[Federal Register Volume 62, Number 203 (Tuesday, October 21, 1997)]
[Rules and Regulations]
[Pages 54744-54746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27828]
[[Page 54743]]
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Part IV
Department of the Treasury
_______________________________________________________________________
Office of the Comptroller of the Currency
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12 CFR Part 8
Assessment of Fees; National Banks; District of Columbia Banks; Final
and Proposed Rules
Federal Register / Vol. 62, No. 203 / Tuesday, October 21, 1997 /
Rules and Regulations
[[Page 54744]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 8
[Docket No. 97-21]
RIN 1557-AB60
Assessment of Fees; National Banks; District of Columbia Banks
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
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SUMMARY: The OCC is finalizing, with slight modifications, changes made
by two previous interim rules with request for comments. The first
interim rule removed the specific calculation of fees for examinations
of fiduciary activities, special examinations and investigations,
examinations of affiliates, and examinations and investigations of
corporate activities (collectively, trust and other examinations and
investigations). The second interim rule authorized the OCC to reduce
assessments on national banks that are not the largest national bank in
a bank holding company (referred to as non-lead banks). These changes
have resulted in assessment revenue that more accurately reflects the
expenses incurred by the OCC as it supervises banks according to the
OCC's Supervision by Risk Program.
EFFECTIVE DATE: October 21, 1997.
FOR FURTHER INFORMATION CONTACT: Roy Madsen, Deputy Chief Financial
Officer, Financial Review, Policy and Analysis, (202) 874-5130; or Mark
Tenhundfeld, Assistant Director, Legislative and Regulatory Activities
Division, (202) 874-5090, Office of the Comptroller of the Currency,
Washington, D.C. 20219.
SUPPLEMENTARY INFORMATION:
Interim Rules and Comments Received 1
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\1\ Elsewhere in this issue of the Federal Register the OCC is
soliciting comments on, among other things, a proposed change to
part 8 that would impose a 25 percent surcharge on national banks
that receive a rating of 3, 4, or 5 under the Uniform Financial
Institutions Rating System (the CAMELS rating) and on Federal
branches and agencies of foreign banks that receive a rating of 3,
4, or 5 under the ROCA rating system (which rates risk management,
operational controls, compliance, and asset quality).
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1994 Interim Rule Regarding Fees for Trust and Other Examinations and
Investigations
The OCC issued an interim rule on November 18, 1994 (59 FR 59640)
(1994 Interim Rule) that removed specific fees for trust and other
examinations and investigations. That rule was adopted in response to
changes to 12 U.S.C. 482 made by the Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA) which, among other things,
removed the specific requirement for a fee adequate to recover expenses
of examinations of fiduciary activities. In place of that requirement,
FDICIA authorized the OCC to impose and collect assessments, fees, and
other charges as necessary or appropriate to carry out its
responsibilities, and gave the agency increased flexibility to set the
assessments, fees, and charges to meet its expenses.
The OCC exercised this flexibility by removing the specific formula
for calculating fees that formerly appeared in 12 CFR 8.6. As noted in
the preamble to the 1994 Interim Rule, the specific fee structure
reflected an outdated view of fiduciary activities as special and
separate from other bank operations. The OCC stated in revised Sec. 8.6
that it would assess a fee for examining fiduciary activities and for
conducting special examinations and investigations, and that it would
publish a fee schedule for these examinations and investigations in the
Notice of Comptroller of the Currency Fees described in Sec. 8.8. These
changes were immediately effective, but the OCC also sought the views
of interested parties.
The OCC received two comments in response to this request for
comments. Both commenters supported the interim rule, noting that the
changes will result in substantial savings for national banks. One of
the commenters requested that the OCC seek additional comments when and
if the agency intends to increase fees for fiduciary examinations and
investigations or intends to impose a separate trust assessment.
In light of the comments received, the OCC is issuing this final
rule that adopts the changes set out in the 1994 Interim Rule. In
response to the commenter concerned about the possibility of future
increases or separate assessments for trust examinations, the OCC notes
that it will seek comment before it changes the manner in which it
imposes fees for fiduciary examinations and investigations. While the
specific amount of assessments may change from one assessment to the
next as reflected in the Notice of Comptroller of the Currency Fees,
the OCC will continue to calculate the assessment according to the
method provided in part 8.
1996 Interim Rule Regarding Discounts for Non-Lead Banks
On December 2, 1996, the OCC published another interim rule with
request for comments (61 FR 64000) (1996 Interim Rule). The 1996
Interim Rule amended part 8 by adding Sec. 8.2(a)(6), which provides
that the OCC will reduce the assessments for non-lead banks by a
percentage that is to be specified in the Notice of Comptroller of the
Currency Fees. In that rule, the OCC defined a ``non-lead bank'' as a
national bank that is not the lead bank in a bank holding company that
owns more than one national bank, and defined ``lead bank'' as the
largest national bank controlled by a bank holding company, based on a
comparison of total assets held by each national bank as reported in
each bank's Consolidated Report of Condition and Income filed for the
quarter immediately preceding the payment of a semiannual assessment.
The OCC defined ``bank holding company'' by adopting the definition of
that term used in section 2 of the Bank Holding Company Act of 1956
(BHC Act) (12 U.S.C. 1841(a)(1)).
The 1996 Interim Rule also removed the provisions in part 8
prohibiting the proration of assessments. Prior to adoption of that
rule, part 8 provided that each bank and Federal branch or agency
subject to the OCC's jurisdiction must pay the full amount of its
assessment for the next six-month period, ``without proration for any
reason.'' See former 12 CFR 8.2 (a)(5) and (b). This prohibition is
inconsistent with a reduction in non-lead banks' assessments, because
the reduction is effectively a proration of these banks' assessments.
Accordingly, the OCC removed the prohibition against prorations.
The OCC received two comments in response to the 1996 Interim Rule,
both of which supported the changes. However, one commenter expressed
its concern that the discount could unfairly benefit larger banks,
which, in the commenter's view, tend to be structured in multi-bank
holding companies more often than are smaller banks. The OCC notes that
the discount applies equally to all banks, regardless of size, that are
non-lead banks in a bank holding company, and, in fact, many community
banks have benefitted from the Interim Rule.
The other commenter, which owns several national banks that are
credit card banks, suggested that the rule be further amended to cover
institutions that are chartered and supervised by the OCC as national
banks but that are excluded from the definition of ``bank'' under
section 2(c)(2)(F) of the BHC Act (12 U.S.C. 1841(c)(2)(F)). This
commenter noted that the 1996 Interim Rule, by adopting the definition
of ``bank holding company'' used in the BHC Act, technically precludes
non-
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lead banks from receiving an assessment reduction if the institutions
are not ``banks'' under the BHC Act, because their holding companies
then are not ``bank holding companies'' under the BHC Act. The
commenter opined that the same economies of scale are realized when
supervising non-lead credit card banks, and requested that the OCC
clarify that the assessment reduction applies to all non-lead national
banks, regardless of whether the parent is a ``bank holding company''
under the BHC Act. 2
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\2\ The OCC received a similar request in connection with
Federal branches and agencies of foreign banks, although the request
was not submitted in a comment to the 1996 interim rule.
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The OCC agrees with this commenter. The same economies realized
when supervising non-lead banks owned by bank holding companies are
available when supervising non-lead banks that would qualify for the
reduction but for the fact that the parent is not a ``bank holding
company'' under the BHC Act. This conclusion also applies to non-lead
Federal branches and agencies of foreign banks, whose level of
supervision, enforcement, and licensing are increasingly tied to the
condition of the foreign bank. Consistent with this conclusion, the OCC
has issued letters in which the OCC applied the assessment reduction to
(a) non-lead banks owned by a company that is not a ``bank holding
company'' under the BHC Act and (b) non-lead Federal branches and
agencies of a foreign bank.
In light of the comments received, the OCC is adopting in final
form the changes contained in the 1996 Interim Rule, as amended to
reflect the interpretations noted above. Consistent with these
interpretations, the OCC is amending Sec. 8.2(a)(6)(ii) (A)-(C) so that
``non-lead bank'' includes a national bank that is not the largest
national bank controlled by a company (as opposed to a bank holding
company) and is adopting a new Sec. 8.2(b)(4) to apply the assessment
reduction to non-lead Federal branches and agencies of foreign banks.
Finally, the OCC also has adopted a technical change to Sec. 8.2(b)(3)
to use the term ``Call Report'' (in lieu of ``Report of Condition'')
that is used elsewhere in part 8.
Immediately Effective Rule
This final rule is effective upon publication in the Federal
Register. The OCC has determined that the rule may be immediately
effective pursuant to 5 U.S.C. 553(d) (1) and (3). By enabling the OCC
to reduce assessments, the rulemaking will have the effect of granting
a partial exemption from the assessment obligations that otherwise
would apply to non-lead entities. Accordingly, the rule may be
immediately effective under 5 U.S.C. 553(d)(1). There also is good
cause to dispense with a delayed effective date under 5 U.S.C.
553(d)(3), namely, that the rule needs to be effective in time to
ensure that reductions will be reflected in the Notice of Comptroller
of the Currency Fees that will be mailed in early December to all
national banks and Federal branches and agencies. The OCC will continue
to provide a semiannual Assessment Notice to each institution, and each
national bank and Federal branch or agency will continue to have at
least 30 days following receipt of a semiannual assessment notice in
which to pay the assessment.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA)
(5 U.S.C. 605(b)), the regulatory flexibility analysis otherwise
required under section 604 of the RFA (5 U.S.C. 604) is not required if
the agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities and publishes its
certification and a short, explanatory statement in the Federal
Register along with its rule.
Pursuant to section 605(b) of the RFA, the OCC hereby certifies
that this final rule will not have a significant economic impact on a
substantial number of small entities. The final rule does not impose
any new reporting or recordkeeping requirement. Moreover, to the extent
that it has any impact on national banks, the impact will be to lower
assessments for non-lead national banks and non-lead Federal branches
and agencies of foreign banks and to eliminate a separate assessment
for trust and other examinations and investigations. Accordingly, a
regulatory flexibility analysis under section 604 of the RFA is not
required.
Executive Order 12866
The OCC has determined that this final rule is not a significant
regulatory action under Executive Order 12866.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L.
104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency
prepare a budgetary impact statement before promulgating any rule
likely to result in a Federal mandate that may result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year. If a
budgetary impact statement is required, section 205 of the Unfunded
Mandates Act also requires an agency to identify and consider a
reasonable number of regulatory alternatives before promulgating a
rule. The OCC has determined that the final rule will not result in
expenditures by State, local, and tribal governments, or by the private
sector, of $100 million or more in any one year. Accordingly, the OCC
has not prepared a budgetary impact statement or specifically addressed
any regulatory alternatives. As discussed in the preamble, the final
rule has the effect of reducing the assessments and fees paid by
national banks.
List of Subjects in 12 CFR Part 8
Assessments, Fees, National banks.
Authority and Issuance
For the reasons set forth in the preamble, part 8 of chapter I of
title 12 of the Code of Federal Regulations is amended as follows:
PART 8--ASSESSMENT OF FEES; NATIONAL BANKS; DISTRICT OF COLUMBIA
BANKS
1. The authority citation for part 8 is revised to read as follows:
Authority: 12 U.S.C. 93a, 481, 482, 3102, and 3108; 15 U.S.C.
78c and 78l; and 26 D.C. Code 102.
2. The interim rule amending 12 CFR part 8 that was published at 59
FR 59640 on November 18, 1994 is adopted as a final rule without
change.
3. Section 8.2 is amended by revising paragraphs (a)(6) and (b)(3)
and adding paragraph (b)(4) to read as follows:
Sec. 8.2 Semiannual assessment.
(a) * * *
(6)(i) Notwithstanding any other provision of this part, the OCC
may reduce the semiannual assessment for each non-lead bank by a
percentage that it will specify in the Notice of Comptroller of the
Currency Fees described in Sec. 8.8.
(ii) For purposes of this paragraph (a)(6):
(A) Lead bank means the largest national bank controlled by a
company, based on a comparison of the total assets held by each
national bank controlled by that company as reported in each bank's
Call Report filed for the quarter immediately preceding the payment of
a semiannual assessment.
(B) Non-lead bank means a national bank that is not the lead bank
controlled by a company that controls two or more national banks.
(C) Control and company have the same meanings as these terms have
in
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sections 2(a)(2) and 2(b), respectively, of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841 (a)(2) and (b)).
(b) * * *
(3) Each semiannual assessment of each Federal branch or Federal
agency is based upon the total assets shown in the Call Report most
recently preceding the payment date. The assessment shall be computed
in the manner and on the form provided by the OCC. Each Federal branch
or Federal agency subject to the jurisdiction of the OCC on the date of
the second and fourth Call Reports is subject to the full assessment
for the next six month period.
(4)(i) Notwithstanding any other provision of this part, the OCC
may reduce the semiannual assessment for each non-lead Federal branch
or agency by an amount that it will specify in the Notice of
Comptroller of the Currency Fees described in Sec. 8.8.
(ii) For purposes of this paragraph (b)(4):
(A) Lead Federal branch or agency means the largest Federal branch
or agency of a foreign bank, based on a comparison of the total assets
held by each Federal branch or agency of that foreign bank as reported
in each Federal branch's or agency's Call Report filed for the quarter
immediately preceding the payment of a semiannual assessment.
(B) Non-lead Federal branch or agency means a Federal branch or
Federal agency that is not the lead Federal branch or agency of a
foreign bank that controls two or more Federal branches or agencies.
Dated: October 15, 1997.
Eugene A. Ludwig,
Comptroller of the Currency.
[FR Doc. 97-27828 Filed 10-20-97; 8:45 am]
BILLING CODE 4810-33-P
