Disclosure of Financial and Other Information by FDIC-Insured State Nonmember Banks, 9698-9702 [2019-04944]
Download as PDF
<![CDATA[
9698
Federal Register / Vol. 84, No. 52 / Monday, March 18, 2019 / Rules and Regulations
access to Government information and
services, and for other purposes.
Executive Order 12988, Civil Justice
Reform
This final rule has been reviewed
under E.O. 12988, Civil Justice Reform.
Under this rule: (1) All State and local
laws and regulations that are
inconsistent with this rule will be
preempted; (2) no retroactive effect will
be given to this rule; and (3) no
administrative proceedings will be
required before parties may file suit in
court challenging this rule.
Executive Order 13175
This rule has been reviewed in
accordance with the requirements of
E.O. 13175, ‘‘Consultation and
Coordination with Indian Tribal
Governments.’’ E.O. 13175 requires
Federal agencies to consult and
coordinate with tribes on a governmentto-government basis on policies that
have tribal implications, including
regulations, legislative comments or
proposed legislation, and other policy
statements or actions that have
substantial direct effects on one or more
Indian tribes, on the relationship
between the Federal Government and
Indian tribes or on the distribution of
power and responsibilities between the
Federal Government and Indian tribes.
FSIS has assessed the impact of this
rule on Indian tribes and determined
that this rule does not, to our
knowledge, have tribal implications that
require tribal consultation under E.O.
13175. If a Tribe requests consultation,
FSIS will work with the Office of Tribal
Relations to ensure meaningful
consultation is provided where changes,
additions and modifications identified
herein are not expressly mandated by
Congress.
USDA Non-Discrimination Statement
No agency, officer, or employee of the
USDA shall, on the grounds of race,
color, national origin, religion, sex,
gender identity, sexual orientation,
disability, age, marital status, family/
parental status, income derived from a
public assistance program, or political
beliefs, exclude from participation in,
deny the benefits of, or subject to
discrimination any person in the United
States under any program or activity
conducted by the USDA.
How To File a Complaint of
Discrimination
To file a complaint of discrimination,
complete the USDA Program
Discrimination Complaint Form, which
may be accessed online at https://
www.ocio.usda.gov/sites/default/files/
VerDate Sep<11>2014
15:57 Mar 15, 2019
Jkt 247001
docs/2012/Complain_combined_6_8_
12.pdf, or write a letter signed by you
or your authorized representative.
Send your completed complaint form
or letter to USDA by mail, fax, or email:
Mail: U.S. Department of Agriculture,
Director, Office of Adjudication, 1400
Independence Avenue SW, Washington,
DC 20250–9410, Fax: (202) 690–7442
Email: program.intake@usda.gov.
Persons with disabilities who require
alternative means for communication
(Braille, large print, audiotape, etc.),
should contact USDA’s TARGET Center
at (202) 720–2600 (voice and TDD).
Additional Public Notification
Public awareness of all segments of
rulemaking and policy development is
important. Consequently, FSIS will
announce this Federal Register
publication online through the FSIS
web page located at: https://
www.fsis.usda.gov/federal-register.
FSIS also will make copies of this
publication available through the FSIS
Constituent Update, which is used to
provide information regarding FSIS
policies, procedures, regulations,
Federal Register notices, FSIS public
meetings, and other types of information
that could affect or would be of interest
to our constituents and stakeholders.
The Constituent Update is available on
the FSIS web page. Through the web
page, FSIS is able to provide
information to a much broader, more
diverse audience. In addition, FSIS
offers an email subscription service
which provides automatic and
customized access to selected food
safety news and information. This
service is available at: https://
www.fsis.usda.gov/subscribe. Options
range from recalls to export information,
regulations, directives, and notices.
Customers can add or delete
subscriptions themselves, and have the
option to password protect their
accounts.
List of Subjects in 9 CFR Part 316
Food labeling, Food packaging, Meat
inspection.
For the reasons set forth in the
preamble, FSIS is amending 9 CFR part
316 as follows:
PART 316—MARKING PRODUCTS
AND THEIR CONTAINERS
1. The authority citation for part 316
is revised to read as follows:
■
Authority: 21 U.S.C. 601–695; 7 CFR 2.18,
2.55.
2. In § 316.9, revise paragraph (a),
redesignate paragraphs (b) through (d)
as paragraphs (c) through (e),
■
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
respectively, and add a new paragraph
(b) to read as follows:
§ 316.9 Products to be marked with official
marks.
(a) Each carcass that has been
inspected and passed in an official
establishment must be marked at the
time of inspection with the official
inspection legend containing the
number of the official establishment, if
the carcass is to be shipped into
commerce from the establishment
without further processing.
(b) A passed and inspected carcass
that is to be further processed in the
slaughtering establishment need not be
marked with the official inspection
legend at the time of inspection.
*
*
*
*
*
Done in Washington, DC.
Carmen M. Rottenberg,
Administrator.
[FR Doc. 2019–04993 Filed 3–15–19; 8:45 am]
BILLING CODE 3410–DM–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 350
RIN 3064–AE65
Disclosure of Financial and Other
Information by FDIC-Insured State
Nonmember Banks
Federal Deposit Insurance
Corporation.
ACTION: Final rule.
AGENCY:
SUMMARY: The Federal Deposit
Insurance Corporation (FDIC) is
amending its regulations by rescinding
and removing its regulations entitled
Disclosure of Financial and Other
Information By FDIC-Insured State
Nonmember Banks. Upon the removal
of the regulations, all insured state
nonmember banks and insured statelicensed branches of foreign banks
(collectively, ‘‘banks’’) would no longer
be subject to the annual disclosure
statement requirement set out in the
existing regulations. The financial and
other information that has been subject
to disclosure by individual banks under
the regulations is publicly available
through the FDIC’s website.
DATES: This rule will be effective April
17, 2019.
FOR FURTHER INFORMATION CONTACT:
Robert Storch, Chief Accountant,
Division of Risk Management
Supervision, (202) 898–8906 or rstorch@
fdic.gov; Andrew Overton, Examination
Specialist (Bank Accounting), Division
of Risk Management Supervision, (202)
E:\FR\FM\18MRR1.SGM
18MRR1
Federal Register / Vol. 84, No. 52 / Monday, March 18, 2019 / Rules and Regulations
898–8922 or aoverton@fdic.gov; Michael
Condon, Counsel, Legal Division, (202)
898–6536 or mcondon@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
The policy objective of the final rule
is to simplify the FDIC’s regulations by
removing unnecessary or redundant
regulations. The final rule rescinds and
removes part 350 from the Code of
Federal Regulations. Technological
advancements over the past 30 years
provide the public with ready access to
more extensive and timely information
on the condition and performance of
individual banks, obviating the need for
the annual disclosure statement
requirements in part 350.
II. Background
Part 350 was adopted by the FDIC
Board of Directors on December 17,
1987, and took effect February 1, 1988.1
In general, part 350 requires FDICinsured state nonmember banks and
FDIC-insured state-licensed branches of
foreign banks (collectively, ‘‘banks’’) to
prepare, and make available on request,
annual disclosure statements consisting
of: (1) Required financial data
comparable to specified schedules in
the Consolidated Reports of Condition
and Income (Call Report) filed for the
previous two year-ends; (2) information
that the FDIC may require of particular
banks, which could include disclosure
of enforcement actions; and (3) other
information at a bank’s option. Part 350
also permits the use of certain
alternatives to the Call Report as a
disclosure statement. Part 350 does not
apply to the insured state savings
associations that are supervised by the
FDIC.
The annual disclosure statement for a
particular year must be prepared, and
made available to the public, by March
31 of the following year, or the fifth day
after an organization’s annual report
covering the year is sent to
shareholders, whichever occurs first.
Banks are required to announce the
availability of the disclosure statements
in lobby notices in each of their offices
and in notices of annual meetings sent
to shareholders.
In adopting part 350, the FDIC’s intent
was to improve public awareness and
understanding of the financial condition
of individual banks. In the preamble to
the December 1987 final rule, the FDIC
stated that ‘‘improved financial
disclosure should reduce the likelihood
of the market or bank customers
overreacting to incomplete
information.’’ The FDIC also said it
1 See
52 FR 49379 (December 31, 1987).
VerDate Sep<11>2014
15:57 Mar 15, 2019
Jkt 247001
believed the disclosure requirement
‘‘will complement its supervisory efforts
and enhance public confidence in the
banking system.’’ With limited
resources available for the public to
gather, analyze, and understand
information about the financial
condition of individual banks before
and during the 1980s, the FDIC’s
adoption of part 350 provided the
public with an opportunity to obtain
certain basic bank financial information.
After the FDIC adopted part 350, the
Office of the Comptroller of the
Currency (OCC) and the Federal Reserve
Board (FRB) adopted similar disclosure
regulations. When initially adopted, the
disclosure regulations adopted by the
FDIC (12 CFR part 350), the FRB (12
CFR 208.17), and the OCC (12 CFR part
18) were substantially uniform. These
regulations required institutions to
make almost identical information
available to the public upon request.
The former Office of Thrift Supervision
(OTS) had a similar, but not identical,
disclosure regulation (12 CFR 562.3). As
a result of its review of regulations
pursuant to Section 303(a) of the Riegle
Community Development and
Regulatory Improvement Act of 1994,
the OTS repealed 12 CFR 562.3 as
unnecessary in 1995.2 In 1998, the FRB
eliminated 12 CFR 208.17, Disclosure of
Financial Information by State Member
Banks, from its regulations on the basis
that Call Report information for banks
had become available through the
internet.3 In 2017, the OCC removed 12
CFR part 18 from its regulations, noting
that the information it required national
banks to disclose is contained in other
publicly available documents, which
meant that 12 CFR part 18 is duplicative
and unnecessary.4
With advancements in information
technology since part 350 was adopted,
including widespread public access to
the internet (including through public
libraries for individuals without their
own direct personal access to the
internet), information about the
financial condition of individual
insured depository institutions is now
reliably and directly offered to the
public through the FDIC’s and the
Federal Financial Institutions
Examination Council’s (FFIEC)
websites. For example, information
about the financial condition and
performance of all insured depository
institutions is publicly available each
quarter through the Call Report and the
Uniform Bank Performance Report
(UBPR). In addition, enforcement
2 See
60 FR 66866 (December 27, 1995).
3 See 63 FR 37630 (July 13, 1998).
4 See 82 FR 8082 (January 23, 2017).
PO 00000
Frm 00007
Fmt 4700
Sfmt 4700
9699
actions taken by the FDIC are readily
available to the public from the FDIC’s
website.
The Call Report contains an
institution’s balance sheet, income
statement, and supplemental schedules
that disclose additional details about the
major categories of assets and liabilities,
regulatory capital, and other financial
information. Since the successful
deployment of the FFIEC’s Central Data
Repository (CDR) Public Data
Distribution (PDD) website,5 the public
has had ready access to financial
information for each insured depository
institution. The public is able to obtain
more current Call Report data for
individual institutions in various
formats from the FFIEC’s CDR PDD
website than the financial information
available in the annual disclosure
statement required by part 350.
Individual institution Call Report data
generally are posted on this website
within 24 hours after the data have been
submitted to and accepted by the CDR.
The UBPR is an analytical tool created
for bank supervisory, examination, and
management purposes that shows the
impact of management decisions and
economic conditions on a bank’s
performance and balance-sheet
composition. The content of the UBPR
is calculated each quarter primarily
from Call Report data. UBPRs for
individual institutions are available to
the public via the CDR PDD website. An
institution’s UBPR is usually published
online within a day after its Call Report
has been filed with and accepted by the
CDR. Online access to an institution’s
UBPR each quarter complements the
public’s use of the institution’s Call
Report and further expands upon the
amount of publicly available financial
data for an institution beyond the
limited financial information provided
in the annual disclosure statement
required by part 350. The public is able
to easily locate the Call Report and the
UBPR for a bank through the FDIC
BankFind tool, which is available on the
FDIC’s website.6
In addition, on a monthly basis, the
FDIC publishes a press release listing
the administrative enforcement actions
it has taken against banks and
individuals during the preceding
month. Enforcement actions taken by
the FDIC since 1990 are available to the
public on the FDIC’s website.7
Interested parties may also obtain
5 https://cdr.ffiec.gov/public/Manage
Facsimiles.aspx.
6 https://research.fdic.gov/bankfind/.
7 https://www5.fdic.gov/EDO/.
E:\FR\FM\18MRR1.SGM
18MRR1
9700
Federal Register / Vol. 84, No. 52 / Monday, March 18, 2019 / Rules and Regulations
administrative orders through the
FDIC’s Public Information Center.
III. The Proposal
Under section 2222 of the Economic
Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA),8 the
FDIC is required to conduct a review at
least once every 10 years to identify any
outdated or otherwise unnecessary
regulations. As part of the EGRPRA
review completed in 2017, part 350 was
included in the third EGRPRA Federal
Register notice of regulatory review.9
The FDIC did not receive any comments
on this regulation in response to that
notice. Nevertheless, upon review, the
FDIC has determined that part 350 is
outdated and no longer necessary and
therefore should be eliminated. Part 350
places a burden on insured state
nonmember banks and insured statelicensed branches of foreign banks by
requiring them to prepare an annual
disclosure statement and make available
to the public a potentially unlimited
number of copies of these statements.
This burden was justified in the past
because disclosure statements were an
effective means for the public to obtain
information concerning a bank’s
financial condition. However, with
widespread public access to the internet
where more extensive and timely
financial information about individual
banks, as well as administrative
enforcement actions, can be readily
obtained, the incremental burden on
banks of providing an annual disclosure
statement in accordance with a
regulation that has become outdated is
no longer justified. Furthermore,
because part 350 does not apply to
insured state savings associations, for
which the FDIC became the primary
federal regulatory agency in 2011, the
proposal would eliminate a difference
in the regulatory requirements and
resulting regulatory burden imposed on
insured state nonmember banks and
insured state-licensed branches of
foreign banks compared to insured state
savings associations. Finally, because
regulations similar to part 350 have
been rescinded by the FRB and the OCC
(as well as the former OTS), the
preparation and availability of annual
disclosure statements are no longer
required by the other federal banking
agencies for the institutions under their
supervision.
IV. Comments
Consistent with the objectives of
section 2222 of EGRPRA, on October 17,
8 Public Law 104–208 (1996), codified at 12
U.S.C. 3311.
9 See 80 FR 32046 (June 5, 2015).
VerDate Sep<11>2014
15:57 Mar 15, 2019
Jkt 247001
2018, the FDIC Board authorized
publication of a notice of proposed
rulemaking (NPR) to rescind and
remove part 350 from the Code of
Federal Regulations. The NPR was
published in the Federal Register on
October 25, 2018, with a 30-day
comment period.10
The FDIC received nine comments
addressing the proposed rescission and
removal of part 350 from bankers,
banking associations, and a consultant.
The nine commenters fully supported
the proposal. One additional comment
was received from an individual, but it
did not specifically address the
proposed rescission and removal. After
considering the comments received, the
FDIC is adopting as proposed the
rescission and removal of part 350 from
the Code of Federal Regulations.
V. Expected Effects
The removal of the requirement that
each FDIC-insured state nonmember
bank and insured state-licensed branch
of a foreign bank prepare, and make
available on request, annual disclosure
statements will lessen the burden the
FDIC imposes on these institutions. As
of September 30, 2018, there were 3,493
FDIC-insured state nonmember banks
and insured state-licensed branches of
foreign banks that would be affected by
this final rule.11
The final rule is expected to reduce
recordkeeping, reporting, and disclosure
requirements for FDIC-insured state
nonmember banks and insured statelicensed branches of foreign banks. As
discussed in Section III: The Proposal,
part 350 requires institutions to prepare
an annual disclosure statement and
make it available to the public. By
removing part 350, the final rule will
remove this disclosure burden. The
FDIC assumes that 15 percent of the
institutions covered by part 350 provide
a management discussion and analysis
in their annual disclosure statement,
and estimates that preparing this
material takes each institution 1.5
hours. Assuming the time spent
preparing the material is divided
equally between a financial analyst and
a manager, each earning the 75th
percentile wage for their occupation, the
estimated annual cost per institution to
prepare the material is $157.82.12 Based
10 See
83 FR 53829 (October 25, 2018).
from the September 30, 2018, Call Report
and FFIEC 002 report.
12 The annual cost per institution is estimated
using the 75th percentile hourly wage for financial
analysts and management occupations in the
depository credit intermediation industry as of May
2017. This hourly wage is adjusted for inflation,
and grossed-up to include benefits, through June
2018. The 75th percentile inflation and benefit11 Data
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
on the FDIC’s estimation that 15 percent
of institutions prepare this material, the
total annual cost is estimated to be
$82,695, or approximately 0.0001
percent of noninterest expenses for
covered institutions.13
In addition to the directly measurable
cost savings, another potential benefit of
the final rule is that it frees up
institution staff time that would
otherwise have been spent complying
with part 350. Theoretically, time
previously spent complying with part
350 may now be spent on another task
of higher value to the institution. This
potential effect is difficult to accurately
estimate with available information, but
it is likely to be small given that the
disclosure burden imposed by part 350
is a relatively small percentage of
noninterest expenses.
The final rule removes a disclosure
requirement for affected institutions;
however, the FDIC believes that the
reduction will not have material effects
for customers, investors, or
counterparties. As discussed in Section
III: The Proposal, extensive and timely
financial information about individual
banks, as well as administrative
enforcement actions, can be readily
obtained by the public on the internet.
Therefore, the FDIC believes that
removal of this disclosure requirement
will not have substantive effects on
financial market participants.
VI. Alternatives Considered
The FDIC considered alternatives, but
believes that the rescission and removal
of part 350 represents the most
appropriate option. In particular, the
FDIC considered whether to (1) retain
the existing disclosure statement
requirement, but to extend it to the
adjusted hourly wage of management occupations
as of June 2018 is $125.21, and for financial
analysts is $85.21. Assuming the 1.5 hours are
equally divided between a manager and an analyst,
this yields an estimated total annual cost per
institution of (0.75 * $125.21) + (0.75 * $85.21) =
$157.82.
Hourly wages are from the Bureau of Labor
Statistics (BLS) May 2017 National IndustrySpecific Occupational Employment and Wage
Estimates, https://www.bls.gov/oes/current/
oessrci.htm. Wages are adjusted for inflation
through June 2018 using the Seasonally Adjusted
All-items Consumer Price Index for All Urban
Consumers, https://data.bls.gov/PDQWeb/cu. The
hourly wages are grossed-up to include benefits
based on Employer Cost for Employee
Compensation data as of June 2018, https://
www.bls.gov/news.release/pdf/ecec.pdf. June 2018
is the latest available period of Employer Cost for
Employee Compensation data. The data on hourly
wages, inflation, and employer cost for employee
compensation was extracted on December 14, 2018.
13 This equals 524 * $157.82, i.e., (3,493 * 0.15)
* $157.82, rounded to the nearest dollar.
Noninterest expenses are calculated from data
reported in the September 30, 2018, Call Report,
and annualized.
E:\FR\FM\18MRR1.SGM
18MRR1
Federal Register / Vol. 84, No. 52 / Monday, March 18, 2019 / Rules and Regulations
insured state savings associations now
supervised by the FDIC, (2) require that
disclosure statements be updated
quarterly instead of annually, and/or (3)
require the inclusion in disclosure
statements of either the entire Call
Report (excluding a limited number of
items accorded confidential treatment)
or financial data comparable to a greater
number of specified Call Report
schedules. However, with the timely
public availability of each institution’s
quarterly Call Report and UBPR via the
FDIC’s and the FFIEC’s websites, and
with the public disclosure of
information about enforcement actions
taken by the FDIC routinely made
available on the FDIC’s website, the
FDIC believes any extension of part 350
to other institutions, increase in the
frequency of disclosure, increase in the
scope of disclosure, or combination of
these alternatives, imposes additional
cost without any corresponding public
benefit in terms of access to financial
and other information on institutions.
Moreover, the FDIC is not aware of any
difficulties encountered by the public in
obtaining current financial and
enforcement action information on
institutions supervised by the FRB and
the OCC (and those institutions
previously supervised by the OTS) via
public websites since these agencies
eliminated their respective disclosure
statement requirements.
VII. Regulatory Analysis and Procedure
A. The Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of 1995
(PRA) (44 U.S.C. 3501–3521), the FDIC
may not conduct or sponsor, and the
respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number. Part 350 is currently an
approved information collection with
OMB Control No. 3064–0090. Removing
part 350 obviates the need for this
collection of information pursuant to
the PRA, and FDIC will seek to
discontinue its use.
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
generally requires that, in connection
with a rulemaking, an agency prepare
and make available for public comment
a final regulatory flexibility analysis
describing the impact of the final rule
on small entities.14 A regulatory
flexibility analysis is not required;
however, if the agency certifies that the
rule will not have a significant
14 5
U.S.C. 601 et seq.
VerDate Sep<11>2014
15:57 Mar 15, 2019
Jkt 247001
economic impact on a substantial
number of small entities. The U.S. Small
Business Administration (SBA) has
defined ‘‘small entities’’ to include
banking organizations with total assets
less than or equal to $550 million.15
As of September 30, 2018, there are
3,493 FDIC-insured state nonmember
banks and FDIC-insured state-licensed
branches of foreign banks.16 Of these,
2,689 are considered small entities for
the purposes of RFA. Thus, the FDIC
concludes the proposed rule will affect
a substantial number of small entities.
The final rule is expected to reduce
recordkeeping, reporting, and disclosure
requirements for small FDIC-supervised
banks. As discussed in Section III: The
Proposal, part 350 requires institutions
to prepare an annual disclosure
statement and make it available to the
public. By removing part 350, the final
rule will remove this disclosure burden.
As discussed in Section IV: Expected
Effects, the FDIC estimates the annual
cost per institution to prepare the
material is $157.82.17 Based on the
FDIC’s estimation that 15 percent of
institutions prepare this material, the
total annual cost for small FDIC15 The SBA defines a small banking organization
as having $550 million or less in assets, where an
organization’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).
In its determination, the ‘‘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
covered entity is ‘‘small’’ for the purposes of RFA.
16 Data from the September 30, 2018, Call Report
and FFIEC 002 report.
17 The annual cost per institution is estimated
using the 75th percentile hourly wage for financial
analysts and management occupations in the
depository credit intermediation industry as of May
2017. This hourly wage is adjusted for inflation,
and grossed-up to include benefits, through June
2018. The 75th percentile inflation and benefitadjusted hourly wage of management occupations
as of June 2018 is $125.21, and for financial
analysts is $85.21. Assuming the 1.5 hours are
equally divided between a manager and an analyst,
this yields an estimated total annual cost per
institution of (0.75 * $125.21) + (0.75 * $85.21) =
$157.82.
Hourly wages are from the Bureau of Labor
Statistics (BLS) May 2017 National IndustrySpecific Occupational Employment and Wage
Estimates, https://www.bls.gov/oes/current/
oessrci.htm. Wages are adjusted for inflation
through June 2018 using the Seasonally Adjusted
All-items Consumer Price Index for All Urban
Consumers, https://data.bls.gov/PDQWeb/cu. The
hourly wages are grossed-up to include benefits
based on Employer Cost for Employee
Compensation data as of June 2018, https://
www.bls.gov/news.release/pdf/ecec.pdf. June 2018
is the latest available period of Employer Cost for
Employee Compensation data. The data on hourly
wages, inflation, and employer cost for employee
compensation was extracted on December 14, 2018.
PO 00000
Frm 00009
Fmt 4700
Sfmt 4700
9701
supervised institutions is estimated to
be $63,599, or less than 0.0005 percent
of noninterest expenses for such
institutions.18
Also as described in Section IV above,
in addition to the directly measurable
cost savings, another potential benefit of
the final rule is that it frees up
institution staff time that would
otherwise have been spent complying
with part 350. While this potential effect
is difficult to accurately estimate with
available information, it is likely to be
small given that the disclosure burden
imposed by part 350 is a relatively small
percentage of noninterest expenses for
small FDIC-supervised institutions.
The final rule removes a disclosure
requirement for affected institutions;
however, the FDIC believes that the
reduction will not have material effects
for customers, investors, or
counterparties. As discussed in Section
III: The Proposal, extensive and timely
financial information about individual
banks, as well as administrative
enforcement actions, can be readily
obtained by the public on the internet.
Therefore, the FDIC believes that
removal of this disclosure requirement
with have not substantive effects on
financial market participants.
Based on the information above, the
FDIC certifies that the final rule will not
have a significant economic impact on
a substantial number of small entities.
C. Small Business Regulatory
Enforcement Fairness Act
The OMB has determined that the
final rule is not a ‘‘major rule’’ within
the meaning of the Small Business
Regulatory Enforcement Fairness Act of
1996 (SBREFA).19 As required by
SBREFA, the FDIC will submit the final
rule and other appropriate reports to
Congress and the Government
Accountability Office for review.
D. Plain Language
Section 722 of the Gramm-LeachBliley Act, Public Law 106–102, 113
Stat. 1338, 1471, 12 U.S.C. 4809,
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 final
rule to rescind part 350 in a simple and
straightforward manner.
18 This equals 403 * $157.82, i.e., (2,689 * 0.15)
* $157.82, rounded to the nearest dollar.
Noninterest expenses are calculated from data
reported in the September 30, 2018, Call Report,
and annualized.
19 5 U.S.C. 801 et seq.
E:\FR\FM\18MRR1.SGM
18MRR1
9702
Federal Register / Vol. 84, No. 52 / Monday, March 18, 2019 / Rules and Regulations
E. The Economic Growth and Regulatory FEDERAL HOUSING FINANCE
Paperwork Reduction Act
AGENCY
Under section 2222 of EGRPRA, the
FDIC is required to conduct a review at
least once every 10 years to identify any
outdated or otherwise unnecessary
regulations. The FDIC completed its
most recent comprehensive review of its
regulations under EGRPRA in 2017 and
did not receive any comments from the
public concerning part 350. The burden
reduction evidenced in this final rule is
consistent with the objectives of the
EGRPRA review process.
F. Riegle Community Development and
Regulatory Improvement Act
Under section 302(b) of the Riegle
Community Development and
Regulatory Improvement Act, 12 U.S.C.
4802(b), new regulations and
amendments to regulations prescribed
by a Federal banking agency which
impose additional reporting,
disclosures, or other new requirements
on insured depository institutions shall
take effect on the first day of a calendar
quarter which begins on or after the date
on which the regulations are published
in final form. Because this rule
rescission does not impose additional
reporting, disclosures, or other
requirements, but rather relieves banks
of a disclosure requirement, this rule
may take effect prior to the start of the
next calendar quarter.
List of Subjects in 12 CFR Part 350
Accounting, Banks, Banking,
Reporting and recordkeeping
requirements.
Authority and Issuance
PART 350—[REMOVED AND
RESERVED]
For the reasons stated in the preamble,
and under the authority of 12 U.S.C
1817(a)(1), 1819 ‘‘Seventh’’ and
‘‘Tenth,’’ the Board of Directors of the
Federal Deposit Insurance Corporation
removes and reserves 12 CFR part 350.
■
Dated at Washington, DC, on March 12,
2019.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2019–04944 Filed 3–15–19; 8:45 am]
BILLING CODE 6714–01–P
12 CFR Parts 1209, 1217, and 1250
RIN 2590–AB01
Rules of Practice and Procedure; Civil
Money Penalty Inflation Adjustment
Federal Housing Finance
Agency.
ACTION: Final rule.
AGENCY:
SUMMARY: The Federal Housing Finance
Agency (FHFA) is adopting this final
rule amending its Rules of Practice and
Procedure and other agency regulations
to adjust each civil money penalty
within its jurisdiction to account for
inflation, pursuant to the Federal Civil
Penalties Inflation Adjustment Act of
1990, as amended by the Federal Civil
Penalties Inflation Adjustment Act
Improvements Act of 2015.
DATES: Effective date: April 17, 2019.
FOR FURTHER INFORMATION CONTACT:
Stephen E. Hart, Deputy General
Counsel, at (202) 649–3053,
Stephen.Hart@fhfa.gov, or Frank R.
Wright, Assistant General Counsel, at
(202) 649–3087, Frank.Wright@fhfa.gov
(not toll-free numbers); Federal Housing
Finance Agency, 400 7th Street SW,
Washington, DC 20219. The telephone
number for the Telecommunications
Device for the Hearing Impaired is: (800)
877–8339 (TDD only).
SUPPLEMENTARY INFORMATION:
I. Background
FHFA is an independent agency of the
Federal government, and the financial
safety and soundness regulator of the
Federal National Mortgage Association
(Fannie Mae) and the Federal Home
Loan Mortgage Corporation (Freddie
Mac) (collectively, the Enterprises), as
well as the Federal Home Loan Banks
(collectively, the Banks) and the Office
of Finance under authority granted by
the Federal Housing Enterprises
Financial Safety and Soundness Act of
1992 (Safety and Soundness Act).1
FHFA oversees the Enterprises and
Banks (collectively, the regulated
entities) and the Office of Finance to
ensure that they operate in a safe and
sound manner and maintain liquidity in
the housing finance market in
accordance with applicable laws, rules
and regulations. To that end, FHFA is
vested with broad supervisory
discretion and specific civil
administrative enforcement powers,
similar to such authority granted by
Congress to the Federal bank regulatory
1 See Safety and Soundness Act, 12 U.S.C. 4513
and 4631–4641.
VerDate Sep<11>2014
15:57 Mar 15, 2019
Jkt 247001
PO 00000
Frm 00010
Fmt 4700
Sfmt 4700
agencies.2 Section 1376 of the Safety
and Soundness Act (12 U.S.C. 4636)
empowers FHFA to impose civil money
penalties under specific conditions.
FHFA’s Rules of Practice and Procedure
(12 CFR part 1209) (the Enforcement
regulations) govern cease and desist
proceedings, civil money penalty
assessment proceedings, and other
administrative adjudications.3 FHFA’s
Flood Insurance regulation (12 CFR part
1250) governs flood insurance
responsibilities as they pertain to the
Enterprises.4 FHFA’s Implementation of
the Program Fraud Civil Remedies Act
of 1986 regulation (12 CFR part 1217)
sets forth procedures for imposing civil
penalties and assessments under the
Program Fraud Civil Remedies Act (31
U.S.C. 3801 et seq.) on any person that
makes a false claim for property,
services or money from FHFA, or makes
a false material statement to FHFA in
connection with a claim, where the
amount involved does not exceed
$150,000.5
The Adjustment Improvements Act
The Federal Civil Penalties Inflation
Adjustment Act of 1990 (Inflation
Adjustment Act), as amended by the
Federal Civil Penalties Inflation
Adjustment Act Improvements Act of
2015 (Adjustment Improvements Act),
requires FHFA, as well as other federal
agencies with the authority to issue civil
money penalties (CMPs), to adjust by
regulation the maximum amount of each
CMP authorized by law that the agency
has jurisdiction to administer.6 The
Adjustment Improvements Act required
agencies to make an initial ‘‘catch-up’’
adjustment of their CMPs upon the
statute’s enactment,7 and further
requires agencies to make additional
adjustments on an annual basis
following the initial adjustment.8
The Adjustment Improvements Act
sets forth the formula that agencies must
apply when making annual adjustments,
based on the percent change between
the October Consumer Price Index for
All Urban Consumers (the CPI–U)
preceding the date of the last adjustment
and the October CPI–U for the year
before that.
2 Id.
3 See
12 CFR part 1209.
12 CFR part 1250.
5 See generally, 31 U.S.C. 3801 et seq.
6 See 28 U.S.C. 2461 note.
7 FHFA promulgated its catch-up adjustment of
its CMPs with an interim final rule published July
1, 2016. 81 FR 43028.
8 FHFA promulgated its first annual adjustment of
its CMP with a final rule published August 29,
2018. 83 FR 43965.
4 See
E:\FR\FM\18MRR1.SGM
18MRR1
]]>Agencies
[Federal Register Volume 84, Number 52 (Monday, March 18, 2019)]
[Rules and Regulations]
[Pages 9698-9702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04944]
=======================================================================
-----------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 350
RIN 3064-AE65
Disclosure of Financial and Other Information by FDIC-Insured
State Nonmember Banks
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending
its regulations by rescinding and removing its regulations entitled
Disclosure of Financial and Other Information By FDIC-Insured State
Nonmember Banks. Upon the removal of the regulations, all insured state
nonmember banks and insured state-licensed branches of foreign banks
(collectively, ``banks'') would no longer be subject to the annual
disclosure statement requirement set out in the existing regulations.
The financial and other information that has been subject to disclosure
by individual banks under the regulations is publicly available through
the FDIC's website.
DATES: This rule will be effective April 17, 2019.
FOR FURTHER INFORMATION CONTACT: Robert Storch, Chief Accountant,
Division of Risk Management Supervision, (202) 898-8906 or
rstorch@fdic.gov; Andrew Overton, Examination Specialist (Bank
Accounting), Division of Risk Management Supervision, (202)
[[Page 9699]]
898-8922 or aoverton@fdic.gov; Michael Condon, Counsel, Legal Division,
(202) 898-6536 or mcondon@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
The policy objective of the final rule is to simplify the FDIC's
regulations by removing unnecessary or redundant regulations. The final
rule rescinds and removes part 350 from the Code of Federal
Regulations. Technological advancements over the past 30 years provide
the public with ready access to more extensive and timely information
on the condition and performance of individual banks, obviating the
need for the annual disclosure statement requirements in part 350.
II. Background
Part 350 was adopted by the FDIC Board of Directors on December 17,
1987, and took effect February 1, 1988.\1\ In general, part 350
requires FDIC-insured state nonmember banks and FDIC-insured state-
licensed branches of foreign banks (collectively, ``banks'') to
prepare, and make available on request, annual disclosure statements
consisting of: (1) Required financial data comparable to specified
schedules in the Consolidated Reports of Condition and Income (Call
Report) filed for the previous two year-ends; (2) information that the
FDIC may require of particular banks, which could include disclosure of
enforcement actions; and (3) other information at a bank's option. Part
350 also permits the use of certain alternatives to the Call Report as
a disclosure statement. Part 350 does not apply to the insured state
savings associations that are supervised by the FDIC.
---------------------------------------------------------------------------
\1\ See 52 FR 49379 (December 31, 1987).
---------------------------------------------------------------------------
The annual disclosure statement for a particular year must be
prepared, and made available to the public, by March 31 of the
following year, or the fifth day after an organization's annual report
covering the year is sent to shareholders, whichever occurs first.
Banks are required to announce the availability of the disclosure
statements in lobby notices in each of their offices and in notices of
annual meetings sent to shareholders.
In adopting part 350, the FDIC's intent was to improve public
awareness and understanding of the financial condition of individual
banks. In the preamble to the December 1987 final rule, the FDIC stated
that ``improved financial disclosure should reduce the likelihood of
the market or bank customers overreacting to incomplete information.''
The FDIC also said it believed the disclosure requirement ``will
complement its supervisory efforts and enhance public confidence in the
banking system.'' With limited resources available for the public to
gather, analyze, and understand information about the financial
condition of individual banks before and during the 1980s, the FDIC's
adoption of part 350 provided the public with an opportunity to obtain
certain basic bank financial information.
After the FDIC adopted part 350, the Office of the Comptroller of
the Currency (OCC) and the Federal Reserve Board (FRB) adopted similar
disclosure regulations. When initially adopted, the disclosure
regulations adopted by the FDIC (12 CFR part 350), the FRB (12 CFR
208.17), and the OCC (12 CFR part 18) were substantially uniform. These
regulations required institutions to make almost identical information
available to the public upon request. The former Office of Thrift
Supervision (OTS) had a similar, but not identical, disclosure
regulation (12 CFR 562.3). As a result of its review of regulations
pursuant to Section 303(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994, the OTS repealed 12 CFR 562.3 as
unnecessary in 1995.\2\ In 1998, the FRB eliminated 12 CFR 208.17,
Disclosure of Financial Information by State Member Banks, from its
regulations on the basis that Call Report information for banks had
become available through the internet.\3\ In 2017, the OCC removed 12
CFR part 18 from its regulations, noting that the information it
required national banks to disclose is contained in other publicly
available documents, which meant that 12 CFR part 18 is duplicative and
unnecessary.\4\
---------------------------------------------------------------------------
\2\ See 60 FR 66866 (December 27, 1995).
\3\ See 63 FR 37630 (July 13, 1998).
\4\ See 82 FR 8082 (January 23, 2017).
---------------------------------------------------------------------------
With advancements in information technology since part 350 was
adopted, including widespread public access to the internet (including
through public libraries for individuals without their own direct
personal access to the internet), information about the financial
condition of individual insured depository institutions is now reliably
and directly offered to the public through the FDIC's and the Federal
Financial Institutions Examination Council's (FFIEC) websites. For
example, information about the financial condition and performance of
all insured depository institutions is publicly available each quarter
through the Call Report and the Uniform Bank Performance Report (UBPR).
In addition, enforcement actions taken by the FDIC are readily
available to the public from the FDIC's website.
The Call Report contains an institution's balance sheet, income
statement, and supplemental schedules that disclose additional details
about the major categories of assets and liabilities, regulatory
capital, and other financial information. Since the successful
deployment of the FFIEC's Central Data Repository (CDR) Public Data
Distribution (PDD) website,\5\ the public has had ready access to
financial information for each insured depository institution. The
public is able to obtain more current Call Report data for individual
institutions in various formats from the FFIEC's CDR PDD website than
the financial information available in the annual disclosure statement
required by part 350. Individual institution Call Report data generally
are posted on this website within 24 hours after the data have been
submitted to and accepted by the CDR.
---------------------------------------------------------------------------
\5\ https://cdr.ffiec.gov/public/ManageFacsimiles.aspx.
---------------------------------------------------------------------------
The UBPR is an analytical tool created for bank supervisory,
examination, and management purposes that shows the impact of
management decisions and economic conditions on a bank's performance
and balance-sheet composition. The content of the UBPR is calculated
each quarter primarily from Call Report data. UBPRs for individual
institutions are available to the public via the CDR PDD website. An
institution's UBPR is usually published online within a day after its
Call Report has been filed with and accepted by the CDR. Online access
to an institution's UBPR each quarter complements the public's use of
the institution's Call Report and further expands upon the amount of
publicly available financial data for an institution beyond the limited
financial information provided in the annual disclosure statement
required by part 350. The public is able to easily locate the Call
Report and the UBPR for a bank through the FDIC BankFind tool, which is
available on the FDIC's website.\6\
---------------------------------------------------------------------------
\6\ https://research.fdic.gov/bankfind/.
---------------------------------------------------------------------------
In addition, on a monthly basis, the FDIC publishes a press release
listing the administrative enforcement actions it has taken against
banks and individuals during the preceding month. Enforcement actions
taken by the FDIC since 1990 are available to the public on the FDIC's
website.\7\ Interested parties may also obtain
[[Page 9700]]
administrative orders through the FDIC's Public Information Center.
---------------------------------------------------------------------------
\7\ https://www5.fdic.gov/EDO/.
---------------------------------------------------------------------------
III. The Proposal
Under section 2222 of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA),\8\ the FDIC is required to conduct a
review at least once every 10 years to identify any outdated or
otherwise unnecessary regulations. As part of the EGRPRA review
completed in 2017, part 350 was included in the third EGRPRA Federal
Register notice of regulatory review.\9\ The FDIC did not receive any
comments on this regulation in response to that notice. Nevertheless,
upon review, the FDIC has determined that part 350 is outdated and no
longer necessary and therefore should be eliminated. Part 350 places a
burden on insured state nonmember banks and insured state-licensed
branches of foreign banks by requiring them to prepare an annual
disclosure statement and make available to the public a potentially
unlimited number of copies of these statements. This burden was
justified in the past because disclosure statements were an effective
means for the public to obtain information concerning a bank's
financial condition. However, with widespread public access to the
internet where more extensive and timely financial information about
individual banks, as well as administrative enforcement actions, can be
readily obtained, the incremental burden on banks of providing an
annual disclosure statement in accordance with a regulation that has
become outdated is no longer justified. Furthermore, because part 350
does not apply to insured state savings associations, for which the
FDIC became the primary federal regulatory agency in 2011, the proposal
would eliminate a difference in the regulatory requirements and
resulting regulatory burden imposed on insured state nonmember banks
and insured state-licensed branches of foreign banks compared to
insured state savings associations. Finally, because regulations
similar to part 350 have been rescinded by the FRB and the OCC (as well
as the former OTS), the preparation and availability of annual
disclosure statements are no longer required by the other federal
banking agencies for the institutions under their supervision.
---------------------------------------------------------------------------
\8\ Public Law 104-208 (1996), codified at 12 U.S.C. 3311.
\9\ See 80 FR 32046 (June 5, 2015).
---------------------------------------------------------------------------
IV. Comments
Consistent with the objectives of section 2222 of EGRPRA, on
October 17, 2018, the FDIC Board authorized publication of a notice of
proposed rulemaking (NPR) to rescind and remove part 350 from the Code
of Federal Regulations. The NPR was published in the Federal Register
on October 25, 2018, with a 30-day comment period.\10\
---------------------------------------------------------------------------
\10\ See 83 FR 53829 (October 25, 2018).
---------------------------------------------------------------------------
The FDIC received nine comments addressing the proposed rescission
and removal of part 350 from bankers, banking associations, and a
consultant. The nine commenters fully supported the proposal. One
additional comment was received from an individual, but it did not
specifically address the proposed rescission and removal. After
considering the comments received, the FDIC is adopting as proposed the
rescission and removal of part 350 from the Code of Federal
Regulations.
V. Expected Effects
The removal of the requirement that each FDIC-insured state
nonmember bank and insured state-licensed branch of a foreign bank
prepare, and make available on request, annual disclosure statements
will lessen the burden the FDIC imposes on these institutions. As of
September 30, 2018, there were 3,493 FDIC-insured state nonmember banks
and insured state-licensed branches of foreign banks that would be
affected by this final rule.\11\
---------------------------------------------------------------------------
\11\ Data from the September 30, 2018, Call Report and FFIEC 002
report.
---------------------------------------------------------------------------
The final rule is expected to reduce recordkeeping, reporting, and
disclosure requirements for FDIC-insured state nonmember banks and
insured state-licensed branches of foreign banks. As discussed in
Section III: The Proposal, part 350 requires institutions to prepare an
annual disclosure statement and make it available to the public. By
removing part 350, the final rule will remove this disclosure burden.
The FDIC assumes that 15 percent of the institutions covered by part
350 provide a management discussion and analysis in their annual
disclosure statement, and estimates that preparing this material takes
each institution 1.5 hours. Assuming the time spent preparing the
material is divided equally between a financial analyst and a manager,
each earning the 75th percentile wage for their occupation, the
estimated annual cost per institution to prepare the material is
$157.82.\12\ Based on the FDIC's estimation that 15 percent of
institutions prepare this material, the total annual cost is estimated
to be $82,695, or approximately 0.0001 percent of noninterest expenses
for covered institutions.\13\
---------------------------------------------------------------------------
\12\ The annual cost per institution is estimated using the 75th
percentile hourly wage for financial analysts and management
occupations in the depository credit intermediation industry as of
May 2017. This hourly wage is adjusted for inflation, and grossed-up
to include benefits, through June 2018. The 75th percentile
inflation and benefit-adjusted hourly wage of management occupations
as of June 2018 is $125.21, and for financial analysts is $85.21.
Assuming the 1.5 hours are equally divided between a manager and an
analyst, this yields an estimated total annual cost per institution
of (0.75 * $125.21) + (0.75 * $85.21) = $157.82.
Hourly wages are from the Bureau of Labor Statistics (BLS) May
2017 National Industry-Specific Occupational Employment and Wage
Estimates, https://www.bls.gov/oes/current/oessrci.htm. Wages are
adjusted for inflation through June 2018 using the Seasonally
Adjusted All-items Consumer Price Index for All Urban Consumers,
https://data.bls.gov/PDQWeb/cu. The hourly wages are grossed-up to
include benefits based on Employer Cost for Employee Compensation
data as of June 2018, https://www.bls.gov/news.release/pdf/ecec.pdf.
June 2018 is the latest available period of Employer Cost for
Employee Compensation data. The data on hourly wages, inflation, and
employer cost for employee compensation was extracted on December
14, 2018.
\13\ This equals 524 * $157.82, i.e., (3,493 * 0.15) * $157.82,
rounded to the nearest dollar. Noninterest expenses are calculated
from data reported in the September 30, 2018, Call Report, and
annualized.
---------------------------------------------------------------------------
In addition to the directly measurable cost savings, another
potential benefit of the final rule is that it frees up institution
staff time that would otherwise have been spent complying with part
350. Theoretically, time previously spent complying with part 350 may
now be spent on another task of higher value to the institution. This
potential effect is difficult to accurately estimate with available
information, but it is likely to be small given that the disclosure
burden imposed by part 350 is a relatively small percentage of
noninterest expenses.
The final rule removes a disclosure requirement for affected
institutions; however, the FDIC believes that the reduction will not
have material effects for customers, investors, or counterparties. As
discussed in Section III: The Proposal, extensive and timely financial
information about individual banks, as well as administrative
enforcement actions, can be readily obtained by the public on the
internet. Therefore, the FDIC believes that removal of this disclosure
requirement will not have substantive effects on financial market
participants.
VI. Alternatives Considered
The FDIC considered alternatives, but believes that the rescission
and removal of part 350 represents the most appropriate option. In
particular, the FDIC considered whether to (1) retain the existing
disclosure statement requirement, but to extend it to the
[[Page 9701]]
insured state savings associations now supervised by the FDIC, (2)
require that disclosure statements be updated quarterly instead of
annually, and/or (3) require the inclusion in disclosure statements of
either the entire Call Report (excluding a limited number of items
accorded confidential treatment) or financial data comparable to a
greater number of specified Call Report schedules. However, with the
timely public availability of each institution's quarterly Call Report
and UBPR via the FDIC's and the FFIEC's websites, and with the public
disclosure of information about enforcement actions taken by the FDIC
routinely made available on the FDIC's website, the FDIC believes any
extension of part 350 to other institutions, increase in the frequency
of disclosure, increase in the scope of disclosure, or combination of
these alternatives, imposes additional cost without any corresponding
public benefit in terms of access to financial and other information on
institutions. Moreover, the FDIC is not aware of any difficulties
encountered by the public in obtaining current financial and
enforcement action information on institutions supervised by the FRB
and the OCC (and those institutions previously supervised by the OTS)
via public websites since these agencies eliminated their respective
disclosure statement requirements.
VII. Regulatory Analysis and Procedure
A. The Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3501-3521), the FDIC may not conduct or
sponsor, and the respondent is not required to respond to, an
information collection unless it displays a currently valid Office of
Management and Budget (OMB) control number. Part 350 is currently an
approved information collection with OMB Control No. 3064-0090.
Removing part 350 obviates the need for this collection of information
pursuant to the PRA, and FDIC will seek to discontinue its use.
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that, in
connection with a rulemaking, an agency prepare and make available for
public comment a final regulatory flexibility analysis describing the
impact of the final rule on small entities.\14\ A regulatory
flexibility analysis is not required; however, if the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. The U.S. Small Business
Administration (SBA) has defined ``small entities'' to include banking
organizations with total assets less than or equal to $550 million.\15\
---------------------------------------------------------------------------
\14\ 5 U.S.C. 601 et seq.
\15\ The SBA defines a small banking organization as having $550
million or less in assets, where an organization'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). In its determination, the
``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 covered entity is ``small'' for the purposes
of RFA.
---------------------------------------------------------------------------
As of September 30, 2018, there are 3,493 FDIC-insured state
nonmember banks and FDIC-insured state-licensed branches of foreign
banks.\16\ Of these, 2,689 are considered small entities for the
purposes of RFA. Thus, the FDIC concludes the proposed rule will affect
a substantial number of small entities.
---------------------------------------------------------------------------
\16\ Data from the September 30, 2018, Call Report and FFIEC 002
report.
---------------------------------------------------------------------------
The final rule is expected to reduce recordkeeping, reporting, and
disclosure requirements for small FDIC-supervised banks. As discussed
in Section III: The Proposal, part 350 requires institutions to prepare
an annual disclosure statement and make it available to the public. By
removing part 350, the final rule will remove this disclosure burden.
As discussed in Section IV: Expected Effects, the FDIC estimates the
annual cost per institution to prepare the material is $157.82.\17\
Based on the FDIC's estimation that 15 percent of institutions prepare
this material, the total annual cost for small FDIC-supervised
institutions is estimated to be $63,599, or less than 0.0005 percent of
noninterest expenses for such institutions.\18\
---------------------------------------------------------------------------
\17\ The annual cost per institution is estimated using the 75th
percentile hourly wage for financial analysts and management
occupations in the depository credit intermediation industry as of
May 2017. This hourly wage is adjusted for inflation, and grossed-up
to include benefits, through June 2018. The 75th percentile
inflation and benefit-adjusted hourly wage of management occupations
as of June 2018 is $125.21, and for financial analysts is $85.21.
Assuming the 1.5 hours are equally divided between a manager and an
analyst, this yields an estimated total annual cost per institution
of (0.75 * $125.21) + (0.75 * $85.21) = $157.82.
Hourly wages are from the Bureau of Labor Statistics (BLS) May
2017 National Industry-Specific Occupational Employment and Wage
Estimates, https://www.bls.gov/oes/current/oessrci.htm. Wages are
adjusted for inflation through June 2018 using the Seasonally
Adjusted All-items Consumer Price Index for All Urban Consumers,
https://data.bls.gov/PDQWeb/cu. The hourly wages are grossed-up to
include benefits based on Employer Cost for Employee Compensation
data as of June 2018, https://www.bls.gov/news.release/pdf/ecec.pdf.
June 2018 is the latest available period of Employer Cost for
Employee Compensation data. The data on hourly wages, inflation, and
employer cost for employee compensation was extracted on December
14, 2018.
\18\ This equals 403 * $157.82, i.e., (2,689 * 0.15) * $157.82,
rounded to the nearest dollar. Noninterest expenses are calculated
from data reported in the September 30, 2018, Call Report, and
annualized.
---------------------------------------------------------------------------
Also as described in Section IV above, in addition to the directly
measurable cost savings, another potential benefit of the final rule is
that it frees up institution staff time that would otherwise have been
spent complying with part 350. While this potential effect is difficult
to accurately estimate with available information, it is likely to be
small given that the disclosure burden imposed by part 350 is a
relatively small percentage of noninterest expenses for small FDIC-
supervised institutions.
The final rule removes a disclosure requirement for affected
institutions; however, the FDIC believes that the reduction will not
have material effects for customers, investors, or counterparties. As
discussed in Section III: The Proposal, extensive and timely financial
information about individual banks, as well as administrative
enforcement actions, can be readily obtained by the public on the
internet. Therefore, the FDIC believes that removal of this disclosure
requirement with have not substantive effects on financial market
participants.
Based on the information above, the FDIC certifies that the final
rule will not have a significant economic impact on a substantial
number of small entities.
C. Small Business Regulatory Enforcement Fairness Act
The OMB has determined that the final rule is not a ``major rule''
within the meaning of the Small Business Regulatory Enforcement
Fairness Act of 1996 (SBREFA).\19\ As required by SBREFA, the FDIC will
submit the final rule and other appropriate reports to Congress and the
Government Accountability Office for review.
---------------------------------------------------------------------------
\19\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113
Stat. 1338, 1471, 12 U.S.C. 4809, 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 final
rule to rescind part 350 in a simple and straightforward manner.
[[Page 9702]]
E. The Economic Growth and Regulatory Paperwork Reduction Act
Under section 2222 of EGRPRA, the FDIC is required to conduct a
review at least once every 10 years to identify any outdated or
otherwise unnecessary regulations. The FDIC completed its most recent
comprehensive review of its regulations under EGRPRA in 2017 and did
not receive any comments from the public concerning part 350. The
burden reduction evidenced in this final rule is consistent with the
objectives of the EGRPRA review process.
F. Riegle Community Development and Regulatory Improvement Act
Under section 302(b) of the Riegle Community Development and
Regulatory Improvement Act, 12 U.S.C. 4802(b), new regulations and
amendments to regulations prescribed by a Federal banking agency which
impose additional reporting, disclosures, or other new requirements on
insured depository institutions shall take effect on the first day of a
calendar quarter which begins on or after the date on which the
regulations are published in final form. Because this rule rescission
does not impose additional reporting, disclosures, or other
requirements, but rather relieves banks of a disclosure requirement,
this rule may take effect prior to the start of the next calendar
quarter.
List of Subjects in 12 CFR Part 350
Accounting, Banks, Banking, Reporting and recordkeeping
requirements.
Authority and Issuance
PART 350--[REMOVED AND RESERVED]
0
For the reasons stated in the preamble, and under the authority of 12
U.S.C 1817(a)(1), 1819 ``Seventh'' and ``Tenth,'' the Board of
Directors of the Federal Deposit Insurance Corporation removes and
reserves 12 CFR part 350.
Dated at Washington, DC, on March 12, 2019.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2019-04944 Filed 3-15-19; 8:45 am]
BILLING CODE 6714-01-P
