on part 362 in making such
investments consistent with State law
and in a safe and sound manner. As
such, the FDIC considers section
390.268 to be unnecessary and proposes
that it be rescinded.
B. Activities Implicating Safety and
Soundness
1. FDIC’s 12 CFR Part 364—Standards
for Safety and Soundness
The FDIC’s standards for safety and
soundness were promulgated in the
mid-1990s jointly by the FDIC, along
with the FRB, the OCC, and the OTS
(collectively, ‘‘the Agencies’’) pursuant
to section 39 of the FDI Act.25 Section
39(a) of the FDI Act 26 required the
Agencies to prescribe standards for
safety and soundness relating to the
following: (A) Internal controls and
information systems; (B) internal audit
systems; (C) loan documentation; (D)
credit underwriting; (E) interest rate
exposure; (F) asset growth; (G) asset
quality; (H) earnings; and (I)
compensation and benefits, as well as
such other operational and managerial
24 12
U.S.C. 1464(c)(1)(P); see 12 U.S.C. 1469.
U.S.C. 1831p–1. Section 132 of the Federal
Deposit Insurance Corporation Improvement Act of
1991, Public Law 102–242, 105 Stat. 2236 (codified
at 12 U.S.C. 1831p–1) added section 39 to the FDI
Act. Section 39 was later amended by section 956
of the Housing and Community Development Act
of 1992, Public Law 102–550, 106 Stat. 3672 and
section 318 of the Riegle Community Development
and Regulatory Improvement Act of 1994 (CDRI
Act), Public Law 103–325, 108 Stat. 2160.
26 12 U.S.C. 1831p–1(a).
25 12
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standards as appropriate. Section 39(b)
of the FDI Act required the Agencies to
prescribe standards for insured
depository institutions related to asset
quality, earnings, and stock valuation.27
Further, section 39(c) of the FDI Act
required the Agencies to develop
standards related to preventing unsafe
and unsound practices related to
compensation arrangements.28
In 1995, the Agencies published part
364 as a final rule with an appendix that
implements Section 39(a) of the FDI Act
regarding standards for safety and
soundness (appendix A).29 Later, part
364, appendix A was amended to reflect
subsections 39(b) and (c) of the FDI
Act.30 The OTS’s part 570, as amended,
implemented section 39 of the FDI Act
for all savings associations.31
The FDIC’s part 364, appendix A
(regarding safety and soundness) and
appendix B (regarding information
security) implement section 39 of the
FDI Act.32 Section 364.101 of part 364
provides that appendix A and appendix
B apply to all insured State nonmember
banks, State-licensed insured branches
of foreign banks, and State savings
associations.
Generally, part 364, appendix A
addresses operational and managerial
standards, compensation standards, and
standards related to asset quality,
earnings, and stock valuation and also
provides that an institution should have
internal controls and information
systems that are appropriate to the size
of the institution and the nature, scope,
and risk of its activities and that provide
for: (1) An organizational structure that
establishes clear lines of authority and
responsibility for monitoring adherence
to established policies; (2) effective risk
assessment; (3) timely and accurate
financial, operational, and regulatory
reports; (4) adequate procedures to
safeguard and manage assets; and (5)
compliance with applicable laws and
regulations.
With respect to timely and accurate
financial, operational and regulatory
27 12
U.S.C. 1831p–1(b).
U.S.C. 1831p–1(c).
29 60 FR 35674 (Jul. 10, 1995).
30 61 FR 43948 (Aug. 27, 1996).
31 See 60 FR at 35686; 61 FR at 43952. The FDIC
transferred part 570 of the OTS’s regulations to part
391, subpart B, of the Code of Federal Regulations.
Subsequently, the FDIC rescinded part 391, subpart
B and made conforming amendments to 12 CFR
part 364 to reflect its applicability to all entities for
which the FDIC is the applicable Federal banking
agency. See 80 FR 65903 (Oct. 28, 2015).
32 Appendix B was added in accordance with
section 501 of the Gramm-Leach-Bliley Financial
Modernization Act of 1999, Public Law 106–102,
113 Stat. 1338, codified at 15 U.S.C. 6801, which
statute required the Agencies to establish
appropriate information security standards in order
to protect nonpublic personal information.
28 12
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reports, FDIC-supervised institutions are
required to prepare such reports in
accordance with generally accepted
accounting principles 33 (GAAP) and are
also required to file quarterly Reports of
Condition.34
Appendix A of part 364 also
addresses loan documentation,
requiring institutions to establish and
maintain loan documentation practices
that: (1) Enable the institution to make
informed lending decisions and to
assess risk, as necessary, on an ongoing
basis; (2) identify the purpose of a loan
and the source of repayment, and assess
the ability of the borrower to repay the
indebtedness in a timely manner; (3)
ensure that any claim against a borrow
is legally enforceable; (4) demonstrate
appropriate administration monitoring
of a loan; and (5) take account the size
and complexity of the loan.35
Appendix A of part 364 sets standards
for asset quality and provides that an
insured depository institution ‘‘establish
and maintain a system that is
commensurate with the institution’s
size and the nature and scope of its
operations to identify problem assets
and prevent deterioration of those
assets’’ 36 by: (1) Conducting periodic
asset quality reviews to identify
problem assets; (2) estimating the
inherent losses in those assets and
establish reserves that are sufficient to
absorb estimated losses; (3) comparing
problem asset totals to capital; (4) taking
appropriate corrective action to resolve
problem assets; (5) considering the size
and potential risks of material asset
concentrations; and (6) providing
periodic asset reports with adequate
information for management and the
board of directors to assess the level of
asset risk.37
Taken together, part 364 and
appendix A constitute the FDIC’s longstanding expectations for all prudently
managed insured depository
institutions, but leave specific methods
of achieving these objectives to each
institution. Specifically, they provide a
framework for sound corporate
governance and the supervision of
operations designed to prompt an
institution to identify emerging
problems and correct deficiencies before
capital becomes impaired. The FDIC
uses these standards in its supervisory
examination process in order to assess
an institution’s risk profile and assign
an appropriate rating during the
supervisory examination process, with
33 12
U.S.C. 1831n.
U.S.C. 1817 (a)(3); 12 U.S.C. 1464(v).
35 12 CFR part 364 app. A, sec. II.C.
36 Id. sec. II.G.
37 Id.
34 12
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material deficiencies documented in the
Report of Examination. Pursuant to
section 39(e) of the FDI Act,38 an FDICsupervised institution’s failure to meet
the standards may cause the FDIC to
require the institution to submit a safety
and soundness compliance plan and if
the institution does not comply with its
plan, the FDIC will issue an order to
correct safety and soundness
deficiencies.39
2. Former OTS Safety and Soundness—
Part 390, Subpart P, Sections 390.260,
390.262, 390.269, 390.270, 390.271, and
390.272
a. Section 390.260—General
Former OTS section 560.1, as
modified by the FDIC in transferred
section 390.260, provided the general
authority and scope for safety-andsoundness-based lending and
investment for State savings
associations. It is substantively similar
to 12 CFR 364.101. Because the two
regulations are substantively similar and
section 364.101 already applies to State
savings associations, the FDIC considers
it duplicative to retain section 390.260.
Accordingly, the FDIC proposes that
section 390.260 be rescinded.
b. Section 390.262—Definitions
Former section 560.3 provided a set of
definitions to several commonly used
terms related to lending, such as
‘‘consumer loans,’’ home loans,’’ ‘‘real
estate loans,’’ and ‘‘credit card,’’ and it
is not expressly duplicative of or
substantively similar to any
corresponding FDIC regulation.
However, as transferred and
redesignated by the FDIC, the
definitions contained in section 390.262
are only relevant to the provisions of
part 390, subpart P. Specifically, section
390.262 provides a list of definitions
‘‘[f]or purposes of this subpart.’’ 40
Because the FDIC has concluded that
the substantive provisions of part 390,
subpart P are unnecessary, redundant,
or otherwise duplicative of other FDIC
regulations, it follows that the
definitions contained in section 390.262
that are only relevant to subpart P are
also unnecessary. Accordingly, the FDIC
considers section 390.262 to be
unnecessary and proposes that it be
rescinded.
c. Section 390.269—Prohibition on Loan
Procurement Fees
Former section 560.130 addressed
loan procurement fees, and is not
expressly duplicative of or substantively
similar to any corresponding FDIC
regulation. This section was originally
transferred to the OTS from the Bank
Board in 1989 41 and has been the
subject of a regulatory clarification and
an OTS interpretative letter.42
Specifically, the provision had applied
to affiliated persons of savings
associations but, in response to requests
for clarification and public comment,
the OTS revised it to apply only to
natural persons.43 As transferred to the
FDIC, section 390.269 provides,
If you are a director, officer, or other
natural person having the power to direct the
management or policies of a State savings
association, you must not receive, directly or
indirectly, any commission, fee, or other
compensation in connection with the
procurement of any loan made by the State
savings association or a subsidiary of the
State savings association.44
Although the OTS maintained this
provision in its regulations since 1989,
of the other Federal banking agencies,
only the OCC has a corresponding
provision in its regulations, as the OCC
also transferred former section 560.130
from the OTS.45 Rather than identify
and prohibit particular types of
compensation or fees on a case-by-case
basis, the FDIC’s approach has been to
act against compensation practices that
are unsafe or unsound, or represent a
breach of an officer’s or director’s duty
not to place his or her own interests
ahead of those of the institution; and
where necessary, the FDIC can take
action under section 8 of the FDI Act.46
Because the FDIC can act against
compensation practices that are
demonstrably unsafe or unsound or a
breach of fiduciary duty, the FDIC
considers section 390.269 to be
unnecessary and proposes that it be
rescinded.
d. Section 390.270—Asset Classification
Former OTS section 560.160, entitled
‘‘Asset Classification,’’ required savings
associations to classify their assets on a
regular basis in accordance with the
OTS’s Thrift Activities Handbook.47 The
41 See
54 FR 49411, 49560 (Nov. 30, 1989).
61 FR 60173, 60176 (Nov. 27, 1996); OTS
Interpretative Letter, Loan Procurement Fees (Dec.
14, 1994), available at https://www.occ.gov/static/
ots/legal-opinions/ots-lo-12-14-1994a.pdf. Former
section 560.130 was previously listed as section
563.40(a), see 61 FR at 60176, and the 1994 OTS
interpretive letter references this earlier section
number.
43 61 FR at 60176.
42 See
44 12
CFR 390.262.
OCC prohibition on loan procurement fees
is located at 12 CFR 160.130. See 76 FR 48950,
49043 (Aug. 9, 2011).
46 12 U.S.C. 1818.
47 12 CFR 560.160.
1657
regulation originally was transferred to
the OTS from the Bank Board in 1989
and it contained specific accounting
classification metrics.48 It was revised
over time in response to initiatives to
modernize and streamline Federal
banking regulations.49 Commenters had
suggested that the OTS remove the
classification metrics from the
regulation and move them to the Thrift
Activities Handbook.50 In response to
these comments, the OTS simplified
former section 560.160 but retained
portions of the regulation to ensure that
a savings association’s board of directors
would be responsible for monitoring its
classification system.
Transferred to the FDIC as section
390.270, the current regulation requires,
among other things, State savings
associations to classify assets on a
regular basis in a manner consistent
with the classification system used by
the FDIC and to establish adequate
valuation allowances or charge-offs, as
appropriate, consistent with GAAP and
the practices of the Federal banking
agencies. The FDIC’s implementation of
part 364, appendix A provides the
FDIC’s minimum standards for
establishing and maintaining ‘‘a system
that is commensurate with the
institution’s size and the nature and
scope of its operations to identify
problem assets and prevent
deterioration of those assets.’’ 51
State savings associations are already
expected to maintain an appropriate
level of allowance for loan and lease
losses in accordance with GAAP.
Because safety and soundness
principles require all insured depository
institutions for which the FDIC is the
appropriate Federal banking agency—
including State savings associations—to
provide timely and accurate financial,
operational, and regulatory reports in
accordance with GAAP, the FDIC
considers section 390.270 to be
unnecessary and proposes that it be
rescinded.
e. Section 390.271—Records for Lending
Transactions
As transferred to the FDIC, section
390.271 requires State savings
associations to establish and maintain
loan documentation practices that
mirror all of the requirements of part
364, appendix A. Because the lending
documentation practices and
requirements contained in section
390.271 are contained in part 364,
appendix A, as discussed above, the
45 The
38 12
U.S.C. 1831p–1(e).
12 U.S.C. 1831p–1(e); 12 CFR 308.300, et
39 See
seq.
40 12
CFR 390.262.
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48 See
54 FR at 49415.
61 FR 50951, 50982 (Sept. 30, 1996).
50 Id. at 50963.
51 12 CFR 364, app. A, sec. II.G.
49 See
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FDIC considers section 390.271 to be
unnecessary and proposes that it be
rescinded.
f. Section 390.272—Re-Evaluation of
Real Estate Owned
Former OTS section 560.172 also was
part of the transfer to OTS and
recodification of Bank Board regulations
in 1989.52 It originally addressed reevaluation of assets and, among other
things, required a savings association to
appraise each parcel of real estate
owned at the earlier of in-substance
foreclosure or at the time of the savings
association’s acquisition, and at such
times thereafter as dictated by prudent
management policy or as required by
the OTS’ regional director.53 The
provision did not apply to real estate
owned by the institution that was sold
and reacquired less than 12 months
subsequent to the most recent appraisal.
The form of the regulation transferred to
the FDIC as section 390.272 remains
substantively the same as the most
recent version adopted by the former
OTS.54
As transferred to the FDIC, section
390.272 is not duplicative of any other
existing FDIC regulation. However, as
discussed in part III.B.1. of this
SUPPLEMENTARY INFORMATION section,
above, the FDIC relies on part 364,
appendix A to convey its expectation
that FDIC-supervised institutions
should ‘‘establish and maintain a system
that is commensurate with the
institution’s size and the nature and
scope of its operations to identify
problem assets and prevent
deterioration of those assets’’ 55 and, as
State-chartered institutions, to follow
State law with respect to the initial and
subsequent valuations of other real
estate (ORE).56 The FDIC expects all
supervised institutions to adhere to part
364 with regard to maintaining a system
to identify and manage problem assets
(including ORE) and to provide for
timely and accurate financial,
operational, and regulatory reports
according to GAAP and the Call Report
Instructions as it pertains to the
appropriate carrying value of ORE.
Further, State law generally provides for
when an appraisal is necessary for Statechartered institutions (including savings
associations). Therefore, the FDIC
considers section 390.272 to be
unnecessary and proposes that it be
rescinded.
52 See
54 FR at 49587.
53 12 CFR 563.172 (1994).
54 See 12 CFR 390.272; cf 12 CFR 560.172.
55 12 CFR 364, app. A., sec. II.G.
56 See FIL–62–2008.
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Accordingly, as explained in the
analysis above, the FDIC proposes to
remove sections 390.260, 390.262,
390.269, 390.270, 390.271 and 390.272
of part 390, subpart P because these
sections are unnecessary, redundant of,
or otherwise duplicative of the safety
and soundness standards delineated in
part 364 and its appendix A.
C. Activities Implicating Real Estate
Lending Provisions
1. The FDIC’s Part 365—Real Estate
Lending Standards
Section 304 of the Federal Deposit
Insurance Corporation Improvement Act
of 1991 (FDICIA) required the Agencies
to adopt uniform regulations prescribing
standards for extensions of credit that
are secured by liens on interests in real
estate or made for the purpose of
financing the construction of a building
or other improvements to real estate.57
The Agencies published their joint rule
and appendices for real estate lending
on the last day of 1992, and the rules
became effective on March 19, 1993.58
The FDIC’s regulation is found at part
365, subpart A, which includes an
appendix A regarding real estate
lending.
2. Sections 390.264, 390.265, Including
Appendix to 390.265—Real Estate
Lending
Former OTS sections 560.100 and
560.101 (including the appendix)
implemented real estate lending
provisions, as required by FDICIA.
Former sections 560.100 and 560.101
were transferred to the FDIC as sections
390.264 and 390.265 (including the
appendix to part 365, subpart A). These
regulations are nearly identical to 12
CFR 365.1 and 365.2 (including
appendix A to part 365, subpart A).
However, in order to include State
savings associations within the scope of
part 365 and its appendix A, it is
necessary for the FDIC to make the
technical amendment as discussed in
section IV of this SUPPLEMENTARY
INFORMATION section, below.
Because the FDIC considers sections
390.264 and 390.265 (including the
appendix to section 390.265) to be
duplicative of part 365, subpart A, as
proposed to be amended herein, the
FDIC proposes to rescind and remove
them from the Code of Federal
Regulations.
57 See Public Law 102–242, 105 Stat. 2236
(codified at 12 U.S.C. 1828(o)).
58 See 57 FR 62890, 62900 (Dec. 31, 1992).
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IV. Proposed Amendment to Part 365,
Subpart A
As discussed in part III.C of this
the FDIC’s
part 365 subpart A addresses real estate
lending standards for insured State
nonmember banks (including Statelicensed insured branches of foreign
banks). The Dodd-Frank Act added State
savings associations to the list of entities
for which the FDIC is designated as the
appropriate Federal banking agency.59
To clarify that part 365 applies to all
institutions for which the FDIC is the
appropriate Federal banking agency, the
FDIC proposes to amend sections 365.1
and 365.2 of part 365 to replace the
phrases ‘‘insured state nonmember
banks (including state-licensed insured
branches of foreign banks)’’ and ‘‘state
nonmember bank’’ throughout subpart
A with the phrase ‘‘FDIC-supervised
institution.’’ Under the proposal, section
365.1 would be revised to add the
definition of the term ‘‘FDIC-supervised
institution’’ to mean any insured
depository institution for which the
FDIC is the appropriate Federal banking
agency pursuant to section 3(q) of the
FDI Act.60
SUPPLEMENTARY INFORMATION,
V. Rescinding Part 365, Subpart B
The FDIC issued part 365, subpart B
to implement the Federal registration
requirements for mortgage loan
originators required by the S.A.F.E. Act.
As relevant here, the S.A.F.E. Act
required the Agencies, the Farm Credit
Administration, and National Credit
Union Administration (the ‘‘S.A.F.E.
Act Agencies’’) to develop and maintain
a system for registering mortgage loan
originators employed by institutions
regulated by the agencies.61
However, the Dodd-Frank Act
amended the S.A.F.E. Act, transferring
that authority from the S.A.F.E. Act
Agencies to the Bureau.62 On December
19, 2011, the Bureau published an
interim final rule incorporating the
S.A.F.E. Act into its Regulation G. On
April 28, 2016, the Bureau finalized the
interim final rule, which is substantially
duplicative to the FDIC’s S.A.F.E. Act
regulation at part 365, subpart B. The
Bureau’s regulation addresses Federal
registration requirements for mortgage
loan originators and applies to all FDICsupervised institutions.63 As such, the
FDIC proposes to rescind part 365,
59 See section 312(c) of the Dodd-Frank Act,
codified at 12 U.S.C. 1813(q).
60 12 U.S.C. 1813(q).
61 12 U.S.C. 5106.
62 See section 1100 of the Dodd-Frank Act.
63 12 CFR 1007.101(c).
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subpart B because it is outdated and no
longer necessary.
VI. Summary
If the proposal is finalized, 12 CFR
part 390, subpart P would be removed
because it is largely unnecessary,
redundant, or duplicative of existing
FDIC regulations; the requirements of
part 365, subpart A expressly would
apply to all FDIC-supervised insured
depository institutions; and part 365
subpart B would be removed because it
is outdated and no longer necessary due
to the transfer of S.A.F.E. Act
rulemaking power to the Bureau. These
three initiatives will serve to streamline
the FDIC’s regulations and reduce the
regulatory burden on FDIC-supervised
institutions.
VII. Expected Effects
As explained in detail in Section III
of this SUPPLEMENTARY INFORMATION
section, certain OTS regulations
transferred to the FDIC by the DoddFrank Act relating to lending and
investment are either unnecessary or
effectively duplicate existing FDIC
regulations. This proposal would
eliminate those transferred OTS
regulations. The proposal also would
clarify that the standards in part 365
apply to State savings associations
because the FDIC is the ‘‘appropriate
Federal banking agency’’ pursuant to the
FDI Act.
As of June 30, 2018, the FDIC
supervises 3,575 depository institutions,
of which 41 (1.1%) are State savings
associations. The proposed rule
primarily would affect regulations that
govern State savings associations.
As explained previously, the
proposed rule would remove sections
390.260, 390.261, 390.262, 390.263,
390.264, 390.265, 390.266, 390.267,
390.268, 390.269, 390.270, 390.271, and
390.272 of part 390, subpart P because
these sections are unnecessary,
redundant of, or otherwise duplicative
of other FDIC regulations regarding
safety and soundness. Because these
regulations are redundant to existing
regulations, rescinding them will not
have any substantive effects on FDICsupervised institutions.
Thus, for example, as explained
previously, part 364 covers State savings
associations in section 364.101 and its
appendix A. Because the lending
documentation practices and standards
in part 364, appendix A are
substantively similar to existing
regulations for State savings
associations found in section 390.271,
rescission of section 390.271 would not
have any substantive effects on FDICsupervised institutions. The same
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would be true for the other sections of
part 390, subpart P.
The proposed rule would amend part
365, subpart A so that it would
expressly apply to State savings
associations. Because the real estate
lending requirements in sections 365.1
and 365.2 and appendix A to part 365,
subpart A are substantively identical to
currently applicable regulations for
State savings associations found in
390.264 and 390.265 (including the
appendix to 390.265), amending part
365, subpart A to include State savings
associations would not have any
substantive effects on FDIC-supervised
institutions.
Finally, as previously explained, the
proposed rule would rescind part 365,
subpart B because the authority to
implement Federal registration
requirements for mortgage loan
originators has been transferred by
statute to the Bureau. Because
rulemaking authority for the S.A.F.E.
Act was transferred to the Bureau in
December 2011, the removal of the
FDIC’s S.A.F.E. Act regulations would
not have any substantive effects on
FDIC-supervised institutions.
The FDIC invites comments on all
aspects of this analysis. In particular,
would the proposed rule have any costs
or benefits to covered entities that the
FDIC has not identified?
VIII. Alternatives
The FDIC has considered alternatives
to the proposed rule but believes that
the proposed amendments represent the
most appropriate option for covered
institutions. As discussed previously,
the Dodd-Frank Act transferred certain
powers, duties, and functions formerly
performed by the OTS to the FDIC. The
FDIC’s Board reissued and redesignated
certain transferred regulations from the
OTS, but noted that it would evaluate
them and might later incorporate them
into other FDIC regulations, amend
them, or rescind them, as appropriate.
The FDIC has evaluated the existing
regulations relating to lending and
investment of covered entities,
including part 365 and part 390, subpart
P. The FDIC considered the status quo
alternative of retaining the current
regulations but did not choose to do so
because it would be needlessly complex
for substantively similar regulations
regarding lending and investment
activities of State nonmember banks and
State savings associations to be located
in different locations within the Code of
Federal Regulations. The FDIC believes
it would be procedurally complex for
FDIC-supervised institutions to
continue to refer to these separate sets
of regulations. Therefore, the FDIC is
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1659
proposing to amend and streamline the
FDIC’s regulations.
IX. Request for Comments
The FDIC invites comments on all
aspects of this proposed rulemaking. In
particular, the FDIC requests comments
on the following questions:
1. Are the provisions of 12 CFR parts
362, 364, and 365 sufficient to provide
consistent and effective requirements
related to permissible lending and
investment activities for all insured
depository institutions for which the
FDIC is the appropriate Federal banking
agency? Please provide examples, data,
or otherwise substantiate your answer.
2. What negative impacts, if any, can
you foresee in the FDIC’s proposal to
rescind part 390, subpart P and part
365, subpart B and remove them from
the Code of Federal Regulations?
3. As to the OTS’s former rule
prohibiting loan procurement fees, the
FDIC noted above that no other Federal
banking agency has a similar rule. Do
you believe that a separate rule is
necessary for safety and soundness
reasons? Please provide examples, data,
or otherwise substantiate your answer.
4. Please provide any other comments
you have on the proposal.
X. Regulatory Analysis and Procedure
A. The Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of 1995
(PRA),64 the FDIC may not conduct or
sponsor, and the respondent is not
required to respond to, an information
collection unless it displays a currently
valid Office of Management and Budget
(OMB) control number.
The proposed rule would rescind and
remove from FDIC regulations part 390,
subpart P. With regard to part 365,
subpart A, the proposed rule would
amend sections 365.1 and 365.2 to
clarify that State savings associations, as
well as State nonmember banks and
foreign banks having insured branches
are all subject to part 365. It would also
rescind and remove from the FDIC’s
regulations part 365, subpart B. The
proposed rule will not create any new
or revise any existing collections of
information under the PRA. Therefore,
no information collection request will
be submitted to the OMB for review.
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA),
requires that, in connection with a
notice of proposed rulemaking, an
agency prepare and make available for
public comment an initial regulatory
flexibility analysis that describes the
64 44
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impact of the proposed rule on small
entities.65 However, a regulatory
flexibility analysis is not required if the
agency certifies that the rule will not
have a significant economic impact on
a substantial number of small entities,
and publishes its certification and a
short explanatory statement in the
Federal Register together with the rule.
The Small Business Administration
(SBA) has defined ‘‘small entities’’ to
include banking organizations with total
assets of less than or equal to $550
million.66 For the reasons provided
below, the FDIC certifies that the
proposed rule, if adopted in final form,
would not have a significant economic
impact on a substantial number of small
banking organizations. Accordingly, a
regulatory flexibility analysis is not
required.
As of June 30, 2018, the FDIC
supervised 3,575 insured financial
institutions, of which 2,804 are
considered small banking organizations
for the purposes of RFA. The proposed
rule primarily affects regulations that
govern State savings associations. There
are 38 State savings associations
considered to be small banking
organizations for the purposes of the
RFA.67
As explained previously, the
proposed rule would remove sections
390.260, 390.261, 390.262, 390.263,
390.264, 390.265, 390.266, 390.267,
390.268, 390.269, 390.270, 390.271, and
390.272 of part 390, subpart P because
these sections are unnecessary,
redundant of, or otherwise duplicative
of other FDIC regulations for safety and
soundness standards. Because these
regulations are redundant to existing
regulations, rescinding them would not
have any substantive effects on small
FDIC-supervised institutions.
As explained previously, part 364
covers State savings associations in
section 364.101 and in appendix A.
Because the lending documentation
practices and standards in part 364,
appendix A are substantively similar to
existing regulations for State savings
associations found in section 390.271
65 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.’’ See 13
CFR 121.201 (as amended, effective December 2,
2014). ‘‘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.’’ See 13 CFR 121.103. Following these
regulations, the FDIC uses a covered entity’s
affiliated and acquired assets, averaged over the
preceding four quarters, to determine whether the
FDIC-supervised institution is ‘‘small’’ for the
purposes of RFA.
67 FDIC Call Report, March 31st, 2018.
66 The
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rescinding section 390.271 and the rest
of part 390, subpart P would not have
any substantive effects on small FDICsupervised institutions.
As stated previously, the proposed
rule would amend part 365, subpart A
so that it would expressly apply to State
savings associations. Because the real
estate lending requirements in sections
365.1 and 365.2 and part 364, appendix
A are substantively identical to
currently applicable regulations for
State savings associations found in
390.264 and 390.265 (including the
appendix to section 390.265), amending
part 365, subpart A so that it would
apply to all FDIC-supervised
institutions would not have any
substantive effects on small FDICsupervised institutions.
As explained previously, the
proposed rule would rescind part 365,
subpart B because the authority to
implement Federal registration
requirements for mortgage loan
originators has been transferred by
statute to the Bureau. Because
rulemaking authority for the S.A.F.E.
Act was transferred to the Bureau in
December 30, 2011, the removal of the
FDIC’s S.A.F.E. Act regulations would
not have any substantive effects on
small FDIC-supervised covered
institutions.
Based on the information above, the
FDIC certifies that the proposed rule
would not have a significant economic
impact on a substantial number of small
entities.
5. 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?
C. Plain Language
Section 722 of the Gramm-LeachBliley Act 68 requires each Federal
banking agency to use plain language in
all of its proposed and final rules
published after January 1, 2000. As a
federal banking agency subject to the
provisions of this section, the FDIC has
sought to present the proposed rule to
rescind part 390, subpart P and amend
part 365 in a simple and straightforward
manner.
6. The FDIC invites comments on
whether the proposal is clearly stated
and effectively organized, and how the
FDIC might make the proposal easier to
understand.
68 Public Law 106–102, 113 Stat. 1338, 1471
(codified at 12 U.S.C. 4809).
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D. The Economic Growth and
Regulatory Paperwork Reduction Act
Under section 2222 of the Economic
Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA), the
FDIC is required to review all of its
regulations, at least once every 10 years,
in order to identify any outdated or
otherwise unnecessary regulations
imposed on insured institutions.69 The
FDIC, along with the other federal
banking agencies, submitted a Joint
Report to Congress on March 21, 2017,
(EGRPRA Report) discussing how the
review was conducted, what has been
done to date to address regulatory
burden, and further measures that will
be taken to address issues that were
identified. As noted in the EGRPRA
Report, the FDIC is continuing to
streamline and clarify its regulations
through the OTS rule integration
process. By removing outdated or
unnecessary regulations, such as part
390, subpart P and part 365, subpart B,
and amending part 365, subpart A, this
rule complements other actions the
FDIC has taken, separately and with the
other federal banking agencies, to
further the EGRPRA mandate.
List of Subjects
12 CFR Part 365
Banks, banking, Credit, Mortgages,
Savings associations.
12 CFR Part 390
Administrative practice and
procedure, Advertising, Aged, Civil
rights, Conflict of interests, Credit,
Crime, Equal employment opportunity,
Fair housing, Government employees,
Individuals with disabilities, Reporting
and recordkeeping requirements,
Savings associations.
Authority and Issuance
For the reasons stated in the
preamble, the Board of Directors of the
Federal Deposit Insurance Corporation
proposes to amend title 12 of the Code
of Federal Regulations as follows:
PART 365—REAL ESTATE LENDING
STANDARDS
Subpart A—Real Estate Lending
Standards [Amended]
1. Revise the authority citation for part
365 to read as follows:
■
Authority: 12 U.S.C. 1828(o), 5412.
■
2. Revise § 365.1 to read as follows:
§ 365.1
Purpose and scope.
This subpart, issued pursuant to
section 304 of the Federal Deposit
69 Public
E:\FR\FM\05FEP1.SGM
Law 104–208, 110 Stat. 3009 (1996).
05FEP1
Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules
Insurance Corporation Improvement Act
of 1991, 12 U.S.C. 1828(o), prescribes
standards for real estate lending to be
used by FDIC-supervised institutions in
adopting internal real estate lending
policies. For purposes of this subpart,
the term ‘‘FDIC-supervised institution’’
means any insured depository
institution for which the Federal
Deposit Insurance Corporation is the
appropriate Federal banking agency
pursuant to section 3(q) of the Federal
Deposit Insurance Act, 12 U.S.C.
1813(q).
■ 3. Amend § 365.2 by revising
paragraphs (a), (b)(1)(iii), (2)(iii) and
(iv), and (c) to read as follows:
Dated at Washington, DC, on December 18,
2018.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Valerie Best,
Assistant Executive Secretary.
§ 365.2
Noncommercial Use of Pre-1972 Sound
Recordings That Are Not Being
Commercially Exploited
Real estate lending standards.
(a) Each FDIC-supervised institution
shall adopt and maintain written
policies that establish appropriate limits
and standards for extensions of credit
that are secured by liens on or interests
in real estate, or that are made for the
purpose of financing permanent
improvements to real estate.
(b)(1) * * *
(iii) Be reviewed and approved by the
FDIC-supervised institution’s board of
directors at least annually.
(2) * * *
(iii) Loan administration procedures
for the FDIC-supervised institution’s
real estate portfolio; and
(iv) Documentation, approval, and
reporting requirements to monitor
compliance with the FDIC-supervised
institution’s real estate lending policies.
(c) Each FDIC-supervised institution
must monitor conditions in the real
estate market in its lending area to
ensure that its real estate lending
policies continue to be appropriate for
current market conditions.
*
*
*
*
*
Subpart B—[Removed and Reserved]
4. Remove and reserve subpart B,
consisting of §§ 365.101, 365.102,
365.103, 365.104, 365.105, and
appendix A to subpart B.
■
PART 390—REGULATIONS
TRANSFERRED FROM THE OFFICE OF
THRIFT SUPERVISION
5. The authority citation for part 390
continues to read as follows:
■
Authority: 12 U.S.C. 1819.
Subpart P—[Removed and Reserved]
6. Remove and reserve Subpart P,
consisting of §§ 390.260, 390.261,
390.262, 390.263, 390.264, 390.265,
390.266, 390.267, 390.268, 390.269,
390.270, 390.271, 390.272.
■
VerDate Sep<11>2014
16:34 Feb 04, 2019
Jkt 247001
[FR Doc. 2018–28084 Filed 2–4–19; 8:45 am]
BILLING CODE 6714–01–P
LIBRARY OF CONGRESS
Copyright Office
37 CFR Part 201
[Docket No. 2018–8]
U.S. Copyright Office, Library
of Congress.
ACTION: Notice of proposed rulemaking.
AGENCY:
The U.S. Copyright Office
(‘‘Copyright Office’’ or ‘‘Office’’) is
issuing a notice of proposed rulemaking
regarding the Classics Protection and
Access Act, title II of the recently
enacted Orrin G. Hatch-Bob Goodlatte
Music Modernization Act. In connection
with the establishment of federal
remedies for unauthorized uses of
sound recordings fixed before February
15, 1972 (‘‘Pre-1972 Sound
Recordings’’), Congress also established
an exception for certain noncommercial
uses of Pre-1972 Sound Recordings that
are not being commercially exploited.
To qualify for this exemption, a user
must file a notice of noncommercial use
after conducting a good faith, reasonable
search to determine whether the Pre1972 Sound Recording is being
commercially exploited, and the rights
owner of the sound recording must not
object to the use within 90 days. After
soliciting public comments through a
notice of inquiry, the Office is proposing
regulations identifying the specific steps
that a user should take to demonstrate
she has made a good faith, reasonable
search. The proposed rule also details
the filing requirements for the user to
submit a notice of noncommercial use
and for a rights owner to submit a notice
objecting to such use.
DATES: Written comments must be
received no later than 11:59 p.m.
Eastern Time on March 7, 2019. Meeting
requests must be received no later than
11:59 p.m. Eastern Time on March 18,
2019, and all meetings must take place
no later than Friday, March 22, 2019.
The Office will not consider requests to
hold meetings after that date. So that the
Copyright Office is able to meet the
SUMMARY:
PO 00000
Frm 00021
Fmt 4702
Sfmt 4702
1661
statutory deadlines set forth in the
Music Modernization Act, no further
extensions of time will be granted in
this rulemaking.
ADDRESSES: For reasons of government
efficiency, the Copyright Office is using
the regulations.gov system for the
submission and posting of public
comments in this proceeding. All
comments are therefore to be submitted
electronically through regulations.gov.
Specific instructions for submitting
comments are available on the
Copyright Office’s website at https://
www.copyright.gov/rulemaking/
pre1972-soundrecordingsnoncommercial/. If electronic
submission of comments is not feasible
due to lack of access to a computer and/
or the internet, please contact the Office
using the contact information below for
special instructions.
FOR FURTHER INFORMATION CONTACT:
Regan A. Smith, General Counsel and
Associate Register of Copyrights, by
email at regans@copyright.gov or Anna
Chauvet, Assistant General Counsel, by
email at achau@copyright.gov. Each can
be contacted by telephone by calling
(202) 707–8350.
SUPPLEMENTARY INFORMATION:
I. Background
On October 11, 2018, the president
signed into law the Orrin G. Hatch-Bob
Goodlatte Music Modernization Act,
H.R. 1551 (‘‘MMA’’). Title II of the
MMA, the Classics Protection and
Access Act, created chapter 14 of the
copyright law, title 17, United States
Code, which, among other things,
extends remedies for copyright
infringement to owners of sound
recordings fixed before February 15,
1972 (‘‘Pre-1972 Sound Recordings’’).
Under the provision, rights owners may
be eligible to recover statutory damages
and/or attorneys’ fees for the
unauthorized use of their Pre-1972
Sound Recordings if certain
requirements are met. To be eligible for
these remedies, rights owners must
typically file schedules listing their Pre1972 Sound Recordings (‘‘Pre-1972
Schedules’’) with the U.S. Copyright
Office, which are indexed into the
Office’s public records.1 The filing
requirement is ‘‘designed to operate in
place of a formal registration
requirement that normally applies to
claims involving statutory damages.’’ 2
The MMA also creates a new
mechanism for members of the public to
obtain authorization to make
noncommercial uses of Pre-1972 Sound
1 17
U.S.C. 1401(f)(5)(A)(i)(I)–(II).
Rep. No. 115–651, at 16 (2018); see S. Rep.
No. 115–339, at 18 (2018).
2 H.R.
E:\FR\FM\05FEP1.SGM
05FEP1
]]>Agencies
[Federal Register Volume 84, Number 24 (Tuesday, February 5, 2019)]
[Proposed Rules]
[Pages 1653-1661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28084]
=======================================================================
-----------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 365 and 390
RIN 3064-AE22
Removal of Transferred OTS Regulations Regarding Lending and
Investment; and Conforming Amendments to Other Regulation
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: In order to streamline FDIC regulations and reduce regulatory
burden, the FDIC proposes to rescind and remove from the Code of
Federal Regulations rules entitled ``Lending and Investment'' (part
390, subpart P) that were transferred to the FDIC from the Office of
Thrift Supervision (OTS) on July 21, 2011, in connection with the
implementation of Title III of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act); amend certain sections of
existing FDIC regulations governing real estate lending standards to
make it clear that such rules apply to all insured depository
institutions for which the FDIC is the appropriate Federal banking
agency; and amend part 365 by rescinding in its entirety the subpart
concerning registration requirements for residential mortgage loan
originators because supervision and rulemaking authority in this area
was transferred to the Bureau of Consumer Financial Protection (Bureau)
by the Dodd-Frank Act.
DATES: Comments must be received on or before April 8, 2019.
ADDRESSES: You may submit comments by any of the following methods:
FDIC Website: https://www.fdic.gov/regulations/laws/federal/ Follow instructions for submitting comments on the agency
website.
FDIC Email: Comments@fdic.gov. Include RIN 3064-AE22 on
the subject line of the message.
FDIC Mail: Robert E. Feldman, Executive Secretary,
Attention: Comments, Federal Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
Hand Delivery to FDIC: Comments may be hand-delivered to
the guard station at the rear of the 550 17th Street Building (located
on F Street) on business days between 7 a.m. and 5 p.m.
Please include your name, affiliation, address, email address, and
telephone number(s) in your comment. All statements received, including
attachments and other supporting materials, are part of the public
record
[[Page 1654]]
and are subject to public disclosure. You should submit only
information that you wish to make publicly available.
Please note: All comments received will be posted generally
without change to https://www.fdic.gov/regulations/laws/federal/,
including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Karen J. Currie, Senior Examination
Specialist, (202) 898-3981, email address kcurrie@fdic.gov, Division of
Risk Management Supervision; Cassandra Duhaney, Senior Policy Analyst,
(202) 898-6804, Division of Depositor and Consumer Protection; Rodney
D. Ray, Counsel, Legal Division, (202) 898-3556 or Linda Hubble Ku,
Counsel, Legal Division, (202) 898-6634.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
The policy objectives of the proposed rule are twofold. The first
is to simplify the FDIC's regulations by removing unnecessary
regulations, or realigning existing regulations in order to improve the
public's understanding and to improve the ease of reference. The second
is to promote parity between State savings associations and State
nonmember banks by making both classes of institutions subject to the
same requirements regarding real estate lending standards. Thus, as
further detailed in this SUPPLEMENTARY INFORMATION Section, the FDIC
proposes to rescind and remove from the CFR rules entitled ``Lending
and Investment'' (part 390, subpart P) that were transferred to the
FDIC from OTS in connection with the implementation of Title III the
Dodd-Frank Act. The FDIC takes the view that other existing regulations
that concern permissible activities, safety and soundness standards,
and real estate lending standards replicate the current requirements in
part 390, subpart P. In addition, the proposal would amend certain
sections of part 365 of the FDIC's existing regulations on real estate
lending standards to make it clear that part 365, subpart A, applies to
all insured depository institutions for which the FDIC is the
appropriate Federal banking agency. Not only would this approach
simplify the FDIC's regulations by removing unnecessary provisions, but
it would have the added benefit of creating parity between state
savings associations and state nonmenber banks by ensuring that both
classes of institutions are subject to the same requirements regarding
safety and soundness and real estate lending standards. Finally, the
FDIC proposes to amend part 365 by rescinding in its entirety subpart B
concerning registration requirements for residential mortgage loan
originators because supervision and rulemaking authority in this area
was transferred to the Bureau by the Dodd-Frank Act and the Bureau has
issued its own regulation, Regulation G.
II. Background
A. The Dodd-Frank Act
The Dodd-Frank Act, signed into law on July 21, 2010, provided for
a substantial reorganization of the regulation of State and Federal
savings associations and their holding companies.\1\ Beginning July 21,
2011, the transfer date established by section 311 of the Dodd-Frank
Act,\2\ the powers, duties, and functions formerly performed by the OTS
were divided among the FDIC, as to State savings associations, the
Office of the Comptroller of the Currency (OCC), as to Federal savings
associations, and the Board of Governors of the Federal Reserve System
(FRB), as to savings and loan holding companies. Section 316(b) of the
Dodd-Frank Act \3\ provides the manner of treatment for all orders,
resolutions, determinations, regulations, and other advisory materials
that have been issued, made, prescribed, or allowed to become effective
by the OTS. The section provides that if such materials were in effect
on the day before the transfer date, they continue in effect and are
enforceable by or against the appropriate successor agency until they
are modified, terminated, set aside, or superseded in accordance with
applicable law by such successor agency, by any court of competent
jurisdiction, or by operation of law.
---------------------------------------------------------------------------
\1\ Public Law 111-203, 124 Stat. 1376 (2010).
\2\ Codified at 12 U.S.C. 5411.
\3\ Codified at 12 U.S.C. 5414(b).
---------------------------------------------------------------------------
Pursuant to section 316(c) of the Dodd-Frank Act,\4\ on June 14,
2011, the FDIC's Board of Directors approved a ``List of OTS
Regulations to be Enforced by the OCC and the FDIC Pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act.'' This list
was published by the FDIC and the OCC as a Joint Notice in the Federal
Register on July 6, 2011.\5\
---------------------------------------------------------------------------
\4\ Codified at 12 U.S.C. 5414(c).
\5\ 76 FR 39246 (July 6, 2011).
---------------------------------------------------------------------------
Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act,\6\
granted the OCC rulemaking authority relating to both State and Federal
savings associations, nothing in the Dodd-Frank Act affected the FDIC's
existing authority to issue regulations under the Federal Deposit
Insurance Act (FDI Act) \7\ and other laws as the ``appropriate Federal
banking agency'' or under similar statutory terminology. Section
312(c)(1) of the Dodd-Frank Act \8\ revised the definition of
``appropriate Federal banking agency'' contained in section 3(q) of the
FDI Act,\9\ to add State savings associations to the list of entities
for which the FDIC is designated as the ``appropriate Federal banking
agency.'' As a result, when the FDIC acts as the designated
``appropriate Federal banking agency'' (or under similar terminology)
for State savings associations, as it does here, the FDIC is authorized
to issue, modify, and rescind regulations involving such associations,
as well as for State nonmember banks and insured branches of foreign
banks.
---------------------------------------------------------------------------
\6\ Codified at 12 U.S.C. 5412(b)(2)(B)(i)(II).
\7\ 12 U.S.C. 1811 et seq.
\8\ Codified at 12 U.S.C. 5412(c)(1).
\9\ 12 U.S.C. 1813(q).
---------------------------------------------------------------------------
As noted above, on June 14, 2011, operating pursuant to this
authority, the FDIC's Board of Directors (Board) issued a list of
regulations of the former OTS that the FDIC would enforce with respect
to State savings associations. Also on June 14, 2011, the FDIC's Board
reissued and redesignated certain regulations transferred from the
former OTS. These transferred OTS regulations were published as new
FDIC regulations in the Federal Register on August 5, 2011.\10\ When
the FDIC republished the transferred OTS regulations as new FDIC
regulations, it specifically noted that its staff would evaluate the
transferred OTS rules and might later recommend incorporating the
transferred OTS regulations into other FDIC regulations, amending them,
or rescinding them, as appropriate.\11\
---------------------------------------------------------------------------
\10\ 76 FR 47652 (Aug. 5, 2011).
\11\ See 76 FR at 47653.
---------------------------------------------------------------------------
B. Transferred OTS Regulations (Transferred to the FDIC's Part 390,
Subpart P)
A subset of the regulations transferred to the FDIC from the OTS
concern lending and investment provisions applicable to State savings
associations. The OTS regulations, formerly found at 12 CFR part 560,
sections 560.1, 560.3, 560.100, 560.101, 560.120, 560.121, 560.130,
560.160, 560.170, and 560.172, were transferred to the FDIC with only
nomenclature changes and now comprise part 390, subpart P. Each
provision of part 390, subpart P is discussed in Part III of this
SUPPLEMENTARY INFORMATION section, below.
The FDIC has conducted a careful review and comparison of part 390,
[[Page 1655]]
subpart P and other FDIC regulations concerning permissible activities
for State savings associations (12 CFR part 362, subpart C (part 362,
subpart C)), activities implicating safety and soundness (12 CFR part
364 (part 364 and its appendix A)), and activities implicating real
estate lending standards (part 365, subpart A and its appendix A). As
discussed in Part III of this SUPPLEMENTARY INFORMATION section, the
FDIC proposes to rescind part 390, subpart P because the FDIC considers
the provisions contained in part 390, subpart P to be unnecessary
because of the applicability of other FDIC regulations.
C. Part 365, Subpart A, Real Estate Lending Standards
The FDIC proposes to further effectuate the transfer of supervisory
authority for State savings associations from the former OTS to the
FDIC by amending certain parts of part 365 of the FDIC's regulations to
clarify that part 365, subpart A applies to all insured depository
institutions, including State savings associations, for which the FDIC
is the appropriate Federal banking agency. As discussed in Part IV of
this SUPPLEMENTARY INFORMATION section, the FDIC proposes to amend part
365, subpart A in order to make part 365, subpart A applicable to all
insured depository institutions, including State savings associations,
for which the FDIC is the appropriate Federal banking agency.
D. Part 365, Subpart B, Registration of Residential Mortgage Loan
Originators
Simultaneously, the FDIC proposes to take the opportunity to
rescind, in its entirety, subpart B of part 365, which relates to
registration requirements for residential mortgage loan originators,
due to the Bureau's issuance of its \12\ regulation, Regulation G,
pursuant to the Bureau's authority under the Dodd-Frank Act.\13\ As
discussed in Part V of this SUPPLEMENTARY INFORMATION section, the FDIC
considers the provisions contained in part 365, subpart B to be
unnecessary, redundant, or otherwise duplicative of the Bureau
regulation governing this area.
---------------------------------------------------------------------------
\12\ The Secure and Fair Mortgage Licensing Act of 2008
(S.A.F.E. Act) was enacted as part of the Housing and Economic
Recovery Act of 2008, Public Law 110-289, 122 Stat. 2654, sections
1501-17 (codified at 12 U.S.C. 5101-16) as amended by Title X of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act) (Pub. L. 111-203, 124 Stat. 1376). The S.A.F.E. Act
requires residential mortgage loan originators employed by
depository institutions, subsidiaries that are owned and controlled
by a depository institution and regulated by a federal banking
agency, and institutions regulated by the Farm Credit Administration
to register with the Nationwide Mortgage Licensing System and
Registry, obtain a unique identifier, and maintain such
registration.
\13\ See 81 FR 25323 (April 28, 2016).
---------------------------------------------------------------------------
III. Comparison of FDIC Regulations With the Transferred OTS
Regulations To Be Rescinded
A. Permissible Activities for State Savings Associations
1. FDIC's 12 CFR Part 362, Subpart C--Activities of Insured State
Savings Associations
Part 362 of the FDIC's regulations governs the activities and
investments in which insured State banks and insured State savings
associations may engage as principals. Subpart C of part 362 implements
section 28 of the FDI Act.\14\ Subpart C specifically addresses insured
State savings associations and restricts their activities and
investments to those permissible for a Federal savings association
under any statute, including the Home Owners' Loan Act \15\ (HOLA), and
to those recognized as permissible for a Federal savings association by
the OCC (or former OTS) or in bulletins, orders, or written
interpretations of either the OCC or former OTS.\16\ The FDIC has
indicated that it will allow State savings associations and their
service corporations to ``undertake only safe and sound activities and
investments that do not present significant risks to the Deposit
Insurance Fund and that are consistent with the purposes of Federal
deposit insurance and other applicable law.'' \17\
---------------------------------------------------------------------------
\14\ 12 U.S.C. 1831e.
\15\ See 12 U.S.C. 1461 et seq.
\16\ 12 CFR 362.9(a).
\17\ 12 CFR 362.9(c).
---------------------------------------------------------------------------
2. Former OTS Part 560, Sections 560.120 and 560.121 (Transferred to
the FDIC as Sections 390.267 and 390.268)
a. Section 390.267--Letters of Credit and Other Independent
Undertakings To Pay Against Documents
As part of a regulatory reorganization and modernization
initiative, section 560.120 was promulgated by the OTS in 1996. At that
time, the OTS incorporated the substance of former section 545.48
(authorizing Federal savings associations to issue letters of credit)
into new section 560.120 that applied to both Federal and State savings
associations.\18\ Section 560.120 was designed to provide uniform
authority, standards and restrictions for all savings associations to
consider before issuing a letter of credit or entering into another
independent undertaking that had been recognized in law or approved by
the OTS.\19\ The former OTS rule largely mirrored the approach taken by
the OCC for national banks, which incorporated market standards and
international conventions applicable to letters of credit.\20\
---------------------------------------------------------------------------
\18\ 61 FR 50951, 50958 (Sept. 30, 1996).
\19\ 12 CFR 560.120.
\20\ 61 FR at 50958.
---------------------------------------------------------------------------
Section 560.120 was transferred to the FDIC and redesignated as
section 390.267 to cover letters of credit and other independent
undertakings to pay against documents issued by or entered into by
State savings associations, and it was also transferred to the OCC and
redesignated as section 160.120 to cover Federal savings associations
that issue letters of credit and enter into other independent
undertakings.\21\
---------------------------------------------------------------------------
\21\ See 76 FR 48950 (Aug. 9, 2011).
---------------------------------------------------------------------------
Sections 390.267 and 160.120 provide that subject to safety and
soundness considerations, ``a [State/Federal] savings association may
issue and commit to issue letters of credit within the scope of
applicable laws or rules of practice recognized by law. It may also
issue other independent undertakings within the scope of such laws or
rules of practice recognized by law, that have been approved by the
[FDIC/OCC] (approved undertaking).'' \22\
---------------------------------------------------------------------------
\22\ 12 CFR 390.267 (a). A footnote lists examples of laws or
rules of practice applicable to letters of credit and other
independent undertakings.
---------------------------------------------------------------------------
As noted above in Part III.A.1 of this SUPPLEMENTARY INFORMATION
section, part 362, subpart C of the FDIC's regulations prohibits
insured State savings associations and their service corporations from
engaging in activities and investments of a type that are not
permissible for a Federal savings association and their service
corporations.
Under subpart C of part 362, the phrase ``activities and
investments of a type that are not permissible for a Federal savings
association'' generally means any activity not authorized expressly by
HOLA and activities not recognized as permissible by OCC regulation or
other written supervisory directive from the OCC or from the OTS to the
extent not modified, terminated, set aside, or superseded by the
OCC.\23\ Federal savings associations are permitted to issue letters of
credit and may issue other independent undertakings pursuant to 12 CFR
160.50, as transferred by the OCC from the OTS, subject to standards
and restrictions found in 12 CFR 160.120, discussed above.
---------------------------------------------------------------------------
\23\ 12 CFR 362.9(a).
---------------------------------------------------------------------------
Because 12 CFR 362.9 allows State savings associations to exercise
the power permitted to Federal savings associations by 12 CFR 160.50
and must
[[Page 1656]]
follow State law, the standards and restrictions applicable to Federal
savings associations that issue letters of credit and engage in other
independent undertakings set forth in 12 CFR 160.120, and
considerations of safety and soundness, the FDIC considers section
390.267 to be unnecessary and proposes that it be rescinded.
b. Section 390.268--Investment in State Housing Corporations
Section 390.268 of part 390, subpart P, formerly designated as OTS
section 560.121, applies to all savings associations and addresses
investments in or loans to State housing corporations.
Under subpart C of part 362, State savings associations generally
are permitted to invest in State housing corporations because Federal
savings associations are expressly authorized to invest in State
housing corporations pursuant to section 5(c)(1)(P) of HOLA.\24\
Because such investments are expressly permissible for Federal savings
associations to make under HOLA, State savings associations may rely on
part 362 in making such investments consistent with State law and in a
safe and sound manner. As such, the FDIC considers section 390.268 to
be unnecessary and proposes that it be rescinded.
---------------------------------------------------------------------------
\24\ 12 U.S.C. 1464(c)(1)(P); see 12 U.S.C. 1469.
---------------------------------------------------------------------------
B. Activities Implicating Safety and Soundness
1. FDIC's 12 CFR Part 364--Standards for Safety and Soundness
The FDIC's standards for safety and soundness were promulgated in
the mid-1990s jointly by the FDIC, along with the FRB, the OCC, and the
OTS (collectively, ``the Agencies'') pursuant to section 39 of the FDI
Act.\25\ Section 39(a) of the FDI Act \26\ required the Agencies to
prescribe standards for safety and soundness relating to the following:
(A) Internal controls and information systems; (B) internal audit
systems; (C) loan documentation; (D) credit underwriting; (E) interest
rate exposure; (F) asset growth; (G) asset quality; (H) earnings; and
(I) compensation and benefits, as well as such other operational and
managerial standards as appropriate. Section 39(b) of the FDI Act
required the Agencies to prescribe standards for insured depository
institutions related to asset quality, earnings, and stock
valuation.\27\ Further, section 39(c) of the FDI Act required the
Agencies to develop standards related to preventing unsafe and unsound
practices related to compensation arrangements.\28\
---------------------------------------------------------------------------
\25\ 12 U.S.C. 1831p-1. Section 132 of the Federal Deposit
Insurance Corporation Improvement Act of 1991, Public Law 102-242,
105 Stat. 2236 (codified at 12 U.S.C. 1831p-1) added section 39 to
the FDI Act. Section 39 was later amended by section 956 of the
Housing and Community Development Act of 1992, Public Law 102-550,
106 Stat. 3672 and section 318 of the Riegle Community Development
and Regulatory Improvement Act of 1994 (CDRI Act), Public Law 103-
325, 108 Stat. 2160.
\26\ 12 U.S.C. 1831p-1(a).
\27\ 12 U.S.C. 1831p-1(b).
\28\ 12 U.S.C. 1831p-1(c).
---------------------------------------------------------------------------
In 1995, the Agencies published part 364 as a final rule with an
appendix that implements Section 39(a) of the FDI Act regarding
standards for safety and soundness (appendix A).\29\ Later, part 364,
appendix A was amended to reflect subsections 39(b) and (c) of the FDI
Act.\30\ The OTS's part 570, as amended, implemented section 39 of the
FDI Act for all savings associations.\31\
---------------------------------------------------------------------------
\29\ 60 FR 35674 (Jul. 10, 1995).
\30\ 61 FR 43948 (Aug. 27, 1996).
\31\ See 60 FR at 35686; 61 FR at 43952. The FDIC transferred
part 570 of the OTS's regulations to part 391, subpart B, of the
Code of Federal Regulations. Subsequently, the FDIC rescinded part
391, subpart B and made conforming amendments to 12 CFR part 364 to
reflect its applicability to all entities for which the FDIC is the
applicable Federal banking agency. See 80 FR 65903 (Oct. 28, 2015).
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The FDIC's part 364, appendix A (regarding safety and soundness)
and appendix B (regarding information security) implement section 39 of
the FDI Act.\32\ Section 364.101 of part 364 provides that appendix A
and appendix B apply to all insured State nonmember banks, State-
licensed insured branches of foreign banks, and State savings
associations.
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\32\ Appendix B was added in accordance with section 501 of the
Gramm-Leach-Bliley Financial Modernization Act of 1999, Public Law
106-102, 113 Stat. 1338, codified at 15 U.S.C. 6801, which statute
required the Agencies to establish appropriate information security
standards in order to protect nonpublic personal information.
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Generally, part 364, appendix A addresses operational and
managerial standards, compensation standards, and standards related to
asset quality, earnings, and stock valuation and also provides that an
institution should have internal controls and information systems that
are appropriate to the size of the institution and the nature, scope,
and risk of its activities and that provide for: (1) An organizational
structure that establishes clear lines of authority and responsibility
for monitoring adherence to established policies; (2) effective risk
assessment; (3) timely and accurate financial, operational, and
regulatory reports; (4) adequate procedures to safeguard and manage
assets; and (5) compliance with applicable laws and regulations.
With respect to timely and accurate financial, operational and
regulatory reports, FDIC-supervised institutions are required to
prepare such reports in accordance with generally accepted accounting
principles \33\ (GAAP) and are also required to file quarterly Reports
of Condition.\34\
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\33\ 12 U.S.C. 1831n.
\34\ 12 U.S.C. 1817 (a)(3); 12 U.S.C. 1464(v).
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Appendix A of part 364 also addresses loan documentation, requiring
institutions to establish and maintain loan documentation practices
that: (1) Enable the institution to make informed lending decisions and
to assess risk, as necessary, on an ongoing basis; (2) identify the
purpose of a loan and the source of repayment, and assess the ability
of the borrower to repay the indebtedness in a timely manner; (3)
ensure that any claim against a borrow is legally enforceable; (4)
demonstrate appropriate administration monitoring of a loan; and (5)
take account the size and complexity of the loan.\35\
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\35\ 12 CFR part 364 app. A, sec. II.C.
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Appendix A of part 364 sets standards for asset quality and
provides that an insured depository institution ``establish and
maintain a system that is commensurate with the institution's size and
the nature and scope of its operations to identify problem assets and
prevent deterioration of those assets'' \36\ by: (1) Conducting
periodic asset quality reviews to identify problem assets; (2)
estimating the inherent losses in those assets and establish reserves
that are sufficient to absorb estimated losses; (3) comparing problem
asset totals to capital; (4) taking appropriate corrective action to
resolve problem assets; (5) considering the size and potential risks of
material asset concentrations; and (6) providing periodic asset reports
with adequate information for management and the board of directors to
assess the level of asset risk.\37\
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\36\ Id. sec. II.G.
\37\ Id.
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Taken together, part 364 and appendix A constitute the FDIC's long-
standing expectations for all prudently managed insured depository
institutions, but leave specific methods of achieving these objectives
to each institution. Specifically, they provide a framework for sound
corporate governance and the supervision of operations designed to
prompt an institution to identify emerging problems and correct
deficiencies before capital becomes impaired. The FDIC uses these
standards in its supervisory examination process in order to assess an
institution's risk profile and assign an appropriate rating during the
supervisory examination process, with
[[Page 1657]]
material deficiencies documented in the Report of Examination. Pursuant
to section 39(e) of the FDI Act,\38\ an FDIC-supervised institution's
failure to meet the standards may cause the FDIC to require the
institution to submit a safety and soundness compliance plan and if the
institution does not comply with its plan, the FDIC will issue an order
to correct safety and soundness deficiencies.\39\
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\38\ 12 U.S.C. 1831p-1(e).
\39\ See 12 U.S.C. 1831p-1(e); 12 CFR 308.300, et seq.
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2. Former OTS Safety and Soundness--Part 390, Subpart P, Sections
390.260, 390.262, 390.269, 390.270, 390.271, and 390.272
a. Section 390.260--General
Former OTS section 560.1, as modified by the FDIC in transferred
section 390.260, provided the general authority and scope for safety-
and-soundness-based lending and investment for State savings
associations. It is substantively similar to 12 CFR 364.101. Because
the two regulations are substantively similar and section 364.101
already applies to State savings associations, the FDIC considers it
duplicative to retain section 390.260. Accordingly, the FDIC proposes
that section 390.260 be rescinded.
b. Section 390.262--Definitions
Former section 560.3 provided a set of definitions to several
commonly used terms related to lending, such as ``consumer loans,''
home loans,'' ``real estate loans,'' and ``credit card,'' and it is not
expressly duplicative of or substantively similar to any corresponding
FDIC regulation. However, as transferred and redesignated by the FDIC,
the definitions contained in section 390.262 are only relevant to the
provisions of part 390, subpart P. Specifically, section 390.262
provides a list of definitions ``[f]or purposes of this subpart.'' \40\
Because the FDIC has concluded that the substantive provisions of part
390, subpart P are unnecessary, redundant, or otherwise duplicative of
other FDIC regulations, it follows that the definitions contained in
section 390.262 that are only relevant to subpart P are also
unnecessary. Accordingly, the FDIC considers section 390.262 to be
unnecessary and proposes that it be rescinded.
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\40\ 12 CFR 390.262.
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c. Section 390.269--Prohibition on Loan Procurement Fees
Former section 560.130 addressed loan procurement fees, and is not
expressly duplicative of or substantively similar to any corresponding
FDIC regulation. This section was originally transferred to the OTS
from the Bank Board in 1989 \41\ and has been the subject of a
regulatory clarification and an OTS interpretative letter.\42\
Specifically, the provision had applied to affiliated persons of
savings associations but, in response to requests for clarification and
public comment, the OTS revised it to apply only to natural
persons.\43\ As transferred to the FDIC, section 390.269 provides,
\41\ See 54 FR 49411, 49560 (Nov. 30, 1989).
\42\ See 61 FR 60173, 60176 (Nov. 27, 1996); OTS Interpretative
Letter, Loan Procurement Fees (Dec. 14, 1994), available at https://www.occ.gov/static/ots/legal-opinions/ots-lo-12-14-1994a.pdf. Former
section 560.130 was previously listed as section 563.40(a), see 61
FR at 60176, and the 1994 OTS interpretive letter references this
earlier section number.
\43\ 61 FR at 60176.
If you are a director, officer, or other natural person having
the power to direct the management or policies of a State savings
association, you must not receive, directly or indirectly, any
commission, fee, or other compensation in connection with the
procurement of any loan made by the State savings association or a
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subsidiary of the State savings association.\44\
\44\ 12 CFR 390.262.
Although the OTS maintained this provision in its regulations since
1989, of the other Federal banking agencies, only the OCC has a
corresponding provision in its regulations, as the OCC also transferred
former section 560.130 from the OTS.\45\ Rather than identify and
prohibit particular types of compensation or fees on a case-by-case
basis, the FDIC's approach has been to act against compensation
practices that are unsafe or unsound, or represent a breach of an
officer's or director's duty not to place his or her own interests
ahead of those of the institution; and where necessary, the FDIC can
take action under section 8 of the FDI Act.\46\ Because the FDIC can
act against compensation practices that are demonstrably unsafe or
unsound or a breach of fiduciary duty, the FDIC considers section
390.269 to be unnecessary and proposes that it be rescinded.
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\45\ The OCC prohibition on loan procurement fees is located at
12 CFR 160.130. See 76 FR 48950, 49043 (Aug. 9, 2011).
\46\ 12 U.S.C. 1818.
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d. Section 390.270--Asset Classification
Former OTS section 560.160, entitled ``Asset Classification,''
required savings associations to classify their assets on a regular
basis in accordance with the OTS's Thrift Activities Handbook.\47\ The
regulation originally was transferred to the OTS from the Bank Board in
1989 and it contained specific accounting classification metrics.\48\
It was revised over time in response to initiatives to modernize and
streamline Federal banking regulations.\49\ Commenters had suggested
that the OTS remove the classification metrics from the regulation and
move them to the Thrift Activities Handbook.\50\ In response to these
comments, the OTS simplified former section 560.160 but retained
portions of the regulation to ensure that a savings association's board
of directors would be responsible for monitoring its classification
system.
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\47\ 12 CFR 560.160.
\48\ See 54 FR at 49415.
\49\ See 61 FR 50951, 50982 (Sept. 30, 1996).
\50\ Id. at 50963.
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Transferred to the FDIC as section 390.270, the current regulation
requires, among other things, State savings associations to classify
assets on a regular basis in a manner consistent with the
classification system used by the FDIC and to establish adequate
valuation allowances or charge-offs, as appropriate, consistent with
GAAP and the practices of the Federal banking agencies. The FDIC's
implementation of part 364, appendix A provides the FDIC's minimum
standards for establishing and maintaining ``a system that is
commensurate with the institution's size and the nature and scope of
its operations to identify problem assets and prevent deterioration of
those assets.'' \51\
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\51\ 12 CFR 364, app. A, sec. II.G.
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State savings associations are already expected to maintain an
appropriate level of allowance for loan and lease losses in accordance
with GAAP. Because safety and soundness principles require all insured
depository institutions for which the FDIC is the appropriate Federal
banking agency--including State savings associations--to provide timely
and accurate financial, operational, and regulatory reports in
accordance with GAAP, the FDIC considers section 390.270 to be
unnecessary and proposes that it be rescinded.
e. Section 390.271--Records for Lending Transactions
As transferred to the FDIC, section 390.271 requires State savings
associations to establish and maintain loan documentation practices
that mirror all of the requirements of part 364, appendix A. Because
the lending documentation practices and requirements contained in
section 390.271 are contained in part 364, appendix A, as discussed
above, the
[[Page 1658]]
FDIC considers section 390.271 to be unnecessary and proposes that it
be rescinded.
f. Section 390.272--Re-Evaluation of Real Estate Owned
Former OTS section 560.172 also was part of the transfer to OTS and
recodification of Bank Board regulations in 1989.\52\ It originally
addressed re-evaluation of assets and, among other things, required a
savings association to appraise each parcel of real estate owned at the
earlier of in-substance foreclosure or at the time of the savings
association's acquisition, and at such times thereafter as dictated by
prudent management policy or as required by the OTS' regional
director.\53\ The provision did not apply to real estate owned by the
institution that was sold and reacquired less than 12 months subsequent
to the most recent appraisal. The form of the regulation transferred to
the FDIC as section 390.272 remains substantively the same as the most
recent version adopted by the former OTS.\54\
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\52\ See 54 FR at 49587.
\53\ 12 CFR 563.172 (1994).
\54\ See 12 CFR 390.272; cf 12 CFR 560.172.
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As transferred to the FDIC, section 390.272 is not duplicative of
any other existing FDIC regulation. However, as discussed in part
III.B.1. of this SUPPLEMENTARY INFORMATION section, above, the FDIC
relies on part 364, appendix A to convey its expectation that FDIC-
supervised institutions should ``establish and maintain a system that
is commensurate with the institution's size and the nature and scope of
its operations to identify problem assets and prevent deterioration of
those assets'' \55\ and, as State-chartered institutions, to follow
State law with respect to the initial and subsequent valuations of
other real estate (ORE).\56\ The FDIC expects all supervised
institutions to adhere to part 364 with regard to maintaining a system
to identify and manage problem assets (including ORE) and to provide
for timely and accurate financial, operational, and regulatory reports
according to GAAP and the Call Report Instructions as it pertains to
the appropriate carrying value of ORE. Further, State law generally
provides for when an appraisal is necessary for State-chartered
institutions (including savings associations). Therefore, the FDIC
considers section 390.272 to be unnecessary and proposes that it be
rescinded.
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\55\ 12 CFR 364, app. A., sec. II.G.
\56\ See FIL-62-2008.
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Accordingly, as explained in the analysis above, the FDIC proposes
to remove sections 390.260, 390.262, 390.269, 390.270, 390.271 and
390.272 of part 390, subpart P because these sections are unnecessary,
redundant of, or otherwise duplicative of the safety and soundness
standards delineated in part 364 and its appendix A.
C. Activities Implicating Real Estate Lending Provisions
1. The FDIC's Part 365--Real Estate Lending Standards
Section 304 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA) required the Agencies to adopt uniform
regulations prescribing standards for extensions of credit that are
secured by liens on interests in real estate or made for the purpose of
financing the construction of a building or other improvements to real
estate.\57\ The Agencies published their joint rule and appendices for
real estate lending on the last day of 1992, and the rules became
effective on March 19, 1993.\58\ The FDIC's regulation is found at part
365, subpart A, which includes an appendix A regarding real estate
lending.
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\57\ See Public Law 102-242, 105 Stat. 2236 (codified at 12
U.S.C. 1828(o)).
\58\ See 57 FR 62890, 62900 (Dec. 31, 1992).
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2. Sections 390.264, 390.265, Including Appendix to 390.265--Real
Estate Lending
Former OTS sections 560.100 and 560.101 (including the appendix)
implemented real estate lending provisions, as required by FDICIA.
Former sections 560.100 and 560.101 were transferred to the FDIC as
sections 390.264 and 390.265 (including the appendix to part 365,
subpart A). These regulations are nearly identical to 12 CFR 365.1 and
365.2 (including appendix A to part 365, subpart A). However, in order
to include State savings associations within the scope of part 365 and
its appendix A, it is necessary for the FDIC to make the technical
amendment as discussed in section IV of this SUPPLEMENTARY INFORMATION
section, below.
Because the FDIC considers sections 390.264 and 390.265 (including
the appendix to section 390.265) to be duplicative of part 365, subpart
A, as proposed to be amended herein, the FDIC proposes to rescind and
remove them from the Code of Federal Regulations.
IV. Proposed Amendment to Part 365, Subpart A
As discussed in part III.C of this SUPPLEMENTARY INFORMATION, the
FDIC's part 365 subpart A addresses real estate lending standards for
insured State nonmember banks (including State-licensed insured
branches of foreign banks). The Dodd-Frank Act added State savings
associations to the list of entities for which the FDIC is designated
as the appropriate Federal banking agency.\59\ To clarify that part 365
applies to all institutions for which the FDIC is the appropriate
Federal banking agency, the FDIC proposes to amend sections 365.1 and
365.2 of part 365 to replace the phrases ``insured state nonmember
banks (including state-licensed insured branches of foreign banks)''
and ``state nonmember bank'' throughout subpart A with the phrase
``FDIC-supervised institution.'' Under the proposal, section 365.1
would be revised to add the definition of the term ``FDIC-supervised
institution'' to mean any insured depository institution for which the
FDIC is the appropriate Federal banking agency pursuant to section 3(q)
of the FDI Act.\60\
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\59\ See section 312(c) of the Dodd-Frank Act, codified at 12
U.S.C. 1813(q).
\60\ 12 U.S.C. 1813(q).
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V. Rescinding Part 365, Subpart B
The FDIC issued part 365, subpart B to implement the Federal
registration requirements for mortgage loan originators required by the
S.A.F.E. Act. As relevant here, the S.A.F.E. Act required the Agencies,
the Farm Credit Administration, and National Credit Union
Administration (the ``S.A.F.E. Act Agencies'') to develop and maintain
a system for registering mortgage loan originators employed by
institutions regulated by the agencies.\61\
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\61\ 12 U.S.C. 5106.
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However, the Dodd-Frank Act amended the S.A.F.E. Act, transferring
that authority from the S.A.F.E. Act Agencies to the Bureau.\62\ On
December 19, 2011, the Bureau published an interim final rule
incorporating the S.A.F.E. Act into its Regulation G. On April 28,
2016, the Bureau finalized the interim final rule, which is
substantially duplicative to the FDIC's S.A.F.E. Act regulation at part
365, subpart B. The Bureau's regulation addresses Federal registration
requirements for mortgage loan originators and applies to all FDIC-
supervised institutions.\63\ As such, the FDIC proposes to rescind part
365,
[[Page 1659]]
subpart B because it is outdated and no longer necessary.
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\62\ See section 1100 of the Dodd-Frank Act.
\63\ 12 CFR 1007.101(c).
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VI. Summary
If the proposal is finalized, 12 CFR part 390, subpart P would be
removed because it is largely unnecessary, redundant, or duplicative of
existing FDIC regulations; the requirements of part 365, subpart A
expressly would apply to all FDIC-supervised insured depository
institutions; and part 365 subpart B would be removed because it is
outdated and no longer necessary due to the transfer of S.A.F.E. Act
rulemaking power to the Bureau. These three initiatives will serve to
streamline the FDIC's regulations and reduce the regulatory burden on
FDIC-supervised institutions.
VII. Expected Effects
As explained in detail in Section III of this SUPPLEMENTARY
INFORMATION section, certain OTS regulations transferred to the FDIC by
the Dodd-Frank Act relating to lending and investment are either
unnecessary or effectively duplicate existing FDIC regulations. This
proposal would eliminate those transferred OTS regulations. The
proposal also would clarify that the standards in part 365 apply to
State savings associations because the FDIC is the ``appropriate
Federal banking agency'' pursuant to the FDI Act.
As of June 30, 2018, the FDIC supervises 3,575 depository
institutions, of which 41 (1.1%) are State savings associations. The
proposed rule primarily would affect regulations that govern State
savings associations.
As explained previously, the proposed rule would remove sections
390.260, 390.261, 390.262, 390.263, 390.264, 390.265, 390.266, 390.267,
390.268, 390.269, 390.270, 390.271, and 390.272 of part 390, subpart P
because these sections are unnecessary, redundant of, or otherwise
duplicative of other FDIC regulations regarding safety and soundness.
Because these regulations are redundant to existing regulations,
rescinding them will not have any substantive effects on FDIC-
supervised institutions.
Thus, for example, as explained previously, part 364 covers State
savings associations in section 364.101 and its appendix A. Because the
lending documentation practices and standards in part 364, appendix A
are substantively similar to existing regulations for State savings
associations found in section 390.271, rescission of section 390.271
would not have any substantive effects on FDIC-supervised institutions.
The same would be true for the other sections of part 390, subpart P.
The proposed rule would amend part 365, subpart A so that it would
expressly apply to State savings associations. Because the real estate
lending requirements in sections 365.1 and 365.2 and appendix A to part
365, subpart A are substantively identical to currently applicable
regulations for State savings associations found in 390.264 and 390.265
(including the appendix to 390.265), amending part 365, subpart A to
include State savings associations would not have any substantive
effects on FDIC-supervised institutions.
Finally, as previously explained, the proposed rule would rescind
part 365, subpart B because the authority to implement Federal
registration requirements for mortgage loan originators has been
transferred by statute to the Bureau. Because rulemaking authority for
the S.A.F.E. Act was transferred to the Bureau in December 2011, the
removal of the FDIC's S.A.F.E. Act regulations would not have any
substantive effects on FDIC-supervised institutions.
The FDIC invites comments on all aspects of this analysis. In
particular, would the proposed rule have any costs or benefits to
covered entities that the FDIC has not identified?
VIII. Alternatives
The FDIC has considered alternatives to the proposed rule but
believes that the proposed amendments represent the most appropriate
option for covered institutions. As discussed previously, the Dodd-
Frank Act transferred certain powers, duties, and functions formerly
performed by the OTS to the FDIC. The FDIC's Board reissued and
redesignated certain transferred regulations from the OTS, but noted
that it would evaluate them and might later incorporate them into other
FDIC regulations, amend them, or rescind them, as appropriate. The FDIC
has evaluated the existing regulations relating to lending and
investment of covered entities, including part 365 and part 390,
subpart P. The FDIC considered the status quo alternative of retaining
the current regulations but did not choose to do so because it would be
needlessly complex for substantively similar regulations regarding
lending and investment activities of State nonmember banks and State
savings associations to be located in different locations within the
Code of Federal Regulations. The FDIC believes it would be procedurally
complex for FDIC-supervised institutions to continue to refer to these
separate sets of regulations. Therefore, the FDIC is proposing to amend
and streamline the FDIC's regulations.
IX. Request for Comments
The FDIC invites comments on all aspects of this proposed
rulemaking. In particular, the FDIC requests comments on the following
questions:
1. Are the provisions of 12 CFR parts 362, 364, and 365 sufficient
to provide consistent and effective requirements related to permissible
lending and investment activities for all insured depository
institutions for which the FDIC is the appropriate Federal banking
agency? Please provide examples, data, or otherwise substantiate your
answer.
2. What negative impacts, if any, can you foresee in the FDIC's
proposal to rescind part 390, subpart P and part 365, subpart B and
remove them from the Code of Federal Regulations?
3. As to the OTS's former rule prohibiting loan procurement fees,
the FDIC noted above that no other Federal banking agency has a similar
rule. Do you believe that a separate rule is necessary for safety and
soundness reasons? Please provide examples, data, or otherwise
substantiate your answer.
4. Please provide any other comments you have on the proposal.
X. Regulatory Analysis and Procedure
A. The Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA),\64\ the FDIC may not conduct or sponsor, and the
respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number.
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\64\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------
The proposed rule would rescind and remove from FDIC regulations
part 390, subpart P. With regard to part 365, subpart A, the proposed
rule would amend sections 365.1 and 365.2 to clarify that State savings
associations, as well as State nonmember banks and foreign banks having
insured branches are all subject to part 365. It would also rescind and
remove from the FDIC's regulations part 365, subpart B. The proposed
rule will not create any new or revise any existing collections of
information under the PRA. Therefore, no information collection request
will be submitted to the OMB for review.
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), requires that, in connection
with a notice of proposed rulemaking, an agency prepare and make
available for public comment an initial regulatory flexibility analysis
that describes the
[[Page 1660]]
impact of the proposed rule on small entities.\65\ However, a
regulatory flexibility analysis is not required if the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities, and publishes its certification
and a short explanatory statement in the Federal Register together with
the rule. The Small Business Administration (SBA) has defined ``small
entities'' to include banking organizations with total assets of less
than or equal to $550 million.\66\ For the reasons provided below, the
FDIC certifies that the proposed rule, if adopted in final form, would
not have a significant economic impact on a substantial number of small
banking organizations. Accordingly, a regulatory flexibility analysis
is not required.
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\65\ 5 U.S.C. 601, et seq.
\66\ 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.'' See 13 CFR
121.201 (as amended, effective December 2, 2014). ``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.''
See 13 CFR 121.103. Following these regulations, the FDIC uses a
covered entity's affiliated and acquired assets, averaged over the
preceding four quarters, to determine whether the FDIC-supervised
institution is ``small'' for the purposes of RFA.
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As of June 30, 2018, the FDIC supervised 3,575 insured financial
institutions, of which 2,804 are considered small banking organizations
for the purposes of RFA. The proposed rule primarily affects
regulations that govern State savings associations. There are 38 State
savings associations considered to be small banking organizations for
the purposes of the RFA.\67\
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\67\ FDIC Call Report, March 31st, 2018.
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As explained previously, the proposed rule would remove sections
390.260, 390.261, 390.262, 390.263, 390.264, 390.265, 390.266, 390.267,
390.268, 390.269, 390.270, 390.271, and 390.272 of part 390, subpart P
because these sections are unnecessary, redundant of, or otherwise
duplicative of other FDIC regulations for safety and soundness
standards. Because these regulations are redundant to existing
regulations, rescinding them would not have any substantive effects on
small FDIC-supervised institutions.
As explained previously, part 364 covers State savings associations
in section 364.101 and in appendix A. Because the lending documentation
practices and standards in part 364, appendix A are substantively
similar to existing regulations for State savings associations found in
section 390.271 rescinding section 390.271 and the rest of part 390,
subpart P would not have any substantive effects on small FDIC-
supervised institutions.
As stated previously, the proposed rule would amend part 365,
subpart A so that it would expressly apply to State savings
associations. Because the real estate lending requirements in sections
365.1 and 365.2 and part 364, appendix A are substantively identical to
currently applicable regulations for State savings associations found
in 390.264 and 390.265 (including the appendix to section 390.265),
amending part 365, subpart A so that it would apply to all FDIC-
supervised institutions would not have any substantive effects on small
FDIC-supervised institutions.
As explained previously, the proposed rule would rescind part 365,
subpart B because the authority to implement Federal registration
requirements for mortgage loan originators has been transferred by
statute to the Bureau. Because rulemaking authority for the S.A.F.E.
Act was transferred to the Bureau in December 30, 2011, the removal of
the FDIC's S.A.F.E. Act regulations would not have any substantive
effects on small FDIC-supervised covered institutions.
Based on the information above, the FDIC certifies that the
proposed rule would not have a significant economic impact on a
substantial number of small entities.
5. 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?
C. Plain Language
Section 722 of the Gramm-Leach-Bliley Act \68\ requires each
Federal banking agency to use plain language in all of its proposed and
final rules published after January 1, 2000. As a federal banking
agency subject to the provisions of this section, the FDIC has sought
to present the proposed rule to rescind part 390, subpart P and amend
part 365 in a simple and straightforward manner.
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\68\ Public Law 106-102, 113 Stat. 1338, 1471 (codified at 12
U.S.C. 4809).
---------------------------------------------------------------------------
6. The FDIC invites comments on whether the proposal is clearly
stated and effectively organized, and how the FDIC might make the
proposal easier to understand.
D. The Economic Growth and Regulatory Paperwork Reduction Act
Under section 2222 of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA), the FDIC is required to review all of
its regulations, at least once every 10 years, in order to identify any
outdated or otherwise unnecessary regulations imposed on insured
institutions.\69\ The FDIC, along with the other federal banking
agencies, submitted a Joint Report to Congress on March 21, 2017,
(EGRPRA Report) discussing how the review was conducted, what has been
done to date to address regulatory burden, and further measures that
will be taken to address issues that were identified. As noted in the
EGRPRA Report, the FDIC is continuing to streamline and clarify its
regulations through the OTS rule integration process. By removing
outdated or unnecessary regulations, such as part 390, subpart P and
part 365, subpart B, and amending part 365, subpart A, this rule
complements other actions the FDIC has taken, separately and with the
other federal banking agencies, to further the EGRPRA mandate.
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\69\ Public Law 104-208, 110 Stat. 3009 (1996).
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List of Subjects
12 CFR Part 365
Banks, banking, Credit, Mortgages, Savings associations.
12 CFR Part 390
Administrative practice and procedure, Advertising, Aged, Civil
rights, Conflict of interests, Credit, Crime, Equal employment
opportunity, Fair housing, Government employees, Individuals with
disabilities, Reporting and recordkeeping requirements, Savings
associations.
Authority and Issuance
For the reasons stated in the preamble, the Board of Directors of
the Federal Deposit Insurance Corporation proposes to amend title 12 of
the Code of Federal Regulations as follows:
PART 365--REAL ESTATE LENDING STANDARDS
Subpart A--Real Estate Lending Standards [Amended]
0
1. Revise the authority citation for part 365 to read as follows:
Authority: 12 U.S.C. 1828(o), 5412.
0
2. Revise Sec. 365.1 to read as follows:
Sec. 365.1 Purpose and scope.
This subpart, issued pursuant to section 304 of the Federal Deposit
[[Page 1661]]
Insurance Corporation Improvement Act of 1991, 12 U.S.C. 1828(o),
prescribes standards for real estate lending to be used by FDIC-
supervised institutions in adopting internal real estate lending
policies. For purposes of this subpart, the term ``FDIC-supervised
institution'' means any insured depository institution for which the
Federal Deposit Insurance Corporation is the appropriate Federal
banking agency pursuant to section 3(q) of the Federal Deposit
Insurance Act, 12 U.S.C. 1813(q).
0
3. Amend Sec. 365.2 by revising paragraphs (a), (b)(1)(iii), (2)(iii)
and (iv), and (c) to read as follows:
Sec. 365.2 Real estate lending standards.
(a) Each FDIC-supervised institution shall adopt and maintain
written policies that establish appropriate limits and standards for
extensions of credit that are secured by liens on or interests in real
estate, or that are made for the purpose of financing permanent
improvements to real estate.
(b)(1) * * *
(iii) Be reviewed and approved by the FDIC-supervised institution's
board of directors at least annually.
(2) * * *
(iii) Loan administration procedures for the FDIC-supervised
institution's real estate portfolio; and
(iv) Documentation, approval, and reporting requirements to monitor
compliance with the FDIC-supervised institution's real estate lending
policies.
(c) Each FDIC-supervised institution must monitor conditions in the
real estate market in its lending area to ensure that its real estate
lending policies continue to be appropriate for current market
conditions.
* * * * *
Subpart B--[Removed and Reserved]
0
4. Remove and reserve subpart B, consisting of Sec. Sec. 365.101,
365.102, 365.103, 365.104, 365.105, and appendix A to subpart B.
PART 390--REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT
SUPERVISION
0
5. The authority citation for part 390 continues to read as follows:
Authority: 12 U.S.C. 1819.
Subpart P--[Removed and Reserved]
0
6. Remove and reserve Subpart P, consisting of Sec. Sec. 390.260,
390.261, 390.262, 390.263, 390.264, 390.265, 390.266, 390.267, 390.268,
390.269, 390.270, 390.271, 390.272.
Dated at Washington, DC, on December 18, 2018.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Valerie Best,
Assistant Executive Secretary.
[FR Doc. 2018-28084 Filed 2-4-19; 8:45 am]
BILLING CODE 6714-01-P
