Securitization Safe Harbor Rule, 43732-43737 [2019-15536]

Agencies

• FEDERAL DEPOSIT INSURANCE CORPORATION

[Federal Register Volume 84, Number 163 (Thursday, August 22, 2019)]
[Proposed Rules]
[Pages 43732-43737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15536]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 360

RIN 3064-AF09


Securitization Safe Harbor Rule

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is proposing a rule (the proposed rule) that would 
revise certain provisions of its securitization safe harbor rule, which 
relates to the treatment of financial assets transferred in connection 
with a securitization or participation transaction, in order to 
eliminate a requirement that the securitization documents require 
compliance with Regulation AB of the Securities and Exchange Commission 
in circumstances where Regulation AB by its terms would not apply to 
the issuance of obligations backed by such financial assets.

[[Page 43733]]


DATES: Comments on the proposed rule must be received by October 21, 
2019.

ADDRESSES: You may submit comments, identified by RIN 3064-AF09, by any 
of the following methods:
     Agency Website: https://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the agency 
website.
     Email: [email protected]. Include RIN 3064-AF09 in the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW, 
Washington, DC 20429.
     Hand Delivery/Courier: Guard station at the rear of the 
550 17th Street Building (located on F Street) on business days between 
7:00 a.m. and 5:00 p.m.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
    Instructions: All comments will be posted without change to https://www.fdic.gov/regulations/laws/federal/, including any personal 
information provided.

FOR FURTHER INFORMATION CONTACT: Phillip E. Sloan, Counsel, Legal 
Division, (703) 562-6137, [email protected]; George H. Williamson, 
Manager, Division of Resolutions and Receiverships, (571) 858-8199, 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Policy Objectives

    The FDIC is proposing to revise the Securitization Safe Harbor Rule 
by removing a disclosure requirement that was established by the Rule 
when it was amended and restated in 2010. As used in this notice of 
proposed rulemaking (NPR), ``Securitization Safe Harbor Rule'' and 
``Rule'' refer to the FDIC's securitization safe harbor rule titled 
``Treatment of financial assets transferred in connection with a 
securitization or participation'' and codified at 12 CFR 360.6.
    The Rule addresses circumstances that may arise if the FDIC is 
appointed receiver or conservator for an insured depository institution 
(IDI) which has sponsored one or more securitization transactions.\1\ 
If a securitization satisfies one of the sets of conditions established 
by the Rule, the Rule provides that, depending on which set of 
conditions is satisfied, either (i) in the exercise of its authority to 
repudiate or disclaim contracts, the FDIC shall not reclaim, recover or 
recharacterize as property of the institution or receivership the 
financial assets transferred as part of the securitization transaction, 
or (ii) if the FDIC repudiates the securitization agreement pursuant to 
which financial assets were transferred and does not pay damages within 
a specified period, or if the FDIC is in monetary default under a 
securitization for a specified period due to its failure to pay or 
apply collections received by it under the securitization documents, 
certain remedies will be available to investors on an expedited basis.
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    \1\ The Rule also addresses transfers of assets in connection 
with participation transactions. Since the revision included in the 
proposed rule does not address participations, this NPR does not 
include further reference to participations.
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    The FDIC is proposing to remove the requirement of the Rule that 
the documents governing securitization transactions require compliance 
with Regulation AB of the Securities and Exchange Commission, 17 CFR 
part 229, subpart 229.1100 (Regulation AB), which imposes significant 
asset-level disclosure requirements in circumstances where, under the 
terms of Regulation AB itself, Regulation AB is not applicable to the 
transaction. This would mean that, unlike under the Rule as currently 
in effect, the documents governing a private placement or an issuance 
not otherwise required to be registered would not be required to 
mandate compliance with Regulation AB (as currently in effect). This 
proposal is made in response to feedback that it is difficult for 
institutions to comply with Regulation AB as applied to certain types 
of securitization transactions, in particular residential mortgage 
securitizations. While the SEC has not applied the Regulation AB 
disclosure requirements to private placement transactions, the Rule has 
required (except for certain grandfathered transactions) that these 
disclosures be required as a condition for eligibility for the Rule's 
benefits. The net effect appears to have been a disincentive for IDIs 
to sponsor securitizations of residential mortgages that are compliant 
with the Rule.
    The FDIC's rationale for establishing the disclosure requirements 
in 2010 was to reduce the likelihood of a buildup of structurally 
opaque and potentially risky mortgage securitizations or other 
securitizations that could pose risks to IDIs. In the ensuing years, a 
number of other regulatory changes have been implemented that have also 
contributed to the same objective. As a result, it is no longer clear 
that compliance with the public disclosure requirements of Regulation 
AB in a private placement or in an issuance not otherwise required to 
be registered is needed to achieve the policy objective of preventing a 
buildup of opaque and potentially risky securitizations such as 
occurred during the pre-crisis years, particularly where the imposition 
of such a requirement may serve to restrict overall liquidity.
    Accordingly, the policy objective of the proposed rule is to remove 
unnecessary barriers to securitization transactions, in particular the 
securitization of residential mortgages, without adverse effects on the 
safety and soundness of insured institutions.

II. Background

    The FDIC, in the Securitization Safe Harbor Rule, set forth 
criteria under which in its capacity as receiver or conservator of an 
IDI the FDIC will not, in the exercise of its authority to repudiate 
contracts, recover or reclaim financial assets transferred in 
connection with securitization transactions. Asset transfers that, 
under the Securitization Safe Harbor Rule, are not subject to recovery 
or reclamation through the exercise of the FDIC's repudiation authority 
include those that pertain to certain grandfathered transactions, such 
as, for example, asset transfers made prior to December 31, 2010, which 
satisfied the conditions (except for the legal isolation condition 
addressed by the Securitization Safe Harbor Rule) for sale accounting 
treatment under generally accepted accounting principles (GAAP) in 
effect for reporting periods prior to November 15, 2009, and which 
pertain to a securitization transaction that satisfied certain other 
requirements. In addition, the Securitization Safe Harbor Rule provides 
that asset transfers that are not grandfathered, but that satisfy the 
conditions (except for the legal isolation condition addressed by the 
Securitization Safe Harbor Rule) for sale accounting treatment under 
GAAP in effect for reporting periods after November 15, 2009, and that 
pertain to a securitization transaction that satisfies all other 
conditions of the Securitization Safe Harbor Rule (such asset 
transfers, together with grandfathered asset transfers, are referred to 
collectively as Safe Harbor Transfers) will not be subject to FDIC 
recovery or reclamation actions through the exercise of the FDIC's 
repudiation authority. For any securitization transaction in respect of 
which transfers of financial assets do not qualify as Safe Harbor 
Transfers but which transaction satisfies all of its other 
requirements, the Securitization Safe Harbor Rule provides that, in the 
event the FDIC as receiver or conservator remains in monetary default 
for a specified period under a securitization due to its failure to pay 
or apply collections, or repudiates the securitization asset transfer 
agreement

[[Page 43734]]

and does not pay damages within a specified period, certain remedies 
can be exercised by investors on an expedited basis.
    Paragraph (b)(2) of the Securitization Safe Harbor Rule sets forth 
conditions relating to the disclosure of information. Under paragraph 
(b)(2)(i)(A), the documents governing the securitization must require 
disclosure of information as to the securitized financial assets on a 
financial asset or pool level and on a security level that, at a 
minimum, complies with the requirements of Regulation AB, even if the 
securities issued in the securitization are issued in private placement 
or are not otherwise required to be registered.
    The SEC first adopted Regulation AB in 2004 as a new, principles-
based set of disclosure items specifically tailored to asset-backed 
securities. The regulation was intended to form the basis of disclosure 
for both Securities Act registration statements and Exchange Act 
reports relating to asset-backed securities. In April 2010, the SEC 
proposed significant revisions to Regulation AB and other rules 
regarding the offering process, disclosure and reporting for asset-
backed securities (Proposed Regulation AB). Among such revisions were 
the adoption of specified asset-level disclosures for particular asset 
classes and the extension of the Regulation AB disclosure requirements 
to exempt offerings and exempt resale transactions for asset backed 
securities. As adopted in 2014, Regulation AB retained the majority of 
the proposed asset-specific disclosure requirements but declined to 
require issuers to provide the same disclosure for exempt offerings as 
is required for registered offerings. The disclosure requirements of 
Regulation AB vary, depending on the type of securitization issuance. 
The most extensive disclosure requirements relate to residential 
mortgage securitizations. These requirements became effective in 
November 2016.
    FDIC staff has been told that potential IDI sponsors of residential 
mortgage securitizations have found that it is difficult to provide 
certain information required by Regulation AB, either because the 
information is not readily available to them or because there is 
uncertainty as to the information requested to be disclosed and, thus, 
uncertainty as to whether the disclosure would be deemed accurate. FDIC 
staff was also advised that due to the provision of paragraph 
(b)(2)(i)(A) that requires that the securitization documents require 
compliance with Regulation AB in private transactions, private 
offerings of residential mortgage backed securitization obligations 
that are compliant with the Rule are similarly challenging for 
sponsors, and that the net effect has been to discourage IDIs from 
participating in the securitization of residential mortgages, apart 
from selling the mortgages to, or with a guarantee from, the 
government-sponsored housing enterprises.

III. Discussion

    In adopting the Securitization Safe Harbor Rule, the FDIC stated 
that the conditions of the Rule were designed to ``provide greater 
clarity and transparency to allow a better ongoing evaluation of the 
quality of lending by banks and reduce the risks to the DIF from opaque 
securitization structures and the poorly underwritten loans that led to 
onset of the financial crisis.'' \2\ As part of its effort to achieve 
this goal, the FDIC included paragraph (b)(2) in the Rule, which 
imposes extensive disclosure requirements relating to securitizations. 
These requirements include paragraph (b)(2)(i)(A), which mandates that 
the documents governing a securitization require disclosure of 
information as to the securitized financial assets on a financial asset 
or pool level and on a security level that, at a minimum, complies with 
the requirements of Regulation AB, whether or not the transaction is a 
registered issuance otherwise subject to Regulation AB.
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    \2\ 75 FR 60287 at 60291(Sept. 30, 2010).
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    While the requirement of the Rule that documents governing a 
private securitization require compliance with the disclosure 
requirements of Regulation AB differs from the requirements of 
Regulation AB as adopted by the SEC in 2014, the requirement was 
consistent with Proposed Regulation AB, which was pending when the FDIC 
adopted the Rule and proposed that investors in ``structured finance 
products'' (which term included private placements of securitization 
transactions) be entitled to request and receive the information that 
would be required by Regulation AB in a public transaction. This 
consistency was emphasized in the preamble to the Final Rule (published 
on September 30, 2010), which states that the Rule ``is also consistent 
with the amendments to Regulation AB proposed by the Securities and 
Exchange Commission (``SEC'') on April 7, 2010 (as so proposed to be 
amended, ``New Regulation AB'').'' \3\ After noting that Proposed 
Regulation AB would establish extensive new requirements for both SEC 
registered publicly offered securitizations and many private 
placements, the preamble states ``[t]he disclosure and retention 
requirements of New Regulation AB are consistent with and support the 
approach of the Rule.'' \4\ A later paragraph of the preamble addresses 
the same point, and states that, as Proposed Regulation AB governs 
disclosure for private transactions as well as other issuances, ``the 
Rule and the SEC's proposed regulations are fully consistent.'' \5\
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    \3\ Id. at 60290.
    \4\ Id.
    \5\ Id.
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    Subsequently, the SEC finalized Regulation AB to apply only to 
public issuances. The FDIC is now proposing to modify paragraph 
(b)(2)(i)(A) of the Rule such that its disclosure requirements are 
consistent with Regulation AB and are applicable only when disclosure 
is required by Regulation AB.
    The reasons underlying the requirement that private transactions 
include Regulation AB disclosures have diminished. While the 
requirement applies to all securitizations, the preamble to the Rule 
makes clear that the FDIC was focused mostly on residential mortgage 
securitizations. The preamble states that ``securitization as a viable 
liquidity tool in mortgage finance will not return without greater 
transparency and clarity . . . [G]reater transparency . . . will serve 
to more closely tie the origination of loans to their long-term 
performance by requiring disclosures of performance.'' \6\ In a 
different paragraph, the preamble refers to defects in many of the 
subprime and other mortgages originated and sold into securitizations, 
and states that such originations require attention by the FDIC to 
fulfill its responsibilities as deposit insurer and that the defects 
and misalignment of incentives in the securitization process for 
residential mortgages constituted a ``significant contributor to the 
erosion of underwriting standards throughout the mortgage finance 
system.'' \7\
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    \6\ Id. at 60291.
    \7\ Id. at 60289.
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    The FDIC believes that if, in the midst of the financial crisis, it 
was appropriate, in crafting an FDIC rule governing when securitization 
investors are eligible for safe harbor protection, to make applicable 
to certain transactions SEC disclosure requirements that do not 
otherwise apply to those transactions, such a requirement is no longer 
necessary in view of regulatory developments relating to residential 
mortgages since 2010.
    In addition, the specific requirements in paragraph (b)(2), other 
than paragraph (b)(2)(i)(A), address goals set

[[Page 43735]]

out in the preamble to the Rule. Paragraph (b)(2)(i)(B) mandates that 
the documents governing the securitization require disclosure of 
numerous matters, including (among others), the capital or tranche 
structure of the securitization, priority of payments and subordination 
features, and representations and warranties made with respect to the 
financial assets. The documents must also require that while the 
securities are outstanding, the issuer provide information as to the 
credit performance of the securities and the underlying financial 
assets, substitutions and removal of financial assets, servicer 
advances and losses allocated tranches. The documents must also 
disclose the nature and amount of compensation paid to originators, the 
sponsor, rating agencies, and certain other parties. In the case of 
securitizations backed by any residential mortgage, the documents must 
require disclosure of certain loan level information, such as loan 
type, loan structure, maturity and interest rate, as well as disclosure 
of certain interests by servicers, and a requirement that the sponsors 
affirm compliance with applicable statutory and regulatory standards 
for the origination of mortgage loans. These additional requirements 
are not affected by the proposed rule and would remain in effect if the 
proposed rule is adopted.

IV. Expected Effects

    The proposed rule could increase the willingness of IDIs to sponsor 
the issuance of asset backed securities (ABS) that are exempt from 
registration with the SEC. Feedback from market participants suggests 
that the proposed rule may be most likely to affect incentives to issue 
residential mortgage backed securities (RMBS) that are exempt from 
registration (henceforth, privately issued RMBS, or private RMBS), 
since the disclosure requirements of Regulation AB are most extensive 
for residential mortgages.
    If these market perceptions are correct, the proposed rule could 
result in an increase in the dollar volume of privately issued RMBS, 
presumably increasing the total flow of credit available to finance 
residential mortgages in the United States. For context, total issuance 
of RMBS secured by 1-4 family residential mortgages was approximately 
$1.3 trillion in 2018.\8\ About $1.2 trillion of this total were agency 
issuances, issued through the government sponsored housing enterprises, 
or GSEs: the Federal National Mortgage Association (Fannie Mae), the 
Federal Home Loan Mortgage Corporation (Freddie Mac), and the 
Government National Mortgage Association (Ginnie Mae). About $100 
billion of RMBS were non-agency issuances. The $100 billion of non-
agency issuances would include both securities registered with the SEC 
(public issuances), if any, and private issuances.
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    \8\ Inside Mortgage Finance, 2019 Mortgage Market Statistical 
Annual.
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    The FDIC cannot readily identify the set of FDIC-insured banks that 
have sponsored private RMBS. Moreover, for any bank that has sponsored 
private RMBS, some may have chosen to make the Regulation AB 
disclosures necessary for the safe harbor, and some may have chosen not 
to make such disclosures, but instead may have chosen to disclose to 
investors the risks associated with the exercise of the FDIC's 
receivership authorities. Information about such disclosure choices 
made by private RMBS issuers also is not readily available to the FDIC.
    The FDIC believes, however, that the number of insured banks 
sponsoring private RMBS, or any type of private ABS, and thereby 
directly affected by this proposed rule, is extremely small. In its 
most recent Information Collection Resubmission request for Sec.  360.6 
of the FDIC regulations, the FDIC identified fewer than 20 distinct 
private ABS issuances of any type sponsored by FDIC insured 
institutions based on a sample of issuances in 2017, some of which were 
different issuances by the same banks.\9\ For most of the transactions, 
the sponsoring banks were very large institutions.
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    \9\ 82 FR 56240 (Nov. 28, 2017).
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    This information appears generally consistent with market 
participants' observations that current private RMBS activity by 
insured banks is muted. This would suggest that removing the 
disclosures might be expected to encourage banks engaging in sponsoring 
private RMBS issuances to expand their activities. It also is possible 
that other institutions not currently involved in issuing private RMBS 
could begin doing so. While the proposed rule could be expected to 
result in an increase in the dollar volume of private RMBS issuances, 
the disclosures are only one among many factors affecting the demand 
and supply of RMBS. Levels of RMBS outstanding suggest that demand for 
non-agency RMBS is still weak in the aftermath of the crisis.\10\ For 
all these reasons, the FDIC does not have a basis for quantifying the 
amount of any increase in RMBS that might result from the proposed 
rule.
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    \10\ Annual non-agency single family RMBS issuance reached a 
high of about $1.2 trillion in 2005, and as previously noted, was 
about $100 billion in 2018. Inside Mortgage Finance, 2019 Mortgage 
Market Statistical Annual.
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    Increased issuance sponsored by insured banks of private RMBS, to 
the extent it is not offset by corresponding reductions in the amount 
of mortgages they hold in portfolio, would result in an increase in the 
supply of credit available to fund residential mortgages. An increase 
in the supply of mortgage credit would be expected to benefit borrowers 
by increasing mortgage availability and decreasing mortgage costs. 
While problematical or predatory mortgage practices can harm borrowers, 
a significant body of regulation exists to prevent such practices. 
Given this, it is more likely that any increase in mortgage credit 
resulting from the proposed rule would be beneficial to borrowers.
    Some associated increase in measured U.S. economic output would be 
expected to accompany an increased volume of mortgage credit. This is 
in part because the imputed value of the credit services banks provide 
is a component of measured GDP. The purchase of a new home also may be 
accompanied by the purchase of other household goods and services that 
contribute to an increase in overall economic activity.
    Institutions affected by the proposed rule would incur reduced 
compliance costs as a result of not having to make the otherwise 
required disclosures. Based on the Information Collection Resubmission 
cited earlier, the reduction in compliance costs associated with the 
proposed change to part 360 across the FDIC-insured institutions 
identified as having been involved in private ABS issuances in 2017 
would have been about $9.7 million.
    To the extent private ABS is being issued now in conformance with 
the disclosure requirements that would be removed under the proposal, a 
potential cost of the proposal is that the information available to 
investors about the credit quality of the assets underlying these ABS 
could be reduced. As a general matter, a reduction in information 
available to investors can result in a less efficient allocation of 
credit and increased risk of potential losses to investors, including 
banks. A related potential cost is that if privately placed 
securitization products were to become more widespread and risky as a 
result of the proposed rule, the vulnerability of the mortgage market 
to a period of financial stress could increase. In this respect, a 
significant part of the problems experienced with RMBS during the 
crisis were attributable to the proliferation of

[[Page 43736]]

subprime and so-called alternative mortgages as underlying assets for 
those RMBS. The FDIC believes that a number of post-crisis regulatory 
changes make it unlikely that substantial growth of similar types of 
RMBS would occur again.

V. Request for Comment

    The FDIC invites comment from all members of the public on all 
aspects of the proposed rule. Comments are specifically requested on 
whether the proposed rule is consistent with the purposes of section 
360.6 and whether the results intended to be achieved by the proposed 
rule will be and should be achieved as set forth in the proposed rule 
or by way of different modifications to the Securitization Safe Harbor 
Rule. The FDIC will carefully consider all comments that relate to the 
proposed rule.

VI. Administrative Law Matters

A. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (44 U.S.C. 3501, et 
seq.) (PRA) the FDIC may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a currently valid Office of Management and Budget (OMB) control number.
    As discussed above, the FDIC proposes to revise certain provisions 
of its securitization safe harbor rule, which relates to the treatment 
of financial assets transferred in connection with a securitization or 
participation transaction, in order to eliminate a requirement that the 
securitization documents require compliance with Regulation AB of the 
Securities and Exchange Commission in circumstances where Regulation AB 
by its terms would not apply to the issuance of obligations backed by 
such financial assets.
    The FDIC has determined that this proposed rule would revise an 
existing collection of information (3064-0177). The information 
collection requirements contained in this proposed rulemaking will be 
submitted by the FDIC to OMB for review and approval under section 
3507(d) of the PRA (44 U.S.C. 3507(d)) and Sec.  1320.11 of the OMB's 
implementing regulations (5 CFR 1320.11).
    The FDIC proposes to revise this information collection as follows:
    Title of Information Collection: Conservator or Receiver of 
Financial Assets Transferred by an Insured Depository Institution in 
Connection with a Securitization or Participation After September 30, 
2010.
    OMB Control Number: 3064-0177
    Affected Public: Insured Depository Institutions.
    Burden Estimate:

                                                                      Annual Burden
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                                                                         Estimated
                                                         Estimated       number of                                                         Total annual
                                    Type of burden       number of       responses    Estimated time     Estimated       Frequency of        estimated
                                                        respondents      (average      per response      frequency         response       burden (hours)
                                                                          number)
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Disclosures:
    360.6(b)(2)(i)(A), (D)--      ..................  ..............  ..............  ..............  ..............  ..................  ..............
     Ongoing.
    Private Transactions--Non     Disclosure........               0           1.895              37            12.0  Monthly...........               0
     Reg AB Compliant.
    360.6(b)(2)(i)(D)...........  Disclosure........              35           1.971               3             1.0  On Occasion.......             207
    360.6(b)(2)(ii)(B)--Initial/  Disclosure........               1           6.000               1             1.0  On Occasion.......               6
     One-Time.
    360.6(b)(2)(ii)(C ).........  Disclosure........               1           6.000               1             1.0  On Occasion.......               6
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        Total Disclosure Burden.  ..................  ..............  ..............  ..............  ..............  ..................             219
Recordkeeping:
    360.6(c)(7).................  Recordkeeping.....              35           1.971               1             1.0  On Occasion.......              69
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        Total Recordkeeping       ..................  ..............  ..............  ..............  ..............  ..................              69
         Burden.
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            Total burden........  ..................  ..............  ..............  ..............  ..............  ..................             288
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    Comments are invited on: (a) Whether the collection of information 
is necessary for the proper performance of the FDIC's functions, 
including whether the information has practical utility; (b) the 
accuracy of the estimates of the burden of the information collection, 
including the validity of the methodology and assumptions used; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; (d) ways to minimize the burden of the information 
collection on respondents, including through the use of automated 
collection techniques or other forms of information technology; and (e) 
estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information. All 
comments will become a matter of public record.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires that, in 
connection with a proposed rule, an agency prepare and make available 
for public comment an initial regulatory flexibility analysis 
describing the impact of the rulemaking on small entities.\11\ A 
regulatory flexibility analysis is not required, however, if the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. The Small Business 
Administration (SBA) has defined ``small entities'' to include banking 
organizations with total assets less than or equal to $550 million.\12\ 
Generally, the FDIC considers a significant effect to be a quantified 
effect in excess of 5 percent of total annual salaries and benefits per 
institution, or

[[Page 43737]]

2.5 percent of total non-interest expenses. The FDIC believes that 
effects in excess of these thresholds typically represent significant 
effects for FDIC-supervised institutions. For the reasons described 
below and under section 605(b) of the RFA, the FDIC certifies that this 
proposed rule will not have a significant economic effect on a 
substantial number of small entities.
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    \11\ 5 U.S.C. 601 et seq.
    \12\ 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.
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    The FDIC supervises 3,489 depository institutions,\13\ of which 
2,674 are considered small entities for the purposes of RFA.\14\ The 
proposed rule will only affect institutions currently engaged in 
arranging, issuing or acting as servicer for privately placed 
securitizations of asset-backed securities, or likely to do so as a 
result of the proposed rule. The FDIC knows of no small FDIC-insured 
institution that is currently acting in this capacity. The FDIC 
believes that acting as arranger, issuer or servicer for privately 
placed ABS requires a level of resources and capital markets expertise 
that would preclude a substantial number of small FDIC-insured 
institutions from becoming involved in these activities.
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    \13\ FDIC-supervised institutions are set forth in 12 U.S.C. 
1813(q)(2).
    \14\ FDIC Call Report, December 31, 2018.
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    Accordingly, the FDIC concludes that the proposed rule will not 
have a significant impact on a substantial number of small entities. 
For the reasons described above and pursuant to 5 U.S.C. 605(b), the 
FDIC certifies that the proposed rule will not have a significant 
economic impact on a substantial number of small entities. The FDIC 
invites comments on all aspects of the supporting information provided 
in this RFA section. In particular, would this rule have any 
significant effects on small entities that the FDIC has not identified?

C. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \15\ requires the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The FDIC has sought to present the 
proposed rule in a simple and straightforward manner, and invites 
comment on the use of plain language. For example:
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    \15\ Public Law 106-102, sec. 722, 113 Stat. 1338, 1471 (1999).
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     Has the FDIC organized the material to suit your needs? If 
not, how could this material be better organized?
     Are the requirements in the proposed rule clearly stated? 
If not, how could the rule be stated more clearly?
     Does the proposed rule contain language or jargon that is 
unclear? If so, which language requires clarification?
     What else could the FDIC do to make the proposed rule 
easier to understand?

D. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA), in determining the effective date 
and administrative compliance requirements for new regulations that 
impose additional reporting, disclosure, or other requirements on 
insured depository institutions, each federal banking agency must 
consider, consistent with principles of safety and soundness and the 
public interest, any administrative burdens that such regulations would 
place on insured depository institutions, including small depository 
institutions, and customers of depository institutions, as well as the 
benefits of such regulations.\16\ In addition, section 302(b) of RCDRIA 
requires new regulations and amendments to regulations that impose 
additional reporting, disclosures, or other new requirements on insured 
depository institutions generally to take effect on the first day of a 
calendar quarter that begins on or after the date on which the 
regulations are published in final form.\17\
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    \16\ 12 U.S.C. 4802(a).
    \17\ 12 U.S.C. 4802(b).
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    The FDIC has determined that the proposed rule would not impose 
additional reporting, disclosure, or other requirements; therefore the 
requirements of RCDRIA do not apply. However, the FDIC invites any 
comments that will inform its consideration of RCDRIA.

List of Subjects in 12 CFR Part 360

    Banks, Banking, Bank deposit insurance, Holding companies, National 
banks, Participations, Reporting and recordkeeping requirements, 
Savings associations, Securitizations.

Authority and Issuance

    For the reasons set forth in the preamble, the Federal Deposit 
Insurance Corporation proposes to amend 12 CFR part 360 as follows:

PART 360--RESOLUTION AND RECEIVERSHIP RULES

0
1. The authority citation for part 360 continues to read as follows:

    Authority:  12 U.S.C. 1821(d)(1),1821(d)(10)(C), 1821(d)(11), 
1821(e)(1), 1821(e)(8)(D)(i), 1823(c)(4), 1823(e)(2); Sec. 401(h), 
Public Law 101-73, 103 Stat. 357.
0
2. Revise Sec.  360.6(b)(2)(i)(A) to read as follows:


Sec.  360.6  Treatment of financial assets transferred in connection 
with a securitization or participation.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (A) In the case of an issuance of obligations that is subject to 17 
CFR part 229, subpart 229.1100 (Regulation AB of the Securities and 
Exchange Commission (Regulation AB)), the documents shall require that, 
on or prior to issuance of obligations and at the time of delivery of 
any periodic distribution report and, in any event, at least once per 
calendar quarter, while obligations are outstanding, information about 
the obligations and the securitized financial assets shall be disclosed 
to all potential investors at the financial asset or pool level, as 
appropriate for the financial assets, and security-level to enable 
evaluation and analysis of the credit risk and performance of the 
obligations and financial assets. The documents shall require that such 
information and its disclosure, at a minimum, shall comply with the 
requirements of Regulation AB. Information that is unknown or not 
available to the sponsor or the issuer after reasonable investigation 
may be omitted if the issuer includes a statement in the offering 
documents disclosing that the specific information is otherwise 
unavailable;
* * * * *

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.
    Dated at Washington, DC, on July 16, 2019.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2019-15536 Filed 8-21-19; 8:45 am]
 BILLING CODE 6714-01-P