[Federal Register Volume 64, Number 220 (Tuesday, November 16, 1999)]
[Rules and Regulations]
[Pages 62096-62103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29830]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 308 and 330
RIN 3064-AC30
Technical Amendments to FDIC Regulations Relating to Rules of
Practice and Procedure and Deposit Insurance Coverage
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rule.
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SUMMARY: The FDIC is amending various sections of its Local Rules of
Practice and Procedure (Local Rules) governing administrative
enforcement proceedings. The amendments are generally technical in
nature, and are necessary to ensure that the rules are consistent with
statutory provisions and procedural changes that have occurred since
the rules were first adopted. The FDIC also is making a conforming,
technical amendment that was inadvertently omitted from recent
revisions to the FDIC's deposit insurance regulations.
EFFECTIVE DATE: November 16, 1999.
FOR FURTHER INFORMATION CONTACT: On the Part 308 amendments, Andrea
Winkler, Counsel, Legal Division (202) 898-3727; on the Part 330
amendment, Joseph A. DiNuzzo, Counsel, Legal Division (202) 898-7349,
Federal Deposit Insurance Corporation, 550 17th Street, N.W.,
Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION:
I. Part 308 Amendments
A. Background
On August 9, 1991, the federal banking agencies \1\ published one
set of final uniform rules and procedures (Uniform Rules) for formal
administrative enforcement hearings required to be conducted on the
record under the Administrative Procedure Act (APA)(5 U.S.C. 554-
557).\2\ In addition, each agency published separate ``Local Rules''
applicable to that agency to supplement the Uniform Rules in order to
address some or all of the following: formal enforcement actions not
within the scope of the Uniform Rules, informal actions which are not
subject to the APA, and procedures to supplement or facilitate the
processing of administrative enforcement actions within the FDIC and
the other agencies.
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\1\ The agencies were the FDIC, Office of the Comptroller of the
Currency, Board of Governors of the Federal Reserve System, Office
of Thrift Supervision and National Credit Union Administration.
\2\ 56 FR 37975 (1991) (amended at 61 FR 20347 (1996)). The
uniform rules, which are contained in subpart A of part 308 ((12 CFR
part 308, subpart A), are intended to standardize procedures for
actions common to at least four of the five Agencies.
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B. Summary of the Amendments
The FDIC is amending various subparts of its Local Rules as
described below.
Authority. The section listing the authority for the Uniform Rules
and Local Rules has been amended to incorporate references to the cross
guaranty provisions of the Federal Deposit Insurance Act (FDIA) (12
U.S.C. 1815(e)), which were initially omitted by technical oversight,
and to the prompt corrective action and safety and
[[Page 62097]]
soundness provisions of the FDIA (12 U.S.C. 1831o and 1831p-1), which
were enacted after the Local Rules were first promulgated.
Subpart B--General Rules of Procedure
Section 308.101. As presently written, Sec. 308.101, ``Scope of
Local Rules,'' makes clear that the rules contained in subpart A,
``Uniform Rules,'' and subpart B of the Local Rules, ``General Rules of
Procedure,'' do not apply to subparts D through P of part 308 unless
specifically provided. Since 1991, three additional subparts have been
added--subpart Q, which pertains to prompt corrective action, was added
in 1992 (57 FR 48426); subpart R, which pertains to safety and
soundness compliance plans, was added in 1995 (60 FR 35684); and
subpart S, which pertains to bank clearing agencies, was added in 1996
(61 FR 48403). Therefore, a technical amendment is made to include a
reference to those subparts to indicate that subparts A and B do not
apply to subparts D through S of part 308 unless specifically provided.
Section 308.102. Section 308.102 sets forth the authority of the
Board of Directors and Executive Secretary. Since the enactment of the
Local Rules, certain authority to act upon routine and procedural
matters in enforcement cases has been delegated by Resolution of the
Board of Directors to the Executive Secretary, Deputy Executive
Secretary and or the Assistant Executive Secretary (Operations). In
exercising such delegated authority, those persons can only act upon
the advice and recommendations of the Deputy General Counsel for
Litigation, or, in his absence, the Assistant General Counsel, Trial
Litigation Section.
The delegation resulted from the fact that there are a variety of
procedural matters that arise in enforcement cases that are of a
technical legal nature, subject to well-settled case law and that do
not involve important policy issues. Thus, the authority to issue
rulings in the context of sections 7(j), 8, 18(j), 19, 32 and 38 of the
FDIA (12 U.S.C. 1817(j), 1818, 1828(j), 1829, 1831i and 1831o
concerning denials of requests for private hearing, interlocutory
appeals; stays pending judicial review; reopenings of the record and/or
remands of the record to the administrative law judge; supplementation
of the evidence in the record; all remands from the courts of appeals
not involving substantive issues; extensions of stays of orders
terminating deposit insurance; and all matters, including final
decisions, in proceedings under section 8(g) of the FDIA (12 U.S.C.
1818(g)) have been delegated.
The authority to act on such matters was delegated in order to
allow the Board to concentrate its limited available time upon
important policy matters. A delegation, which initially was a more
limited delegation concerning interlocutory and procedural matters,
first became effective in 1992, and was later expanded in 1997, because
it worked well in allowing the FDIC to operate more efficiently.
Therefore, Sec. 308.102 has been revised to reflect the current
delegations and practice.
Subpart C--Rules of Practice Before the FDIC and Standards of
Conduct
Section 308.109. This section, which pertains to suspension and
disbarment, authorizes summary suspension from practice in a particular
FDIC matter based upon contemptuous conduct in that matter. Section
308.109(b) of the regulations provides for mandatory and automatic
suspension and disbarment of attorneys under certain circumstances and
gives the Board of Directors discretion to suspend and disbar under
other circumstances. The current rule is somewhat confusing insofar as
it provides simply that an application to be reinstated may be filed at
any time not less than one year after the applicant's most recent
application. The FDIC intends that once suspended or disbarred from
practice before the FDIC by the Board, a counsel may not make an
application for reinstatement for at least one year, and thereafter,
may make a new request for reinstatement no sooner than one year after
the counsel's most recent reinstatement application. A technical,
clarifying amendment reflecting this intent is made.
An applicant for reinstatement under either the discretionary or
mandatory suspension and disbarment provisions may, in the Board's sole
discretion, be afforded a hearing. Section 308.109(c) provides that
hearings conducted pursuant to this section shall be handled in the
same manner as other hearings under the Uniform Rules, except that in
proceedings to terminate an existing FDIC suspension or disbarment
order, the person seeking the termination shall bear the burden of
going forward with the application and with proof, and the Board of
Directors may limit any such hearings to written submissions. A
clarifying amendment is proposed to make explicit that the applicant
has the burden of proof with regard to the grounds supporting the
application.
Subpart G--Rules and Procedures Applicable to Proceedings Relating
to Cease-and-Desist Orders
Section 308.127. This section defines the scope of the Uniform and
Local Rules as they pertain to cease-and-desist proceedings under
section 8(b) of the FDIA (12 U.S.C. 1818(b)). Paragraph (a) contains a
statement regarding the applicability of those rules to temporary
cease-and-desist proceedings under section 8(c) of the FDIA (12 U.S.C.
1818(c)). Insofar as Sec. 308.131 pertains specifically to temporary
cease-and-desist orders, and paragraph (c) of that section indicates
that the Uniform Rules and subpart B of the Local Rules do not apply to
the issuance of temporary cease-and-desist orders pursuant to section
8(c) of the FDIA, that same language in Sec. 308.127(a) is redundant,
and a technical amendment deleting that phrase in Sec. 308.127(a) has
been made.
Subpart H--Rules and Procedures Applicable to Proceedings Relating
to Assessment and Collection of Civil Money Penalties for Violation
of Cease-and-Desist Orders and of Certain Federal Statutes,
Including Call Report Penalties
Section 308.132. The FDIC is making a technical correction to
Sec. 308.132(c)(3) which inadvertently refers to the Debt Collection
Act rather than the appropriate title of that law which is the Debt
Collection Improvement Act.
Subpart K--Procedures Applicable to Investigations Pursuant to
Section 10(c) of the FDIA
Section 308.145. A technical amendment is made to correct the
citation to Sec. 303.9, which is now codified at Sec. 303.272.
Section 308.148. A technical amendment is made to paragraph (b) to
correct the citation to Sec. 308.6, which is incorrectly cited as
Sec. 308.06. A similar amendment is made to paragraph (d) to correct
the citation to Sec. 308.8, which is incorrectly cited as Sec. 308.08.
Subpart L--Procedures and Standards Applicable to a Notice of
Change in Senior Executive Officer or Director Pursuant to Section
32 of the FDIA
Section 308.151. Subpart L governs proceedings for the disapproval
of candidates for senior executive officer and director. Section 2208
of the Economic Growth and Regulatory Paperwork Reduction Act of 1996
(Pub. L. 104-208) amended the circumstances that require an insured
state nonmember bank to notify the FDIC of a proposed addition or
employment of a director or senior executive officer. After 1996,
[[Page 62098]]
there is no longer a requirement that a bank which has been chartered
less than two years or which has undergone a change in control within
the preceding two years submit such a notice. Instead, the law now
requires that a bank must file a prior notice where (i) it is not in
compliance with all minimum capital requirements applicable to it as
determined by the FDIC on the basis of such institution's most recent
report of condition or report of examination or inspection; (ii) the
bank is in a troubled condition; or (iii) the FDIC determines, in
connection with the review of a plan required under section 38 of the
FDIA (12 U.S.C. 1831o) or otherwise, that such prior notice is
appropriate. Section 308.151(a) has been revised to incorporate these
statutory changes.
Sections 308.152, 308.153 and 308.155. Technical amendments to
correct grammatical errors or incorrect citations to other parts of the
regulations are made.
Subpart M--Procedures and Standards Applicable to an Application
Pursuant to Section 19 of the FDIA
Subpart M governs procedures for FDIC approval of applications
filed pursuant to section 19 of the FDIA (12 U.S.C. 1829) by persons
convicted of certain crimes who wish to participate in banking. This
subpart has been revised in order to comply with the changes to section
19 made by the Housing and Community Development Act (Pub. L. 102-550)
which added convictions for money laundering to the list of covered
crimes for which an application must be filed, and to make this subpart
consistent with current policy and practice, especially in light of the
FDIC's Statement of Policy on Section 19 of the FDI Act which became
effective December 1, 1998 (63 FR 66177 (1998)).
Sections 308.156 and 308.157. These sections pertain to the scope
of the regulation and relevant considerations for granting
applications. Section 308.156 has been amended to reflect that under
current policy and consistent with the revised regulations, an insured
depository institution may file an application on behalf of an
individual, or in certain cases, an individual may directly file an
application. Both sections have been amended to include convictions for
money laundering consistent with the statutory language of section 19.
Section 308.158. Section 308.158(a) of subpart M directs that
applications be filed with the appropriate FDIC regional office, but it
is silent as to who must file the application. Longstanding FDIC policy
has been that an application must be filed by the insured depository
institution at which the convicted individual intends to be employed or
otherwise participate, or which the individual intends to own or
control. Two recent policy changes affect filing requirements. The FDIC
has adopted an approach of granting blanket approval, and not requiring
an application, in cases in which an individual meets the criteria of
the de minimis exception set forth in the FDIC's Statement of Policy on
Section 19 of the FDI Act (63 FR 66177 (1998)). In addition, the FDIC
will consider waivers of the institution filing requirement, on a case-
by-case basis, in instances in which an individual can show substantial
good cause why an application should be granted.
Therefore, paragraph (a) has been amended to clarify that an
institution must file the application unless a waiver is granted for
substantial good cause shown which allows the individual to file, or
unless no application is required because the de minimis exception
applies. Paragraph (b) has been amended to clarify that the prohibition
pursuant to section 19 shall continue until the individual has been
reinstated by the Board of Directors or its designee for good cause
shown. In addition, a new paragraph (c) has been added to reflect the
current policy and practice regarding the filing requirements and
delegations of authority for waiver applications.
Section 308.160. This section pertains to the hearing procedure in
section 19 cases. A technical correction has been made to change the
reference to 308.06 to 308.6.
Subpart N--Rules and Procedures Applicable to Proceedings Relating
to Suspension, Removal, and Prohibition Where a Felony Is Charged
Subpart N governs proceedings for suspension, removal, and
prohibition pursuant to section 8(g) of the FDIA (12 U.S.C. 1818(g))
where a felony is charged. The changes in subpart N were made for
purposes of clarity and to reflect the amendments to section 8(g) made
by the Housing and Community Development Act of 1992 (1992
Amendments)(Pub. L. 102-550).
Section 308.161. This section sets forth the scope of the rules as
they apply to suspension, removal and prohibition proceedings. Where an
institution-affiliated party is charged in any information, indictment,
or complaint with the commission of, or participation in, a crime
involving dishonesty or breach of trust punishable by imprisonment
exceeding one year under state or federal law, section 8(g) of the FDIA
allows the FDIC to suspend that individual or to prohibit that party,
absent prior written FDIC consent, from further participation in the
conduct of the affairs of the depository institution, if his or her
continued service or participation poses a threat to the interests of
the depository institution's depositors or threatens to impair public
confidence in the depository institution. The 1992 Amendments added, as
a cause justifying suspension, an individual being charged with the
commission of a criminal violation involving money laundering (section
1956, 1957, or 1960 of Title 18) or violations of the Bank Secrecy Act
(section 5322 or 5324 of Title 31).
In addition, where a conviction or an agreement to enter a pre-
trial diversion or other similar program has been entered against an
institution-affiliated party in connection with a crime involving
dishonesty or breach of trust punishable by imprisonment exceeding one
year under state or federal law, and the conviction is not subject to
further appellate review, the FDIC may remove or prohibit the party,
absent prior FDIC consent, from further participation in the conduct of
the affairs of the depository institution, if continued service or
participation by such party poses a threat to the interests of the
depository institution's depositors or threatens to impair public
confidence in the depository institution. The 1992 Amendments added as
a mandatory cause of removal or prohibition, the entry of a judgment of
conviction or an agreement to enter a pre-trial diversion or other
similar program against such party in connection with a criminal
violation of section 1956, 1957, or 1960 of Title 18 or section 5322 or
5324 of Title 31. Amendments to this section reflect these statutory
changes.
Section 308.162. This section sets forth relevant considerations
for the issuance of a suspension, removal or prohibition. Consistent
with the statutory changes described above, whether the alleged offense
is a criminal violation of section 1956, 1957, or 1960 of Title 18 or
section 5322 or 5324 of Title 31 has been added as a factor.
Section 308.163. This section pertains to orders of removal or
prohibition. Amendments have been proposed to incorporate the 1992
Amendments which direct that an order be entered where a final judgment
of conviction is entered against the individual for a criminal
violation of section 1956, 1957, or 1960 of Title 18 or section 5322 or
5324 of Title 31.
Section 308.164. A technical amendment has been made to correct the
citation to Sec. 308.6 of the Uniform Rules.
[[Page 62099]]
Subpart P--Rules and Procedures Relating to the Recovery of
Attorney Fees and Other Expenses
Subpart P governs proceedings relating to the recovery of attorney
fees and other expenses under the Equal Access to Justice Act (EAJA) (5
U.S.C. 504). The revisions to this subpart are made to conform to
statutory changes made by the Small Business Regulatory Enforcement
Fairness Act (1996 Amendments) (Pub. L. 104-121, 110 Stat. 857 (1996)).
The EAJA allows individuals and small businesses who have been sued by
the government to recover their attorneys fees and costs if they
prevailed in the suit, unless the agency's position was substantially
justified or special circumstances make an award unjust. The 1996
Amendments added a new grounds for recovery in an adversary
adjudication arising from an agency action to enforce a party's
compliance with a statutory or regulatory requirement where the demand
by the agency is substantially in excess of the decision of the
adjudicative officer and is unreasonable when compared with such
decision under the facts or circumstances of the case. A party may seek
such an award unless the party has committed a willful violation of law
or otherwise acted in bad faith, or special circumstances make an award
unjust. Fees and expenses awarded under the foregoing grounds shall be
paid only as a consequence of appropriations paid in advance. In
addition, the 1996 Amendments added ``small entities'' to the
applicants that are eligible for an award pursuant to the new
provisions and increased the maximum amount of attorneys fees for all
EAJA actions from $75.00 per hour to $125.00 per hour.
Section 308.170. This section pertains to the filing, content, and
service of documents. Proposed amendments have been made to clarify
filing requirements and to include in this section a reference to
applications concerning excessive demands.
Section 308.171. This section pertains to responses to
applications. It has been revised to incorporate references to answers
and replies in applications involving excessive demands.
Section 308.172. This section addresses the eligibility of
applicants. It has been amended to add a small entity as defined in 5
U.S.C. 601 as an eligible applicant for awards based upon excessive
demands.
Section 308.174. This section sets the standards for awards. It has
been amended to reference applications based upon excessive awards.
Section 308.175. This section addresses the measure of awards and
has been amended to change references to the maximum amount of
attorneys fees that may be awarded in an EAJA claim from $75.00 per
hour to $125.00 per hour, and to include a statement incorporating the
1996 Amendments that fees and expenses related to defending against an
excessive demand shall be paid only as a consequence of appropriations
paid in advance.
Section 308.176. This section contains guidelines for the contents
of applications for awards. It has been amended to include requirements
relevant to an application concerning an excessive award.
Section 308.179. This section pertains to settlement. It has been
amended to indicate that while a statement of intent to negotiate a
settlement should be filed with the Executive Secretary, a copy of a
statement should also be filed with the administrative law judge. This
is to ensure that, in cases in which an answer has not yet been filed,
the administrative law judge will be aware of potential settlement. In
addition, the time within which an answer must be filed pending
settlement negotiations has been extended from 20 to 30 days. This time
frame better reflects the timetable within which settlements are able
to be approved.
II. Part 330 Amendment
Effective April 1, 1999, the FDIC revised its deposit insurance
rules on the coverage of joint accounts and payable-on-death accounts
(64 FR 15653, April 1, 1999). In amending the joint account provisions,
however, the FDIC failed to revise Sec. 330.9(a) of the FDIC's
regulations (12 CFR 330.9(a)) to indicate that joint accounts comprised
of community property funds would continue to be treated as any other
type of qualifying joint account. The final rule makes this technical,
conforming amendment to Sec. 330.9(a).
III. Exemption From Public Notice and Comment
Chapter 6 of Title 5 of the United States Code which pertains to
``The Analysis of Regulatory Functions'' does not apply to the final
rule. The revisions to part 308 and part 330 do not constitute a
``rule'' for which the FDIC is required to publish a general notice of
proposed rulemaking under section 553(b) of Title 5 of the United
States Code. This is because the final rule contains only
clarifications and technical changes intended to bring the agency's
rules of practice and procedure and deposit insurance rules into
conformity with statutory changes or current agency practices and
procedures. Thus, the FDIC has determined for good cause that public
notice and comment are unnecessary and that the rule should be
published in final form.
IV. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires an
agency to publish an initial regulatory flexibility analysis, except to
the extent provided in 5 U.S.C. 605(b), whenever the agency is required
to publish a general notice of proposed rulemaking for a proposed rule.
For the reasons discussed above, the FDIC is publishing this rule as a
final rule, for which no publication of a general notice of proposed
rulemaking is necessary. No regulatory flexibility analysis is
required.
V. Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget has determined that the final
rule is not a ``major rule'' within the meaning of the relevant
sections of the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA) (5 U.S.C. 801 et seq.). As required by SBREFA, the FDIC
will file the appropriate reports with Congress and the General
Accounting Office so that the final rule may be reviewed.
VI. Paperwork Reduction Act
No collections of information pursuant to the Paperwork Reduction
Act of 1980 (44 U.S.C. 3501 et seq.) are contained in this rule.
Consequently, no information has been submitted to the Office of
Management and Budget for review.
VII. Assessment of Impact of Federal Regulation on Families
The FDIC has determined that this regulation will not affect family
well-being within the meaning of section 654 of the Treasury Department
Appropriations Act of 1999, enacted as part of the Omnibus Consolidated
and Emergency Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat.
2681).
VIII. Effective Date
The APA (5 U.S.C. 551 et seq.) provides that regulations shall
become effective thirty (30) days after their publication in the
Federal Register (5 U.S.C. 553). One exception to this requirement is
for a finding of ``good cause''(Id. at 553(d)). For the final rule, the
Board finds ``good cause'' to make the amendments effective immediately
upon publication in the Federal Register because the amendments are
[[Page 62100]]
technical and conforming to pre-existing statutory and regulatory
requirements.
IX. Authority for the Regulation
This regulation is authorized by the FDIC's general rulemaking
authority and pursuant to its fundamental responsibilities to ensure
the safety and soundness of insured depository institutions.
Specifically, 12 U.S.C. 1819(a) Tenth provides the FDIC with general
authority to issue such rules and regulations as it deems necessary to
carry out the statutory mandates of the Federal Deposit Insurance Act
and other laws that the FDIC is charged with administering or
enforcing.
List of Subjects
12 CFR Part 308
Administrative practice and procedure, Banks, banking, Claims,
Crime, Equal access to justice, Lawyers, Penalties, State nonmember
banks.
12 CFR Part 330
Bank deposit insurance, Banks, banking, Reporting and recordkeeping
requirements, Savings and loan associations, Trusts and trustees.
Adoption of Technical Amendments
For the reasons set forth in the preamble, the FDIC hereby amends
chapter III of title 12 of the Code of Federal Regulations as set forth
below:
PART 308--RULES OF PRACTICE AND PROCEDURE
1. The authority citation for part 308 is revised to read as
follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505,
1815(e), 1817, 1818, 1820, 1828, 1829, 1829b, 1831i, 1831o, 1831p-1,
1832(c), 1884(b), 1972, 3102, 3108(a), 3349, 3909, 4717; 15 U.S.C.
78 (h) and (i), 78o-4(c), 78o-5, 78q-1, 78s 78u, 78u-2, 78u-3 and
78w; 28 U.S.C. 2461 note; 31 U.S.C. 330, 5321; 42 U.S.C. 4012a; sec.
31001(s), Pub. L. 104-134, 110 Stat. 1321-358.
2. In Sec. 308.101, paragraph (b) is revised to read as follows:
Sec. 308.101 Scope of Local Rules.
* * * * *
(b) Except as otherwise specifically provided, the Uniform Rules
and subpart B of the Local Rules shall not apply to subparts D through
S of the Local Rules.
* * * * *
3. In Sec. 308.102, paragraph (b) is revised to read as follows:
Sec. 308.102 Authority of Board of Directors and Executive Secretary.
* * * * *
(b) The Executive Secretary. (1) When no administrative law judge
has jurisdiction over a proceeding, the Executive Secretary may act in
place of, and with the same authority as, an administrative law judge,
except that the Executive Secretary may not hear a case on the merits
or make a recommended decision on the merits to the Board of Directors.
(2) Pursuant to authority delegated by the Board of Directors, the
Executive Secretary, Deputy Executive Secretary or the Assistant
Executive Secretary (Operations), upon the advice and recommendation of
the Deputy General Counsel for Litigation or, in his absence, the
Assistant General Counsel, Trial Litigation Section, may issue rulings
in proceedings under sections 7(j), 8, 18(j), 19, 32 and 38 of the FDIA
(12 USC 1817(j), 1818, 1828(j), 1829, 1831i and 1831o concerning:
(i) Denials of requests for private hearing;
(ii) Interlocutory appeals;
(iii) Stays pending judicial review;
(iv) Reopenings of the record and/or remands of the record to the
ALJ;
(v) Supplementation of the evidence in the record;
(vi) All remands from the courts of appeals not involving
substantive issues;
(vii) Extensions of stays of orders terminating deposit insurance;
and
(viii) All matters, including final decisions, in proceedings under
section 8(g) of the FDIA (12 U.S.C. 1818(g)).
* * * * *
4. In Sec. 308.109, paragraphs (b)(3) and (c) are revised to read
as follows:
Sec. 308.109 Suspension and disbarment.
* * * * *
(b) * * *
(3) A suspension or disbarment under paragraph (b)(1) of this
section from practice before the FDIC shall continue until the
applicant has been reinstated by the Board of Directors for good cause
shown, provided that any person suspended or disbarred under paragraph
(b)(1) of this section shall be automatically reinstated by the
Executive Secretary, upon appropriate application, if all the grounds
for suspension or disbarment under paragraph (b)(1) of this section are
subsequently removed by a reversal of the conviction (or the passage of
time since the conviction) or termination of the underlying suspension
or disbarment. An application for reinstatement on any other grounds by
any person suspended or disbarred under paragraph (b)(1) of this
section may be filed no sooner than one year after the suspension or
disbarment, and thereafter, a new request for reinstatement may be made
no sooner than one year after the counsel's most recent reinstatement
application. An applicant for reinstatement under this provision may,
in the Board of Directors' sole discretion, be afforded a hearing.
(c) Hearings under this section. Hearings conducted under this
section shall be conducted in substantially the same manner as other
hearings under the Uniform Rules, provided that in proceedings to
terminate an existing FDIC suspension or disbarment order, the person
seeking the termination of the order shall bear the burden of going
forward with an application and with the burden of proving the grounds
supporting the application, and that the Board of Directors may, in its
sole discretion, direct that any proceeding to terminate an existing
suspension or disbarment by the FDIC be limited to written submissions.
* * * * *
Sec. 308.127 [Amended]
6. In Sec. 308.127, paragraph (a) is amended by adding a period
after ``12 U.S.C. 1818(b)'', and removing the words ``; provided that
the provisions of the Uniform Rules and subpart B of the Local Rules
shall not apply to the issuance of temporary cease-and-desist orders
pursuant to section 8(c) of the FDIA (12 U.S.C. 1818(c))''.
Sec. 308.132 [Amended]
7. In Sec. 308.132, the paragraph (c)(3) heading and introductory
text are amended by removing the words ``Debt Collection Act'' and
adding the words ``Debt Collection Improvement Act''.
Sec. 308.145 [Amended]
8. The first sentence of Sec. 308.145 is amended by removing ``
Sec. 303.9'' and adding in its place ``Sec. 303.272.''
Sec. 308.148 [Amended]
9. In Sec. 308.148, paragraph (b) is amended by removing
``Sec. 308.06'' and adding in its place ``Sec. 308.6'', and paragraph
(d) is amended by removing ``Sec. 308.08'' and adding in its place
``Sec. 308.8''.
10. Sec. 308.151 is revised to read as follows:
Sec. 308.151 Scope.
The rules and procedures set forth in this subpart shall apply to
the notice filed by a state nonmember bank pursuant to section 32 of
the FDIA (12 U.S.C. 1831i) and Sec. 303.102 of this chapter for the
consent of the FDIC to add or replace an individual on the Board of
Directors, or to employ any
[[Page 62101]]
individual as a senior executive officer, or change the
responsibilities of any individual to a position of senior executive
officer where:
(a) The bank is not in compliance with all minimum capital
requirements applicable to it as determined by the FDIC on the basis of
such institution's most recent report of condition or report of
examination or inspection;
(b) The bank is in a troubled condition as defined in
Sec. 303.101(c) of this chapter; or
(c) The FDIC determines, in connection with the review of a capital
restoration plan required under section 38(e)(2) of the FDIA (12 U.S.C.
1831o(e)(2)) or otherwise, that such prior notice is appropriate.
Sec. 308.152 [Amended]
11. In Sec. 308.152, paragraph (a) is amended by adding the word
``is'' after the word ``notice'', and paragraph (b) is amended by
removing the word ``indicated'' and adding in its place the word
``indicates''.
Sec. 308.153 [Amended]
12. In Sec. 308.153, the section heading is amended by removing
``Sec. 303.14'' and adding in its place ``Sec. 303.103(c)''.
Sec. 308.155 [Amended]
13. In Sec. 308.155, paragraph (c)(2) is amended by removing
``Sec. 308.06'' and adding in its place ``Sec. 308.6.''
Sec. 308.156 [Amended]
14. Sec. 308.156 is amended by removing the words ``and/or an
individual'' and adding in their place the words ``and a person'' and
by adding the words ``or money laundering'' after the word ``trust''.
Sec. 308.157 [Amended]
15. In Sec. 308.157, paragraph (a)(1) is amended by adding the
words ``or money laundering'' after the word ``trust''.
16. Sec. 308.158 is revised to read as follows:
Sec. 308.158 Filing papers and effective date.
(a) Filing with the regional office. Applications pursuant to
section 19 shall be filed by in the appropriate regional office. Unless
a waiver has been granted pursuant to paragraph (c) of this section,
only an insured depository institution may file an application. Persons
meeting the de minimis criteria set forth in the FDIC's Statement of
Policy on Section 19 of the FDIA (63 FR 66177 (1998)) need not file an
application.
(b) Effective date. An application pursuant to section 19 may be
made in writing at any time more than one year after the issuance of a
decision denying an application pursuant to section 19. The removal
and/or prohibition pursuant to section 19 shall continue until the
individual has been reinstated by the Board of Directors or its
designee for good cause shown.
(c) Waiver applications. If an institution does not file an
application regarding an individual, the individual may file a request
for a waiver of the institution filing requirement for section 19 of
the FDIA. Such a waiver application shall be filed with the appropriate
regional office and shall set forth substantial good cause why the
application should be granted. The Director of the Division of
Supervision and, where confirmed in writing by the director, a deputy
director or an associate director may grant or deny applications
requesting waivers of the institution filing requirement. The authority
delegated under this section shall be exercised only upon the
concurrent certification of the General Counsel or his designee that
the action to be taken is not inconsistent with section 19 of the FDIA.
Sec. 308.160 [Amended]
17. In Sec. 308.160, paragraph (c)(2) is amended by removing
``Sec. 308.06'' and adding in its place ``Sec. 308.6''.
18. Sec. 308.161 is revised to read as follows:
Sec. 308.161 Scope.
The rules and procedures set forth in this subpart shall apply to
the following:
(a) Proceedings to suspend an institution-affiliated party of an
insured state nonmember bank, or to prohibit such party from further
participation in the conduct of the affairs of the bank, if continued
service or participation by such party poses a threat to the interests
of the bank's depositors or threatens to impair public confidence in
the depository institution, where the individual is charged in any
state or federal information, indictment, or complaint, with the
commission of, or participation in:
(1) A crime involving dishonesty or breach of trust punishable by
imprisonment exceeding one year under state or federal law; or (2) A
criminal violation of section 1956, 1957, or 1960 of Title 18 or
section 5322 or 5324 of Title 31.
(b) Proceedings to remove from office or to prohibit an
institution-affiliated party from further participation in the conduct
of the affairs of the bank without the consent of the Board of
Directors or its designee where:
(1) A judgment of conviction or an agreement to enter a pre-trial
diversion or other similar program has been entered against such party
in connection with a crime described in paragraph (a)(1) of this
section that is not subject to further appellate review, if continued
service or participation by such party poses a threat to the interests
of the bank's depositors or threatens to impair public confidence in
the depository institution; or
(2) A judgment of conviction or an agreement to enter a pre-trial
diversion or other similar program has been entered against such party
in connection with a crime described in paragraph (a)(2) of this
section.
19. In Sec. 308.162, paragraph (a) is revised to read as follows:
Sec. 308.162 Relevant considerations.
(a)(1) In proceedings under Sec. 308.161 (a) and (b) for a
suspension, removal or prohibition order, the following shall be
considered:
(i) Whether the alleged offense is a crime which is punishable by
imprisonment for a term exceeding one year under state or federal law
and which involves dishonesty or breach of trust; and
(ii) Whether the alleged offense is a criminal violation of section
1956, 1957, or 1960 of Title 18 or section 5322 or 5324 of Title 31;
and
(iii) Whether continued service or participation by the
institution-affiliated party may pose a threat to the interest of the
bank's depositors, or threatens to impair public confidence in the
bank.
* * * * *
20. In Sec. 308.163, paragraph (b) is revised to read as follows:
Sec. 308.163 Notice of suspension, and orders of removal or
prohibition.
* * * * *
(b) Order of removal or prohibition. (1) The Board of Directors or
its designee may issue an order removing or prohibiting from further
participation in the conduct of the affairs of the bank an institution-
affiliated party, when a final judgment of conviction not subject to
further appellate review is entered against the individual for a crime
referred to in Sec. 308.161(a)(1) and continued service or
participation by such party poses a threat to the interests of the
bank's depositors or threatens to impair public confidence in the
depository institution.
(2) An order of removal or prohibition shall be entered if a
judgment of conviction is entered against the individual for a crime
described in Sec. 308.161(a)(ii).
[[Page 62102]]
Sec. 308.164 [Amended]
21. In Sec. 308.164, paragraph (b)(2) is amended by removing
``Sec. 308.06'' and adding in its place ``Sec. 308.6.''
22. In Sec. 308.170, paragraphs (a) and (b) are revised to read as
follows:
Sec. 308.170 Filing, content, and service of documents.
(a) Time to file. An application and any other pleading or document
related to the application shall be filed with the Executive Secretary
within 30 days after service of the final order of the Board of
Directors in disposition of the proceeding whenever:
(1) The applicant seeks an award pursuant to 5 U.S.C. 504(a)(1) as
the prevailing party in the adversary adjudication or in a discrete
significant substantive portion of the proceeding; or
(2) The applicant, in an adversary adjudication arising from an
action to enforce compliance with a statutory or regulatory
requirement, asserts pursuant to 5 U.S.C. 504(a)(4) that the demand by
the FDIC is substantially in excess of the decision of the
administrative law judge and is unreasonable when compared with such
decision under the facts and circumstances of the case.
(b) Content. The application and related documents shall conform to
the requirements of Sec. 308.10(b) and (c) of the Uniform Rules.
* * * * *
23. In Sec. 308.171, paragraph (b) is revised to read as follows:
Sec. 308.171 Responses to application.
* * * * *
(b) Reply to answer. The applicant may file a reply with regard to
an application filed pursuant to 5 U.S.C. 504 (a)(1), if the FDIC has
addressed in its answer any of the following issues: that the position
of the FDIC was substantially justified, that the applicant unduly
protracted the proceedings, or that special circumstances make an award
unjust. The applicant may file a reply with regard to an application
filed pursuant to 5 U.S.C. 504 (a)(4), if the FDIC has addressed in its
answer any of the following issues: that the applicant has committed a
willful violation of law or otherwise acted in bad faith, that the
FDIC's demand is reasonable when compared to the decision of the
administrative law judge or that special circumstances make an award
unjust. The reply shall be filed within 15 days after service of the
answer. If the reply is based on any alleged facts not already in the
record of the proceeding, the reply shall include either supporting
affidavits or a request for further proceedings under Sec. 308.180.
* * * * *
24. In Sec. 308.172, paragraph (b) is amended by adding a new
paragraph (b)(3) to read as follows:
Sec. 308.172 Eligibility of applicants.
* * * * *
(b) * * *
(3) For purposes of an application filed pursuant to 5 U.S.C.
504(a)(4), a small entity as defined in 5 U.S.C. 601.
* * * * *
25. Sec. 308.174 is revised to read as follows:
Sec. 308.174 Standards for awards.
(a) For applications filed pursuant to 5 U.S.C. 504(a)(1), a
prevailing applicant may receive an award for fees and expenses unless
the position of the FDIC during the proceeding was substantially
justified or special circumstances make the award unjust. An award will
be reduced or denied if the applicant has unduly or unreasonably
protracted the proceedings. Awards for fees and expenses incurred
before the date on which the adversary adjudication was initiated are
allowable if their incurrence was necessary to prepare for the
proceeding.
(b) For applications filed pursuant to 5 U.S.C. 504(a)(4), an
applicant may receive an award unless the demand by the FDIC was
reasonable when compared with the decision of the administrative law
judge, the applicant has committed a willful violation of law or
otherwise acted in bad faith, or special circumstances make an award
unjust.
Sec. 308.175 [Amended]
26. In Sec. 308.175, paragraph (a) is amended by removing ``$75''
and adding in its place ``$125'', and by adding at the end of the
paragraph the following sentence: ``Fees and expenses awarded under 5
U.S.C. 504(a)(4) related to defending against an excessive demand shall
be paid only as a consequence of appropriations paid in advance''.
27. In Sec. 308.176, paragraph (a) is revised to read as follows:
Sec. 308.176 Application for awards.
(a) Contents. An application for an award of fees and expenses
under this subpart shall contain:
(1) The name of the applicant and an identification of the
proceeding;
(2) For applications filed pursuant to 5 U.S.C. 504(a)(1), a
showing that the applicant has prevailed, and an identification of each
issue with regard to which the applicant believes that the position of
the FDIC in the proceeding was not substantially justified;
(3) For applications filed pursuant to 5 U.S.C. 504(a)(4), a
showing that the demand by the FDIC is substantially in excess of the
decision of the administrative law judge and is unreasonable when
compared with such decision under the facts and circumstances of the
case;
(4) A statement of the amount of fees and expenses for which an
award is sought;
(5) For applications filed pursuant to 5 U.S.C. 504(a)(4), a
statement of the amount of fees and expenses which constitute
appropriations paid in advance;
(6) If the applicant is not an individual, a statement of the
number of its employees on the date the proceeding was initiated;
(7) A description of any affiliated individuals or entities, as
defined in Sec. 308.172(c)(5), or a statement that none exist;
(8) A declaration that the applicant, together with any affiliates,
had a net worth not more than the ceiling established for it by
Sec. 308.172(b) as of the date the proceeding was initiated;
(9) For applications filed pursuant to 5 U.S.C. 504(a)(1), a
statement whether the applicant is a small entity as defined in 5
U.S.C. 601; and
(10) Any other matters that the applicant wishes the FDIC to
consider in determining whether and in what amount an award should be
made.
* * * * *
Sec. 308.179 [Amended]
28. Sec. 308.179 is amended by adding the words ``with a copy to
the administrative law judge'' after the word ``Secretary'' and by
removing ``20'' and in its place adding ``30''.
PART 330--DEPOSIT INSURANCE COVERAGE
29. The Authority citation for part 330 continues to read as
follows:
Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818(q),
1819(Tenth), 1820(f), 1821(a), 1822(c).
30. In Sec. 330.9, paragraph (a) is revised to read as follows:
Sec. 330.9 Joint ownership accounts.
(a) Separate insurance coverage. Qualifying joint accounts, whether
owned as joint tenants with the right of survivorship, as tenants in
common or as tenants by the entirety, shall be insured separately from
any individually owned (single ownership) deposit accounts maintained
by the co-owners. (Example: If A has a single ownership account and
also is a joint owner of a qualifying joint account, A's interest in
the joint account would be insured separately from his or her
[[Page 62103]]
interest in the individual account.) Qualifying joint accounts in the
names of both husband and wife which are comprised of community
property funds shall be added together and insured up to $200,000,
separately from any funds deposited into accounts bearing their
individual names.
* * * * *
By order of the Board of Directors.
Dated at Washington, D.C., this 8th day of November, 1999.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 99-29830 Filed 11-15-99; 8:45 am]
BILLING CODE 6714-01-P
