Federal Deposit Insurance Corporation August 2, 2005 – Federal Register Recent Federal Regulation Documents
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Community Reinvestment Act Regulations
The OCC, Board, and FDIC (collectively, ``federal banking agencies'' or ``the agencies'') are issuing this joint final rule that revises certain provisions of our rules implementing the Community Reinvestment Act (CRA). The agencies are taking this action after carefully considering public comments received in response to the joint notice of proposed rulemaking published on March 11, 2005 (the ``March proposal''). The joint final rule addresses regulatory burden imposed on small banks with an asset size between $250 million and $1 billion by exempting them from CRA loan data collection and reporting obligations. It also exempts such banks from the large bank lending, investment, and service tests, and makes them eligible for evaluation under the small bank lending test and a flexible new community development test. Holding company affiliation is no longer a factor in determining which CRA evaluation standards apply to a bank. In addition, the joint final rule revises the term ``community development'' to include activities to revitalize and stabilize distressed or underserved rural areas and designated disaster areas. Finally, it adopts without change the amendments to the regulations to address the impact on a bank's CRA rating of evidence of discrimination or other credit practices that violate an applicable law, rule, or regulation.
Annual Independent Audits and Reporting Requirements
The FDIC is proposing to amend its regulations concerning annual independent audits and reporting requirements, which implement Section 36 of the Federal Deposit Insurance Act (FDI Act). Section 36 and the FDIC's implementing regulations are generally intended to facilitate early identification of problems in financial management at insured depository institutions with total assets above a certain threshold (currently $500 million) through annual independent audits, assessments of the effectiveness of internal control over financial reporting and compliance with designated laws and regulations, and related reporting requirements. Section 36 also includes requirements for audit committees at these insured depository institutions. The FDIC's amendments would raise the asset size threshold from $500 million to $1 billion for internal control assessments by management and external auditors and for the members of the audit committee, who must be outside directors, to be independent of management. As required by section 36, the FDIC has consulted with the other Federal banking agencies. These amendments are proposed to take effect December 31, 2005.
Securities of Nonmember Insured Banks
The FDIC is adopting a final rule amending part 335 of its regulations with one nonsubstantive change from the interim final rule published on March 31, 2005, in the Federal Register (see 70 FR 16398). The final rule adopts amendments to the FDIC's securities disclosure regulations applicable to state nonmember banks with securities required to be registered under section 12 of the Securities Exchange Act of 1934 (Exchange Act). The final rule reflects amendments to the Securities Exchange Act of 1934 made by the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), and accommodates certain operational changes within the FDIC. The rule also incorporates through cross reference changes in regulations adopted by the Securities Exchange and Commission (SEC) into the provisions of the FDIC's securities regulations. Incorporation by reference will assure that the FDIC's regulations remain substantially similar to the SEC's regulations, as required by law.
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