Transferred OTS Regulations Regarding Nondiscrimination Requirements, 60389-60402 [2020-18813]
Download as PDF
<![CDATA[
60389
Proposed Rules
Federal Register
Vol. 85, No. 187
Friday, September 25, 2020
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 338 and 390
RIN 3064–AF35
Transferred OTS Regulations
Regarding Nondiscrimination
Requirements
Federal Deposit Insurance
Corporation (FDIC).
ACTION: Proposed rule.
AGENCY:
In this notice of proposed
rulemaking, the Federal Deposit
Insurance Corporation (FDIC) proposes
to rescind and remove from the Code of
Federal Regulations rules entitled
‘‘Nondiscrimination Requirements’’
(part 390, subpart G), and to amend
FDIC regulation part 338 to make it
applicable to State savings associations.
Part 390, subpart G was included in the
regulations that were transferred to the
FDIC from the Office of Thrift
Supervision (OTS) on July 21, 2011, in
connection with the implementation of
applicable provisions of Title III of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank
Act). The FDIC’s part 338 is entitled
‘‘Fair Housing’’ and applies to insured
State nonmember banks. Several
provisions for State savings associations
in part 390, subpart G have
substantively similar provisions in part
338. The remaining provisions in part
390, subpart G without a direct
counterpart are largely duplicative of
federal laws (Equal Credit Opportunity
Act (ECOA), Fair Housing Act (FHA),
Equal Employment Opportunity Act
(EEOA) and other laws concerning
nondiscrimination in lending,
employment, and services) and
implementing regulations. After careful
review of part 390, subpart G, the FDIC
proposes to rescind and remove in its
entirety part 390, subpart G to
streamline the FDIC’s rules and
eliminate unnecessary, inconsistent,
and duplicative regulations and to
modify the scope of part 338 to include
khammond on DSKJM1Z7X2PROD with PROPOSALS
SUMMARY:
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
State savings associations to reflect the
scope of the FDIC’s current supervisory
responsibilities as the appropriate
Federal banking agency for those
institutions. The FDIC also proposes to
define ‘‘FDIC-supervised institution’’
and ‘‘State savings association.’’ If the
proposal is adopted in final form,
insured State nonmember banks and
State savings associations will be
subject to the same anti-discrimination
requirements. Upon removal of part 390,
subpart G, nondiscrimination
regulations related to lending applicable
for all insured depository institutions
for which the FDIC has been designated
the appropriate Federal banking agency
will be found at part 338 and related
nondiscrimination federal regulations
listed above, as applicable.
DATES: Comments must be received on
or before October 26, 2020.
ADDRESSES: You may submit comments,
identified by RIN 3064–AF35, by any of
the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments in
the portal.
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the website.
• Email: Comments@fdic.gov. Include
RIN 3064–AF35 in the subject line of
the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
• Hand Delivery/Courier: 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: All submissions for this
rulemaking must include the agency
name and RIN 3064–AF35. Comments
received will be posted without change
to https://www.fdic.gov/regulations/
laws/federal/, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT:
Navid Choudhury, Counsel, Legal
Division, (202) 898–6526, nchoudhury@
fdic.gov; Jamie Goodson, Senior Policy
Analyst, (202) 898–6685, jagoodson@
fdic.gov; Ernestine Ward, Policy
Analyst, (202) 898–3812, erward@
fdic.gov; and Evelyn Manley, Fair
Lending Specialist, (202) 898–3775,
PO 00000
Frm 00001
Fmt 4702
Sfmt 4702
emanley@fdic.gov, Division of Depositor
and Consumer Protection.
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Act
Title III of the Dodd-Frank Act 1
provided for a substantial reorganization
of the regulation of State and Federal
savings associations and their holding
companies. Beginning July 21, 2011, the
transfer date established by section 311
of the Dodd-Frank Act,2 the powers,
duties, and functions formerly
performed by the OTS were divided
among the FDIC, as to State savings
associations, the Office of the
Comptroller of the Currency (OCC), as to
Federal savings associations, and the
Board of Governors of the Federal
Reserve System (FRB), as to savings and
loan holding companies. Section 316(b)
of the Dodd-Frank Act 3 provides the
manner of treatment for all orders,
resolutions, determinations, regulations,
and advisory materials that had been
issued, made, prescribed, or allowed to
become effective by the OTS. Section
316(b) states that if the materials were
in effect on the day before the transfer
date, they continue to be in effect and
are enforceable by or against the
appropriate successor agency until they
are modified, terminated, set aside, or
superseded in accordance with
applicable law by such successor
agency, by any court of competent
jurisdiction, or by operation of law.
Section 316(c) of the Dodd-Frank
Act 4 further directed the FDIC and the
OCC to consult with one another and to
publish a list of the continued OTS
regulations which would be enforced by
the FDIC and the OCC, respectively. On
June 14, 2011, the FDIC’s Board of
Directors approved a ‘‘List of OTS
Regulations to be Enforced by the OCC
and the FDIC Pursuant to the DoddFrank Wall Street Reform and Consumer
Protection Act.’’ This list was published
by the FDIC and the OCC as a Joint
Notice in the Federal Register on July
6, 2011.5
1 Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, 124 Stat. 1376
(2010).
2 Codified at 12 U.S.C. 5411.
3 Codified at 12 U.S.C. 5414(b).
4 Codified at 12 U.S.C. 5414(c).
5 76 FR 39247 (July 6, 2011).
E:\FR\FM\25SEP1.SGM
25SEP1
khammond on DSKJM1Z7X2PROD with PROPOSALS
60390
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
Although section 312(b)(2)(B)(i)(II) of
the Dodd-Frank Act 6 granted the OCC
rulemaking authority relating to both
State and Federal savings associations,
nothing in the Dodd-Frank Act affected
the FDIC’s existing authority to issue
regulations under the Federal Deposit
Insurance Act (FDI Act) and other laws
as the ‘‘appropriate Federal banking
agency’’ or under similar statutory
terminology. Section 312(c) of the DoddFrank Act amended the definition of
‘‘appropriate Federal banking agency’’
contained in section 3(q) of the FDI Act 7
to add State savings associations to the
list of entities for which the FDIC is
designated as the ‘‘appropriate Federal
banking agency.’’ As a result, when the
FDIC acts as the designated
‘‘appropriate Federal banking agency’’
(or under similar terminology) for State
savings associations, as it does here, the
FDIC is authorized to issue, modify and
rescind regulations involving such
associations, insured State nonmember
banks, and insured branches of foreign
banks.
As noted, on June 14, 2011, operating
pursuant to this authority, the FDIC’s
Board of Directors reissued and
redesignated certain transferred OTS
regulations. These transferred OTS
regulations were published as new FDIC
regulations in the Federal Register on
August 5, 2011.8 When it republished
the transferred OTS regulations as new
FDIC regulations, the FDIC specifically
noted that its staff would evaluate the
transferred OTS regulations and might
later recommend incorporating them
into other FDIC regulations, amending
them, or rescinding them, as
appropriate.
One of the OTS rules transferred to
the FDIC requires State savings
associations to not discriminate with
respect to lending, employment, and
other services provided. The OTS rule,
formerly found at 12 CFR part 528 (part
528), was transferred to the FDIC with
only technical changes and is now
found in the FDIC’s rules at part 390,
subpart G, entitled ‘‘Nondiscrimination
Requirements.’’ Although few
provisions of part 390, subpart G have
a direct counterpart within the FDIC’s
regulations, the provisions are largely
duplicative of regulations implementing
federal laws (ECOA, FHA, EEOA, and
other laws concerning
nondiscrimination in lending,
employment, and services)
implemented by other agencies. After
careful review of part 390, subpart G,
the FDIC proposes to rescind and
at 12 U.S.C. 5412(b)(2)(B)(i)(II).
U.S.C. 1813(q).
8 76 FR 47652 (Aug. 5, 2011).
remove part 390, subpart G, because, as
discussed below, it is duplicative,
unnecessary, and burdensome to require
State savings associations to comply
with additional requirements to which
insured State nonmember banks are not
subject. The FDIC also proposes to
makes technical conforming edits to
part 338 to encompass State savings
associations and update the regulation.
FDIC’s Existing 12 CFR Part 338 and
Former OTS Part 528 (Transferred to
FDIC Part 390, Subpart G)
The Fair Housing Act of 1968
prohibits discrimination concerning the
sale, rental and financing of housing
based on race, religion, national origin
or sex. Section 808 of the FHA directed
all executive departments and agencies
to administer their programs relating to
housing and urban development
(including any Federal agency having
regulatory or supervisory authority over
financial institutions, e.g., the OTS’
predecessor, the Federal Home Loan
Bank Board (FHLBB)) in a manner to
further the purposes of the FHA.
Effective May 1, 1972, the FHLBB
amended Chapter V, subchapter B of
Title 12, by issuing a new section part
528 which prohibited ‘‘discrimination
by member institutions in their lending
and employment practices and in their
advertising and requiring that such
institutions display an Equal Housing
Lender Poster.’’ 9
Following this initial issuance of part
528 in 1972, in 1978 the FHLBB
finalized major amendments to the
regulation to update and strengthen its
nondiscrimination in lending
regulations to reflect provisions of the
FHA, ECOA, and the Community
Reinvestment Act (CRA) and to
‘‘strengthen the Bank Board’s ability to
enforce member institutions’
compliance with these and other
Federal laws which prohibit
discriminatory lending practices.’’ 10
Specifically, these amendments to the
FHLBB’s fair lending regulation: ‘‘(1)
[p]rohibit member institutions from
automatically refusing to lend because
of the age or location of a dwelling; (2)
prohibit loan decisions based on
discriminatory appraisals; (3) emphasize
that there is a right to file a written loan
application; (4) require member
institutions to have written loan
underwriting standards which are
available to the public upon request; (5)
revise the Equal Housing Lender poster
which member institutions display in
their lobbies; and (6) establish a new
6 Codified
7 12
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
9 37
FR 8436 (Apr. 3 1972).
FR 22332 (May 25, 1978).
10 43
PO 00000
Frm 00002
Fmt 4702
Sfmt 4702
monitoring system for fair lending
enforcement and analysis.’’ 11
In 1993, following the President’s
order for federal agencies to review all
Federal regulations and policies to
eliminate over-burdensome regulations
that discourage economic growth,12 the
OTS (as successor to the FHLBB) 13
updated part 528 to eliminate certain
definitions that were deemed
unnecessary and amended § 528.6,
regarding compliance with Home
Mortgage Disclosure Act (HMDA) loan/
application registers (LARs).
Commenters favored elimination of the
nondiscrimination disclosure
requirements of § 528.6, arguing it was
duplicative of the requirements set forth
in 12 CFR part 203, which made HMDA
requirements applicable to savings
associations. In its proposed rule, the
OTS stated that its own ‘‘loan
application register’’ was ‘‘more
comprehensive than required by
Regulation C’’ and that ‘‘the additional
register information is useful to
examiners’’ but also stated that the
additional information was available to
examiners through other means.14 In its
final rule, the OTS agreed that part
528.6 was substantially duplicative of
HMDA part 203 but disagreed that the
OTS’ requirement to report ‘‘reason for
denial’’ is unnecessary. At the time,
reporting the reason for denial was
optional under Regulation C.15 The OTS
argued that ‘‘[t]he ‘reason for denial’
provides us with useful information that
assists the examination process. We
believe that retaining the regulatory
requirement assures that this important
data field is completed by all OTSregulated filers, including any majorityowned savings association service
corporations or affiliates.’’ 16 As a result,
the OTS continued to require that
savings associations and other OTS
regulated filers required to keep HMDA
LARs pursuant to part 203 to report the
‘‘reason for denial’’ for all loan denials.
Part 528 was among the regulations
that were transferred to the FDIC from
the OTS on July 21, 2011, pursuant to
11 43
FR 22332 (May 25, 1978).
1996, the Department of Housing and Urban
Development (HUD), in accordance with the
President’s initiative on regulatory reinvention and
reform which requires deletion of nonbinding
guidance or explanations, entirely eliminated
HUD’s part 109 (Advertising Guidelines), which
provided a variety of nonbinding suggestions and
examples of advertising practices that would violate
the FHA. 61 FR 14378 (April 1, 1996).
13 The updates followed the passage of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989. Public Law 101–73, 103
Stat. 183 (1989).
14 57 FR 40352 (Sept. 3, 1992).
15 See 12 CFR 203.4(c) (1993).
16 58 FR 4309 (Jan. 14, 1993).
12 In
E:\FR\FM\25SEP1.SGM
25SEP1
khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
the Dodd-Frank Act as noted above.
OTS’ part 528 was adopted as FDIC’s
part 390 subpart G and was not
integrated with the FDIC’s rules
contained in part 338, entitled ‘‘Fair
Housing.’’ Both in 2011 when OTS part
528 was transferred and today, the
FDIC’s part 338, a regulation whose
provisions are substantially similar to
some provisions in the OTS’ former part
528: (1) Prohibits insured State
nonmember banks from engaging in
discriminatory advertising with regard
to residential real estate-related
transactions; and (2) requires
recordkeeping of certain home loan
application data for compliance with
the ECOA and HMDA with respect to
insured State nonmember banks for
which the FDIC has been designated the
appropriate Federal banking agency.17
These provisions have direct
counterparts in part 390, subpart G.
Specifically, the FDIC’s fair housing
recordkeeping provisions (see §§ 338.7
and 338.8) are a counterpart to the
former OTS requirement to file a HMDA
LAR (§ 390.147). The FDIC rules require
supervised institutions to request and
retain any monitoring information
required by HMDA and its
implementing Regulation C when
receiving an application for credit for
the purchase or refinancing of a
dwelling to be occupied as a principal
residence. Prior to the passage of the
final HMDA rule in 2015 by the Bureau
of Consumer Financial Protection
(CFPB),18 reporting of reason for denial
was optional for insured State
nonmember banks, as mentioned earlier.
However, reporting of reason for denial
became mandatory following the 2015
HMDA rule for covered institutions.
FDIC-supervised institutions, under part
338, are already subject to the HMDA
reporting requirement to provide a
reason for denial as a result of the
change in 2015. Therefore, the FDIC has
not found any reasonable basis to add
such a specific provision into its part
338, and the FDIC proposes to rescind
and remove the former OTS rule as
duplicative and unnecessary. Moreover,
in 2018, the HMDA rule was further
amended by the Economic Growth,
Regulatory Relief, and Consumer
Protection Act (EGRRCPA),19 which
provided that insured depository
institutions and insured credit unions
need not report certain data points for
transactions that qualify for a partial
17 12
CFR part 338.
FR 66127 (Oct. 28, 2015).
19 Public Law 117–154 (2018). In recent CFPB
rulemakings and other issuances, the requirement
to report Reason for Denial in § 390.147 is stated to
be independent of the partial exemption from
reporting that data field under HMDA.
18 80
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
exemption, unless otherwise required
by their regulator. Reason for denial is
one such data point. Rescinding and
removing former OTS’s § 390.147 would
promote regulatory consistency among
insured State nonmember banks and
State savings associations and enable
State savings associations to take
advantage of the partial exemption, if
eligible.
In addition, FDIC requirements
related to nondiscrimination in
advertising and displaying a fair
housing poster (§§ 338.3 and 338.4) are
counterparts to substantially similar
former OTS requirements (§§ 390.145
and 390.146). However, the FDIC’s part
338 and the former OTS’ part 390,
subpart G differ with respect to where
they require fair housing posters to be
displayed and the presence of
nonbinding recommendations about
displaying Spanish-language posters in
certain offices. With respect to poster
location, FDIC’s § 338.4 requires posting
either the FDIC’s Equal Housing Lender
poster or the U.S. Department of
Housing and Urban Development’s
Equal Housing Opportunity poster at ‘‘a
central location within the bank where
deposits are received or where such
loans are made in a manner clearly
visible to the general public entering the
area,’’ whereas § 390.146 requires
posting at each of a State savings
association’s offices. The FDIC has not
identified a reason for State savings
associations to post an Equal Housing
Opportunity notice at locations where
insured State nonmember banks are not
required to post. Therefore, the FDIC
proposes to rescind and remove
§ 390.146. As discussed below, the FDIC
also proposes to amend § 338.4 to apply
to State savings associations, in addition
to insured State nonmember banks and
to update the address provided for the
FDIC’s Consumer Response Center
(CRC).
With respect to the presence of nonbinding guidance, § 390.146
recommends, but does not require, that
State savings associations ‘‘post a
Spanish language version of the [Equal
Housing Lender] poster in offices
serving areas with a substantial
Spanish-speaking population.’’ The
FDIC’s part 338 does not contain
guidance about posting supplemental
foreign-language posters. The FDIC does
not propose to add this nonbinding
recommendation to the existing Equal
Housing Lending poster requirements in
§ 338.4.20
Although several former OTS
nondiscrimination rules codified in part
20 https://www.fdic.gov/news/news/press/2018/
pr18059a.pdf.
PO 00000
Frm 00003
Fmt 4702
Sfmt 4702
60391
390, subpart G do not have direct FDIC
counterparts, they are substantially
duplicative of nondiscrimination
provisions found in other federal laws
(e.g., ECOA, FHA, EEOA, and other laws
concerning nondiscrimination in
lending, employment, and services) and
implementing regulations of the CFPB
or Department of Labor.21 Additionally,
the interagency Policy Statement on
Discrimination in Lending applies to
State savings associations.22 The
applicable prohibitions on
discrimination addressed by these other
laws, regulations, and policy statements
apply to State savings associations
regardless of specific references in the
FDIC’s regulation.
In addition, to the extent that any
such provision of part 390, subpart G
can be interpreted as applying in a case
where ECOA, FHA, EEOA and other
laws and regulations concerning
nondiscrimination in lending,
employment or services would not
apply, the FDIC’s authority to amend
these former OTS provisions is not
certain.23 The OTS had authority under
the Home Owners’ Loan Act (HOLA) to
adopt regulations that give primary
consideration of the best practices of
thrift institutions in the United States
and appears to have used such authority
in adopting and maintaining their
nondiscrimination requirements.24
However, such HOLA authority does
not extend to the FDIC. Moreover, the
FDIC has not identified cases where the
OTS applied the nondiscrimination
requirements of its part 528 to address
acts or practices that were not
prohibited by ECOA, FHA, or EEOA.
The FDIC also has not found cases
where a fair lending review of a State
savings association identified acts or
practices that were deemed appropriate
to address under part 390 subpart G but
not under ECOA or the FHA. For these
reasons, the FDIC finds §§ 390.142
through 390.144 and 390.148 to be
unnecessary and duplicative, as a result
of the overlapping provisions in ECOA,
FHA, or EEOA, and proposes to rescind
§§ 390.142 through 390.144 and 390.148
in their entirety rather than revise them
21 FDIC part 352 addresses nondiscrimination on
the basis of disability to provide equal access to
programs and activities conducted by the FDIC.
22 59 FR 18267 (April 15, 1994).
23 See, e.g., OTS, Advance Notice of Proposed
Rulemaking, Unfair or Deceptive Acts and
Practices, 72 FR 43570, 43573 (Aug. 6, 2007)
(stating that OTS’ Nondiscrimination Rule, then 12
CFR part 528, ‘‘extends beyond the federal fair
lending laws by prohibiting discrimination not
covered by those laws’’ and providing examples of
such broader applicability).
24 See id.
E:\FR\FM\25SEP1.SGM
25SEP1
60392
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
khammond on DSKJM1Z7X2PROD with PROPOSALS
to address acts or practices not
addressed by ECOA, FHA, or EEOA.
The FDIC has determined that several
provisions of part 390 subpart G have no
counterparts in either the FDIC’s
regulations or other nondiscrimination
federal regulations. For these
provisions, the FDIC has not identified
a reasonable basis for retaining these
requirements for State savings
associations, given that they do not
apply to insured State nonmember
banks, and therefore proposes to rescind
the following provisions, which—
1. Require each State savings
association to have clearly written,
nondiscriminatory loan underwriting
standards, available to the public upon
request, at each of its offices. Require
each association to review its standards,
and business practices that implement
them, at least annually to ensure equal
opportunity in lending.25
2. Require each State savings
association notify each ‘‘inquirer’’ of a
right to obtain a copy of its loan
underwriting standards.26
3. Provide supplementary guidelines
to aid savings associations in
developing and implementing
nondiscriminatory lending policies and
provide that each State savings
association ‘‘should reexamine its
underwriting standards at least annually
in order to ensure equal opportunity.’’ 27
4. Treat the age or location of a
dwelling as a per se prohibited basis for
discrimination.28
5. Provide certain guidelines relating
to nondiscrimination in marketing
practices.29
In summary, after careful review of
part 390, subpart G (formerly part 528),
and the former OTS’s stated rationale
for the rule, the FDIC, as the appropriate
Federal banking agency for State savings
associations, proposes to rescind and
remove part 390, subpart G in its
entirety. Rescinding part 390, subpart G
also will serve to streamline the FDIC’s
rules and eliminate unnecessary,
inconsistent, and duplicative
regulations. If the proposal is adopted in
final form, all insured State nonmember
banks and State savings associations
will be subject to the same antidiscrimination requirements.
II. The Proposal
Regarding the functions of the former
OTS that were transferred to the FDIC,
section 316(b)(3) of the Dodd-Frank
Act 30 provides that the former OTS
25 12
CFR 390.143(b).
CFR 390.144(b).
27 12 CFR 390.150(a).
28 12 CFR 390.142 through 390.144.
29 12 CFR 390.150(d).
30 12 U.S.C. 5414(b)(3).
26 12
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
regulations will be enforceable by the
FDIC until they are modified,
terminated, set aside, or superseded in
accordance with applicable law. After
reviewing the Nondiscrimination
Requirements rule currently found in
part 390, subpart G, the FDIC, as the
appropriate Federal banking agency for
State savings associations, proposes to
rescind and remove part 390, subpart G
in its entirety. Further, in part 338, the
FDIC proposes to (1) revise § 338.1 to
reflect that the advertising provisions of
subpart A apply to State savings
associations and their subsidiaries, to
conform to and reflect the scope of
FDIC’s current supervisory
responsibilities as the appropriate
Federal banking agency for State savings
associations; (2) in § 338.2, add a
defined term ‘‘FDIC-supervised
institution,’’ defined to mean ‘‘either a
bank [defined in § 338.2(a) to mean ‘‘an
insured State nonmember bank as
defined in section 3 of the Federal
Deposit Insurance Act’’] or a State
savings association’’; (3) add a new
subsection to define ‘‘State savings
association’’ as having ‘‘the same
meaning as in section 3(b)(3) of the
Federal Deposit Insurance Act’’; 31 (4)
make conforming technical edits
throughout, including replacing the
term ‘‘FDIC-supervised institution’’ or
‘‘institution’’ in place of ‘‘bank’’
throughout the rule where necessary
and revising references to the FRB’s part
202 and part 203 throughout part 338 to
refer to the CFPB’s part 1002 and part
1003, respectively; and (5) amend
§ 338.4 to update the text required for
the Equal Housing Lender poster to the
correct address for the FDIC Consumer
Response Center.
Part 390, Subpart G
A. Section 390.140—Definitions
Section 390.140 defines the terms
‘‘application,’’ ‘‘dwelling,’’ and ‘‘State
savings association.’’ In light of the
proposal to rescind subpart G of part
390 in its entirety, these definitions
need not be retained. Therefore, the
FDIC proposes to rescind § 390.140.
B. Section 390.141—Supplementary
Guidelines
Section 390.141 cross-references a
policy statement transferred from OTS
regulations to § 390.151, HUD’s fair
housing regulations at 24 CFR part 100
et seq., and Regulation B and Regulation
C. The cross-reference to the policy
statement would be obsolete if § 390.151
is rescinded as proposed. Moreover, the
cross-references to HUD’s fair housing
31 12
PO 00000
U.S.C. 1813(b)(3).
Frm 00004
Fmt 4702
Sfmt 4702
regulations and to the regulations that
implement ECOA and HMDA are
unnecessary. Therefore, the FDIC
proposes to rescind § 390.141.
C. Section 390.142—Nondiscrimination
in Lending and Other Services
Section 390.142 prohibits
discrimination on a prohibited basis by
State savings associations in lending
and other services. The prohibited bases
specified are location and age of a
dwelling and race, color, religion, sex,
handicap, familial status, marital status,
or age of an applicant or a joint
applicant, among other parties.32 In
general, § 390.142(a) prohibits denying a
loan or other service, discriminating in
the purchase of loans or securities, or
discriminating in fixing the amount,
interest rate, duration, application
procedures, collection or enforcement
procedures, or other terms or conditions
of such loan or service, on a prohibited
basis. Section 390.142(b) provides that
‘‘[a] State savings association shall
consider without prejudice the
combined income of joint applicants for
a loan or other service.’’ Section
390.142(c) prohibits a State savings
association from discriminating against
an applicant for a loan or other service
on any prohibited basis, as defined in
Regulation B or HUD’s FHA regulation
in 24 CFR part 100.
There is significant overlap between
the requirements of § 390.142 and of the
requirements of ECOA and Regulation B
and the FHA and HUD’s FHA
regulations (the general federal fair
lending laws). For example, under
ECOA, it is ‘‘unlawful for any creditor
to discriminate against any applicant,
with respect to any aspect of a credit
transaction’’ on a prohibited basis.33
Similarly, the FHA provides that it is
‘‘unlawful for any person or other entity
whose business includes engaging in
residential real estate-related
transactions to discriminate against any
person in making available such a
transaction, or in the terms or
conditions of such a transaction’’
because of a prohibited basis.34
Moreover, the following are prohibited
bases under both subpart G of part 390
and the general federal fair lending
laws: Race, color, religion, national
origin, and sex.35
32 The other parties specified in § 390.147(a) are
a person associated with respect to a loan or service
or the purpose thereof, present or prospective
owners, lessees, tenants, or occupants of the
dwelling(s), or present or prospective owners,
lessees, tenant, or occupants of other dwellings in
the vicinity of the dwelling(s).
33 See 15 U.S.C. 1691(a).
34 See 42 U.S.C. 3605(a).
35 Prohibited bases for discrimination under
ECOA but not the FHA are age (of an applicant),
E:\FR\FM\25SEP1.SGM
25SEP1
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
khammond on DSKJM1Z7X2PROD with PROPOSALS
However, there are differences
between § 390.142 and the general
federal fair lending laws. For example,
under § 390.142(a), prohibited bases for
discrimination explicitly include the
location and age of a dwelling, whereas
prohibited bases for discrimination
under ECOA, FHA, and their
implementing regulations do not
include such factors.
As discussed earlier, to the extent that
a provision of § 390.142 can be
interpreted as applying in a case where
ECOA, FHA, EEOA and other laws and
regulations concerning
nondiscrimination in lending,
employment or services would not
apply, the FDIC’s authority to amend
these former OTS provisions is not
certain. Because the general federal fair
lending laws address substantially the
same acts and practices as are addressed
by § 390.142(a) and it is uncertain
whether the FDIC could amend
§ 390.142(a) in connection with acts or
practices not explicitly prohibited by
the general federal fair lending laws,
FDIC proposes to rescind § 390.142(a).
Similarly, § 390.142(b) addresses acts
and practices addressed by the general
federal fair lending laws but differs in
ways that make FDIC’s authority to
amend § 390.142(b) uncertain. As
mentioned, § 390.142(b) provides that
‘‘[a] State savings association shall
consider without prejudice the
combined income of joint applicants for
a loan or other service.’’ By contrast,
Regulation B’s provisions establishing
standards for consideration of an
applicant’s income in § 1002.6(b)(5)
does not require creditors to consider
the combined income of joint
applicants, and Comment 6(b)(5)–3.ii
states that creditors need not consider
income at all. In contrast with
§ 390.142(b), 12 CFR 1002.6(b)(5) in
Regulation B prohibits treating joint
applicants differently based on the
existence, absence or likelihood of a
marital relationship. The FDIC believes
that the prohibition in § 1002.6(b)(5)
addresses substantially the same issue
that § 390.142(b) addresses and the
latter is duplicative and arguably less
clear. Therefore, the FDIC proposes to
rescind § 390.142(b).36
marital status, and good faith exercise of a right
under the Consumer Credit Protection Act (or any
state law upon which the CFPB has granted an
exception). Prohibited bases for discrimination
under the FHA but not ECOA are handicap and
familial status. Compare 15 U.S.C. 1691(a) with 42
U.S.C. 3604, 3605(a).
36 Section 1002.6(b)(5) prohibits discounting, or
excluding from consideration, the income of an
applicant or his or her spouse because of a
prohibited basis or because the income is derived
from part-time employment or is an annuity,
pension, or other retirement benefit. The provision
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
As mentioned, § 390.142(c) prohibits
a State savings association from
discriminating against an applicant for a
loan or other service on any prohibited
basis, as defined in Regulation B or
HUD’s FHA regulation in 24 CFR part
100. The FDIC believes that § 390.142(c)
is duplicative of the general federal fair
lending laws and therefore proposes to
rescind the provision.
D. Section 390.143—Nondiscriminatory
Appraisal and Underwriting
Section 390.143(a) prohibits using or
relying upon a dwelling appraisal that a
State savings association knows or
reasonably should know is
‘‘discriminatory on the basis of the age
or location of the dwelling’’ or is
‘‘discriminatory per se or in effect’’
under the FHA or ECOA. The general
federal fair lending laws prohibit
appraisal-related discrimination on a
prohibited basis.37 Although the
location of a dwelling is not a per se
prohibited basis for discrimination
under those statutes, ECOA prohibits
discrimination because of the race,
color, religion, national origin, etc. of
residents in the neighborhood where the
property offered as collateral.38 To the
extent that § 390.143(a) prohibits
considering the age of a dwelling in a
way that would not be prohibited under
the general federal fair lending laws, the
authority of the FDIC to amend the
provision is unclear.
As stated, § 390.143(a) also prohibits
using or relying upon a dwelling
appraisal that is discriminatory per se or
in effect under the FHA or ECOA. The
FDIC believes that prohibition is
duplicative of prohibitions under the
general fair lending laws and therefore
is unnecessary. For these reasons, the
FDIC proposes to rescind § 390.143(a).
Section 390.143(b) requires each State
savings association to have clearly
written, nondiscriminatory loan
underwriting standards available to the
public upon request at each of its
offices. In addition, § 390.143(b)
requires each association to review its
standards, and business practices that
implement them, at least annually to
ensure equal opportunity in lending. No
also prohibits treating joint applicants differently
based on the existence, absence, or likelihood of a
marital relationship.
37 Regulation B prohibits discrimination ‘‘against
an applicant on a prohibited basis regarding any
aspect of a credit transaction.’’ 12 CFR 1002.4(a).
Under HUD’s FHA regulations, it is unlawful to use
‘‘an appraisal of residential real property in
connection with the sale, rental, or financing of any
dwelling where the person knows or reasonably
should know that the appraisal improperly takes
into consideration’’ a prohibited basis. 24 CFR
100.135(d)(1).
38 See 12 CFR 1002.2(z) and Comment 2(z)–1.
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
60393
such requirements apply to insured
State nonmember banks. The provision
is not required by ECOA or the FHA,
and the authority of the FDIC to amend
former OTS requirements that were
adopted pursuant to HOLA authority is
unclear. For these reasons, the FDIC
proposes to rescind § 390.143(b).
E. Section 390.144—Nondiscrimination
in Applications
Section 390.144(a) prohibits
discouraging or refusing to allow,
receive, or consider any applicant,
request or inquiry about a loan or other
service on a prohibited basis. Section
390.144(b) requires a State savings
association to ‘‘inform each inquirer of
his or her right to file a written loan
application, and to receive a copy of the
association’s underwriting standards.’’
Section 390.144(a) is substantially
similar to, and duplicative of,
prohibitions under the general federal
fair lending laws.39 To the extent that
§ 390.144(a) relies on HOLA authority to
prohibit discrimination with respect to
a service, or with respect to the age or
the location of a dwelling, in cases
where the general federal fair lending
laws would not apply, the FDIC’s
authority to amend the provision is
unclear. Therefore, the FDIC proposes to
rescind § 390.144(a).
As discussed earlier, the FDIC
proposes to rescind the requirement in
§ 390.143(b) for a State savings
association to provide a copy of its
underwriting standards upon request.
Further, the FDIC believes that the
requirement to post an Equal Housing
Lender poster, discussed below in
connection with 12 CFR 338.4, serves a
substantially similar purpose as the
requirement to ‘‘inform each inquirer of
his or her right to file a written loan
application’’ in 12 CFR 390.144(b). For
the foregoing reasons, the FDIC
proposes to rescind § 390.144(b).
F. Section 390.145—Nondiscriminatory
Advertising
Section 390.145 prohibits directly or
indirectly engaging in any form of
advertising that implies or suggests a
policy of discrimination or exclusion in
violation of ECOA, the FHA, or subpart
G of part 390. The provision also
provides that advertisements for any
loan for purchasing, constructing,
improving, repairing, or maintaining a
dwelling or any loan secured by a
dwelling must include the Equal
Housing Lender symbol.
The requirement in § 390.145 to
include the Equal Housing Lender
39 See, e.g., 15 U.S.C. 1691(a); 12 CFR 1002.4; 24
CFR 100.120.
E:\FR\FM\25SEP1.SGM
25SEP1
60394
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
khammond on DSKJM1Z7X2PROD with PROPOSALS
symbol in dwelling-related advertising
is substantially similar to the
requirement in § 338.4(a) that an
insured State nonmember bank
prominently indicate in advertisements
for dwelling-related loans ‘‘that the bank
makes such loans without regard to
race, color, religion, national origin, sex,
handicap, or familial status.’’ Section
338.4(a)(1) permits, but does not
require, an insured State nonmember
bank to comply ‘‘by including in the
advertisement a copy of the logotype
with the Equal Housing Lender legend
contained in the Equal Housing Lender
poster prescribed in § 338.4(b) of the
FDIC’s regulations or a copy of the
logotype with the Equal Housing
Opportunity legend contained in the
Equal Housing Opportunity poster
prescribed in’’ § 110.25(a) of HUD’s
FHA regulation. Because § 390.145 is
substantially similar to § 338.4, FDIC
proposes to rescind § 390.145 and, as
discussed below, amend § 338.4 to cover
State savings associations in addition to
insured State nonmember banks.
G. Section 390.146—Equal Housing
Lender Poster
Section 390.146(a) requires each State
savings association to post and maintain
at least one Equal Housing Lender
poster prominently in the lobby of each
of its offices, requires the use of
specified text, establishes a minimum
poster size, and requires that the text be
legible. Also, § 390.146(a) states that
‘‘[i]t is recommended that savings
associations post a Spanish language
version of the poster in offices serving
areas with a substantial Spanishspeaking population.’’ Section
390.146(b) sets forth the required poster
text and the Equal Housing Lender
logotype.
The requirements of § 390.146 are
substantially similar to the requirements
applicable to insured State nonmember
banks under § 338.4. As discussed later,
although the FDIC’s Equal Housing
Lender poster provisions do not include
the Spanish-language recommendation
included in § 390.146, the FDIC makes
a Spanish-language poster available to
the institutions it supervises. For these
reasons, the FDIC proposes to rescind
§ 390.146 and, as discussed below,
amend § 338.4 to also apply to State
savings associations.
H. Section 390.147—Loan Application
Register
Section 390.147 requires that State
savings associations and other lenders
required to file HMDA LARs with the
FDIC to enter the reason for denial with
respect to all loan denials. As discussed
earlier in Section I, Background,
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
Regulation C now requires a covered
financial institution to report ‘‘[t]he
principal reason or reasons the financial
institution denied the application, if
applicable.’’ 40 The FDIC believes that
§ 390.147 is duplicative now that
reporting reason for denial is required
rather than optional under Regulation C.
Furthermore, pursuant to the EGRRCPA,
Regulation C provides a partial
exemption from reporting reason for
denial and certain other data points for
financial institutions that meet specified
conditions. Banks eligible for the partial
exemption need not report reason for
denial, but State savings associations
supervised by the FDIC must report
reason for denial pursuant to
§ 390.147.41 The FDIC has not identified
grounds for State savings associations
that are eligible for the partial
exemption under HMDA to be treated
differently from similarly situated
banks. For the foregoing reasons, the
FDIC proposes to rescind § 390.147.
I. Section 390.148—Nondiscrimination
in Employment
Section 390.148 prohibits
discrimination on a prohibited basis by
State savings associations in
employment. The specified prohibited
bases are race, color, religion, sex, and
national origin. Section 390.148(a)
prohibits discrimination in the hiring,
firing, promoting, compensating, or
training of an individual or similar
discriminatory treatment during
employment or with regard to training.
Section 390.148(b) prohibits segregation
or classification of employees in a way
that would adversely affect their status
as an employee on a prohibited basis.
Section 390.148(c) prohibits State
savings associations from retaliating
against an employee for opposing an
unlawful employment practice. Section
390.148(d) prohibits discrimination by
State savings associations in
advertisements for employment. Section
390.148(e) states the regulation does not
apply in any case in which certain
exemptions and exceptions under the
EEOA apply. Section 390.148(f) states
that any violation of specified laws or
regulations, such as the EEOA and the
Age Discrimination in Employment Act,
shall be deemed a violation of this
regulation.
There is significant overlap between
the requirements of § 390.148(a) through
(d) and the EEOA. Under the EEOA, it
is unlawful for an employer to
discriminate in hiring, firing,
40 See
§ 1003.4(a)(16).
institutions regulated by the OCC are
required to report reasons for denial on their HMDA
LARs pursuant to 12 CFR 27.3(a)(1)(i) and 128.6.
41 Financial
PO 00000
Frm 00006
Fmt 4702
Sfmt 4702
compensating or providing training
because of the same prohibited bases as
under § 390.148(a).42 Similarly, the
EEOA prohibits employers from
segregating or classifying employees
that would adversely affect their status
as an employee on a prohibited basis.43
The EEOA also makes it unlawful for an
employer to retaliate against an
employee for opposing a practice made
unlawful under a subchapter of the
EEOA.44 The EEOA makes it generally
unlawful for an employer to
discriminate in advertisements for
employment.45 The FDIC believes that
§§ 390.148(a) through (d) are duplicative
of the prohibitions under the EEOA and
therefore are unnecessary. For these
reasons, the FDIC proposes to rescind
these provisions.
Section 390.148(e) cross-references
the EEOA. The cross-reference to the
statute would be obsolete if § 390.148 is
rescinded as proposed. Section
390.148(f) cross-references multiple
employment laws, including the EEOA.
The FDIC believes such cross-references
are unnecessary and therefore proposes
to rescind §§ 390.148(e) and (f).
J. Section 390.149—Complaints
Section 390.149 provides that
complaints about discrimination in
lending by a State savings association
‘‘shall be referred’’ to the Secretary of
HUD for processing under the FHA and
the Director of the Division of Depositor
and Consumer Protection at the FDIC for
processing under FDIC regulations. In
addition, § 390.149 provides that
complaints about discrimination in
employment by a State savings
association ‘‘shall be referred’’ to the
EEOC (with a copy to the FDIC) if they
relate to employment. Similar, although
more detailed, discrimination complaint
processing provisions can be found in
other federal laws, and their
implementing regulations.46 Moreover,
as a matter of practice, consistent with
the 1991 Memorandum of
Understanding Between the U.S.
Department of Housing and Urban
Development and the Federal Financial
Institutions Examination Council
(FFIEC) Member Agencies, the FDIC has
long had procedures for referring
complaints to HUD regarding lending
discrimination by financial institutions.
These procedures apply to complaints
involving lending by State savings
associations. Therefore, the FDIC
42 See
42 U.S.C. 2000e–2(a)(1) and (d).
42 U.S.C. 2000e–2(a)(2).
44 See 42 U.S.C. 2000e–3(a).
45 See 42 U.S.C. 3605(a).
46 See 24 CFR part 103 ((Fair Housing—Complaint
Processing) (FHA)) and 29 CFR part 1601
((Procedural Regulations) (EEOA)).
43 See
E:\FR\FM\25SEP1.SGM
25SEP1
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
believes the provisions in § 390.149
regarding routing complaints about
discrimination in lending are
duplicative and unnecessary.
However, there appears to be no
equivalent requirement to the
provisions in § 390.149 regarding
referring complaints to EEOC regarding
employment discrimination by FDICsupervised institutions. The FDIC
believes it would be burdensome and
unnecessary to require State savings
associations to comply with this
additional requirement to which
insured State nonmember banks are not
subject. For the foregoing reasons, the
FDIC proposes to rescind § 390.149 in
its entirety.
khammond on DSKJM1Z7X2PROD with PROPOSALS
K. Section 390.150—Guidelines Relating
to Nondiscrimination in Lending
Section 390.150 ‘‘provides
supplementary guidelines to aid savings
associations in developing and
implementing nondiscriminatory
lending policies.’’ In general, § 390.150
states actions that State savings
associations ‘‘should’’ take or actions
that ‘‘can’’ or ‘‘may’’ constitute illegal
discrimination.47 The requirements in
the guidelines generally have analogous
requirements in the general federal fair
lending laws; for example, with respect
to discrimination on the basis of marital
status,48 discounting or excluding
spousal income or supplementary
income,49 and inquiring about child
47 See, e.g., § 390.150(a) (stating that ‘‘[e]ach State
savings association should reexamine its
underwriting standards at least annually in order to
ensure equal opportunity’’); § 390.150(c)(2) (stating
that ‘‘[r]equiring fluency in the English language as
a prerequisite for obtaining a loan may be a
discriminatory practice based on national origin’’);
§ 390.150(c)(6) (stating that ‘‘[r]efusing to lend, or
offering less favorable terms (such as interest rate,
down payment, or maturity) to applicants because
of the income level in an area can discriminate
against minority group persons’’).
48 Compare § 390.150(c)(1) (‘‘Loan underwriting
decisions must be based on an applicant’s credit
history and present and reasonably foreseeable
economic prospects, rather than on the basis of
assumptions regarding comparative differences in
creditworthiness between married and unmarried
individuals, or between men and women.’’) with 12
CFR 1002.6(b)(8) (stating that, except as otherwise
permitted or required by law, a creditor must
evaluate married and unmarried applicants by the
same standards and must not treat applicants
differently based on the existence, absence, or
likelihood of a marital relationship between the
parties) and 12 CFR 1002.7(a) (stating that a creditor
must not refuse to grant an individual account to
a creditworthy applicant on the basis of sex, marital
status, or any other prohibited basis).
49 Compare § 390.150(c)(3) (stating that, when
spouses apply jointly for a loan, discounting
spousal income violates the FHA and that the
determination whether a spouse’s income qualifies
for credit purposes should depend upon a
reasonable evaluation of his or her past, present,
and reasonably foreseeable economic
circumstances) and § 390.150(c)(4) (‘‘Lending
standards which consider as effective only the non-
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
bearing or childrearing.50 Therefore, the
FDIC proposes to rescind this section as
duplicative or unnecessary.
Part 338—Fair Housing
The FDIC’s part 338, Fair Housing,
applies to insured State nonmember
banks and addresses discrimination in
advertising and recordkeeping
requirements under ECOA and HMDA.
The FDIC proposes to make technical
amendments to part 338 to reflect the
applicability of its provisions to State
savings associations, as discussed
below.
A. Section 338.1—Purpose
Section 338.1 states that its purposes
are to prohibit insured State nonmember
banks from engaging in discriminatory
advertising with regard to residential
real estate-related transactions and
require them to publicly display either
the Equal Housing Lender poster set
forth in § 338.4(b) of the FDIC’s
regulations or the Equal Housing
Opportunity poster prescribed in 24
CFR part 110 in HUD’s regulations. To
reflect that § 338.1 applies to all
institutions for which the FDIC is the
appropriate Federal banking agency, the
FDIC proposes to amend § 338.1 to
change references to ‘‘insured State
nonmember banks’’ to refer to ‘‘FDICsupervised institutions.’’
B. Section 338.2—Definitions
Applicable to Subpart A of This Part
Section 338.2 defines terms used in
subpart A of part 338, including the
term ‘‘bank’’ defined in § 338.2(a) to
mean ‘‘an insured state nonmember
bank as defined in section 3 of the
Federal Deposit Insurance Act.’’ The
FDIC proposes to add to § 338.2(c) a
new defined term ‘‘FDIC-supervised
institution’’ meaning a bank or a State
savings association and to add
§ 338.2(f), a new defined term ‘‘State
savings association’’ having ‘‘the same
meaning as in section (3)(b)(3) of the
overtime income of the primary wage-earner may
result in discrimination because they do not take
account of variations in employment patterns
among individuals and families.’’) with
§ 1002.6(b)(5) (prohibiting discounting or excluding
income of an applicant or an applicant’s spouse
because of a prohibited basis or because the income
is derived from part-time employment or is an
annuity, pension, or other retirement benefit).
50 Compare § 390.150(c)(3) (‘‘Information relating
to child-bearing intentions of a couple or an
individual may not be requested.’’) with
§ 1002.6(b)(3) (stating that a creditor must not make
assumptions or use aggregate statistics about the
likelihood ‘‘that any category of persons will bear
or rear children or will, for that reason, receive
diminished or interrupted income in the future’’)
and § 1002.5(d)(3) (providing that a creditor must
not ‘‘inquire about birth control practices,
intentions regarding the bearing or rearing of
children, or capability to bear children’’).
PO 00000
Frm 00007
Fmt 4702
Sfmt 4702
60395
Federal Deposit Insurance Act, 12
U.S.C. 1813(b)(3)’’. Also, the FDIC
proposes to make conforming technical
edits to other subsections in § 338.2 to
reflect the re-ordering of definitions.
C. Section 338.3—Nondiscriminatory
Advertising
Section 338.3 provides certain
requirements with respect to dwellingrelated advertisements to reflect the
bank’s nondiscrimination lending
practice and prohibits such
advertisements from including ‘‘words,
symbols, models, or other forms of
communication which express, imply,
or suggest a discriminatory preference
or policy of exclusion in violation of the
provisions of the FHA or ECOA. To
reflect that § 338.3 applies to all
institutions for which the FDIC is the
appropriate Federal banking agency, the
FDIC proposes to amend § 338.3 to
change references to ‘‘bank’’ to refer to
‘‘FDIC-supervised institution.’’
D. Section 338.4—Fair Housing Poster
Section 338.4(a) requires insured
State nonmember banks engaged in
extending dwelling-related loans to
conspicuously display either an Equal
Housing Lender poster or an Equal
Housing Opportunity poster ‘‘in a
central location within the bank where
deposits are received or where such
loans are made in a manner clearly
visible to the general public entering the
area, where the poster is displayed.’’
This requirement is substantially similar
to the requirement in § 390.146 for State
savings associations to display an Equal
Housing Lender poster, which the FDIC
herein proposes to rescind and remove.
To reflect that § 338.4(a) applies to all
institutions for which the FDIC is the
appropriate Federal banking agency, the
FDIC proposes to amend § 338.4(a) to
change references to ‘‘insured State
nonmember banks’’ to refer to ‘‘FDICsupervised institutions.’’
Section 338.4(b) sets forth the
required text of the FDIC’s Equal
Housing Lender poster, including the
former mailing address of the FDIC’s
CRC, formatted as a Portable Document
Format (PDF) image. Since the CRC
mailing address changed in 2011, the
FDIC has made available to FDICsupervised institutions an Equal
Housing Lender poster with the correct
address of the CRC, both in English and
in Spanish.51 Because the CRC mailing
address may change in the future, the
FDIC proposes to amend § 338.4(b) to
51 The poster is available to both insured State
nonmember banks and State savings associations.
Moreover, the current CRC mailing address is
correctly stated in FDIC regulations applicable to
State savings associations. 12 CFR 390.146.
E:\FR\FM\25SEP1.SGM
25SEP1
60396
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
reflect that the mailing address stated on
the Equal Housing Lender poster should
be the address for the Consumer
Response Center stated on the FDIC’s
website at www.fdic.gov.52 Furthermore,
the FDIC proposes to set forth the
required text of the Equal Housing
Lender poster in § 338.4(b) as a text
statement rather than as a PDF image.
To assist FDIC-supervised
institutions, the FDIC expects to
continue to provide them with access to
a poster stating the required text,
including the accurate CRC mailing
address. If this rule is finalized as
proposed, no change to posters would
be required of FDIC-supervised
institutions that use an Equal Housing
Lender poster obtained from the FDIC
since the CRC mailing address was
updated in 2011. The FDIC believes that
few insured State nonmember banks
make their own Equal Housing Lender
poster based on the text of § 338.4(b).
Nonetheless, to facilitate the transition
to the updated poster, the FDIC
proposes to provide a transition period
of one year for FDIC-supervised
institutions to change their posters to
reflect the current CRC mailing address,
if needed. That is, the effective date of
§ 338.4(b), as amended, would be the
date that is one year after a final rule
amending the provision is published in
the Federal Register.
E. Section 338.5—Purpose
khammond on DSKJM1Z7X2PROD with PROPOSALS
Section 338.5 states that its purpose is
to notify insured State nonmember
banks of their duty both to collect and
retain certain information about a home
loan applicant’s personal characteristics
in accordance with Regulation B and to
maintain, update and report a register of
home loan applications in accordance
with Regulation C. To reflect that
§ 338.5 applies to all institutions for
which the FDIC is the appropriate
Federal banking agency, the FDIC
proposes to amend § 338.5 to change
references to ‘‘insured State nonmember
banks’’ to refer to ‘‘FDIC-supervised
institutions.’’ The FDIC also proposes to
make technical amendments to § 338.5
to reflect that Regulation B and
Regulation C have been re-designated as
12 CFR part 1002 and 12 CFR part 1003,
respectively, and are implemented by
the CFPB.
52 Currently, the mailing address for the
Consumer Response Center (1100 Walnut St., Box
#11 Kansas City, MO 64106) is provided at https://
www.fdic.gov/consumers/assistance/
filecomplaint.html. Since May 31, 2012, Regulation
B has required the use of that address in adverse
action notices, as applicable. See Board of
Governors of the Federal Reserve System, Final
Rule, Equal Credit Opportunity, 76 FR 31451 (Jun.
1, 2011).
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
F. Section 338.6—Definitions
Applicable to This Subpart B
Section 338.6 defines terms used in
subpart B of part 338, including the
term ‘‘bank’’ defined in § 338.6(a) to
mean ‘‘an insured State nonmember
bank as defined in section 3 of the
Federal Deposit Insurance Act.’’ The
FDIC proposes to add as § 338.2(c) a
new defined term ‘‘FDIC-supervised
institution’’ meaning a bank or a State
savings association and to add as
§ 338.6(d) a new defined term ‘‘State
savings association’’ having ‘‘the same
meaning as in section (3)(b)(3) of the
Federal Deposit Insurance Act, 12
U.S.C. 1813(b)(3).’’
G. Section 338.7—Recordkeeping
Requirements
Section 338.7 requires banks that
receive an application for credit
primarily for the purchase or
refinancing of a dwelling occupied or to
be occupied by the applicant as a
principal residence where the extension
of credit will be secured by the dwelling
to request and retain the monitoring
information required by Regulation B.53
To reflect that § 338.7 applies to all
institutions for which the FDIC is the
appropriate Federal banking agency, the
FDIC proposes to amend § 338.7 to
change references to ‘‘bank’’ to refer to
‘‘FDIC-supervised institution.’’ The
FDIC also proposes to make technical
amendments to § 338.7 to reflect that
Regulation B has been re-designated as
12 CFR part 1002 and is implemented
by the CFPB.
H. Section 338.8—Compilation of Loan
Data in Register Format
Section 338.8 requires banks and
other lenders required to file a HMDA
LAR with the FDIC to maintain, update
and report such LAR in accordance with
Regulation C. To reflect that § 338.8
applies to all institutions for which the
FDIC is the appropriate Federal banking
agency, the FDIC proposes to amend
§ 338.8 to change references to ‘‘bank’’
to refer to ‘‘FDIC-supervised
institution.’’ Additionally, to reflect
amendments made to Regulation C
regarding the responsibilities of a
financial institution with respect to
HMDA LAR data, the FDIC proposes to
amend § 338.8 require banks and other
lenders required to file a HMDA LAR
with the FDIC to collect, record, and
report such LAR in accordance with
Regulation C. The FDIC also proposes to
make technical amendments to § 338.8
to reflect that Regulation C has been re53 This requirement relates to the collection of
information for monitoring purposes required by 12
CFR 1002.13.
PO 00000
Frm 00008
Fmt 4702
Sfmt 4702
designated as 12 CFR part 1003 and is
implemented by the CFPB.
I. Section 338.9—Mortgage Lending of a
Controlled Entity
Section 338.9 establishes
requirements that apply if a bank refers
applicants to a ‘‘controlled entity,’’ as
defined in § 338.6, and purchases any
home purchase loans or home
improvement loans (as defined in
Regulation C) that are originated by the
controlled entity, as a condition to
transacting any business with the
controlled entity.54 In such cases,
§ 338.9 provides that the bank must
require the controlled entity to enter
into a written agreement with the bank
that states that the controlled entity
must comply with the requirements of
§§ 338.3, 338.4 and 338.7 and, if the
controlled entity is subject to Regulation
C, § 338.8. Further, the written
agreement must provide that the
controlled entity must open its books
and records to FDIC examination and
comply with all FDIC instructions and
orders with respect to its home loan
practices.
Because this notice of proposed
rulemaking is intended to rescind and
remove former OTS regulations that are
duplicative of regulations under ECOA,
FHA, or EEOA, the FDIC does not
propose in this rulemaking to impose
substantive requirements regarding the
business transactions between a State
savings association and any entity it
controls. That is, the FDIC does not
propose to replace the term ‘‘bank’’ with
the term ‘‘FDIC-supervised institution’’
in § 338.9. However, the FDIC proposes
to make technical amendments to
§ 338.9 to reflect that Regulation C has
been re-designated as 12 CFR part 1003
and is implemented by the CFPB.
III. Expected Effects
As of March 31, 2020, the FDICsupervised 3,309 depository
institutions,55 of which 35 are State
savings associations.56
If the proposed rule were adopted by
the FDIC, §§ 390.140 and 390.141 would
be rescinded. As discussed previously,
these sections include definitions and
cross-references to other parts of section
390, so their rescission has no
independent significance for
institutions or applicants, but rather is
54 Pursuant to § 338.9, ‘‘controlled entity’’ means
‘‘a corporation, partnership, association, or other
business entity with respect to which a bank
possesses, directly or indirectly, the power to direct
or cause the direction of management and policies,
whether through the ownership of voting securities,
by contract, or otherwise.’’
55 FDIC-supervised institutions are set forth in 12
U.S.C. 1813(q)(2).
56 FDIC Call Report data, March 31, 2020.
E:\FR\FM\25SEP1.SGM
25SEP1
khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
a technical amendment associated with
the proposal to rescind subpart G of part
390 in its entirety.
As previously discussed, if the
proposed rule were adopted by the
FDIC, § 390.142 would be rescinded.
This section has substantial overlap
with the requirements of ECOA and
Regulation B and the FHA and HUD’s
FHA regulations. Additionally, although
some aspects of § 390.142 have no
counterpart in existing regulations for
insured State nonmember banks, as
indicated earlier, the FDIC’s authority to
amend those elements is uncertain.
Therefore, the FDIC believes that these
aspects of the proposed rule are unlikely
to significantly affect FDIC-supervised
institutions or applicants.
If the proposed rule were adopted, the
FDIC would rescind § 390.143. As
discussed previously, aspects of
§ 390.143 are either duplicative of
prohibitions under the general fair
lending laws or the authority of the
FDIC to amend them is uncertain. With
regard to § 390.143(b), the proposed rule
would reduce compliance requirements
associated with maintaining and
distributing relevant paperwork. The
FDIC believes that this is likely to pose
a relatively small benefit to the 35
institutions to which it applies. Further,
the FDIC believes that it is unlikely that
the rescission of the requirement to
establish, maintain, and distribute upon
request nondiscriminatory loan
underwriting standards for these 35
State savings associations would lead to
an increase in discriminatory lending
behavior because these institutions are
still subject to the general fair lending
laws. Therefore, the FDIC does not
believe that this aspect of the proposed
rule, if adopted, is likely to have
substantive effects on FDIC-supervised
institutions or applicants.
As discussed previously, if the
proposed rule were adopted by the
FDIC, § 390.144 would be rescinded.
Section 390.144(a) is substantially
similar to, and duplicative of,
prohibitions under the general federal
fair lending laws.57 Additionally, the
authority of the FDIC to amend it is
unclear. The FDIC also believes that the
requirement to post an Equal Housing
Lender poster, discussed above in
connection with § 338.4, serves a
substantially similar purpose as the
requirement to ‘‘inform each inquirer of
his or her right to file a written loan
application’’ in § 390.144(b). Therefore,
the FDIC believes that the rescission of
§ 390.144 is unlikely to have any
57 See, e.g., 15 U.S.C. 1691(a); 12 CFR 1002.4; 24
CFR 100.120.
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
substantive effect on FDIC-supervised
institutions or applicants.
As discussed previously, if the
proposed rule were adopted by the
FDIC, § 390.145 would be rescinded.
Section 390.145 is substantially similar
to § 338.4 and the proposed rule would
amend § 338.4 to cover State savings
associations in addition to insured State
nonmember banks. Therefore, the FDIC
believes that this aspect of the proposed
rule is unlikely to have any substantive
effect on FDIC-supervised institutions or
applicants.
As discussed previously, if the
proposed rule were adopted by the
FDIC, § 390.146 would be rescinded.
The requirements of § 390.146 are
substantially similar to the requirements
applicable to insured State nonmember
banks under § 338.4. Section 338.4,
however, unlike § 390.146, does not
include a ‘‘recommendation’’ that a
Spanish-language version of the Equal
Housing Lender poster be posted in
offices serving areas with a substantial
Spanish-speaking population. The FDIC
does, however, make a Spanishlanguage poster available to the
institutions it supervises. Given the
substantive similarity of much of
§ 390.146 to § 338.4, the FDIC believes
that rescinding it is unlikely to have
substantial effects on covered
institutions or applicants.
If the proposed rule were adopted, the
FDIC would rescind § 390.147. As
previously discussed, the FDIC believes
that § 390.147 is duplicative now that
reporting reason for denial is required
rather than optional under Regulation C.
Further, since Regulation C provides a
partial exemption from reporting reason
for denial and certain other data points
for financial institutions that meet
specified conditions, but no such
exemption exists for State savings
associations, the proposed rule would
establish parity with respect to the
reporting requirements for HMDA LARs
for State savings associations and other
FDIC-supervised institutions. The FDIC
believes that this aspect of the proposed
rule is unlikely to significantly affect
FDIC-supervised institutions or
applicants.
As previously discussed, the
proposed rule would rescind § 390.148
if it were adopted. The FDIC believes
that there is significant overlap between
the requirements of § 390.148(a) through
(d) and various aspects of the EEOA.
Further, § 390.148(e) and (f) references
multiple employment laws, including
the EEOA, which if the rest of § 390.148
were rescinded as proposed, would be
unnecessary. Therefore, the FDIC
believes that this aspect of the proposed
rule is unlikely to substantively affect
PO 00000
Frm 00009
Fmt 4702
Sfmt 4702
60397
FDIC-supervised institutions or
applicants.
As previously discussed, the
proposed rule would rescind § 390.149
if it were adopted. The FDIC has
procedures for referring complaints to
HUD regarding lending discrimination
by financial institutions and these
procedures apply to complaints
involving lending by State savings
associations. However, there appears to
be no equivalent requirement to the
provisions in § 390.149 regarding
referring complaints to EEOC regarding
employment discrimination by FDICsupervised institutions. This aspect of
the proposed rule would thus create
parity between insured State
nonmember banks and State savings
associations with respect to complaints
about discriminatory lending. Given
that FDIC-supervised institutions are
still subject to applicable elements of
the EEOA and FDIC regulations and
procedures, the FDIC does not believe
that this aspect of the proposed rule is
likely to have a substantive effect on
covered institutions or their employees.
As previously discussed, the
proposed rule would rescind § 390.150
if adopted. This section contains
guidelines intended to serve as a
resource for State savings associations
when developing and implementing
nondiscriminatory lending policies.
State savings associations, like other
FDIC-supervised banks, remain subject
to federal fair lending laws and
regulations and the FDIC does not
believe removal of these guidelines will
have any meaningful effect on these
institutions or their applicants.
Finally, the proposed rule, if adopted,
would make some technical changes to
FDIC’s part 338 in order to make it
applicable to State savings associations
and provide for Equal Housing Lender
posters to state the accurate CRC
mailing address. As previously
discussed, these proposed changes are
unlikely to have significant effects on
State savings associations because they
are already subject to substantively
similar regulations.
Rescinding part 390, subpart G also
will serve to streamline the FDIC’s rules
and eliminate unnecessary,
inconsistent, and duplicative
regulations. If the proposal is adopted in
its final form, insured State nonmember
banks and State savings associations
will be subject to the same antidiscrimination requirements.
V. Alternatives
Several alternatives to the proposed
rulemaking were available to the FDIC.
The FDIC could have retained the
current regulations in part 390, subpart
E:\FR\FM\25SEP1.SGM
25SEP1
60398
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
G, but chose not to do so since most of
the requirements in subpart G are
duplicative of or substantively similar to
existing requirements under federal law
or under the FDIC’s current fair housing
requirements in part 338. As previously
discussed, the FDIC also could have
retained certain requirements in subpart
G that the OTS issued pursuant to the
HOLA, but chose not to do so because
the FDIC’s legal authority to amend
requirements that the OTS issued
pursuant to HOLA is not clear.
In the instances where the regulations
in part 390, subpart G were more
stringent than similar requirements for
insured State nonmember banks, the
FDIC could have applied those
requirements to insured State
nonmember banks. However, the FDIC
chose not to adopt this alternative
because it believes the fair lending laws
and regulations that already apply to
insured State nonmember banks provide
an appropriate and sufficient framework
to prohibit discrimination.
The FDIC believes that this proposed
rule, which would remove and rescind
part 390, subpart G, and make the
FDIC’s existing nondiscrimination
regulations applicable to State savings
associations, is less burdensome to State
savings associations and the public than
the alternatives discussed above since it
would promote consistency among the
regulatory requirements for all FDICsupervised institutions and improve the
public’s understanding and ease of
reference. Additionally, the FDIC
believes that the proposed rule does not
materially change the
nondiscrimination requirements to
which insured State nonmember banks
and State savings associations are
required to adhere, relative to the
alternatives discussed.
IV. Request for Comments
The FDIC invites comments on all
aspects of this proposed rulemaking,
and specifically requests comments on
the following:
What impacts, positive or negative,
can you foresee in the FDIC’s proposal
to rescind and remove part 390, subpart
G?
khammond on DSKJM1Z7X2PROD with PROPOSALS
V. Regulatory Analysis and Procedure
A. The Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of 1995
(PRA),58 the FDIC may not conduct or
sponsor, and the respondent is not
required to respond to, an information
collection unless it displays a currently
58 44
U.S.C. 3501–3521.
VerDate Sep<11>2014
18:00 Sep 24, 2020
valid Office of Management and Budget
(OMB) control number.
The Proposed Rule would rescind and
remove from FDIC regulations part 390,
subpart G because it is duplicative and
unnecessary. This rule was transferred
with only nominal changes to the FDIC
from the OTS when the OTS was
abolished by title III of the Dodd-Frank
Act. Although few provisions of part
390, subpart G have a direct counterpart
within the FDIC’s existing
nondiscrimination requirements for
insured State nonmember banks in part
338, it is largely duplicative of federal
laws (ECOA, FHA, EEOA, and other
laws concerning nondiscrimination in
lending, employment, and services) and
implementing regulations of the CFPB
or the Department of Labor. Where
provisions of part 390, subpart G had no
such counterparts, the FDIC concluded
no reasonable basis exists for applying
these requirements to State savings
associations but not to insured State
nonmember banks or that the
requirements are inconsistent with
current agency policy.
In addition, the proposed rule would:
(1) Amend part 338 to include State
savings associations and their
subsidiaries within its scope; (2) define
the new terms ‘‘FDIC-supervised
institution’’ and ‘‘State savings
association;’’ and (3) make conforming
technical edits throughout to update the
regulation. These revisions would
clarify that State savings associations, as
well as insured State nonmember banks,
are subject to part 338 with the
exception of § 338.9.
Therefore, the Proposed Rule does not
revise any existing, or create any new
information collection pursuant to the
PRA. Consequently, no submission will
be made to the OMB for review.
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
generally requires that, in connection
with a proposed rulemaking, an agency
prepare and make available for public
comment an initial regulatory flexibility
analysis describing the impact of the
proposed rule on small entities.59
However, a regulatory flexibility
analysis is not required if the agency
certifies that the proposed rule will not
have a significant economic impact on
a substantial number of small entities.
The Small Business Administration
(SBA) has defined ‘‘small entities’’ to
include banking organizations with total
assets of less than or equal to $600
million that are independently owned
and operated or owned by a holding
company with less than or equal to $600
59 5
Jkt 250001
PO 00000
U.S.C. 601 et seq.
Frm 00010
Fmt 4702
Sfmt 4702
million in total assets.60 Generally, the
FDIC considers a significant effect to be
a quantified effect in excess of 5 percent
of total annual salaries and benefits per
institution, or 2.5 percent of total
noninterest expenses. The FDIC believes
that effects in excess of these thresholds
typically represent significant effects for
FDIC-supervised institutions. For the
reasons described below and under
section 605(b) of the RFA, the FDIC
certifies that this proposed rule will not
have a significant economic impact on
a substantial number of small entities.
As of March 31, 2020, the FDICsupervised 3,309 depository
institutions,61 of which 2,548 were
considered small entities for the
purposes of RFA.62 There are 33 State
savings associations that are small
entities for the purposes of RFA.63 If the
proposed rule were adopted by the
FDIC, §§ 390.140 and 390.141 would be
rescinded. As discussed previously,
these sections include definitions and
cross-references to other parts of § 390,
so their rescission has no independent
significance for institutions or
borrowers, but rather is a technical
amendment associated with the
proposal to rescind subpart G of part
390 in its entirety.
As previously discussed, if the
proposed rule were adopted by the FDIC
§ 390.142 would be rescinded. This
section has substantial overlap with the
requirements of ECOA and Regulation B
and the FHA and HUD’s FHA
regulations. Additionally, although
some aspects of § 390.142 have no
counterpart in existing regulations for
State nonmember banks, as indicated
earlier the FDIC is uncertain if it has the
authority to amend those elements.
Therefore, the FDIC believes that these
aspects of the proposed rule are unlikely
to significantly affect small FDICsupervised institutions or borrowers.
If the proposed rule were adopted, the
FDIC would rescind § 390.143. As
discussed previously, aspects of 390.143
are either duplicative of prohibitions
60 The SBA defines a small banking organization
as having $600 million or less in assets, where an
organization’s ‘‘assets are determined by averaging
the assets reported on its four quarterly financial
statements for the preceding year.’’ See 13 CFR
121.201 (as amended by 84 FR 34261, effective
August 19, 2019). In its determination, the ‘‘SBA
counts the receipts, employees, or other measure of
size of the concern whose size is at issue and all
of its domestic and foreign affiliates.’’ See 13 CFR
121.103. Following these regulations, the FDIC uses
a covered entity’s affiliated and acquired assets,
averaged over the preceding four quarters, to
determine whether the covered entity is ‘‘small’’ for
the purposes of RFA.
61 FDIC-supervised institutions are set forth in 12
U.S.C. 1813(q)(2).
62 FDIC Call Report data, March 31, 2020.
63 Id.
E:\FR\FM\25SEP1.SGM
25SEP1
khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
under the general fair lending laws or
the authority of the FDIC to amend them
is uncertain. With regard to
§ 390.143(b), the proposed rule would
reduce compliance requirements
associated with maintaining and
distributing relevant paperwork. The
FDIC believes that this is likely to pose
a relatively small benefit to the 33 small
institutions to which it applies. Further,
the FDIC believes that it is unlikely that
the rescission of the requirement to
establish, maintain, and distribute upon
request nondiscriminatory loan
underwriting standards for these 33
small State savings associations would
lead to an increase in discriminatory
lending behavior because these
institutions are still subject to the
general fair lending laws. Therefore, the
FDIC does not believe that this aspect of
the proposed rule, if adopted, is likely
to have substantive effects on small
FDIC-supervised institutions or
borrowers.
As discussed previously, if the
proposed rule were adopted by the FDIC
§ 390.144 would be rescinded. Section
390.144(a) is substantially similar to,
and duplicative of, prohibitions under
the general federal fair lending laws.64
Additionally, the authority of the FDIC
to amend them is uncertain. The FDIC
also believes that the requirement to
post an Equal Housing Lender poster,
discussed above in connection with 12
CFR 338.4, serves a substantially similar
purpose as the requirement to ‘‘inform
each inquirer of his or her right to file
a written loan application’’ in 12 CFR
390.144(b). Therefore, the FDIC believes
that the rescission of § 390.144 is
unlikely to have any substantive effect
on small FDIC-supervised institutions or
borrowers.
As discussed previously, if the
proposed rule were adopted by the FDIC
§ 390.145 would be rescinded. Section
390.145 is substantially similar to
§ 338.4 and the proposed rule would
amend § 338.4 to cover State savings
associations in addition to insured State
nonmember banks. Therefore, the FDIC
believes that this aspect of the proposed
rule is unlikely to have any substantive
effect on small FDIC-supervised
institutions or borrowers.
As discussed previously, if the
proposed rule were adopted by the
FDIC, § 390.146 would be rescinded.
The requirements of § 390.146 are
substantially similar to the requirements
applicable to insured State nonmember
banks under § 338.4. However, § 338.4,
unlike § 390.146, does not include a
‘‘recommendation’’ that a Spanishlanguage version of the Equal Housing
Lender poster be posted in offices
serving areas with a substantial
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
Spanish-speaking population. As
indicated earlier, the FDIC is taking the
approach of not including non-binding
recommendations in the proposed rule.
The FDIC does, however, make a
Spanish-language poster available to the
institutions it supervises. Given the
substantive similarity of much of
§§ 390.146 to 338.4, the FDIC believes
that rescinding it is unlikely to have
substantial effects on small covered
institutions or borrowers.
If the proposed rule were adopted, the
FDIC would rescind § 390.147. As
previously discussed, the FDIC believes
that § 390.147 is duplicative now that
reporting reason for denial is required
rather than optional under Regulation C.
Further, since Regulation C provides a
partial exemption from reporting reason
for denial and certain other data points
for financial institutions that meet
specified conditions, but no such
exemption exists for State savings
associations, the proposed rule would
establish parity with respect to the
reporting requirements for HMDA LARs
for State savings associations and other
FDIC-supervised institutions. The FDIC
believes that this aspect of the proposed
rule is unlikely to substantively affect
small FDIC-supervised institutions or
borrowers.
As previously discussed, the
proposed rule would rescind § 390.148
if it were adopted. The FDIC believes
that there is significant overlap between
the requirements of § 390.148(a) through
(d) and various aspect of the EEOA.
Further, § 390.148(e) and (f) references
multiple employment laws, including
the EEOA, which if the rest of § 390.148
were rescinded as proposed, would be
unnecessary. Therefore, the FDIC
believes that this aspect of the proposed
rule is unlikely to substantively affect
small FDIC-supervised institutions or
borrowers.
As previously discussed, the
proposed rule would rescind § 390.149
if it were adopted. The FDIC has
procedures for referring complaints to
HUD regarding lending discrimination
by financial institutions and these
procedures apply to complaints
involving lending by State savings
associations. However, there appears to
be no equivalent requirement to the
provisions in § 390.149 regarding
referring complaints to EEOC regarding
employment discrimination by FDICsupervised institutions. This aspect of
the proposed rule would thus create
parity between State nonmember banks
and State savings associations with
respect to discriminatory complaints.
Given that FDIC-supervised institutions
are still subject to applicable elements
of the EEOA and FDIC regulations and
PO 00000
Frm 00011
Fmt 4702
Sfmt 4702
60399
procedures, the FDIC does not believe
that this aspect of the proposed rule is
likely to have a substantive effect on
covered institutions or their employees.
As previously discussed, the
proposed rule would rescind § 390.150
if adopted. This section contains
guidelines intended to serve as a
resource for State savings associations
when developing and implementing
nondiscriminatory lending policies.
Small State savings associations, like
other FDIC-supervised banks, remain
subject to federal fair lending laws and
regulations and the FDIC does not
believe removal of these guidelines will
have any meaningful effect on these
institutions or their borrowers.
Finally, the proposed rule if adopted
would make some technical changes to
FDIC’s part 338 in order to make it
applicable to State savings associations
and provide for Equal Housing Lender
posters to state the accurate CRC
mailing address. As previously
discussed, these proposed changes are
unlikely to pose significant effects for
small State savings associations because
they are already subject to substantively
similar regulations.
Rescinding part 390, subpart G also
will serve to streamline the FDIC’s rules
and eliminate unnecessary,
inconsistent, and duplicative
regulations. If the proposal is adopted in
its final form, all small insured State
nonmember banks and State savings
associations—will be subject to the
same anti-discrimination requirements.
The FDIC does not have data with
which to estimate the costs that State
savings associations currently incur to
comply with subpart G or how those
costs will change if this proposal were
adopted in its current form. However,
since this proposal would only affect 33
small entities, and since the differences
between subpart G and existing
regulation and law are modest, the FDIC
certifies that this proposal would not
have a significant economic effect on a
substantial number of small entities.
The FDIC invites comments on all
aspects of the supporting information
provided in this section, and in
particular, whether the proposed rule
would have any significant effects on
small entities that the FDIC has not
identified.
C. Plain Language
Section 722 of the Gramm-LeachBliley Act 65 requires each Federal
banking agency to use plain language in
all of its proposed and final rules
published after January 1, 2000. The
FDIC has sought to present the Proposed
65 12
E:\FR\FM\25SEP1.SGM
U.S.C. 4809.
25SEP1
khammond on DSKJM1Z7X2PROD with PROPOSALS
60400
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
Rule in a simple and straightforward
manner. The FDIC invites comments on
whether the Proposed Rule is clearly
stated and effectively organized, and
how the FDIC might make it easier to
understand. For example:
• Has the FDIC organized the material
to suit your needs? If not, how could it
present the rule more clearly?
• Have we clearly stated the
requirements of the rule? If not, how
could the rule be more clearly stated?
• Does the rule contain technical
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 would make the regulation
easier to understand?
• What else could we do to make the
regulation easier to understand?
Federal banking agency must consider,
consistent with principles of safety and
soundness and the public interest, any
administrative burdens that such
regulations would place on depository
institutions, including small depository
institutions, and customers of
depository institutions, as well as the
benefits of such regulations. In addition,
section 302(b) of RCDRIA requires new
regulations and amendments to
regulations that impose additional
reporting, 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.69 The FDIC invites
comments that further will inform its
consideration of RCDRIA.
D. The Economic Growth and
Regulatory Paperwork Reduction Act
Under section 2222 of the Economic
Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA), the
FDIC is required to review all of its
regulations, at least once every 10 years,
in order to identify any outdated or
otherwise unnecessary regulations
imposed on insured institutions.66 The
FDIC, along with the other Federal
banking agencies, submitted a Joint
Report to Congress on March 21, 2017
(EGRPRA Report) discussing how the
review was conducted, what has been
done to date to address regulatory
burden, and further measures the FDIC
will take to address issues that were
identified.67 As noted in the EGRPRA
Report, the FDIC is continuing to
streamline and clarify its regulations
through the OTS rule integration
process. By removing outdated or
unnecessary regulations, such as part
390, subpart G, this Proposed Rule
complements other actions that the
FDIC has taken, separately and with the
other Federal banking agencies, to
further the EGRPRA mandate.
Aged, Banks, Banking, Civil rights,
Credit, Fair housing, Individuals with
disabilities, Marital status
discrimination, Mortgages, Religious
discrimination, Reporting and
recordkeeping requirements, Savings
associations, Sex discrimination, Signs
and symbols.
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),68 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
66 Public
Law 104–208, 110 Stat. 3009 (1996).
FR 15900 (March 31, 2017).
68 12 U.S.C. 4802(a).
List of Subjects
12 CFR Part 338
12 CFR Part 390
Administrative practice and
procedure, Advertising, Aged, Civil
rights, Conflict of interests, Credit,
Crime, Equal employment opportunity,
Fair housing, Government employees,
Individuals with disabilities,
Nondiscrimination requirements,
Reporting and recordkeeping
requirements, Savings associations.
Authority and Issuance
For the reasons stated in the
preamble, the FDIC proposes to amend
12 CFR parts 338 and 390 as follows:
■ 1. Revise part 338 to read as follows:
PART 338—FAIR HOUSING
Subpart A—Advertising
Sec.
§ 338.1 Purpose.
§ 338.2 Definitions applicable to subpart A
of this part.
§ 338.3 Nondiscriminatory advertising.
§ 338.4 Fair housing poster.
Subpart B—Recordkeeping
§ 338.5 Purpose.
§ 338.6 Definitions applicable to this
subpart B.
§ 338.7 Recordkeeping requirements.
§ 338.8 Compilation of loan data in register
format.
§ 338.9 Mortgage lending of a controlled
entity.
67 82
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
69 Id.
PO 00000
Frm 00012
Fmt 4702
Sfmt 4702
The authority citation for part 338 is
revised to read as follows:
Authority: 12 U.S.C. 1817, 1818, 1819,
1820(b), 2801 et seq.; 15 U.S.C. 1691 et seq.;
42 U.S.C. 3605, 3608; 12 CFR parts 1002,
1003; 24 CFR part 110.
Subpart A—Advertising
§ 338.1
Purpose.
The purpose of this subpart A is to
prohibit FDIC-supervised institutions
from engaging in discriminatory
advertising with regard to residential
real estate-related transactions. This
subpart A also requires FDIC-supervised
institutions to publicly display either
the Equal Housing Lender poster set
forth in § 338.4(b) of the FDIC’s
regulations or the Equal Housing
Opportunity poster prescribed by part
110 of the regulations of the United
States Department of Housing and
Urban Development (24 CFR part 110).
This subpart A enforces section 805 of
title VIII of the Civil Rights Act of 1968,
42 U.S.C. 3601–3619 (Fair Housing Act),
as amended by the Fair Housing
Amendments Act of 1988.
§ 338.2 Definitions applicable to subpart A
of this part.
For purposes of subpart A of this part:
(a) Bank means an insured state
nonmember bank as defined in section
3 of the Federal Deposit Insurance Act.
(b) Dwelling means any building,
structure, or portion thereof which is
occupied as, or designed or intended for
occupancy as, a residence by one or
more families, and any vacant land
which is offered for sale or lease for the
construction or location thereon of any
such building, structure, or portion
thereof.
(c) FDIC-supervised institution means
either a bank or a State savings
association.
(d) Handicap means, with respect to
a person:
(1) A physical or mental impairment
which substantially limits one or more
of such person’s major life activities;
(2) A record of having such an
impairment; or
(3) Being regarded as having such an
impairment, but such term does not
include current, illegal use of or
addiction to a controlled substance (as
defined in section 102 of the Controlled
Substances Act (21 U.S.C. 802)).
(e) Familial status means one or more
individuals (who have not attained the
age of 18 years) being domiciled with:
(1) A parent or another person having
legal custody of such individual or
individuals; or
(2) The designee of such parent or
other person having such custody, with
E:\FR\FM\25SEP1.SGM
25SEP1
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
the written permission of such parent or
other person.
The protections afforded against
discrimination on the basis of familial
status shall apply to any person who is
pregnant or is in the process of securing
legal custody of any individual who has
not attained the age of 18 years.
(f) State savings association has the
same meaning as in section (3)(b)(3) of
the Federal Deposit Insurance Act, 12
U.S.C. 1813(b)(3).
khammond on DSKJM1Z7X2PROD with PROPOSALS
§ 338.3
Nondiscriminatory advertising.
(a) Any FDIC-supervised institution
which directly or through third parties
engages in any form of advertising of
any loan for the purpose of purchasing,
constructing, improving, repairing, or
maintaining a dwelling or any loan
secured by a dwelling shall prominently
indicate in such advertisement, in a
manner appropriate to the advertising
medium and format utilized, that the
FDIC-supervised institutions makes
such loans without regard to race, color,
religion, national origin, sex, handicap,
or familial status.
(1) With respect to written and visual
advertisements, this requirement may be
satisfied by including in the
advertisement a copy of the logotype
with the Equal Housing Lender legend
contained in the Equal Housing Lender
poster prescribed in § 338.4(b) of the
FDIC’s regulations or a copy of the
logotype with the Equal Housing
Opportunity legend contained in the
Equal Housing Opportunity poster
prescribed in § 110.25(a) of the United
States Department of Housing and
Urban Development’s regulations (24
CFR 110.25(a)).
(2) With respect to oral
advertisements, this requirement may be
satisfied by a statement, in the spoken
text of the advertisement, that the FDICsupervised institution is an ‘‘Equal
Housing Lender’’ or an ‘‘Equal
Opportunity Lender.’’
(3) When an oral advertisement is
used in conjunction with a written or
visual advertisement, the use of either of
the methods specified in paragraphs
(a)(1) and (2) of this section will satisfy
the requirements of this paragraph (a).
(b) No advertisement shall contain
any words, symbols, models or other
forms of communication which express,
imply, or suggest a discriminatory
preference or policy of exclusion in
violation of the provisions of the Fair
Housing Act or the Equal Credit
Opportunity Act.
§ 338.4
Fair housing poster.
(a) Each FDIC-supervised institution
engaged in extending loans for the
purpose of purchasing, constructing,
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
improving, repairing, or maintaining a
dwelling or any loan secured by a
dwelling shall conspicuously display
either the Equal Housing Lender poster
set forth in paragraph (b) of this section
or the Equal Housing Opportunity
poster prescribed by § 110.25(a) of the
United States Department of Housing
and Urban Development’s regulations
(24 CFR 110.25(a)), in a central location
within the FDIC-supervised institution
where deposits are received or where
such loans are made, in a manner
clearly visible to the general public
entering the area, where the poster is
displayed.
(b) The Equal Housing Lender Poster
shall be at least 11 by 14 inches in size
and have the following text:
We Do Business in Accordance with
Federal Fair Lending Laws.
UNDER THE FEDERAL FAIR
HOUSING ACT, IT IS ILLEGAL, ON
THE BASIS OF RACE, COLOR,
NATIONAL ORIGIN, RELIGION, SEX,
HANDICAP, OR FAMILIAL STATUS
(HAVING CHILDREN UNDER THE AGE
OF 18) TO:
• Deny a loan for the purpose of
purchasing, constructing, improving,
repairing or maintaining a dwelling or
to deny any loan secured by a dwelling;
or
• Discriminate in fixing the amount,
interest rate, duration, application
procedures, or other terms or conditions
of such a loan or in appraising property.
IF YOU BELIEVE YOU HAVE BEEN
DISCRIMINATED AGAINST, YOU
SHOULD SEND A COMPLAINT TO:
Assistant Secretary for Fair Housing
and Equal Opportunity, Department of
Housing and Urban Development,
Washington, DC 20410.
For processing under the Federal Fair
Housing Act
AND TO:
Federal Deposit Insurance
Corporation, Consumer Response
Center, [Insert address for the Consumer
Response Center stated on the FDIC’s
website at www.fdic.gov]
For processing under the FDIC
Regulations.
UNDER THE EQUAL CREDIT
OPPORTUNITY ACT, IT IS ILLEGAL
TO DISCRIMINATE IN ANY CREDIT
TRANSACTION:
• On the basis of race, color, national
origin, religion, sex, marital status, or
age;
• Because income is from public
assistance; or
• Because a right has been exercised
under the Consumer Credit Protection
Act.
IF YOU BELIEVE YOU HAVE BEEN
DISCRIMINATED AGAINST, YOU
SHOULD SEND A COMPLAINT TO:
PO 00000
Frm 00013
Fmt 4702
Sfmt 4702
60401
Federal Deposit Insurance
Corporation, Consumer Response
Center, [Insert address for the Consumer
Response Center stated on the FDIC’s
website at www.fdic.gov]
(c) The Equal Housing Lender Poster
specified in this section was adopted
under § 110.25(b) of the United States
Department of Housing and Urban
Development’s rules and regulations as
an authorized substitution for the poster
required in § 110.25(a) of those rules
and regulations.
Subpart B—Recordkeeping
§ 338.5
Purpose.
The purpose of this subpart B is twofold. First, this subpart B notifies all
FDIC-supervised institutions of their
duty to collect and retain certain
information about a home loan
applicant’s personal characteristics in
accordance with Regulation B of the
Bureau of Consumer Financial
Protection (12 CFR part 1002) in order
to monitor an institution’s compliance
with the Equal Credit Opportunity Act
of 1974 (15 U.S.C. 1691 et seq.). Second,
this subpart B notifies certain FDICsupervised institutions of their duty to
maintain, update and report a register of
home loan applications in accordance
with Regulation C of the Bureau of
Consumer Financial Protection (12 CFR
part 1003), which implements the Home
Mortgage Disclosure Act (12 U.S.C. 2801
et seq.).
§ 338.6 Definitions applicable to this
subpart B.
For purposes of this subpart B—
(a) Bank means an insured State
nonmember bank as defined in section
3 of the Federal Deposit Insurance Act.
(b) Controlled entity means a
corporation, partnership, association, or
other business entity with respect to
which a bank possesses, directly or
indirectly, the power to direct or cause
the direction of management and
policies, whether through the
ownership of voting securities, by
contract, or otherwise.
(c) FDIC-supervised institution means
either a bank or a State savings
association.
(d) State savings association has the
same meaning as in section 3(b)(3) of
the Federal Deposit Insurance Act, 12
U.S.C. 1813(b)(3).
§ 338.7
Recordkeeping requirements.
All FDIC-supervised institutions that
receive an application for credit
primarily for the purchase or
refinancing of a dwelling occupied or to
be occupied by the applicant as a
principal residence where the extension
of credit will be secured by the dwelling
E:\FR\FM\25SEP1.SGM
25SEP1
60402
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
shall request and retain the monitoring
information required by Regulation B of
the Bureau of Consumer Financial
Protection (12 CFR part 1002).
§ 338.8 Compilation of loan data in register
format.
FDIC-supervised institutions and
other lenders required to file a Home
Mortgage Disclosure Act loan
application register (LAR) with the
Federal Deposit Insurance Corporation
shall collect, record and report such
LAR in accordance with Regulation C of
the Bureau of Consumer Financial
Protection (12 CFR part 1003).
§ 338.9
entity.
Mortgage lending of a controlled
PART 390—REGULATIONS
TRANSFERRED FROM THE OFFICE OF
THRIFT SUPERVISION
2. The authority citation for part 390
is revised to read as follows:
khammond on DSKJM1Z7X2PROD with PROPOSALS
■
Authority: 12 U.S.C. 1819.
Subpart F also issued under 5 U.S.C. 552;
559; 12 U.S.C. 2901 et seq.
Subpart O also issued under 12 U.S.C.
1828.
Subpart Q also issued under 12 U.S.C.
1462; 1462a; 1463; 1464.
Subpart W also issued under 12 U.S.C.
1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m;
78n; 78p; 78w.
Subpart Y also issued under 12 U.S.C.
1831o.
Subpart G—[Removed and Reserved]
3. Remove and reserve subpart G,
consisting of §§ 390.140 through
390.150.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
VerDate Sep<11>2014
18:00 Sep 24, 2020
Jkt 250001
posted without change to https://
www.fdic.gov/regulations/laws/federal/,
including any personal information
provided.
[FR Doc. 2020–18813 Filed 9–24–20; 8:45 am]
FOR FURTHER INFORMATION CONTACT:
BILLING CODE 6714–01–P
Misty Mobley, Senior Review Examiner,
Division of Risk Management and
Supervision, (202) 898–3771,
mimobley@fdic.gov; Lauren Whitaker,
Senior Attorney, Legal Division, (202)
898–3872, lwhitaker@fdic.gov; or
Gregory Feder, Counsel, Legal Division,
(202) 898–8724, gfeder@fdic.gov,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429. For the hearing impaired only,
TDD users may contact (202) 925–4618.
SUPPLEMENTARY INFORMATION:
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Chapter III
RIN 3064–ZA19
Statement of Policy Regarding Minority
Depository Institutions
Federal Deposit Insurance
Corporation (FDIC).
ACTION: Proposed revisions to statement
of policy; request for comment.
AGENCY:
Any bank which refers any applicants
to a controlled entity and which
purchases any covered loan as defined
in Regulation C of the Bureau of
Consumer Financial Protection (12 CFR
part 1003) originated by the controlled
entity, as a condition to transacting any
business with the controlled entity,
shall require the controlled entity to
enter into a written agreement with the
bank. The written agreement shall
provide that the entity shall:
(a) Comply with the requirements of
§§ 338.3, 338.4, and 338.7, and, if
otherwise subject to Regulation C of the
Bureau of Consumer Financial
Protection (12 CFR part 1003), § 338.8;
(b) Open its books and records to
examination by the Federal Deposit
Insurance Corporation; and
(c) Comply with all instructions and
orders issued by the Federal Deposit
Insurance Corporation with respect to
its home loan practices.
■
Dated at Washington, DC, on August 21,
2020.
James P. Sheesley,
Acting Assistant Executive Secretary.
The FDIC is proposing to
revise its Statement of Policy Regarding
Minority Depository Institutions.
Section 308 of the Financial Institutions
Reform, Recovery and Enforcement Act
of 1989 established several goals related
to encouraging, assisting, and preserving
minority depository institutions. The
FDIC has long recognized the unique
role and importance of minority
depository institutions and has
historically taken steps to preserve and
encourage minority-owned and
minority-led financial institutions. The
revised Statement of Policy updates,
strengthens, and clarifies the agency’s
policies and procedures related to
minority depository institutions.
DATES: Written comments must be
received on or before November 24,
2020.
SUMMARY:
Interested parties are
encouraged to submit written
comments. Commenters are encouraged
to use the title ‘‘Statement of Policy
Regarding Minority Depository
Institutions’’ to facilitate the
organization and distribution of
comments. You may submit comments,
identified by RIN 3064–ZA19, by any of
the following methods:
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the FDIC’s website.
• Email: comments@fdic.gov. Include
RIN 3064–ZA19 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.
Instructions: Comments submitted
must include ‘‘FDIC’’ and ‘‘RIN 3064–
ZA19.’’ Comments received will be
ADDRESSES:
PO 00000
Frm 00014
Fmt 4702
Sfmt 4702
Table of Contents
I. Background
II. Revisions to the Proposed Statement of
Policy
III. Proposed Statement of Policy Regarding
Minority Depository Institutions
IV. Administrative Matters
I. Background
Section 308 of the Financial
Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA) 1
established several goals related to
minority depository institutions (MDIs):
(1) Preserving the number of MDIs; (2)
preserving the minority character in
cases of merger or acquisition; (3)
providing technical assistance to
prevent insolvency of institutions not
now insolvent; (4) promoting and
encouraging creation of new MDIs; and
(5) providing for training, technical
assistance, and education programs.
On April 3, 1990, the Board of
Directors of the Federal Deposit
Insurance Corporation (FDIC Board and
FDIC, respectively) adopted the Policy
Statement on Encouragement and
Preservation of Minority Ownership of
Financial Institutions (1990 Policy
Statement). The framework for the 1990
Policy Statement resulted from key
provisions contained in Section 308 of
FIRREA. The 1990 Policy Statement
provided information to the public and
minority banking industry regarding the
agency’s efforts in achieving the goals of
Section 308.
During the 1990s, many MDIs
continued to underperform industry
averages for profitability and experience
failure rates that were significantly
higher than those of the industry
overall. In order to discuss the
challenges that MDIs faced, and identify
1 Public Law 101–73, title III, § 308, Aug. 9, 1989,
103 Stat. 353, as amended by Public Law 111–203,
title III, § 367(4), July 21, 2010, 124 Stat. 1556,
codified at 12 U.S.C. 1463 note.
E:\FR\FM\25SEP1.SGM
25SEP1
]]>Agencies
[Federal Register Volume 85, Number 187 (Friday, September 25, 2020)]
[Proposed Rules]
[Pages 60389-60402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18813]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 /
Proposed Rules
[[Page 60389]]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 338 and 390
RIN 3064-AF35
Transferred OTS Regulations Regarding Nondiscrimination
Requirements
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: In this notice of proposed rulemaking, the Federal Deposit
Insurance Corporation (FDIC) proposes to rescind and remove from the
Code of Federal Regulations rules entitled ``Nondiscrimination
Requirements'' (part 390, subpart G), and to amend FDIC regulation part
338 to make it applicable to State savings associations. Part 390,
subpart G was included in the regulations that were transferred to the
FDIC from the Office of Thrift Supervision (OTS) on July 21, 2011, in
connection with the implementation of applicable provisions of Title
III of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act). The FDIC's part 338 is entitled ``Fair Housing'' and
applies to insured State nonmember banks. Several provisions for State
savings associations in part 390, subpart G have substantively similar
provisions in part 338. The remaining provisions in part 390, subpart G
without a direct counterpart are largely duplicative of federal laws
(Equal Credit Opportunity Act (ECOA), Fair Housing Act (FHA), Equal
Employment Opportunity Act (EEOA) and other laws concerning
nondiscrimination in lending, employment, and services) and
implementing regulations. After careful review of part 390, subpart G,
the FDIC proposes to rescind and remove in its entirety part 390,
subpart G to streamline the FDIC's rules and eliminate unnecessary,
inconsistent, and duplicative regulations and to modify the scope of
part 338 to include State savings associations to reflect the scope of
the FDIC's current supervisory responsibilities as the appropriate
Federal banking agency for those institutions. The FDIC also proposes
to define ``FDIC-supervised institution'' and ``State savings
association.'' If the proposal is adopted in final form, insured State
nonmember banks and State savings associations will be subject to the
same anti-discrimination requirements. Upon removal of part 390,
subpart G, nondiscrimination regulations related to lending applicable
for all insured depository institutions for which the FDIC has been
designated the appropriate Federal banking agency will be found at part
338 and related nondiscrimination federal regulations listed above, as
applicable.
DATES: Comments must be received on or before October 26, 2020.
ADDRESSES: You may submit comments, identified by RIN 3064-AF35, by any
of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments in the portal.
Agency Website: https://www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the
website.
Email: [email protected]. Include RIN 3064-AF35 in the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW,
Washington, DC 20429.
Hand Delivery/Courier: 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: All submissions for this rulemaking must include the
agency name and RIN 3064-AF35. Comments received will be posted without
change to https://www.fdic.gov/regulations/laws/federal/, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT: Navid Choudhury, Counsel, Legal
Division, (202) 898-6526, [email protected]; Jamie Goodson, Senior
Policy Analyst, (202) 898-6685, [email protected]; Ernestine Ward,
Policy Analyst, (202) 898-3812, [email protected]; and Evelyn Manley,
Fair Lending Specialist, (202) 898-3775, [email protected], Division of
Depositor and Consumer Protection.
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Act
Title III of the Dodd-Frank Act \1\ provided for a substantial
reorganization of the regulation of State and Federal savings
associations and their holding companies. Beginning July 21, 2011, the
transfer date established by section 311 of the Dodd-Frank Act,\2\ the
powers, duties, and functions formerly performed by the OTS were
divided among the FDIC, as to State savings associations, the Office of
the Comptroller of the Currency (OCC), as to Federal savings
associations, and the Board of Governors of the Federal Reserve System
(FRB), as to savings and loan holding companies. Section 316(b) of the
Dodd-Frank Act \3\ provides the manner of treatment for all orders,
resolutions, determinations, regulations, and advisory materials that
had been issued, made, prescribed, or allowed to become effective by
the OTS. Section 316(b) states that if the materials were in effect on
the day before the transfer date, they continue to be in effect and are
enforceable by or against the appropriate successor agency until they
are modified, terminated, set aside, or superseded in accordance with
applicable law by such successor agency, by any court of competent
jurisdiction, or by operation of law.
---------------------------------------------------------------------------
\1\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203, 124 Stat. 1376 (2010).
\2\ Codified at 12 U.S.C. 5411.
\3\ Codified at 12 U.S.C. 5414(b).
---------------------------------------------------------------------------
Section 316(c) of the Dodd-Frank Act \4\ further directed the FDIC
and the OCC to consult with one another and to publish a list of the
continued OTS regulations which would be enforced by the FDIC and the
OCC, respectively. On June 14, 2011, the FDIC's Board of Directors
approved a ``List of OTS Regulations to be Enforced by the OCC and the
FDIC Pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act.'' This list was published by the FDIC and the OCC as a
Joint Notice in the Federal Register on July 6, 2011.\5\
---------------------------------------------------------------------------
\4\ Codified at 12 U.S.C. 5414(c).
\5\ 76 FR 39247 (July 6, 2011).
---------------------------------------------------------------------------
[[Page 60390]]
Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act \6\
granted the OCC rulemaking authority relating to both State and Federal
savings associations, nothing in the Dodd-Frank Act affected the FDIC's
existing authority to issue regulations under the Federal Deposit
Insurance Act (FDI Act) and other laws as the ``appropriate Federal
banking agency'' or under similar statutory terminology. Section 312(c)
of the Dodd-Frank Act amended the definition of ``appropriate Federal
banking agency'' contained in section 3(q) of the FDI Act \7\ to add
State savings associations to the list of entities for which the FDIC
is designated as the ``appropriate Federal banking agency.'' As a
result, when the FDIC acts as the designated ``appropriate Federal
banking agency'' (or under similar terminology) for State savings
associations, as it does here, the FDIC is authorized to issue, modify
and rescind regulations involving such associations, insured State
nonmember banks, and insured branches of foreign banks.
---------------------------------------------------------------------------
\6\ Codified at 12 U.S.C. 5412(b)(2)(B)(i)(II).
\7\ 12 U.S.C. 1813(q).
---------------------------------------------------------------------------
As noted, on June 14, 2011, operating pursuant to this authority,
the FDIC's Board of Directors reissued and redesignated certain
transferred OTS regulations. These transferred OTS regulations were
published as new FDIC regulations in the Federal Register on August 5,
2011.\8\ When it republished the transferred OTS regulations as new
FDIC regulations, the FDIC specifically noted that its staff would
evaluate the transferred OTS regulations and might later recommend
incorporating them into other FDIC regulations, amending them, or
rescinding them, as appropriate.
---------------------------------------------------------------------------
\8\ 76 FR 47652 (Aug. 5, 2011).
---------------------------------------------------------------------------
One of the OTS rules transferred to the FDIC requires State savings
associations to not discriminate with respect to lending, employment,
and other services provided. The OTS rule, formerly found at 12 CFR
part 528 (part 528), was transferred to the FDIC with only technical
changes and is now found in the FDIC's rules at part 390, subpart G,
entitled ``Nondiscrimination Requirements.'' Although few provisions of
part 390, subpart G have a direct counterpart within the FDIC's
regulations, the provisions are largely duplicative of regulations
implementing federal laws (ECOA, FHA, EEOA, and other laws concerning
nondiscrimination in lending, employment, and services) implemented by
other agencies. After careful review of part 390, subpart G, the FDIC
proposes to rescind and remove part 390, subpart G, because, as
discussed below, it is duplicative, unnecessary, and burdensome to
require State savings associations to comply with additional
requirements to which insured State nonmember banks are not subject.
The FDIC also proposes to makes technical conforming edits to part 338
to encompass State savings associations and update the regulation.
FDIC's Existing 12 CFR Part 338 and Former OTS Part 528 (Transferred to
FDIC Part 390, Subpart G)
The Fair Housing Act of 1968 prohibits discrimination concerning
the sale, rental and financing of housing based on race, religion,
national origin or sex. Section 808 of the FHA directed all executive
departments and agencies to administer their programs relating to
housing and urban development (including any Federal agency having
regulatory or supervisory authority over financial institutions, e.g.,
the OTS' predecessor, the Federal Home Loan Bank Board (FHLBB)) in a
manner to further the purposes of the FHA. Effective May 1, 1972, the
FHLBB amended Chapter V, subchapter B of Title 12, by issuing a new
section part 528 which prohibited ``discrimination by member
institutions in their lending and employment practices and in their
advertising and requiring that such institutions display an Equal
Housing Lender Poster.'' \9\
---------------------------------------------------------------------------
\9\ 37 FR 8436 (Apr. 3 1972).
---------------------------------------------------------------------------
Following this initial issuance of part 528 in 1972, in 1978 the
FHLBB finalized major amendments to the regulation to update and
strengthen its nondiscrimination in lending regulations to reflect
provisions of the FHA, ECOA, and the Community Reinvestment Act (CRA)
and to ``strengthen the Bank Board's ability to enforce member
institutions' compliance with these and other Federal laws which
prohibit discriminatory lending practices.'' \10\ Specifically, these
amendments to the FHLBB's fair lending regulation: ``(1) [p]rohibit
member institutions from automatically refusing to lend because of the
age or location of a dwelling; (2) prohibit loan decisions based on
discriminatory appraisals; (3) emphasize that there is a right to file
a written loan application; (4) require member institutions to have
written loan underwriting standards which are available to the public
upon request; (5) revise the Equal Housing Lender poster which member
institutions display in their lobbies; and (6) establish a new
monitoring system for fair lending enforcement and analysis.'' \11\
---------------------------------------------------------------------------
\10\ 43 FR 22332 (May 25, 1978).
\11\ 43 FR 22332 (May 25, 1978).
---------------------------------------------------------------------------
In 1993, following the President's order for federal agencies to
review all Federal regulations and policies to eliminate over-
burdensome regulations that discourage economic growth,\12\ the OTS (as
successor to the FHLBB) \13\ updated part 528 to eliminate certain
definitions that were deemed unnecessary and amended Sec. 528.6,
regarding compliance with Home Mortgage Disclosure Act (HMDA) loan/
application registers (LARs). Commenters favored elimination of the
nondiscrimination disclosure requirements of Sec. 528.6, arguing it
was duplicative of the requirements set forth in 12 CFR part 203, which
made HMDA requirements applicable to savings associations. In its
proposed rule, the OTS stated that its own ``loan application
register'' was ``more comprehensive than required by Regulation C'' and
that ``the additional register information is useful to examiners'' but
also stated that the additional information was available to examiners
through other means.\14\ In its final rule, the OTS agreed that part
528.6 was substantially duplicative of HMDA part 203 but disagreed that
the OTS' requirement to report ``reason for denial'' is unnecessary. At
the time, reporting the reason for denial was optional under Regulation
C.\15\ The OTS argued that ``[t]he `reason for denial' provides us with
useful information that assists the examination process. We believe
that retaining the regulatory requirement assures that this important
data field is completed by all OTS-regulated filers, including any
majority-owned savings association service corporations or
affiliates.'' \16\ As a result, the OTS continued to require that
savings associations and other OTS regulated filers required to keep
HMDA LARs pursuant to part 203 to report the ``reason for denial'' for
all loan denials.
---------------------------------------------------------------------------
\12\ In 1996, the Department of Housing and Urban Development
(HUD), in accordance with the President's initiative on regulatory
reinvention and reform which requires deletion of nonbinding
guidance or explanations, entirely eliminated HUD's part 109
(Advertising Guidelines), which provided a variety of nonbinding
suggestions and examples of advertising practices that would violate
the FHA. 61 FR 14378 (April 1, 1996).
\13\ The updates followed the passage of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989. Public
Law 101-73, 103 Stat. 183 (1989).
\14\ 57 FR 40352 (Sept. 3, 1992).
\15\ See 12 CFR 203.4(c) (1993).
\16\ 58 FR 4309 (Jan. 14, 1993).
---------------------------------------------------------------------------
Part 528 was among the regulations that were transferred to the
FDIC from the OTS on July 21, 2011, pursuant to
[[Page 60391]]
the Dodd-Frank Act as noted above. OTS' part 528 was adopted as FDIC's
part 390 subpart G and was not integrated with the FDIC's rules
contained in part 338, entitled ``Fair Housing.'' Both in 2011 when OTS
part 528 was transferred and today, the FDIC's part 338, a regulation
whose provisions are substantially similar to some provisions in the
OTS' former part 528: (1) Prohibits insured State nonmember banks from
engaging in discriminatory advertising with regard to residential real
estate-related transactions; and (2) requires recordkeeping of certain
home loan application data for compliance with the ECOA and HMDA with
respect to insured State nonmember banks for which the FDIC has been
designated the appropriate Federal banking agency.\17\ These provisions
have direct counterparts in part 390, subpart G.
---------------------------------------------------------------------------
\17\ 12 CFR part 338.
---------------------------------------------------------------------------
Specifically, the FDIC's fair housing recordkeeping provisions (see
Sec. Sec. 338.7 and 338.8) are a counterpart to the former OTS
requirement to file a HMDA LAR (Sec. 390.147). The FDIC rules require
supervised institutions to request and retain any monitoring
information required by HMDA and its implementing Regulation C when
receiving an application for credit for the purchase or refinancing of
a dwelling to be occupied as a principal residence. Prior to the
passage of the final HMDA rule in 2015 by the Bureau of Consumer
Financial Protection (CFPB),\18\ reporting of reason for denial was
optional for insured State nonmember banks, as mentioned earlier.
However, reporting of reason for denial became mandatory following the
2015 HMDA rule for covered institutions. FDIC-supervised institutions,
under part 338, are already subject to the HMDA reporting requirement
to provide a reason for denial as a result of the change in 2015.
Therefore, the FDIC has not found any reasonable basis to add such a
specific provision into its part 338, and the FDIC proposes to rescind
and remove the former OTS rule as duplicative and unnecessary.
Moreover, in 2018, the HMDA rule was further amended by the Economic
Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA),\19\
which provided that insured depository institutions and insured credit
unions need not report certain data points for transactions that
qualify for a partial exemption, unless otherwise required by their
regulator. Reason for denial is one such data point. Rescinding and
removing former OTS's Sec. 390.147 would promote regulatory
consistency among insured State nonmember banks and State savings
associations and enable State savings associations to take advantage of
the partial exemption, if eligible.
---------------------------------------------------------------------------
\18\ 80 FR 66127 (Oct. 28, 2015).
\19\ Public Law 117-154 (2018). In recent CFPB rulemakings and
other issuances, the requirement to report Reason for Denial in
Sec. 390.147 is stated to be independent of the partial exemption
from reporting that data field under HMDA.
---------------------------------------------------------------------------
In addition, FDIC requirements related to nondiscrimination in
advertising and displaying a fair housing poster (Sec. Sec. 338.3 and
338.4) are counterparts to substantially similar former OTS
requirements (Sec. Sec. 390.145 and 390.146). However, the FDIC's part
338 and the former OTS' part 390, subpart G differ with respect to
where they require fair housing posters to be displayed and the
presence of nonbinding recommendations about displaying Spanish-
language posters in certain offices. With respect to poster location,
FDIC's Sec. 338.4 requires posting either the FDIC's Equal Housing
Lender poster or the U.S. Department of Housing and Urban Development's
Equal Housing Opportunity poster at ``a central location within the
bank where deposits are received or where such loans are made in a
manner clearly visible to the general public entering the area,''
whereas Sec. 390.146 requires posting at each of a State savings
association's offices. The FDIC has not identified a reason for State
savings associations to post an Equal Housing Opportunity notice at
locations where insured State nonmember banks are not required to post.
Therefore, the FDIC proposes to rescind and remove Sec. 390.146. As
discussed below, the FDIC also proposes to amend Sec. 338.4 to apply
to State savings associations, in addition to insured State nonmember
banks and to update the address provided for the FDIC's Consumer
Response Center (CRC).
With respect to the presence of non-binding guidance, Sec. 390.146
recommends, but does not require, that State savings associations
``post a Spanish language version of the [Equal Housing Lender] poster
in offices serving areas with a substantial Spanish-speaking
population.'' The FDIC's part 338 does not contain guidance about
posting supplemental foreign-language posters. The FDIC does not
propose to add this nonbinding recommendation to the existing Equal
Housing Lending poster requirements in Sec. 338.4.\20\
---------------------------------------------------------------------------
\20\ https://www.fdic.gov/news/news/press/2018/pr18059a.pdf.
---------------------------------------------------------------------------
Although several former OTS nondiscrimination rules codified in
part 390, subpart G do not have direct FDIC counterparts, they are
substantially duplicative of nondiscrimination provisions found in
other federal laws (e.g., ECOA, FHA, EEOA, and other laws concerning
nondiscrimination in lending, employment, and services) and
implementing regulations of the CFPB or Department of Labor.\21\
Additionally, the interagency Policy Statement on Discrimination in
Lending applies to State savings associations.\22\ The applicable
prohibitions on discrimination addressed by these other laws,
regulations, and policy statements apply to State savings associations
regardless of specific references in the FDIC's regulation.
---------------------------------------------------------------------------
\21\ FDIC part 352 addresses nondiscrimination on the basis of
disability to provide equal access to programs and activities
conducted by the FDIC.
\22\ 59 FR 18267 (April 15, 1994).
---------------------------------------------------------------------------
In addition, to the extent that any such provision of part 390,
subpart G can be interpreted as applying in a case where ECOA, FHA,
EEOA and other laws and regulations concerning nondiscrimination in
lending, employment or services would not apply, the FDIC's authority
to amend these former OTS provisions is not certain.\23\ The OTS had
authority under the Home Owners' Loan Act (HOLA) to adopt regulations
that give primary consideration of the best practices of thrift
institutions in the United States and appears to have used such
authority in adopting and maintaining their nondiscrimination
requirements.\24\ However, such HOLA authority does not extend to the
FDIC. Moreover, the FDIC has not identified cases where the OTS applied
the nondiscrimination requirements of its part 528 to address acts or
practices that were not prohibited by ECOA, FHA, or EEOA. The FDIC also
has not found cases where a fair lending review of a State savings
association identified acts or practices that were deemed appropriate
to address under part 390 subpart G but not under ECOA or the FHA. For
these reasons, the FDIC finds Sec. Sec. 390.142 through 390.144 and
390.148 to be unnecessary and duplicative, as a result of the
overlapping provisions in ECOA, FHA, or EEOA, and proposes to rescind
Sec. Sec. 390.142 through 390.144 and 390.148 in their entirety rather
than revise them
[[Page 60392]]
to address acts or practices not addressed by ECOA, FHA, or EEOA.
---------------------------------------------------------------------------
\23\ See, e.g., OTS, Advance Notice of Proposed Rulemaking,
Unfair or Deceptive Acts and Practices, 72 FR 43570, 43573 (Aug. 6,
2007) (stating that OTS' Nondiscrimination Rule, then 12 CFR part
528, ``extends beyond the federal fair lending laws by prohibiting
discrimination not covered by those laws'' and providing examples of
such broader applicability).
\24\ See id.
---------------------------------------------------------------------------
The FDIC has determined that several provisions of part 390 subpart
G have no counterparts in either the FDIC's regulations or other
nondiscrimination federal regulations. For these provisions, the FDIC
has not identified a reasonable basis for retaining these requirements
for State savings associations, given that they do not apply to insured
State nonmember banks, and therefore proposes to rescind the following
provisions, which--
1. Require each State savings association to have clearly written,
nondiscriminatory loan underwriting standards, available to the public
upon request, at each of its offices. Require each association to
review its standards, and business practices that implement them, at
least annually to ensure equal opportunity in lending.\25\
---------------------------------------------------------------------------
\25\ 12 CFR 390.143(b).
---------------------------------------------------------------------------
2. Require each State savings association notify each ``inquirer''
of a right to obtain a copy of its loan underwriting standards.\26\
---------------------------------------------------------------------------
\26\ 12 CFR 390.144(b).
---------------------------------------------------------------------------
3. Provide supplementary guidelines to aid savings associations in
developing and implementing nondiscriminatory lending policies and
provide that each State savings association ``should reexamine its
underwriting standards at least annually in order to ensure equal
opportunity.'' \27\
---------------------------------------------------------------------------
\27\ 12 CFR 390.150(a).
---------------------------------------------------------------------------
4. Treat the age or location of a dwelling as a per se prohibited
basis for discrimination.\28\
---------------------------------------------------------------------------
\28\ 12 CFR 390.142 through 390.144.
---------------------------------------------------------------------------
5. Provide certain guidelines relating to nondiscrimination in
marketing practices.\29\
---------------------------------------------------------------------------
\29\ 12 CFR 390.150(d).
---------------------------------------------------------------------------
In summary, after careful review of part 390, subpart G (formerly
part 528), and the former OTS's stated rationale for the rule, the
FDIC, as the appropriate Federal banking agency for State savings
associations, proposes to rescind and remove part 390, subpart G in its
entirety. Rescinding part 390, subpart G also will serve to streamline
the FDIC's rules and eliminate unnecessary, inconsistent, and
duplicative regulations. If the proposal is adopted in final form, all
insured State nonmember banks and State savings associations will be
subject to the same anti-discrimination requirements.
II. The Proposal
Regarding the functions of the former OTS that were transferred to
the FDIC, section 316(b)(3) of the Dodd-Frank Act \30\ provides that
the former OTS regulations will be enforceable by the FDIC until they
are modified, terminated, set aside, or superseded in accordance with
applicable law. After reviewing the Nondiscrimination Requirements rule
currently found in part 390, subpart G, the FDIC, as the appropriate
Federal banking agency for State savings associations, proposes to
rescind and remove part 390, subpart G in its entirety. Further, in
part 338, the FDIC proposes to (1) revise Sec. 338.1 to reflect that
the advertising provisions of subpart A apply to State savings
associations and their subsidiaries, to conform to and reflect the
scope of FDIC's current supervisory responsibilities as the appropriate
Federal banking agency for State savings associations; (2) in Sec.
338.2, add a defined term ``FDIC-supervised institution,'' defined to
mean ``either a bank [defined in Sec. 338.2(a) to mean ``an insured
State nonmember bank as defined in section 3 of the Federal Deposit
Insurance Act''] or a State savings association''; (3) add a new
subsection to define ``State savings association'' as having ``the same
meaning as in section 3(b)(3) of the Federal Deposit Insurance Act'';
\31\ (4) make conforming technical edits throughout, including
replacing the term ``FDIC-supervised institution'' or ``institution''
in place of ``bank'' throughout the rule where necessary and revising
references to the FRB's part 202 and part 203 throughout part 338 to
refer to the CFPB's part 1002 and part 1003, respectively; and (5)
amend Sec. 338.4 to update the text required for the Equal Housing
Lender poster to the correct address for the FDIC Consumer Response
Center.
---------------------------------------------------------------------------
\30\ 12 U.S.C. 5414(b)(3).
\31\ 12 U.S.C. 1813(b)(3).
---------------------------------------------------------------------------
Part 390, Subpart G
A. Section 390.140--Definitions
Section 390.140 defines the terms ``application,'' ``dwelling,''
and ``State savings association.'' In light of the proposal to rescind
subpart G of part 390 in its entirety, these definitions need not be
retained. Therefore, the FDIC proposes to rescind Sec. 390.140.
B. Section 390.141--Supplementary Guidelines
Section 390.141 cross-references a policy statement transferred
from OTS regulations to Sec. 390.151, HUD's fair housing regulations
at 24 CFR part 100 et seq., and Regulation B and Regulation C. The
cross-reference to the policy statement would be obsolete if Sec.
390.151 is rescinded as proposed. Moreover, the cross-references to
HUD's fair housing regulations and to the regulations that implement
ECOA and HMDA are unnecessary. Therefore, the FDIC proposes to rescind
Sec. 390.141.
C. Section 390.142--Nondiscrimination in Lending and Other Services
Section 390.142 prohibits discrimination on a prohibited basis by
State savings associations in lending and other services. The
prohibited bases specified are location and age of a dwelling and race,
color, religion, sex, handicap, familial status, marital status, or age
of an applicant or a joint applicant, among other parties.\32\ In
general, Sec. 390.142(a) prohibits denying a loan or other service,
discriminating in the purchase of loans or securities, or
discriminating in fixing the amount, interest rate, duration,
application procedures, collection or enforcement procedures, or other
terms or conditions of such loan or service, on a prohibited basis.
Section 390.142(b) provides that ``[a] State savings association shall
consider without prejudice the combined income of joint applicants for
a loan or other service.'' Section 390.142(c) prohibits a State savings
association from discriminating against an applicant for a loan or
other service on any prohibited basis, as defined in Regulation B or
HUD's FHA regulation in 24 CFR part 100.
---------------------------------------------------------------------------
\32\ The other parties specified in Sec. 390.147(a) are a
person associated with respect to a loan or service or the purpose
thereof, present or prospective owners, lessees, tenants, or
occupants of the dwelling(s), or present or prospective owners,
lessees, tenant, or occupants of other dwellings in the vicinity of
the dwelling(s).
---------------------------------------------------------------------------
There is significant overlap between the requirements of Sec.
390.142 and of the requirements of ECOA and Regulation B and the FHA
and HUD's FHA regulations (the general federal fair lending laws). For
example, under ECOA, it is ``unlawful for any creditor to discriminate
against any applicant, with respect to any aspect of a credit
transaction'' on a prohibited basis.\33\ Similarly, the FHA provides
that it is ``unlawful for any person or other entity whose business
includes engaging in residential real estate-related transactions to
discriminate against any person in making available such a transaction,
or in the terms or conditions of such a transaction'' because of a
prohibited basis.\34\ Moreover, the following are prohibited bases
under both subpart G of part 390 and the general federal fair lending
laws: Race, color, religion, national origin, and sex.\35\
---------------------------------------------------------------------------
\33\ See 15 U.S.C. 1691(a).
\34\ See 42 U.S.C. 3605(a).
\35\ Prohibited bases for discrimination under ECOA but not the
FHA are age (of an applicant), marital status, and good faith
exercise of a right under the Consumer Credit Protection Act (or any
state law upon which the CFPB has granted an exception). Prohibited
bases for discrimination under the FHA but not ECOA are handicap and
familial status. Compare 15 U.S.C. 1691(a) with 42 U.S.C. 3604,
3605(a).
---------------------------------------------------------------------------
[[Page 60393]]
However, there are differences between Sec. 390.142 and the
general federal fair lending laws. For example, under Sec. 390.142(a),
prohibited bases for discrimination explicitly include the location and
age of a dwelling, whereas prohibited bases for discrimination under
ECOA, FHA, and their implementing regulations do not include such
factors.
As discussed earlier, to the extent that a provision of Sec.
390.142 can be interpreted as applying in a case where ECOA, FHA, EEOA
and other laws and regulations concerning nondiscrimination in lending,
employment or services would not apply, the FDIC's authority to amend
these former OTS provisions is not certain. Because the general federal
fair lending laws address substantially the same acts and practices as
are addressed by Sec. 390.142(a) and it is uncertain whether the FDIC
could amend Sec. 390.142(a) in connection with acts or practices not
explicitly prohibited by the general federal fair lending laws, FDIC
proposes to rescind Sec. 390.142(a).
Similarly, Sec. 390.142(b) addresses acts and practices addressed
by the general federal fair lending laws but differs in ways that make
FDIC's authority to amend Sec. 390.142(b) uncertain. As mentioned,
Sec. 390.142(b) provides that ``[a] State savings association shall
consider without prejudice the combined income of joint applicants for
a loan or other service.'' By contrast, Regulation B's provisions
establishing standards for consideration of an applicant's income in
Sec. 1002.6(b)(5) does not require creditors to consider the combined
income of joint applicants, and Comment 6(b)(5)-3.ii states that
creditors need not consider income at all. In contrast with Sec.
390.142(b), 12 CFR 1002.6(b)(5) in Regulation B prohibits treating
joint applicants differently based on the existence, absence or
likelihood of a marital relationship. The FDIC believes that the
prohibition in Sec. 1002.6(b)(5) addresses substantially the same
issue that Sec. 390.142(b) addresses and the latter is duplicative and
arguably less clear. Therefore, the FDIC proposes to rescind Sec.
390.142(b).\36\
---------------------------------------------------------------------------
\36\ Section 1002.6(b)(5) prohibits discounting, or excluding
from consideration, the income of an applicant or his or her spouse
because of a prohibited basis or because the income is derived from
part-time employment or is an annuity, pension, or other retirement
benefit. The provision also prohibits treating joint applicants
differently based on the existence, absence, or likelihood of a
marital relationship.
---------------------------------------------------------------------------
As mentioned, Sec. 390.142(c) prohibits a State savings
association from discriminating against an applicant for a loan or
other service on any prohibited basis, as defined in Regulation B or
HUD's FHA regulation in 24 CFR part 100. The FDIC believes that Sec.
390.142(c) is duplicative of the general federal fair lending laws and
therefore proposes to rescind the provision.
D. Section 390.143--Nondiscriminatory Appraisal and Underwriting
Section 390.143(a) prohibits using or relying upon a dwelling
appraisal that a State savings association knows or reasonably should
know is ``discriminatory on the basis of the age or location of the
dwelling'' or is ``discriminatory per se or in effect'' under the FHA
or ECOA. The general federal fair lending laws prohibit appraisal-
related discrimination on a prohibited basis.\37\ Although the location
of a dwelling is not a per se prohibited basis for discrimination under
those statutes, ECOA prohibits discrimination because of the race,
color, religion, national origin, etc. of residents in the neighborhood
where the property offered as collateral.\38\ To the extent that Sec.
390.143(a) prohibits considering the age of a dwelling in a way that
would not be prohibited under the general federal fair lending laws,
the authority of the FDIC to amend the provision is unclear.
---------------------------------------------------------------------------
\37\ Regulation B prohibits discrimination ``against an
applicant on a prohibited basis regarding any aspect of a credit
transaction.'' 12 CFR 1002.4(a). Under HUD's FHA regulations, it is
unlawful to use ``an appraisal of residential real property in
connection with the sale, rental, or financing of any dwelling where
the person knows or reasonably should know that the appraisal
improperly takes into consideration'' a prohibited basis. 24 CFR
100.135(d)(1).
\38\ See 12 CFR 1002.2(z) and Comment 2(z)-1.
---------------------------------------------------------------------------
As stated, Sec. 390.143(a) also prohibits using or relying upon a
dwelling appraisal that is discriminatory per se or in effect under the
FHA or ECOA. The FDIC believes that prohibition is duplicative of
prohibitions under the general fair lending laws and therefore is
unnecessary. For these reasons, the FDIC proposes to rescind Sec.
390.143(a).
Section 390.143(b) requires each State savings association to have
clearly written, nondiscriminatory loan underwriting standards
available to the public upon request at each of its offices. In
addition, Sec. 390.143(b) requires each association to review its
standards, and business practices that implement them, at least
annually to ensure equal opportunity in lending. No such requirements
apply to insured State nonmember banks. The provision is not required
by ECOA or the FHA, and the authority of the FDIC to amend former OTS
requirements that were adopted pursuant to HOLA authority is unclear.
For these reasons, the FDIC proposes to rescind Sec. 390.143(b).
E. Section 390.144--Nondiscrimination in Applications
Section 390.144(a) prohibits discouraging or refusing to allow,
receive, or consider any applicant, request or inquiry about a loan or
other service on a prohibited basis. Section 390.144(b) requires a
State savings association to ``inform each inquirer of his or her right
to file a written loan application, and to receive a copy of the
association's underwriting standards.''
Section 390.144(a) is substantially similar to, and duplicative of,
prohibitions under the general federal fair lending laws.\39\ To the
extent that Sec. 390.144(a) relies on HOLA authority to prohibit
discrimination with respect to a service, or with respect to the age or
the location of a dwelling, in cases where the general federal fair
lending laws would not apply, the FDIC's authority to amend the
provision is unclear. Therefore, the FDIC proposes to rescind Sec.
390.144(a).
---------------------------------------------------------------------------
\39\ See, e.g., 15 U.S.C. 1691(a); 12 CFR 1002.4; 24 CFR
100.120.
---------------------------------------------------------------------------
As discussed earlier, the FDIC proposes to rescind the requirement
in Sec. 390.143(b) for a State savings association to provide a copy
of its underwriting standards upon request. Further, the FDIC believes
that the requirement to post an Equal Housing Lender poster, discussed
below in connection with 12 CFR 338.4, serves a substantially similar
purpose as the requirement to ``inform each inquirer of his or her
right to file a written loan application'' in 12 CFR 390.144(b). For
the foregoing reasons, the FDIC proposes to rescind Sec. 390.144(b).
F. Section 390.145--Nondiscriminatory Advertising
Section 390.145 prohibits directly or indirectly engaging in any
form of advertising that implies or suggests a policy of discrimination
or exclusion in violation of ECOA, the FHA, or subpart G of part 390.
The provision also provides that advertisements for any loan for
purchasing, constructing, improving, repairing, or maintaining a
dwelling or any loan secured by a dwelling must include the Equal
Housing Lender symbol.
The requirement in Sec. 390.145 to include the Equal Housing
Lender
[[Page 60394]]
symbol in dwelling-related advertising is substantially similar to the
requirement in Sec. 338.4(a) that an insured State nonmember bank
prominently indicate in advertisements for dwelling-related loans
``that the bank makes such loans without regard to race, color,
religion, national origin, sex, handicap, or familial status.'' Section
338.4(a)(1) permits, but does not require, an insured State nonmember
bank to comply ``by including in the advertisement a copy of the
logotype with the Equal Housing Lender legend contained in the Equal
Housing Lender poster prescribed in Sec. 338.4(b) of the FDIC's
regulations or a copy of the logotype with the Equal Housing
Opportunity legend contained in the Equal Housing Opportunity poster
prescribed in'' Sec. 110.25(a) of HUD's FHA regulation. Because Sec.
390.145 is substantially similar to Sec. 338.4, FDIC proposes to
rescind Sec. 390.145 and, as discussed below, amend Sec. 338.4 to
cover State savings associations in addition to insured State nonmember
banks.
G. Section 390.146--Equal Housing Lender Poster
Section 390.146(a) requires each State savings association to post
and maintain at least one Equal Housing Lender poster prominently in
the lobby of each of its offices, requires the use of specified text,
establishes a minimum poster size, and requires that the text be
legible. Also, Sec. 390.146(a) states that ``[i]t is recommended that
savings associations post a Spanish language version of the poster in
offices serving areas with a substantial Spanish-speaking population.''
Section 390.146(b) sets forth the required poster text and the Equal
Housing Lender logotype.
The requirements of Sec. 390.146 are substantially similar to the
requirements applicable to insured State nonmember banks under Sec.
338.4. As discussed later, although the FDIC's Equal Housing Lender
poster provisions do not include the Spanish-language recommendation
included in Sec. 390.146, the FDIC makes a Spanish-language poster
available to the institutions it supervises. For these reasons, the
FDIC proposes to rescind Sec. 390.146 and, as discussed below, amend
Sec. 338.4 to also apply to State savings associations.
H. Section 390.147--Loan Application Register
Section 390.147 requires that State savings associations and other
lenders required to file HMDA LARs with the FDIC to enter the reason
for denial with respect to all loan denials. As discussed earlier in
Section I, Background, Regulation C now requires a covered financial
institution to report ``[t]he principal reason or reasons the financial
institution denied the application, if applicable.'' \40\ The FDIC
believes that Sec. 390.147 is duplicative now that reporting reason
for denial is required rather than optional under Regulation C.
Furthermore, pursuant to the EGRRCPA, Regulation C provides a partial
exemption from reporting reason for denial and certain other data
points for financial institutions that meet specified conditions. Banks
eligible for the partial exemption need not report reason for denial,
but State savings associations supervised by the FDIC must report
reason for denial pursuant to Sec. 390.147.\41\ The FDIC has not
identified grounds for State savings associations that are eligible for
the partial exemption under HMDA to be treated differently from
similarly situated banks. For the foregoing reasons, the FDIC proposes
to rescind Sec. 390.147.
---------------------------------------------------------------------------
\40\ See Sec. 1003.4(a)(16).
\41\ Financial institutions regulated by the OCC are required to
report reasons for denial on their HMDA LARs pursuant to 12 CFR
27.3(a)(1)(i) and 128.6.
---------------------------------------------------------------------------
I. Section 390.148--Nondiscrimination in Employment
Section 390.148 prohibits discrimination on a prohibited basis by
State savings associations in employment. The specified prohibited
bases are race, color, religion, sex, and national origin. Section
390.148(a) prohibits discrimination in the hiring, firing, promoting,
compensating, or training of an individual or similar discriminatory
treatment during employment or with regard to training. Section
390.148(b) prohibits segregation or classification of employees in a
way that would adversely affect their status as an employee on a
prohibited basis. Section 390.148(c) prohibits State savings
associations from retaliating against an employee for opposing an
unlawful employment practice. Section 390.148(d) prohibits
discrimination by State savings associations in advertisements for
employment. Section 390.148(e) states the regulation does not apply in
any case in which certain exemptions and exceptions under the EEOA
apply. Section 390.148(f) states that any violation of specified laws
or regulations, such as the EEOA and the Age Discrimination in
Employment Act, shall be deemed a violation of this regulation.
There is significant overlap between the requirements of Sec.
390.148(a) through (d) and the EEOA. Under the EEOA, it is unlawful for
an employer to discriminate in hiring, firing, compensating or
providing training because of the same prohibited bases as under Sec.
390.148(a).\42\ Similarly, the EEOA prohibits employers from
segregating or classifying employees that would adversely affect their
status as an employee on a prohibited basis.\43\ The EEOA also makes it
unlawful for an employer to retaliate against an employee for opposing
a practice made unlawful under a subchapter of the EEOA.\44\ The EEOA
makes it generally unlawful for an employer to discriminate in
advertisements for employment.\45\ The FDIC believes that Sec. Sec.
390.148(a) through (d) are duplicative of the prohibitions under the
EEOA and therefore are unnecessary. For these reasons, the FDIC
proposes to rescind these provisions.
---------------------------------------------------------------------------
\42\ See 42 U.S.C. 2000e-2(a)(1) and (d).
\43\ See 42 U.S.C. 2000e-2(a)(2).
\44\ See 42 U.S.C. 2000e-3(a).
\45\ See 42 U.S.C. 3605(a).
---------------------------------------------------------------------------
Section 390.148(e) cross-references the EEOA. The cross-reference
to the statute would be obsolete if Sec. 390.148 is rescinded as
proposed. Section 390.148(f) cross-references multiple employment laws,
including the EEOA. The FDIC believes such cross-references are
unnecessary and therefore proposes to rescind Sec. Sec. 390.148(e) and
(f).
J. Section 390.149--Complaints
Section 390.149 provides that complaints about discrimination in
lending by a State savings association ``shall be referred'' to the
Secretary of HUD for processing under the FHA and the Director of the
Division of Depositor and Consumer Protection at the FDIC for
processing under FDIC regulations. In addition, Sec. 390.149 provides
that complaints about discrimination in employment by a State savings
association ``shall be referred'' to the EEOC (with a copy to the FDIC)
if they relate to employment. Similar, although more detailed,
discrimination complaint processing provisions can be found in other
federal laws, and their implementing regulations.\46\ Moreover, as a
matter of practice, consistent with the 1991 Memorandum of
Understanding Between the U.S. Department of Housing and Urban
Development and the Federal Financial Institutions Examination Council
(FFIEC) Member Agencies, the FDIC has long had procedures for referring
complaints to HUD regarding lending discrimination by financial
institutions. These procedures apply to complaints involving lending by
State savings associations. Therefore, the FDIC
[[Page 60395]]
believes the provisions in Sec. 390.149 regarding routing complaints
about discrimination in lending are duplicative and unnecessary.
---------------------------------------------------------------------------
\46\ See 24 CFR part 103 ((Fair Housing--Complaint Processing)
(FHA)) and 29 CFR part 1601 ((Procedural Regulations) (EEOA)).
---------------------------------------------------------------------------
However, there appears to be no equivalent requirement to the
provisions in Sec. 390.149 regarding referring complaints to EEOC
regarding employment discrimination by FDIC-supervised institutions.
The FDIC believes it would be burdensome and unnecessary to require
State savings associations to comply with this additional requirement
to which insured State nonmember banks are not subject. For the
foregoing reasons, the FDIC proposes to rescind Sec. 390.149 in its
entirety.
K. Section 390.150--Guidelines Relating to Nondiscrimination in Lending
Section 390.150 ``provides supplementary guidelines to aid savings
associations in developing and implementing nondiscriminatory lending
policies.'' In general, Sec. 390.150 states actions that State savings
associations ``should'' take or actions that ``can'' or ``may''
constitute illegal discrimination.\47\ The requirements in the
guidelines generally have analogous requirements in the general federal
fair lending laws; for example, with respect to discrimination on the
basis of marital status,\48\ discounting or excluding spousal income or
supplementary income,\49\ and inquiring about child bearing or
childrearing.\50\ Therefore, the FDIC proposes to rescind this section
as duplicative or unnecessary.
---------------------------------------------------------------------------
\47\ See, e.g., Sec. 390.150(a) (stating that ``[e]ach State
savings association should reexamine its underwriting standards at
least annually in order to ensure equal opportunity''); Sec.
390.150(c)(2) (stating that ``[r]equiring fluency in the English
language as a prerequisite for obtaining a loan may be a
discriminatory practice based on national origin''); Sec.
390.150(c)(6) (stating that ``[r]efusing to lend, or offering less
favorable terms (such as interest rate, down payment, or maturity)
to applicants because of the income level in an area can
discriminate against minority group persons'').
\48\ Compare Sec. 390.150(c)(1) (``Loan underwriting decisions
must be based on an applicant's credit history and present and
reasonably foreseeable economic prospects, rather than on the basis
of assumptions regarding comparative differences in creditworthiness
between married and unmarried individuals, or between men and
women.'') with 12 CFR 1002.6(b)(8) (stating that, except as
otherwise permitted or required by law, a creditor must evaluate
married and unmarried applicants by the same standards and must not
treat applicants differently based on the existence, absence, or
likelihood of a marital relationship between the parties) and 12 CFR
1002.7(a) (stating that a creditor must not refuse to grant an
individual account to a creditworthy applicant on the basis of sex,
marital status, or any other prohibited basis).
\49\ Compare Sec. 390.150(c)(3) (stating that, when spouses
apply jointly for a loan, discounting spousal income violates the
FHA and that the determination whether a spouse's income qualifies
for credit purposes should depend upon a reasonable evaluation of
his or her past, present, and reasonably foreseeable economic
circumstances) and Sec. 390.150(c)(4) (``Lending standards which
consider as effective only the non-overtime income of the primary
wage-earner may result in discrimination because they do not take
account of variations in employment patterns among individuals and
families.'') with Sec. 1002.6(b)(5) (prohibiting discounting or
excluding income of an applicant or an applicant's spouse because of
a prohibited basis or because the income is derived from part-time
employment or is an annuity, pension, or other retirement benefit).
\50\ Compare Sec. 390.150(c)(3) (``Information relating to
child-bearing intentions of a couple or an individual may not be
requested.'') with Sec. 1002.6(b)(3) (stating that a creditor must
not make assumptions or use aggregate statistics about the
likelihood ``that any category of persons will bear or rear children
or will, for that reason, receive diminished or interrupted income
in the future'') and Sec. 1002.5(d)(3) (providing that a creditor
must not ``inquire about birth control practices, intentions
regarding the bearing or rearing of children, or capability to bear
children'').
---------------------------------------------------------------------------
Part 338--Fair Housing
The FDIC's part 338, Fair Housing, applies to insured State
nonmember banks and addresses discrimination in advertising and
recordkeeping requirements under ECOA and HMDA. The FDIC proposes to
make technical amendments to part 338 to reflect the applicability of
its provisions to State savings associations, as discussed below.
A. Section 338.1--Purpose
Section 338.1 states that its purposes are to prohibit insured
State nonmember banks from engaging in discriminatory advertising with
regard to residential real estate-related transactions and require them
to publicly display either the Equal Housing Lender poster set forth in
Sec. 338.4(b) of the FDIC's regulations or the Equal Housing
Opportunity poster prescribed in 24 CFR part 110 in HUD's regulations.
To reflect that Sec. 338.1 applies to all institutions for which the
FDIC is the appropriate Federal banking agency, the FDIC proposes to
amend Sec. 338.1 to change references to ``insured State nonmember
banks'' to refer to ``FDIC-supervised institutions.''
B. Section 338.2--Definitions Applicable to Subpart A of This Part
Section 338.2 defines terms used in subpart A of part 338,
including the term ``bank'' defined in Sec. 338.2(a) to mean ``an
insured state nonmember bank as defined in section 3 of the Federal
Deposit Insurance Act.'' The FDIC proposes to add to Sec. 338.2(c) a
new defined term ``FDIC-supervised institution'' meaning a bank or a
State savings association and to add Sec. 338.2(f), a new defined term
``State savings association'' having ``the same meaning as in section
(3)(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3)''.
Also, the FDIC proposes to make conforming technical edits to other
subsections in Sec. 338.2 to reflect the re-ordering of definitions.
C. Section 338.3--Nondiscriminatory Advertising
Section 338.3 provides certain requirements with respect to
dwelling-related advertisements to reflect the bank's nondiscrimination
lending practice and prohibits such advertisements from including
``words, symbols, models, or other forms of communication which
express, imply, or suggest a discriminatory preference or policy of
exclusion in violation of the provisions of the FHA or ECOA. To reflect
that Sec. 338.3 applies to all institutions for which the FDIC is the
appropriate Federal banking agency, the FDIC proposes to amend Sec.
338.3 to change references to ``bank'' to refer to ``FDIC-supervised
institution.''
D. Section 338.4--Fair Housing Poster
Section 338.4(a) requires insured State nonmember banks engaged in
extending dwelling-related loans to conspicuously display either an
Equal Housing Lender poster or an Equal Housing Opportunity poster ``in
a central location within the bank where deposits are received or where
such loans are made in a manner clearly visible to the general public
entering the area, where the poster is displayed.'' This requirement is
substantially similar to the requirement in Sec. 390.146 for State
savings associations to display an Equal Housing Lender poster, which
the FDIC herein proposes to rescind and remove. To reflect that Sec.
338.4(a) applies to all institutions for which the FDIC is the
appropriate Federal banking agency, the FDIC proposes to amend Sec.
338.4(a) to change references to ``insured State nonmember banks'' to
refer to ``FDIC-supervised institutions.''
Section 338.4(b) sets forth the required text of the FDIC's Equal
Housing Lender poster, including the former mailing address of the
FDIC's CRC, formatted as a Portable Document Format (PDF) image. Since
the CRC mailing address changed in 2011, the FDIC has made available to
FDIC-supervised institutions an Equal Housing Lender poster with the
correct address of the CRC, both in English and in Spanish.\51\ Because
the CRC mailing address may change in the future, the FDIC proposes to
amend Sec. 338.4(b) to
[[Page 60396]]
reflect that the mailing address stated on the Equal Housing Lender
poster should be the address for the Consumer Response Center stated on
the FDIC's website at www.fdic.gov.\52\ Furthermore, the FDIC proposes
to set forth the required text of the Equal Housing Lender poster in
Sec. 338.4(b) as a text statement rather than as a PDF image.
---------------------------------------------------------------------------
\51\ The poster is available to both insured State nonmember
banks and State savings associations. Moreover, the current CRC
mailing address is correctly stated in FDIC regulations applicable
to State savings associations. 12 CFR 390.146.
\52\ Currently, the mailing address for the Consumer Response
Center (1100 Walnut St., Box #11 Kansas City, MO 64106) is provided
at https://www.fdic.gov/consumers/assistance/filecomplaint.html.
Since May 31, 2012, Regulation B has required the use of that
address in adverse action notices, as applicable. See Board of
Governors of the Federal Reserve System, Final Rule, Equal Credit
Opportunity, 76 FR 31451 (Jun. 1, 2011).
---------------------------------------------------------------------------
To assist FDIC-supervised institutions, the FDIC expects to
continue to provide them with access to a poster stating the required
text, including the accurate CRC mailing address. If this rule is
finalized as proposed, no change to posters would be required of FDIC-
supervised institutions that use an Equal Housing Lender poster
obtained from the FDIC since the CRC mailing address was updated in
2011. The FDIC believes that few insured State nonmember banks make
their own Equal Housing Lender poster based on the text of Sec.
338.4(b). Nonetheless, to facilitate the transition to the updated
poster, the FDIC proposes to provide a transition period of one year
for FDIC-supervised institutions to change their posters to reflect the
current CRC mailing address, if needed. That is, the effective date of
Sec. 338.4(b), as amended, would be the date that is one year after a
final rule amending the provision is published in the Federal Register.
E. Section 338.5--Purpose
Section 338.5 states that its purpose is to notify insured State
nonmember banks of their duty both to collect and retain certain
information about a home loan applicant's personal characteristics in
accordance with Regulation B and to maintain, update and report a
register of home loan applications in accordance with Regulation C. To
reflect that Sec. 338.5 applies to all institutions for which the FDIC
is the appropriate Federal banking agency, the FDIC proposes to amend
Sec. 338.5 to change references to ``insured State nonmember banks''
to refer to ``FDIC-supervised institutions.'' The FDIC also proposes to
make technical amendments to Sec. 338.5 to reflect that Regulation B
and Regulation C have been re-designated as 12 CFR part 1002 and 12 CFR
part 1003, respectively, and are implemented by the CFPB.
F. Section 338.6--Definitions Applicable to This Subpart B
Section 338.6 defines terms used in subpart B of part 338,
including the term ``bank'' defined in Sec. 338.6(a) to mean ``an
insured State nonmember bank as defined in section 3 of the Federal
Deposit Insurance Act.'' The FDIC proposes to add as Sec. 338.2(c) a
new defined term ``FDIC-supervised institution'' meaning a bank or a
State savings association and to add as Sec. 338.6(d) a new defined
term ``State savings association'' having ``the same meaning as in
section (3)(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C.
1813(b)(3).''
G. Section 338.7--Recordkeeping Requirements
Section 338.7 requires banks that receive an application for credit
primarily for the purchase or refinancing of a dwelling occupied or to
be occupied by the applicant as a principal residence where the
extension of credit will be secured by the dwelling to request and
retain the monitoring information required by Regulation B.\53\ To
reflect that Sec. 338.7 applies to all institutions for which the FDIC
is the appropriate Federal banking agency, the FDIC proposes to amend
Sec. 338.7 to change references to ``bank'' to refer to ``FDIC-
supervised institution.'' The FDIC also proposes to make technical
amendments to Sec. 338.7 to reflect that Regulation B has been re-
designated as 12 CFR part 1002 and is implemented by the CFPB.
---------------------------------------------------------------------------
\53\ This requirement relates to the collection of information
for monitoring purposes required by 12 CFR 1002.13.
---------------------------------------------------------------------------
H. Section 338.8--Compilation of Loan Data in Register Format
Section 338.8 requires banks and other lenders required to file a
HMDA LAR with the FDIC to maintain, update and report such LAR in
accordance with Regulation C. To reflect that Sec. 338.8 applies to
all institutions for which the FDIC is the appropriate Federal banking
agency, the FDIC proposes to amend Sec. 338.8 to change references to
``bank'' to refer to ``FDIC-supervised institution.'' Additionally, to
reflect amendments made to Regulation C regarding the responsibilities
of a financial institution with respect to HMDA LAR data, the FDIC
proposes to amend Sec. 338.8 require banks and other lenders required
to file a HMDA LAR with the FDIC to collect, record, and report such
LAR in accordance with Regulation C. The FDIC also proposes to make
technical amendments to Sec. 338.8 to reflect that Regulation C has
been re-designated as 12 CFR part 1003 and is implemented by the CFPB.
I. Section 338.9--Mortgage Lending of a Controlled Entity
Section 338.9 establishes requirements that apply if a bank refers
applicants to a ``controlled entity,'' as defined in Sec. 338.6, and
purchases any home purchase loans or home improvement loans (as defined
in Regulation C) that are originated by the controlled entity, as a
condition to transacting any business with the controlled entity.\54\
In such cases, Sec. 338.9 provides that the bank must require the
controlled entity to enter into a written agreement with the bank that
states that the controlled entity must comply with the requirements of
Sec. Sec. 338.3, 338.4 and 338.7 and, if the controlled entity is
subject to Regulation C, Sec. 338.8. Further, the written agreement
must provide that the controlled entity must open its books and records
to FDIC examination and comply with all FDIC instructions and orders
with respect to its home loan practices.
---------------------------------------------------------------------------
\54\ Pursuant to Sec. 338.9, ``controlled entity'' means ``a
corporation, partnership, association, or other business entity with
respect to which a bank possesses, directly or indirectly, the power
to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract, or
otherwise.''
---------------------------------------------------------------------------
Because this notice of proposed rulemaking is intended to rescind
and remove former OTS regulations that are duplicative of regulations
under ECOA, FHA, or EEOA, the FDIC does not propose in this rulemaking
to impose substantive requirements regarding the business transactions
between a State savings association and any entity it controls. That
is, the FDIC does not propose to replace the term ``bank'' with the
term ``FDIC-supervised institution'' in Sec. 338.9. However, the FDIC
proposes to make technical amendments to Sec. 338.9 to reflect that
Regulation C has been re-designated as 12 CFR part 1003 and is
implemented by the CFPB.
III. Expected Effects
As of March 31, 2020, the FDIC-supervised 3,309 depository
institutions,\55\ of which 35 are State savings associations.\56\
---------------------------------------------------------------------------
\55\ FDIC-supervised institutions are set forth in 12 U.S.C.
1813(q)(2).
\56\ FDIC Call Report data, March 31, 2020.
---------------------------------------------------------------------------
If the proposed rule were adopted by the FDIC, Sec. Sec. 390.140
and 390.141 would be rescinded. As discussed previously, these sections
include definitions and cross-references to other parts of section 390,
so their rescission has no independent significance for institutions or
applicants, but rather is
[[Page 60397]]
a technical amendment associated with the proposal to rescind subpart G
of part 390 in its entirety.
As previously discussed, if the proposed rule were adopted by the
FDIC, Sec. 390.142 would be rescinded. This section has substantial
overlap with the requirements of ECOA and Regulation B and the FHA and
HUD's FHA regulations. Additionally, although some aspects of Sec.
390.142 have no counterpart in existing regulations for insured State
nonmember banks, as indicated earlier, the FDIC's authority to amend
those elements is uncertain. Therefore, the FDIC believes that these
aspects of the proposed rule are unlikely to significantly affect FDIC-
supervised institutions or applicants.
If the proposed rule were adopted, the FDIC would rescind Sec.
390.143. As discussed previously, aspects of Sec. 390.143 are either
duplicative of prohibitions under the general fair lending laws or the
authority of the FDIC to amend them is uncertain. With regard to Sec.
390.143(b), the proposed rule would reduce compliance requirements
associated with maintaining and distributing relevant paperwork. The
FDIC believes that this is likely to pose a relatively small benefit to
the 35 institutions to which it applies. Further, the FDIC believes
that it is unlikely that the rescission of the requirement to
establish, maintain, and distribute upon request nondiscriminatory loan
underwriting standards for these 35 State savings associations would
lead to an increase in discriminatory lending behavior because these
institutions are still subject to the general fair lending laws.
Therefore, the FDIC does not believe that this aspect of the proposed
rule, if adopted, is likely to have substantive effects on FDIC-
supervised institutions or applicants.
As discussed previously, if the proposed rule were adopted by the
FDIC, Sec. 390.144 would be rescinded. Section 390.144(a) is
substantially similar to, and duplicative of, prohibitions under the
general federal fair lending laws.\57\ Additionally, the authority of
the FDIC to amend it is unclear. The FDIC also believes that the
requirement to post an Equal Housing Lender poster, discussed above in
connection with Sec. 338.4, serves a substantially similar purpose as
the requirement to ``inform each inquirer of his or her right to file a
written loan application'' in Sec. 390.144(b). Therefore, the FDIC
believes that the rescission of Sec. 390.144 is unlikely to have any
substantive effect on FDIC-supervised institutions or applicants.
---------------------------------------------------------------------------
\57\ See, e.g., 15 U.S.C. 1691(a); 12 CFR 1002.4; 24 CFR
100.120.
---------------------------------------------------------------------------
As discussed previously, if the proposed rule were adopted by the
FDIC, Sec. 390.145 would be rescinded. Section 390.145 is
substantially similar to Sec. 338.4 and the proposed rule would amend
Sec. 338.4 to cover State savings associations in addition to insured
State nonmember banks. Therefore, the FDIC believes that this aspect of
the proposed rule is unlikely to have any substantive effect on FDIC-
supervised institutions or applicants.
As discussed previously, if the proposed rule were adopted by the
FDIC, Sec. 390.146 would be rescinded. The requirements of Sec.
390.146 are substantially similar to the requirements applicable to
insured State nonmember banks under Sec. 338.4. Section 338.4,
however, unlike Sec. 390.146, does not include a ``recommendation''
that a Spanish-language version of the Equal Housing Lender poster be
posted in offices serving areas with a substantial Spanish-speaking
population. The FDIC does, however, make a Spanish-language poster
available to the institutions it supervises. Given the substantive
similarity of much of Sec. 390.146 to Sec. 338.4, the FDIC believes
that rescinding it is unlikely to have substantial effects on covered
institutions or applicants.
If the proposed rule were adopted, the FDIC would rescind Sec.
390.147. As previously discussed, the FDIC believes that Sec. 390.147
is duplicative now that reporting reason for denial is required rather
than optional under Regulation C. Further, since Regulation C provides
a partial exemption from reporting reason for denial and certain other
data points for financial institutions that meet specified conditions,
but no such exemption exists for State savings associations, the
proposed rule would establish parity with respect to the reporting
requirements for HMDA LARs for State savings associations and other
FDIC-supervised institutions. The FDIC believes that this aspect of the
proposed rule is unlikely to significantly affect FDIC-supervised
institutions or applicants.
As previously discussed, the proposed rule would rescind Sec.
390.148 if it were adopted. The FDIC believes that there is significant
overlap between the requirements of Sec. 390.148(a) through (d) and
various aspects of the EEOA. Further, Sec. 390.148(e) and (f)
references multiple employment laws, including the EEOA, which if the
rest of Sec. 390.148 were rescinded as proposed, would be unnecessary.
Therefore, the FDIC believes that this aspect of the proposed rule is
unlikely to substantively affect FDIC-supervised institutions or
applicants.
As previously discussed, the proposed rule would rescind Sec.
390.149 if it were adopted. The FDIC has procedures for referring
complaints to HUD regarding lending discrimination by financial
institutions and these procedures apply to complaints involving lending
by State savings associations. However, there appears to be no
equivalent requirement to the provisions in Sec. 390.149 regarding
referring complaints to EEOC regarding employment discrimination by
FDIC-supervised institutions. This aspect of the proposed rule would
thus create parity between insured State nonmember banks and State
savings associations with respect to complaints about discriminatory
lending. Given that FDIC-supervised institutions are still subject to
applicable elements of the EEOA and FDIC regulations and procedures,
the FDIC does not believe that this aspect of the proposed rule is
likely to have a substantive effect on covered institutions or their
employees.
As previously discussed, the proposed rule would rescind Sec.
390.150 if adopted. This section contains guidelines intended to serve
as a resource for State savings associations when developing and
implementing nondiscriminatory lending policies. State savings
associations, like other FDIC-supervised banks, remain subject to
federal fair lending laws and regulations and the FDIC does not believe
removal of these guidelines will have any meaningful effect on these
institutions or their applicants.
Finally, the proposed rule, if adopted, would make some technical
changes to FDIC's part 338 in order to make it applicable to State
savings associations and provide for Equal Housing Lender posters to
state the accurate CRC mailing address. As previously discussed, these
proposed changes are unlikely to have significant effects on State
savings associations because they are already subject to substantively
similar regulations.
Rescinding part 390, subpart G also will serve to streamline the
FDIC's rules and eliminate unnecessary, inconsistent, and duplicative
regulations. If the proposal is adopted in its final form, insured
State nonmember banks and State savings associations will be subject to
the same anti-discrimination requirements.
V. Alternatives
Several alternatives to the proposed rulemaking were available to
the FDIC. The FDIC could have retained the current regulations in part
390, subpart
[[Page 60398]]
G, but chose not to do so since most of the requirements in subpart G
are duplicative of or substantively similar to existing requirements
under federal law or under the FDIC's current fair housing requirements
in part 338. As previously discussed, the FDIC also could have retained
certain requirements in subpart G that the OTS issued pursuant to the
HOLA, but chose not to do so because the FDIC's legal authority to
amend requirements that the OTS issued pursuant to HOLA is not clear.
In the instances where the regulations in part 390, subpart G were
more stringent than similar requirements for insured State nonmember
banks, the FDIC could have applied those requirements to insured State
nonmember banks. However, the FDIC chose not to adopt this alternative
because it believes the fair lending laws and regulations that already
apply to insured State nonmember banks provide an appropriate and
sufficient framework to prohibit discrimination.
The FDIC believes that this proposed rule, which would remove and
rescind part 390, subpart G, and make the FDIC's existing
nondiscrimination regulations applicable to State savings associations,
is less burdensome to State savings associations and the public than
the alternatives discussed above since it would promote consistency
among the regulatory requirements for all FDIC-supervised institutions
and improve the public's understanding and ease of reference.
Additionally, the FDIC believes that the proposed rule does not
materially change the nondiscrimination requirements to which insured
State nonmember banks and State savings associations are required to
adhere, relative to the alternatives discussed.
IV. Request for Comments
The FDIC invites comments on all aspects of this proposed
rulemaking, and specifically requests comments on the following:
What impacts, positive or negative, can you foresee in the FDIC's
proposal to rescind and remove part 390, subpart G?
V. Regulatory Analysis and Procedure
A. The Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA),\58\ the FDIC may not conduct or sponsor, and the
respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number.
---------------------------------------------------------------------------
\58\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------
The Proposed Rule would rescind and remove from FDIC regulations
part 390, subpart G because it is duplicative and unnecessary. This
rule was transferred with only nominal changes to the FDIC from the OTS
when the OTS was abolished by title III of the Dodd-Frank Act. Although
few provisions of part 390, subpart G have a direct counterpart within
the FDIC's existing nondiscrimination requirements for insured State
nonmember banks in part 338, it is largely duplicative of federal laws
(ECOA, FHA, EEOA, and other laws concerning nondiscrimination in
lending, employment, and services) and implementing regulations of the
CFPB or the Department of Labor. Where provisions of part 390, subpart
G had no such counterparts, the FDIC concluded no reasonable basis
exists for applying these requirements to State savings associations
but not to insured State nonmember banks or that the requirements are
inconsistent with current agency policy.
In addition, the proposed rule would: (1) Amend part 338 to include
State savings associations and their subsidiaries within its scope; (2)
define the new terms ``FDIC-supervised institution'' and ``State
savings association;'' and (3) make conforming technical edits
throughout to update the regulation. These revisions would clarify that
State savings associations, as well as insured State nonmember banks,
are subject to part 338 with the exception of Sec. 338.9.
Therefore, the Proposed Rule does not revise any existing, or
create any new information collection pursuant to the PRA.
Consequently, no submission will be made to the OMB for review.
B. The Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that, in
connection with a proposed rulemaking, an agency prepare and make
available for public comment an initial regulatory flexibility analysis
describing the impact of the proposed rule on small entities.\59\
However, a regulatory flexibility analysis is not required if the
agency certifies that the proposed rule will not have a significant
economic impact on a substantial number of small entities. The Small
Business Administration (SBA) has defined ``small entities'' to include
banking organizations with total assets of less than or equal to $600
million that are independently owned and operated or owned by a holding
company with less than or equal to $600 million in total assets.\60\
Generally, the FDIC considers a significant effect to be a quantified
effect in excess of 5 percent of total annual salaries and benefits per
institution, or 2.5 percent of total noninterest expenses. The FDIC
believes that effects in excess of these thresholds typically represent
significant effects for FDIC-supervised institutions. For the reasons
described below and under section 605(b) of the RFA, the FDIC certifies
that this proposed rule will not have a significant economic impact on
a substantial number of small entities.
---------------------------------------------------------------------------
\59\ 5 U.S.C. 601 et seq.
\60\ The SBA defines a small banking organization as having $600
million or less in assets, where an organization's ``assets are
determined by averaging the assets reported on its four quarterly
financial statements for the preceding year.'' See 13 CFR 121.201
(as amended by 84 FR 34261, effective August 19, 2019). In its
determination, the ``SBA counts the receipts, employees, or other
measure of size of the concern whose size is at issue and all of its
domestic and foreign affiliates.'' See 13 CFR 121.103. Following
these regulations, the FDIC uses a covered entity's affiliated and
acquired assets, averaged over the preceding four quarters, to
determine whether the covered entity is ``small'' for the purposes
of RFA.
---------------------------------------------------------------------------
As of March 31, 2020, the FDIC-supervised 3,309 depository
institutions,\61\ of which 2,548 were considered small entities for the
purposes of RFA.\62\ There are 33 State savings associations that are
small entities for the purposes of RFA.\63\ If the proposed rule were
adopted by the FDIC, Sec. Sec. 390.140 and 390.141 would be rescinded.
As discussed previously, these sections include definitions and cross-
references to other parts of Sec. 390, so their rescission has no
independent significance for institutions or borrowers, but rather is a
technical amendment associated with the proposal to rescind subpart G
of part 390 in its entirety.
---------------------------------------------------------------------------
\61\ FDIC-supervised institutions are set forth in 12 U.S.C.
1813(q)(2).
\62\ FDIC Call Report data, March 31, 2020.
\63\ Id.
---------------------------------------------------------------------------
As previously discussed, if the proposed rule were adopted by the
FDIC Sec. 390.142 would be rescinded. This section has substantial
overlap with the requirements of ECOA and Regulation B and the FHA and
HUD's FHA regulations. Additionally, although some aspects of Sec.
390.142 have no counterpart in existing regulations for State nonmember
banks, as indicated earlier the FDIC is uncertain if it has the
authority to amend those elements. Therefore, the FDIC believes that
these aspects of the proposed rule are unlikely to significantly affect
small FDIC-supervised institutions or borrowers.
If the proposed rule were adopted, the FDIC would rescind Sec.
390.143. As discussed previously, aspects of 390.143 are either
duplicative of prohibitions
[[Page 60399]]
under the general fair lending laws or the authority of the FDIC to
amend them is uncertain. With regard to Sec. 390.143(b), the proposed
rule would reduce compliance requirements associated with maintaining
and distributing relevant paperwork. The FDIC believes that this is
likely to pose a relatively small benefit to the 33 small institutions
to which it applies. Further, the FDIC believes that it is unlikely
that the rescission of the requirement to establish, maintain, and
distribute upon request nondiscriminatory loan underwriting standards
for these 33 small State savings associations would lead to an increase
in discriminatory lending behavior because these institutions are still
subject to the general fair lending laws. Therefore, the FDIC does not
believe that this aspect of the proposed rule, if adopted, is likely to
have substantive effects on small FDIC-supervised institutions or
borrowers.
As discussed previously, if the proposed rule were adopted by the
FDIC Sec. 390.144 would be rescinded. Section 390.144(a) is
substantially similar to, and duplicative of, prohibitions under the
general federal fair lending laws.\64\ Additionally, the authority of
the FDIC to amend them is uncertain. The FDIC also believes that the
requirement to post an Equal Housing Lender poster, discussed above in
connection with 12 CFR 338.4, serves a substantially similar purpose as
the requirement to ``inform each inquirer of his or her right to file a
written loan application'' in 12 CFR 390.144(b). Therefore, the FDIC
believes that the rescission of Sec. 390.144 is unlikely to have any
substantive effect on small FDIC-supervised institutions or borrowers.
As discussed previously, if the proposed rule were adopted by the
FDIC Sec. 390.145 would be rescinded. Section 390.145 is substantially
similar to Sec. 338.4 and the proposed rule would amend Sec. 338.4 to
cover State savings associations in addition to insured State nonmember
banks. Therefore, the FDIC believes that this aspect of the proposed
rule is unlikely to have any substantive effect on small FDIC-
supervised institutions or borrowers.
As discussed previously, if the proposed rule were adopted by the
FDIC, Sec. 390.146 would be rescinded. The requirements of Sec.
390.146 are substantially similar to the requirements applicable to
insured State nonmember banks under Sec. 338.4. However, Sec. 338.4,
unlike Sec. 390.146, does not include a ``recommendation'' that a
Spanish-language version of the Equal Housing Lender poster be posted
in offices serving areas with a substantial Spanish-speaking
population. As indicated earlier, the FDIC is taking the approach of
not including non-binding recommendations in the proposed rule. The
FDIC does, however, make a Spanish-language poster available to the
institutions it supervises. Given the substantive similarity of much of
Sec. Sec. 390.146 to 338.4, the FDIC believes that rescinding it is
unlikely to have substantial effects on small covered institutions or
borrowers.
If the proposed rule were adopted, the FDIC would rescind Sec.
390.147. As previously discussed, the FDIC believes that Sec. 390.147
is duplicative now that reporting reason for denial is required rather
than optional under Regulation C. Further, since Regulation C provides
a partial exemption from reporting reason for denial and certain other
data points for financial institutions that meet specified conditions,
but no such exemption exists for State savings associations, the
proposed rule would establish parity with respect to the reporting
requirements for HMDA LARs for State savings associations and other
FDIC-supervised institutions. The FDIC believes that this aspect of the
proposed rule is unlikely to substantively affect small FDIC-supervised
institutions or borrowers.
As previously discussed, the proposed rule would rescind Sec.
390.148 if it were adopted. The FDIC believes that there is significant
overlap between the requirements of Sec. 390.148(a) through (d) and
various aspect of the EEOA. Further, Sec. 390.148(e) and (f)
references multiple employment laws, including the EEOA, which if the
rest of Sec. 390.148 were rescinded as proposed, would be unnecessary.
Therefore, the FDIC believes that this aspect of the proposed rule is
unlikely to substantively affect small FDIC-supervised institutions or
borrowers.
As previously discussed, the proposed rule would rescind Sec.
390.149 if it were adopted. The FDIC has procedures for referring
complaints to HUD regarding lending discrimination by financial
institutions and these procedures apply to complaints involving lending
by State savings associations. However, there appears to be no
equivalent requirement to the provisions in Sec. 390.149 regarding
referring complaints to EEOC regarding employment discrimination by
FDIC-supervised institutions. This aspect of the proposed rule would
thus create parity between State nonmember banks and State savings
associations with respect to discriminatory complaints. Given that
FDIC-supervised institutions are still subject to applicable elements
of the EEOA and FDIC regulations and procedures, the FDIC does not
believe that this aspect of the proposed rule is likely to have a
substantive effect on covered institutions or their employees.
As previously discussed, the proposed rule would rescind Sec.
390.150 if adopted. This section contains guidelines intended to serve
as a resource for State savings associations when developing and
implementing nondiscriminatory lending policies. Small State savings
associations, like other FDIC-supervised banks, remain subject to
federal fair lending laws and regulations and the FDIC does not believe
removal of these guidelines will have any meaningful effect on these
institutions or their borrowers.
Finally, the proposed rule if adopted would make some technical
changes to FDIC's part 338 in order to make it applicable to State
savings associations and provide for Equal Housing Lender posters to
state the accurate CRC mailing address. As previously discussed, these
proposed changes are unlikely to pose significant effects for small
State savings associations because they are already subject to
substantively similar regulations.
Rescinding part 390, subpart G also will serve to streamline the
FDIC's rules and eliminate unnecessary, inconsistent, and duplicative
regulations. If the proposal is adopted in its final form, all small
insured State nonmember banks and State savings associations--will be
subject to the same anti-discrimination requirements.
The FDIC does not have data with which to estimate the costs that
State savings associations currently incur to comply with subpart G or
how those costs will change if this proposal were adopted in its
current form. However, since this proposal would only affect 33 small
entities, and since the differences between subpart G and existing
regulation and law are modest, the FDIC certifies that this proposal
would not have a significant economic effect on a substantial number of
small entities.
The FDIC invites comments on all aspects of the supporting
information provided in this section, and in particular, whether the
proposed rule would have any significant effects on small entities that
the FDIC has not identified.
C. Plain Language
Section 722 of the Gramm-Leach-Bliley Act \65\ requires each
Federal banking agency to use plain language in all of its proposed and
final rules published after January 1, 2000. The FDIC has sought to
present the Proposed
[[Page 60400]]
Rule in a simple and straightforward manner. The FDIC invites comments
on whether the Proposed Rule is clearly stated and effectively
organized, and how the FDIC might make it easier to understand. For
example:
---------------------------------------------------------------------------
\65\ 12 U.S.C. 4809.
---------------------------------------------------------------------------
Has the FDIC organized the material to suit your needs? If
not, how could it present the rule more clearly?
Have we clearly stated the requirements of the rule? If
not, how could the rule be more clearly stated?
Does the rule contain technical 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 would make the regulation easier to
understand?
What else could we do to make the regulation easier to
understand?
D. The Economic Growth and Regulatory Paperwork Reduction Act
Under section 2222 of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA), the FDIC is required to review all of
its regulations, at least once every 10 years, in order to identify any
outdated or otherwise unnecessary regulations imposed on insured
institutions.\66\ The FDIC, along with the other Federal banking
agencies, submitted a Joint Report to Congress on March 21, 2017
(EGRPRA Report) discussing how the review was conducted, what has been
done to date to address regulatory burden, and further measures the
FDIC will take to address issues that were identified.\67\ As noted in
the EGRPRA Report, the FDIC is continuing to streamline and clarify its
regulations through the OTS rule integration process. By removing
outdated or unnecessary regulations, such as part 390, subpart G, this
Proposed Rule complements other actions that the FDIC has taken,
separately and with the other Federal banking agencies, to further the
EGRPRA mandate.
---------------------------------------------------------------------------
\66\ Public Law 104-208, 110 Stat. 3009 (1996).
\67\ 82 FR 15900 (March 31, 2017).
---------------------------------------------------------------------------
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),\68\ in determining the effective
date and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements on
insured depository institutions (IDIs), each Federal banking agency
must consider, consistent with principles of safety and soundness and
the public interest, any administrative burdens that such regulations
would place on depository institutions, including small depository
institutions, and customers of depository institutions, as well as the
benefits of such regulations. In addition, section 302(b) of RCDRIA
requires new regulations and amendments to regulations that impose
additional reporting, 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.\69\ The FDIC invites comments that further will inform its
consideration of RCDRIA.
---------------------------------------------------------------------------
\68\ 12 U.S.C. 4802(a).
\69\ Id.
---------------------------------------------------------------------------
List of Subjects
12 CFR Part 338
Aged, Banks, Banking, Civil rights, Credit, Fair housing,
Individuals with disabilities, Marital status discrimination,
Mortgages, Religious discrimination, Reporting and recordkeeping
requirements, Savings associations, Sex discrimination, Signs and
symbols.
12 CFR Part 390
Administrative practice and procedure, Advertising, Aged, Civil
rights, Conflict of interests, Credit, Crime, Equal employment
opportunity, Fair housing, Government employees, Individuals with
disabilities, Nondiscrimination requirements, Reporting and
recordkeeping requirements, Savings associations.
Authority and Issuance
For the reasons stated in the preamble, the FDIC proposes to amend
12 CFR parts 338 and 390 as follows:
0
1. Revise part 338 to read as follows:
PART 338--FAIR HOUSING
Subpart A--Advertising
Sec.
Sec. 338.1 Purpose.
Sec. 338.2 Definitions applicable to subpart A of this part.
Sec. 338.3 Nondiscriminatory advertising.
Sec. 338.4 Fair housing poster.
Subpart B--Recordkeeping
Sec. 338.5 Purpose.
Sec. 338.6 Definitions applicable to this subpart B.
Sec. 338.7 Recordkeeping requirements.
Sec. 338.8 Compilation of loan data in register format.
Sec. 338.9 Mortgage lending of a controlled entity.
The authority citation for part 338 is revised to read as follows:
Authority: 12 U.S.C. 1817, 1818, 1819, 1820(b), 2801 et seq.;
15 U.S.C. 1691 et seq.; 42 U.S.C. 3605, 3608; 12 CFR parts 1002,
1003; 24 CFR part 110.
Subpart A--Advertising
Sec. 338.1 Purpose.
The purpose of this subpart A is to prohibit FDIC-supervised
institutions from engaging in discriminatory advertising with regard to
residential real estate-related transactions. This subpart A also
requires FDIC-supervised institutions to publicly display either the
Equal Housing Lender poster set forth in Sec. 338.4(b) of the FDIC's
regulations or the Equal Housing Opportunity poster prescribed by part
110 of the regulations of the United States Department of Housing and
Urban Development (24 CFR part 110). This subpart A enforces section
805 of title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3601-3619
(Fair Housing Act), as amended by the Fair Housing Amendments Act of
1988.
Sec. 338.2 Definitions applicable to subpart A of this part.
For purposes of subpart A of this part:
(a) Bank means an insured state nonmember bank as defined in
section 3 of the Federal Deposit Insurance Act.
(b) Dwelling means any building, structure, or portion thereof
which is occupied as, or designed or intended for occupancy as, a
residence by one or more families, and any vacant land which is offered
for sale or lease for the construction or location thereon of any such
building, structure, or portion thereof.
(c) FDIC-supervised institution means either a bank or a State
savings association.
(d) Handicap means, with respect to a person:
(1) A physical or mental impairment which substantially limits one
or more of such person's major life activities;
(2) A record of having such an impairment; or
(3) Being regarded as having such an impairment, but such term does
not include current, illegal use of or addiction to a controlled
substance (as defined in section 102 of the Controlled Substances Act
(21 U.S.C. 802)).
(e) Familial status means one or more individuals (who have not
attained the age of 18 years) being domiciled with:
(1) A parent or another person having legal custody of such
individual or individuals; or
(2) The designee of such parent or other person having such
custody, with
[[Page 60401]]
the written permission of such parent or other person.
The protections afforded against discrimination on the basis of
familial status shall apply to any person who is pregnant or is in the
process of securing legal custody of any individual who has not
attained the age of 18 years.
(f) State savings association has the same meaning as in section
(3)(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).
Sec. 338.3 Nondiscriminatory advertising.
(a) Any FDIC-supervised institution which directly or through third
parties engages in any form of advertising of any loan for the purpose
of purchasing, constructing, improving, repairing, or maintaining a
dwelling or any loan secured by a dwelling shall prominently indicate
in such advertisement, in a manner appropriate to the advertising
medium and format utilized, that the FDIC-supervised institutions makes
such loans without regard to race, color, religion, national origin,
sex, handicap, or familial status.
(1) With respect to written and visual advertisements, this
requirement may be satisfied by including in the advertisement a copy
of the logotype with the Equal Housing Lender legend contained in the
Equal Housing Lender poster prescribed in Sec. 338.4(b) of the FDIC's
regulations or a copy of the logotype with the Equal Housing
Opportunity legend contained in the Equal Housing Opportunity poster
prescribed in Sec. 110.25(a) of the United States Department of
Housing and Urban Development's regulations (24 CFR 110.25(a)).
(2) With respect to oral advertisements, this requirement may be
satisfied by a statement, in the spoken text of the advertisement, that
the FDIC-supervised institution is an ``Equal Housing Lender'' or an
``Equal Opportunity Lender.''
(3) When an oral advertisement is used in conjunction with a
written or visual advertisement, the use of either of the methods
specified in paragraphs (a)(1) and (2) of this section will satisfy the
requirements of this paragraph (a).
(b) No advertisement shall contain any words, symbols, models or
other forms of communication which express, imply, or suggest a
discriminatory preference or policy of exclusion in violation of the
provisions of the Fair Housing Act or the Equal Credit Opportunity Act.
Sec. 338.4 Fair housing poster.
(a) Each FDIC-supervised institution engaged in extending loans for
the purpose of purchasing, constructing, improving, repairing, or
maintaining a dwelling or any loan secured by a dwelling shall
conspicuously display either the Equal Housing Lender poster set forth
in paragraph (b) of this section or the Equal Housing Opportunity
poster prescribed by Sec. 110.25(a) of the United States Department of
Housing and Urban Development's regulations (24 CFR 110.25(a)), in a
central location within the FDIC-supervised institution where deposits
are received or where such loans are made, in a manner clearly visible
to the general public entering the area, where the poster is displayed.
(b) The Equal Housing Lender Poster shall be at least 11 by 14
inches in size and have the following text:
We Do Business in Accordance with Federal Fair Lending Laws.
UNDER THE FEDERAL FAIR HOUSING ACT, IT IS ILLEGAL, ON THE BASIS OF
RACE, COLOR, NATIONAL ORIGIN, RELIGION, SEX, HANDICAP, OR FAMILIAL
STATUS (HAVING CHILDREN UNDER THE AGE OF 18) TO:
Deny a loan for the purpose of purchasing, constructing,
improving, repairing or maintaining a dwelling or to deny any loan
secured by a dwelling; or
Discriminate in fixing the amount, interest rate,
duration, application procedures, or other terms or conditions of such
a loan or in appraising property.
IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU SHOULD SEND
A COMPLAINT TO:
Assistant Secretary for Fair Housing and Equal Opportunity,
Department of Housing and Urban Development, Washington, DC 20410.
For processing under the Federal Fair Housing Act
AND TO:
Federal Deposit Insurance Corporation, Consumer Response Center,
[Insert address for the Consumer Response Center stated on the FDIC's
website at www.fdic.gov]
For processing under the FDIC Regulations.
UNDER THE EQUAL CREDIT OPPORTUNITY ACT, IT IS ILLEGAL TO
DISCRIMINATE IN ANY CREDIT TRANSACTION:
On the basis of race, color, national origin, religion,
sex, marital status, or age;
Because income is from public assistance; or
Because a right has been exercised under the Consumer
Credit Protection Act.
IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU SHOULD SEND
A COMPLAINT TO:
Federal Deposit Insurance Corporation, Consumer Response Center,
[Insert address for the Consumer Response Center stated on the FDIC's
website at www.fdic.gov]
(c) The Equal Housing Lender Poster specified in this section was
adopted under Sec. 110.25(b) of the United States Department of
Housing and Urban Development's rules and regulations as an authorized
substitution for the poster required in Sec. 110.25(a) of those rules
and regulations.
Subpart B--Recordkeeping
Sec. 338.5 Purpose.
The purpose of this subpart B is two-fold. First, this subpart B
notifies all FDIC-supervised institutions of their duty to collect and
retain certain information about a home loan applicant's personal
characteristics in accordance with Regulation B of the Bureau of
Consumer Financial Protection (12 CFR part 1002) in order to monitor an
institution's compliance with the Equal Credit Opportunity Act of 1974
(15 U.S.C. 1691 et seq.). Second, this subpart B notifies certain FDIC-
supervised institutions of their duty to maintain, update and report a
register of home loan applications in accordance with Regulation C of
the Bureau of Consumer Financial Protection (12 CFR part 1003), which
implements the Home Mortgage Disclosure Act (12 U.S.C. 2801 et seq.).
Sec. 338.6 Definitions applicable to this subpart B.
For purposes of this subpart B--
(a) Bank means an insured State nonmember bank as defined in
section 3 of the Federal Deposit Insurance Act.
(b) Controlled entity means a corporation, partnership,
association, or other business entity with respect to which a bank
possesses, directly or indirectly, the power to direct or cause the
direction of management and policies, whether through the ownership of
voting securities, by contract, or otherwise.
(c) FDIC-supervised institution means either a bank or a State
savings association.
(d) State savings association has the same meaning as in section
3(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).
Sec. 338.7 Recordkeeping requirements.
All FDIC-supervised institutions that receive an application for
credit primarily for the purchase or refinancing of a dwelling occupied
or to be occupied by the applicant as a principal residence where the
extension of credit will be secured by the dwelling
[[Page 60402]]
shall request and retain the monitoring information required by
Regulation B of the Bureau of Consumer Financial Protection (12 CFR
part 1002).
Sec. 338.8 Compilation of loan data in register format.
FDIC-supervised institutions and other lenders required to file a
Home Mortgage Disclosure Act loan application register (LAR) with the
Federal Deposit Insurance Corporation shall collect, record and report
such LAR in accordance with Regulation C of the Bureau of Consumer
Financial Protection (12 CFR part 1003).
Sec. 338.9 Mortgage lending of a controlled entity.
Any bank which refers any applicants to a controlled entity and
which purchases any covered loan as defined in Regulation C of the
Bureau of Consumer Financial Protection (12 CFR part 1003) originated
by the controlled entity, as a condition to transacting any business
with the controlled entity, shall require the controlled entity to
enter into a written agreement with the bank. The written agreement
shall provide that the entity shall:
(a) Comply with the requirements of Sec. Sec. 338.3, 338.4, and
338.7, and, if otherwise subject to Regulation C of the Bureau of
Consumer Financial Protection (12 CFR part 1003), Sec. 338.8;
(b) Open its books and records to examination by the Federal
Deposit Insurance Corporation; and
(c) Comply with all instructions and orders issued by the Federal
Deposit Insurance Corporation with respect to its home loan practices.
PART 390--REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT
SUPERVISION
0
2. The authority citation for part 390 is revised to read as follows:
Authority: 12 U.S.C. 1819.
Subpart F also issued under 5 U.S.C. 552; 559; 12 U.S.C. 2901 et
seq.
Subpart O also issued under 12 U.S.C. 1828.
Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464.
Subpart W also issued under 12 U.S.C. 1462a; 1463; 1464; 15
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w.
Subpart Y also issued under 12 U.S.C. 1831o.
Subpart G--[Removed and Reserved]
0
3. Remove and reserve subpart G, consisting of Sec. Sec. 390.140
through 390.150.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on August 21, 2020.
James P. Sheesley,
Acting Assistant Executive Secretary.
[FR Doc. 2020-18813 Filed 9-24-20; 8:45 am]
BILLING CODE 6714-01-P
