Federal Reserve Bank Capital Stock, 19152-19157 [2021-07477]
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19152
Proposed Rules
Federal Register
Vol. 86, No. 69
Tuesday, April 13, 2021
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 986
[Doc. No. AMS–SC–20–0081; SC20–986–2
CR]
Pecans Grown in the States of
Alabama, Arkansas, Arizona,
California, Florida, Georgia, Kansas,
Louisiana, Missouri, Mississippi, North
Carolina, New Mexico, Oklahoma,
South Carolina, and Texas;
Continuance Referendum
Agricultural Marketing Service,
USDA.
ACTION: Referendum order.
AGENCY:
This document directs that a
referendum be conducted among
eligible growers of pecans grown in the
states of Alabama, Arkansas, Arizona,
California, Florida, Georgia, Kansas,
Louisiana, Missouri, Mississippi, North
Carolina, New Mexico, Oklahoma,
South Carolina, and Texas to determine
whether they favor continuance of the
marketing order regulating the handling
of pecans produced in the production
area.
SUMMARY:
The referendum will be
conducted from June 7 through June 28,
2021. Only current pecan growers
within the production area that
produced a minimum average of 50,000
pounds of inshell pecans over the four
years from October 1, 2016, to
September 30, 2020, or own a minimum
of 30 pecan acres are eligible to vote in
this referendum.
ADDRESSES: Copies of the marketing
order may be obtained from the
Southeast Marketing Field Office,
Marketing Order and Agreement
Division, Specialty Crops Program,
AMS, USDA, 1124 First Street South,
Winter Haven, FL 33880; Telephone:
(863) 324–3375; or from the Marketing
Order and Agreement Division,
Specialty Crops Program, AMS, USDA,
1400 Independence Avenue SW, STOP
0237, Washington, DC 20250–0237;
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DATES:
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Telephone: (202) 720–2491; or on the
internet: https://www.ecfr.gov/cgi-bin/
ECFR?page=browse.
FOR FURTHER INFORMATION CONTACT:
Abigail Campos, Marketing Specialist,
or Christian D. Nissen, Regional
Director, Southeast Marketing Field
Office, Marketing Order and Agreement
Division, Specialty Crops Program,
AMS, USDA, 1124 First Street South,
Winter Haven, FL 33880; Telephone:
(863) 324–3375, Fax: (863) 291–8614, or
Email: Abigail.Campos@usda.gov or
Christian.Nissen@usda.gov.
SUPPLEMENTARY INFORMATION: Pursuant
to Marketing Agreement and Order No.
986, as amended (7 CFR part 986),
hereinafter referred to as the ‘‘Order,’’
and the applicable provisions of the
Agricultural Marketing Agreement Act
of 1937, as amended (7 U.S.C. 601–674),
hereinafter referred to as the ‘‘Act,’’ it is
hereby directed that a referendum be
conducted to ascertain whether
continuance of the Order is favored by
growers. The referendum shall be
conducted from June 7 through June 28,
2021, among pecan growers in the
fifteen-state production area. To be
eligible to participate in the continuance
referendum, a grower must have
produced a minimum average of 50,000
pounds of inshell pecans during the
four-year period from October 1, 2016,
to September 30, 2020, or must own a
minimum of 30 pecan acres.
USDA has determined continuance
referenda are an effective means for
determining whether growers favor the
continuation of marketing order
programs. The Order will continue in
effect if two-thirds of the growers that
cast votes, or growers representing twothirds of the volume of pecans voted in
the referendum, cast ballots in favor of
continuance. In evaluating the merits of
continuance versus termination of the
order, USDA will not exclusively
consider the results of the continuance
referendum. USDA will also consider all
other relevant information regarding the
operation of the Order and relative
benefits and disadvantages to growers,
handlers, and consumers in determining
whether continued operation of the
Order would tend to effectuate the
declared policy of the Act.
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
Chapter 35), the ballots used in the
referendum have been approved by the
Office of Management and Budget
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(OMB) and have been assigned OMB
No. 0581–0291, Federal Marketing
Order for Pecans. It has been estimated
it will take an average of 20 minutes for
each of the approximately 4,267 growers
of pecans to cast a ballot. Participation
is voluntary. Ballots postmarked after
June 28, 2021, will not be included in
the vote tabulation.
Abigail Campos, Dolores Lowenstine,
and Christian D. Nissen of the Southeast
Marketing Field Office, Specialty Crops
Program, AMS, USDA, are hereby
designated as the referendum agents for
the Secretary of Agriculture to conduct
this referendum. The procedure
applicable to the referendum shall be
the ‘‘Procedure for the Conduct of
Referenda in Connection with
Marketing Orders for Fruits, Vegetables,
and Nuts Pursuant to the Agricultural
Marketing Agreement Act of 1937, as
Amended’’ (7 CFR 900.400 et seq.).
Ballots will be mailed to all growers
of record and may also be obtained from
the referendum agents or their
appointees.
List of Subjects in 7 CFR Part 986
Marketing agreements, Pecans,
Reporting and recordkeeping
requirements.
Authority: 7 U.S.C. 601–674.
Bruce Summers,
Administrator, Agricultural Marketing
Service.
[FR Doc. 2021–07516 Filed 4–12–21; 8:45 am]
BILLING CODE P
FEDERAL RESERVE SYSTEM
12 CFR Part 209
[Regulation I; Docket No. R–1745]
RIN 7100–AG13
Federal Reserve Bank Capital Stock
Board of Governors of the
Federal Reserve System.
ACTION: Notice of proposed rulemaking
and request for comment.
AGENCY:
The Board of Governors
(Board) invites public comment on a
proposal to automate non-mergerrelated adjustments to member banks’
subscriptions to Federal Reserve Bank
(Reserve Bank) capital stock. The Board
is also proposing certain technical
amendments to Regulation I and
SUMMARY:
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Federal Register / Vol. 86, No. 69 / Tuesday, April 13, 2021 / Proposed Rules
conforming revisions to the FR 2056
reporting form.
DATES: Comments on the proposed rule
must be received on or before June 14,
2021.
ADDRESSES: When submitting
comments, please consider submitting
your comments by email or fax because
paper mail in the Washington, DC area
and at the Board may be subject to
delay. You may submit comments,
identified by Docket No. R–1745, RIN
7100–AG13, by any of the following
methods:
• Agency Website: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Email: regs.comments@
federalreserve.gov. Include the docket
number in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments are available
from the Board’s website at https://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room 146, 1709 New
York Avenue NW, Washington, DC
20006, between 9:00 a.m. and 5:00 p.m.
on weekdays. You may make an
appointment to inspect comments by
calling (202) 452–3684.
FOR FURTHER INFORMATION CONTACT:
Evan Winerman, Senior Counsel (202–
872–7578), Legal Division; or Kimberly
Zaikov, Manager (202–452–2256),
Reserve Bank Operations and Payments
Systems Division. Users of
Telecommunication Device for Deaf
(TDD) only, call (202) 263–4869.
SUPPLEMENTARY INFORMATION:
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I. Background
Regulation I governs the issuance and
cancellation of capital stock by the
Reserve Banks. Under section 5 of the
Federal Reserve Act and Regulation I, a
member bank (other than a mutual
savings bank) must subscribe to capital
stock of the Reserve Bank of its district
in an amount equal to 6 percent of the
member bank’s capital and surplus.1
Similarly, under section 9 of the Federal
1 12
U.S.C. 287 and 12 CFR 209.4(a).
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Reserve Act and Regulation I, a member
bank that is a mutual savings bank must
subscribe to capital stock of the Reserve
Bank of its district in an amount equal
to six-tenths of 1 percent of its total
deposit liabilities.2 The member bank
must pay for one-half of this
subscription on the date that the
Reserve Bank approves its application
for capital stock, while the remaining
half of the subscription shall be subject
to call by the Board.3
Under section 7 of the Federal
Reserve Act and Regulation I, smaller
member banks (currently those with
$10.785 billion or less in total
consolidated assets) receive a 6 percent
annual dividend on their Reserve Bank
stock.4 Other member banks receive a
dividend at the lesser of (i) the annual
rate equal to the high yield of the 10year Treasury note auctioned at the last
auction held prior to the payment of
such dividend and (ii) an annual rate of
6 percent.5
A. Non-Merger-Related Adjustments to
Reserve Bank Stock Subscriptions
Regulation I requires that a member
bank apply to adjust its stock
subscription ‘‘promptly after filing’’ its
December 31 report of condition (Call
Report).6 Additionally, a member bank
must apply to adjust its stock
subscription promptly after filing any
other quarterly Call Report showing that
the member bank has experienced an
increase or decrease to its capital and
surplus (or its total deposit liabilities for
a mutual savings bank) requiring a
change in excess of the lesser of 15
percent or 100 shares of Reserve Bank
capital stock.7 Member banks use the FR
2056 reporting form to apply for
adjustments to their stock
subscriptions.8
2 12
U.S.C. 333 and 12 CFR 209.4(b). The Federal
Reserve Act and Regulation I allow a mutual
savings bank to maintain a temporary ‘‘deposit’’
with a Reserve Bank in lieu of obtaining capital
stock if the mutual savings bank is not permitted
to purchase Reserve Bank stock under state law.
However, if the relevant state law is not amended
at the first session of the legislature after the bank
is admitted to authorize the purchase of Reserve
Bank stock, or if the bank fails to purchase the stock
within six months of such amendment, the Reserve
Bank will terminate the membership of the mutual
savings bank. 12 U.S.C. 333; 12 CFR 209.2(a) and
208.3(a)(1).
3 12 U.S.C. 287 and 12 CFR 209.4(c)(2).
4 12 U.S.C. 289 and 12 CFR 209.4(e). Regulation
I generally defines total consolidated assets by
reference to the total assets reported on a member
bank’s most recent December 31 Call Report. 12
CFR 209.1(d)(3).
5 Id.
6 12 CFR 209.4(a) and (b).
7 Id.
8 See https://www.federalreserve.gov/reportforms/
forms/FR_205620200115_f.pdf.
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B. Merger-Related Adjustments to
Reserve Bank Stock Subscriptions
Regulation I provides that, when two
member banks merge or consolidate, the
appropriate Reserve Banks shall cancel
shares of the nonsurviving bank and
credit shares to the surviving bank.9 In
order to effectuate this requirement, the
Reserve Banks direct surviving member
banks to apply to adjust their stock
subscriptions before they merge or
consolidate with other member banks.
Similarly, the Reserve Banks direct
nonsurviving member banks to apply to
cancel their stock subscriptions before
they merge or consolidate with other
member banks.10
Regulation I does not expressly
require that a surviving member bank
apply to adjust its stock subscription
before it merges or consolidates with a
nonmember bank. In practice, however,
the Reserve Banks request that surviving
member banks apply to adjust their
stock subscriptions before they merge or
consolidate with nonmember banks.11
This practice allows the Reserve Banks
to make timely changes to the stock
subscriptions of surviving member
banks that merge or consolidate with
nonmember banks.
When a surviving member bank
applies to adjust its stock subscription,
it must state whether its total
consolidated assets exceed $10.785
billion.12 This requirement ensures that
a Reserve Bank receives timely and
accurate notice of whether a merger has
caused a surviving member bank’s total
consolidated assets to exceed $10.785
billion, which (as noted above)
determines the dividend rate to which
the member bank is entitled.
II. Description of the Proposed Rule
The Board is proposing to automate
non-merger-related adjustments to
member banks’ subscriptions to Reserve
Bank capital stock. The Board is also
proposing to clarify that a surviving
member bank must apply to adjust its
stock subscription before merging or
consolidating with another bank.
9 12 CFR 209.3(d)(1) and (2). If the surviving or
nonsurviving bank is a mutual savings bank that is
not permitted to purchase Reserve Bank stock under
state law, Regulation I instead directs the Reserve
Bank to transfer or increase the member bank’s
deposit obligation. Id.
10 Nonsurviving member banks use the FR 2086a
reporting form to apply to cancel their stock
subscriptions. https://www.federalreserve.gov/
reportforms/forms/FR_2086a20200115_f.pdf.
11 The surviving bank applies to adjust its stock
subscription based on its anticipated post-merger
capital and surplus or, in the case of a member bank
that is a mutual savings bank, its anticipated postmerger total deposit liabilities.
12 12 CFR 209.1(d)(3) and 209.3(d)(3).
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Federal Register / Vol. 86, No. 69 / Tuesday, April 13, 2021 / Proposed Rules
Finally, the Board is proposing two
technical amendments to Regulation I.
A. Automation of Non-Merger-Related
Stock Adjustments
As noted above, Regulation I currently
requires that a member bank apply to
adjust its stock subscription at least
annually and sometimes quarterly. A
member bank determines its required
stock subscription based on its capital
and surplus (or total deposit liabilities
for a mutual savings bank) as reported
in the member bank’s most recent Call
Report.
The Reserve Banks are developing
software that will automatically pull the
information needed to calculate member
banks’ required stock subscriptions from
Call Reports. The Board is therefore
proposing amendments to section 209.4
that would automate the stock
adjustment process. Specifically, the
Board proposes that a Reserve Bank
would adjust a member bank’s stock
subscription each time the member bank
files a Call Report.13 This automated
process would eliminate the need for
member banks to file applications to
adjust their stock subscriptions (except
in the context of mergers, as described
infra).
The Board also proposes to clarify
that, when a Reserve Bank issues stock
to a member bank, the Reserve Bank
would obtain payment for that stock by
debit to an account on the Reserve
Bank’s books or by other form of
settlement to which the Reserve Bank
agrees.
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B. Merger-Related Stock Adjustments
As noted above, before two member
banks merge or consolidate, the Reserve
Banks direct the surviving member bank
to apply to adjust its stock subscription
and the nonsurviving member bank to
apply to cancel its stock subscription.
Similarly, before a member bank merges
or consolidates with a nonmember bank,
the Reserve Banks request that the
surviving member bank apply to adjust
its stock subscription.
The Board is proposing amendments
to section 209.3 that would codify the
Reserve Banks’ current practice of
requesting pre-merger stock adjustment
applications. The amendments would
expressly require a surviving member
bank to apply to adjust its stock
subscription before merging or
consolidating with another (member or
13 Similarly, the Board is proposing to automate
the process for adjusting the deposit obligation of
a mutual savings bank that has a deposit with the
appropriate Reserve Bank in lieu of Reserve Bank
capital stock.
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nonmember) bank.14 15 These proposed
amendments would ensure that the
Reserve Banks make timely changes to
the stock subscriptions of surviving
member banks that merge or consolidate
with other banks.
Relatedly, the Board proposes to make
conforming amendments to two
provisions of Regulation I (current 12
CFR 209.1(d)(3) and 209.3(d)(3)) to
clarify that, consistent with the existing
text of Regulation I, a surviving member
bank must state in its stock adjustment
application whether its total
consolidated assets exceed $10.785
billion.
C. Technical Amendments
The Board is also proposing two
technical amendments to Regulation I.
Section 209.1(c) recognizes that a bank
located in a United States dependency
or possession may apply for
membership, and a footnote in
§ 209.1(c) explains that such a bank
‘‘should communicate with the Federal
Reserve Bank with which it desires to
do business.’’ The Board is proposing to
amend this footnote to clarify that a
bank located in the Virgin Islands or
Puerto Rico should communicate with
the Federal Reserve Bank of New York,
while a bank located in Guam,
American Samoa, or the Northern
Mariana Islands should communicate
with the Federal Reserve Bank of San
Francisco. The proposed amendment
would make this footnote in Regulation
I consistent with a provision in the
Board’s Regulation J that clarifies the
Federal Reserve Districts in which
banks from United States dependencies
and possessions are deemed to be
located.16
Section 209.3(a) requires that any
bank that desires to withdraw from
membership in the Federal Reserve
System promptly file with its Reserve
Bank an application for cancellation of
all its Reserve Bank stock. The Board is
14 Similarly, if a surviving bank is a mutual
savings bank that is not permitted to purchase
Reserve Bank stock under state law, the proposed
amendments would require the surviving bank to
apply to adjust its deposit obligation.
15 Regulation I expressly requires that a
nonsurviving member bank apply to cancel its stock
subscription when it ‘‘is merged or consolidated
into a nonmember bank.’’ 12 CFR 209.3(a). The
proposed amendments would also expressly require
that a nonsurviving member bank apply to cancel
its stock subscription (or, in the case of a mutual
savings bank that is not permitted to purchase
Reserve Bank stock, transfer its deposit obligation)
before merging or consolidating with another
member bank. This amendment would be
consistent with the existing requirement in
Regulation I that a member bank apply to cancel its
stock subscription when it ‘‘desires to withdraw
from membership’’ or ‘‘voluntarily . . . ceases
business.’’ 12 CFR 209.3(a).
16 See 12 CFR 210.2(i)(1)(A).
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proposing to amend section 209.3(a) to
clarify that, consistent with the Board’s
current understanding, this requirement
applies to any national bank that wants
to convert into a state nonmember bank.
III. Solicitation of Comments
The Board invites comments on all
aspects of this rulemaking, including
the following questions.
1. If the Reserve Banks automate nonmerger-related stock adjustments, would
member banks experience any
challenges in managing balances in their
Reserve Bank accounts? If so, what steps
could the Reserve Banks take to mitigate
those challenges?
2. Under the proposal, a Reserve Bank
would adjust a member bank’s stock
subscription each time the member bank
files a Call Report. Should a Reserve
Banks adjust a member bank’s stock
subscription if the member bank refiles
a quarterly Call Report after identifying
an error?
IV. Regulatory Analysis
A. Regulatory Flexibility Act
In accordance with section 4 of the
Regulatory Flexibility Act (‘‘RFA’’), 5
U.S.C. 601 et seq., the Board is
publishing an initial regulatory
flexibility analysis for the proposed
rule. The RFA generally requires an
agency to assess the impact a rule is
expected to have on small entities.17
The RFA requires an agency either to
provide a regulatory flexibility analysis
or to certify that the proposed will not
have a significant economic impact on
a substantial number of small entities.
Two of the requirements of an initial
regulatory flexibility analysis 18—a
description of the reasons why the
action is being considered and a
statement of the objectives of, and legal
basis for, the proposed rule—are
contained in the information above.
There are no reporting provisions or
relevant federal rules that duplicate,
overlap, or conflict with the proposed
rule.
Another requirement for the initial
regulatory flexibility analysis is a
description of, and where feasible, an
estimate of, the number of small entities
to which the proposed rule will apply.
The proposed rule would apply to all
member banks, of which 991 are small
entities.19
17 Under size standards established by the Small
Business Administration, banks and other
depository institutions are considered ‘‘small’’ if
they have less than $600 million in assets. 13 CFR
121.201.
18 5 U.S.C. 603(b).
19 991 member banks have less than $600 million
in assets based on data reported in December 31,
2020 Call Reports.
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Finally, an initial regulatory
flexibility analysis must include a
description of the projected reporting,
recordkeeping and other compliance
requirements of the proposed rule. As
described in the information above, the
proposed rule would reduce reporting
requirements for member banks by
automating non-merger-related stock
adjustments. However, the proposed
rule would expressly require that a
surviving stockholder apply to adjust its
stock subscription before merging or
consolidating with another bank.20
There are approximately 50 mergers
each year in which the surviving
stockholder is a member bank.
B. Paperwork Reduction Act
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Certain provisions of the proposed
rule contain ‘‘collections of
information’’ within the meaning of the
Paperwork Reduction Act of 1995 (PRA)
(44 U.S.C. 3501–3521). The Board may
not conduct or sponsor, and a
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 Board reviewed the
proposed rule under the authority
delegated to the Board by OMB.
The proposed rule contains revisions
to sections 209.3 and 209.4 that would
automate non-merger-related
adjustments to member banks’
subscriptions to Reserve Bank capital
stock. Automating the adjustment
process would reduce the frequency of
reporting. To implement this
requirement, the Board proposes to
extend for three years, with revision, the
Federal Reserve Bank Stock
Applications (FR 2030, FR 2030a, FR
2056, FR 2086, FR2086a, 2087; OMB
No. 7100–0042). The revisions would
affect only the FR 2056.
Comments are invited on:
(a) Whether the proposed collections
of information are necessary for the
proper performance of the Board’s
functions, including whether the
information has practical utility;
(b) The accuracy of the estimates of
the burden of the proposed information
collections, including the validity of the
methodology and assumptions used;
(c) Ways to enhance the quality,
utility, and clarity of the information to
be collected;
20 Consistent with the current text of Regulation
I, a surviving member bank would need to report
in its stock adjustment application whether its total
consolidated assets exceed $10.785 billion. See n.
12, supra. Additionally, consistent with the current
text of Regulation I, a nonsurviving member bank
would need to apply to cancel its stock before
merging or consolidating with another bank. See n.
15, supra.
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(d) Ways to minimize the burden of
the information collections on
respondents, including through the use
of automated collection techniques or
other forms of information technology;
and
(e) Estimates of capital or startup costs
and costs of operation, maintenance,
and purchase of services to provide
information.
Proposed Revision, With Extension, of
the Following Information Collection
Report title: Federal Reserve Bank
Stock Applications.
Agency form numbers: FR 2030; FR
2030a; FR 2056; FR 2086; FR 2086a; FR
2087.
OMB control number: 7100–0042.
Frequency: On occasion.
Respondents: New national banks,
non-member state banks converting into
national banks, member banks, and
member banks converting into or
merging into member or nonmember
banks.
Estimated number of respondents: FR
2030, 4; FR 2030a, 7; FR 2056, 50; FR
2086, 10; FR 2086a, 86; FR 2087, 1.
Estimated average hours per response:
0.5.
Estimated annual burden hours: FR
2030, 2; FR 2030a, 3.5; FR 2056, 25; FR
2086, 5; FR 2086a, 43; FR 2087, 0.5.
General description of report: Any
national bank wanting to purchase stock
in the Federal Reserve System, any
member bank wanting to increase or
decrease its Federal Reserve Bank stock
holdings, or any bank wanting to cancel
its stock holdings must file an
application with the appropriate Federal
Reserve Bank. The application forms for
the initial subscription of Federal
Reserve Bank stock filed by organizing
national banks and nonmember state
banks converting to national banks (FR
2030 and 2030a, respectively) and the
application forms for the cancellation of
Federal Reserve Bank stock filed by
liquidating member banks, member
banks merging or consolidating with
nonmember banks, and insolvent
member banks (FR 2086, FR 2086a, and
FR 2087, respectively) require one or
more of the following: A resolution by
the applying bank’s board of directors
authorizing the transaction, an
indication of the capital and surplus of
the bank as of the date of application,
a certification (by official signatures) of
the resolution, and/or an indication of
the number of shares and dollar amount
of the Federal Reserve Bank stock to be
purchased or cancelled.
The application form for an interim
adjustment in a member bank’s holdings
of Federal Reserve Bank stock (FR 2056)
requires an indication of the capital and
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19155
surplus of the bank (or total deposit
liabilities for a mutual savings bank) as
of the date of application and an
indication of the number of shares held
and the number of shares to be acquired
or canceled. A member bank must
submit a completed FR 2056 form to
correct a discrepancy between the
amount of Federal Reserve Bank stock
required to be held and the amount
actually held by the member bank. The
latter is determined through information
that the member bank reports quarterly
on the Consolidated Reports of
Condition and Income (Call Report)
(FFIEC 031, FFIEC 041, and FFIEC 051;
OMB No. 7100–0036).
Legal authorization and
confidentiality: The Federal Reserve
Membership Application is authorized
by section 9 of the FRA (12 U.S.C. 321,
322, 323, 329, and 333). The Federal
Reserve Bank Stock Applications are
authorized pursuant to sections 9 and
11(a) of the FRA (12 U.S.C. 321 and
248(a)). Additionally, the FR 2030 and
FR 2030a are specifically authorized by
section 2 of the FRA (12 U.S.C. 222 and
282), the FR 2056, FR 2086, and FR
2086a are authorized by section 5 of the
FRA (12 U.S.C. 287), and the FR 2087
is authorized by section 6 of the FRA
(12 U.S.C. 288). The FR 2083 is required
to obtain a benefit, while the FR 2030,
FR 2030a, FR 2056, FR 2086, FR 2086a,
and FR 2087 are mandatory.
Individual respondents may request
that information submitted to the Board
in these applications be kept
confidential on a case-by-case basis.
Such applications may contain
information related the business plans
of the respondent. Under certain
circumstances, this information may be
withheld under exemption 4 of the
Freedom of Information Act (FOIA),
which protects privileged or
confidential commercial or financial
information (5 U.S.C. 552(b)(4)). These
applications may also contain
information of a personal nature the
disclosure of which would result in a
clearly unwarranted invasion of
personal privacy, which may be
protected under exemption 6 of the
FOIA (5 U.S.C. 552(b)(6)). Additionally,
exemption 8 of the FOIA (5 U.S.C.
552(b)(8)) may apply to the extent the
reported information is contained in or
related to examination reports.
Current Actions: The Board is
proposing to automate non-mergerrelated adjustments to member banks’
subscriptions to Reserve Bank capital
stock. The Board is also proposing two
technical amendments to Regulation I.
Regulation I currently requires that a
member bank apply to adjust its stock
subscription at least annually and
E:\FR\FM\13APP1.SGM
13APP1
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Federal Register / Vol. 86, No. 69 / Tuesday, April 13, 2021 / Proposed Rules
sometimes quarterly. A member bank
determines its required stock
subscription based on its capital and
surplus (or total deposit liabilities for a
mutual savings bank) as reported in the
member bank’s most recent Call Report.
The Reserve Banks are developing
software that will automatically pull the
information needed to calculate member
banks’ required stock subscriptions from
Call Reports. Accordingly, the Board is
proposing amendments to section 209.4
that would automate non-merger-related
stock adjustments. The Board is also
proposing amendments to § 209.3(d)
that would require a surviving
stockholder to apply to adjust its stock
subscription before merging with
another bank. Consistent with these
proposed changes to Regulation I, the
Board is proposing to eliminate the
requirement that member banks
routinely submit FR 2056 reporting
forms to adjust their stock subscriptions.
The Board is proposing to amend the FR
2056 reporting form to clarify that the
form should be filed only by a surviving
member bank that merges or
consolidates with another bank.
jbell on DSKJLSW7X2PROD with PROPOSALS
C. Plain Language
Section 722 of the Gramm-Leach
Bliley Act requires the Board to use
plain language in all proposed and final
rules published after January 1, 2000.
The Board invites your comments on
how to make this proposed rule easier
to understand. For example:
• Has the Board organized the
material to suit your needs? If not, how
could this material be better organized?
• Are the requirements in the
proposed rule clearly stated? If not, how
could the proposed rule be more clearly
stated?
• Does the proposed rule contain
language or jargon that is not clear? If
so, which language requires
clarification?
• Would a different format (grouping
and order of sections, use of headings,
paragraphing) make the proposed rule
easier to understand? If so, what
changes to the format would make the
proposed rule easier to understand?
• What else could the Board do to
make the regulation easier to
understand?
List of Subjects in 12 CFR Part 209
Banks and banking, Federal Reserve
System, Reporting and recordkeeping
requirements, Securities.
Authority and Issuance
For the reasons set forth in the
preamble, the Board proposes to amend
Regulation I, 12 CFR part 209, as
follows:
VerDate Sep<11>2014
16:22 Apr 12, 2021
Jkt 253001
PART 209—FEDERAL RESERVE BANK
CAPITAL STOCK (REGULATION I)
1. The authority citation for part 209
continues to read as follows:
■
Authority: 12 U.S.C. 12 U.S.C. 222, 248,
282, 286–288, 289, 321, 323, 327–328, and
466.
2. Revise the heading to part 209 as
shown above.
■ 3. Amend § 209.1 by revising
paragraphs (c) and (d)(3) to read as
follows.
■
§ 209.1 Authority, purpose, scope, and
definitions.
*
*
*
*
*
(c) Scope. This part applies to
member banks of the Federal Reserve
System, to national banks in process of
organization, and to state banks
applying for membership. National
banks and locally-incorporated banks
located in United States dependencies
and possessions are eligible (with the
consent of the Board) but not required
to apply for membership under section
19(h) of the Federal Reserve Act, 12
U.S.C. 466.1
—————
1 A bank located in the Virgin Islands or
Puerto Rico should communicate with the
Federal Reserve Bank of New York regarding
applications for membership under the
provisions of § 19(h) of the Federal Reserve
Act. A bank located in Guam, American
Samoa, or the Northern Mariana Islands
should communicate with the Federal
Reserve Bank of San Francisco regarding
applications for membership under the
provisions of § 19(h) of the Federal Reserve
Act.
(d) * * *
(3) Total consolidated assets means
the total assets on the stockholder’s
balance sheet as reported by the
stockholder on its Consolidated Report
of Condition and Income (Call Report)
as of the most recent December 31,
except in the case of (i) a new member
‘‘total consolidated assets’’ means (until
the next December 31 Call Report
becomes available) the total
consolidated assets of the new member
at the time of its application for capital
stock and (ii) a surviving stockholder
after a merger ‘‘total consolidated
assets’’ means (until the next December
31 Call Report becomes available) the
total consolidated assets reported by
that stockholder pursuant to
§ 209.3(d)(5) of this part.
■ 4. Amend § 209.3 by:
■ a. Revising the section heading;
■ b. Revising paragraph (a);
■ c. Revising the introductory text of
paragraph (d), redesignating paragraphs
(d)(1), (2) and (3) as paragraphs (d)(2),
(3), and (5), adding new paragraphs
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
(d)(1) and (4), and revising paragraph
(d)(5).
The revisions and additions to read as
follows:
§ 209.3 Cancellation of Reserve Bank
stock; mergers involving member banks.
(a) Application for cancellation. Any
bank that desires to withdraw from
membership in the Federal Reserve
System (including a national bank that
wants to convert into a State
nonmember bank), voluntarily
liquidates or ceases business, is merged
or consolidated into a nonmember bank,
or is involuntarily liquidated by a
receiver or conservator or otherwise,
shall promptly file with its Reserve
Bank an application for cancellation of
all its Reserve Bank stock (or
withdrawal of its deposit, as the case
may be) and payment therefor in
accordance with § 209.4.
*
*
*
*
*
(d) Exchange of stock on merger or
change in location; stock adjustment
upon merger with a nonmember bank;
reporting of total consolidated assets
following merger.
(1) Applications.
(i) Before a merger or consolidation of
member banks, the nonsurviving
member bank shall file an application
with the appropriate Reserve Bank to
cancel its shares of Reserve Bank stock
(or in the case of a mutual savings bank
not authorized to purchase Reserve
Bank stock, shall file an application to
transfer its deposit to the account of the
surviving bank) and the surviving
member bank shall file an application
with the appropriate Reserve Bank for
issue of a corresponding number of
shares of Reserve Bank stock (or in the
case of a mutual savings bank not
authorized to purchase Reserve Bank
stock, shall file an application to
increase its deposit obligation).
(ii) Before a merger or consolidation
of a member bank and a nonmember
bank, a surviving member bank shall file
an application with the appropriate
Reserve Bank to adjust its Reserve Bank
capital stock subscription to equal six
percent of the member bank’s
anticipated post-merger capital and
surplus, or, in the case of member bank
that is a mutual savings bank, six-tenths
of 1 percent of the member bank’s
anticipated post-merger total deposit
liabilities. A mutual savings bank not
authorized to purchase Reserve Bank
stock shall file an application to adjust
its deposit obligation in a like manner.
*
*
*
*
*
(4) Merger with a nonmember bank.
Upon a merger or consolidation of a
member bank and a nonmember bank,
the Reserve Bank will adjust the
E:\FR\FM\13APP1.SGM
13APP1
Federal Register / Vol. 86, No. 69 / Tuesday, April 13, 2021 / Proposed Rules
surviving member bank’s stock
subscription to equal six percent of the
member bank’s capital and surplus, or,
in the case of a member bank that is a
mutual savings bank, six-tenths of 1
percent of the member bank’s total
deposit liabilities. If a mutual savings
bank has a deposit with the appropriate
Reserve Bank in lieu of Reserve Bank
capital stock, its deposit obligation shall
be adjusted in a like manner.
(5) Statement of total consolidated
assets. When a member bank merges or
consolidates with another bank and the
surviving bank remains a Reserve Bank
stockholder, the surviving stockholder
must report whether its total
consolidated assets exceed
$10,785,000,000 in the application
described in paragraph (d)(1) of this
section.
*
*
*
*
*
■ 5. Amend § 209.4 by:
■ a. Revising paragraphs (a) and (b);
■ b. Revising the introductory text of
paragraph (c)(1), redesignating
paragraphs (c)(2) and (3) as paragraphs
(c)(3) and (4), and adding a new
paragraph (c)(2); and
■ c. Revising the introductory text of
paragraph (d)(1).
The revisions and addition read as
follows:
jbell on DSKJLSW7X2PROD with PROPOSALS
§ 209.4 Amounts and payments for
subscriptions and cancellations; timing and
rate of dividends.
(a) Amount of subscription. The total
subscription of a member bank (other
than a mutual savings bank) shall equal
six percent of its capital and surplus as
shown on its most recent Call Report.
After a member bank files a Call Report,
the appropriate Reserve Bank will adjust
the member bank’s Reserve Bank capital
stock subscription to equal six percent
of the member bank’s capital and
surplus.
(b) Mutual savings banks. The total
subscription of a member bank that is a
mutual savings bank shall equal sixtenths of 1 percent of its total deposit
liabilities as shown on its most recent
Call Report. After a member bank that
is a mutual savings bank files a Call
Report, the appropriate Reserve Bank
will adjust the member bank’s Reserve
Bank capital stock subscription to equal
six-tenths of 1 percent of the member
bank’s total deposit liabilities. If a
mutual savings bank has a deposit with
the appropriate Reserve Bank in lieu of
Reserve Bank capital stock, its deposit
obligation shall be adjusted in a like
manner.
(c) Payment for subscriptions. (1)
When a Reserve Bank issues capital
stock to a member bank (or accepts a
VerDate Sep<11>2014
16:22 Apr 12, 2021
Jkt 253001
deposit in lieu thereof), the member
bank shall pay the Reserve Bank—
*
*
*
*
*
(2) A Reserve Bank shall obtain
settlement for the payment described in
paragraph (c)(1) of this section by debit
to an account on the Reserve Bank’s
books or other form of settlement to
which the Reserve Bank agrees.
*
*
*
*
*
(d) Payment for cancellations. (1)
When a Reserve Bank cancels Reserve
Bank capital stock of a member bank, or
(in the case of involuntary termination
of membership) upon the effective date
of cancellation specified in § 209.3(c)(3),
the Reserve Bank shall—
*
*
*
*
*
19157
[Docket No. FAA–2021–0297; Project
Identifier 2019–SW–062–AD]
You may send comments,
using the procedures found in 14 CFR
11.43 and 11.45, by any of the following
methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
• Hand Delivery: Deliver to Mail
address above between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
For material that is proposed for IBR
in this AD, contact the EASA, KonradAdenauer-Ufer 3, 50668 Cologne,
Germany; phone: +49 221 8999 000;
email: ADs@easa.europa.eu; internet:
www.easa.europa.eu. You may find this
material on the EASA website at https://
ad.easa.europa.eu. You may view this
material at the FAA, Office of the
Regional Counsel, Southwest Region,
10101 Hillwood Pkwy., Room 6N–321,
Fort Worth, TX 76177. For information
on the availability of this material at the
FAA, call 817–222–5110. It is also
available in the AD docket on the
internet at https://www.regulations.gov
by searching for and locating Docket No.
FAA–2021–0297.
RIN 2120–AA64
Examining the AD Docket
By order of the Board of Governors of the
Federal Reserve System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2021–07477 Filed 4–12–21; 8:45 am]
BILLING CODE P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
Airworthiness Directives; Airbus
Helicopters
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
The FAA proposes to adopt a
new airworthiness directive (AD) for
Airbus Helicopters Model SA330J
helicopters, all serial numbers. This
proposed AD was prompted by reports
of the failure of the lower bearing cage
of the main rotor hub (MRH) flapping
hinges and of the presence of metallic
particles at the bottom of a drag hinge.
This proposed AD would require
repetitive inspections of the MRH chip
detectors, or for helicopters not
equipped with chip detectors, repetitive
inspections of the oil for contamination
by metallic particles, and corrective
actions if necessary, as specified in a
European Union Aviation Safety Agency
(EASA) AD, which is proposed for
incorporation by reference (IBR). The
FAA is proposing this AD to address the
unsafe condition on these products.
DATES: The FAA must receive comments
on this proposed AD by May 28, 2021.
SUMMARY:
PO 00000
Frm 00006
Fmt 4702
Sfmt 4702
ADDRESSES:
You may examine the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2021–
0297; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The AD docket contains this NPRM, any
comments received, and other
information. The street address for
Docket Operations is listed above.
Comments will be available in the AD
docket shortly after receipt.
FOR FURTHER INFORMATION CONTACT:
Mahmood G. Shah, Aviation Safety
Engineer, Fort Worth ACO Branch,
FAA, 10101 Hillwood Pkwy., Fort
Worth, TX 76177; phone: 817–222–
5538; email: mahmood.g.shah@faa.gov.
SUPPLEMENTARY INFORMATION:
Comments Invited
The FAA invites you to send any
written relevant data, views, or
arguments about this proposal. Send
your comments to an address listed
under ADDRESSES. Include ‘‘Docket No.
FAA–2021–0297; Project Identifier
2019–SW–062–AD’’ at the beginning of
your comments. The most helpful
comments reference a specific portion of
E:\FR\FM\13APP1.SGM
13APP1
]]>Agencies
[Federal Register Volume 86, Number 69 (Tuesday, April 13, 2021)]
[Proposed Rules]
[Pages 19152-19157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07477]
=======================================================================
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 209
[Regulation I; Docket No. R-1745]
RIN 7100-AG13
Federal Reserve Bank Capital Stock
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notice of proposed rulemaking and request for comment.
-----------------------------------------------------------------------
SUMMARY: The Board of Governors (Board) invites public comment on a
proposal to automate non-merger-related adjustments to member banks'
subscriptions to Federal Reserve Bank (Reserve Bank) capital stock. The
Board is also proposing certain technical amendments to Regulation I
and
[[Page 19153]]
conforming revisions to the FR 2056 reporting form.
DATES: Comments on the proposed rule must be received on or before June
14, 2021.
ADDRESSES: When submitting comments, please consider submitting your
comments by email or fax because paper mail in the Washington, DC area
and at the Board may be subject to delay. You may submit comments,
identified by Docket No. R-1745, RIN 7100-AG13, by any of the following
methods:
Agency Website: https://www.federalreserve.gov. Follow the
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Email: [email protected]. Include the
docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Ann Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments are available from the Board's website at
https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, your
comments will not be edited to remove any identifying or contact
information. Public comments may also be viewed electronically or in
paper form in Room 146, 1709 New York Avenue NW, Washington, DC 20006,
between 9:00 a.m. and 5:00 p.m. on weekdays. You may make an
appointment to inspect comments by calling (202) 452-3684.
FOR FURTHER INFORMATION CONTACT: Evan Winerman, Senior Counsel (202-
872-7578), Legal Division; or Kimberly Zaikov, Manager (202-452-2256),
Reserve Bank Operations and Payments Systems Division. Users of
Telecommunication Device for Deaf (TDD) only, call (202) 263-4869.
SUPPLEMENTARY INFORMATION:
I. Background
Regulation I governs the issuance and cancellation of capital stock
by the Reserve Banks. Under section 5 of the Federal Reserve Act and
Regulation I, a member bank (other than a mutual savings bank) must
subscribe to capital stock of the Reserve Bank of its district in an
amount equal to 6 percent of the member bank's capital and surplus.\1\
Similarly, under section 9 of the Federal Reserve Act and Regulation I,
a member bank that is a mutual savings bank must subscribe to capital
stock of the Reserve Bank of its district in an amount equal to six-
tenths of 1 percent of its total deposit liabilities.\2\ The member
bank must pay for one-half of this subscription on the date that the
Reserve Bank approves its application for capital stock, while the
remaining half of the subscription shall be subject to call by the
Board.\3\
---------------------------------------------------------------------------
\1\ 12 U.S.C. 287 and 12 CFR 209.4(a).
\2\ 12 U.S.C. 333 and 12 CFR 209.4(b). The Federal Reserve Act
and Regulation I allow a mutual savings bank to maintain a temporary
``deposit'' with a Reserve Bank in lieu of obtaining capital stock
if the mutual savings bank is not permitted to purchase Reserve Bank
stock under state law. However, if the relevant state law is not
amended at the first session of the legislature after the bank is
admitted to authorize the purchase of Reserve Bank stock, or if the
bank fails to purchase the stock within six months of such
amendment, the Reserve Bank will terminate the membership of the
mutual savings bank. 12 U.S.C. 333; 12 CFR 209.2(a) and 208.3(a)(1).
\3\ 12 U.S.C. 287 and 12 CFR 209.4(c)(2).
---------------------------------------------------------------------------
Under section 7 of the Federal Reserve Act and Regulation I,
smaller member banks (currently those with $10.785 billion or less in
total consolidated assets) receive a 6 percent annual dividend on their
Reserve Bank stock.\4\ Other member banks receive a dividend at the
lesser of (i) the annual rate equal to the high yield of the 10-year
Treasury note auctioned at the last auction held prior to the payment
of such dividend and (ii) an annual rate of 6 percent.\5\
---------------------------------------------------------------------------
\4\ 12 U.S.C. 289 and 12 CFR 209.4(e). Regulation I generally
defines total consolidated assets by reference to the total assets
reported on a member bank's most recent December 31 Call Report. 12
CFR 209.1(d)(3).
\5\ Id.
---------------------------------------------------------------------------
A. Non-Merger-Related Adjustments to Reserve Bank Stock Subscriptions
Regulation I requires that a member bank apply to adjust its stock
subscription ``promptly after filing'' its December 31 report of
condition (Call Report).\6\ Additionally, a member bank must apply to
adjust its stock subscription promptly after filing any other quarterly
Call Report showing that the member bank has experienced an increase or
decrease to its capital and surplus (or its total deposit liabilities
for a mutual savings bank) requiring a change in excess of the lesser
of 15 percent or 100 shares of Reserve Bank capital stock.\7\ Member
banks use the FR 2056 reporting form to apply for adjustments to their
stock subscriptions.\8\
---------------------------------------------------------------------------
\6\ 12 CFR 209.4(a) and (b).
\7\ Id.
\8\ See https://www.federalreserve.gov/reportforms/forms/FR_205620200115_f.pdf.
---------------------------------------------------------------------------
B. Merger-Related Adjustments to Reserve Bank Stock Subscriptions
Regulation I provides that, when two member banks merge or
consolidate, the appropriate Reserve Banks shall cancel shares of the
nonsurviving bank and credit shares to the surviving bank.\9\ In order
to effectuate this requirement, the Reserve Banks direct surviving
member banks to apply to adjust their stock subscriptions before they
merge or consolidate with other member banks. Similarly, the Reserve
Banks direct nonsurviving member banks to apply to cancel their stock
subscriptions before they merge or consolidate with other member
banks.\10\
---------------------------------------------------------------------------
\9\ 12 CFR 209.3(d)(1) and (2). If the surviving or nonsurviving
bank is a mutual savings bank that is not permitted to purchase
Reserve Bank stock under state law, Regulation I instead directs the
Reserve Bank to transfer or increase the member bank's deposit
obligation. Id.
\10\ Nonsurviving member banks use the FR 2086a reporting form
to apply to cancel their stock subscriptions. https://www.federalreserve.gov/reportforms/forms/FR_2086a20200115_f.pdf.
---------------------------------------------------------------------------
Regulation I does not expressly require that a surviving member
bank apply to adjust its stock subscription before it merges or
consolidates with a nonmember bank. In practice, however, the Reserve
Banks request that surviving member banks apply to adjust their stock
subscriptions before they merge or consolidate with nonmember
banks.\11\ This practice allows the Reserve Banks to make timely
changes to the stock subscriptions of surviving member banks that merge
or consolidate with nonmember banks.
---------------------------------------------------------------------------
\11\ The surviving bank applies to adjust its stock subscription
based on its anticipated post-merger capital and surplus or, in the
case of a member bank that is a mutual savings bank, its anticipated
post-merger total deposit liabilities.
---------------------------------------------------------------------------
When a surviving member bank applies to adjust its stock
subscription, it must state whether its total consolidated assets
exceed $10.785 billion.\12\ This requirement ensures that a Reserve
Bank receives timely and accurate notice of whether a merger has caused
a surviving member bank's total consolidated assets to exceed $10.785
billion, which (as noted above) determines the dividend rate to which
the member bank is entitled.
---------------------------------------------------------------------------
\12\ 12 CFR 209.1(d)(3) and 209.3(d)(3).
---------------------------------------------------------------------------
II. Description of the Proposed Rule
The Board is proposing to automate non-merger-related adjustments
to member banks' subscriptions to Reserve Bank capital stock. The Board
is also proposing to clarify that a surviving member bank must apply to
adjust its stock subscription before merging or consolidating with
another bank.
[[Page 19154]]
Finally, the Board is proposing two technical amendments to Regulation
I.
A. Automation of Non-Merger-Related Stock Adjustments
As noted above, Regulation I currently requires that a member bank
apply to adjust its stock subscription at least annually and sometimes
quarterly. A member bank determines its required stock subscription
based on its capital and surplus (or total deposit liabilities for a
mutual savings bank) as reported in the member bank's most recent Call
Report.
The Reserve Banks are developing software that will automatically
pull the information needed to calculate member banks' required stock
subscriptions from Call Reports. The Board is therefore proposing
amendments to section 209.4 that would automate the stock adjustment
process. Specifically, the Board proposes that a Reserve Bank would
adjust a member bank's stock subscription each time the member bank
files a Call Report.\13\ This automated process would eliminate the
need for member banks to file applications to adjust their stock
subscriptions (except in the context of mergers, as described infra).
---------------------------------------------------------------------------
\13\ Similarly, the Board is proposing to automate the process
for adjusting the deposit obligation of a mutual savings bank that
has a deposit with the appropriate Reserve Bank in lieu of Reserve
Bank capital stock.
---------------------------------------------------------------------------
The Board also proposes to clarify that, when a Reserve Bank issues
stock to a member bank, the Reserve Bank would obtain payment for that
stock by debit to an account on the Reserve Bank's books or by other
form of settlement to which the Reserve Bank agrees.
B. Merger-Related Stock Adjustments
As noted above, before two member banks merge or consolidate, the
Reserve Banks direct the surviving member bank to apply to adjust its
stock subscription and the nonsurviving member bank to apply to cancel
its stock subscription. Similarly, before a member bank merges or
consolidates with a nonmember bank, the Reserve Banks request that the
surviving member bank apply to adjust its stock subscription.
The Board is proposing amendments to section 209.3 that would
codify the Reserve Banks' current practice of requesting pre-merger
stock adjustment applications. The amendments would expressly require a
surviving member bank to apply to adjust its stock subscription before
merging or consolidating with another (member or nonmember)
bank.14 15 These proposed amendments would ensure that the
Reserve Banks make timely changes to the stock subscriptions of
surviving member banks that merge or consolidate with other banks.
---------------------------------------------------------------------------
\14\ Similarly, if a surviving bank is a mutual savings bank
that is not permitted to purchase Reserve Bank stock under state
law, the proposed amendments would require the surviving bank to
apply to adjust its deposit obligation.
\15\ Regulation I expressly requires that a nonsurviving member
bank apply to cancel its stock subscription when it ``is merged or
consolidated into a nonmember bank.'' 12 CFR 209.3(a). The proposed
amendments would also expressly require that a nonsurviving member
bank apply to cancel its stock subscription (or, in the case of a
mutual savings bank that is not permitted to purchase Reserve Bank
stock, transfer its deposit obligation) before merging or
consolidating with another member bank. This amendment would be
consistent with the existing requirement in Regulation I that a
member bank apply to cancel its stock subscription when it ``desires
to withdraw from membership'' or ``voluntarily . . . ceases
business.'' 12 CFR 209.3(a).
---------------------------------------------------------------------------
Relatedly, the Board proposes to make conforming amendments to two
provisions of Regulation I (current 12 CFR 209.1(d)(3) and 209.3(d)(3))
to clarify that, consistent with the existing text of Regulation I, a
surviving member bank must state in its stock adjustment application
whether its total consolidated assets exceed $10.785 billion.
C. Technical Amendments
The Board is also proposing two technical amendments to Regulation
I. Section 209.1(c) recognizes that a bank located in a United States
dependency or possession may apply for membership, and a footnote in
Sec. 209.1(c) explains that such a bank ``should communicate with the
Federal Reserve Bank with which it desires to do business.'' The Board
is proposing to amend this footnote to clarify that a bank located in
the Virgin Islands or Puerto Rico should communicate with the Federal
Reserve Bank of New York, while a bank located in Guam, American Samoa,
or the Northern Mariana Islands should communicate with the Federal
Reserve Bank of San Francisco. The proposed amendment would make this
footnote in Regulation I consistent with a provision in the Board's
Regulation J that clarifies the Federal Reserve Districts in which
banks from United States dependencies and possessions are deemed to be
located.\16\
---------------------------------------------------------------------------
\16\ See 12 CFR 210.2(i)(1)(A).
---------------------------------------------------------------------------
Section 209.3(a) requires that any bank that desires to withdraw
from membership in the Federal Reserve System promptly file with its
Reserve Bank an application for cancellation of all its Reserve Bank
stock. The Board is proposing to amend section 209.3(a) to clarify
that, consistent with the Board's current understanding, this
requirement applies to any national bank that wants to convert into a
state nonmember bank.
III. Solicitation of Comments
The Board invites comments on all aspects of this rulemaking,
including the following questions.
1. If the Reserve Banks automate non-merger-related stock
adjustments, would member banks experience any challenges in managing
balances in their Reserve Bank accounts? If so, what steps could the
Reserve Banks take to mitigate those challenges?
2. Under the proposal, a Reserve Bank would adjust a member bank's
stock subscription each time the member bank files a Call Report.
Should a Reserve Banks adjust a member bank's stock subscription if the
member bank refiles a quarterly Call Report after identifying an error?
IV. Regulatory Analysis
A. Regulatory Flexibility Act
In accordance with section 4 of the Regulatory Flexibility Act
(``RFA''), 5 U.S.C. 601 et seq., the Board is publishing an initial
regulatory flexibility analysis for the proposed rule. The RFA
generally requires an agency to assess the impact a rule is expected to
have on small entities.\17\ The RFA requires an agency either to
provide a regulatory flexibility analysis or to certify that the
proposed will not have a significant economic impact on a substantial
number of small entities.
---------------------------------------------------------------------------
\17\ Under size standards established by the Small Business
Administration, banks and other depository institutions are
considered ``small'' if they have less than $600 million in assets.
13 CFR 121.201.
---------------------------------------------------------------------------
Two of the requirements of an initial regulatory flexibility
analysis \18\--a description of the reasons why the action is being
considered and a statement of the objectives of, and legal basis for,
the proposed rule--are contained in the information above. There are no
reporting provisions or relevant federal rules that duplicate, overlap,
or conflict with the proposed rule.
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\18\ 5 U.S.C. 603(b).
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Another requirement for the initial regulatory flexibility analysis
is a description of, and where feasible, an estimate of, the number of
small entities to which the proposed rule will apply. The proposed rule
would apply to all member banks, of which 991 are small entities.\19\
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\19\ 991 member banks have less than $600 million in assets
based on data reported in December 31, 2020 Call Reports.
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[[Page 19155]]
Finally, an initial regulatory flexibility analysis must include a
description of the projected reporting, recordkeeping and other
compliance requirements of the proposed rule. As described in the
information above, the proposed rule would reduce reporting
requirements for member banks by automating non-merger-related stock
adjustments. However, the proposed rule would expressly require that a
surviving stockholder apply to adjust its stock subscription before
merging or consolidating with another bank.\20\ There are approximately
50 mergers each year in which the surviving stockholder is a member
bank.
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\20\ Consistent with the current text of Regulation I, a
surviving member bank would need to report in its stock adjustment
application whether its total consolidated assets exceed $10.785
billion. See n. 12, supra. Additionally, consistent with the current
text of Regulation I, a nonsurviving member bank would need to apply
to cancel its stock before merging or consolidating with another
bank. See n. 15, supra.
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B. Paperwork Reduction Act
Certain provisions of the proposed rule contain ``collections of
information'' within the meaning of the Paperwork Reduction Act of 1995
(PRA) (44 U.S.C. 3501-3521). The Board may not conduct or sponsor, and
a 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 Board reviewed the proposed rule under the
authority delegated to the Board by OMB.
The proposed rule contains revisions to sections 209.3 and 209.4
that would automate non-merger-related adjustments to member banks'
subscriptions to Reserve Bank capital stock. Automating the adjustment
process would reduce the frequency of reporting. To implement this
requirement, the Board proposes to extend for three years, with
revision, the Federal Reserve Bank Stock Applications (FR 2030, FR
2030a, FR 2056, FR 2086, FR2086a, 2087; OMB No. 7100-0042). The
revisions would affect only the FR 2056.
Comments are invited on:
(a) Whether the proposed collections of information are necessary
for the proper performance of the Board's functions, including whether
the information has practical utility;
(b) The accuracy of the estimates of the burden of the proposed
information collections, including the validity of the methodology and
assumptions used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
(e) Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
Proposed Revision, With Extension, of the Following Information
Collection
Report title: Federal Reserve Bank Stock Applications.
Agency form numbers: FR 2030; FR 2030a; FR 2056; FR 2086; FR 2086a;
FR 2087.
OMB control number: 7100-0042.
Frequency: On occasion.
Respondents: New national banks, non-member state banks converting
into national banks, member banks, and member banks converting into or
merging into member or nonmember banks.
Estimated number of respondents: FR 2030, 4; FR 2030a, 7; FR 2056,
50; FR 2086, 10; FR 2086a, 86; FR 2087, 1.
Estimated average hours per response: 0.5.
Estimated annual burden hours: FR 2030, 2; FR 2030a, 3.5; FR 2056,
25; FR 2086, 5; FR 2086a, 43; FR 2087, 0.5.
General description of report: Any national bank wanting to
purchase stock in the Federal Reserve System, any member bank wanting
to increase or decrease its Federal Reserve Bank stock holdings, or any
bank wanting to cancel its stock holdings must file an application with
the appropriate Federal Reserve Bank. The application forms for the
initial subscription of Federal Reserve Bank stock filed by organizing
national banks and nonmember state banks converting to national banks
(FR 2030 and 2030a, respectively) and the application forms for the
cancellation of Federal Reserve Bank stock filed by liquidating member
banks, member banks merging or consolidating with nonmember banks, and
insolvent member banks (FR 2086, FR 2086a, and FR 2087, respectively)
require one or more of the following: A resolution by the applying
bank's board of directors authorizing the transaction, an indication of
the capital and surplus of the bank as of the date of application, a
certification (by official signatures) of the resolution, and/or an
indication of the number of shares and dollar amount of the Federal
Reserve Bank stock to be purchased or cancelled.
The application form for an interim adjustment in a member bank's
holdings of Federal Reserve Bank stock (FR 2056) requires an indication
of the capital and surplus of the bank (or total deposit liabilities
for a mutual savings bank) as of the date of application and an
indication of the number of shares held and the number of shares to be
acquired or canceled. A member bank must submit a completed FR 2056
form to correct a discrepancy between the amount of Federal Reserve
Bank stock required to be held and the amount actually held by the
member bank. The latter is determined through information that the
member bank reports quarterly on the Consolidated Reports of Condition
and Income (Call Report) (FFIEC 031, FFIEC 041, and FFIEC 051; OMB No.
7100-0036).
Legal authorization and confidentiality: The Federal Reserve
Membership Application is authorized by section 9 of the FRA (12 U.S.C.
321, 322, 323, 329, and 333). The Federal Reserve Bank Stock
Applications are authorized pursuant to sections 9 and 11(a) of the FRA
(12 U.S.C. 321 and 248(a)). Additionally, the FR 2030 and FR 2030a are
specifically authorized by section 2 of the FRA (12 U.S.C. 222 and
282), the FR 2056, FR 2086, and FR 2086a are authorized by section 5 of
the FRA (12 U.S.C. 287), and the FR 2087 is authorized by section 6 of
the FRA (12 U.S.C. 288). The FR 2083 is required to obtain a benefit,
while the FR 2030, FR 2030a, FR 2056, FR 2086, FR 2086a, and FR 2087
are mandatory.
Individual respondents may request that information submitted to
the Board in these applications be kept confidential on a case-by-case
basis. Such applications may contain information related the business
plans of the respondent. Under certain circumstances, this information
may be withheld under exemption 4 of the Freedom of Information Act
(FOIA), which protects privileged or confidential commercial or
financial information (5 U.S.C. 552(b)(4)). These applications may also
contain information of a personal nature the disclosure of which would
result in a clearly unwarranted invasion of personal privacy, which may
be protected under exemption 6 of the FOIA (5 U.S.C. 552(b)(6)).
Additionally, exemption 8 of the FOIA (5 U.S.C. 552(b)(8)) may apply to
the extent the reported information is contained in or related to
examination reports.
Current Actions: The Board is proposing to automate non-merger-
related adjustments to member banks' subscriptions to Reserve Bank
capital stock. The Board is also proposing two technical amendments to
Regulation I.
Regulation I currently requires that a member bank apply to adjust
its stock subscription at least annually and
[[Page 19156]]
sometimes quarterly. A member bank determines its required stock
subscription based on its capital and surplus (or total deposit
liabilities for a mutual savings bank) as reported in the member bank's
most recent Call Report.
The Reserve Banks are developing software that will automatically
pull the information needed to calculate member banks' required stock
subscriptions from Call Reports. Accordingly, the Board is proposing
amendments to section 209.4 that would automate non-merger-related
stock adjustments. The Board is also proposing amendments to Sec.
209.3(d) that would require a surviving stockholder to apply to adjust
its stock subscription before merging with another bank. Consistent
with these proposed changes to Regulation I, the Board is proposing to
eliminate the requirement that member banks routinely submit FR 2056
reporting forms to adjust their stock subscriptions. The Board is
proposing to amend the FR 2056 reporting form to clarify that the form
should be filed only by a surviving member bank that merges or
consolidates with another bank.
C. Plain Language
Section 722 of the Gramm-Leach Bliley Act requires the Board to use
plain language in all proposed and final rules published after January
1, 2000. The Board invites your comments on how to make this proposed
rule easier to understand. For example:
Has the Board organized the material to suit your needs?
If not, how could this material be better organized?
Are the requirements in the proposed rule clearly stated?
If not, how could the proposed rule be more clearly stated?
Does the proposed rule contain language or jargon that is
not clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the proposed rule easier to
understand? If so, what changes to the format would make the proposed
rule easier to understand?
What else could the Board do to make the regulation easier
to understand?
List of Subjects in 12 CFR Part 209
Banks and banking, Federal Reserve System, Reporting and
recordkeeping requirements, Securities.
Authority and Issuance
For the reasons set forth in the preamble, the Board proposes to
amend Regulation I, 12 CFR part 209, as follows:
PART 209--FEDERAL RESERVE BANK CAPITAL STOCK (REGULATION I)
0
1. The authority citation for part 209 continues to read as follows:
Authority: 12 U.S.C. 12 U.S.C. 222, 248, 282, 286-288, 289, 321,
323, 327-328, and 466.
0
2. Revise the heading to part 209 as shown above.
0
3. Amend Sec. 209.1 by revising paragraphs (c) and (d)(3) to read as
follows.
Sec. 209.1 Authority, purpose, scope, and definitions.
* * * * *
(c) Scope. This part applies to member banks of the Federal Reserve
System, to national banks in process of organization, and to state
banks applying for membership. National banks and locally-incorporated
banks located in United States dependencies and possessions are
eligible (with the consent of the Board) but not required to apply for
membership under section 19(h) of the Federal Reserve Act, 12 U.S.C.
466.\1\
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\1\ A bank located in the Virgin Islands or Puerto Rico should
communicate with the Federal Reserve Bank of New York regarding
applications for membership under the provisions of Sec. 19(h) of
the Federal Reserve Act. A bank located in Guam, American Samoa, or
the Northern Mariana Islands should communicate with the Federal
Reserve Bank of San Francisco regarding applications for membership
under the provisions of Sec. 19(h) of the Federal Reserve Act.
(d) * * *
(3) Total consolidated assets means the total assets on the
stockholder's balance sheet as reported by the stockholder on its
Consolidated Report of Condition and Income (Call Report) as of the
most recent December 31, except in the case of (i) a new member ``total
consolidated assets'' means (until the next December 31 Call Report
becomes available) the total consolidated assets of the new member at
the time of its application for capital stock and (ii) a surviving
stockholder after a merger ``total consolidated assets'' means (until
the next December 31 Call Report becomes available) the total
consolidated assets reported by that stockholder pursuant to Sec.
209.3(d)(5) of this part.
0
4. Amend Sec. 209.3 by:
0
a. Revising the section heading;
0
b. Revising paragraph (a);
0
c. Revising the introductory text of paragraph (d), redesignating
paragraphs (d)(1), (2) and (3) as paragraphs (d)(2), (3), and (5),
adding new paragraphs (d)(1) and (4), and revising paragraph (d)(5).
The revisions and additions to read as follows:
Sec. 209.3 Cancellation of Reserve Bank stock; mergers involving
member banks.
(a) Application for cancellation. Any bank that desires to withdraw
from membership in the Federal Reserve System (including a national
bank that wants to convert into a State nonmember bank), voluntarily
liquidates or ceases business, is merged or consolidated into a
nonmember bank, or is involuntarily liquidated by a receiver or
conservator or otherwise, shall promptly file with its Reserve Bank an
application for cancellation of all its Reserve Bank stock (or
withdrawal of its deposit, as the case may be) and payment therefor in
accordance with Sec. 209.4.
* * * * *
(d) Exchange of stock on merger or change in location; stock
adjustment upon merger with a nonmember bank; reporting of total
consolidated assets following merger.
(1) Applications.
(i) Before a merger or consolidation of member banks, the
nonsurviving member bank shall file an application with the appropriate
Reserve Bank to cancel its shares of Reserve Bank stock (or in the case
of a mutual savings bank not authorized to purchase Reserve Bank stock,
shall file an application to transfer its deposit to the account of the
surviving bank) and the surviving member bank shall file an application
with the appropriate Reserve Bank for issue of a corresponding number
of shares of Reserve Bank stock (or in the case of a mutual savings
bank not authorized to purchase Reserve Bank stock, shall file an
application to increase its deposit obligation).
(ii) Before a merger or consolidation of a member bank and a
nonmember bank, a surviving member bank shall file an application with
the appropriate Reserve Bank to adjust its Reserve Bank capital stock
subscription to equal six percent of the member bank's anticipated
post-merger capital and surplus, or, in the case of member bank that is
a mutual savings bank, six-tenths of 1 percent of the member bank's
anticipated post-merger total deposit liabilities. A mutual savings
bank not authorized to purchase Reserve Bank stock shall file an
application to adjust its deposit obligation in a like manner.
* * * * *
(4) Merger with a nonmember bank. Upon a merger or consolidation of
a member bank and a nonmember bank, the Reserve Bank will adjust the
[[Page 19157]]
surviving member bank's stock subscription to equal six percent of the
member bank's capital and surplus, or, in the case of a member bank
that is a mutual savings bank, six-tenths of 1 percent of the member
bank's total deposit liabilities. If a mutual savings bank has a
deposit with the appropriate Reserve Bank in lieu of Reserve Bank
capital stock, its deposit obligation shall be adjusted in a like
manner.
(5) Statement of total consolidated assets. When a member bank
merges or consolidates with another bank and the surviving bank remains
a Reserve Bank stockholder, the surviving stockholder must report
whether its total consolidated assets exceed $10,785,000,000 in the
application described in paragraph (d)(1) of this section.
* * * * *
0
5. Amend Sec. 209.4 by:
0
a. Revising paragraphs (a) and (b);
0
b. Revising the introductory text of paragraph (c)(1), redesignating
paragraphs (c)(2) and (3) as paragraphs (c)(3) and (4), and adding a
new paragraph (c)(2); and
0
c. Revising the introductory text of paragraph (d)(1).
The revisions and addition read as follows:
Sec. 209.4 Amounts and payments for subscriptions and cancellations;
timing and rate of dividends.
(a) Amount of subscription. The total subscription of a member bank
(other than a mutual savings bank) shall equal six percent of its
capital and surplus as shown on its most recent Call Report. After a
member bank files a Call Report, the appropriate Reserve Bank will
adjust the member bank's Reserve Bank capital stock subscription to
equal six percent of the member bank's capital and surplus.
(b) Mutual savings banks. The total subscription of a member bank
that is a mutual savings bank shall equal six-tenths of 1 percent of
its total deposit liabilities as shown on its most recent Call Report.
After a member bank that is a mutual savings bank files a Call Report,
the appropriate Reserve Bank will adjust the member bank's Reserve Bank
capital stock subscription to equal six-tenths of 1 percent of the
member bank's total deposit liabilities. If a mutual savings bank has a
deposit with the appropriate Reserve Bank in lieu of Reserve Bank
capital stock, its deposit obligation shall be adjusted in a like
manner.
(c) Payment for subscriptions. (1) When a Reserve Bank issues
capital stock to a member bank (or accepts a deposit in lieu thereof),
the member bank shall pay the Reserve Bank--
* * * * *
(2) A Reserve Bank shall obtain settlement for the payment
described in paragraph (c)(1) of this section by debit to an account on
the Reserve Bank's books or other form of settlement to which the
Reserve Bank agrees.
* * * * *
(d) Payment for cancellations. (1) When a Reserve Bank cancels
Reserve Bank capital stock of a member bank, or (in the case of
involuntary termination of membership) upon the effective date of
cancellation specified in Sec. 209.3(c)(3), the Reserve Bank shall--
* * * * *
By order of the Board of Governors of the Federal Reserve
System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2021-07477 Filed 4-12-21; 8:45 am]
BILLING CODE P
