Removal of Transferred OTS Regulations Regarding Application Processing Procedures of State Savings Associations and Conforming Amendments to Other Regulations, 8089-8098 [2020-28453]

Download as PDF jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations 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 24 CFR 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 is twofold. First, this subpart notifies all FDIC- VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 supervised institutions of their duty to collect and retain certain information about a home loan applicant’s personal characteristics in accordance with 12 CFR part 1002 (Regulation B of the Bureau of Consumer Financial Protection) 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 notifies certain FDIC-supervised institutions of their duty to maintain, update, and report a register of home loan applications in accordance with 12 CFR part 1003 (Regulation C of the Bureau of Consumer Financial Protection), which implements the Home Mortgage Disclosure Act (12 U.S.C. 2801 et seq.). § 338.6 Definitions applicable to this subpart. For purposes of this subpart— (a) Bank means an insured State nonmember bank as defined in section 3 of the Federal Deposit Insurance Act, 12 U.S.C. 1813. (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 shall request and retain the monitoring information required by Regulation B of the Bureau of Consumer Financial Protection (12 CFR part 1002). § 338.9 entity. Mortgage lending of a controlled 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. PART 390—REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT SUPERVISION 2. The authority citation for part 390 is revised to read as follows: ■ Authority: 12 U.S.C. 1819. 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 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. Dated at Washington, DC, on December 15, 2020. James P. Sheesley, Assistant Executive Secretary. [FR Doc. 2020–28452 Filed 2–2–21; 8:45 am] BILLING CODE 6714–01–P FEDERAL DEPOSIT INSURANCE CORPORATION § 338.8 Compilation of loan data in register format. 12 CFR Parts 303 and 390 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). RIN 3064–AF36 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 8089 Removal of Transferred OTS Regulations Regarding Application Processing Procedures of State Savings Associations and Conforming Amendments to Other Regulations Federal Deposit Insurance Corporation (FDIC). AGENCY: E:\FR\FM\03FER2.SGM 03FER2 8090 ACTION: Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations Final rule. The Federal Deposit Insurance Corporation (FDIC) is adopting a final rule (final rule) to rescind and remove certain regulations transferred to the FDIC from the Office of Thrift Supervision (OTS) in 2011 pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). These regulations generally concern the supervision and governance of State savings associations, including the application processing procedures for certain applications, notices and filings by State savings associations. In addition to the removal of our regulations, the FDIC is making technical changes to our regulations that do not currently apply to State savings associations. Following the rescission, the filing regulations pertaining to State savings associations and all other FDIC-supervised institutions will be substantially the same. DATES: The final rule is effective March 5, 2021. FOR FURTHER INFORMATION CONTACT: Donald Hamm, Special Advisor, (202) 898–3528, dhamm@fdic.gov; Shelli Coffey, Review Examiner, (312) 382– 7539, scoffey@fdic.gov, Risk Management Supervision; Andrew B. Williams II, Counsel, (202) 898–3591, and willimas@fdic.gov, Legal Division. SUPPLEMENTARY INFORMATION: SUMMARY: jbell on DSKJLSW7X2PROD with RULES2 I. Policy Objective The policy objective of the final rule is to remove unnecessary and duplicative regulations in order to simplify and improve the public’s understanding of the FDIC’s regulations, and to promote parity between State savings associations and State nonmember banks by applying the same filing requirements to both classes of institutions. Thus, as further detailed in this section, the FDIC is rescinding and removing, from the Code of Federal Regulations (CFR), 12 CFR part 390, subpart F (subpart F). As discussed below, the FDIC is making technical changes to certain sections of part 303. The rescission of subpart F, with the accompanying revisions to 12 CFR part 303, simplifies and streamlines the FDIC’s regulations by removing unnecessary provisions that are adequately provided for in other existing statutes and regulations. II. Background A. The Dodd-Frank Act The Dodd-Frank Act, signed into law on July 21, 2010, provided for a substantial reorganization of the VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 regulation of State and Federal savings associations and their holding companies.1 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 of all orders, resolutions, determinations, regulations, and advisory materials that had been issued, made, prescribed, or allowed to become effective by the OTS. The section provides that if such materials were in effect on the day before the transfer date, they continue in effect and are enforceable by or against the appropriate successor agency until they are modified, terminated, set aside, or superseded in accordance with applicable law by such successor agency, by any court of competent jurisdiction, or by operation of law. Pursuant to section 316(c) of the Dodd-Frank Act,4 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 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) 7 and other laws as the ‘‘appropriate Federal banking agency’’ or under similar statutory terminology. Section 312(c) of the DoddFrank Act 8 revised the definition of ‘‘appropriate Federal banking agency’’ contained in section 3(q) of the FDI Act 9 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’’ 1 Public Law 111–203, 124 Stat. 1376 (2010). 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). 6 Codified at 12 U.S.C. 5412(b)(2)(B)(i)(II). 7 12 U.S.C. 1811 et seq. 8 Codified at 12 U.S.C. 5412(c)(1). 9 12 U.S.C. 1813(q). 2 Codified PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 (or similar terminology) for State savings associations, as it does here, the FDIC is authorized to issue, modify, and rescind regulations involving such associations, as well as for State nonmember banks and insured Statelicensed branches of foreign banks. As noted, on July 14, 2011, operating pursuant to this authority, the FDIC’s Board of Directors issued a list of regulations of the former OTS that the FDIC would enforce with respect to State savings associations. On that same date, the FDIC Board reissued and redesignated certain transferring regulations of the former OTS. These transferred OTS regulations were published as new FDIC regulations in the Federal Register on August 5, 2011.10 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 the transferred OTS regulations into other FDIC regulations, amending them, or rescinding them, as appropriate.11 B. 12 CFR Part 516—Application Processing Procedures A subset of the regulations transferred to the FDIC from the OTS concern application processing procedures. The OTS regulations, formerly found at 12 CFR part 516, §§ 516.1 through 516.290, were transferred to the FDIC with only nomenclature changes and now comprise part 390, subpart F (subpart F). Subpart F governs the FDIC’s procedures for processing applications, notices or filings under part 390 and, prior to its rescission, part 391 for State savings associations.12 III. The Proposal A. Removal of Part 390, Subpart F— Application Processing Procedures Section 316(b)(3) of the Dodd-Frank Act in pertinent part, provides that the regulations of the former OTS, as they apply to State savings associations, will be enforceable by the FDIC until they are modified, terminated, set aside, or superseded in accordance with applicable law.13 Consistent with the FDIC’s stated intention to evaluate transferred OTS regulations before taking action on them, the FDIC conducted a careful review of subpart F and related Federal statutes, regulations, and statements of policy relevant to 10 76 FR 47652 (Aug. 5, 2011). 76 FR 47653. 12 12 CFR part 390, subpart F. 13 12 U.S.C. 5414(b)(3). 11 See E:\FR\FM\03FER2.SGM 03FER2 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations subordinate organizations of State savings associations. On October 15, 2020, the FDIC published a notice of proposed rulemaking (NPR or proposal) regarding the removal of subpart F, which concerns the FDIC’s procedures for processing applications, notices or filings under part 390 and, prior to its rescission, part 391 for State savings associations.14 The NPR proposed removing subpart F from the Code of Federal Regulations (CFR) because, after careful review and consideration, the FDIC believed the provisions contained in subpart F to be unnecessary in light of the applicability of other provisions of Federal statutes and regulations, specifically 12 CFR part 303 (part 303) or guidance that produce substantially the same supervisory results. The FDIC received no comments on those aspects of the proposal. Rather than restate the rationale for rescission and removal of each section of subpart F, the reader is referred to the explanations for rescission and removal provided in the NPR,15 which the FDIC references here as the basis for finalizing the regulations as proposed. In the NPR the FDIC also proposed to amend certain sections of part 303, subparts A, K, and M, of the FDIC’s regulations. Those amendments are discussed below. jbell on DSKJLSW7X2PROD with RULES2 B. Revision of Certain Sections of Part 303, Filing Procedures Part 303 of the FDIC Rules and Regulations (12 CFR part 303) provides a framework for filing requirements for various applications, notices, and requests (collectively, ‘‘filings’’ as defined in § 303.2(s)) (12 CFR 303.2(s)). Subpart A of part 303, Rules of General Applicability, prescribes the general procedures for submitting filings to the FDIC that are required by statute or regulation. This subpart also prescribes the procedures to be followed by the FDIC, applicants, and interested parties during the process of considering a filing, including public notices and comment when required. This subpart explains the availability of expedited processing for eligible depository institutions (defined in § 303.2(r)) for matters subject to expedited processing. Specific filings are detailed in subpart B through subpart M of part 303. The FDIC is making technical changes in certain sections of part 303, subparts A, K, and M. The revisions make those sections applicable on their terms to State savings associations. 14 85 FR 65270 (Oct. 15, 2020). 15 Id. VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 8091 1. Section 303.7—Public Notice Requirements The FDIC received no comments on these aspects of the proposal. Section 5 of the FDI Act,16 generally and in part, provides that any depository institution engaged in the business of receiving deposits other than trust funds, upon application to and examination by the FDIC and approval by its Board of Directors, may become an insured depository institution. The term ‘‘depository institution’’ means any bank or savings association pursuant to section 3(c)(1) of the FDI Act.17 Subpart B—Deposit Insurance, of part 303 of the FDIC regulations, sets forth the procedures for applying for deposit insurance by certain applicants, including for a proposed depository institution under section 5 of the FDI Act, and applies to savings associations.18 Section 303.23(a) of subpart B states that, in addition to other requirements, the applicant ‘‘shall publish a notice as prescribed in § 303.7 in a newspaper of general circulation in the community in which the main office of the depository institution is or will be located.’’ Subpart F of part 390 of the FDIC regulations addresses public notice requirements, stating that §§ 390.111 through 390.115 apply whenever a FDIC regulation requires an applicant to follow the public notice procedures.19 The FDIC is rescinding §§ 390.111 through 390.115 because part 303 substantively addresses the same requirements, including, for deposit insurance applications, §§ 303.7, subpart A, and 303.23, subpart B. Section 303.7 of the FDIC regulations, of part 303, subpart A, addresses public notice requirements for filings with respect to mergers, changes in control, and requests for deposit insurance. With one exception, § 303.7 makes no distinction between banks and savings associations. However, § 303.7(c)(1)(i) states, in part: ‘‘[i]n the case of an application for deposit insurance for a de novo bank (emphasis added), include the names of all organizers or incorporators.’’ The NPR proposed to amend § 303.7(c)(1)(i) to replace ‘‘bank’’ with ‘‘depository institution,’’ a term used elsewhere in the section. The revision would clarify that § 303.7(c)(1)(i) is applicable to savings associations, consistent with section 5 of the FDI Act and part 303, including subpart B—Deposit Insurance, and would make the requirement consistent for both types of depository institutions. 2. Section 303.15—Certain Limited Liability Companies Deemed Incorporated Under State Law Pursuant to section 5 of the FDI Act, the FDIC may approve deposit insurance for certain depository institutions. One of the statutory requirements for a State bank to be eligible for Federal deposit insurance is that it must be ‘‘incorporated under the laws of any State.’’ 20 That requirement effectively limited the approval of deposit insurance to State banks chartered under the traditional corporate form, despite the creation and increased use of limited liability entities other than corporations, such as limited liability companies (LLCs). Section 303.15 of the FDIC regulations is found in part 303, subpart A. Section 303.15(a) was promulgated to provide that a bank chartered as an LLC under State law would be deemed ‘‘incorporated’’ if it met four requirements, thus permitting the entity to be eligible to apply and be approved for deposit insurance.21 To be deemed incorporated, the LLC must possesses the four traditional corporate characteristics of perpetual succession, centralized management, limited liability, and free transferability of interests.22 Section 303.15(b) further provides that, for purposes of the FDI Act and the FDIC regulations, the terms ‘‘stockholder,’’ ‘‘shareholder,’’ ‘‘director,’’ ‘‘officer,’’ ‘‘voting stock,’’ ‘‘voting shares,’’ and ‘‘voting securities,’’ for banks chartered as LLCs, shall encompass or have substantially the same meaning as those terms have for banks chartered as corporations. The definition of ‘‘State savings association’’ under the FDI Act, which uses the phrase ‘‘organized and operating according to the laws of the State’’ instead of ‘‘incorporated,’’ does not limit State savings associations to the corporate charter form (absent a state requirement).23 In order to clarify that the terms in § 303.15(b) apply to savings association chartered as LLCs as they do for banks so chartered, the NPR proposed to revise references to ‘‘bank’’ in § 303.15(b) to ‘‘depository institution.’’ The revisions would make the terms ‘‘stockholder,’’ ‘‘shareholder,’’ ‘‘director,’’ ‘‘officer,’’ ‘‘voting stock,’’ ‘‘voting shares,’’ and ‘‘voting securities,’’ with respect to savings associations 20 12 U.S.C. 1813(a)(2). 68 FR 7308, February 13, 2003. 22 12 CFR 303.15(a)(1) through (4). See also, 68 FR 7308. 23 12 U.S.C. 1813(b)(3). 16 12 U.S.C. 1815. 17 12 U.S.C. 1813(c)(1). 18 12 CFR 303.20. 19 12 CFR 390.111. PO 00000 Frm 00011 Fmt 4701 21 See Sfmt 4700 E:\FR\FM\03FER2.SGM 03FER2 8092 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations chartered as LLCs, encompass or have substantially the same meaning with respect to savings associations chartered as LLCs as for those chartered as corporations. The FDIC received no comments on these aspects of the proposal. jbell on DSKJLSW7X2PROD with RULES2 3. Subpart K—Prompt Corrective Action: Section 303.204—Applications for Acquisitions, Branching, and New Lines of Business; Section 303.205— Applications for Bonuses and Increased Compensation for Senior Executive Officers Part 303 of the FDIC’s regulations includes procedures to implement the filing requirements for certain activities or transactions relative to undercapitalized or weaker depository institutions, and implements certain elements of section 38 of the FDI Act.24 Section 38 applies to all insured depository institutions. Among other things, section 38 generally prohibits an insured depository institution, without application and approval, from engaging in acquisitions, branching, or new lines of business, if the institution is undercapitalized or weaker, significantly undercapitalized, or critically undercapitalized.25 It also prohibits an insured depository institution, without application and approval, from payment of bonuses or increased compensation to senior executive officers, if the institution is significantly or critically undercapitalized, or is undercapitalized and has failed to submit or implement an acceptable capital restoration plan.26 Sections 303.204 and 303.205 of the FDIC regulations implement the provisions of section 38 described above. Section 303.204 requires any insured State nonmember bank and any insured branch of a foreign bank that is undercapitalized or significantly undercapitalized, and any critically undercapitalized insured depository institution, to submit an application to engage in acquisitions, branching, or new lines of business. This section clarifies that new lines of business include ‘‘any new activity exercised which, although it may be permissible, has not been exercised by the institution.’’ It also specifies the content of the filing, including information regarding whether the institution’s primary Federal regulator has accepted the institution’s capital restoration plan, U.S.C. 1831o. 12 U.S.C. 1831o(e)(4). 26 See 12 U.S.C. 1831o(f)(4). 12 U.S.C. 1831o(f) contains additional, discretionary restrictions that may be imposed by a financial regulator. and whether the institution has implemented that plan. Section 303.205 requires any insured State nonmember bank or insured branch of a foreign bank that is (i) significantly undercapitalized or critically undercapitalized, or (ii) is undercapitalized and has failed to submit or implement an acceptable capital restoration plan, to submit an application to pay a bonus or increase compensation to any senior executive officer. The section specifies the content of the filing, including information regarding the acceptance and implementation of the institution’s capital restoration plan. Although section 38 and other sections of subpart K of part 303 by their terms apply to all insured depository institutions, § 303.204, in part, and § 303.205 apply by their terms only to insured State nonmember banks and insured branches of foreign banks. The NPR proposed to revise §§ 303.204 and 303.205 to make those sections expressly apply to State savings associations to the same extent as they do to insured State nonmember banks. The final rule revises those sections to add ‘‘insured State savings associations.’’ The FDIC received no comments on these aspects of the proposal. 4. Section 303.249—Management Official Interlocks Part 348 27 of the FDIC regulations implements the Deposit Insurance Management Interlocks Act (Interlocks Act).28 The purpose of the Interlocks Act and part 348 are to foster competition by generally prohibiting a management official from serving two nonaffiliated depository organizations when the management interlock likely would have an anti-competitive effect.29 The Interlocks Act is applicable to both insured State nonmember banks and State savings associations, and part 348 applies to management officials of FDICsupervised institutions and their affiliates. With regard to insured State nonmember banks and State savings associations, the Interlocks Act provides the FDIC with administrative and enforcement authority under section 3206, as well as authority to prescribe regulations to carry out the Interlocks Act.30 Under section 13(k) of the FDI Act, and notwithstanding any provision of State law, the FDIC may authorize dual service that would otherwise be prohibited by the Interlocks Act upon determining that severe financial conditions threaten the stability of a significant number of savings associations, or of savings associations possessing significant financial resources, and that such authorization would lessen the risk to the FDIC.31 Subpart F of part 390 does not apply to a transaction under section 13(k) of the FDI Act.32 As discussed above, the FDIC transferred various OTS regulations into FDIC regulations. One of the transferred OTS regulations governed OTS oversight of management official interlocks in the context of State savings associations. The OTS regulation, formerly found at 12 CFR part 563f, was transferred to the FDIC with only minor, nonsubstantive changes, and was found in the FDIC’s regulations at 12 CFR part 390, subpart V (part 390, subpart V), entitled ‘‘Management Official Interlocks.’’ Before the transfer of the OTS regulations and continuing today as noted above, the FDIC’s regulations contained part 348. After review and comparison of part 390, subpart V, and part 348, effective January 20, 2016, the FDIC rescinded part 390, subpart V, because the FDIC found it to be substantially redundant to existing part 348, considering technical conforming edits to part 348.33 However, § 303.249, found in part 303, subpart M, of the FDIC regulations, addresses the ‘‘procedures to be followed by an insured State nonmember bank (emphasis added) to seek the approval of the FDIC to establish an interlock pursuant to’’ the Interlocks Act, section 13(k) of the FDI Act, and part 348 of the FDIC regulations.34 The NPR proposed to revise § 303.249(a) to insert, following ‘‘bank’’ in the language quoted immediately above, ‘‘or an insured State savings association.’’ The revision clarifies that State savings associations may use the procedures contained in § 303.249 to apply for approval to establish interlocks as provided therein. The FDIC received no comments on these aspects of the proposal. IV. The Final Rule For the reasons stated herein and in the NPR, the FDIC is adopting the amendments as proposed. V. Expected Effects As of June 30, 2020, the FDIC supervised 3,270 depository 24 12 25 See VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 27 12 31 12 28 12 CFR part 348. U.S.C. 3201–3208. 29 12 CFR 348.1(b). 30 12 U.S.C. 3206, 3207. 32 12 PO 00000 Frm 00012 Fmt 4701 U.S.C. 1823(k)(1)(A)(v). CFR 390.100(b)(1). 33 80 FR 79252 (Dec. 21, 2015). 34 12 CFR 303.249(a). Sfmt 4700 E:\FR\FM\03FER2.SGM 03FER2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations institutions, of which 35 (1.1 percent) were State savings associations.35 The final rule primarily affects regulations that govern State savings associations. Therefore, the final rule is expected to affect 35 FDIC-supervised institutions. As previously discussed, the final rule rescinds part 390, subpart F, because most of its elements are duplicative of substantively similar provisions of FDIC regulations, principally part 303. Additionally, the final rule amends certain elements of part 303 so that the provisions are applicable to State savings associations. In doing so, the final rule makes elements of part 390, subpart F, substantively duplicative of the amended elements of part 303, and, therefore, unnecessary. As such, the FDIC does not believe the final rule will have substantive effects on State savings associations. Section 390.100 sets forth application processing procedures for State savings associations. However, existing statutes 36 and regulations already ‘‘prescribe the general procedures for submitting filings to the FDIC and the procedures to be followed by the FDIC, applicants and interested parties during the process of considering a filing’’ 37 for FDIC-supervised institutions, including State savings associations. Therefore, rescinding § 390.100 is not expected to have any substantive effects on State savings associations. Section 390.101 specifies the criteria for determining which filings receive expedited treatment and which receive standard treatment. State savings associations are already subject to substantively similar requirements in §§ 303.2(r) and 303.11(c), as well as the substantive subparts of part 303 of the FDIC regulations. Therefore, rescinding § 390.101 is not expected to have any substantive effects on State savings associations. Section 390.102 addresses the computation of time periods for State savings associations. State savings associations are subject to regulations that address the computation of relevant time periods at § 303.4 of the FDIC regulations. Therefore, rescinding § 390.102 is not expected to have any substantive effects on State savings associations. Section 390.103 addresses pre-filing meetings and FDIC contacts for filings to acquire control of State savings associations. Pre-filing meetings are not addressed in FDIC regulations, but are addressed in the Applications Procedures Manual (APM), in which a 35 Call Report data, June 30 2020. U.S.C. 1831a. 37 12 CFR 303.1. 36 12 VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 substantively similar description of prefiling meetings is given. Additionally, the APM states that a Case Manager will be assigned by the FDIC to the application in order to facilitate communication and engagement with the applicant. Therefore, the FDIC believes that rescinding § 390.103 is unlikely to have any substantive effects on State savings associations or change in control applicants. Section 390.104 addresses certain requirements for business plans submitted by State savings associations under subpart F, which permits the FDIC to require additional business plan information during processing of the filing. Under part 303, business plans are required for certain filings, though the FDIC may request additional information for any filing. In this regard, the FDIC’s review processes include, as appropriate, pre-filing and other activities to ensure institutions’ understanding of the FDIC’s filing requirements and information needs. In certain cases, the content for business plans is addressed in filing forms or other FDIC resources. For example, the Inter-agency Charter and Deposit Insurance Application Form contains detailed instructions for the development of the business plan; and those instructions may assist institutions when submitting business plans as part of other filings. The FDIC has also provided a Handbook for Organizers—Applying for Deposit Insurance, which aids all applicants for deposit insurance and includes sections on developing a business plan and business plan content. Generally, the FDIC believes it is appropriate to provide an institution with flexibility to tailor the content of the business plan to reflect its unique circumstances, strategies, and challenges. Therefore, in light of the discussion above, the FDIC believes that rescinding § 390.104 is unlikely to have any substantive effects on State savings associations or change in control applicants. Section 390.105 addresses expedited and standard processing, as well as waiver requests for State savings associations. Expedited and standard processing, as well as waiver requirements, are encompassed in FDIC regulations applicable to State savings associations found throughout various subparts and sections of part 303. Therefore, the FDIC believes that rescinding § 390.105 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.106 addresses the content of filings for State savings associations. It directs State savings associations to the applicable forms and the content PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 8093 requirements. The required content of filings is encompassed in FDIC regulations applicable to State savings associations throughout various subparts and sections of part 303. Therefore, the FDIC believes that rescinding § 390.106 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.107 addresses application confidentiality for State savings associations. FDIC regulations found at § 303.8 and applicable to FDICsupervised institutions, including State savings associations, includes confidential treatment regulations that are substantively similar to those in § 390.107. Therefore, the FDIC believes that rescinding § 390.107 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.108 addresses where to file applications, specifically providing regional office addresses. General application filing procedures for all FDIC-supervised institutions, including State savings associations, are encompassed in regulations found at § 303.3 of the FDIC regulations. Further, although specific regional office addresses are not included in the regulation, they are available on the FDIC’s public website. Therefore, the FDIC believes that rescinding § 390.108 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.109 explains the application filing date. The FDIC does not have substantively similar regulations governing the filing date of an application. However, FDIC regulations operate on the basis of the date on which a substantially complete filing is submitted. Further, the FDIC’s APM, which is accessible to all FDICsupervised institutions, including State savings associations, addresses the date on which an application is considered to be substantively complete. Therefore, the FDIC believes that rescinding § 390.109 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.110 discusses amending or supplementing an application. The FDIC does not have substantively similar regulations governing amending or supplementing an application. However, the FDIC relies on determinations as to when an application is substantially complete. In addition, the FDIC’s APM, which is applicable to all FDIC-supervised institutions, including State savings associations, addresses both substantially complete filings and those not substantially complete, as well as E:\FR\FM\03FER2.SGM 03FER2 jbell on DSKJLSW7X2PROD with RULES2 8094 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations how to supplement information. Further, the APM states that an applicant may modify and update an application throughout the review process until final disposition, and that applicants often supplement their applications throughout the review process. Therefore, the FDIC believes that rescinding § 390.110 is unlikely to have any substantive effects on State savings associations or future applicants. Sections 390.111 through 390.115 address public notice requirements. FDIC-supervised institutions, including State savings associations, are subject to substantively similar public notice requirements in § 303.7 of the FDIC regulations and throughout various subparts and sections of part 303. Therefore, the FDIC believes that rescinding §§ 390.111 through 390.115 is unlikely to have any substantive effects on State savings associations or future applicants. Sections 390.116 through 390.120 address procedures for submission of public comments. FDIC-supervised institutions, including State savings associations, are subject to substantively similar requirements regarding procedures for submission of public comments in § 303.9 of the FDIC regulations and throughout various subparts and sections of part 303. Therefore, the FDIC believes that rescinding §§ 390.116 through 390.120 is unlikely to have any substantive effects on State savings associations or future applicants. Sections 390.121 through 390.125 contain meeting procedures. Meetings are addressed generally in FDIC regulations found at 12 CFR 303.6 and 303.10 for FDIC-supervised institutions, including State savings associations. Although §§ 303.6 and 303.10 of the FDIC regulations are generally less specific than §§ 390.121 through 390.125, the FDIC believes the language in § 303.6 is generally inclusive of the substance of §§ 390.121 through 390.125 by stating that ‘‘[t]he FDIC may examine or investigate and evaluate facts related to any filing under this chapter to the extent necessary to reach an informed decision and take any action necessary or appropriate under the circumstances.’’ Therefore, the FDIC believes that rescinding §§ 390.121 through 390.125 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.126 addresses expedited treatment, including removal of the filing to standard processing, additional information requests, suspension of the processing period, and when the applicant can proceed with the activity VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 if the FDIC has not acted. FDICsupervised institutions, including State savings associations, are subject to substantively similar requirements for matters receiving expedited treatment in § 303.11(c) of the FDIC regulations, as well as §§ 303.122 and 303.142. Sections 303.3 and 303.11(e), as well as substantive subparts of part 303, provide the FDIC authority to require submission of additional information. Therefore, the FDIC believes that rescinding § 390.126 is unlikely to have any substantive effects on State savings associations or future applicants. Sections 390.127 and 390.128 address application completeness. The FDIC does not have corresponding regulations addressing application completeness. Instead, the application processing time periods under part 303 are triggered by the FDIC’s receipt of a substantially complete filing.38 The FDIC believes that the substantially complete filing step of part 303 permits the procedures for processing a filing under part 303, while essentially addressing the same issues, to be simpler and easier to navigate than those of §§ 390.127 and 390.128. Sections 303.3 and 303.11(e) of the FDIC regulations, as well as substantive subparts of part 303, provide the FDIC authority to require submission of additional information. The FDIC’s APM, which aids all FDICsupervised institutions, including State savings associations, addresses both substantially complete filings and those not substantially complete. Therefore, the FDIC believes that rescinding §§ 390.127 and 390.128 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.129 addresses eligibility examinations, as well as the authority of the FDIC to require such examinations and to request additional information. Under § 303.6 of the FDIC regulations, the FDIC may examine or investigate and evaluate facts related to any filing to the extent necessary to reach an informed decision and take any action necessary or appropriate under the circumstances. Sections 303.3 and 303.11(e), as well as substantive subparts of part 303, provide the FDIC authority to require submission of additional information. Therefore, the FDIC believes that a separate eligibility determination provision is unneeded, and rescinding § 390.129 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.130 addresses potential FDIC requests for additional information 38 12 PO 00000 CFR 303.304. Frm 00014 Fmt 4701 Sfmt 4700 or actions from applicants. FDICsupervised institutions, including State savings associations, are subject to substantively similar requirements regarding potential FDIC requests for additional information or actions from applicants through various subparts and sections of part 303. Therefore, the FDIC believes that rescinding § 390.130 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.131 explains requirements to publish new public notices. FDIC-supervised institutions, including State savings associations, are subject to substantively similar requirements regarding publishing new public notices in § 303.7(f) of the FDIC regulations. Therefore, the FDIC believes that rescinding § 390.131 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.132 addresses suspension of an application. Part 303 has no such provision. However, the FDIC believes that situations envisioned by § 390.132 can be effectively addressed on a caseby-case basis without need of a regulation, or that a regulation is not needed because the processing period under part 303 does not begin until the FDIC receives a substantially complete filing and, thus, no suspension is necessary. Therefore, the FDIC believes that rescinding § 390.132 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.133 addresses the applicable review period for an application. The FDIC’s part 303 regulations contain provisions that bear on the same issues and are similar in substantive effect as the § 390.133 provisions. Thus, while part 303 addresses review periods in a different manner than subpart F, the FDIC believes that the substantive effect is similar and that rescinding § 390.133 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.134 requires the FDIC to approve or deny an application before the expiration of the applicable review period, including any extensions, and notify the applicant, in writing, of its decision. If the FDIC does not act under paragraph (a)(1) of the section, the application is deemed approved. The FDIC’s part 303 procedures do not contain such a requirement for applications (as opposed to some notice filings). However, when read in conjunction with § 390.133, the FDIC has significant, though not complete, discretion under subpart F to extend the E:\FR\FM\03FER2.SGM 03FER2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations review period for applications until a determination is issued. The substantial ability of the FDIC to extend the processing period under subpart F, to a great extent, renders any difference with part 303 immaterial. As such, the application review periods and notification procedures for State savings associations are subject to substantively similar requirements under both subpart F and part 303. Therefore, the FDIC believes that rescinding § 390.134 is unlikely to have any substantive effects on State savings associations or future applicants. Section 390.135 addresses withdrawal if an application is not acted on within two calendar years. The FDIC does not have substantively similar regulations addressing withdrawal if an application is not acted on. However, the FDIC’s APM, which aids all FDIC-supervised institutions, including State savings associations, states that the FDIC’s goal is to act on filings as promptly as practical, while allowing appropriate time for review and evaluation. Additionally, the FDIC has established timeframes for processing each type of filing, which have been published in Financial Institution Letter 81–2018.39 It is also, generally, the FDIC’s practice to provide an applicant with an opportunity to withdraw its application if FDIC staff propose an unfavorable recommendation. Therefore, the FDIC believes that rescinding § 390.135 is unlikely to have any substantive effects on State savings associations or future applicants. The final rule amends certain elements of part 303, specifically §§ 303.7(c)(1)(i) and 303.15(b)(1) through (4), so that the provisions are applicable to State savings associations. In so doing, the final rule makes elements of part 390, subpart F, substantively duplicative of the amended elements of part 303, and, therefore, unnecessary. The final rule amends §§ 303.204 and 303.205 of part 303’s subpart K (Prompt Corrective Action). Section 303.204 requires any insured State nonmember bank and any insured branch of a foreign bank that is undercapitalized or significantly undercapitalized, and any critically undercapitalized insured depository institution, to submit an application to engage in acquisitions, branching, or new lines of business. Section 303.205 requires any insured State nonmember bank or insured branch of a foreign bank that is (i) significantly undercapitalized or critically undercapitalized, or (ii) is 39 www.fdic.gov/news/financial-institutionletters/2018/fil18081.html. VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 undercapitalized and has failed to submit or implement an acceptable capital restoration plan, to submit an application to pay a bonus or increase compensation to any senior executive officer. The final rule makes these sections applicable to State savings associations. The provisions of section 38 of the FDI Act,40 which establishes the statutory authority for §§ 303.204 and 303.205, contain the restrictions at issue and are applicable to all insured depository institutions. Thus, the final rule should not have a material impact on State savings associations. Section 303.249 of the FDIC regulations addresses the ‘‘procedures to be followed by an insured State nonmember bank to seek the approval of the FDIC to establish an interlock pursuant to’’ the Interlocks Act, section 13(k) of the FDI Act, and part 348 of the FDIC regulations. The final rule amends § 303.249(a) to apply to State savings associations. Although the amendment sets forth more explicit requirements for State savings associations seeking approval for establishing an interlock, State savings associations would not realize any effects because they are already subject to the Interlocks Act, and part 348. Therefore, State savings associations would currently need to undertake similar procedures, and provide substantively similar information, to those outlined in § 303.249. By removing duplicative or unnecessary regulations, the FDIC believes that the final rule will benefit State savings associations by clarifying regulations and improving the ease of references. VI. Alternatives The FDIC has considered alternatives to the rule, but believes the amendments represent the most appropriate option for covered institutions. As discussed previously, the Dodd-Frank Act transferred to the FDIC certain powers, duties, and functions formerly performed by the OTS. The FDIC’s Board reissued and redesignated certain transferred regulations from the OTS, but noted that it would evaluate and might later, as appropriate, rescind, amend, or incorporate the regulations into other FDIC regulations. The FDIC has evaluated the existing regulations related to application processing procedures. The FDIC considered the status quo alternative of retaining the current regulations, but believes it would be procedurally complex and unnecessary for FDICsupervised institutions to continue to 40 12 PO 00000 U.S.C. 1831o. Frm 00015 Fmt 4701 Sfmt 4700 8095 refer to the separate sets of regulations. Therefore, the FDIC is amending the specified sections of part 303 and rescinding subpart F. VII. Regulatory Analysis and Procedure A. The Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), 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. The final rule rescinds and removes from FDIC regulations subpart F and makes technical revisions to certain sections of part 303. The final rule will not create any new or revise any existing collections of information under the PRA. Therefore, no information collection request will be submitted to the OMB for review. B. The Regulatory Flexibility Act The Regulatory Flexibility Act (RFA), requires that, in connection with a final rule, an agency prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of the final rule on small entities.41 However, a regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities, and publishes its certification and a short explanatory statement in the Federal Register together with the rule. The Small Business Administration (SBA) has defined ‘‘small entities’’ to include banking organizations with total assets of less than or equal to $600 million.42 Generally, the FDIC considers a significant effect to be a quantified effect in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of these thresholds typically represent significant effects for FDIC-supervised institutions. For the reasons provided below, the FDIC certifies that the final rule will not have 41 5 U.S.C. 601, et seq. SBA defines a small banking organization as having $600 million or less in assets, where an organization’s ‘‘assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year.’’ See 13 CFR 121.201 (as amended, by 84 FR 34261, effective August 19, 2019). ‘‘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. 42 The E:\FR\FM\03FER2.SGM 03FER2 8096 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES2 a significant economic impact on a substantial number of small banking organizations. Accordingly, a regulatory flexibility analysis is not required. As of June 2020, the FDIC supervised 3,270 insured depository institutions, of which 2,492 are considered small banking organizations for the purposes of RFA. The final rule primarily affects regulations that govern State savings associations.43 There are 33 State savings associations considered to be small banking organizations for the purposes of the RFA.44 As previously discussed, the final rule rescinds part 390, subpart F, because most of its elements are duplicative of substantively similar provisions of FDIC regulations, specifically part 303. Additionally, the final rule amends §§ 303.7(c)(1)(i) and 303.15(b)(1) through (4) of part 303 so that the provisions are applicable to State savings associations. In doing so, the final rule makes elements of part 390, subpart F, substantively duplicative of the amended elements of part 303, and, therefore, unnecessary. The final rule amends §§ 303.204 and 303.205 to make the provisions applicable to all insured depository institutions, including small, State savings associations. The revisions to §§ 303.204 and 303.205 provide a procedure for State savings associations to apply to the FDIC for relief from the restrictions of section 38 of the FDI Act.45 Finally, the final rule amends § 303.249(a) to make the provisions applicable to all insured depository institutions, including small, State savings associations. The FDIC believes that the amendment will not have any substantive effects on small, State savings associations because it will not result in any substantive change in the procedures for, or content associated with seeking approval for establishing an interlock. Thus, the FDIC does not believe the final rule will substantially impact small, FDIC-supervised institutions or future applicants. The FDIC received no comments on the information provided in the Regulatory Flexibility Act section of the NPR. Based on the information above, the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small entities. C. The Congressional Review Act For purposes of Congressional Review Act, the OMB makes a determination as 43 FDIC Call Report, March 31, 2020. 44 Id. 45 12 U.S.C. 1831o. VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 to whether a final rule constitutes a ‘‘major’’ rule.46 If a rule is deemed a major rule by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.47 The Congressional Review Act defines a ‘‘major rule’’ as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in—(A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets.48 The OMB has determined that the final rule is not a major rule for purposes of the Congressional Review Act and the FDIC will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review. D. Plain Language Section 722 of the Gramm-LeachBliley Act 49 requires each Federal banking agency to use plain language in all of its proposed and final regulations published after January 1, 2000. As a Federal banking agency subject to the provisions of this section, the FDIC has sought to present the final rule to rescind subpart F and make technical revisions to certain sections of part 303 in a simple and straightforward manner. E. The Economic Growth and Regulatory Paperwork Reduction Act Under section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), the FDIC is required to review all of its regulations, at least once every 10 years, in order to identify any outdated or otherwise unnecessary regulations imposed on insured institutions.50 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 that will 46 5 U.S.C. 801 et seq. U.S.C. 801(a)(3). 48 5 U.S.C. 804(2). 49 Public Law 106–102, 113 Stat. 1338, 1471 (codified at 12 U.S.C. 4809). 50 Public Law 104–208, 110 Stat. 3009 (1996). 47 5 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 be taken to address issues that were identified. 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 subpart F, the final rule complements other actions the FDIC has taken, separately and with the other Federal banking agencies, to further the EGRPRA mandate. F. Riegle Community Development and Regulatory Improvement Act of 1994 Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA),51 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosure, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.52 As previously stated, the final rule removes subpart F from the Code of Federal Regulations because, after careful review and consideration, the FDIC believes it is largely unnecessary in light of the applicability of other provisions of Federal statutes and regulations, specifically 12 CFR part 303 (part 303) or guidance that produce substantially the same supervisory results. In addition, the final rule also includes amendments to certain sections of part 303, subparts A, K, and M, of the FDIC’s regulations make those sections applicable by their terms to State savings associations. Those amendments do not impose any additional reporting, disclosure, or other requirements on IDIs. Because the final rule does not impose additional reporting, disclosure, or other new requirements on IDIs, section 302 of the RCDRIA does not apply. 51 12 52 12 E:\FR\FM\03FER2.SGM U.S.C. 4802(a). U.S.C. 4802. 03FER2 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations List of Subjects 12 CFR Part 303 Administrative practice and procedure, Bank deposit insurance, Banks, banking, Reporting and recordkeeping requirements, Savings associations. 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, Reporting and recordkeeping requirements, Savings associations. Authority and Issuance For the reasons stated in the preamble, the Federal Deposit Insurance Corporation amends 12 CFR parts 303 and 390 as follows: PART 303—FILING PROCEDURES 1. The authority citation for part 303 is revised to read as follows: ■ Authority: 12 U.S.C. 378, 1463, 1467a, 1813, 1815, 1817, 1818, 1819(a) (Seventh and Tenth), 1820, 1823, 1828, 1831i, 1831e, 1831o, 1831p–1, 1831w, 1831z, 1835a, 1843(l), 3104, 3105, 3108, 3207, 5412; 15 U.S.C. 1601–1607. 2. Revise § 303.7(c)(1) to read as follows: ■ § 303.7 Public notice requirements. jbell on DSKJLSW7X2PROD with RULES2 * * * * * (c) * * * (1) The public notice referred to in paragraph (a) of this section shall consist of the following: (i) In the case of an application for deposit insurance for a de novo depository institution, include the names of all organizers or incorporators. In the case of an application to establish a branch, include the location of the proposed branch or, in the case of an application to relocate a branch or main office, include the current and proposed address of the office. In the case of a merger application, include the names of all parties to the transaction. In the case of a notice of acquisition of control, include the name(s) of the acquiring parties. In the case of an application to relocate an insured branch of a foreign bank, include the current and proposed address of the branch. (ii) Type of filing being made; (iii) Name of the depository institution(s) that is the subject matter of the filing; (iv) That the public may submit comments to the appropriate FDIC regional director; VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 (v) The address of the appropriate FDIC office where comments may be sent (the same location where the filing will be made); (vi) The closing date of the public comment period as specified in the appropriate subpart of this part; and (vii) That the nonconfidential portions of the application are on file in the appropriate FDIC office and are available for public inspection during regular business hours; photocopies of the nonconfidential portion of the application file will be made available upon request. * * * * * ■ 3. Revise § 303.15(b) to read as follows: § 303.15 Certain limited liability companies deemed incorporated under State law. * * * * * (b) For purposes of the Federal Deposit Insurance Act and this chapter: (1) Each of the terms ‘‘stockholder’’ and ‘‘shareholder’’ includes an owner of any interest in a depository institution chartered as an LLC, including a member or participant; (2) The term ‘‘director’’ includes a manager or director of a depository institution chartered as an LLC, or other person who has, with respect to such a depository institution, authority substantially similar to that of a director of a corporation; (3) The term ‘‘officer’’ includes an officer of a depository institution chartered as an LLC, or other person who has, with respect to such a depository institution, authority substantially similar to that of an officer of a corporation; and (4) Each of the terms ‘‘voting stock,’’ ‘‘voting shares,’’ and ‘‘voting securities’’ includes ownership interests in a depository institution chartered as an LLC, as well as any certificates or other evidence of such ownership interests. ■ 4. Revise § 303.204 to read as follows: § 303.204 Applications for acquisitions, branching, and new lines of business. (a) Scope. (1) Any insured State nonmember bank, any insured State savings association, and any insured branch of a foreign bank which is undercapitalized or significantly undercapitalized, and any insured depository institution which is critically undercapitalized, shall submit an application to engage in acquisitions, branching or new lines of business. (2) A new line of business will include any new activity exercised which, although it may be permissible, has not been exercised by the institution. PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 8097 (b) Content of filing. Applications shall describe the proposal, state the date the institution’s capital restoration plan was accepted by its primary Federal regulator, describe the institution’s status in implementing the plan, and explain how the proposed action is consistent with and will further the achievement of the plan or otherwise further the purposes of section 38 of the FDI Act. If the FDIC is not the applicant’s primary Federal regulator, the application also should state whether approval has been requested from the applicant’s primary Federal regulator, the date of such request and the disposition of the request, if any. If the proposed action also requires applications pursuant to section 18 (c) or (d) of the FDI Act (mergers and branches) (12 U.S.C. 1828 (c) or (d)), such applications should be filed concurrently with, or made a part of, the application filed pursuant to section 38 of the FDI Act (12 U.S.C. 1831o). ■ 5. Revise § 303.205(a) to read as follows: § 303.205 Applications for bonuses and increased compensation for senior executive officers. (a) Scope. Any insured State nonmember bank, insured State savings association, or insured branch of a foreign bank that is significantly or critically undercapitalized, or any insured State nonmember bank, any insured State savings association, or any insured branch of a foreign bank that is undercapitalized and which has failed to submit or implement in any material respect an acceptable capital restoration plan, shall submit an application to pay a bonus or increase compensation for any senior executive officer. * * * * * ■ 6. Revise § 303.249(a) to read as follows: § 303.249 Management official interlocks. (a) Scope. This section contains the procedures to be followed by an insured State nonmember bank or an insured State savings association to seek the approval of FDIC to establish an interlock pursuant to the Depository Institutions Management Interlocks Act (12 U.S.C. 3207), section 13 of the FDI Act (12 U.S.C. 1823(k)), and part 348 of this chapter. * * * * * PART 390—REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT SUPERVISION 7. The authority citation for part 390 continues to read as follows: ■ E:\FR\FM\03FER2.SGM 03FER2 8098 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations Authority: 12 U.S.C. 1819. 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. SUPPLEMENTARY INFORMATION: Subpart F—[Removed and Reserved] I. Policy Objective 8. Remove and reserve subpart F, consisting of §§ 390.100 through 390.135. The policy objective of the final rule is to simplify the FDIC’s regulations by removing unnecessary regulations and realigning existing regulations in order to improve the public’s understanding of the rules and to improve the ease of the public’s reference to them. Thus, as further detailed in this section, the FDIC is rescinding and removing from the CFR rules entitled Subordinate Organizations (12 CFR part 390, subpart O) applicable to State savings associations.1 Pursuant to subpart O, the FDIC may, at any time, limit a State savings association’s investment in their subordinate organizations, or may limit or refuse to permit any activities of any of these entities for supervisory, legal, or safety and soundness reasons.2 Subpart O includes definitions related to State savings association subsidiaries,3 a requirement for the parent State savings association and its subsidiaries to maintain separate corporate identities,4 a prior notice requirement for a State savings association seeking to establish or acquire a new subsidiary or engage in new activities through an existing subsidiary,5 requirements related to the issuance of securities by a subsidiary,6 and requirements for the exercise of salvage power by a State savings association.7 The FDIC has determined that the requirements for State savings association subordinate organizations set forth in subpart O are substantially similar to requirements of section 28 of the FDI Act and its implementing regulations, 12 CFR part 362 of the FDIC’s Rules and Regulations; and section 37 of the FDI Act.8 Therefore, the FDIC is rescinding and removing subpart O and will apply part 362, subpart C and subpart D, as appropriate, to achieve substantially similar supervisory results for State savings associations and subsidiaries as have been obtained through the application of subpart O. ■ Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on or about December 15, 2020. James P. Sheesley, Assistant Executive Secretary. [FR Doc. 2020–28453 Filed 2–2–21; 8:45 am] BILLING CODE 6714–01–P FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Parts 362 and 390 RIN 3064–AF37 Removal of Transferred OTS Regulations Regarding Certain Subordinate Organizations of State Savings Associations Federal Deposit Insurance Corporation. ACTION: Final rule. AGENCY: The Federal Deposit Insurance Corporation (FDIC) is adopting a final rule to rescind and remove rules from the Code of Federal Regulations (CFR) regulations titled Subordinate Organizations that were transferred to the FDIC from the Office of Thrift Supervision (OTS) on July 21, 2011, in connection with the implementation of Title III of the DoddFrank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) regarding subordinate organizations of State savings associations because the FDIC has determined that the requirements for State savings association subordinate organizations included therein are substantially similar to the requirements for State savings associations and their subsidiaries set forth by certain sections of the Federal Deposit Insurance Act (FDI Act) and its implementing regulations. DATES: The final rule is effective on March 5, 2021. FOR FURTHER INFORMATION CONTACT: Donald Hamm, Special Advisor, (202) 898–3528, dhamm@fdic.gov; or Shelli Coffey, Review Examiner, (312) 382– 7539, scoffey@fdic.gov, Risk Management and Applications, Division jbell on DSKJLSW7X2PROD with RULES2 SUMMARY: VerDate Sep<11>2014 18:20 Feb 02, 2021 Jkt 253001 of Risk Management Supervision; Suzanne Dawley, Counsel, sudawley@ fdic.gov; or Karlyn J. Hunter, Counsel, khunter@fdic.gov, Legal Division. II. Background The Dodd-Frank Act,9 signed into law on July 21, 2010, provided for a substantial reorganization of the regulation of State and Federal savings associations and their holding companies.10 Beginning July 21, 2011, the transfer date established by section 311 of the Dodd-Frank Act,11 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 12 provides the manner of treatment of all orders, resolutions, determinations, regulations, and advisory materials that had been issued, made, prescribed, or allowed to become effective by the OTS. The section provides that if such materials were in effect on the day before the transfer date, they continue in effect and are enforceable by or against the appropriate successor agency until they are modified, terminated, set aside, or superseded in accordance with applicable law by such successor agency, by any court of competent jurisdiction, or by operation of law. Pursuant to section 316(c) of the Dodd-Frank Act,13 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, 2011.14 Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act 15 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 FDI Act 16 and other laws as the ‘‘appropriate Federal banking agency’’ or under similar statutory terminology. Section 312(c) of the Dodd-Frank Act 17 revised the definition of ‘‘appropriate Federal banking agency’’ contained in section 3(q) of the FDI Act 18 to add State 9 12 1 12 CFR part 390, subpart O. 2 12 CFR 390.250. 3 12 CFR 390.251. 4 12 CFR 390.252. 5 12 CFR 390.253. 6 12 CFR 390.254. 7 12 CFR 390.255. 8 12 U.S.C. 1831e(a); 12 CFR part 362, subparts C and D; 12 U.S.C. 1831n(a). PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 U.S.C. 5301 et seq. U.S.C. 5411. 11 Id. 12 12 U.S.C. 5414(b). 13 12 U.S.C. 5414(c). 14 76 FR 39246 (July 6, 2011). 15 12 U.S.C. 5412(b)(2)(B)(i)(II). 16 12 U.S.C. 1811 et seq. 17 12 U.S.C. 5412(c)(1). 18 12 U.S.C. 1813(q). 10 12 E:\FR\FM\03FER2.SGM 03FER2

Agencies

[Federal Register Volume 86, Number 21 (Wednesday, February 3, 2021)]
[Rules and Regulations]
[Pages 8089-8098]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28453]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 303 and 390

RIN 3064-AF36


Removal of Transferred OTS Regulations Regarding Application 
Processing Procedures of State Savings Associations and Conforming 
Amendments to Other Regulations

AGENCY: Federal Deposit Insurance Corporation (FDIC).

[[Page 8090]]


ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is adopting a 
final rule (final rule) to rescind and remove certain regulations 
transferred to the FDIC from the Office of Thrift Supervision (OTS) in 
2011 pursuant to the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act). These regulations generally concern 
the supervision and governance of State savings associations, including 
the application processing procedures for certain applications, notices 
and filings by State savings associations. In addition to the removal 
of our regulations, the FDIC is making technical changes to our 
regulations that do not currently apply to State savings associations. 
Following the rescission, the filing regulations pertaining to State 
savings associations and all other FDIC-supervised institutions will be 
substantially the same.

DATES: The final rule is effective March 5, 2021.

FOR FURTHER INFORMATION CONTACT: Donald Hamm, Special Advisor, (202) 
898-3528, [email protected]; Shelli Coffey, Review Examiner, (312) 382-
7539, [email protected], Risk Management Supervision; Andrew B. Williams 
II, Counsel, (202) 898-3591, and [email protected], Legal Division.

SUPPLEMENTARY INFORMATION: 

I. Policy Objective

    The policy objective of the final rule is to remove unnecessary and 
duplicative regulations in order to simplify and improve the public's 
understanding of the FDIC's regulations, and to promote parity between 
State savings associations and State nonmember banks by applying the 
same filing requirements to both classes of institutions. Thus, as 
further detailed in this section, the FDIC is rescinding and removing, 
from the Code of Federal Regulations (CFR), 12 CFR part 390, subpart F 
(subpart F).
    As discussed below, the FDIC is making technical changes to certain 
sections of part 303. The rescission of subpart F, with the 
accompanying revisions to 12 CFR part 303, simplifies and streamlines 
the FDIC's regulations by removing unnecessary provisions that are 
adequately provided for in other existing statutes and regulations.

II. Background

A. The Dodd-Frank Act

    The Dodd-Frank Act, signed into law on July 21, 2010, provided for 
a substantial reorganization of the regulation of State and Federal 
savings associations and their holding companies.\1\ 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 of all orders, 
resolutions, determinations, regulations, and advisory materials that 
had been issued, made, prescribed, or allowed to become effective by 
the OTS. The section provides that if such materials were in effect on 
the day before the transfer date, they continue in effect and are 
enforceable by or against the appropriate successor agency until they 
are modified, terminated, set aside, or superseded in accordance with 
applicable law by such successor agency, by any court of competent 
jurisdiction, or by operation of law.
---------------------------------------------------------------------------

    \1\ 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).
---------------------------------------------------------------------------

    Pursuant to section 316(c) of the Dodd-Frank Act,\4\ 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).
---------------------------------------------------------------------------

    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) \7\ and other laws as the ``appropriate Federal 
banking agency'' or under similar statutory terminology. Section 312(c) 
of the Dodd-Frank Act \8\ revised the definition of ``appropriate 
Federal banking agency'' contained in section 3(q) of the FDI Act \9\ 
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 similar terminology) for State savings 
associations, as it does here, the FDIC is authorized to issue, modify, 
and rescind regulations involving such associations, as well as for 
State nonmember banks and insured State-licensed branches of foreign 
banks.
---------------------------------------------------------------------------

    \6\ Codified at 12 U.S.C. 5412(b)(2)(B)(i)(II).
    \7\ 12 U.S.C. 1811 et seq.
    \8\ Codified at 12 U.S.C. 5412(c)(1).
    \9\ 12 U.S.C. 1813(q).
---------------------------------------------------------------------------

    As noted, on July 14, 2011, operating pursuant to this authority, 
the FDIC's Board of Directors issued a list of regulations of the 
former OTS that the FDIC would enforce with respect to State savings 
associations. On that same date, the FDIC Board reissued and re-
designated certain transferring regulations of the former OTS. These 
transferred OTS regulations were published as new FDIC regulations in 
the Federal Register on August 5, 2011.\10\ 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 the transferred OTS 
regulations into other FDIC regulations, amending them, or rescinding 
them, as appropriate.\11\
---------------------------------------------------------------------------

    \10\ 76 FR 47652 (Aug. 5, 2011).
    \11\ See 76 FR 47653.
---------------------------------------------------------------------------

B. 12 CFR Part 516--Application Processing Procedures

    A subset of the regulations transferred to the FDIC from the OTS 
concern application processing procedures. The OTS regulations, 
formerly found at 12 CFR part 516, Sec. Sec.  516.1 through 516.290, 
were transferred to the FDIC with only nomenclature changes and now 
comprise part 390, subpart F (subpart F). Subpart F governs the FDIC's 
procedures for processing applications, notices or filings under part 
390 and, prior to its rescission, part 391 for State savings 
associations.\12\
---------------------------------------------------------------------------

    \12\ 12 CFR part 390, subpart F.
---------------------------------------------------------------------------

III. The Proposal

A. Removal of Part 390, Subpart F--Application Processing Procedures

    Section 316(b)(3) of the Dodd-Frank Act in pertinent part, provides 
that the regulations of the former OTS, as they apply to State savings 
associations, will be enforceable by the FDIC until they are modified, 
terminated, set aside, or superseded in accordance with applicable 
law.\13\ Consistent with the FDIC's stated intention to evaluate 
transferred OTS regulations before taking action on them, the FDIC 
conducted a careful review of subpart F and related Federal statutes, 
regulations, and statements of policy relevant to

[[Page 8091]]

subordinate organizations of State savings associations.
---------------------------------------------------------------------------

    \13\ 12 U.S.C. 5414(b)(3).
---------------------------------------------------------------------------

    On October 15, 2020, the FDIC published a notice of proposed 
rulemaking (NPR or proposal) regarding the removal of subpart F, which 
concerns the FDIC's procedures for processing applications, notices or 
filings under part 390 and, prior to its rescission, part 391 for State 
savings associations.\14\ The NPR proposed removing subpart F from the 
Code of Federal Regulations (CFR) because, after careful review and 
consideration, the FDIC believed the provisions contained in subpart F 
to be unnecessary in light of the applicability of other provisions of 
Federal statutes and regulations, specifically 12 CFR part 303 (part 
303) or guidance that produce substantially the same supervisory 
results. The FDIC received no comments on those aspects of the 
proposal.
---------------------------------------------------------------------------

    \14\ 85 FR 65270 (Oct. 15, 2020).
---------------------------------------------------------------------------

    Rather than restate the rationale for rescission and removal of 
each section of subpart F, the reader is referred to the explanations 
for rescission and removal provided in the NPR,\15\ which the FDIC 
references here as the basis for finalizing the regulations as 
proposed. In the NPR the FDIC also proposed to amend certain sections 
of part 303, subparts A, K, and M, of the FDIC's regulations. Those 
amendments are discussed below.
---------------------------------------------------------------------------

    \15\ Id.
---------------------------------------------------------------------------

B. Revision of Certain Sections of Part 303, Filing Procedures

    Part 303 of the FDIC Rules and Regulations (12 CFR part 303) 
provides a framework for filing requirements for various applications, 
notices, and requests (collectively, ``filings'' as defined in Sec.  
303.2(s)) (12 CFR 303.2(s)). Subpart A of part 303, Rules of General 
Applicability, prescribes the general procedures for submitting filings 
to the FDIC that are required by statute or regulation. This subpart 
also prescribes the procedures to be followed by the FDIC, applicants, 
and interested parties during the process of considering a filing, 
including public notices and comment when required. This subpart 
explains the availability of expedited processing for eligible 
depository institutions (defined in Sec.  303.2(r)) for matters subject 
to expedited processing. Specific filings are detailed in subpart B 
through subpart M of part 303.
    The FDIC is making technical changes in certain sections of part 
303, subparts A, K, and M. The revisions make those sections applicable 
on their terms to State savings associations.
1. Section 303.7--Public Notice Requirements
    Section 5 of the FDI Act,\16\ generally and in part, provides that 
any depository institution engaged in the business of receiving 
deposits other than trust funds, upon application to and examination by 
the FDIC and approval by its Board of Directors, may become an insured 
depository institution. The term ``depository institution'' means any 
bank or savings association pursuant to section 3(c)(1) of the FDI 
Act.\17\ Subpart B--Deposit Insurance, of part 303 of the FDIC 
regulations, sets forth the procedures for applying for deposit 
insurance by certain applicants, including for a proposed depository 
institution under section 5 of the FDI Act, and applies to savings 
associations.\18\ Section 303.23(a) of subpart B states that, in 
addition to other requirements, the applicant ``shall publish a notice 
as prescribed in Sec.  303.7 in a newspaper of general circulation in 
the community in which the main office of the depository institution is 
or will be located.''
---------------------------------------------------------------------------

    \16\ 12 U.S.C. 1815.
    \17\ 12 U.S.C. 1813(c)(1).
    \18\ 12 CFR 303.20.
---------------------------------------------------------------------------

    Subpart F of part 390 of the FDIC regulations addresses public 
notice requirements, stating that Sec. Sec.  390.111 through 390.115 
apply whenever a FDIC regulation requires an applicant to follow the 
public notice procedures.\19\ The FDIC is rescinding Sec. Sec.  390.111 
through 390.115 because part 303 substantively addresses the same 
requirements, including, for deposit insurance applications, Sec. Sec.  
303.7, subpart A, and 303.23, subpart B.
---------------------------------------------------------------------------

    \19\ 12 CFR 390.111.
---------------------------------------------------------------------------

    Section 303.7 of the FDIC regulations, of part 303, subpart A, 
addresses public notice requirements for filings with respect to 
mergers, changes in control, and requests for deposit insurance. With 
one exception, Sec.  303.7 makes no distinction between banks and 
savings associations. However, Sec.  303.7(c)(1)(i) states, in part: 
``[i]n the case of an application for deposit insurance for a de novo 
bank (emphasis added), include the names of all organizers or 
incorporators.'' The NPR proposed to amend Sec.  303.7(c)(1)(i) to 
replace ``bank'' with ``depository institution,'' a term used elsewhere 
in the section. The revision would clarify that Sec.  303.7(c)(1)(i) is 
applicable to savings associations, consistent with section 5 of the 
FDI Act and part 303, including subpart B--Deposit Insurance, and would 
make the requirement consistent for both types of depository 
institutions.
    The FDIC received no comments on these aspects of the proposal.
2. Section 303.15--Certain Limited Liability Companies Deemed 
Incorporated Under State Law
    Pursuant to section 5 of the FDI Act, the FDIC may approve deposit 
insurance for certain depository institutions. One of the statutory 
requirements for a State bank to be eligible for Federal deposit 
insurance is that it must be ``incorporated under the laws of any 
State.'' \20\ That requirement effectively limited the approval of 
deposit insurance to State banks chartered under the traditional 
corporate form, despite the creation and increased use of limited 
liability entities other than corporations, such as limited liability 
companies (LLCs). Section 303.15 of the FDIC regulations is found in 
part 303, subpart A. Section 303.15(a) was promulgated to provide that 
a bank chartered as an LLC under State law would be deemed 
``incorporated'' if it met four requirements, thus permitting the 
entity to be eligible to apply and be approved for deposit 
insurance.\21\ To be deemed incorporated, the LLC must possesses the 
four traditional corporate characteristics of perpetual succession, 
centralized management, limited liability, and free transferability of 
interests.\22\
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    \20\ 12 U.S.C. 1813(a)(2).
    \21\ See 68 FR 7308, February 13, 2003.
    \22\ 12 CFR 303.15(a)(1) through (4). See also, 68 FR 7308.
---------------------------------------------------------------------------

    Section 303.15(b) further provides that, for purposes of the FDI 
Act and the FDIC regulations, the terms ``stockholder,'' 
``shareholder,'' ``director,'' ``officer,'' ``voting stock,'' ``voting 
shares,'' and ``voting securities,'' for banks chartered as LLCs, shall 
encompass or have substantially the same meaning as those terms have 
for banks chartered as corporations. The definition of ``State savings 
association'' under the FDI Act, which uses the phrase ``organized and 
operating according to the laws of the State'' instead of 
``incorporated,'' does not limit State savings associations to the 
corporate charter form (absent a state requirement).\23\ In order to 
clarify that the terms in Sec.  303.15(b) apply to savings association 
chartered as LLCs as they do for banks so chartered, the NPR proposed 
to revise references to ``bank'' in Sec.  303.15(b) to ``depository 
institution.'' The revisions would make the terms ``stockholder,'' 
``shareholder,'' ``director,'' ``officer,'' ``voting stock,'' ``voting 
shares,'' and ``voting securities,'' with respect to savings 
associations

[[Page 8092]]

chartered as LLCs, encompass or have substantially the same meaning 
with respect to savings associations chartered as LLCs as for those 
chartered as corporations.
---------------------------------------------------------------------------

    \23\ 12 U.S.C. 1813(b)(3).
---------------------------------------------------------------------------

    The FDIC received no comments on these aspects of the proposal.
3. Subpart K--Prompt Corrective Action: Section 303.204--Applications 
for Acquisitions, Branching, and New Lines of Business; Section 
303.205--Applications for Bonuses and Increased Compensation for Senior 
Executive Officers
    Part 303 of the FDIC's regulations includes procedures to implement 
the filing requirements for certain activities or transactions relative 
to undercapitalized or weaker depository institutions, and implements 
certain elements of section 38 of the FDI Act.\24\ Section 38 applies 
to all insured depository institutions. Among other things, section 38 
generally prohibits an insured depository institution, without 
application and approval, from engaging in acquisitions, branching, or 
new lines of business, if the institution is undercapitalized or 
weaker, significantly undercapitalized, or critically 
undercapitalized.\25\ It also prohibits an insured depository 
institution, without application and approval, from payment of bonuses 
or increased compensation to senior executive officers, if the 
institution is significantly or critically undercapitalized, or is 
undercapitalized and has failed to submit or implement an acceptable 
capital restoration plan.\26\
---------------------------------------------------------------------------

    \24\ 12 U.S.C. 1831o.
    \25\ See 12 U.S.C. 1831o(e)(4).
    \26\ See 12 U.S.C. 1831o(f)(4). 12 U.S.C. 1831o(f) contains 
additional, discretionary restrictions that may be imposed by a 
financial regulator.
---------------------------------------------------------------------------

    Sections 303.204 and 303.205 of the FDIC regulations implement the 
provisions of section 38 described above. Section 303.204 requires any 
insured State nonmember bank and any insured branch of a foreign bank 
that is undercapitalized or significantly undercapitalized, and any 
critically undercapitalized insured depository institution, to submit 
an application to engage in acquisitions, branching, or new lines of 
business. This section clarifies that new lines of business include 
``any new activity exercised which, although it may be permissible, has 
not been exercised by the institution.'' It also specifies the content 
of the filing, including information regarding whether the 
institution's primary Federal regulator has accepted the institution's 
capital restoration plan, and whether the institution has implemented 
that plan.
    Section 303.205 requires any insured State nonmember bank or 
insured branch of a foreign bank that is (i) significantly 
undercapitalized or critically undercapitalized, or (ii) is 
undercapitalized and has failed to submit or implement an acceptable 
capital restoration plan, to submit an application to pay a bonus or 
increase compensation to any senior executive officer. The section 
specifies the content of the filing, including information regarding 
the acceptance and implementation of the institution's capital 
restoration plan.
    Although section 38 and other sections of subpart K of part 303 by 
their terms apply to all insured depository institutions, Sec.  
303.204, in part, and Sec.  303.205 apply by their terms only to 
insured State nonmember banks and insured branches of foreign banks. 
The NPR proposed to revise Sec. Sec.  303.204 and 303.205 to make those 
sections expressly apply to State savings associations to the same 
extent as they do to insured State nonmember banks. The final rule 
revises those sections to add ``insured State savings associations.''
    The FDIC received no comments on these aspects of the proposal.
4. Section 303.249--Management Official Interlocks
    Part 348 \27\ of the FDIC regulations implements the Deposit 
Insurance Management Interlocks Act (Interlocks Act).\28\ The purpose 
of the Interlocks Act and part 348 are to foster competition by 
generally prohibiting a management official from serving two 
nonaffiliated depository organizations when the management interlock 
likely would have an anti-competitive effect.\29\ The Interlocks Act is 
applicable to both insured State nonmember banks and State savings 
associations, and part 348 applies to management officials of FDIC-
supervised institutions and their affiliates. With regard to insured 
State nonmember banks and State savings associations, the Interlocks 
Act provides the FDIC with administrative and enforcement authority 
under section 3206, as well as authority to prescribe regulations to 
carry out the Interlocks Act.\30\
---------------------------------------------------------------------------

    \27\ 12 CFR part 348.
    \28\ 12 U.S.C. 3201-3208.
    \29\ 12 CFR 348.1(b).
    \30\ 12 U.S.C. 3206, 3207.
---------------------------------------------------------------------------

    Under section 13(k) of the FDI Act, and notwithstanding any 
provision of State law, the FDIC may authorize dual service that would 
otherwise be prohibited by the Interlocks Act upon determining that 
severe financial conditions threaten the stability of a significant 
number of savings associations, or of savings associations possessing 
significant financial resources, and that such authorization would 
lessen the risk to the FDIC.\31\ Subpart F of part 390 does not apply 
to a transaction under section 13(k) of the FDI Act.\32\
---------------------------------------------------------------------------

    \31\ 12 U.S.C. 1823(k)(1)(A)(v).
    \32\ 12 CFR 390.100(b)(1).
---------------------------------------------------------------------------

    As discussed above, the FDIC transferred various OTS regulations 
into FDIC regulations. One of the transferred OTS regulations governed 
OTS oversight of management official interlocks in the context of State 
savings associations. The OTS regulation, formerly found at 12 CFR part 
563f, was transferred to the FDIC with only minor, nonsubstantive 
changes, and was found in the FDIC's regulations at 12 CFR part 390, 
subpart V (part 390, subpart V), entitled ``Management Official 
Interlocks.'' Before the transfer of the OTS regulations and continuing 
today as noted above, the FDIC's regulations contained part 348. After 
review and comparison of part 390, subpart V, and part 348, effective 
January 20, 2016, the FDIC rescinded part 390, subpart V, because the 
FDIC found it to be substantially redundant to existing part 348, 
considering technical conforming edits to part 348.\33\
---------------------------------------------------------------------------

    \33\ 80 FR 79252 (Dec. 21, 2015).
---------------------------------------------------------------------------

    However, Sec.  303.249, found in part 303, subpart M, of the FDIC 
regulations, addresses the ``procedures to be followed by an insured 
State nonmember bank (emphasis added) to seek the approval of the FDIC 
to establish an interlock pursuant to'' the Interlocks Act, section 
13(k) of the FDI Act, and part 348 of the FDIC regulations.\34\ The NPR 
proposed to revise Sec.  303.249(a) to insert, following ``bank'' in 
the language quoted immediately above, ``or an insured State savings 
association.'' The revision clarifies that State savings associations 
may use the procedures contained in Sec.  303.249 to apply for approval 
to establish interlocks as provided therein.
---------------------------------------------------------------------------

    \34\ 12 CFR 303.249(a).
---------------------------------------------------------------------------

    The FDIC received no comments on these aspects of the proposal.

IV. The Final Rule

    For the reasons stated herein and in the NPR, the FDIC is adopting 
the amendments as proposed.

V. Expected Effects

    As of June 30, 2020, the FDIC supervised 3,270 depository

[[Page 8093]]

institutions, of which 35 (1.1 percent) were State savings 
associations.\35\ The final rule primarily affects regulations that 
govern State savings associations. Therefore, the final rule is 
expected to affect 35 FDIC-supervised institutions.
---------------------------------------------------------------------------

    \35\ Call Report data, June 30 2020.
---------------------------------------------------------------------------

    As previously discussed, the final rule rescinds part 390, subpart 
F, because most of its elements are duplicative of substantively 
similar provisions of FDIC regulations, principally part 303. 
Additionally, the final rule amends certain elements of part 303 so 
that the provisions are applicable to State savings associations. In 
doing so, the final rule makes elements of part 390, subpart F, 
substantively duplicative of the amended elements of part 303, and, 
therefore, unnecessary. As such, the FDIC does not believe the final 
rule will have substantive effects on State savings associations.
    Section 390.100 sets forth application processing procedures for 
State savings associations. However, existing statutes \36\ and 
regulations already ``prescribe the general procedures for submitting 
filings to the FDIC and the procedures to be followed by the FDIC, 
applicants and interested parties during the process of considering a 
filing'' \37\ for FDIC-supervised institutions, including State savings 
associations. Therefore, rescinding Sec.  390.100 is not expected to 
have any substantive effects on State savings associations.
---------------------------------------------------------------------------

    \36\ 12 U.S.C. 1831a.
    \37\ 12 CFR 303.1.
---------------------------------------------------------------------------

    Section 390.101 specifies the criteria for determining which 
filings receive expedited treatment and which receive standard 
treatment. State savings associations are already subject to 
substantively similar requirements in Sec. Sec.  303.2(r) and 
303.11(c), as well as the substantive subparts of part 303 of the FDIC 
regulations. Therefore, rescinding Sec.  390.101 is not expected to 
have any substantive effects on State savings associations.
    Section 390.102 addresses the computation of time periods for State 
savings associations. State savings associations are subject to 
regulations that address the computation of relevant time periods at 
Sec.  303.4 of the FDIC regulations. Therefore, rescinding Sec.  
390.102 is not expected to have any substantive effects on State 
savings associations.
    Section 390.103 addresses pre-filing meetings and FDIC contacts for 
filings to acquire control of State savings associations. Pre-filing 
meetings are not addressed in FDIC regulations, but are addressed in 
the Applications Procedures Manual (APM), in which a substantively 
similar description of pre-filing meetings is given. Additionally, the 
APM states that a Case Manager will be assigned by the FDIC to the 
application in order to facilitate communication and engagement with 
the applicant. Therefore, the FDIC believes that rescinding Sec.  
390.103 is unlikely to have any substantive effects on State savings 
associations or change in control applicants.
    Section 390.104 addresses certain requirements for business plans 
submitted by State savings associations under subpart F, which permits 
the FDIC to require additional business plan information during 
processing of the filing. Under part 303, business plans are required 
for certain filings, though the FDIC may request additional information 
for any filing. In this regard, the FDIC's review processes include, as 
appropriate, pre-filing and other activities to ensure institutions' 
understanding of the FDIC's filing requirements and information needs. 
In certain cases, the content for business plans is addressed in filing 
forms or other FDIC resources. For example, the Inter-agency Charter 
and Deposit Insurance Application Form contains detailed instructions 
for the development of the business plan; and those instructions may 
assist institutions when submitting business plans as part of other 
filings. The FDIC has also provided a Handbook for Organizers--Applying 
for Deposit Insurance, which aids all applicants for deposit insurance 
and includes sections on developing a business plan and business plan 
content. Generally, the FDIC believes it is appropriate to provide an 
institution with flexibility to tailor the content of the business plan 
to reflect its unique circumstances, strategies, and challenges. 
Therefore, in light of the discussion above, the FDIC believes that 
rescinding Sec.  390.104 is unlikely to have any substantive effects on 
State savings associations or change in control applicants.
    Section 390.105 addresses expedited and standard processing, as 
well as waiver requests for State savings associations. Expedited and 
standard processing, as well as waiver requirements, are encompassed in 
FDIC regulations applicable to State savings associations found 
throughout various subparts and sections of part 303. Therefore, the 
FDIC believes that rescinding Sec.  390.105 is unlikely to have any 
substantive effects on State savings associations or future applicants.
    Section 390.106 addresses the content of filings for State savings 
associations. It directs State savings associations to the applicable 
forms and the content requirements. The required content of filings is 
encompassed in FDIC regulations applicable to State savings 
associations throughout various subparts and sections of part 303. 
Therefore, the FDIC believes that rescinding Sec.  390.106 is unlikely 
to have any substantive effects on State savings associations or future 
applicants.
    Section 390.107 addresses application confidentiality for State 
savings associations. FDIC regulations found at Sec.  303.8 and 
applicable to FDIC-supervised institutions, including State savings 
associations, includes confidential treatment regulations that are 
substantively similar to those in Sec.  390.107. Therefore, the FDIC 
believes that rescinding Sec.  390.107 is unlikely to have any 
substantive effects on State savings associations or future applicants.
    Section 390.108 addresses where to file applications, specifically 
providing regional office addresses. General application filing 
procedures for all FDIC-supervised institutions, including State 
savings associations, are encompassed in regulations found at Sec.  
303.3 of the FDIC regulations. Further, although specific regional 
office addresses are not included in the regulation, they are available 
on the FDIC's public website. Therefore, the FDIC believes that 
rescinding Sec.  390.108 is unlikely to have any substantive effects on 
State savings associations or future applicants.
    Section 390.109 explains the application filing date. The FDIC does 
not have substantively similar regulations governing the filing date of 
an application. However, FDIC regulations operate on the basis of the 
date on which a substantially complete filing is submitted. Further, 
the FDIC's APM, which is accessible to all FDIC-supervised 
institutions, including State savings associations, addresses the date 
on which an application is considered to be substantively complete. 
Therefore, the FDIC believes that rescinding Sec.  390.109 is unlikely 
to have any substantive effects on State savings associations or future 
applicants.
    Section 390.110 discusses amending or supplementing an application. 
The FDIC does not have substantively similar regulations governing 
amending or supplementing an application. However, the FDIC relies on 
determinations as to when an application is substantially complete. In 
addition, the FDIC's APM, which is applicable to all FDIC-supervised 
institutions, including State savings associations, addresses both 
substantially complete filings and those not substantially complete, as 
well as

[[Page 8094]]

how to supplement information. Further, the APM states that an 
applicant may modify and update an application throughout the review 
process until final disposition, and that applicants often supplement 
their applications throughout the review process. Therefore, the FDIC 
believes that rescinding Sec.  390.110 is unlikely to have any 
substantive effects on State savings associations or future applicants.
    Sections 390.111 through 390.115 address public notice 
requirements. FDIC-supervised institutions, including State savings 
associations, are subject to substantively similar public notice 
requirements in Sec.  303.7 of the FDIC regulations and throughout 
various subparts and sections of part 303. Therefore, the FDIC believes 
that rescinding Sec. Sec.  390.111 through 390.115 is unlikely to have 
any substantive effects on State savings associations or future 
applicants.
    Sections 390.116 through 390.120 address procedures for submission 
of public comments. FDIC-supervised institutions, including State 
savings associations, are subject to substantively similar requirements 
regarding procedures for submission of public comments in Sec.  303.9 
of the FDIC regulations and throughout various subparts and sections of 
part 303. Therefore, the FDIC believes that rescinding Sec. Sec.  
390.116 through 390.120 is unlikely to have any substantive effects on 
State savings associations or future applicants.
    Sections 390.121 through 390.125 contain meeting procedures. 
Meetings are addressed generally in FDIC regulations found at 12 CFR 
303.6 and 303.10 for FDIC-supervised institutions, including State 
savings associations. Although Sec. Sec.  303.6 and 303.10 of the FDIC 
regulations are generally less specific than Sec. Sec.  390.121 through 
390.125, the FDIC believes the language in Sec.  303.6 is generally 
inclusive of the substance of Sec. Sec.  390.121 through 390.125 by 
stating that ``[t]he FDIC may examine or investigate and evaluate facts 
related to any filing under this chapter to the extent necessary to 
reach an informed decision and take any action necessary or appropriate 
under the circumstances.'' Therefore, the FDIC believes that rescinding 
Sec. Sec.  390.121 through 390.125 is unlikely to have any substantive 
effects on State savings associations or future applicants.
    Section 390.126 addresses expedited treatment, including removal of 
the filing to standard processing, additional information requests, 
suspension of the processing period, and when the applicant can proceed 
with the activity if the FDIC has not acted. FDIC-supervised 
institutions, including State savings associations, are subject to 
substantively similar requirements for matters receiving expedited 
treatment in Sec.  303.11(c) of the FDIC regulations, as well as 
Sec. Sec.  303.122 and 303.142. Sections 303.3 and 303.11(e), as well 
as substantive subparts of part 303, provide the FDIC authority to 
require submission of additional information. Therefore, the FDIC 
believes that rescinding Sec.  390.126 is unlikely to have any 
substantive effects on State savings associations or future applicants.
    Sections 390.127 and 390.128 address application completeness. The 
FDIC does not have corresponding regulations addressing application 
completeness. Instead, the application processing time periods under 
part 303 are triggered by the FDIC's receipt of a substantially 
complete filing.\38\ The FDIC believes that the substantially complete 
filing step of part 303 permits the procedures for processing a filing 
under part 303, while essentially addressing the same issues, to be 
simpler and easier to navigate than those of Sec. Sec.  390.127 and 
390.128. Sections 303.3 and 303.11(e) of the FDIC regulations, as well 
as substantive subparts of part 303, provide the FDIC authority to 
require submission of additional information. The FDIC's APM, which 
aids all FDIC-supervised institutions, including State savings 
associations, addresses both substantially complete filings and those 
not substantially complete. Therefore, the FDIC believes that 
rescinding Sec. Sec.  390.127 and 390.128 is unlikely to have any 
substantive effects on State savings associations or future applicants.
---------------------------------------------------------------------------

    \38\ 12 CFR 303.304.
---------------------------------------------------------------------------

    Section 390.129 addresses eligibility examinations, as well as the 
authority of the FDIC to require such examinations and to request 
additional information. Under Sec.  303.6 of the FDIC regulations, the 
FDIC may examine or investigate and evaluate facts related to any 
filing to the extent necessary to reach an informed decision and take 
any action necessary or appropriate under the circumstances. Sections 
303.3 and 303.11(e), as well as substantive subparts of part 303, 
provide the FDIC authority to require submission of additional 
information. Therefore, the FDIC believes that a separate eligibility 
determination provision is unneeded, and rescinding Sec.  390.129 is 
unlikely to have any substantive effects on State savings associations 
or future applicants.
    Section 390.130 addresses potential FDIC requests for additional 
information or actions from applicants. FDIC-supervised institutions, 
including State savings associations, are subject to substantively 
similar requirements regarding potential FDIC requests for additional 
information or actions from applicants through various subparts and 
sections of part 303. Therefore, the FDIC believes that rescinding 
Sec.  390.130 is unlikely to have any substantive effects on State 
savings associations or future applicants.
    Section 390.131 explains requirements to publish new public 
notices. FDIC-supervised institutions, including State savings 
associations, are subject to substantively similar requirements 
regarding publishing new public notices in Sec.  303.7(f) of the FDIC 
regulations. Therefore, the FDIC believes that rescinding Sec.  390.131 
is unlikely to have any substantive effects on State savings 
associations or future applicants.
    Section 390.132 addresses suspension of an application. Part 303 
has no such provision. However, the FDIC believes that situations 
envisioned by Sec.  390.132 can be effectively addressed on a case-by-
case basis without need of a regulation, or that a regulation is not 
needed because the processing period under part 303 does not begin 
until the FDIC receives a substantially complete filing and, thus, no 
suspension is necessary. Therefore, the FDIC believes that rescinding 
Sec.  390.132 is unlikely to have any substantive effects on State 
savings associations or future applicants.
    Section 390.133 addresses the applicable review period for an 
application. The FDIC's part 303 regulations contain provisions that 
bear on the same issues and are similar in substantive effect as the 
Sec.  390.133 provisions. Thus, while part 303 addresses review periods 
in a different manner than subpart F, the FDIC believes that the 
substantive effect is similar and that rescinding Sec.  390.133 is 
unlikely to have any substantive effects on State savings associations 
or future applicants.
    Section 390.134 requires the FDIC to approve or deny an application 
before the expiration of the applicable review period, including any 
extensions, and notify the applicant, in writing, of its decision. If 
the FDIC does not act under paragraph (a)(1) of the section, the 
application is deemed approved. The FDIC's part 303 procedures do not 
contain such a requirement for applications (as opposed to some notice 
filings). However, when read in conjunction with Sec.  390.133, the 
FDIC has significant, though not complete, discretion under subpart F 
to extend the

[[Page 8095]]

review period for applications until a determination is issued. The 
substantial ability of the FDIC to extend the processing period under 
subpart F, to a great extent, renders any difference with part 303 
immaterial. As such, the application review periods and notification 
procedures for State savings associations are subject to substantively 
similar requirements under both subpart F and part 303. Therefore, the 
FDIC believes that rescinding Sec.  390.134 is unlikely to have any 
substantive effects on State savings associations or future applicants.
    Section 390.135 addresses withdrawal if an application is not acted 
on within two calendar years. The FDIC does not have substantively 
similar regulations addressing withdrawal if an application is not 
acted on. However, the FDIC's APM, which aids all FDIC-supervised 
institutions, including State savings associations, states that the 
FDIC's goal is to act on filings as promptly as practical, while 
allowing appropriate time for review and evaluation. Additionally, the 
FDIC has established timeframes for processing each type of filing, 
which have been published in Financial Institution Letter 81-2018.\39\ 
It is also, generally, the FDIC's practice to provide an applicant with 
an opportunity to withdraw its application if FDIC staff propose an 
unfavorable recommendation. Therefore, the FDIC believes that 
rescinding Sec.  390.135 is unlikely to have any substantive effects on 
State savings associations or future applicants.
---------------------------------------------------------------------------

    \39\ www.fdic.gov/news/financial-institution-letters/2018/fil18081.html.
---------------------------------------------------------------------------

    The final rule amends certain elements of part 303, specifically 
Sec. Sec.  303.7(c)(1)(i) and 303.15(b)(1) through (4), so that the 
provisions are applicable to State savings associations. In so doing, 
the final rule makes elements of part 390, subpart F, substantively 
duplicative of the amended elements of part 303, and, therefore, 
unnecessary.
    The final rule amends Sec. Sec.  303.204 and 303.205 of part 303's 
subpart K (Prompt Corrective Action). Section 303.204 requires any 
insured State nonmember bank and any insured branch of a foreign bank 
that is undercapitalized or significantly undercapitalized, and any 
critically undercapitalized insured depository institution, to submit 
an application to engage in acquisitions, branching, or new lines of 
business. Section 303.205 requires any insured State nonmember bank or 
insured branch of a foreign bank that is (i) significantly 
undercapitalized or critically undercapitalized, or (ii) is 
undercapitalized and has failed to submit or implement an acceptable 
capital restoration plan, to submit an application to pay a bonus or 
increase compensation to any senior executive officer. The final rule 
makes these sections applicable to State savings associations. The 
provisions of section 38 of the FDI Act,\40\ which establishes the 
statutory authority for Sec. Sec.  303.204 and 303.205, contain the 
restrictions at issue and are applicable to all insured depository 
institutions. Thus, the final rule should not have a material impact on 
State savings associations.
---------------------------------------------------------------------------

    \40\ 12 U.S.C. 1831o.
---------------------------------------------------------------------------

    Section 303.249 of the FDIC regulations addresses the ``procedures 
to be followed by an insured State nonmember bank to seek the approval 
of the FDIC to establish an interlock pursuant to'' the Interlocks Act, 
section 13(k) of the FDI Act, and part 348 of the FDIC regulations. The 
final rule amends Sec.  303.249(a) to apply to State savings 
associations. Although the amendment sets forth more explicit 
requirements for State savings associations seeking approval for 
establishing an interlock, State savings associations would not realize 
any effects because they are already subject to the Interlocks Act, and 
part 348. Therefore, State savings associations would currently need to 
undertake similar procedures, and provide substantively similar 
information, to those outlined in Sec.  303.249.
    By removing duplicative or unnecessary regulations, the FDIC 
believes that the final rule will benefit State savings associations by 
clarifying regulations and improving the ease of references.

VI. Alternatives

    The FDIC has considered alternatives to the rule, but believes the 
amendments represent the most appropriate option for covered 
institutions. As discussed previously, the Dodd-Frank Act transferred 
to the FDIC certain powers, duties, and functions formerly performed by 
the OTS. The FDIC's Board reissued and redesignated certain transferred 
regulations from the OTS, but noted that it would evaluate and might 
later, as appropriate, rescind, amend, or incorporate the regulations 
into other FDIC regulations.
    The FDIC has evaluated the existing regulations related to 
application processing procedures. The FDIC considered the status quo 
alternative of retaining the current regulations, but believes it would 
be procedurally complex and unnecessary for FDIC-supervised 
institutions to continue to refer to the separate sets of regulations. 
Therefore, the FDIC is amending the specified sections of part 303 and 
rescinding subpart F.

VII. Regulatory Analysis and Procedure

A. The Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA), 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. The final rule rescinds and removes from FDIC 
regulations subpart F and makes technical revisions to certain sections 
of part 303. The final rule will not create any new or revise any 
existing collections of information under the PRA. Therefore, no 
information collection request will be submitted to the OMB for review.

B. The Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), requires that, in connection 
with a final rule, an agency prepare and make available for public 
comment a final regulatory flexibility analysis that describes the 
impact of the final rule on small entities.\41\ However, a regulatory 
flexibility analysis is not required if the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities, and publishes its certification and a short 
explanatory statement in the Federal Register together with the rule. 
The Small Business Administration (SBA) has defined ``small entities'' 
to include banking organizations with total assets of less than or 
equal to $600 million.\42\ 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 non-
interest expenses. The FDIC believes that effects in excess of these 
thresholds typically represent significant effects for FDIC-supervised 
institutions. For the reasons provided below, the FDIC certifies that 
the final rule will not have

[[Page 8096]]

a significant economic impact on a substantial number of small banking 
organizations. Accordingly, a regulatory flexibility analysis is not 
required.
---------------------------------------------------------------------------

    \41\ 5 U.S.C. 601, et seq.
    \42\ 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). ``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 June 2020, the FDIC supervised 3,270 insured depository 
institutions, of which 2,492 are considered small banking organizations 
for the purposes of RFA. The final rule primarily affects regulations 
that govern State savings associations.\43\ There are 33 State savings 
associations considered to be small banking organizations for the 
purposes of the RFA.\44\
---------------------------------------------------------------------------

    \43\ FDIC Call Report, March 31, 2020.
    \44\ Id.
---------------------------------------------------------------------------

    As previously discussed, the final rule rescinds part 390, subpart 
F, because most of its elements are duplicative of substantively 
similar provisions of FDIC regulations, specifically part 303. 
Additionally, the final rule amends Sec. Sec.  303.7(c)(1)(i) and 
303.15(b)(1) through (4) of part 303 so that the provisions are 
applicable to State savings associations. In doing so, the final rule 
makes elements of part 390, subpart F, substantively duplicative of the 
amended elements of part 303, and, therefore, unnecessary.
    The final rule amends Sec. Sec.  303.204 and 303.205 to make the 
provisions applicable to all insured depository institutions, including 
small, State savings associations. The revisions to Sec. Sec.  303.204 
and 303.205 provide a procedure for State savings associations to apply 
to the FDIC for relief from the restrictions of section 38 of the FDI 
Act.\45\
---------------------------------------------------------------------------

    \45\ 12 U.S.C. 1831o.
---------------------------------------------------------------------------

    Finally, the final rule amends Sec.  303.249(a) to make the 
provisions applicable to all insured depository institutions, including 
small, State savings associations. The FDIC believes that the amendment 
will not have any substantive effects on small, State savings 
associations because it will not result in any substantive change in 
the procedures for, or content associated with seeking approval for 
establishing an interlock. Thus, the FDIC does not believe the final 
rule will substantially impact small, FDIC-supervised institutions or 
future applicants.
    The FDIC received no comments on the information provided in the 
Regulatory Flexibility Act section of the NPR.
    Based on the information above, the FDIC certifies that the final 
rule will not have a significant economic impact on a substantial 
number of small entities.

C. The Congressional Review Act

    For purposes of Congressional Review Act, the OMB makes a 
determination as to whether a final rule constitutes a ``major'' 
rule.\46\ If a rule is deemed a major rule by the OMB, the 
Congressional Review Act generally provides that the rule may not take 
effect until at least 60 days following its publication.\47\
---------------------------------------------------------------------------

    \46\ 5 U.S.C. 801 et seq.
    \47\ 5 U.S.C. 801(a)(3).
---------------------------------------------------------------------------

    The Congressional Review Act defines a ``major rule'' as any rule 
that the Administrator of the Office of Information and Regulatory 
Affairs of the OMB finds has resulted in or is likely to result in--(A) 
an annual effect on the economy of $100,000,000 or more; (B) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies or geographic regions, or 
(C) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\48\
---------------------------------------------------------------------------

    \48\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------

    The OMB has determined that the final rule is not a major rule for 
purposes of the Congressional Review Act and the FDIC will submit the 
final rule and other appropriate reports to Congress and the Government 
Accountability Office for review.

D. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \49\ requires each 
Federal banking agency to use plain language in all of its proposed and 
final regulations published after January 1, 2000. As a Federal banking 
agency subject to the provisions of this section, the FDIC has sought 
to present the final rule to rescind subpart F and make technical 
revisions to certain sections of part 303 in a simple and 
straightforward manner.
---------------------------------------------------------------------------

    \49\ Public Law 106-102, 113 Stat. 1338, 1471 (codified at 12 
U.S.C. 4809).
---------------------------------------------------------------------------

E. The Economic Growth and Regulatory Paperwork Reduction Act

    Under section 2222 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (EGRPRA), the FDIC is required to review all of 
its regulations, at least once every 10 years, in order to identify any 
outdated or otherwise unnecessary regulations imposed on insured 
institutions.\50\ 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 that 
will be taken to address issues that were identified. 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 subpart F, the final rule 
complements other actions the FDIC has taken, separately and with the 
other Federal banking agencies, to further the EGRPRA mandate.
---------------------------------------------------------------------------

    \50\ Public Law 104-208, 110 Stat. 3009 (1996).
---------------------------------------------------------------------------

F. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (RCDRIA),\51\ in determining the 
effective date and administrative compliance requirements for new 
regulations that impose additional reporting, disclosure, or other 
requirements on insured depository institutions (IDIs), each Federal 
banking agency must consider, consistent with principles of safety and 
soundness and the public interest, any administrative burdens that such 
regulations would place on depository institutions, including small 
depository institutions, and customers of depository institutions, as 
well as the benefits of such regulations. In addition, section 302(b) 
of RCDRIA requires new regulations and amendments to regulations that 
impose additional reporting, disclosure, or other new requirements on 
IDIs generally to take effect on the first day of a calendar quarter 
that begins on or after the date on which the regulations are published 
in final form.\52\
---------------------------------------------------------------------------

    \51\ 12 U.S.C. 4802(a).
    \52\ 12 U.S.C. 4802.
---------------------------------------------------------------------------

    As previously stated, the final rule removes subpart F from the 
Code of Federal Regulations because, after careful review and 
consideration, the FDIC believes it is largely unnecessary in light of 
the applicability of other provisions of Federal statutes and 
regulations, specifically 12 CFR part 303 (part 303) or guidance that 
produce substantially the same supervisory results. In addition, the 
final rule also includes amendments to certain sections of part 303, 
subparts A, K, and M, of the FDIC's regulations make those sections 
applicable by their terms to State savings associations. Those 
amendments do not impose any additional reporting, disclosure, or other 
requirements on IDIs. Because the final rule does not impose additional 
reporting, disclosure, or other new requirements on IDIs, section 302 
of the RCDRIA does not apply.

[[Page 8097]]

List of Subjects

12 CFR Part 303

    Administrative practice and procedure, Bank deposit insurance, 
Banks, banking, Reporting and recordkeeping requirements, Savings 
associations.

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, Reporting and recordkeeping requirements, Savings 
associations.

Authority and Issuance

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation amends 12 CFR parts 303 and 390 as follows:

PART 303--FILING PROCEDURES

0
1. The authority citation for part 303 is revised to read as follows:

    Authority: 12 U.S.C. 378, 1463, 1467a, 1813, 1815, 1817, 1818, 
1819(a) (Seventh and Tenth), 1820, 1823, 1828, 1831i, 1831e, 1831o, 
1831p-1, 1831w, 1831z, 1835a, 1843(l), 3104, 3105, 3108, 3207, 5412; 
15 U.S.C. 1601-1607.


0
2. Revise Sec.  303.7(c)(1) to read as follows:


Sec.  303.7  Public notice requirements.

* * * * *
    (c) * * *
    (1) The public notice referred to in paragraph (a) of this section 
shall consist of the following:
    (i) In the case of an application for deposit insurance for a de 
novo depository institution, include the names of all organizers or 
incorporators. In the case of an application to establish a branch, 
include the location of the proposed branch or, in the case of an 
application to relocate a branch or main office, include the current 
and proposed address of the office. In the case of a merger 
application, include the names of all parties to the transaction. In 
the case of a notice of acquisition of control, include the name(s) of 
the acquiring parties. In the case of an application to relocate an 
insured branch of a foreign bank, include the current and proposed 
address of the branch.
    (ii) Type of filing being made;
    (iii) Name of the depository institution(s) that is the subject 
matter of the filing;
    (iv) That the public may submit comments to the appropriate FDIC 
regional director;
    (v) The address of the appropriate FDIC office where comments may 
be sent (the same location where the filing will be made);
    (vi) The closing date of the public comment period as specified in 
the appropriate subpart of this part; and
    (vii) That the nonconfidential portions of the application are on 
file in the appropriate FDIC office and are available for public 
inspection during regular business hours; photocopies of the 
nonconfidential portion of the application file will be made available 
upon request.
* * * * *

0
3. Revise Sec.  303.15(b) to read as follows:


Sec.  303.15  Certain limited liability companies deemed incorporated 
under State law.

* * * * *
    (b) For purposes of the Federal Deposit Insurance Act and this 
chapter:
    (1) Each of the terms ``stockholder'' and ``shareholder'' includes 
an owner of any interest in a depository institution chartered as an 
LLC, including a member or participant;
    (2) The term ``director'' includes a manager or director of a 
depository institution chartered as an LLC, or other person who has, 
with respect to such a depository institution, authority substantially 
similar to that of a director of a corporation;
    (3) The term ``officer'' includes an officer of a depository 
institution chartered as an LLC, or other person who has, with respect 
to such a depository institution, authority substantially similar to 
that of an officer of a corporation; and
    (4) Each of the terms ``voting stock,'' ``voting shares,'' and 
``voting securities'' includes ownership interests in a depository 
institution chartered as an LLC, as well as any certificates or other 
evidence of such ownership interests.

0
4. Revise Sec.  303.204 to read as follows:


Sec.  303.204  Applications for acquisitions, branching, and new lines 
of business.

    (a) Scope. (1) Any insured State nonmember bank, any insured State 
savings association, and any insured branch of a foreign bank which is 
undercapitalized or significantly undercapitalized, and any insured 
depository institution which is critically undercapitalized, shall 
submit an application to engage in acquisitions, branching or new lines 
of business.
    (2) A new line of business will include any new activity exercised 
which, although it may be permissible, has not been exercised by the 
institution.
    (b) Content of filing. Applications shall describe the proposal, 
state the date the institution's capital restoration plan was accepted 
by its primary Federal regulator, describe the institution's status in 
implementing the plan, and explain how the proposed action is 
consistent with and will further the achievement of the plan or 
otherwise further the purposes of section 38 of the FDI Act. If the 
FDIC is not the applicant's primary Federal regulator, the application 
also should state whether approval has been requested from the 
applicant's primary Federal regulator, the date of such request and the 
disposition of the request, if any. If the proposed action also 
requires applications pursuant to section 18 (c) or (d) of the FDI Act 
(mergers and branches) (12 U.S.C. 1828 (c) or (d)), such applications 
should be filed concurrently with, or made a part of, the application 
filed pursuant to section 38 of the FDI Act (12 U.S.C. 1831o).

0
5. Revise Sec.  303.205(a) to read as follows:


Sec.  303.205  Applications for bonuses and increased compensation for 
senior executive officers.

    (a) Scope. Any insured State nonmember bank, insured State savings 
association, or insured branch of a foreign bank that is significantly 
or critically undercapitalized, or any insured State nonmember bank, 
any insured State savings association, or any insured branch of a 
foreign bank that is undercapitalized and which has failed to submit or 
implement in any material respect an acceptable capital restoration 
plan, shall submit an application to pay a bonus or increase 
compensation for any senior executive officer.
* * * * *

0
6. Revise Sec.  303.249(a) to read as follows:


Sec.  303.249  Management official interlocks.

    (a) Scope. This section contains the procedures to be followed by 
an insured State nonmember bank or an insured State savings association 
to seek the approval of FDIC to establish an interlock pursuant to the 
Depository Institutions Management Interlocks Act (12 U.S.C. 3207), 
section 13 of the FDI Act (12 U.S.C. 1823(k)), and part 348 of this 
chapter.
* * * * *

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

0
7. The authority citation for part 390 continues to read as follows:


[[Page 8098]]


    Authority: 12 U.S.C. 1819.
    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 F--[Removed and Reserved]

0
8. Remove and reserve subpart F, consisting of Sec. Sec.  390.100 
through 390.135.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on or about December 15, 2020.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2020-28453 Filed 2-2-21; 8:45 am]
BILLING CODE 6714-01-P
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