[Federal Register Volume 63, Number 231 (Wednesday, December 2, 1998)]
[Proposed Rules]
[Pages 66499-66500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32051]
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FEDERAL RESERVE SYSTEM
12 CFR Part 229
[Regulation CC; Docket No. R-1027]
Availability of Funds and Collection of Checks
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Board of Governors of the Federal Reserve System (the
Board) is proposing to amend Regulation CC to allow banks that
consummate a merger on or after July 1, 1998, and before June 1, 1999,
greater time to implement software changes related to the merger.
DATES: Comments must be received by January 4, 1999.
ADDRESSES: Comments, which should refer to Docket No. R-1027, may be
mailed to Ms. Jennifer Johnson, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue, N.W.,
Washington, D.C. 20551. Comments addressed to Ms. Johnson may also be
delivered to the Board's mail room between 8:45 a.m. and 5:15 p.m., and
to the security control room at all other times. Both the mail room and
the security control room are accessible from the courtyard entrance on
20th Street between Constitution Avenue and C Street, N.W. Comments may
be inspected in room MP-500, pursuant to Sec. 261.12 of the Board's
Rules Regarding Availability of Information, between 9:00 a.m. and 5:00
p.m., except as provided in Sec. 261.14 of those same Rules. (12 CFR
261.12 and 261.14)
FOR FURTHER INFORMATION CONTACT: Jean Anderson, Staff Attorney, Legal
Division (202/452-3707). For the hearing impaired only,
Telecommunications Device for the Deaf (TDD), Diane Jenkins (202/452-
3544).
SUPPLEMENTARY INFORMATION: The Board is proposing to amend Regulation
CC to allow banks that consummate merger transactions on or after July
1, 1998, and before June 1, 1999, greater time to implement software
changes related to the merger. The Board recognizes that banks are
currently dedicating their automation resources to renovating and
testing software and replacing noncompliant systems to address Year
2000 and leap year computer problems. Because a large amount of banks'
automation resources may be dedicated to these efforts, banks may be
challenged to make and test other programming changes, including those
that may be required to comply with Regulation CC's merger transition
provisions, thus potentially jeopardizing the success of their Year
2000 efforts and/or their system integration efforts due to the merger.
Therefore, the Board is proposing to allow banks that consummate a
merger on or after July 1, 1998, and before June 1, 1999, to be treated
as separate banks until June 1, 2000. Beginning in June 1999, the
normal one-year transition period will resume.
The Board requests comment on the need for this amendment and
whether the proposed liberalization of the regulation's merger
transition provisions is adequate to avoid contention for programming
and testing resources necessary to manage banks' Year 2000 readiness
efforts that otherwise would be created by these requirements.
Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires an
agency to publish an initial regulatory flexibility analysis with any
notice of proposed rulemaking. The initial regulatory flexibility
analysis (5 U.S.C. 603(b)) requires an agency to describe the reasons
why the proposed rule is being considered and a statement of the
objectives of, and legal basis for, the proposed rule. The
``Supplementary Information'' above, contains this information. The
proposed rule requires no additional reporting or recordkeeping
requirements and does not overlap with other federal rules.
The initial regulatory flexibility analysis also requires a
description of,
[[Page 66500]]
and where feasible, an estimate of the number of small entities to
which the proposed rule will apply. The proposal will apply to all
insured banks, as defined in section 3 of the Federal Deposit Insurance
Act (12 USC 1813) as well as banks that are eligible to apply to become
an insured bank under section 5 of that act (12 U.S.C. 1815). As of
June 30, 1998, there were 10,712 insured banks. The proposed amendments
are intended to provide relief to banks involved in mergers, including
small institutions, by reducing required changes to their automation
environment during the period surrounding the century rollover, and
should not have a negative economic effect on small institutions.
List of Subjects in 12 CFR Part 229
Banks, banking, Federal Reserve System, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, the Board proposes to
amend Regulation CC, 12 CFR part 229 as set forth below:
PART 229--AVAILABILITY OF FUNDS AND COLLECTION OF CHECKS
(REGULATION CC)
1. The authority citation for part 229 continues to read as
follows:
Authority: 12 U.S.C. 4001 et seq.
2. In Sec. 229.19, paragraph (g) is redesignated as paragraph
(g)(1), a heading is added for newly designated paragraph (g)(1), and a
new paragraph (g)(2) would be added to read as follows:
Sec. 229.19 Miscellaneous.
* * * * *
(g) Effect of merger transaction. (1) In general. * * *
(2) Merger transactions on or after July 1, 1998, and before June
1, 1999. If banks have consummated a merger transaction on or after
July 1, 1998, and before June 1, 1999, the merged banks may be
considered separate banks until June 1, 2000.
3. In Sec. 229.40 the existing text is redesignated as paragraph
(a), a heading is added for newly designated paragraph (a), and a new
paragraph (b) would be added to read as follows:
Sec. 229.40 Effect of merger transaction.
(a) In general. * * *
(b) Merger transactions on or after July 1, 1998, and before June
1, 1999. If banks have consummated a merger transaction on or after
July 1, 1998, and before June 1, 1999, the merged banks may be
considered separate banks until June 1, 2000.
By order of the Board of Governors of the Federal Reserve
System, November 25, 1998.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 98-32051 Filed 12-1-98; 8:45 am]
BILLING CODE 6210-01-P
