Removal of Transferred OTS Regulations Regarding Regulatory Reporting Requirements, Reports and Audits of State Savings Associations, 3247-3250 [2019-27577]

Download as PDF Federal Register / Vol. 85, No. 13 / Tuesday, January 21, 2020 / Rules and Regulations Reserve Act. For the purposes of complying with § 215.5(d) of Federal Reserve Board Regulation O, the reference to ‘‘the amount specified for a category of credit in paragraph (c) of this section’’ shall be understood to refer to the amount specified in paragraph (c)(2) of this § 337.3. (d) Definition. For purposes of this section, FDIC-supervised institution means an entity for which the FDIC is the appropriate Federal banking agency pursuant to section 3(q) of the FDI Act, 12 U.S.C. 1813(q). ■ 17. Revise § 337.11 to read as follows: § 337.11 Effect on other banking practices. (a) Nothing in this part shall be construed as restricting in any manner the Corporation’s authority to deal with any banking practice which is deemed to be unsafe or unsound or otherwise not in accordance with law, rule, or regulation; or which violates any condition imposed in writing by the Corporation in connection with the granting of any application or other request by an FDIC-Supervised institution, or any written agreement entered into by such institution with the Corporation. Compliance with the provisions of this part shall not relieve an FDIC-supervised institution from its duty to conduct its operations in a safe and sound manner nor prevent the Corporation from taking whatever action it deems necessary and desirable to deal with specific acts or practices which, although they do not violate the provisions of this part, are considered detrimental to the safety and sound operation of the institution engaged therein. (b) Definition. FDIC-supervised institution means an entity for which the FDIC is the appropriate Federal banking agency pursuant to section 3(q) of the FDI Act, 12 U.S.C. 1813(q). PART 353—SUSPICIOUS ACTIVITY REPORTS 18. The authority citation for part 353 is revised to read as follows: ■ Authority: 12 U.S.C. 1818, 1819; 31 U.S.C. 5318. § 353.1 ■ 19. Revise § 353.1 to read as follows: § 353.1 jbell on DSKJLSW7X2PROD with RULES [Amended] Purpose and scope. The purpose of this part is to ensure that an FDIC supervised institution files a Suspicious Activity Report when it detects a known or suspected criminal violation of federal law or a suspicious transaction related to a money laundering activity or a violation of the VerDate Sep<11>2014 16:38 Jan 17, 2020 Jkt 250001 Bank Secrecy Act. This part applies to all FDIC supervised institutions. 20. Amend § 353.2 by adding paragraph (c) to read as follows: ■ § 353.2 Definitions. 3247 Dated at Washington, DC, on December 12, 2019. Annmarie H. Boyd, Assistant Executive Secretary. [FR Doc. 2019–27580 Filed 1–17–20; 8:45 am] BILLING CODE 6714–01–P * * * * * (c) FDIC-supervised institution means an entity for which the FDIC is the appropriate Federal banking agency pursuant to section 3(q) of the FDI Act, 12 U.S.C. 1813(q). § 353.3 21. Amend § 353.3 by: a. Removing the term ‘‘A bank’’ and adding in its place the term ‘‘An FDICsupervised institution’’ wherever it appears; ■ b. Removing the term ‘‘a bank’’ and adding in its place the term ‘‘an FDICsupervised institution’’ wherever it appears; ■ c. Removing the term ‘‘an insured state-licensed branch of a foreign bank’’ in paragraph (f) and adding in its place the term ‘‘a foreign bank having an insured branch’’; ■ d. Removing the term ‘‘Any bank’’ in paragraph (g) and adding ‘‘An FDICsupervised institution’’ in its place; ■ e. Removing the term ‘‘any bank’’ in paragraph (h) and adding ‘‘an FDICsupervised institution’’ in its place; and ■ f. Removing the term ‘‘the bank’’ and adding in its place the term ‘‘the FDICsupervised institution’’ wherever it appears. ■ PART 390—REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT SUPERVISION 22. The authority citation for part 390 is revised to read as follows: ■ Authority: 12 U.S.C. 1819. Subpart F also issued under 5 U.S.C. 552; 559; 12 U.S.C. 2901 et seq. Subpart G also issued under 12 U.S.C. 2810 et seq., 2901 et seq.; 15 U.S.C. 1691; 42 U.S.C. 1981, 1982, 3601–3619. Subpart O also issued under 12 U.S.C. 1828. Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464. Subpart W also issued under 12 U.S.C. 1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m; 78n; 78p; 78w. Subpart Y also issued under 12 U.S.C.1831o. Subpart S—[Removed and Reserved] 23. Remove and reserve subpart S, consisting of §§ 390.330 through 390.368. ■ Federal Deposit Insurance Corporation. By order of the Board of Directors. Frm 00019 Fmt 4700 12 CFR Part 390 RIN 3064–AF13 [Amended] ■ PO 00000 FEDERAL DEPOSIT INSURANCE CORPORATION Sfmt 4700 Removal of Transferred OTS Regulations Regarding Regulatory Reporting Requirements, Reports and Audits of State Savings Associations Federal Deposit Insurance Corporation. ACTION: Final rule. AGENCY: The Federal Deposit Insurance Corporation (‘‘FDIC’’) is adopting a final rule rescinding and removing from the Code of Federal Regulations the regulations regarding regulatory reporting standards. DATES: The final rule is effective on February 20, 2020. FOR FURTHER INFORMATION CONTACT: Christine M. Bouvier, Assistant Chief Accountant, (202) 898–7289, CBouvier@ FDIC.gov, Division of Risk Management Supervision; Karen J. Currie, Senior Examination Specialist, (202) 898–3981, Division of Risk Management Supervision; David M. Miles, Counsel, Legal Division, (202) 898–3651. SUPPLEMENTARY INFORMATION: SUMMARY: I. Policy Objectives The policy objectives of the final rule are twofold. The first is to simplify the FDIC’s regulations by removing unnecessary ones and thereby improving ease of reference and public understanding. The second is to promote parity between State savings associations and State nonmember banks by having the regulatory reporting requirements, regulatory reports and audits of both classes of institutions addressed in the same FDIC rules. II. Background Part 390, subpart R was included in the regulations that were transferred from the Office of Thrift Supervision (‘‘OTS’’) to the FDIC on July 21, 2011, in connection with the implementation of title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act (‘‘Dodd-Frank Act’’).1 Beginning July 21, 2011, the transfer date established by 1 Public E:\FR\FM\21JAR1.SGM Law 111–203, 124 Stat. 1376 (2010). 21JAR1 jbell on DSKJLSW7X2PROD with RULES 3248 Federal Register / Vol. 85, No. 13 / Tuesday, January 21, 2020 / Rules and Regulations section 311 of the Dodd-Frank Act,2 the powers, duties, and functions formerly performed by the OTS were divided among the FDIC for State savings associations, the Office of the Comptroller of the Currency (‘‘OCC’’) for Federal savings associations, and the Board of Governors of the Federal Reserve System (‘‘FRB’’) for savings and loan holding companies. Section 316(b) of the Dodd-Frank Act 3 provides the manner of treatment for all orders, resolutions, determinations, regulations, and advisory materials that had been issued, made, prescribed, or allowed to become effective by the OTS. The section provides that if such regulatory issuances were in effect on the day before the transfer date, they continue in effect and are enforceable by or against the appropriate successor agency until they are modified, terminated, set aside, or superseded in accordance with applicable law by such successor agency, by any court of competent jurisdiction, or by operation of law. The Dodd-Frank Act directed the FDIC and the OCC to consult with one another and to publish a list of continued OTS regulations to be enforced by each respective agency that would continue to remain in effect until the appropriate Federal banking agency modified or removed the regulations in accordance with applicable law. The list was published by the FDIC and OCC as a Joint Notice in the Federal Register on July 6, 2011,4 and shortly thereafter, the FDIC published its transferred OTS regulations as new FDIC regulations in parts 390 and 391. When it republished the transferred OTS regulations, the FDIC noted that its staff would evaluate the transferred OTS rules and might later recommend incorporating the transferred regulations into other FDIC rules, amending them, or rescinding them, as appropriate. Further, section 312(c)(1) of the Dodd-Frank Act 5 amended the definition of ‘‘appropriate Federal banking agency’’ contained in section 3(q) of the FDI Act,6 to add State savings associations to the list of entities for which the FDIC is designated as the ‘‘appropriate Federal banking agency.’’ As a result, when the FDIC acts as the ‘‘appropriate Federal banking agency’’ for State savings associations, as it does today, it has the authority to issue, modify, and rescind regulations involving such associations, as well as for State nonmember banks and StateU.S.C. 5411. U.S.C. 5414(b). 4 76 FR 39246 (July 6, 2011). 5 12 U.S.C. 5412(c)(1). 6 12 U.S.C. 1813(q). licensed insured branches of foreign banks. III. Proposed Rule On October 2, 2019, the FDIC published a notice of proposed rulemaking (NPR) regarding the removal of part 390, subpart R (former OTS part 562), which addressed regulatory reporting requirements, regulatory reports and audits of State savings associations.7 The former OTS rule was transferred to the FDIC with only nominal changes. The NPR proposed removing part 390, subpart R, because, after careful review and consideration, the FDIC believed it was largely unnecessary, redundant or duplicative given other FDIC regulations that pertain to regulatory reporting requirements (12 CFR part 304, 12 CFR part 363 and its appendices A and B, and 12 CFR part 364 and its appendix A), regulatory reports (12 CFR part 304 and 12 CFR part 308), and audits of insured depository institutions (12 CFR part 363 and its appendices A and B and 12 CFR part 364 and its appendix A) that already apply to State savings associations. IV. Comments The FDIC issued the NPR on October 2, 2019, with a 30-day comment period. On October 9, 2019, the FDIC issued a supplemental notice of proposed rulemaking (SNPR) which, among other things, extended the deadline for comments on the FDIC’s regulatory flexibility analysis until November 8, 2019. The FDIC received no comments on the NPR or the SNPR, and consequently the final rule is adopted without change. V. Explanation of the Final Rule As discussed in the NPR, 12 CFR part 390, subpart R, is being rescinded, in its entirety, because it is largely unnecessary, redundant or duplicative given the existence of other applicable FDIC regulations described in Part III above. VI. Expected Effects As explained in Part III of this Supplementary Information section, certain OTS regulations transferred to the FDIC by the Dodd-Frank Act relating to regulatory reporting requirements, regulatory reports, and audits of State savings associations are redundant or unnecessary in light of other applicable FDIC regulations. This rule would 2 12 3 12 VerDate Sep<11>2014 16:38 Jan 17, 2020 7 See 84 FR 52387 (Oct. 2, 2019). The FDIC published a SNPR in the Federal Register relating to the FDIC’s regulatory flexibility analysis on October 9, 2019. See 84 FR 54045 (Oct. 9, 2019). Jkt 250001 PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 eliminate those transferred OTS regulations. As of June 30, 2019, the FDIC supervises 3,424 insured depository institutions, of which 38 (1.1 percent) are State savings associations.8 The rule primarily would affect regulations that govern State savings associations. As explained in the NPR, the rule would remove §§ 390.320, 390.321, and 390.332 of part 390, subpart R, because these sections are redundant of, or otherwise unnecessary in light of, applicable statutes and other FDIC regulations regarding audits, reporting, and safety and soundness. As a result, rescinding and removing these regulations will not have any substantive effects on FDIC-supervised institutions. VII. Alternatives The FDIC has considered alternatives to the final rule but believes that the amendments represent the most appropriate option for covered institutions. As discussed previously, the Dodd-Frank Act transferred certain powers, duties, and functions formerly performed by the OTS to the FDIC. The FDIC’s Board reissued and redesignated certain transferred regulations from the OTS, but noted that it would evaluate them and might later incorporate them into other FDIC regulations, amend them, or rescind them, as appropriate. The FDIC has evaluated the existing regulations relating to regulatory reporting standards and audits of insured depository institutions, including 12 CFR part 304; 12 CFR part 308; 12 CFR part 363 and its appendices A and B; 12 CFR part 364 and its appendix A; and 12 CFR part 390, subpart R. The FDIC considered the status quo alternative of retaining the current regulations but did not choose to do so because the underlying purposes of those regulations are already accomplished through substantively similar regulations regarding regulatory reports, regulatory reporting requirements, and audits. Therefore, the FDIC is amending and streamlining the FDIC’s regulations. VIII. Regulatory Analysis and Procedure A. The Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act of 1995 (‘‘PRA’’),9 the FDIC may not conduct or sponsor, and the respondent is not 8 Based on data from the June 30, 2019, Call Report and FFIEC 002 Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks. 9 44 U.S.C. 3501–3521. E:\FR\FM\21JAR1.SGM 21JAR1 Federal Register / Vol. 85, No. 13 / Tuesday, January 21, 2020 / Rules and Regulations required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (‘‘OMB’’) control number. The final rule rescinds and removes from FDIC regulations part 390, subpart R. The final rule will not create any new or revise any existing collections of information under the PRA. Therefore, no information collection request will be submitted to the OMB for review. B. The Regulatory Flexibility Act The Regulatory Flexibility Act (‘‘RFA’’) requires that, in connection with a final rule, an agency prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of the final rule on small entities.10 However, a regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities, and publishes its certification and a short explanatory statement in the Federal Register together with the rule. The Small Business Administration (‘‘SBA’’) has defined ‘‘small entities’’ to include banking organizations with total assets of less than or equal to $600 million.11 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 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of these thresholds typically represent significant effects for FDIC-supervised institutions. For the reasons provided below, the FDIC certifies that the rule would not have a significant economic impact on a substantial number of small banking organizations. Accordingly, a regulatory flexibility analysis is not required. As of June 30, 2019, the FDIC supervised 3,424 insured depository institutions, of which 2,665 are considered small banking organizations 10 5 U.S.C. 601, et seq. SBA defines a small banking organization as having $600 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, by 84 FR 34261, effective August 19, 2019). In its determination, ‘‘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 the RFA. 12 The FDIC supplemented the RFA analysis in the NPR with an updated regulatory flexibility analysis to reflect changes to the Small Business Administration’s monetary-based size standards which were adjusted for inflation as of August 19, 2019. See 84 FR 54045 (Oct. 9, 2019). jbell on DSKJLSW7X2PROD with RULES 11 The VerDate Sep<11>2014 16:38 Jan 17, 2020 Jkt 250001 for the purposes of RFA.13 The final rule primarily affects regulations that govern State savings associations. There are 36 State savings associations considered to be small banking organizations for the purposes of the RFA.14 As explained in the NPR, the final rule would remove §§ 390.320, 390.321, and 390.332 of part 390, subpart R, because these sections are redundant or otherwise unnecessary in light of applicable statutes and other FDIC regulations. As a result, rescinding the regulations would not have any substantive effects on small FDICsupervised institutions. Based on the information above, the FDIC certifies that the final rule would not have a significant economic impact on a substantial number of small entities. C. The Congressional Review Act For purposes of Congressional Review Act, the OMB makes a determination as to whether a final rule constitutes a ‘‘major’’ rule.15 If a rule is deemed a major rule by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.16 The Congressional Review Act defines a ‘‘major rule’’ as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in—(A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets.17 The OMB has determined that the final rule is not a major rule for purposes of the Congressional Review Act and 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 18 requires each Federal banking agency to use plain language in 13 FDIC Call Report, June 30, 2019. 14 Id. 15 5 U.S.C. 801 et seq. U.S.C. 801(a)(3). 17 5 U.S.C. 804(2). 18 Public Law 106–102, section 722, 113 Stat. 1338, 1471 (1999). 3249 all of its proposed and final rules published after January 1, 2000. The FDIC has sought to present the final rule in a simple and straightforward manner and did not receive any comments on the use of plain language. E. The Economic Growth and Regulatory Paperwork Reduction Act Under section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (‘‘EGRPRA’’), the FDIC is required to review all of its regulations, at least once every 10 years, in order to identify any outdated or otherwise unnecessary regulations imposed on insured institutions.19 The FDIC, along with the other Federal banking agencies, submitted a Joint Report to Congress on March 21, 2017 (‘‘EGRPRA Report’’), discussing how the review was conducted, what has been done to date to address regulatory burden, and further measures the agency will take to address issues that were identified.20 As noted in the EGRPRA Report, the FDIC is continuing to streamline and clarify its regulations through the OTS rule integration process. By removing outdated or unnecessary regulations, such as part 390, subpart R, this final rule complements other actions the FDIC has taken, separately and with the other Federal banking agencies, to further the EGRPRA mandate. F. Riegle Community Development and Regulatory Improvement Act of 1994 Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (‘‘RCDRIA’’),21 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (‘‘IDIs’’), 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 depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosure, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date 16 5 PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 19 Public Law 104–208, 110 Stat. 3900 (1996). FR 15900 (March 31, 2017). 21 12 U.S.C. 4802(a). 20 82 E:\FR\FM\21JAR1.SGM 21JAR1 3250 Federal Register / Vol. 85, No. 13 / Tuesday, January 21, 2020 / Rules and Regulations on which the regulations are published in final form.22 Because the final rule does not impose additional reporting, disclosure, or other requirements on IDIs, section 302 of RCDRIA does not apply. List of Subjects in 12 CFR Part 390 Regulatory reporting standards. Authority and Issuance For the reasons stated in the preamble, the Federal Deposit Insurance Corporation amends title 12 CFR part 390 as follows: PART 390—REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT SUPERVISION 1. Revise the authority citation for part 390 to read as follows: ■ Authority: 12 U.S.C. 1819. Subpart F also issued under 5 U.S.C. 552; 559; 12 U.S.C. 2901 et seq. Subpart G also issued under 12 U.S.C. 2810 et seq., 2901 et seq.; 15 U.S.C. 1691; 42 U.S.C. 1981, 1982, 3601–3619. Subpart O also issued under 12 U.S.C. 1828. Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464. Subpart W also issued under 12 U.S.C. 1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m; 78n; 78p; 78w. Subpart Y also issued under 12 U.S.C. 1831o. Subpart R—[Removed and Reserved] 2. Remove and reserve subpart R, consisting of §§ 390.320 through 390.322. ■ Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on December 12, 2019. Annmarie H. Boyd, Assistant Executive Secretary. [FR Doc. 2019–27577 Filed 1–17–20; 8:45 am] BILLING CODE 6714–01–P FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 390 RIN 3064–AF15 jbell on DSKJLSW7X2PROD with RULES Removal of Transferred OTS Regulations Regarding Accounting Requirements for State Savings Associations Federal Deposit Insurance Corporation. ACTION: Final rule. AGENCY: The Federal Deposit Insurance Corporation (FDIC) is adopting a final rule to rescind and remove rules regarding accounting requirements for State savings associations because these financial statement and disclosure requirements are substantially similar to, although more detailed than, otherwise applicable financial statement form and content requirements and disclosure requirements that a State savings association must satisfy under Federal banking or securities laws or regulations. The final rule adopts, without change, a notice of proposed rulemaking (NPR) published in the Federal Register on October 2, 2019, which received no comments. DATES: The final rule is effective on February 20, 2020. FOR FURTHER INFORMATION CONTACT: Maureen Loviglio, Senior Staff Accountant, Division of Risk Management Supervision, (202) 898– 6777, MLoviglio@FDIC.gov; Suzanne Dawley, Counsel, Legal Division, sudawley@FDIC.gov. SUPPLEMENTARY INFORMATION: SUMMARY: I. Policy Objectives The policy objectives of the final rule are twofold. The first is to simplify the FDIC’s regulations by removing unnecessary regulations, or realigning existing regulations in order to improve the public’s understanding and to improve the ease of reference. The second is to promote parity between State savings associations and State nonmember banks by making both classes of institutions subject to the same accounting requirements. Thus, as further detailed in this section, the FDIC is rescinding and removing from the Code of Federal Regulations rules entitled Accounting Requirements (part 390, subpart T) applicable to State savings associations. Such requirements prescribe definitions, public accountant qualifications, and the form and content of financial statements pertaining to certain securities and their related transaction documents. Transaction documents may include proxy statements and offering circulars in connection with a conversion, any offering of securities by a State savings association, and filings by State savings associations requiring financial statements under the Securities Exchange Act of 1934 (Exchange Act).1 The FDIC has determined that the additional financial disclosure requirements required by part 390, subpart T, for State savings associations are substantially similar to, although more detailed than, otherwise applicable financial statement form and content requirements and disclosure requirements that State nonmember banks must satisfy under Federal banking or securities laws or regulations. Therefore, the FDIC is rescinding and removing part 390, subpart T, and will apply existing disclosure requirements, and related form and content of financial statements requirements to State savings associations. II. Background The Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act),2 signed into law on July 21, 2010, provided for a substantial reorganization of the regulation of State and Federal savings associations and their holding companies.3 Beginning July 21, 2011, the transfer date established by section 311 of the DoddFrank Act,4 the powers, duties, and functions formerly performed by the Office of Thrift Supervision (OTS) were divided among the FDIC, as to State savings associations, the Office of the Comptroller of the Currency (OCC), as to Federal savings associations, and the Board of Governors of the Federal Reserve System, as to savings and loan holding companies. Section 316(b) of the Dodd-Frank Act 5 provides the manner of treatment for all orders, resolutions, determinations, regulations, and advisory materials issued, made, prescribed, or allowed to become effective by the OTS. Section 316(b) also provides that, if such materials were in effect on the day before the transfer date, they continue in effect and are enforceable by or against the appropriate successor agency until they are modified, terminated, set aside, or superseded in accordance with applicable law by such successor agency, by any court of competent jurisdiction, or by operation of law. Pursuant to section 316(c) of the Dodd-Frank Act,6 on June 14, 2011, the FDIC’s Board of Directors approved a ‘‘List of OTS Regulations to be Enforced by the OCC and the FDIC Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.’’ This list was published by the FDIC and the OCC as a Joint Notice in the Federal Register on July 6, 2011.7 2 12 3 12 U.S.C. 5301 et seq. U.S.C. 5411. 4 Id. 5 12 U.S.C. 5414(b). U.S.C. 5414(c). 7 76 FR 39246 (July 6, 2011). 6 12 22 12 U.S.C. 4802. VerDate Sep<11>2014 17:25 Jan 17, 2020 1 15 Jkt 250001 PO 00000 U.S.C. 78a et seq. Frm 00022 Fmt 4700 Sfmt 4700 E:\FR\FM\21JAR1.SGM 21JAR1

Agencies

[Federal Register Volume 85, Number 13 (Tuesday, January 21, 2020)]
[Rules and Regulations]
[Pages 3247-3250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27577]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 390

RIN 3064-AF13


Removal of Transferred OTS Regulations Regarding Regulatory 
Reporting Requirements, Reports and Audits of State Savings 
Associations

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (``FDIC'') is 
adopting a final rule rescinding and removing from the Code of Federal 
Regulations the regulations regarding regulatory reporting standards.

DATES: The final rule is effective on February 20, 2020.

FOR FURTHER INFORMATION CONTACT: Christine M. Bouvier, Assistant Chief 
Accountant, (202) 898-7289, [email protected], Division of Risk 
Management Supervision; Karen J. Currie, Senior Examination Specialist, 
(202) 898-3981, Division of Risk Management Supervision; David M. 
Miles, Counsel, Legal Division, (202) 898-3651.

SUPPLEMENTARY INFORMATION:

I. Policy Objectives

    The policy objectives of the final rule are twofold. The first is 
to simplify the FDIC's regulations by removing unnecessary ones and 
thereby improving ease of reference and public understanding. The 
second is to promote parity between State savings associations and 
State nonmember banks by having the regulatory reporting requirements, 
regulatory reports and audits of both classes of institutions addressed 
in the same FDIC rules.

II. Background

    Part 390, subpart R was included in the regulations that were 
transferred from the Office of Thrift Supervision (``OTS'') to the FDIC 
on July 21, 2011, in connection with the implementation of title III of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (``Dodd-
Frank Act'').\1\ Beginning July 21, 2011, the transfer date established 
by

[[Page 3248]]

section 311 of the Dodd-Frank Act,\2\ the powers, duties, and functions 
formerly performed by the OTS were divided among the FDIC for State 
savings associations, the Office of the Comptroller of the Currency 
(``OCC'') for Federal savings associations, and the Board of Governors 
of the Federal Reserve System (``FRB'') for savings and loan holding 
companies. Section 316(b) of the Dodd-Frank Act \3\ provides the manner 
of treatment for all orders, resolutions, determinations, regulations, 
and advisory materials that had been issued, made, prescribed, or 
allowed to become effective by the OTS. The section provides that if 
such regulatory issuances were in effect on the day before the transfer 
date, they continue in effect and are enforceable by or against the 
appropriate successor agency until they are modified, terminated, set 
aside, or superseded in accordance with applicable law by such 
successor agency, by any court of competent jurisdiction, or by 
operation of law.
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    \1\ Public Law 111-203, 124 Stat. 1376 (2010).
    \2\ 12 U.S.C. 5411.
    \3\ 12 U.S.C. 5414(b).
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    The Dodd-Frank Act directed the FDIC and the OCC to consult with 
one another and to publish a list of continued OTS regulations to be 
enforced by each respective agency that would continue to remain in 
effect until the appropriate Federal banking agency modified or removed 
the regulations in accordance with applicable law. The list was 
published by the FDIC and OCC as a Joint Notice in the Federal Register 
on July 6, 2011,\4\ and shortly thereafter, the FDIC published its 
transferred OTS regulations as new FDIC regulations in parts 390 and 
391. When it republished the transferred OTS regulations, the FDIC 
noted that its staff would evaluate the transferred OTS rules and might 
later recommend incorporating the transferred regulations into other 
FDIC rules, amending them, or rescinding them, as appropriate. Further, 
section 312(c)(1) of the Dodd-Frank Act \5\ amended the definition of 
``appropriate Federal banking agency'' contained in section 3(q) of the 
FDI Act,\6\ to add State savings associations to the list of entities 
for which the FDIC is designated as the ``appropriate Federal banking 
agency.'' As a result, when the FDIC acts as the ``appropriate Federal 
banking agency'' for State savings associations, as it does today, it 
has the authority to issue, modify, and rescind regulations involving 
such associations, as well as for State nonmember banks and State-
licensed insured branches of foreign banks.
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    \4\ 76 FR 39246 (July 6, 2011).
    \5\ 12 U.S.C. 5412(c)(1).
    \6\ 12 U.S.C. 1813(q).
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III. Proposed Rule

    On October 2, 2019, the FDIC published a notice of proposed 
rulemaking (NPR) regarding the removal of part 390, subpart R (former 
OTS part 562), which addressed regulatory reporting requirements, 
regulatory reports and audits of State savings associations.\7\ The 
former OTS rule was transferred to the FDIC with only nominal changes. 
The NPR proposed removing part 390, subpart R, because, after careful 
review and consideration, the FDIC believed it was largely unnecessary, 
redundant or duplicative given other FDIC regulations that pertain to 
regulatory reporting requirements (12 CFR part 304, 12 CFR part 363 and 
its appendices A and B, and 12 CFR part 364 and its appendix A), 
regulatory reports (12 CFR part 304 and 12 CFR part 308), and audits of 
insured depository institutions (12 CFR part 363 and its appendices A 
and B and 12 CFR part 364 and its appendix A) that already apply to 
State savings associations.
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    \7\ See 84 FR 52387 (Oct. 2, 2019). The FDIC published a SNPR in 
the Federal Register relating to the FDIC's regulatory flexibility 
analysis on October 9, 2019. See 84 FR 54045 (Oct. 9, 2019).
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IV. Comments

    The FDIC issued the NPR on October 2, 2019, with a 30-day comment 
period. On October 9, 2019, the FDIC issued a supplemental notice of 
proposed rulemaking (SNPR) which, among other things, extended the 
deadline for comments on the FDIC's regulatory flexibility analysis 
until November 8, 2019. The FDIC received no comments on the NPR or the 
SNPR, and consequently the final rule is adopted without change.

V. Explanation of the Final Rule

    As discussed in the NPR, 12 CFR part 390, subpart R, is being 
rescinded, in its entirety, because it is largely unnecessary, 
redundant or duplicative given the existence of other applicable FDIC 
regulations described in Part III above.

VI. Expected Effects

    As explained in Part III of this Supplementary Information section, 
certain OTS regulations transferred to the FDIC by the Dodd-Frank Act 
relating to regulatory reporting requirements, regulatory reports, and 
audits of State savings associations are redundant or unnecessary in 
light of other applicable FDIC regulations. This rule would eliminate 
those transferred OTS regulations.
    As of June 30, 2019, the FDIC supervises 3,424 insured depository 
institutions, of which 38 (1.1 percent) are State savings 
associations.\8\ The rule primarily would affect regulations that 
govern State savings associations.
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    \8\ Based on data from the June 30, 2019, Call Report and FFIEC 
002 Report of Assets and Liabilities of U.S. Branches and Agencies 
of Foreign Banks.
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    As explained in the NPR, the rule would remove Sec. Sec.  390.320, 
390.321, and 390.332 of part 390, subpart R, because these sections are 
redundant of, or otherwise unnecessary in light of, applicable statutes 
and other FDIC regulations regarding audits, reporting, and safety and 
soundness. As a result, rescinding and removing these regulations will 
not have any substantive effects on FDIC-supervised institutions.

VII. Alternatives

    The FDIC has considered alternatives to the final rule but believes 
that the amendments represent the most appropriate option for covered 
institutions. As discussed previously, the Dodd-Frank Act transferred 
certain powers, duties, and functions formerly performed by the OTS to 
the FDIC. The FDIC's Board reissued and redesignated certain 
transferred regulations from the OTS, but noted that it would evaluate 
them and might later incorporate them into other FDIC regulations, 
amend them, or rescind them, as appropriate. The FDIC has evaluated the 
existing regulations relating to regulatory reporting standards and 
audits of insured depository institutions, including 12 CFR part 304; 
12 CFR part 308; 12 CFR part 363 and its appendices A and B; 12 CFR 
part 364 and its appendix A; and 12 CFR part 390, subpart R. The FDIC 
considered the status quo alternative of retaining the current 
regulations but did not choose to do so because the underlying purposes 
of those regulations are already accomplished through substantively 
similar regulations regarding regulatory reports, regulatory reporting 
requirements, and audits. Therefore, the FDIC is amending and 
streamlining the FDIC's regulations.

VIII. Regulatory Analysis and Procedure

A. The Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (``PRA''),\9\ the FDIC may not conduct or sponsor, and the 
respondent is not

[[Page 3249]]

required to respond to, an information collection unless it displays a 
currently valid Office of Management and Budget (``OMB'') control 
number.
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    \9\ 44 U.S.C. 3501-3521.
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    The final rule rescinds and removes from FDIC regulations part 390, 
subpart R. The final rule will not create any new or revise any 
existing collections of information under the PRA. Therefore, no 
information collection request will be submitted to the OMB for review.

B. The Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires that, in 
connection with a final rule, an agency prepare and make available for 
public comment a final regulatory flexibility analysis that describes 
the impact of the final rule on small entities.\10\ However, a 
regulatory flexibility analysis is not required if the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities, and publishes its certification 
and a short explanatory statement in the Federal Register together with 
the rule. The Small Business Administration (``SBA'') has defined 
``small entities'' to include banking organizations with total assets 
of less than or equal to $600 million.11 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 
2.5 percent of total noninterest expenses. The FDIC believes that 
effects in excess of these thresholds typically represent significant 
effects for FDIC-supervised institutions. For the reasons provided 
below, the FDIC certifies that the rule would not have a significant 
economic impact on a substantial number of small banking organizations. 
Accordingly, a regulatory flexibility analysis is not required.
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    \10\ 5 U.S.C. 601, et seq.
    \11\ The SBA defines a small banking organization as having $600 
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, by 84 FR 34261, effective August 19, 2019). In its 
determination, ``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 the RFA.
    \12\ The FDIC supplemented the RFA analysis in the NPR with an 
updated regulatory flexibility analysis to reflect changes to the 
Small Business Administration's monetary-based size standards which 
were adjusted for inflation as of August 19, 2019. See 84 FR 54045 
(Oct. 9, 2019).
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    As of June 30, 2019, the FDIC supervised 3,424 insured depository 
institutions, of which 2,665 are considered small banking organizations 
for the purposes of RFA.\13\ The final rule primarily affects 
regulations that govern State savings associations. There are 36 State 
savings associations considered to be small banking organizations for 
the purposes of the RFA.\14\
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    \13\ FDIC Call Report, June 30, 2019.
    \14\ Id.
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    As explained in the NPR, the final rule would remove Sec. Sec.  
390.320, 390.321, and 390.332 of part 390, subpart R, because these 
sections are redundant or otherwise unnecessary in light of applicable 
statutes and other FDIC regulations. As a result, rescinding the 
regulations would not have any substantive effects on small FDIC-
supervised institutions.
    Based on the information above, the FDIC certifies that the final 
rule would not have a significant economic impact on a substantial 
number of small entities.

C. The Congressional Review Act

    For purposes of Congressional Review Act, the OMB makes a 
determination as to whether a final rule constitutes a ``major'' 
rule.\15\ If a rule is deemed a major rule by the OMB, the 
Congressional Review Act generally provides that the rule may not take 
effect until at least 60 days following its publication.\16\
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    \15\ 5 U.S.C. 801 et seq.
    \16\ 5 U.S.C. 801(a)(3).
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    The Congressional Review Act defines a ``major rule'' as any rule 
that the Administrator of the Office of Information and Regulatory 
Affairs of the OMB finds has resulted in or is likely to result in--(A) 
an annual effect on the economy of $100,000,000 or more; (B) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies or geographic regions, or 
(C) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\17\
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    \17\ 5 U.S.C. 804(2).
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    The OMB has determined that the final rule is not a major rule for 
purposes of the Congressional Review Act and 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-Leach-Bliley Act \18\ requires each 
Federal banking agency to use plain language in all of its proposed and 
final rules published after January 1, 2000. The FDIC has sought to 
present the final rule in a simple and straightforward manner and did 
not receive any comments on the use of plain language.
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    \18\ Public Law 106-102, section 722, 113 Stat. 1338, 1471 
(1999).
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E. The Economic Growth and Regulatory Paperwork Reduction Act

    Under section 2222 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (``EGRPRA''), the FDIC is required to review all 
of its regulations, at least once every 10 years, in order to identify 
any outdated or otherwise unnecessary regulations imposed on insured 
institutions.\19\ The FDIC, along with the other Federal banking 
agencies, submitted a Joint Report to Congress on March 21, 2017 
(``EGRPRA Report''), discussing how the review was conducted, what has 
been done to date to address regulatory burden, and further measures 
the agency will take to address issues that were identified.\20\ As 
noted in the EGRPRA Report, the FDIC is continuing to streamline and 
clarify its regulations through the OTS rule integration process. By 
removing outdated or unnecessary regulations, such as part 390, subpart 
R, this final rule complements other actions the FDIC has taken, 
separately and with the other Federal banking agencies, to further the 
EGRPRA mandate.
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    \19\ Public Law 104-208, 110 Stat. 3900 (1996).
    \20\ 82 FR 15900 (March 31, 2017).
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F. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (``RCDRIA''),\21\ in determining the 
effective date and administrative compliance requirements for new 
regulations that impose additional reporting, disclosure, or other 
requirements on insured depository institutions (``IDIs''), 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 depository institutions, 
including small depository institutions, and customers of depository 
institutions, as well as the benefits of such regulations. In addition, 
section 302(b) of RCDRIA requires new regulations and amendments to 
regulations that impose additional reporting, disclosure, or other new 
requirements on IDIs generally to take effect on the first day of a 
calendar quarter that begins on or after the date

[[Page 3250]]

on which the regulations are published in final form.\22\
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    \21\ 12 U.S.C. 4802(a).
    \22\ 12 U.S.C. 4802.
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    Because the final rule does not impose additional reporting, 
disclosure, or other requirements on IDIs, section 302 of RCDRIA does 
not apply.

List of Subjects in 12 CFR Part 390

    Regulatory reporting standards.

Authority and Issuance

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation amends title 12 CFR part 390 as follows:

PART 390--REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT 
SUPERVISION

0
1. Revise the authority citation for part 390 to read as follows:

    Authority: 12 U.S.C. 1819.

    Subpart F also issued under 5 U.S.C. 552; 559; 12 U.S.C. 2901 et 
seq.
    Subpart G also issued under 12 U.S.C. 2810 et seq., 2901 et 
seq.; 15 U.S.C. 1691; 42 U.S.C. 1981, 1982, 3601-3619.
    Subpart O also issued under 12 U.S.C. 1828.
    Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464.
    Subpart W also issued under 12 U.S.C. 1462a; 1463; 1464; 15 
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w.
    Subpart Y also issued under 12 U.S.C. 1831o.

Subpart R--[Removed and Reserved]

0
2. Remove and reserve subpart R, consisting of Sec. Sec.  390.320 
through 390.322.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.
    Dated at Washington, DC, on December 12, 2019.
Annmarie H. Boyd,
Assistant Executive Secretary.
[FR Doc. 2019-27577 Filed 1-17-20; 8:45 am]
BILLING CODE 6714-01-P