Statement of Policy Regarding Minority Depository Institutions, 60402-60407 [2020-18816]
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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:
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■
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.
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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:
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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.
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best practices and possible ways the
regulatory agencies could promote and
preserve MDIs, the FDIC and other
banking regulatory agencies—with
assistance from several minority bank
trade associations—invited officers from
156 MDIs to participate in a ‘‘Bankers
and Supervisors Regulatory Forum’’
held in March of 2001. Approximately
70 bankers attended.
The FDIC also formed an
Interdivisional Working Group to
consider measures to modernize the
policies and procedures related to MDIs.
The working group incorporated many
suggestions from the March 2001 forum
into a revised Policy Statement
Regarding Minority Depository
Institutions, issued by the FDIC, after
notice and comment, in April of 2002
(2002 Policy Statement).2 The FDIC
issued the 2002 Policy Statement to
provide additional information
regarding the FDIC’s initiatives related
to Section 308. The 2002 Policy
Statement provided a more structured
framework that set forth initiatives of
the FDIC to promote the preservation of,
as well as to provide technical
assistance, training, and educational
programs for, MDIs by working with
those institutions, their trade
associations, and the other federal
financial regulatory agencies.
Over the years, the FDIC has
continued to modify and enhance its
MDI Program to better carry out the
FDIC’s efforts to meet the goals in
Section 308 of FIRREA. The revisions in
the proposed Statement of Policy are
intended, in part, to strengthen and
improve the various aspects of the MDI
Program and how each component of
the MDI Program is carried out by
various responsible entities that are part
of the MDI Program. The proposed
revisions to the 2002 Policy Statement
reflected in the proposed Statement of
Policy describe the FDIC’s enduring and
strengthened commitment to, and
engagement with, MDIs in furtherance
of its goal of preserving and promoting
MDIs.
In 2019, the FDIC established a new
MDI Subcommittee of the Advisory
Committee on Community Banking
(CBAC). The MDI Subcommittee held its
inaugural meeting in December 2019.
There are nine executives serving as
members of the MDI Subcommittee,
representing African American, Native
American, Hispanic American, and
Asian American MDIs across the
country. The MDI Subcommittee
provides recommendations regarding
the FDIC’s MDI Program to the CBAC for
consideration. The MDI Subcommittee
2 67
FR 18618 (Apr. 16, 2002).
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serves as a source of feedback with
regard to the FDIC’s efforts to fulfill its
statutory goals to preserve and promote
MDIs; provides a platform for MDIs to
promote collaboration, partnerships,
and best practices; and identifies ways
to highlight the work of MDIs in their
communities.
The FDIC published, also in 2019, an
MDI research study, which explores
changes in MDIs, their role in the
financial services industry, and their
impact on the communities they serve.3
The study period covered 2001 to 2018
and looked at the demographics,
structural change, geography, financial
performance, and social impact of MDIs.
Additionally, to discuss the
challenges that MDIs face, provide
information on best practices, and
collaborate on possible ways the
regulatory agencies can promote and
preserve MDIs, in June of 2019, the
FDIC hosted the Interagency MDI and
Community Development Financial
Institution (CDFI) Bank Conference,
Focus on the Future: Prospering in a
Changing Industry, in collaboration
with the Office of the Comptroller of
Currency and the Board of Governors of
the Federal Reserve System. More than
80 MDI and CDFI bankers, representing
61 banks, attended the two-day
conference.4
All of these various efforts by the
FDIC to enhance its MDI Program have
informed the proposed revisions to the
Statement of Policy. The FDIC has
received suggestions from bankers at
outreach and trade association meetings
as well as feedback from the June 2019
conference. The MDI Subcommittee has
also provided feedback to the CBAC for
consideration and recommendation to
the FDIC. Many of these suggestions and
feedback have been incorporated into
the revised Statement of Policy. The
following section summarizes the
significant changes from the 2002 Policy
Statement.
II. Revisions to the Policy Statement
The FDIC is proposing to revise its
MDI Policy Statement in the following
areas:
Technical assistance and other
engagement. The proposed Statement of
Policy clarifies that technical assistance
is not a supervisory activity and is not
3 See FDIC MDI research study, published June
2019, Minority Depository Institutions: Structure,
Performance, and Social Impact, https://
www.fdic.gov/regulations/resources/minority/2019mdi-study/full.pdf.
4 See Chairman Jelena McWilliams Keynote
Remarks, MDI and Community Development
Financial Institution bank conference, Focus on the
Future: Prospering in a Changing Industry, https://
www.youtube.com/watch?v=o0H6Ko00qTk&
feature=youtu.be.
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intended to present additional
regulatory burden. Further, the
proposed Statement of Policy states that
examination teams will not view
requests for, or acceptance of, technical
assistance negatively when evaluating
institution performance or assigning
ratings.
FDIC outreach. The proposed
Statement of Policy was updated to
provide additional outreach
opportunities, including with the
Chairman’s office and the National
Director for Minority and Community
Development Banking.
MDI Subcommittee. The proposed
Statement of Policy describes the newly
established FDIC MDI Subcommittee of
the CBAC, which serves as source of
feedback on FDIC strategies to fulfill
statutory goals to preserve and promote
MDIs. The MDI Subcommittee may also
make recommendations or offer ideas to
the CBAC for consideration and
presentation to the FDIC. The MDI
Subcommittee provides a platform for
MDIs to promote collaboration,
partnerships, and best practices. The
MDI Subcommittee also identifies ways
to highlight the work of MDIs in their
communities.
1. The FDIC requests comment on
other methods to identify and provide
engagement opportunities that would be
beneficial to MDIs.
Definitions. The proposed Statement
of Policy adds definitions for terms used
in the MDI Program: Technical
assistance, training and education, and
outreach. Technical assistance is
defined as individual assistance that a
regulator will provide to a MDI in
response to an institution’s request for
assistance in addressing specific areas of
concern. The proposed Statement of
Policy also notes that technical
assistance is a tool to provide on-going
support to institutions in an effort to
facilitate timely implementation of
recommendations, full understanding of
regulatory requirements, and in some
instances, the viability of the institution.
Training and education programs
consist of instruction designed to impart
proficiency or skills related to a
particular job, process, or regulatory
policy. This training and education can
be provided in person, through
webinars or conference calls, or in a
conference setting. Outreach consists of
FDIC representatives meeting with
financial institutions with a primary
focus of building relationships and open
communication and providing
information and resources. Outreach is
generally offered by the FDIC and can
include meetings between financial
institution management and senior FDIC
management.
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2. The FDIC invites comment on the
definitions assigned to technical
assistance, training and education, and
outreach.
Reporting. The proposed Statement of
Policy updates the reporting
requirements of the FDIC’s MDI
Program, including the Annual Report
to Congress on the Preservation and
Promotion of Minority Depository
Institutions pursuant to Section 367 of
the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 and
Section 308 of FIRREA. The Section 367
requirements were enacted since the
Statement of Policy was last updated in
2002.
3. The FDIC invites the public to
comment on the types of information
that would be helpful and beneficial to
include in annual reports or the MDI
Program website regarding the MDI
Program.
Measurement of effectiveness. The
proposed Statement of Policy also
establishes new requirements to
measure the effectiveness of the MDI
Program. The National Director and the
regional office staff will routinely solicit
feedback from MDIs to assess the
effectiveness of the FDIC’s technical
assistance, training and education, and
outreach efforts and the MDI Program in
general. The FDIC will track instances of
technical assistance, training and
education, and outreach and solicit
feedback on the effectiveness of these
activities by administering periodic
surveys and holding discussions with
bank management.
4. The FDIC invites the public to
comment on other methods to identify
and provide technical assistance,
outreach, and training and education
resources that would be beneficial to
MDIs.
Examinations. The proposed
Statement of Policy adds a description
of how the FDIC applies rating systems
at examinations of MDIs. Specifically,
the proposed Statement of Policy
describes how the Uniform Financial
Rating System (UFIRS) and the Uniform
Interagency Consumer Compliance
Rating System (UICCR) are designed to
reflect an assessment of the individual
institution, including its size and
sophistication, the nature and
complexity of its business activities, and
its risk profile rather than a comparison
to peer institutions
5. The FDIC invites comment on
whether this approach to incorporate
specific considerations when examining
MDIs is clear and understandable.
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III. Proposed Statement of Policy
Regarding Minority Depository
Institutions
minority and the community that the
institution serves is predominantly
minority.
The text of the proposed Statement of
Policy follows:
The FDIC has long recognized the
importance of minority depository
institutions in the financial system and
their unique role in promoting the
economic viability of minority and
under-served communities. The FDIC
historically has implemented programs
to preserve and promote these financial
institutions. This Statement of Policy
describes the framework the FDIC has
put into place and the initiatives the
FDIC will undertake to fulfill its
statutory goals with respect to minority
depository institutions (MDI Program).
Identification of Minority Depository
Institutions
To ensure that all minority depository
institutions are able to participate in the
MDI Program, the FDIC will maintain a
list of Federally insured minority
depository institutions. Institutions that
are not already identified as minority
depository institutions can request to be
designated as such by certifying that
they meet the above definition. For
institutions supervised directly by the
FDIC, examiners will review the
appropriateness of their inclusion on
the list during the examination process.
In addition, case managers in regional
offices will note changes to the list
while processing deposit insurance
applications, merger applications,
change of control notices, or failures of
minority depository institutions. The
FDIC will work closely with the other
Federal banking regulators to ensure
that institutions not directly supervised
by the FDIC are accurately captured on
the list. In addition, the FDIC will
periodically provide the list to relevant
trade associations and seek input
regarding the accuracy of the list.
Inclusion in the FDIC’s MDI Program is
voluntary. Any minority depository
institution not wishing to participate in
the MDI Program will be removed from
the official list upon request.
Statutory Framework
In August 1989, Congress enacted the
Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (FIRREA).
Section 308 of FIRREA established the
following goals:
• Preserve the number of minority
depository institutions;
• Preserve the minority character in
cases of merger or acquisition;
• Provide technical assistance to
prevent insolvency of institutions not
now insolvent;
• Promote and encourage creation of
new minority depository institutions;
and
• Provide for training, technical
assistance, and educational programs.
Definitions
Section 308 of FIRREA defines
‘‘minority depository institution’’ as any
Federally insured depository institution
where 51 percent or more of the voting
stock is owned by one or more ‘‘socially
and economically disadvantaged
individuals.’’ ‘‘Minority,’’ as defined by
Section 308 of FIRREA, means any
‘‘Black American, Native American,
Hispanic American, or Asian
American.’’ Therefore, for the purposes
of this Statement of Policy, ‘‘minority
depository institution’’ is defined as any
Federally insured depository institution
where 51 percent or more of the voting
stock is owned by minority individuals.
This includes institutions collectively
owned by a group of minority
individuals, such as a Native American
Tribe. Ownership must be by U.S.
citizens or permanent legal U.S.
residents to be counted in determining
minority ownership. In addition to the
institutions that meet the ownership
test, for the purposes of this Statement
of Policy, institutions will be considered
minority depository institutions if a
majority of the Board of Directors is
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Organizational Structure
The FDIC has designated a national
director for the FDIC’s MDI Program in
the Washington Office and a regional
coordinator in each Regional Office. The
national director will consult with
officials from the following FDIC
Divisions to ensure appropriate
personnel are involved and resources
are made available with regard to MDI
Program initiatives: Division of Risk
Management Supervision, Division of
Depositor and Consumer Protection,
Division of Resolutions and
Receiverships, Division of Insurance
and Research, Legal Division, and the
Office of Minority and Women
Inclusion. The national director will
also consult with other organizations
within the FDIC as appropriate.
As the primary Federal regulator for
State nonmember banks and State
savings associations, the FDIC will focus
its efforts on minority depository
institutions with those charters.
However, the national director will meet
periodically with the other Federal
banking regulators to discuss each
agency’s outreach efforts, to share ideas,
and to identify opportunities where the
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agencies can work together to assist
minority depository institutions.
Representatives of other divisions and
offices may participate in these
meetings.
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Engagement With Minority Depository
Institutions
The FDIC’s MDI Program will provide
for continual engagement with minority
depository institutions through ongoing
interaction with the Washington,
Regional, and Field Office staff. This
interaction includes providing technical
assistance to share information and
expertise on supervisory topics,
outreach initiatives to provide
opportunities for open dialogue with
senior FDIC staff, and training
initiatives to offer opportunities to gain
additional knowledge about specific
regulatory requirements.
Further, trade associations affiliated
with minority depository institutions
serve as a significant resource in
identifying specific interests or concerns
for those institutions. The national
director will regularly contact minority
depository institution trade associations
to seek feedback on the FDIC’s efforts
under the MDI Program, discuss
possible training initiatives, and explore
options for promoting and preserving
minority depository institutions. The
national director and the regional
coordinators also will solicit
information from trade associations and
other organizations about groups that
may be interested in establishing new
minority depository institutions. FDIC
representatives will be available to
address such groups to discuss the
application process, the requirements of
becoming FDIC insured, and the various
programs supporting minority
depository institutions. The regional
coordinators will contact all new
minority state nonmember banks and
state savings associations identified
through insurance applications, merger
applications, or change in control
notices to familiarize the institutions
with the resources available through the
MDI Program.
Technical Assistance
Technical assistance, as defined by
the FDIC’s MDI Program, is individual
assistance that a regulator will provide
to a minority depository institution in
response to an institution’s request for
assistance in understanding supervisory
topics or findings. At any time, the FDIC
will share information and expertise
with bank management on various
topics including, but not limited to,
understanding bank regulations, FDIC
policies, examination procedures,
accounting practices, supervisory
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recommendations, risk management
procedures, and compliance
management procedures. In providing
technical assistance, FDIC staff will not
actually perform tasks expected of an
institution’s management or employees.
For example, FDIC staff may explain
Call Report instructions as they relate to
specific accounts, but will not assist in
preparing an institution’s Call Report.
FDIC staff may provide information on
community reinvestment opportunities,
but will not recommend a specific
transaction.
An institution can contact its field
office representatives, case manager, or
review examiner to request technical
assistance. In addition, the regional
coordinators and the institution’s
assigned case manager and review
examiner are knowledgeable about
minority bank issues and are available
to answer questions or to direct
inquiries to the appropriate FDIC office
or staff member with expertise on the
subject for response. Case managers can
explain the application process and the
type of analysis and information
required for different applications. Field
office representatives also serve as a
significant resource to minority
depository institutions by readily
answering examination related
questions and explaining regulatory
requirements. Other staff members
within the FDIC with expertise in
various regulatory topics will also be
available to share knowledge to assist
minority depository institutions in
complying with regulations or
implementing supervisory
recommendations.
During examinations, the FDIC
expects examiners to fully explain
supervisory recommendations and offer
to help management understand
satisfactory methods to address such
recommendations. At the conclusion of
each examination of a minority
depository institution directly
supervised by the FDIC, the FDIC will
be available to return to the institution
to provide technical assistance by
reviewing areas of concern or topics of
interest to the institution. The purpose
of return visits is to assist management
in understanding and implementing
examination recommendations, not to
identify new problems.
Technical assistance is a tool to
provide on-going support to institutions
in an effort to ensure timely
implementation of recommendations,
full understanding of regulatory
requirements, and in some instances,
the viability of the institution. Technical
assistance is not a supervisory activity
and is not intended to present
additional regulatory burden. Further,
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examination teams will not view
requests for, or acceptance of, technical
assistance negatively when evaluating
institution performance or assigning
ratings.
Outreach
Outreach, as defined by the FDIC’s
MDI Program, consists of FDIC
representatives meeting with financial
institutions with a primary focus of
building relationships and open
communication and providing
information and resources. Outreach is
generally offered by the FDIC and can
include meetings between financial
institution management and senior FDIC
management.
The FDIC maintains an MDI
Subcommittee of its Advisory
Committee on Community Banking
(CBAC) comprised of executives of
minority depository institutions. The
MDI Subcommittee serves as a source of
feedback on FDIC strategies to fulfill
statutory goals to preserve and promote
minority depository institutions. The
MDI Subcommittee may also make
recommendations or offer ideas to the
CBAC for consideration and
presentation to the FDIC. The MDI
Subcommittee provides a platform for
minority depository institutions to
promote collaboration, partnerships,
and best practices. The Subcommittee
will also identify ways to highlight the
work of minority depository institutions
in their communities.
Executives and staff in the FDIC’s
regional offices will communicate
regularly with each minority depository
institution to outline the FDIC’s efforts
to promote and preserve minority
depository institutions; will offer
annually to have a member of regional
management meet with the institution’s
board of directors to discuss issues of
interest, including through roundtable
discussions and training sessions; and
will seek input regarding any training or
other technical assistance the institution
may desire.
The FDIC will explore opportunities
to facilitate collaboration and partnering
initiatives among minority depository
institutions or between minority
depository institutions and nonminority depository institutions. The
FDIC recognizes that by facilitating
these collaborative relationships,
institutions can have opportunities to
better meet the needs of their
communities.
Training and Educational Programs
Training and educational programs, as
defined by the FDIC’s MDI program,
consist of instruction designed to impart
proficiency or skills related to a
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particular job, process, or regulatory
policy. The FDIC will work with other
banking regulatory agencies and trade
associations representing minority
depository institutions to periodically
assess the need for, and provide for,
training and educational opportunities.
The FDIC will partner with other
Federal banking agencies and trade
associations to offer training programs.
This training and education can be
provided in person, through webinars or
conference calls, or in a conference
setting.
Reporting
The regional coordinators will report
regional office activities related to the
MDI Program to the national director
quarterly. The national director will
develop a comprehensive report on all
MDI Program activities and submit the
report quarterly to the Chairman. The
FDIC’s efforts to preserve and promote
minority depository institutions will
also be highlighted in the FDIC’s
Annual Report and the Annual Report
to Congress on the Preservation and
Promotion of Minority Depository
Institutions pursuant to Section 367 of
the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 and
Section 308 of FIRREA.
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Measuring Program Effectiveness
The national director and the regional
office staff will routinely solicit
feedback from minority depository
institutions to assess the effectiveness of
the FDIC’s technical assistance,
outreach, and training/education efforts
and the MDI Program in general. The
FDIC will track instances of technical
assistance, outreach, and training and
education and solicit feedback on the
effectiveness of these activities by
administering periodic surveys and
holding discussions with bank
management.
Examinations
All insured institutions must be
operated in a safe and sound manner, in
accordance with FDIC’s regulations.
Likewise, all examinations must be
conducted within the parameters of
FDIC exam policies and should
consistently measure the risk an
institution poses to the FDIC’s deposit
insurance fund. Notwithstanding, and
consistent with the Uniform Financial
Institutions Rating System (UFIRS) and
the Uniform Interagency Consumer
Compliance Rating System (UICCR),
examiners are expected to recognize the
distinctive characteristics and
differences in core objectives of each
financial institution and to consider
those unique factors when evaluating an
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institution’s financial condition and risk
management practices.
Under the UFIRS and UICCR, each
financial institution is assigned a
composite rating based on an evaluation
of specific components, which are also
rated. For UFIRS, these component
ratings reflect an institution’s capital
adequacy, asset quality, management
capabilities, earnings sufficiency,
liquidity position, and sensitivity to
market risk (commonly referred to as the
CAMELS ratings). Likewise, the UICCR
is organized under broad components
that assess the institution’s board and
management oversight, compliance
program, and violations of law and
consumer harm. The uniform rating
systems and evaluation and rating
criteria are specific to the examination
types performed. Further, the
assignment of the rating is based solely
on the subject institution’s individual
performance under the specific
components.
Management practices, particularly as
they relate to risk management, vary
considerably among financial
institutions depending on size and
sophistication, the nature and
complexity of business activities, and
risk profile. Each institution must
properly manage risks and have
appropriate policies, processes, or
practices in place that management
follows and uses. Activities undertaken
in a less complex institution engaging in
less sophisticated risk-taking activities
may only need basic management and
control systems compared to the
detailed and formalized systems and
controls used for the broader and more
complex range of activities undertaken
at a larger and more complex
institution.
Peer comparison data are not
included in the rating systems. The
principal reason is to avoid over
reliance on statistical comparisons to
justify the component rating being
assigned. This is very important when
evaluating minority depository
institutions due to their unique
characteristics. For example, many
minority depository institutions were
established to serve an otherwise underserved market. High profitability may
not be as essential to the organizers and
shareholders of the institution. Instead,
community development, improving
consumer services, and promoting
banking services to the unbanked or
under-banked segment of its community
may drive many of the organization’s
decisions. The UFIRS allows for
consideration of the characteristics by
considering not only the level of an
institution’s earnings, but also the trend
and stability of earnings, the ability to
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provide for adequate capital, the quality
and sources of earnings, and the
adequacy of budgeting systems.
Examiners are instructed to consider
all relevant factors when assigning a
component rating. The rating systems
are designed to reflect an assessment of
the individual institution, including its
size and sophistication, the nature and
complexity of its business activities, and
risk profile.
Failing Institutions
The FDIC will attempt to preserve the
minority character of failing institutions
during the resolution process. In the
event of a potential failure of a minority
depository institution, the Division of
Resolutions and Receiverships will
contact all minority depository
institutions nationwide that qualify to
bid on failing institutions. The Division
of Resolutions and Receiverships will
solicit qualified minority depository
institutions’ interest in the failing
institution, discuss the bidding process,
and offer to provide technical assistance
regarding completion of the bid forms.
In addition, the Division of Resolutions
and Receiverships, with assistance from
the Office of Minority and Women
Inclusion, will maintain a list of
minority individuals and nonbank
entities that have expressed an interest
in acquiring failing minority depository
institutions and have been pre-approved
by the Division of Risk Management
Supervision and the chartering
authority for access to the FDIC’s virtual
data room for online due diligence.
Internet Site
The FDIC will maintain a website to
promote the MDI Program. Among other
things, the website will describe the
tools and resources available under the
program. The website will include the
name, phone number, and email address
of the national director, each regional
coordinator, and additional staff. The
website will also contain links to the list
of minority depository institutions,
pertinent trade associations, and other
Federal agency programs. The FDIC will
also explore the feasibility and
usefulness of posting other items to the
page, such as statistical information and
comparative data for minority
depository institutions. Visitors will
have the opportunity to provide
feedback regarding the FDIC’s program
and the usefulness of the website.
IV. Administrative Law Matters
The Paperwork Reduction Act of 1995
(PRA) 5 states that no agency may
conduct or sponsor, nor is the
5 44
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25SEP1
Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Proposed Rules
respondent required to respond to, an
information collection unless it displays
a currently valid Office of Management
and Budget (OMB) control number.
The proposed Statement of Policy
Regarding Minority Depository
Institutions does not create any new or
revise any existing information
collections pursuant to the PRA. Rather,
any reporting, recordkeeping, or
disclosure activities mentioned in the
proposed Statement of Policy Regarding
Minority Depository Institutions are
usual and customary and should occur
in the normal course of business as
defined in the PRA.6 Consequently, no
submissions will be made to the OMB
for review.
6. The agencies request comment on
its conclusion that this aspect of the
proposed Statement of Policy Regarding
Minority Depository Institutions does
not create any new or revise any existing
information collections.
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. 2020–18816 Filed 9–24–20; 8:45 am]
BILLING CODE 6714–01–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R06–OAR–2020–0434; FRL–10014–
56–Region 6]
Approval of Texas Air Quality Plans;
Clean Data Determination for the 2010
1-Hour Primary Sulfur Dioxide National
Ambient Air Quality Standard;
Anderson and Freestone Counties and
Titus County Nonattainment Areas
The Environmental Protection
Agency (EPA) is proposing to determine
that the Anderson and Freestone
Counties and the Titus County
nonattainment areas, in Texas, have
attained the 2010 1-hour primary Sulfur
Dioxide (SO2) National Ambient Air
Quality Standard (NAAQS) per the
EPA’s Clean Data Policy. The primary
sources of SO2 emissions in these
counties have permanently shut down
and as a result air quality in these areas
is now meeting the NAAQS for SO2.
This proposed determination is
khammond on DSKJM1Z7X2PROD with PROPOSALS
65
CFR 1320.3(b)(2).
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Comments must be received on
or before October 26, 2020.
DATES:
Submit your comments,
identified by Docket ID No. EPA–R06–
OAR–2020–0434, to https://
www.regulations.gov. Follow the online
instructions for submitting comments.
Once submitted, comments cannot be
edited or removed from Regulations.gov.
The EPA may publish any comment
received to its public docket. Do not
submit electronically any information
you consider to be Confidential
Business Information (CBI) or other
information whose disclosure is
restricted by statute. Multimedia
submissions (audio, video, etc.) must be
accompanied by a written comment.
The written comment is considered
the official comment and should
include discussion of all points you
wish to make. The EPA will generally
not consider comments or comment
contents located outside of the primary
submission (i.e., on the web, cloud, or
other file sharing system). For
additional submission methods, please
contact Robert Imhoff, (214) 665–7262,
Imhoff.Robert@epa.gov. For, the full
EPA public comment policy,
information about CBI or multimedia
submissions, and general guidance on
making effective comments, please visit
https://www.epa.gov/dockets/
commenting-epa-dockets.
Docket: The index to the docket for
this action is available electronically at
www.regulations.gov. While all
documents in the docket are listed in
the index, some information may not be
publicly available due to docket file size
restrictions or content (e.g., CBI).
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
SUMMARY:
supported by monitoring data from
within or near to the nonattainment
areas, emissions data and an evaluation
of previous modeling.
Robert Imhoff, EPA Region 6 Office, SO2
and Regional Haze Branch, (214) 665–
7262, or by email at Imhoff.Robert@
epa.gov. Out of an abundance of caution
for members of the public and our staff,
the EPA Region 6 office will be closed
to the public to reduce the risk of
transmitting COVID–19. We encourage
the public to submit comments via
https://www.regulations.gov, as there
will be a delay in processing mail and
no courier or hand deliveries will be
accepted. Please call or email the
contact listed above if you need
alternative access to material indexed
but not provided in the docket.
SUPPLEMENTARY INFORMATION:
Throughout this document ‘‘we,’’ ‘‘us,’’
and ‘‘our’’ refer to the EPA.
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60407
Table of Contents
I. What action is the EPA proposing?
II. What is the background of this action?
A. Nonattainment Designation
B. Clean Data Policy
C. How does a nonattainment area achieve
‘‘clean data’’ for the 2010 1-hour primary
SO2 NAAQS?
D. What information did Texas provide
that demonstrates that the area attained
the NAAQS?
i. Primary Source Shutdowns
ii. Monitoring Data
E. What is the EPA’s rationale for
proposing this action?
III. What is the EPA’s analysis?
A. Modeling Data and Supplemental 2016–
2019 Emissions Information Evaluation
B. Ambient Air Quality Monitoring Data
Evaluation
C. EPA’s Proposed Clean Data
Determination
IV. What would be the effects of this action,
if promulgated?
V. Statutory and Executive Order Reviews
I. What action is the EPA proposing?
The EPA is proposing to determine
that portions of Anderson and Freestone
Counties and Titus County (hereby
referred to as ‘‘the nonattainment
areas’’), in Texas, have attained the 2010
1-hour primary SO2 NAAQS.1 This
proposed determination of attainment is
in response to a June 30, 2020 request
from the state 2 that the EPA consider
information—including quality assured
and certified ambient air monitoring
data 3 from the 2017–2019 monitoring
period and the permanent and
enforceable shutdown of the primary
sources of SO2 emissions in these areas,
Big Brown Power Plant (Big Brown) and
Monticello Steam Electric Station
(Monticello), that were the key
contributors to the violations of the
standard—which both support our
proposed finding that the nonattainment
areas have attained the 2010 1-hour
primary SO2 NAAQS. The primary basis
for the state’s request is that the primary
sources of SO2 emissions in these
nonattainment areas have permanently
shut down. These sources were located
in rural areas with few other sources.
EPA has reviewed the Texas
Commission on Environmental Quality
1 In accordance with Appendix T to 40 CFR part
50, the 1-hour primary SO2 NAAQS is met at an
ambient air quality monitoring site when the valid
1-hour primary standard design value is less than
or equal to 75 parts per billion (ppb). 40 CFR
50.17(b).
2 June 30, 2020 Letter from Toby Baker, Executive
Director of TCEQ to Ken McQueen, Regional
Administrator of EPA Region 6, subject: ‘‘Sulfur
Dioxide Clean Data Determination Request for
Portions of Freestone, Anderson, and Titus
Counties in Texas’’ included in the docket for this
action.
3 Monitoring data must be reported, quality
assured, and certified in accordance with the
requirements set forth in 40 CFR part 58.
E:\FR\FM\25SEP1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 187 (Friday, September 25, 2020)]
[Proposed Rules]
[Pages 60402-60407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18816]
-----------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Chapter III
RIN 3064-ZA19
Statement of Policy Regarding Minority Depository Institutions
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Proposed revisions to statement of policy; request for comment.
-----------------------------------------------------------------------
SUMMARY: 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.
ADDRESSES: 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: [email protected]. 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 posted without change to https://www.fdic.gov/regulations/laws/federal/, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT: Misty Mobley, Senior Review Examiner,
Division of Risk Management and Supervision, (202) 898-3771,
[email protected]; Lauren Whitaker, Senior Attorney, Legal Division,
(202) 898-3872, [email protected]; or Gregory Feder, Counsel, Legal
Division, (202) 898-8724, [email protected], 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:
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.
---------------------------------------------------------------------------
\1\ Public Law 101-73, title III, Sec. 308, Aug. 9, 1989, 103
Stat. 353, as amended by Public Law 111-203, title III, Sec.
367(4), July 21, 2010, 124 Stat. 1556, codified at 12 U.S.C. 1463
note.
---------------------------------------------------------------------------
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
[[Page 60403]]
best practices and possible ways the regulatory agencies could promote
and preserve MDIs, the FDIC and other banking regulatory agencies--with
assistance from several minority bank trade associations--invited
officers from 156 MDIs to participate in a ``Bankers and Supervisors
Regulatory Forum'' held in March of 2001. Approximately 70 bankers
attended.
The FDIC also formed an Interdivisional Working Group to consider
measures to modernize the policies and procedures related to MDIs. The
working group incorporated many suggestions from the March 2001 forum
into a revised Policy Statement Regarding Minority Depository
Institutions, issued by the FDIC, after notice and comment, in April of
2002 (2002 Policy Statement).\2\ The FDIC issued the 2002 Policy
Statement to provide additional information regarding the FDIC's
initiatives related to Section 308. The 2002 Policy Statement provided
a more structured framework that set forth initiatives of the FDIC to
promote the preservation of, as well as to provide technical
assistance, training, and educational programs for, MDIs by working
with those institutions, their trade associations, and the other
federal financial regulatory agencies.
---------------------------------------------------------------------------
\2\ 67 FR 18618 (Apr. 16, 2002).
---------------------------------------------------------------------------
Over the years, the FDIC has continued to modify and enhance its
MDI Program to better carry out the FDIC's efforts to meet the goals in
Section 308 of FIRREA. The revisions in the proposed Statement of
Policy are intended, in part, to strengthen and improve the various
aspects of the MDI Program and how each component of the MDI Program is
carried out by various responsible entities that are part of the MDI
Program. The proposed revisions to the 2002 Policy Statement reflected
in the proposed Statement of Policy describe the FDIC's enduring and
strengthened commitment to, and engagement with, MDIs in furtherance of
its goal of preserving and promoting MDIs.
In 2019, the FDIC established a new MDI Subcommittee of the
Advisory Committee on Community Banking (CBAC). The MDI Subcommittee
held its inaugural meeting in December 2019. There are nine executives
serving as members of the MDI Subcommittee, representing African
American, Native American, Hispanic American, and Asian American MDIs
across the country. The MDI Subcommittee provides recommendations
regarding the FDIC's MDI Program to the CBAC for consideration. The MDI
Subcommittee serves as a source of feedback with regard to the FDIC's
efforts to fulfill its statutory goals to preserve and promote MDIs;
provides a platform for MDIs to promote collaboration, partnerships,
and best practices; and identifies ways to highlight the work of MDIs
in their communities.
The FDIC published, also in 2019, an MDI research study, which
explores changes in MDIs, their role in the financial services
industry, and their impact on the communities they serve.\3\ The study
period covered 2001 to 2018 and looked at the demographics, structural
change, geography, financial performance, and social impact of MDIs.
---------------------------------------------------------------------------
\3\ See FDIC MDI research study, published June 2019, Minority
Depository Institutions: Structure, Performance, and Social Impact,
https://www.fdic.gov/regulations/resources/minority/2019-mdi-study/full.pdf.
---------------------------------------------------------------------------
Additionally, to discuss the challenges that MDIs face, provide
information on best practices, and collaborate on possible ways the
regulatory agencies can promote and preserve MDIs, in June of 2019, the
FDIC hosted the Interagency MDI and Community Development Financial
Institution (CDFI) Bank Conference, Focus on the Future: Prospering in
a Changing Industry, in collaboration with the Office of the
Comptroller of Currency and the Board of Governors of the Federal
Reserve System. More than 80 MDI and CDFI bankers, representing 61
banks, attended the two-day conference.\4\
---------------------------------------------------------------------------
\4\ See Chairman Jelena McWilliams Keynote Remarks, MDI and
Community Development Financial Institution bank conference, Focus
on the Future: Prospering in a Changing Industry, https://www.youtube.com/watch?v=o0H6Ko00qTk&feature=youtu.be.
---------------------------------------------------------------------------
All of these various efforts by the FDIC to enhance its MDI Program
have informed the proposed revisions to the Statement of Policy. The
FDIC has received suggestions from bankers at outreach and trade
association meetings as well as feedback from the June 2019 conference.
The MDI Subcommittee has also provided feedback to the CBAC for
consideration and recommendation to the FDIC. Many of these suggestions
and feedback have been incorporated into the revised Statement of
Policy. The following section summarizes the significant changes from
the 2002 Policy Statement.
II. Revisions to the Policy Statement
The FDIC is proposing to revise its MDI Policy Statement in the
following areas:
Technical assistance and other engagement. The proposed Statement
of Policy clarifies that technical assistance is not a supervisory
activity and is not intended to present additional regulatory burden.
Further, the proposed Statement of Policy states that examination teams
will not view requests for, or acceptance of, technical assistance
negatively when evaluating institution performance or assigning
ratings.
FDIC outreach. The proposed Statement of Policy was updated to
provide additional outreach opportunities, including with the
Chairman's office and the National Director for Minority and Community
Development Banking.
MDI Subcommittee. The proposed Statement of Policy describes the
newly established FDIC MDI Subcommittee of the CBAC, which serves as
source of feedback on FDIC strategies to fulfill statutory goals to
preserve and promote MDIs. The MDI Subcommittee may also make
recommendations or offer ideas to the CBAC for consideration and
presentation to the FDIC. The MDI Subcommittee provides a platform for
MDIs to promote collaboration, partnerships, and best practices. The
MDI Subcommittee also identifies ways to highlight the work of MDIs in
their communities.
1. The FDIC requests comment on other methods to identify and
provide engagement opportunities that would be beneficial to MDIs.
Definitions. The proposed Statement of Policy adds definitions for
terms used in the MDI Program: Technical assistance, training and
education, and outreach. Technical assistance is defined as individual
assistance that a regulator will provide to a MDI in response to an
institution's request for assistance in addressing specific areas of
concern. The proposed Statement of Policy also notes that technical
assistance is a tool to provide on-going support to institutions in an
effort to facilitate timely implementation of recommendations, full
understanding of regulatory requirements, and in some instances, the
viability of the institution. Training and education programs consist
of instruction designed to impart proficiency or skills related to a
particular job, process, or regulatory policy. This training and
education can be provided in person, through webinars or conference
calls, or in a conference setting. Outreach consists of FDIC
representatives meeting with financial institutions with a primary
focus of building relationships and open communication and providing
information and resources. Outreach is generally offered by the FDIC
and can include meetings between financial institution management and
senior FDIC management.
[[Page 60404]]
2. The FDIC invites comment on the definitions assigned to
technical assistance, training and education, and outreach.
Reporting. The proposed Statement of Policy updates the reporting
requirements of the FDIC's MDI Program, including the Annual Report to
Congress on the Preservation and Promotion of Minority Depository
Institutions pursuant to Section 367 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 and Section 308 of FIRREA.
The Section 367 requirements were enacted since the Statement of Policy
was last updated in 2002.
3. The FDIC invites the public to comment on the types of
information that would be helpful and beneficial to include in annual
reports or the MDI Program website regarding the MDI Program.
Measurement of effectiveness. The proposed Statement of Policy also
establishes new requirements to measure the effectiveness of the MDI
Program. The National Director and the regional office staff will
routinely solicit feedback from MDIs to assess the effectiveness of the
FDIC's technical assistance, training and education, and outreach
efforts and the MDI Program in general. The FDIC will track instances
of technical assistance, training and education, and outreach and
solicit feedback on the effectiveness of these activities by
administering periodic surveys and holding discussions with bank
management.
4. The FDIC invites the public to comment on other methods to
identify and provide technical assistance, outreach, and training and
education resources that would be beneficial to MDIs.
Examinations. The proposed Statement of Policy adds a description
of how the FDIC applies rating systems at examinations of MDIs.
Specifically, the proposed Statement of Policy describes how the
Uniform Financial Rating System (UFIRS) and the Uniform Interagency
Consumer Compliance Rating System (UICCR) are designed to reflect an
assessment of the individual institution, including its size and
sophistication, the nature and complexity of its business activities,
and its risk profile rather than a comparison to peer institutions
5. The FDIC invites comment on whether this approach to incorporate
specific considerations when examining MDIs is clear and
understandable.
III. Proposed Statement of Policy Regarding Minority Depository
Institutions
The text of the proposed Statement of Policy follows:
The FDIC has long recognized the importance of minority depository
institutions in the financial system and their unique role in promoting
the economic viability of minority and under-served communities. The
FDIC historically has implemented programs to preserve and promote
these financial institutions. This Statement of Policy describes the
framework the FDIC has put into place and the initiatives the FDIC will
undertake to fulfill its statutory goals with respect to minority
depository institutions (MDI Program).
Statutory Framework
In August 1989, Congress enacted the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (FIRREA). Section 308 of FIRREA
established the following goals:
Preserve the number of minority depository institutions;
Preserve the minority character in cases of merger or
acquisition;
Provide technical assistance to prevent insolvency of
institutions not now insolvent;
Promote and encourage creation of new minority depository
institutions; and
Provide for training, technical assistance, and
educational programs.
Definitions
Section 308 of FIRREA defines ``minority depository institution''
as any Federally insured depository institution where 51 percent or
more of the voting stock is owned by one or more ``socially and
economically disadvantaged individuals.'' ``Minority,'' as defined by
Section 308 of FIRREA, means any ``Black American, Native American,
Hispanic American, or Asian American.'' Therefore, for the purposes of
this Statement of Policy, ``minority depository institution'' is
defined as any Federally insured depository institution where 51
percent or more of the voting stock is owned by minority individuals.
This includes institutions collectively owned by a group of minority
individuals, such as a Native American Tribe. Ownership must be by U.S.
citizens or permanent legal U.S. residents to be counted in determining
minority ownership. In addition to the institutions that meet the
ownership test, for the purposes of this Statement of Policy,
institutions will be considered minority depository institutions if a
majority of the Board of Directors is minority and the community that
the institution serves is predominantly minority.
Identification of Minority Depository Institutions
To ensure that all minority depository institutions are able to
participate in the MDI Program, the FDIC will maintain a list of
Federally insured minority depository institutions. Institutions that
are not already identified as minority depository institutions can
request to be designated as such by certifying that they meet the above
definition. For institutions supervised directly by the FDIC, examiners
will review the appropriateness of their inclusion on the list during
the examination process. In addition, case managers in regional offices
will note changes to the list while processing deposit insurance
applications, merger applications, change of control notices, or
failures of minority depository institutions. The FDIC will work
closely with the other Federal banking regulators to ensure that
institutions not directly supervised by the FDIC are accurately
captured on the list. In addition, the FDIC will periodically provide
the list to relevant trade associations and seek input regarding the
accuracy of the list. Inclusion in the FDIC's MDI Program is voluntary.
Any minority depository institution not wishing to participate in the
MDI Program will be removed from the official list upon request.
Organizational Structure
The FDIC has designated a national director for the FDIC's MDI
Program in the Washington Office and a regional coordinator in each
Regional Office. The national director will consult with officials from
the following FDIC Divisions to ensure appropriate personnel are
involved and resources are made available with regard to MDI Program
initiatives: Division of Risk Management Supervision, Division of
Depositor and Consumer Protection, Division of Resolutions and
Receiverships, Division of Insurance and Research, Legal Division, and
the Office of Minority and Women Inclusion. The national director will
also consult with other organizations within the FDIC as appropriate.
As the primary Federal regulator for State nonmember banks and
State savings associations, the FDIC will focus its efforts on minority
depository institutions with those charters. However, the national
director will meet periodically with the other Federal banking
regulators to discuss each agency's outreach efforts, to share ideas,
and to identify opportunities where the
[[Page 60405]]
agencies can work together to assist minority depository institutions.
Representatives of other divisions and offices may participate in these
meetings.
Engagement With Minority Depository Institutions
The FDIC's MDI Program will provide for continual engagement with
minority depository institutions through ongoing interaction with the
Washington, Regional, and Field Office staff. This interaction includes
providing technical assistance to share information and expertise on
supervisory topics, outreach initiatives to provide opportunities for
open dialogue with senior FDIC staff, and training initiatives to offer
opportunities to gain additional knowledge about specific regulatory
requirements.
Further, trade associations affiliated with minority depository
institutions serve as a significant resource in identifying specific
interests or concerns for those institutions. The national director
will regularly contact minority depository institution trade
associations to seek feedback on the FDIC's efforts under the MDI
Program, discuss possible training initiatives, and explore options for
promoting and preserving minority depository institutions. The national
director and the regional coordinators also will solicit information
from trade associations and other organizations about groups that may
be interested in establishing new minority depository institutions.
FDIC representatives will be available to address such groups to
discuss the application process, the requirements of becoming FDIC
insured, and the various programs supporting minority depository
institutions. The regional coordinators will contact all new minority
state nonmember banks and state savings associations identified through
insurance applications, merger applications, or change in control
notices to familiarize the institutions with the resources available
through the MDI Program.
Technical Assistance
Technical assistance, as defined by the FDIC's MDI Program, is
individual assistance that a regulator will provide to a minority
depository institution in response to an institution's request for
assistance in understanding supervisory topics or findings. At any
time, the FDIC will share information and expertise with bank
management on various topics including, but not limited to,
understanding bank regulations, FDIC policies, examination procedures,
accounting practices, supervisory recommendations, risk management
procedures, and compliance management procedures. In providing
technical assistance, FDIC staff will not actually perform tasks
expected of an institution's management or employees. For example, FDIC
staff may explain Call Report instructions as they relate to specific
accounts, but will not assist in preparing an institution's Call
Report. FDIC staff may provide information on community reinvestment
opportunities, but will not recommend a specific transaction.
An institution can contact its field office representatives, case
manager, or review examiner to request technical assistance. In
addition, the regional coordinators and the institution's assigned case
manager and review examiner are knowledgeable about minority bank
issues and are available to answer questions or to direct inquiries to
the appropriate FDIC office or staff member with expertise on the
subject for response. Case managers can explain the application process
and the type of analysis and information required for different
applications. Field office representatives also serve as a significant
resource to minority depository institutions by readily answering
examination related questions and explaining regulatory requirements.
Other staff members within the FDIC with expertise in various
regulatory topics will also be available to share knowledge to assist
minority depository institutions in complying with regulations or
implementing supervisory recommendations.
During examinations, the FDIC expects examiners to fully explain
supervisory recommendations and offer to help management understand
satisfactory methods to address such recommendations. At the conclusion
of each examination of a minority depository institution directly
supervised by the FDIC, the FDIC will be available to return to the
institution to provide technical assistance by reviewing areas of
concern or topics of interest to the institution. The purpose of return
visits is to assist management in understanding and implementing
examination recommendations, not to identify new problems.
Technical assistance is a tool to provide on-going support to
institutions in an effort to ensure timely implementation of
recommendations, full understanding of regulatory requirements, and in
some instances, the viability of the institution. Technical assistance
is not a supervisory activity and is not intended to present additional
regulatory burden. Further, examination teams will not view requests
for, or acceptance of, technical assistance negatively when evaluating
institution performance or assigning ratings.
Outreach
Outreach, as defined by the FDIC's MDI Program, consists of FDIC
representatives meeting with financial institutions with a primary
focus of building relationships and open communication and providing
information and resources. Outreach is generally offered by the FDIC
and can include meetings between financial institution management and
senior FDIC management.
The FDIC maintains an MDI Subcommittee of its Advisory Committee on
Community Banking (CBAC) comprised of executives of minority depository
institutions. The MDI Subcommittee serves as a source of feedback on
FDIC strategies to fulfill statutory goals to preserve and promote
minority depository institutions. The MDI Subcommittee may also make
recommendations or offer ideas to the CBAC for consideration and
presentation to the FDIC. The MDI Subcommittee provides a platform for
minority depository institutions to promote collaboration,
partnerships, and best practices. The Subcommittee will also identify
ways to highlight the work of minority depository institutions in their
communities.
Executives and staff in the FDIC's regional offices will
communicate regularly with each minority depository institution to
outline the FDIC's efforts to promote and preserve minority depository
institutions; will offer annually to have a member of regional
management meet with the institution's board of directors to discuss
issues of interest, including through roundtable discussions and
training sessions; and will seek input regarding any training or other
technical assistance the institution may desire.
The FDIC will explore opportunities to facilitate collaboration and
partnering initiatives among minority depository institutions or
between minority depository institutions and non-minority depository
institutions. The FDIC recognizes that by facilitating these
collaborative relationships, institutions can have opportunities to
better meet the needs of their communities.
Training and Educational Programs
Training and educational programs, as defined by the FDIC's MDI
program, consist of instruction designed to impart proficiency or
skills related to a
[[Page 60406]]
particular job, process, or regulatory policy. The FDIC will work with
other banking regulatory agencies and trade associations representing
minority depository institutions to periodically assess the need for,
and provide for, training and educational opportunities. The FDIC will
partner with other Federal banking agencies and trade associations to
offer training programs. This training and education can be provided in
person, through webinars or conference calls, or in a conference
setting.
Reporting
The regional coordinators will report regional office activities
related to the MDI Program to the national director quarterly. The
national director will develop a comprehensive report on all MDI
Program activities and submit the report quarterly to the Chairman. The
FDIC's efforts to preserve and promote minority depository institutions
will also be highlighted in the FDIC's Annual Report and the Annual
Report to Congress on the Preservation and Promotion of Minority
Depository Institutions pursuant to Section 367 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 and Section 308 of
FIRREA.
Measuring Program Effectiveness
The national director and the regional office staff will routinely
solicit feedback from minority depository institutions to assess the
effectiveness of the FDIC's technical assistance, outreach, and
training/education efforts and the MDI Program in general. The FDIC
will track instances of technical assistance, outreach, and training
and education and solicit feedback on the effectiveness of these
activities by administering periodic surveys and holding discussions
with bank management.
Examinations
All insured institutions must be operated in a safe and sound
manner, in accordance with FDIC's regulations. Likewise, all
examinations must be conducted within the parameters of FDIC exam
policies and should consistently measure the risk an institution poses
to the FDIC's deposit insurance fund. Notwithstanding, and consistent
with the Uniform Financial Institutions Rating System (UFIRS) and the
Uniform Interagency Consumer Compliance Rating System (UICCR),
examiners are expected to recognize the distinctive characteristics and
differences in core objectives of each financial institution and to
consider those unique factors when evaluating an institution's
financial condition and risk management practices.
Under the UFIRS and UICCR, each financial institution is assigned a
composite rating based on an evaluation of specific components, which
are also rated. For UFIRS, these component ratings reflect an
institution's capital adequacy, asset quality, management capabilities,
earnings sufficiency, liquidity position, and sensitivity to market
risk (commonly referred to as the CAMELS ratings). Likewise, the UICCR
is organized under broad components that assess the institution's board
and management oversight, compliance program, and violations of law and
consumer harm. The uniform rating systems and evaluation and rating
criteria are specific to the examination types performed. Further, the
assignment of the rating is based solely on the subject institution's
individual performance under the specific components.
Management practices, particularly as they relate to risk
management, vary considerably among financial institutions depending on
size and sophistication, the nature and complexity of business
activities, and risk profile. Each institution must properly manage
risks and have appropriate policies, processes, or practices in place
that management follows and uses. Activities undertaken in a less
complex institution engaging in less sophisticated risk-taking
activities may only need basic management and control systems compared
to the detailed and formalized systems and controls used for the
broader and more complex range of activities undertaken at a larger and
more complex institution.
Peer comparison data are not included in the rating systems. The
principal reason is to avoid over reliance on statistical comparisons
to justify the component rating being assigned. This is very important
when evaluating minority depository institutions due to their unique
characteristics. For example, many minority depository institutions
were established to serve an otherwise under-served market. High
profitability may not be as essential to the organizers and
shareholders of the institution. Instead, community development,
improving consumer services, and promoting banking services to the
unbanked or under-banked segment of its community may drive many of the
organization's decisions. The UFIRS allows for consideration of the
characteristics by considering not only the level of an institution's
earnings, but also the trend and stability of earnings, the ability to
provide for adequate capital, the quality and sources of earnings, and
the adequacy of budgeting systems.
Examiners are instructed to consider all relevant factors when
assigning a component rating. The rating systems are designed to
reflect an assessment of the individual institution, including its size
and sophistication, the nature and complexity of its business
activities, and risk profile.
Failing Institutions
The FDIC will attempt to preserve the minority character of failing
institutions during the resolution process. In the event of a potential
failure of a minority depository institution, the Division of
Resolutions and Receiverships will contact all minority depository
institutions nationwide that qualify to bid on failing institutions.
The Division of Resolutions and Receiverships will solicit qualified
minority depository institutions' interest in the failing institution,
discuss the bidding process, and offer to provide technical assistance
regarding completion of the bid forms. In addition, the Division of
Resolutions and Receiverships, with assistance from the Office of
Minority and Women Inclusion, will maintain a list of minority
individuals and nonbank entities that have expressed an interest in
acquiring failing minority depository institutions and have been pre-
approved by the Division of Risk Management Supervision and the
chartering authority for access to the FDIC's virtual data room for
online due diligence.
Internet Site
The FDIC will maintain a website to promote the MDI Program. Among
other things, the website will describe the tools and resources
available under the program. The website will include the name, phone
number, and email address of the national director, each regional
coordinator, and additional staff. The website will also contain links
to the list of minority depository institutions, pertinent trade
associations, and other Federal agency programs. The FDIC will also
explore the feasibility and usefulness of posting other items to the
page, such as statistical information and comparative data for minority
depository institutions. Visitors will have the opportunity to provide
feedback regarding the FDIC's program and the usefulness of the
website.
IV. Administrative Law Matters
The Paperwork Reduction Act of 1995 (PRA) \5\ states that no agency
may conduct or sponsor, nor is the
[[Page 60407]]
respondent required to respond to, an information collection unless it
displays a currently valid Office of Management and Budget (OMB)
control number.
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\5\ 44 U.S.C. 3501, et seq.
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The proposed Statement of Policy Regarding Minority Depository
Institutions does not create any new or revise any existing information
collections pursuant to the PRA. Rather, any reporting, recordkeeping,
or disclosure activities mentioned in the proposed Statement of Policy
Regarding Minority Depository Institutions are usual and customary and
should occur in the normal course of business as defined in the PRA.\6\
Consequently, no submissions will be made to the OMB for review.
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\6\ 5 CFR 1320.3(b)(2).
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6. The agencies request comment on its conclusion that this aspect
of the proposed Statement of Policy Regarding Minority Depository
Institutions does not create any new or revise any existing information
collections.
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. 2020-18816 Filed 9-24-20; 8:45 am]
BILLING CODE 6714-01-P
