01-27413. Community Bank-Focused Regulation Review: Lending Limits Pilot Program

AGENCY:

Office of the Comptroller of the Currency, Treasury.

ACTION:

Final rule; correction.

SUMMARY:

The Office of the Comptroller of the Currency (OCC) recently published a final rule amending part 32, the regulation governing the percentage of capital and surplus that a national bank may loan to any one borrower. Inadvertently, six cross-references in the existing regulation were not amended to reflect changes made by the final rule. This document amends these cross-references.

EFFECTIVE DATE:

Effective on September 10, 2001.

FOR FURTHER INFORMATION CONTACT:

Deborah Katz, Senior Counsel, Legislative Regulatory Activities Division, [phone]; or Jonathan Fink, Senior Attorney, Bank Activities and Structure Division, [phone].

SUPPLEMENTARY INFORMATION:

Description of Change

The Office of the Comptroller of the Currency (OCC) published a final rule on June 11, 2001 (66 FR 31114) amending part 32. This final rule established a three-year pilot program that creates new special lending limits for 1-4 family residential real estate loans and small business loans, subject to certain conditions and requirements. The final rule added three new definitions to 12 CFR 32.2 and renumbered the existing definitions in that section. However, we inadvertently did not amend the cross-references in existing part 32 to reflect the changes in the numerical order of the definitions made by the final rule. This correction amends the cross-references throughout part 32 to reflect these changes.

Administrative Procedure Act—Notice and Comment

Pursuant to section 553(b)(B) of the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), the OCC finds good cause for dispensing with the requirements for notice and opportunity for public comment that the APA would otherwise require. Notice and comment on this amendment of part 32 are unnecessary because the renumbering of the cross-references is a technical, rather than a substantive, change. Moreover, if left uncorrected, the cross-references will cause confusion among readers of part 32 as amended because the cross-references currently do not refer to the correct definitional sections.

Effective Date

The APA generally requires that a final rule take effect 30 days after publication in the Federal Register. 5 U.S.C. 553(d). Similarly, section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 generally requires that a final rule issued by a Federal banking agency take effect on the first day of the first calendar quarter that begins on or after the date on which the regulation is published in final form. 12 U.S.C. 4802(b)(1). Both requirements are subject to a good cause exception. For the reasons previously explained, the OCC finds good cause for making this amendment to 12 CFR part 32 effective immediately upon publication.

Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required. 5 U.S.C. 603 and 604. As noted previously, the OCC has determined that it is not necessary to publish a notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis are not applicable.

Executive Order 12866

The Comptroller of the Currency has determined that this final rule is not a significant regulatory action for purposes of Executive Order 12866.

Unfunded Mandates Reform Act of 1995

The Unfunded Mandates Reform Act of 1995 (UMA), Pub. L. 104-4, 109 Stat. 48, applies only when an agency is required to issue a general notice of proposed rulemaking or a final rule for which the agency published a general notice of proposed rulemaking, 2 U.S.C. 1532. As noted previously, the OCC has determined, for good cause, that notice and comment is unnecessary. Accordingly, the UMA does not require a budgetary impact analysis.

List of Subjects in 12 CFR Part 32

• National banks
• Reporting and recordkeeping requirements

Authority and Issuance

For the reasons set forth in the preamble, part 32 of chapter I of title 12 of the Code of Federal Regulations is amended as follows:

PART 32—LENDING LIMITS

1. The authority citation for part 32 continues to read as follows:

Authority: 12 U.S.C. 1 et seq., 84 and 93a.

2. In § 32.2, revise paragraphs (f)(1)(iii), (f)(1)(iv), and (m)(1) to read as follows:

§ 32.2

Definitions.

* * * * *

(f) * * *

(1) * * *

(iii) Advance funds under a qualifying commitment to lend, as defined in paragraph (m) of this section, and

(iv) Advance funds under a standby letter of credit as defined in paragraph (s) of this section, a put, or other similar arrangement.

* * * * *

(m) * * *

(1) In determining whether a commitment is within the bank's lending limit when made, the bank may deduct from the amount of the commitment the amount of any legally binding loan participation commitments that are issued concurrent with the bank's commitment and that would be excluded from the definition of “loan or extension of credit” under paragraph (k)(2)(vi) of this section.

* * * * *

3. In § 32.3:

A. Revise the first sentence of paragraph (a);

B. Revise the first sentence of paragraph (b)(1)(i); and

C. Revise the introductory text of paragraph (b)(5).

The revisions read as follows:

§ 32.3

Lending limits.

(a) * * * A national bank's total outstanding loans and extensions of credit to one borrower may not exceed 15 percent of the bank's capital and surplus, plus an additional 10 percent of the bank's capital and surplus, if the amount that exceeds the bank's 15 percent general limit is fully secured by readily marketable collateral, as defined in § 32.2(n). * * *

(b) * * *

(1) * * *

(i) A national bank's loans or extensions of credit to one borrower secured by bills of lading, warehouse receipts, or similar documents transferring or securing title to readily marketable staples, as defined in § 32.2(o), may not exceed 35 percent of the bank's capital and surplus in addition to the amount allowed under the bank's combined general limit. * * *

* * * * *

(5) * * * A national bank may renew a qualifying commitment to lend, as defined by § 32.2(m), and complete funding under that commitment if all of the following criteria are met—

* * * * *

Dated: October 19, 2001.

John D. Hawke, Jr.,

Comptroller of the Currency.