FEDERAL DEPOSIT INSURANCE CORPORATION, 22924-22930 [2020-07449]
Download as PDF
<![CDATA[
22924
Federal Register / Vol. 85, No. 79 / Thursday, April 23, 2020 / Rules and Regulations
DEPARTMENT OF TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket ID OCC–2020–0016]
RIN 1557–AE88
FEDERAL RESERVE SYSTEM
12 CFR Part 217, 12 CFR Part 324
[Regulation Q; Docket No. R–1710]
RIN 7100–AF84, RIN 3064–AF45
FEDERAL DEPOSIT INSURANCE
CORPORATION
Regulatory Capital Rule: Temporary
Changes to the Community Bank
Leverage Ratio Framework
Office of the Comptroller of the
Currency, Treasury; the Board of
Governors of the Federal Reserve
System; and the Federal Deposit
Insurance Corporation.
ACTION: Interim final rule; request for
comment.
AGENCY:
This interim final rule makes
temporary changes to the community
bank leverage ratio framework, pursuant
to section 4012 of the Coronavirus Aid,
Relief, and Economic Security Act
(statutory interim final rule). As of the
second quarter 2020, a banking
organization with a leverage ratio of 8
percent or greater (and that meets other
qualifying criteria) may elect to use the
community bank leverage ratio
framework. The statutory interim final
rule also establishes a two-quarter grace
period for a qualifying community
banking organization whose leverage
ratio falls below the 8-percent
community bank leverage ratio
requirement, so long as the banking
organization maintains a leverage ratio
of 7 percent or greater. The temporary
changes to the community bank leverage
ratio framework implemented by this
statutory interim final rule will cease to
be effective as of the earlier of the
termination date of the national
emergency concerning the coronavirus
disease declared by the President on
March 13, 2020, under the National
Emergencies Act, or December 31, 2020.
To provide clarity to banking
organizations, the Office of the
Comptroller of the Currency, the Board
of Governors of the Federal Reserve
System, and the Federal Deposit
Insurance Corporation issued
concurrently an interim final rule that
provides a transition from the temporary
lotter on DSKBCFDHB2PROD with RULES3
SUMMARY:
VerDate Sep<11>2014
20:58 Apr 22, 2020
Jkt 250001
8-percent community bank leverage
ratio requirement to a 9-percent
community bank leverage ratio
requirement.
DATES: The interim final rule is effective
April 23, 2020. Comments on the
interim final rule must be received no
later than June 8, 2020.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to all of the agencies.
Commenters are encouraged to use the
title ‘‘Regulatory Capital Rule:
Temporary Changes to the Community
Bank Leverage Ratio Framework’’ to
facilitate the organization and
distribution of comments among the
agencies. Commenters are also
encouraged to identify the number of
the specific question for comment to
which they are responding. Comments
should be directed to:
OCC: You may submit comments to
the OCC by any of the methods set forth
below. Commenters are encouraged to
submit comments through the Federal
eRulemaking Portal or email, if possible.
Please use the title ‘‘Regulatory Capital
Rule: Temporary Changes to the
Community Bank Leverage Ratio
Framework’’ to facilitate the
organization and distribution of the
comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal—
‘‘Regulations.gov Classic or
Regulations.gov Beta’’:
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0016’’ in the Search Box and
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments. For
help with submitting effective
comments please click on ‘‘View
Commenter’s Checklist.’’ Click on the
‘‘Help’’ tab on the Regulations.gov home
page to get information on using
Regulations.gov, including instructions
for submitting public comments.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0016’’ in
the Search Box and click ‘‘Search.’’
Public comments can be submitted via
the ‘‘Comment’’ box below the
displayed document information or by
clicking on the document title and then
clicking the ‘‘Comment’’ box on the topleft side of the screen. For help with
submitting effective comments please
click on ‘‘Commenter’s Checklist.’’ For
assistance with the Regulations.gov Beta
site, please call (877) 378–5457 (toll
free) or (703) 454–9859 Monday–Friday,
9 a.m.–5 p.m. ET or email regulations@
erulemakinghelpdesk.com.
PO 00000
Frm 00002
Fmt 4701
Sfmt 4700
• Email: regs.comments@
occ.treas.gov.
• Mail: Chief Counsel’s Office, Office
of the Comptroller of the Currency, 400
7th Street SW, Suite 3E–218,
Washington, DC 20219.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2020–0016’’ in your comment.
In general, the OCC will enter all
comments received into the docket and
publish the comments on the
Regulations.gov website without
change, including any business or
personal information that you provide
such as name and address information,
email addresses, or phone numbers.
Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
rulemaking action by any of the
following methods:
• Viewing Comments Electronically—
Regulations.gov Classic or
Regulations.gov Beta:
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0016’’ in the Search box and
click ‘‘Search.’’ Click on ‘‘Open Docket
Folder’’ on the right side of the screen.
Comments and supporting materials can
be viewed and filtered by clicking on
‘‘View all documents and comments in
this docket’’ and then using the filtering
tools on the left side of the screen. Click
on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov.
The docket may be viewed after the
close of the comment period in the same
manner as during the comment period.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0016’’ in
the Search Box and click ‘‘Search.’’
Click on the ‘‘Comments’’ tab.
Comments can be viewed and filtered
by clicking on the ‘‘Sort By’’ drop-down
on the right side of the screen or the
‘‘Refine Results’’ options on the left side
of the screen. Supporting materials can
be viewed by clicking on the
‘‘Documents’’ tab and filtered by
clicking on the ‘‘Sort By’’ drop-down on
the right side of the screen or the
‘‘Refine Results’’ options on the left side
of the screen. For assistance with the
Regulations.gov Beta site, please call
(877) 378–5457 (toll free) or (703) 454–
9859 Monday–Friday, 9 a.m.–5 p.m. ET
E:\FR\FM\23APR3.SGM
23APR3
lotter on DSKBCFDHB2PROD with RULES3
Federal Register / Vol. 85, No. 79 / Thursday, April 23, 2020 / Rules and Regulations
or email regulations@
erulemakinghelpdesk.com.
The docket may be viewed after the
close of the comment period in the same
manner as during the comment period.
Board: You may submit comments,
identified by Docket No. R–1710 and
RIN 7100–AF84, by any of the following
methods:
1. Agency website: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/apps/
foia/proposedregs.aspx.
2. Email: regs.comments@
federalreserve.gov. Include docket and
RIN numbers in the subject line of the
message.
3. FAX: (202) 452–3819 or (202) 452–
3102.
4. Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments will be made
available on the Board’s website at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons or to remove sensitive
personally identifiable information at
the commenter’s request. Public
comments may also be viewed
electronically or in paper form in Room
146, 1709 New York Avenue NW,
Washington, DC 20006, between 9:00
a.m. and 5:00 p.m. on weekdays. For
security reasons, the Board requires that
visitors make an appointment to inspect
comments. You may do so by calling
(202) 452–3684.
FDIC: You may submit comments,
identified by RIN 3064–AF45, by any of
the following methods:
• Agency website: https://
www.FDIC.gov/regulations/laws/
Federal/. Follow the instructions for
submitting comments on the Agency
website.
• Email: comments@fdic.gov. Include
the RIN 3064–AF45 in the subject line
of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC 20429.
• Hand Delivery/Courier: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
NW, Building (located on F Street) on
business days between 7:00 a.m. and
5:00 p.m.
Instructions: Comments submitted
must include ‘‘FDIC’’ and ‘‘RIN 3064–
AF45.’’ Comments received will be
posted without change to https://
www.FDIC.gov/regulations/laws/
VerDate Sep<11>2014
20:58 Apr 22, 2020
Jkt 250001
Federal/, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT:
OCC: Margot Schwadron, Director, or
Benjamin Pegg, Risk Expert, Capital and
Regulatory Policy, (202) 649–6370; or
Carl Kaminski, Special Counsel, or
Daniel Perez, Senior Attorney, Chief
Counsel’s Office, (202) 649–5490, for
persons who are deaf or hearing
impaired, TTY, (202) 649–5597, Office
of the Comptroller of the Currency, 400
7th Street SW, Washington, DC 20219.
Board: Constance M. Horsley, Deputy
Associate Director, (202) 452–5239;
Elizabeth MacDonald, Manager, (202)
872–7526; Christopher Appel, Senior
Financial Institution Policy Analyst II,
(202) 973–6862; or Brendan Rowan,
Senior Financial Institution Policy
Analyst I, (202) 475–6685, Division of
Supervision and Regulation; or
Benjamin W. McDonough, Assistant
General Counsel, (202) 452–2036; Mark
Buresh, Senior Counsel, (202) 452–2877;
Andrew Hartlage, Counsel, (202) 452–
6483; or Jonah Kind, Senior Attorney,
(202) 452–2045, Legal Division, Board of
Governors of the Federal Reserve
System, 20th Street and Constitution
Avenue NW, Washington, DC 20551.
Users of Telecommunication Device for
the Deaf (TDD) only, call (202) 263–
4869.
FDIC: Bobby R. Bean, Associate
Director, bbean@fdic.gov; Benedetto
Bosco, Chief, Capital Policy Section,
bbosco@fdic.gov; Noah Cuttler, Senior
Policy Analyst, ncuttler@fdic.gov;
regulatorycapital@fdic.gov; Capital
Markets Branch, Division of Risk
Management Supervision, (202) 898–
6888; or Michael Phillips, Counsel,
mphillips@fdic.gov; Catherine Wood,
Counsel, cawood@fdic.gov; Supervision
and Legislation Branch, Legal Division,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429. For the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (800) 925–4618.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background on the Community Bank
Leverage Ratio Framework
II. Section 4012 of the Coronavirus Aid,
Relief, and Economic Security Act
III. Temporary Changes to the Community
Bank Leverage Ratio Framework
IV. Effective Date of the Statutory Interim
Final Rule
V. Transition Interim Final Rule
VI. Administrative Law Matters
A. Administrative Procedure Act
B. Congressional Review Act
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Riegle Community Development and
Regulatory Improvement Act of 1994
PO 00000
Frm 00003
Fmt 4701
Sfmt 4700
22925
F. Use of Plain Language
G. Unfunded Mandates Act
I. Background on the Community Bank
Leverage Ratio Framework
The community bank leverage ratio
framework provides a simple measure of
capital adequacy for community
banking organizations that meet certain
qualifying criteria. The community bank
leverage ratio framework implements
section 201 of the Economic Growth,
Regulatory Relief, and Consumer
Protection Act (EGRRCPA), which
requires the Office of the Comptroller of
the Currency (OCC), the Board of
Governors of the Federal Reserve
System (Board), and the Federal Deposit
Insurance Corporation (FDIC)
(collectively, the agencies) to establish a
community bank leverage ratio of not
less than 8 percent and not more than
10 percent for qualifying community
banking organizations.1 Under section
201(c) of EGRRCPA, a qualifying
community banking organization that
exceeds the community bank leverage
ratio, as established by the agencies,
shall be considered to have met the
generally applicable risk-based and
leverage capital requirements in the
capital rule (generally applicable rule),
any other applicable capital or leverage
requirements, and, if applicable, the
‘‘well capitalized’’ capital ratio
requirements for purposes of section 38
of the Federal Deposit Insurance Act.
Section 201(b) of EGRRCPA also
requires the agencies to establish
procedures for the treatment of a
qualifying community banking
organization whose leverage ratio falls
below the community bank leverage
ratio requirement as established by the
agencies.
In 2019, the agencies issued a final
rule establishing the community bank
leverage ratio framework, which became
effective January 1, 2020 (2019 final
rule).2 Under the 2019 final rule, the
agencies established a community bank
leverage ratio of 9 percent using the
capital rule’s existing leverage ratio. A
1 Public Law 115–174, 132 Stat. 1296, 1306–07
(2018) (codified at 12 U.S.C. 5371 note). The
authorizing statues use the term ‘‘qualifying
community bank,’’ whereas the regulation
implementing the statues uses the term ‘‘qualifying
community banking organization.’’ The terms
generally have the same meaning. Section 201(a)(3)
of EGRRCPA provides that a qualifying community
banking organization is a depository institution or
depository institution holding company with total
consolidated assets of less than $10 billion that
satisfies such other factors, based on the banking
organization’s risk profile, that the agencies
determine are appropriate. This determination shall
be based on consideration of off-balance sheet
exposures, trading assets and liabilities, total
notional derivatives exposures, and such other
factors that the agencies determine appropriate.
2 84 FR 61776 (November 13, 2019).
E:\FR\FM\23APR3.SGM
23APR3
22926
Federal Register / Vol. 85, No. 79 / Thursday, April 23, 2020 / Rules and Regulations
qualifying community banking
organization that maintains a leverage
ratio of greater than 9 percent and elects
to use the community bank leverage
ratio framework will be considered to
have satisfied the generally applicable
rule and any other applicable capital or
leverage requirements, and, if
applicable, will be considered to be well
capitalized.3
Under the 2019 final rule, a qualifying
community banking organization is any
depository institution or depository
institution holding company that has
less than $10 billion in total
consolidated assets, off-balance sheet
exposures (excluding derivatives other
than sold credit derivatives and
unconditionally cancelable
commitments) of 25 percent or less of
total consolidated assets, and trading
assets and liabilities of 5 percent or less
of total consolidated assets. The banking
organization also cannot be an advanced
approaches banking organization.4
In addition, the 2019 final rule
established a two-quarter grace period
during which a qualifying community
banking organization that temporarily
fails to meet any of the qualifying
criteria, including the greater-than-9percent leverage ratio requirement,
generally would still be considered well
capitalized so long as the banking
organization maintains a leverage ratio
of greater than 8 percent. A banking
organization that either fails to meet all
the qualifying criteria within the grace
period or fails to maintain a leverage
ratio of greater than 8 percent is
required to comply with the generally
applicable rule and file the appropriate
regulatory reports.
II. Section 4012 of the Coronavirus Aid,
Relief, and Economic Security Act
lotter on DSKBCFDHB2PROD with RULES3
On March 27, 2020, the Coronavirus
Aid, Relief, and Economic Security Act
3 Under existing PCA requirements applicable to
insured depository institutions, to be considered
‘‘well capitalized’’ a banking organization must
demonstrate that it is not subject to any written
agreement, order, capital directive, or as applicable,
prompt corrective action directive, to meet and
maintain a specific capital level for any capital
measure. See 12 CFR 6.4(b)(1)(iv) (OCC); 12 CFR
208.43(b)(1)(v) (Board); 12 CFR 324.403(b)(1)(v)
(FDIC). The same legal requirements continue to
apply under the community bank leverage ratio
framework.
4 A banking organization is an advanced
approaches banking organization if it (1) is a global
systemically important bank holding company, (2)
is a Category II banking organization, (3) has elected
to be an advanced approached banking
organization, (4) is a subsidiary of a company that
is an advanced approaches banking organization, or
(5) has a subsidiary depository institution that is an
advanced approaches banking organization. See 12
CFR 3.100 (OCC); 12 CFR 217.100 (Board); 12 CFR
324.100 (FDIC).
VerDate Sep<11>2014
20:58 Apr 22, 2020
Jkt 250001
(CARES Act) was signed into law.5 The
CARES Act directs the agencies to make
temporary changes to the community
bank leverage ratio framework.
Specifically, section 4012 of the CARES
Act directs the agencies to issue an
interim final rule that provides that, for
purposes of section 201 of EGRRCPA,
the community bank leverage ratio shall
be 8 percent and that a qualifying
community banking organization whose
leverage ratio falls below the
community bank leverage ratio
requirement established under the
CARES Act shall have a reasonable
grace period to satisfy that requirement.
A qualifying community banking
organization to which the grace period
applies may continue to be treated as a
qualifying community banking
organization and shall be presumed to
satisfy the capital and leverage
requirements described in section 201(c)
of EGRRCPA.
Under section 4012 of the CARES Act,
this interim final rule (statutory interim
final rule) is effective during the period
beginning on the date on which the
agencies issue the statutory interim final
rule and ending on the sooner of the
termination date of the national
emergency concerning the coronavirus
disease (COVID–19) outbreak declared
by the President on March 13, 2020,
under the National Emergencies Act, or
December 31, 2020 (termination date).
III. Temporary Changes to the
Community Bank Leverage Ratio
Framework
In accordance with section 4012 of
the CARES Act, the statutory interim
final rule makes certain temporary
changes to the community bank leverage
ratio framework. Effective as of April 23,
2020, the community bank leverage
ratio will be 8 percent until the
termination date of the statutory interim
final rule. A banking organization with
a leverage ratio of 8 percent or greater
(and that meets the other qualifying
criteria) may elect to use the community
bank leverage ratio framework during
the time the interim final rule is in
effect.
In addition, under the statutory
interim final rule, a community banking
organization that temporarily fails to
meet any of the qualifying criteria,
including the 8-percent community
bank leverage ratio requirement,
generally will still be considered well
capitalized so long as the banking
organization maintains a leverage ratio
equal to 7 percent or greater. A banking
organization that fails to meet the
5 Coronavirus Aid, Relief, and Economic Security
Act, Public Law 116–136, 134 Stat. 281.
PO 00000
Frm 00004
Fmt 4701
Sfmt 4700
qualifying criteria after the end of the
grace period or reports a leverage ratio
of less than 7 percent will be required
to comply with the generally applicable
rule and file the appropriate regulatory
reports.6 The statutory interim final rule
does not make any changes to the other
qualifying criteria in the community
bank leverage ratio framework.
The agencies adopted, in the 2019
final rule, a two-quarter grace period
with a leverage ratio requirement that is
1 percentage point below the
community bank leverage ratio on the
basis that these requirements
appropriately mitigate potential
volatility in capital and associated
regulatory reporting requirements based
on temporary changes in a banking
organization’s risk profile from quarter
to quarter, while capturing more
permanent changes in a banking
organization’s risk profile. The agencies
continue to believe that this approach is
appropriate and provides a qualifying
community banking organization whose
leverage ratio falls below the 8-percent
community bank leverage ratio
requirement a reasonable amount of
time to satisfy that requirement,
consistent with section 4012 of the
CARES Act.
IV. Effective Date of the Statutory
Interim Final Rule
The statutory interim final rule is
effective as of April 23, 2020. Banking
organizations may utilize the
requirements under the statutory
interim final rule for purposes of filing
their Call Report or Form FR Y–9C, as
applicable, for the second quarter of
2020 (i.e., as of June 30, 2020).
V. Transition Interim Final Rule
The agencies are issuing concurrently
an interim final rule that provides a
transition from the temporary 8-percent
community bank leverage ratio
requirement, as mandated under section
4012 of the CARES Act, to the 9-percent
community bank leverage ratio
requirement, as established by the
agencies in the 2019 final rule
(transition interim final rule). When the
requirements in the transition interim
final rule become applicable, the
community bank leverage ratio will be
8 percent in the second quarter through
fourth quarter of calendar year 2020, 8.5
percent in calendar year 2021, and 9
percent thereafter. Section 201 of
EGRRCPA requires a qualifying
6 In addition, consistent with the 2019 final rule,
a banking organization that ceases to satisfy the
qualifying criteria as a result of a business
combination also will receive no grace period and
will be required to comply with the generally
applicable rule.
E:\FR\FM\23APR3.SGM
23APR3
Federal Register / Vol. 85, No. 79 / Thursday, April 23, 2020 / Rules and Regulations
community banking organization to
exceed the community bank leverage
ratio established by the agencies in
order to be considered to have met the
generally applicable rule, any other
applicable capital or leverage
requirements, and, if applicable, the
‘‘well capitalized’’ capital ratio
requirements, whereas section 4012 of
the CARES Act requires that a
qualifying community banking
organization meet or exceed an 8
percent community bank leverage ratio
to be considered the same. The agencies
are issuing the transition interim final
rule to provide community banking
organizations with sufficient time and
clarity to meet the requirements under
the community bank leverage ratio
framework while they also focus on
supporting lending to creditworthy
households and businesses given the
recent strains on the U.S. economy
caused by the COVID–19 emergency.
Question 1: The agencies invite
comment on the grace period under the
statutory interim final rule. Specifically,
what are the advantages and
disadvantages of the period of time the
statutory interim final rule provides for
a banking organization that no longer
meets the qualifying criteria to
transition to the generally applicable
rule? What other alternatives should the
agencies consider providing as a
reasonable grace period, as required
under section 4012 of the CARES Act,
for a banking organization that no
longer meets the definition of a
qualifying community banking
organization and why?
VI. Administrative Law Matters
lotter on DSKBCFDHB2PROD with RULES3
A. Administrative Procedure Act
The agencies are issuing the statutory
interim final rule without prior notice
and the opportunity for public comment
and the 30-day delayed effective date
ordinarily prescribed by the
Administrative Procedure Act (APA).7
Pursuant to section 553(b) of the APA,
general notice and the opportunity for
public comment are not required with
respect to a rulemaking when an
‘‘agency for good cause finds (and
incorporates the finding and a brief
statement of reasons therefor in the
rules issued) that notice and public
procedure thereon are impracticable,
unnecessary, or contrary to the public
interest.’’ 8
The agencies believe that the public
interest is best served by implementing
the statutory interim final rule
immediately upon publication in the
Federal Register. As discussed above,
section 4012 of the CARES Act directs
the agencies to issue an interim final
rule that provides that, for purposes of
section 201 of EGRRCPA, the
community bank leverage ratio shall be
8 percent and that a qualifying
community banking organization whose
leverage ratio falls below the
community bank leverage ratio
requirement established under the
CARES Act shall have a reasonable
grace period to satisfy that requirement.
A qualifying community banking
organization to which the grace period
applies may continue to be treated as a
qualifying community banking
organization and shall be presumed to
satisfy the capital and leverage
requirements described in section 201(c)
of EGRRCPA.
The APA also requires a 30-day
delayed effective date, except for (1)
substantive rules, which grant or
recognize an exemption or relieve a
restriction; (2) interpretative rules and
statements of policy; or (3) as otherwise
provided by the agency for good cause.9
Because the rules relieve a restriction,
the statutory interim final rule is exempt
from the APA’s delayed effective date
requirement.10 Additionally, the
agencies find good cause to publish the
statutory interim final rule with an
immediate effective date for the same
reasons set forth above under the
discussion of section 553(b)(B) of the
APA.
While the agencies believe that there
is good cause to issue the statutory
interim final rule without advance
notice and comment and with an
immediate effective date as of the date
of Federal Register publication, the
agencies are interested in the views of
the public and request comment on all
aspects of the statutory interim final
rule.
B. Congressional Review Act
For purposes of Congressional Review
Act, the Office of Management and
Budget (OMB) makes a determination as
to whether a final rule constitutes a
‘‘major’’ rule.11 If a rule is deemed a
‘‘major rule’’ by OMB, the Congressional
Review Act generally provides that the
rule may not take effect until at least 60
days following its publication.12
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
95
U.S.C. 553(d).
U.S.C. 553(d)(1).
11 5 U.S.C. 801 et seq.
12 5 U.S.C. 801(a)(3).
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.13
For the same reasons set forth above,
the agencies are adopting the statutory
interim final rule without the delayed
effective date generally prescribed
under the Congressional Review Act.
The delayed effective date required by
the Congressional Review Act does not
apply to any rule for which an agency
for good cause finds (and incorporates
the finding and a brief statement of
reasons therefor in the rule issued) that
notice and public procedure thereon are
impracticable, unnecessary, or contrary
to the public interest.14 In light of
section 4012 of the CARES Act, the
agencies believe that delaying the
effective date of the statutory interim
final rule would be contrary to the
public interest.
As required by the Congressional
Review Act, the agencies will submit
the statutory interim final rule and other
appropriate reports to Congress and the
Government Accountability Office for
review.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3521) (PRA) states that
no agency may conduct or sponsor, nor
is the respondent required to respond
to, an information collection unless it
displays a currently valid OMB control
number. The statutory interim final rule
affects the agencies’ current information
collections for the Call Reports (OCC
OMB Control No. 1557–0081; Board
OMB Control No. 7100–0036; and FDIC
OMB Control No. 3064–0052). The
Board has reviewed the statutory
interim final rule pursuant to authority
delegated by the OMB.
While the statutory interim final rule
contains no information collection
requirements, the agencies have
determined that there are changes that
should be made to the Call Reports as
a result of this rulemaking. Although
there may be a substantive change
resulting from changes to the
community bank leverage ratio
framework for purposes of the Call
Reports, the change should be minimal
10 5
75
85
U.S.C. 553.
U.S.C. 553(b)(B).
VerDate Sep<11>2014
20:58 Apr 22, 2020
Jkt 250001
PO 00000
Frm 00005
Fmt 4701
13 5
14 5
Sfmt 4700
22927
E:\FR\FM\23APR3.SGM
U.S.C. 804(2).
U.S.C. 808.
23APR3
22928
Federal Register / Vol. 85, No. 79 / Thursday, April 23, 2020 / Rules and Regulations
and result in a zero net change in hourly
burden under the agencies’ information
collections. Submissions will, however,
be made by the agencies to OMB. The
changes to the Call Reports and their
related instructions will be addressed in
a separate Federal Register notice.
In addition, there are changes that the
Board should make to the Financial
Statements for Holding Companies (FR
Y–9 reports; OMB No. 7100–0128) to
accurately reflect the changes of the
statutory interim final rule. The Board
will separately address these changes to
the FR Y–9 reports and their
instructions in the transition interim
final rule.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act
(RFA) 15 requires an agency to consider
whether the rules it proposes will have
a significant economic impact on a
substantial number of small entities.16
The RFA applies only to rules for which
an agency publishes a general notice of
proposed rulemaking pursuant to 5
U.S.C. 553(b). As discussed previously,
consistent with section 553(b)(B) of the
APA, the agencies have determined for
good cause that general notice and
opportunity for public comment is
impracticable and contrary to the
public’s interest, and therefore the
agencies are not issuing a notice of
proposed rulemaking. Accordingly, the
agencies have concluded that the RFA’s
requirements relating to initial and final
regulatory flexibility analysis do not
apply. Nevertheless, the agencies are
interested in receiving feedback on ways
that they could reduce any potential
burden of the statutory interim final rule
on small entities.
lotter on DSKBCFDHB2PROD with RULES3
E. Riegle Community Development and
Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the
Riegle Community Development and
Regulatory Improvement Act
(RCDRIA),17 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 the principle of safety
and soundness and the public interest,
any administrative burdens that such
regulations would place on depository
15 5
U.S.C. 601 et seq.
regulations issued by the Small Business
Administration, a small entity includes a depository
institution, bank holding company, or savings and
loan holding company with total assets of $600
million or less and trust companies with total assets
of $41.5 million or less. See 13 CFR 121.201.
17 12 U.S.C. 4802(a).
16 Under
VerDate Sep<11>2014
20:58 Apr 22, 2020
Jkt 250001
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, disclosures, 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
on which the regulations are published
in final form, with certain exceptions,
including for good cause.18 For the
reasons described above, the agencies
find good cause exists under section 302
of RCDRIA to publish the statutory
interim final rule with an immediate
effective date.
F. Use of Plain Language
Section 722 of the Gramm-LeachBliley Act 19 requires the Federal
banking agencies to use ‘‘plain
language’’ in all proposed and final
rules published after January 1, 2000. In
light of this requirement, the agencies
have sought to present the statutory
interim final rule in a simple and
straightforward manner. The agencies
invite comments on whether there are
additional steps they could take to make
the rule easier to understand. For
example:
• Have we organized the material to
suit your needs? If not, how could this
material be better organized?
• Are the requirements in the
regulation clearly stated? If not, how
could the regulation be more clearly
stated?
• Does the regulation contain
language or jargon that is not clear? If
so, which language requires
clarification?
• Would a different format (grouping
and order of sections, use of headings,
paragraphing) make the regulation
easier to understand? If so, what
changes to the format would make the
regulation easier to understand?
• What else could we do to make the
regulation easier to understand?
G. Unfunded Mandates Act
As a general matter, the Unfunded
Mandates Act of 1995 (UMRA), 2 U.S.C.
1531 et seq., requires the preparation of
a budgetary impact statement before
promulgating a rule that includes a
Federal mandate that may result in the
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any one year. However, the UMRA
does not apply to final rules for which
18 12
19 12
PO 00000
U.S.C. 4802.
U.S.C. 4809.
Frm 00006
Fmt 4701
Sfmt 4700
a general notice of proposed rulemaking
was not published. See 2 U.S.C. 1532(a).
Therefore, because the OCC has found
good cause to dispense with notice and
comment for this statutory interim final
rule, the OCC concludes that the
requirements of UMRA do not apply to
this statutory interim final rule.
List of Subjects in 12 CFR
12 CFR Part 3
Administrative practice and
procedure, Capital, Federal savings
associations, National banks, Risk.
12 CFR Part 217
Administrative practice and
procedure, Banks, Banking, Capital,
Federal Reserve System, Holding
companies, Reporting and
recordkeeping requirements, Risk,
Securities.
12 CFR Part 324
Administrative practice and
procedure, Banks, banking, Reporting
and recordkeeping requirements,
Savings associations, State non-member
banks.
Office of the Comptroller of the
Currency
12 CFR Chapter I
Authority and Issuance
For the reasons set forth in the
preamble, the OCC amends chapter I of
Title 12 of the Code of Federal
Regulations as follows:
PART 3—CAPITAL ADEQUACY
STANDARDS
1. The authority citation for part 3 is
revised to read as follows:
■
Authority: 12 U.S.C. 93a, 161, 1462,
1462a, 1463, 1464, 1818, 1828(n), 1828 note,
1831n note, 1835, 3907, 3909, 5412(b)(2)(B),
and Pub. L. 116–136, 134 Stat. 281.
■
2. Add § 3.303 to read as follows:
§ 3.303 Temporary changes to the
community bank leverage ratio framework.
(a)(1) A national bank or Federal
savings association that is not an
advanced approaches national bank or
Federal savings association and that
meets all the criteria to be a qualifying
community banking organization under
§ 3.12(a)(2) but for § 3.12(a)(2)(i) is a
qualifying community banking
organization if it has a leverage ratio
equal to or greater than 8 percent.
(2) Notwithstanding § 3.12(a)(1), a
qualifying community banking
organization that has made an election
to use the community bank leverage
ratio framework under § 3.12(a)(3) shall
be considered to have met the minimum
E:\FR\FM\23APR3.SGM
23APR3
Federal Register / Vol. 85, No. 79 / Thursday, April 23, 2020 / Rules and Regulations
capital requirements under § 3.10, the
capital ratio requirements for the well
capitalized capital category under
§ 6.4(b)(1) of this chapter, and any other
capital or leverage requirements to
which the qualifying community
banking organization is subject, if it has
a leverage ratio equal to or greater than
8 percent.
(b) Notwithstanding § 3.12(c)(6) and
subject to § 3.12(c)(5), a qualifying
community banking organization that
has a leverage ratio of 7 percent or
greater has the grace period described in
§ 3.12(c)(1) through (4). A national bank
or Federal savings association that has
a leverage ratio of less than 7 percent
does not have a grace period and must
comply with the minimum capital
requirements under § 3.10(a)(1) and
must report the required capital
measures under § 3.10(a)(1) for the
quarter in which it reports a leverage
ratio of less than 7 percent.
(c) Pursuant to section 4012 of the
Coronavirus Aid, Relief, and Economic
Security Act, the requirements provided
under paragraphs (a) and (b) of this
section are effective during the period
beginning on April 23, 2020 and ending
on the sooner of:
(1) The termination date of the
national emergency concerning the
novel coronavirus disease outbreak
declared by the President on March 13,
2020, under the National Emergencies
Act (50 U.S.C. 1601 et seq.); or
(2) December 31, 2020.
*
*
*
*
*
Board of Governors of the Federal
Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons stated in the joint
preamble, the Board of Governors of the
Federal Reserve System amends 12 CFR
chapter II as follows:
PART 217—CAPITAL ADEQUACY OF
BANK HOLDING COMPANIES,
SAVINGS AND LOAN HOLDING
COMPANIES, AND STATE MEMBER
BANKS (REGULATION Q)
3. The authority citation for part 217
is revised to read as follows:
lotter on DSKBCFDHB2PROD with RULES3
■
Authority: 12 U.S.C. 248(a), 321–338a,
481–486, 1462a, 1467a, 1818, 1828, 1831n,
1831o, 1831p-1, 1831w, 1835, 1844(b), 1851,
3904, 3906–3909, 4808, 5365, 5368, 5371,
5371 note, and sec. 4012, Pub. L. 116–136,
134 Stat. 281.
Subpart G—Transition Provisions
■
4. Add § 217.304 to read as follows:
VerDate Sep<11>2014
20:58 Apr 22, 2020
Jkt 250001
§ 217.304 Temporary changes to the
community bank leverage ratio framework.
(a)(1) A Board-regulated institution
that is not an advanced approaches
Board-regulated institution and that
meets all the criteria to be a qualifying
community banking organization under
§ 217.12(a)(2) but for § 217.12(a)(2)(i) is
a qualifying community banking
organization if it has a leverage ratio
equal to or greater than 8 percent.
(2) Notwithstanding § 217.12(a)(1), a
qualifying community banking
organization that has made an election
to use the community bank leverage
ratio framework under § 217.12(a)(3)
shall be considered to have met the
minimum capital requirements under
§ 217.10, the capital ratio requirements
for the well capitalized capital category
under § 208.43(b)(1) of this chapter, if
applicable, and any other capital or
leverage requirements to which the
qualifying community banking
organization is subject, if it has a
leverage ratio equal to or greater than 8
percent.
(b) Notwithstanding § 217.12(c)(6) and
subject to § 217.12(c)(5), a Boardregulated institution that has a leverage
ratio of 7 percent or greater has the grace
period described in § 217.12(c)(1)
through (4). A Board-regulated
institution that has a leverage ratio of
less than 7 percent does not have a grace
period and must comply with the
minimum capital requirements under
§ 217.10(a)(1) and must report the
required capital measures under
§ 217.10(a)(1) for the quarter in which it
reports a leverage ratio of less than 7
percent.
(c) Pursuant to section 4012 of the
Coronavirus Aid, Relief, and Economic
Security Act, the requirements provided
under paragraphs (a) and (b) of this
section are effective during the period
beginning on April 23, 2020 and ending
on the sooner of:
(1) The termination date of the
national emergency concerning the
novel coronavirus disease outbreak
declared by the President on March 13,
2020, under the National Emergencies
Act (50 U.S.C. 1601 et seq.); or
(2) December 31, 2020.
Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons stated in the
preamble, the Federal Deposit Insurance
Corporation amends chapter III of Title
12, Code of Federal Regulations as
follows:
PO 00000
Frm 00007
Fmt 4701
Sfmt 4700
22929
PART 324—CAPITAL ADEQUACY OF
FDIC–SUPERVISED INSTITUTIONS
5. The authority citation for part 324
is revised to read as follows:
■
Authority: 12 U.S.C. 1815(a), 1815(b),
1816, 1818(a), 1818(b), 1818(c), 1818(t),
1819(Tenth), 1828(c), 1828(d), 1828(i),
1828(n), 1828(o), 1831o, 1835, 3907, 3909,
4808; 5371; 5412; Pub. L. 102–233, 105 Stat.
1761, 1789, 1790 (12 U.S.C. 1831n note); Pub.
L. 102–242, 105 Stat. 2236, 2355, as amended
by Pub. L. 103–325, 108 Stat. 2160, 2233 (12
U.S.C. 1828 note); Pub. L. 102–242, 105 Stat.
2236, 2386, as amended by Pub. L. 102–550,
106 Stat. 3672, 4089 (12 U.S.C. 1828 note);
Pub. L. 111–203, 124 Stat. 1376, 1887 (15
U.S.C. 78o–7 note); Pub. L. 115–174; Pub. L.
116–136, 134 Stat. 281.
■
6. Add § 324.303 to read as follows:
§ 324.303 Temporary changes to the
community bank leverage ratio framework.
(a)(1) An FDIC-supervised institution
that is not an advanced approaches
FDIC-supervised institution and that
meets all the criteria to be a qualifying
community banking organization under
§ 324.12(a)(2) but for § 324.12(a)(2)(i) is
a qualifying community banking
organization if it has a leverage ratio
equal to or greater than 8 percent.
(2) Notwithstanding § 324.12(a)(1), a
qualifying community banking
organization that has made an election
to use the community bank leverage
ratio framework under § 324.12(a)(3)
shall be considered to have met the
minimum capital requirements under
§ 324.10, the capital ratio requirements
for the well capitalized capital category
under § 324.403(b)(1) of this part, and
any other capital or leverage
requirements to which the qualifying
community banking organization is
subject, if it has a leverage ratio equal
to or greater than 8 percent.
(b) Notwithstanding § 324.12(c)(6) and
subject to § 324.12(c)(5), a qualifying
community banking organization that
has a leverage ratio of 7 percent or
greater has the grace period described in
§ 324.12(c)(1) through (4). An FDICsupervised institution that has a
leverage ratio of less than 7 percent does
not have a grace period and must
comply with the minimum capital
requirements under § 324.10(a)(1) and
must report the required capital
measures under § 324.10(a)(1) for the
quarter in which it reports a leverage
ratio of less than 7 percent.
(c) Pursuant to section 4012 of the
Coronavirus Aid, Relief, and Economic
Security Act, the requirements provided
under paragraphs (a) and (b) of this
section are effective during the period
beginning on April 23, 2020 and ending
on the sooner of:
E:\FR\FM\23APR3.SGM
23APR3
22930
Federal Register / Vol. 85, No. 79 / Thursday, April 23, 2020 / Rules and Regulations
(1) The termination date of the
national emergency concerning the
novel coronavirus disease outbreak
declared by the President on March 13,
2020, under the National Emergencies
Act (50 U.S.C. 1601 et seq.); or
(2) December 31, 2020.
Brian P. Brooks,
First Deputy Comptroller of the Currency
By order of the Board of Governors of the
Federal Reserve System.
Ann Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on or about April
3, 2020.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2020–07449 Filed 4–22–20; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P
DEPARTMENT OF TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket ID OCC–2020–0017]
RIN 1557–AE89
FEDERAL RESERVE SYSTEM
12 CFR Part 217
[Regulation Q; Docket No. R–1711]
RIN 7100–AF85
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 324
RIN 3064–AF47
Regulatory Capital Rule: Transition for
the Community Bank Leverage Ratio
Framework
Office of the Comptroller of the
Currency, Treasury; the Board of
Governors of the Federal Reserve
System; and the Federal Deposit
Insurance Corporation.
ACTION: Interim final rule; request for
comment.
AGENCY:
This interim final rule
provides a graduated transition to a
community bank leverage ratio
requirement of 9 percent from the
temporary 8-percent community bank
leverage ratio requirement (transition
interim final rule). When the
requirements in the transition interim
final rule become applicable, the
community bank leverage ratio will be
lotter on DSKBCFDHB2PROD with RULES3
SUMMARY:
VerDate Sep<11>2014
20:58 Apr 22, 2020
Jkt 250001
8 percent beginning in the second
quarter of calendar year 2020, 8.5
percent through calendar year 2021, and
9 percent thereafter. The transition
interim final rule also maintains a twoquarter grace period for a qualifying
community banking organization whose
leverage ratio falls no more than 1
percentage point below the applicable
community bank leverage ratio
requirement. The Office of the
Comptroller of the Currency, the Board
of Governors of the Federal Reserve
System, and the Federal Deposit
Insurance Corporation (together, the
agencies) issued concurrently an interim
final rule that established an 8-percent
community bank leverage ratio, as
mandated under the Coronavirus Aid,
Relief, and Economic Security Act. The
agencies are issuing the transition
interim final rule to provide community
banking organizations with sufficient
time and clarity to meet the 9 percent
leverage ratio requirement under the
community bank leverage ratio
framework while they also focus on
supporting lending to creditworthy
households and businesses given the
recent strains on the U.S. economy
caused by the coronavirus disease
emergency.
DATES: The interim final rule is effective
April 23, 2020. Comments on the
interim final rule must be received no
later than June 8, 2020.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to all of the agencies.
Commenters are encouraged to use the
title ‘‘Regulatory Capital Rule:
Transition for the Community Bank
Leverage Ratio Framework’’ to facilitate
the organization and distribution of
comments among the agencies.
Commenters are also encouraged to
identify the number of the specific
question for comment to which they are
responding. Comments should be
directed to:
OCC: You may submit comments to
the OCC by any of the methods set forth
below. Commenters are encouraged to
submit comments through the Federal
eRulemaking Portal or email, if possible.
Please use the title ‘‘Regulatory Capital
Rule: Transition for the Community
Bank Leverage Ratio Framework’’ to
facilitate the organization and
distribution of the comments. You may
submit comments by any of the
following methods:
Federal eRulemaking Portal—
‘‘Regulations.gov Classic or
Regulations.gov Beta’’:
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0017’’ in the Search Box and
PO 00000
Frm 00008
Fmt 4701
Sfmt 4700
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments. For
help with submitting effective
comments please click on ‘‘View
Commenter’s Checklist.’’ Click on the
‘‘Help’’ tab on the Regulations.gov home
page to get information on using
Regulations.gov, including instructions
for submitting public comments.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0017’’ in
the Search Box and click ‘‘Search.’’
Public comments can be submitted via
the ‘‘Comment’’ box below the
displayed document information or by
clicking on the document title and then
clicking the ‘‘Comment’’ box on the topleft side of the screen. For help with
submitting effective comments please
click on ‘‘Commenter’s Checklist.’’ For
assistance with the Regulations.gov Beta
site, please call (877) 378–5457 (toll
free) or (703) 454–9859 Monday–Friday,
9 a.m.–5 p.m. ET or email regulations@
erulemakinghelpdesk.com.
• Email: regs.comments@
occ.treas.gov.
• Mail: Chief Counsel’s Office, Office
of the Comptroller of the Currency, 400
7th Street SW, Suite 3E–218,
Washington, DC 20219.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2020–0017’’ in your comment.
In general, the OCC will enter all
comments received into the docket and
publish the comments on the
Regulations.gov website without
change, including any business or
personal information that you provide
such as name and address information,
email addresses, or phone numbers.
Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
rulemaking action by any of the
following methods:
• Viewing Comments Electronically—
Regulations.gov Classic or
Regulations.gov Beta:
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0017’’ in the Search box and
click ‘‘Search.’’ Click on ‘‘Open Docket
Folder’’ on the right side of the screen.
Comments and supporting materials can
be viewed and filtered by clicking on
‘‘View all documents and comments in
this docket’’ and then using the filtering
E:\FR\FM\23APR3.SGM
23APR3
]]>Agencies
[Federal Register Volume 85, Number 79 (Thursday, April 23, 2020)]
[Rules and Regulations]
[Pages 22924-22930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07449]
[[Page 22923]]
Vol. 85
Thursday,
No. 79
April 23, 2020
Part IV
Department of the Treasury
-----------------------------------------------------------------------
Office of the Comptroller of the Currency
-----------------------------------------------------------------------
12 CFR Part 3
Federal Reserve System
-----------------------------------------------------------------------
12 CFR Parts 217 and 324
Federal Deposit Insurance Corporation
-----------------------------------------------------------------------
12 CFR Part 324
Regulatory Capital Rule: Temporary Changes to the Community Bank
Leverage Ratio Framework; Rules
Federal Register / Vol. 85, No. 79 / Thursday, April 23, 2020 / Rules
and Regulations
[[Page 22924]]
-----------------------------------------------------------------------
DEPARTMENT OF TREASURY
Office of the Comptroller of the Currency
12 CFR Part 3
[Docket ID OCC-2020-0016]
RIN 1557-AE88
FEDERAL RESERVE SYSTEM
12 CFR Part 217, 12 CFR Part 324
[Regulation Q; Docket No. R-1710]
RIN 7100-AF84, RIN 3064-AF45
FEDERAL DEPOSIT INSURANCE CORPORATION
Regulatory Capital Rule: Temporary Changes to the Community Bank
Leverage Ratio Framework
AGENCY: Office of the Comptroller of the Currency, Treasury; the Board
of Governors of the Federal Reserve System; and the Federal Deposit
Insurance Corporation.
ACTION: Interim final rule; request for comment.
-----------------------------------------------------------------------
SUMMARY: This interim final rule makes temporary changes to the
community bank leverage ratio framework, pursuant to section 4012 of
the Coronavirus Aid, Relief, and Economic Security Act (statutory
interim final rule). As of the second quarter 2020, a banking
organization with a leverage ratio of 8 percent or greater (and that
meets other qualifying criteria) may elect to use the community bank
leverage ratio framework. The statutory interim final rule also
establishes a two-quarter grace period for a qualifying community
banking organization whose leverage ratio falls below the 8-percent
community bank leverage ratio requirement, so long as the banking
organization maintains a leverage ratio of 7 percent or greater. The
temporary changes to the community bank leverage ratio framework
implemented by this statutory interim final rule will cease to be
effective as of the earlier of the termination date of the national
emergency concerning the coronavirus disease declared by the President
on March 13, 2020, under the National Emergencies Act, or December 31,
2020. To provide clarity to banking organizations, the Office of the
Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, and the Federal Deposit Insurance Corporation issued
concurrently an interim final rule that provides a transition from the
temporary 8-percent community bank leverage ratio requirement to a 9-
percent community bank leverage ratio requirement.
DATES: The interim final rule is effective April 23, 2020. Comments on
the interim final rule must be received no later than June 8, 2020.
ADDRESSES: Interested parties are encouraged to submit written comments
jointly to all of the agencies. Commenters are encouraged to use the
title ``Regulatory Capital Rule: Temporary Changes to the Community
Bank Leverage Ratio Framework'' to facilitate the organization and
distribution of comments among the agencies. Commenters are also
encouraged to identify the number of the specific question for comment
to which they are responding. Comments should be directed to:
OCC: You may submit comments to the OCC by any of the methods set
forth below. Commenters are encouraged to submit comments through the
Federal eRulemaking Portal or email, if possible. Please use the title
``Regulatory Capital Rule: Temporary Changes to the Community Bank
Leverage Ratio Framework'' to facilitate the organization and
distribution of the comments. You may submit comments by any of the
following methods:
Federal eRulemaking Portal--``Regulations.gov Classic or
Regulations.gov Beta'':
Regulations.gov Classic: Go to https://www.regulations.gov/. Enter
``Docket ID OCC-2020-0016'' in the Search Box and click ``Search.''
Click on ``Comment Now'' to submit public comments. For help with
submitting effective comments please click on ``View Commenter's
Checklist.'' Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
submitting public comments.
Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
``Visit New Regulations.gov Site'' from the Regulations.gov Classic
homepage. Enter ``Docket ID OCC-2020-0016'' in the Search Box and click
``Search.'' Public comments can be submitted via the ``Comment'' box
below the displayed document information or by clicking on the document
title and then clicking the ``Comment'' box on the top-left side of the
screen. For help with submitting effective comments please click on
``Commenter's Checklist.'' For assistance with the Regulations.gov Beta
site, please call (877) 378-5457 (toll free) or (703) 454-9859 Monday-
Friday, 9 a.m.-5 p.m. ET or email [email protected].
Email: [email protected].
Mail: Chief Counsel's Office, Office of the Comptroller of
the Currency, 400 7th Street SW, Suite 3E-218, Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2020-0016'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the Regulations.gov website without change, including any business or
personal information that you provide such as name and address
information, email addresses, or phone numbers. Comments received,
including attachments and other supporting materials, are part of the
public record and subject to public disclosure. Do not include any
information in your comment or supporting materials that you consider
confidential or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this rulemaking action by any of the following methods:
Viewing Comments Electronically--Regulations.gov Classic
or Regulations.gov Beta:
Regulations.gov Classic: Go to https://www.regulations.gov/. Enter
``Docket ID OCC-2020-0016'' in the Search box and click ``Search.''
Click on ``Open Docket Folder'' on the right side of the screen.
Comments and supporting materials can be viewed and filtered by
clicking on ``View all documents and comments in this docket'' and then
using the filtering tools on the left side of the screen. Click on the
``Help'' tab on the Regulations.gov home page to get information on
using Regulations.gov. The docket may be viewed after the close of the
comment period in the same manner as during the comment period.
Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
``Visit New Regulations.gov Site'' from the Regulations.gov Classic
homepage. Enter ``Docket ID OCC-2020-0016'' in the Search Box and click
``Search.'' Click on the ``Comments'' tab. Comments can be viewed and
filtered by clicking on the ``Sort By'' drop-down on the right side of
the screen or the ``Refine Results'' options on the left side of the
screen. Supporting materials can be viewed by clicking on the
``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down
on the right side of the screen or the ``Refine Results'' options on
the left side of the screen. For assistance with the Regulations.gov
Beta site, please call (877) 378-5457 (toll free) or (703) 454-9859
Monday-Friday, 9 a.m.-5 p.m. ET
[[Page 22925]]
or email [email protected].
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
Board: You may submit comments, identified by Docket No. R-1710 and
RIN 7100-AF84, by any of the following methods:
1. Agency website: https://www.federalreserve.gov. Follow the
instructions for submitting comments at https://www.federalreserve.gov/apps/foia/proposedregs.aspx.
2. Email: [email protected]. Include docket and RIN
numbers in the subject line of the message.
3. FAX: (202) 452-3819 or (202) 452-3102.
4. Mail: Ann E. Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments will be made available on the Board's website
at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons or to remove sensitive
personally identifiable information at the commenter's request. Public
comments may also be viewed electronically or in paper form in Room
146, 1709 New York Avenue NW, Washington, DC 20006, between 9:00 a.m.
and 5:00 p.m. on weekdays. For security reasons, the Board requires
that visitors make an appointment to inspect comments. You may do so by
calling (202) 452-3684.
FDIC: You may submit comments, identified by RIN 3064-AF45, by any
of the following methods:
Agency website: https://www.FDIC.gov/regulations/laws/Federal/. Follow the instructions for submitting comments on the Agency
website.
Email: [email protected]. Include the RIN 3064-AF45 in the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
Hand Delivery/Courier: Comments may be hand-delivered to
the guard station at the rear of the 550 17th Street NW, Building
(located on F Street) on business days between 7:00 a.m. and 5:00 p.m.
Instructions: Comments submitted must include ``FDIC'' and ``RIN
3064-AF45.'' Comments received will be posted without change to https://www.FDIC.gov/regulations/laws/Federal/, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT:
OCC: Margot Schwadron, Director, or Benjamin Pegg, Risk Expert,
Capital and Regulatory Policy, (202) 649-6370; or Carl Kaminski,
Special Counsel, or Daniel Perez, Senior Attorney, Chief Counsel's
Office, (202) 649-5490, for persons who are deaf or hearing impaired,
TTY, (202) 649-5597, Office of the Comptroller of the Currency, 400 7th
Street SW, Washington, DC 20219.
Board: Constance M. Horsley, Deputy Associate Director, (202) 452-
5239; Elizabeth MacDonald, Manager, (202) 872-7526; Christopher Appel,
Senior Financial Institution Policy Analyst II, (202) 973-6862; or
Brendan Rowan, Senior Financial Institution Policy Analyst I, (202)
475-6685, Division of Supervision and Regulation; or Benjamin W.
McDonough, Assistant General Counsel, (202) 452-2036; Mark Buresh,
Senior Counsel, (202) 452-2877; Andrew Hartlage, Counsel, (202) 452-
6483; or Jonah Kind, Senior Attorney, (202) 452-2045, Legal Division,
Board of Governors of the Federal Reserve System, 20th Street and
Constitution Avenue NW, Washington, DC 20551. Users of
Telecommunication Device for the Deaf (TDD) only, call (202) 263-4869.
FDIC: Bobby R. Bean, Associate Director, [email protected]; Benedetto
Bosco, Chief, Capital Policy Section, [email protected]; Noah Cuttler,
Senior Policy Analyst, [email protected]; [email protected];
Capital Markets Branch, Division of Risk Management Supervision, (202)
898-6888; or Michael Phillips, Counsel, [email protected]; Catherine
Wood, Counsel, [email protected]; Supervision and Legislation Branch,
Legal Division, Federal Deposit Insurance Corporation, 550 17th Street
NW, Washington, DC 20429. For the hearing impaired only,
Telecommunication Device for the Deaf (TDD), (800) 925-4618.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background on the Community Bank Leverage Ratio Framework
II. Section 4012 of the Coronavirus Aid, Relief, and Economic
Security Act
III. Temporary Changes to the Community Bank Leverage Ratio
Framework
IV. Effective Date of the Statutory Interim Final Rule
V. Transition Interim Final Rule
VI. Administrative Law Matters
A. Administrative Procedure Act
B. Congressional Review Act
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Riegle Community Development and Regulatory Improvement Act
of 1994
F. Use of Plain Language
G. Unfunded Mandates Act
I. Background on the Community Bank Leverage Ratio Framework
The community bank leverage ratio framework provides a simple
measure of capital adequacy for community banking organizations that
meet certain qualifying criteria. The community bank leverage ratio
framework implements section 201 of the Economic Growth, Regulatory
Relief, and Consumer Protection Act (EGRRCPA), which requires the
Office of the Comptroller of the Currency (OCC), the Board of Governors
of the Federal Reserve System (Board), and the Federal Deposit
Insurance Corporation (FDIC) (collectively, the agencies) to establish
a community bank leverage ratio of not less than 8 percent and not more
than 10 percent for qualifying community banking organizations.\1\
Under section 201(c) of EGRRCPA, a qualifying community banking
organization that exceeds the community bank leverage ratio, as
established by the agencies, shall be considered to have met the
generally applicable risk-based and leverage capital requirements in
the capital rule (generally applicable rule), any other applicable
capital or leverage requirements, and, if applicable, the ``well
capitalized'' capital ratio requirements for purposes of section 38 of
the Federal Deposit Insurance Act. Section 201(b) of EGRRCPA also
requires the agencies to establish procedures for the treatment of a
qualifying community banking organization whose leverage ratio falls
below the community bank leverage ratio requirement as established by
the agencies.
---------------------------------------------------------------------------
\1\ Public Law 115-174, 132 Stat. 1296, 1306-07 (2018) (codified
at 12 U.S.C. 5371 note). The authorizing statues use the term
``qualifying community bank,'' whereas the regulation implementing
the statues uses the term ``qualifying community banking
organization.'' The terms generally have the same meaning. Section
201(a)(3) of EGRRCPA provides that a qualifying community banking
organization is a depository institution or depository institution
holding company with total consolidated assets of less than $10
billion that satisfies such other factors, based on the banking
organization's risk profile, that the agencies determine are
appropriate. This determination shall be based on consideration of
off-balance sheet exposures, trading assets and liabilities, total
notional derivatives exposures, and such other factors that the
agencies determine appropriate.
---------------------------------------------------------------------------
In 2019, the agencies issued a final rule establishing the
community bank leverage ratio framework, which became effective January
1, 2020 (2019 final rule).\2\ Under the 2019 final rule, the agencies
established a community bank leverage ratio of 9 percent using the
capital rule's existing leverage ratio. A
[[Page 22926]]
qualifying community banking organization that maintains a leverage
ratio of greater than 9 percent and elects to use the community bank
leverage ratio framework will be considered to have satisfied the
generally applicable rule and any other applicable capital or leverage
requirements, and, if applicable, will be considered to be well
capitalized.\3\
---------------------------------------------------------------------------
\2\ 84 FR 61776 (November 13, 2019).
\3\ Under existing PCA requirements applicable to insured
depository institutions, to be considered ``well capitalized'' a
banking organization must demonstrate that it is not subject to any
written agreement, order, capital directive, or as applicable,
prompt corrective action directive, to meet and maintain a specific
capital level for any capital measure. See 12 CFR 6.4(b)(1)(iv)
(OCC); 12 CFR 208.43(b)(1)(v) (Board); 12 CFR 324.403(b)(1)(v)
(FDIC). The same legal requirements continue to apply under the
community bank leverage ratio framework.
---------------------------------------------------------------------------
Under the 2019 final rule, a qualifying community banking
organization is any depository institution or depository institution
holding company that has less than $10 billion in total consolidated
assets, off-balance sheet exposures (excluding derivatives other than
sold credit derivatives and unconditionally cancelable commitments) of
25 percent or less of total consolidated assets, and trading assets and
liabilities of 5 percent or less of total consolidated assets. The
banking organization also cannot be an advanced approaches banking
organization.\4\
---------------------------------------------------------------------------
\4\ A banking organization is an advanced approaches banking
organization if it (1) is a global systemically important bank
holding company, (2) is a Category II banking organization, (3) has
elected to be an advanced approached banking organization, (4) is a
subsidiary of a company that is an advanced approaches banking
organization, or (5) has a subsidiary depository institution that is
an advanced approaches banking organization. See 12 CFR 3.100 (OCC);
12 CFR 217.100 (Board); 12 CFR 324.100 (FDIC).
---------------------------------------------------------------------------
In addition, the 2019 final rule established a two-quarter grace
period during which a qualifying community banking organization that
temporarily fails to meet any of the qualifying criteria, including the
greater-than-9-percent leverage ratio requirement, generally would
still be considered well capitalized so long as the banking
organization maintains a leverage ratio of greater than 8 percent. A
banking organization that either fails to meet all the qualifying
criteria within the grace period or fails to maintain a leverage ratio
of greater than 8 percent is required to comply with the generally
applicable rule and file the appropriate regulatory reports.
II. Section 4012 of the Coronavirus Aid, Relief, and Economic Security
Act
On March 27, 2020, the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act) was signed into law.\5\ The CARES Act directs
the agencies to make temporary changes to the community bank leverage
ratio framework. Specifically, section 4012 of the CARES Act directs
the agencies to issue an interim final rule that provides that, for
purposes of section 201 of EGRRCPA, the community bank leverage ratio
shall be 8 percent and that a qualifying community banking organization
whose leverage ratio falls below the community bank leverage ratio
requirement established under the CARES Act shall have a reasonable
grace period to satisfy that requirement. A qualifying community
banking organization to which the grace period applies may continue to
be treated as a qualifying community banking organization and shall be
presumed to satisfy the capital and leverage requirements described in
section 201(c) of EGRRCPA.
---------------------------------------------------------------------------
\5\ Coronavirus Aid, Relief, and Economic Security Act, Public
Law 116-136, 134 Stat. 281.
---------------------------------------------------------------------------
Under section 4012 of the CARES Act, this interim final rule
(statutory interim final rule) is effective during the period beginning
on the date on which the agencies issue the statutory interim final
rule and ending on the sooner of the termination date of the national
emergency concerning the coronavirus disease (COVID-19) outbreak
declared by the President on March 13, 2020, under the National
Emergencies Act, or December 31, 2020 (termination date).
III. Temporary Changes to the Community Bank Leverage Ratio Framework
In accordance with section 4012 of the CARES Act, the statutory
interim final rule makes certain temporary changes to the community
bank leverage ratio framework. Effective as of April 23, 2020, the
community bank leverage ratio will be 8 percent until the termination
date of the statutory interim final rule. A banking organization with a
leverage ratio of 8 percent or greater (and that meets the other
qualifying criteria) may elect to use the community bank leverage ratio
framework during the time the interim final rule is in effect.
In addition, under the statutory interim final rule, a community
banking organization that temporarily fails to meet any of the
qualifying criteria, including the 8-percent community bank leverage
ratio requirement, generally will still be considered well capitalized
so long as the banking organization maintains a leverage ratio equal to
7 percent or greater. A banking organization that fails to meet the
qualifying criteria after the end of the grace period or reports a
leverage ratio of less than 7 percent will be required to comply with
the generally applicable rule and file the appropriate regulatory
reports.\6\ The statutory interim final rule does not make any changes
to the other qualifying criteria in the community bank leverage ratio
framework.
---------------------------------------------------------------------------
\6\ In addition, consistent with the 2019 final rule, a banking
organization that ceases to satisfy the qualifying criteria as a
result of a business combination also will receive no grace period
and will be required to comply with the generally applicable rule.
---------------------------------------------------------------------------
The agencies adopted, in the 2019 final rule, a two-quarter grace
period with a leverage ratio requirement that is 1 percentage point
below the community bank leverage ratio on the basis that these
requirements appropriately mitigate potential volatility in capital and
associated regulatory reporting requirements based on temporary changes
in a banking organization's risk profile from quarter to quarter, while
capturing more permanent changes in a banking organization's risk
profile. The agencies continue to believe that this approach is
appropriate and provides a qualifying community banking organization
whose leverage ratio falls below the 8-percent community bank leverage
ratio requirement a reasonable amount of time to satisfy that
requirement, consistent with section 4012 of the CARES Act.
IV. Effective Date of the Statutory Interim Final Rule
The statutory interim final rule is effective as of April 23, 2020.
Banking organizations may utilize the requirements under the statutory
interim final rule for purposes of filing their Call Report or Form FR
Y-9C, as applicable, for the second quarter of 2020 (i.e., as of June
30, 2020).
V. Transition Interim Final Rule
The agencies are issuing concurrently an interim final rule that
provides a transition from the temporary 8-percent community bank
leverage ratio requirement, as mandated under section 4012 of the CARES
Act, to the 9-percent community bank leverage ratio requirement, as
established by the agencies in the 2019 final rule (transition interim
final rule). When the requirements in the transition interim final rule
become applicable, the community bank leverage ratio will be 8 percent
in the second quarter through fourth quarter of calendar year 2020, 8.5
percent in calendar year 2021, and 9 percent thereafter. Section 201 of
EGRRCPA requires a qualifying
[[Page 22927]]
community banking organization to exceed the community bank leverage
ratio established by the agencies in order to be considered to have met
the generally applicable rule, any other applicable capital or leverage
requirements, and, if applicable, the ``well capitalized'' capital
ratio requirements, whereas section 4012 of the CARES Act requires that
a qualifying community banking organization meet or exceed an 8 percent
community bank leverage ratio to be considered the same. The agencies
are issuing the transition interim final rule to provide community
banking organizations with sufficient time and clarity to meet the
requirements under the community bank leverage ratio framework while
they also focus on supporting lending to creditworthy households and
businesses given the recent strains on the U.S. economy caused by the
COVID-19 emergency.
Question 1: The agencies invite comment on the grace period under
the statutory interim final rule. Specifically, what are the advantages
and disadvantages of the period of time the statutory interim final
rule provides for a banking organization that no longer meets the
qualifying criteria to transition to the generally applicable rule?
What other alternatives should the agencies consider providing as a
reasonable grace period, as required under section 4012 of the CARES
Act, for a banking organization that no longer meets the definition of
a qualifying community banking organization and why?
VI. Administrative Law Matters
A. Administrative Procedure Act
The agencies are issuing the statutory interim final rule without
prior notice and the opportunity for public comment and the 30-day
delayed effective date ordinarily prescribed by the Administrative
Procedure Act (APA).\7\ Pursuant to section 553(b) of the APA, general
notice and the opportunity for public comment are not required with
respect to a rulemaking when an ``agency for good cause finds (and
incorporates the finding and a brief statement of reasons therefor in
the rules issued) that notice and public procedure thereon are
impracticable, unnecessary, or contrary to the public interest.'' \8\
---------------------------------------------------------------------------
\7\ 5 U.S.C. 553.
\8\ 5 U.S.C. 553(b)(B).
---------------------------------------------------------------------------
The agencies believe that the public interest is best served by
implementing the statutory interim final rule immediately upon
publication in the Federal Register. As discussed above, section 4012
of the CARES Act directs the agencies to issue an interim final rule
that provides that, for purposes of section 201 of EGRRCPA, the
community bank leverage ratio shall be 8 percent and that a qualifying
community banking organization whose leverage ratio falls below the
community bank leverage ratio requirement established under the CARES
Act shall have a reasonable grace period to satisfy that requirement. A
qualifying community banking organization to which the grace period
applies may continue to be treated as a qualifying community banking
organization and shall be presumed to satisfy the capital and leverage
requirements described in section 201(c) of EGRRCPA.
The APA also requires a 30-day delayed effective date, except for
(1) substantive rules, which grant or recognize an exemption or relieve
a restriction; (2) interpretative rules and statements of policy; or
(3) as otherwise provided by the agency for good cause.\9\ Because the
rules relieve a restriction, the statutory interim final rule is exempt
from the APA's delayed effective date requirement.\10\ Additionally,
the agencies find good cause to publish the statutory interim final
rule with an immediate effective date for the same reasons set forth
above under the discussion of section 553(b)(B) of the APA.
---------------------------------------------------------------------------
\9\ 5 U.S.C. 553(d).
\10\ 5 U.S.C. 553(d)(1).
---------------------------------------------------------------------------
While the agencies believe that there is good cause to issue the
statutory interim final rule without advance notice and comment and
with an immediate effective date as of the date of Federal Register
publication, the agencies are interested in the views of the public and
request comment on all aspects of the statutory interim final rule.
B. Congressional Review Act
For purposes of Congressional Review Act, the Office of Management
and Budget (OMB) makes a determination as to whether a final rule
constitutes a ``major'' rule.\11\ If a rule is deemed a ``major rule''
by OMB, the Congressional Review Act generally provides that the rule
may not take effect until at least 60 days following its
publication.\12\
---------------------------------------------------------------------------
\11\ 5 U.S.C. 801 et seq.
\12\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------
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.\13\
---------------------------------------------------------------------------
\13\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------
For the same reasons set forth above, the agencies are adopting the
statutory interim final rule without the delayed effective date
generally prescribed under the Congressional Review Act. The delayed
effective date required by the Congressional Review Act does not apply
to any rule for which an agency for good cause finds (and incorporates
the finding and a brief statement of reasons therefor in the rule
issued) that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.\14\ In light of
section 4012 of the CARES Act, the agencies believe that delaying the
effective date of the statutory interim final rule would be contrary to
the public interest.
---------------------------------------------------------------------------
\14\ 5 U.S.C. 808.
---------------------------------------------------------------------------
As required by the Congressional Review Act, the agencies will
submit the statutory interim final rule and other appropriate reports
to Congress and the Government Accountability Office for review.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA)
states that no agency may conduct or sponsor, nor is the respondent
required to respond to, an information collection unless it displays a
currently valid OMB control number. The statutory interim final rule
affects the agencies' current information collections for the Call
Reports (OCC OMB Control No. 1557-0081; Board OMB Control No. 7100-
0036; and FDIC OMB Control No. 3064-0052). The Board has reviewed the
statutory interim final rule pursuant to authority delegated by the
OMB.
While the statutory interim final rule contains no information
collection requirements, the agencies have determined that there are
changes that should be made to the Call Reports as a result of this
rulemaking. Although there may be a substantive change resulting from
changes to the community bank leverage ratio framework for purposes of
the Call Reports, the change should be minimal
[[Page 22928]]
and result in a zero net change in hourly burden under the agencies'
information collections. Submissions will, however, be made by the
agencies to OMB. The changes to the Call Reports and their related
instructions will be addressed in a separate Federal Register notice.
In addition, there are changes that the Board should make to the
Financial Statements for Holding Companies (FR Y-9 reports; OMB No.
7100-0128) to accurately reflect the changes of the statutory interim
final rule. The Board will separately address these changes to the FR
Y-9 reports and their instructions in the transition interim final
rule.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \15\ requires an agency to
consider whether the rules it proposes will have a significant economic
impact on a substantial number of small entities.\16\ The RFA applies
only to rules for which an agency publishes a general notice of
proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed
previously, consistent with section 553(b)(B) of the APA, the agencies
have determined for good cause that general notice and opportunity for
public comment is impracticable and contrary to the public's interest,
and therefore the agencies are not issuing a notice of proposed
rulemaking. Accordingly, the agencies have concluded that the RFA's
requirements relating to initial and final regulatory flexibility
analysis do not apply. Nevertheless, the agencies are interested in
receiving feedback on ways that they could reduce any potential burden
of the statutory interim final rule on small entities.
---------------------------------------------------------------------------
\15\ 5 U.S.C. 601 et seq.
\16\ Under regulations issued by the Small Business
Administration, a small entity includes a depository institution,
bank holding company, or savings and loan holding company with total
assets of $600 million or less and trust companies with total assets
of $41.5 million or less. See 13 CFR 121.201.
---------------------------------------------------------------------------
E. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA),\17\ 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 the principle 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, disclosures, 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 on which the regulations are published
in final form, with certain exceptions, including for good cause.\18\
For the reasons described above, the agencies find good cause exists
under section 302 of RCDRIA to publish the statutory interim final rule
with an immediate effective date.
---------------------------------------------------------------------------
\17\ 12 U.S.C. 4802(a).
\18\ 12 U.S.C. 4802.
---------------------------------------------------------------------------
F. Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act \19\ requires the Federal
banking agencies to use ``plain language'' in all proposed and final
rules published after January 1, 2000. In light of this requirement,
the agencies have sought to present the statutory interim final rule in
a simple and straightforward manner. The agencies invite comments on
whether there are additional steps they could take to make the rule
easier to understand. For example:
---------------------------------------------------------------------------
\19\ 12 U.S.C. 4809.
---------------------------------------------------------------------------
Have we organized the material to suit your needs? If not,
how could this material be better organized?
Are the requirements in the regulation clearly stated? If
not, how could the regulation be more clearly stated?
Does the regulation contain language or jargon that is not
clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand? If so, what changes to the format would make the regulation
easier to understand?
What else could we do to make the regulation easier to
understand?
G. Unfunded Mandates Act
As a general matter, the Unfunded Mandates Act of 1995 (UMRA), 2
U.S.C. 1531 et seq., requires the preparation of a budgetary impact
statement before promulgating a rule that includes a Federal mandate
that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year. However, the UMRA does not apply to
final rules for which a general notice of proposed rulemaking was not
published. See 2 U.S.C. 1532(a). Therefore, because the OCC has found
good cause to dispense with notice and comment for this statutory
interim final rule, the OCC concludes that the requirements of UMRA do
not apply to this statutory interim final rule.
List of Subjects in 12 CFR
12 CFR Part 3
Administrative practice and procedure, Capital, Federal savings
associations, National banks, Risk.
12 CFR Part 217
Administrative practice and procedure, Banks, Banking, Capital,
Federal Reserve System, Holding companies, Reporting and recordkeeping
requirements, Risk, Securities.
12 CFR Part 324
Administrative practice and procedure, Banks, banking, Reporting
and recordkeeping requirements, Savings associations, State non-member
banks.
Office of the Comptroller of the Currency
12 CFR Chapter I
Authority and Issuance
For the reasons set forth in the preamble, the OCC amends chapter I
of Title 12 of the Code of Federal Regulations as follows:
PART 3--CAPITAL ADEQUACY STANDARDS
0
1. The authority citation for part 3 is revised to read as follows:
Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818,
1828(n), 1828 note, 1831n note, 1835, 3907, 3909, 5412(b)(2)(B), and
Pub. L. 116-136, 134 Stat. 281.
0
2. Add Sec. 3.303 to read as follows:
Sec. 3.303 Temporary changes to the community bank leverage ratio
framework.
(a)(1) A national bank or Federal savings association that is not
an advanced approaches national bank or Federal savings association and
that meets all the criteria to be a qualifying community banking
organization under Sec. 3.12(a)(2) but for Sec. 3.12(a)(2)(i) is a
qualifying community banking organization if it has a leverage ratio
equal to or greater than 8 percent.
(2) Notwithstanding Sec. 3.12(a)(1), a qualifying community
banking organization that has made an election to use the community
bank leverage ratio framework under Sec. 3.12(a)(3) shall be
considered to have met the minimum
[[Page 22929]]
capital requirements under Sec. 3.10, the capital ratio requirements
for the well capitalized capital category under Sec. 6.4(b)(1) of this
chapter, and any other capital or leverage requirements to which the
qualifying community banking organization is subject, if it has a
leverage ratio equal to or greater than 8 percent.
(b) Notwithstanding Sec. 3.12(c)(6) and subject to Sec.
3.12(c)(5), a qualifying community banking organization that has a
leverage ratio of 7 percent or greater has the grace period described
in Sec. 3.12(c)(1) through (4). A national bank or Federal savings
association that has a leverage ratio of less than 7 percent does not
have a grace period and must comply with the minimum capital
requirements under Sec. 3.10(a)(1) and must report the required
capital measures under Sec. 3.10(a)(1) for the quarter in which it
reports a leverage ratio of less than 7 percent.
(c) Pursuant to section 4012 of the Coronavirus Aid, Relief, and
Economic Security Act, the requirements provided under paragraphs (a)
and (b) of this section are effective during the period beginning on
April 23, 2020 and ending on the sooner of:
(1) The termination date of the national emergency concerning the
novel coronavirus disease outbreak declared by the President on March
13, 2020, under the National Emergencies Act (50 U.S.C. 1601 et seq.);
or
(2) December 31, 2020.
* * * * *
Board of Governors of the Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons stated in the joint preamble, the Board of
Governors of the Federal Reserve System amends 12 CFR chapter II as
follows:
PART 217--CAPITAL ADEQUACY OF BANK HOLDING COMPANIES, SAVINGS AND
LOAN HOLDING COMPANIES, AND STATE MEMBER BANKS (REGULATION Q)
0
3. The authority citation for part 217 is revised to read as follows:
Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1462a, 1467a,
1818, 1828, 1831n, 1831o, 1831p-1, 1831w, 1835, 1844(b), 1851, 3904,
3906-3909, 4808, 5365, 5368, 5371, 5371 note, and sec. 4012, Pub. L.
116-136, 134 Stat. 281.
Subpart G--Transition Provisions
0
4. Add Sec. 217.304 to read as follows:
Sec. 217.304 Temporary changes to the community bank leverage ratio
framework.
(a)(1) A Board-regulated institution that is not an advanced
approaches Board-regulated institution and that meets all the criteria
to be a qualifying community banking organization under Sec.
217.12(a)(2) but for Sec. 217.12(a)(2)(i) is a qualifying community
banking organization if it has a leverage ratio equal to or greater
than 8 percent.
(2) Notwithstanding Sec. 217.12(a)(1), a qualifying community
banking organization that has made an election to use the community
bank leverage ratio framework under Sec. 217.12(a)(3) shall be
considered to have met the minimum capital requirements under Sec.
217.10, the capital ratio requirements for the well capitalized capital
category under Sec. 208.43(b)(1) of this chapter, if applicable, and
any other capital or leverage requirements to which the qualifying
community banking organization is subject, if it has a leverage ratio
equal to or greater than 8 percent.
(b) Notwithstanding Sec. 217.12(c)(6) and subject to Sec.
217.12(c)(5), a Board-regulated institution that has a leverage ratio
of 7 percent or greater has the grace period described in Sec.
217.12(c)(1) through (4). A Board-regulated institution that has a
leverage ratio of less than 7 percent does not have a grace period and
must comply with the minimum capital requirements under Sec.
217.10(a)(1) and must report the required capital measures under Sec.
217.10(a)(1) for the quarter in which it reports a leverage ratio of
less than 7 percent.
(c) Pursuant to section 4012 of the Coronavirus Aid, Relief, and
Economic Security Act, the requirements provided under paragraphs (a)
and (b) of this section are effective during the period beginning on
April 23, 2020 and ending on the sooner of:
(1) The termination date of the national emergency concerning the
novel coronavirus disease outbreak declared by the President on March
13, 2020, under the National Emergencies Act (50 U.S.C. 1601 et seq.);
or
(2) December 31, 2020.
Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons stated in the preamble, the Federal Deposit
Insurance Corporation amends chapter III of Title 12, Code of Federal
Regulations as follows:
PART 324--CAPITAL ADEQUACY OF FDIC-SUPERVISED INSTITUTIONS
0
5. The authority citation for part 324 is revised to read as follows:
Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b),
1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n),
1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102-233,
105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242,
105 Stat. 2236, 2355, as amended by Pub. L. 103-325, 108 Stat. 2160,
2233 (12 U.S.C. 1828 note); Pub. L. 102-242, 105 Stat. 2236, 2386,
as amended by Pub. L. 102-550, 106 Stat. 3672, 4089 (12 U.S.C. 1828
note); Pub. L. 111-203, 124 Stat. 1376, 1887 (15 U.S.C. 78o-7 note);
Pub. L. 115-174; Pub. L. 116-136, 134 Stat. 281.
0
6. Add Sec. 324.303 to read as follows:
Sec. 324.303 Temporary changes to the community bank leverage ratio
framework.
(a)(1) An FDIC-supervised institution that is not an advanced
approaches FDIC-supervised institution and that meets all the criteria
to be a qualifying community banking organization under Sec.
324.12(a)(2) but for Sec. 324.12(a)(2)(i) is a qualifying community
banking organization if it has a leverage ratio equal to or greater
than 8 percent.
(2) Notwithstanding Sec. 324.12(a)(1), a qualifying community
banking organization that has made an election to use the community
bank leverage ratio framework under Sec. 324.12(a)(3) shall be
considered to have met the minimum capital requirements under Sec.
324.10, the capital ratio requirements for the well capitalized capital
category under Sec. 324.403(b)(1) of this part, and any other capital
or leverage requirements to which the qualifying community banking
organization is subject, if it has a leverage ratio equal to or greater
than 8 percent.
(b) Notwithstanding Sec. 324.12(c)(6) and subject to Sec.
324.12(c)(5), a qualifying community banking organization that has a
leverage ratio of 7 percent or greater has the grace period described
in Sec. 324.12(c)(1) through (4). An FDIC-supervised institution that
has a leverage ratio of less than 7 percent does not have a grace
period and must comply with the minimum capital requirements under
Sec. 324.10(a)(1) and must report the required capital measures under
Sec. 324.10(a)(1) for the quarter in which it reports a leverage ratio
of less than 7 percent.
(c) Pursuant to section 4012 of the Coronavirus Aid, Relief, and
Economic Security Act, the requirements provided under paragraphs (a)
and (b) of this section are effective during the period beginning on
April 23, 2020 and ending on the sooner of:
[[Page 22930]]
(1) The termination date of the national emergency concerning the
novel coronavirus disease outbreak declared by the President on March
13, 2020, under the National Emergencies Act (50 U.S.C. 1601 et seq.);
or
(2) December 31, 2020.
Brian P. Brooks,
First Deputy Comptroller of the Currency
By order of the Board of Governors of the Federal Reserve
System.
Ann Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on or about April 3, 2020.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2020-07449 Filed 4-22-20; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P
