[Federal Register Volume 60, Number 244 (Wednesday, December 20, 1995)]
[Rules and Regulations]
[Pages 66048-66051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30823]
[[Page 66047]]
_______________________________________________________________________
Part VII
Department of the Treasury
Office of the Comptroller of the Currency
12 CFR Part 25
Federal Reserve System
12 CFR Part 228
Federal Deposit Insurance Corporation
12 CFR Part 345
Department of the Treasury
Office of Thrift Supervision
12 CFR Part 563e
_______________________________________________________________________
Community Reinvestment Act Regulations; Joint Final Rule
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 /
Rules and Regulations
[[Page 66048]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 25
[Docket No. 95-07]
RIN 1557-AB32
FEDERAL RESERVE SYSTEM
12 CFR Part 228
[Regulation BB; Docket No. R-0822]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 345
RIN 3064-AB27
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 563e
[Docket No. 95-203]
RIN 1550-AA93
Community Reinvestment Act Regulations
AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,
Treasury (OTS).
ACTION: Joint final rule.
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SUMMARY: The OCC, Board, FDIC, and OTS, (collectively, the Federal
financial supervisory agencies or agencies) are issuing this final rule
to make technical corrections and clarifications to their regulations
concerning the Community Reinvestment Act (CRA). Since the publication
of the agencies' joint CRA regulations, financial institutions and
others have alerted the agencies that two errors exist and that the
transition rules are confusing. This final rule is intended to correct
the errors and clarify the transition rules.
EFFECTIVE DATE: January 1, 1996.
FOR FURTHER INFORMATION CONTACT:
OCC: Stephen M. Cross, Deputy Comptroller for Compliance, (202)
874-5216; Matthew Roberts, Director, or Margaret Hesse, Attorney,
Community and Consumer Law Division, (202) 874-5750, Office of the
Comptroller of the Currency, 250 E Street SW., Washington, DC 20219.
Board: Glenn E. Loney, Associate Director, Division of Consumer and
Community Affairs, (202) 452-3585; Robert deV. Frierson, Assistant
General Counsel, Legal Division, (202) 452-3711; or Leonard N. Chanin,
Managing Counsel, Division of Consumer and Community Affairs, (202)
452-3667, Board of Governors of the Federal Reserve System, 20th Street
and Constitution Avenue NW., Washington, DC 20551.
FDIC: Bobbie Jean Norris, Chief, Fair Lending Section, Division of
Compliance and Consumer Affairs, (202) 942-3090; Robert W. Mooney, Fair
Lending Specialist, Division of Compliance and Consumer Affairs, (202)
942-3092; or Ann Hume Loikow, Counsel, Regulation and Legislation
Section, Legal Division, (202) 898-3796, Federal Deposit Insurance
Corporation, 550 17th Street NW., Washington, DC 20429.
OTS: Timothy R. Burniston, Assistant Director for Compliance
Policy, (202) 906-5629; Theresa A. Stark, Program Analyst, Compliance
Policy, (202) 906-7054; or John Flannery, Attorney, Regulations and
Legislation Division, Chief Counsel's Office, (202) 906-7293, Office of
Thrift Supervision, 1700 G Street NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
Introduction
The Federal financial supervisory agencies jointly are amending
their regulations implementing the CRA (12 U.S.C. 2901 et seq.). This
final rule makes technical corrections and clarifications to the
agencies' joint CRA regulations, 12 CFR parts 25, 228, 345, and 563e.
Those regulations establish the framework and criteria by which the
agencies assess an institution's record of helping to meet the credit
needs of its community, including low- and moderate-income
neighborhoods, consistent with safe and sound operations, and provide
that the agencies will take those assessments into account in reviewing
certain applications.
Background
The agencies published a joint notice of proposed rulemaking to
amend their CRA regulations on December 21, 1993 (58 FR 67466). In
response to over 6,700 comments received, the agencies published a
second joint notice of proposed rulemaking on October 7, 1994 (59 FR
51232). After considering over 7,200 comments received in response to
the second joint proposed rule, the agencies adopted a joint final rule
on May 4, 1995 (60 FR 22156) (1995 Rule).
Need for Final Rule
The agencies are amending their recently adopted CRA regulations to
correct two technical errors and to clarify the transition rules. Since
the publication of the 1995 Rule, a number of financial institutions
have expressed confusion about the transition rules.
The agencies find that notice and public procedure concerning this
joint final rule are impracticable, unnecessary, and contrary to the
public interest under 5 U.S.C. Sec. 553(b)(B). The agencies make this
finding because: (1) This joint final rule involves only technical
corrections and clarifications to the recently adopted 1995 Rule, which
was subject to public notice and comment; (2) some institutions will be
subject to the performance tests and standards of the 1995 Rule
beginning on January 1, 1996, so it is in the public interest that the
joint final rule be effective at that time; and (3) this joint final
rule makes no substantive change to the 1995 Rule, rather it makes
corrections and eliminates ambiguities associated with the transition
requirements.
Furthermore, under 5 U.S.C. Sec. 553(d)(3), the agencies have
determined to make this joint final rule effective with less than 30
days prior publication. The agencies find that there is good cause for
shortened notice due to the minor nature of the changes, the fact that
some institutions will be subject to the performance tests and
standards of the 1995 Rule beginning January 1, 1996, and for other
reasons previously discussed.
Corrections
The agencies' 1995 Rule contains two errors. First, an internal
cross reference is incorrect. The cross reference is found in the
discussions about how an institution may amend its strategic plan,
found at 12 CFR 25.27(h), 228.27(h), 345.27(h), and 563e.27(h). These
identical sections incorrectly state that the amendment process must be
done in accordance with the public participation requirements of
``paragraph (c) of this section.'' The correct cross reference is
``paragraph (d) of this section.'' The agencies are amending their
respective regulations to reflect the correct cross reference.
Second, an external cross reference is incorrect. In their joint
preamble to the final rule, the agencies discussed the definition of
``community development'' contained in the regulations. In the
preamble, the agencies stated that ``[t]he section of the definition
that discusses activities that promote economic development by
financing small business and farms refers to 13 CFR 121.802(a)(2), the
size limitations for the Small Business Administration's (SBA's) Small
Business Investment
[[Page 66049]]
Company and Development Company programs'' (60 FR 22159). The agencies'
final regulations do, indeed, reference 13 CFR 121.802(a)(2). However,
because of an amendment to the SBA regulation (59 FR 16953) made during
the agencies' CRA rulemaking process, this citation refers to only the
SBA's Development Company Programs. The correct reference should be 13
CFR 121.802(a) (2) and (3), which include both the Development Company
and Small Business Investment Company Programs, as intended. Therefore,
the agencies are amending the cross references in 12 CFR 25.12(h)(3),
228.12(h)(3), 345.12(h)(3), and 563e.12(g)(3). The citations are
changed from ``13 CFR 121.802(a)(2)'' to ``13 CFR 121.802(a) (2) and
(3).''
Clarification
The agencies are amending their transition rules, found at 12 CFR
25.51, 228.51, 345.51, and 563e.51. The transition rules are correct
for purposes of incorporation into and expiration from the Code of
Federal Regulations. However, the banks and thrifts that must comply
with them have expressed confusion regarding how the rules apply.
The transition rules state the final date of applicability to all
institutions with regard to each particular provision of the CRA
regulation. However, the transition rules inadequately explain the
transition from the former regulation to the new regulation. The
agencies are clarifying that when an institution, either mandatorily or
voluntarily, becomes subject to the requirements of the performance
tests and standards in the 1995 Rule (12 CFR 25.21 through 25.27,
228.21 through 228.27, 345.21 through 345.27, and 563e.21 through
563e.27, as applicable), the institution must comply with all aspects
of the 1995 Rule (12 CFR 25.11 through 25.44, 228.11 through 228.44,
345.11 through 345.44, or 563e.11 through 563e.44) applicable to it.
For example, the transition rules state that the agencies will
evaluate small institutions under the small institution performance
standards described in 12 CFR 25.26, 228.26, 345.26, and 563e.26 on
January 1, 1996. However, so that the agencies may evaluate a small
institution under the small institution performance standards, the
small institution must also comply with other provisions of the
regulation that are pertinent. Those provisions would include
delineating an assessment area (12 CFR 25.41, 228.41, 345.41, or
563e.41, as applicable), maintaining a public file (12 CFR 25.43,
228.43, 345.43, or 563e.43, as applicable), and providing the proper
public notice (12 CFR 25.44, 228.44, 345.44, or 563e.44, as
applicable). The transition rules at 12 CFR 25.51(c) (4) and (5),
228.51(c) (4) and (5) 345.51(c) (4) and (5), and 563e.51(c) (4) and
(5), however, state that these requirements do not become applicable
until January 1 or July 1, 1997. The 1997 dates refer to the last point
in time that these requirements become effective for any institution.
However, the requirements become effective for small institutions as
soon as the small institutions are subject to evaluation under the
small institution performance standards.
In some cases, an institution may choose to comply with the
performance standards and tests of the May 1995 rule before it must do
so. For instance, a large institution may elect to be evaluated under
the lending, investment and service tests (12 CFR 25.22 through 25.24,
228.22 through 228.24, 345.22 through 345.24, or 563e.22 through
563e.24, as applicable) before it is required to do so in July of 1997.
In this case, the institution must comply with all other provisions of
the 1995 Rule.
Similarly, the transition rules state that, for example, the
section of the former CRA regulation (12 CFR 25.6, 228.6, 345.6 or
563e.6, as applicable) that addresses public notice requirements does
not expire until January 1, 1997. However, the public notice
requirements (12 CFR 25.44, 228.44, 345.44 or 563e.44, as applicable)
in the 1995 Rule are different from the former requirements.
Institutions would find it confusing, if not impossible, to comply
completely with both provisions. Therefore, once an institution either
voluntarily or mandatorily becomes subject to the performance tests and
standards of the 1995 Rule, the provisions of the former CRA regulation
(12 CFR 25.3 through 25.7, 228.3 through 25.7, 345.3 through 345.7, or
563e.3 through 563e.7, as applicable) no longer apply to that
institution, even though they may continue to apply to other
institutions.
Therefore, to clarify these provisions, the agencies are amending
12 CFR 25.51(a), 228.51(a), 345.51(a), and 563e.51(a) by adding at the
end of paragraph (a), a sentence explaining that once an institution is
either voluntarily or mandatorily subject to the performance tests and
standards of the 1995 Rule, the institution must comply with all of the
requirements of the 1995 Rule and is no longer subject to the
requirements of the former CRA regulation.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
OCC, Board, FDIC, and OTS hereby certify that this joint final rule
will not have a significant economic impact on a substantial number of
small entities. The agencies expect that this joint final rule will not
have significant secondary or incidental effects on a substantial
number of small entities, or create any additional burden on small
entities. The joint final rule merely makes technical corrections to
two cross-references and clarifies requirements of the transition rules
already adopted by the agencies. These changes will not increase and
may, in fact, reduce the burden on institutions because they will make
the rules clearer. Accordingly, a regulatory flexibility analysis is
not required.
Paperwork Reduction Act of 1995
There are no collection of information requirements in this joint
final rule.
Executive Order 12866
OCC and OTS: The OCC and the OTS have determined that this joint
final rule is not a significant regulatory action as defined in
Executive Order 12866.
Unfunded Mandates Reform Act of 1995
OCC and OTS: Section 202 of the Unfunded Mandates Reform Act of
1995, Pub. L. 104-4, 109 Stat. 48 (1995) (Unfunded Mandates Act),
requires that covered agencies prepare a budgetary impact statement
before promulgating a rule that includes any 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 covered agencies to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule. As discussed in the preamble, this joint final
rule amends the agencies' CRA regulations to make two technical
corrections and one clarification. Therefore, the OCC and the OTS have
determined that the joint final rule will not result in expenditures by
State, local, and tribal governments, or by the private sector, of more
than $100 million in any one year. Accordingly, the OCC and the OTS
have not prepared a budgetary impact statement or specifically
addressed the regulatory alternatives considered.
[[Page 66050]]
List of Subjects
12 CFR Part 25
Community development, Credit, Investments, National banks,
Reporting and recordkeeping requirements.
12 CFR Part 228
Banks, Banking, Community development, Credit, Federal Reserve
System, Investments, Reporting and recordkeeping requirements.
12 CFR Part 345
Banks, Banking, Community development, Credit, Investments,
Reporting and recordkeeping requirements.
12 CFR Part 563e
Community development, Credit, Investments, Reporting and
recordkeeping requirements, Savings associations.
OFFICE OF THE COMPTROLLER OF THE CURRENCY
12 CFR CHAPTER I
For the reasons discussed in the joint preamble, 12 CFR part 25 is
amended as follows:
PART 25--[AMENDED]
1. The authority citation for part 25 continues to read as follows:
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215,
215a, 481, 1814, 1816, 1828(c), and 2901 through 2907.
Sec. 25.12 [Amended]
2. In Sec. 25.12(h)(3), the cross reference ``13 CFR
121.802(a)(2)'' is revised to read ``13 CFR 121.802(a) (2) and (3)''.
Sec. 25.27 [Amended]
3. In the last sentence of Sec. 25.27(h), the internal cross
reference ``paragraph (c) of this section'' is revised to read
``paragraph (d) of this section''.
4. Paragraph (a) of Sec. 25.51 is amended by adding a sentence at
the end of the paragraph to read as follows:
Sec. 25.51 Transition rules.
(a) * * * Notwithstanding paragraph (c) of this section, when a
bank, either voluntarily or mandatorily, becomes subject to the
performance tests and standards of Secs. 25.21 through 25.27, the bank
must comply with all the pertinent requirements of Secs. 25.11 through
25.44, and no longer must comply with the requirements of Secs. 25.3
through 25.7.
* * * * *
Dated: December 8, 1995.
Eugene A. Ludwig,
Comptroller of the Currency.
FEDERAL RESERVE SYSTEM
12 CFR CHAPTER II
For the reasons discussed in the joint preamble, 12 CFR part 228 is
amended as follows:
PART 228--[AMENDED]
1. The authority citation for part 228 continues to read as
follows:
Authority: 12 U.S.C. 321, 325, 1828(c), 1842, 1843, 1844, and
2901 et seq.
Sec. 228.12 [Amended]
2. In Sec. 228.12(h)(3), the cross reference ``13 CFR
121.802(a)(2)'' is revised to read ``13 CFR 121.802(a) (2) and (3)''.
Sec. 228.27 [Amended]
3. In the last sentence of Sec. 228.27(h), the internal cross
reference ``paragraph (c) of this section'' is revised to read
``paragraph (d) of this section''.
4. Paragraph (a) of Sec. 228.51 is amended by adding a sentence at
the end of the paragraph to read as follows:
Sec. 228.51 Transition rules.
(a) * * * Notwithstanding paragraph (c) of this section, when a
bank, either voluntarily or mandatorily, becomes subject to the
performance tests and standards of Secs. 228.21 through 228.27, the
bank must comply with all the pertinent requirements of Secs. 228.11
through 228.44, and no longer must comply with the requirements of
Secs. 228.3 through 228.7.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, December 8, 1995.
William W. Wiles,
Secretary of the Board.
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR CHAPTER III
For the reasons discussed in the joint preamble, 12 CFR part 345 is
amended as follows:
PART 345--[AMENDED]
1. The authority citation for part 345 continues to read as
follows:
Authority: 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u and 2901-
2907, 3103-3104, and 3108(a).
Sec. 345.12 [Amended]
2. In Sec. 345.12(h)(3), the cross reference ``13 CFR
121.802(a)(2)'' is revised to read ``13 CFR 121.802(a) (2) and (3)''.
Sec. 345.27 [Amended]
3. In the last sentence of Sec. 345.27(h), the internal cross
reference ``paragraph (c) of this section'' is revised to read
``paragraph (d) of this section''.
4. Paragraph (a) of Sec. 345.51 is amended by adding a sentence at
the end of the paragraph to read as follows:
Sec. 345.51 Transition rules.
(a) * * * Notwithstanding paragraph (c) of this section, when a
bank, either voluntarily or mandatorily, becomes subject to the
performance tests and standards of Secs. 345.21 through 345.27, the
bank must comply with all the pertinent requirements of Secs. 345.11
through 345.44, and no longer must comply with the requirements of
Secs. 345.3 through 345.7.
* * * * *
By order of the Board of Directors of the Federal Deposit
Insurance Corporation.
Dated: December 8, 1995.
Jerry L. Langley,
Executive Secretary.
OFFICE OF THRIFT SUPERVISION
12 CFR CHAPTER V
For the reasons discussed in the joint preamble, 12 CFR part 563e
is amended as follows:
PART 563e--[AMENDED]
1. The authority citation for part 563e continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1814, 1816,
1828(c), and 2901 through 2907.
Sec. 563e.12 [Amended]
2. In Sec. 563e.12(g)(3), the cross reference ``13 CFR
121.802(a)(2)'' is revised to read ``13 CFR 121.802(a) (2) and (3)''.
Sec. 563e.27 [Amended]
3. In the last sentence of Sec. 563e.27(h), the internal cross
reference ``paragraph (c) of this section'' is revised to read
``paragraph (d) of this section''.
4. Paragraph (a) of Sec. 563e.51 is amended by adding a sentence at
the end of the paragraph to read as follows:
Sec. 563e.51 Transition rules.
(a) * * * Notwithstanding paragraph (c) of this section, when a
savings association, either voluntarily or mandatorily, becomes subject
to the performance tests and standards of Secs. 563e.21 through
563e.27, the savings association must comply with all the pertinent
requirements of Secs. 563e.11 through 563e.44, and no longer must
comply with the requirements of Secs. 563e.3 through 563e.7.
* * * * *
[[Page 66051]]
Dated: December 13, 1995.
By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 95-30823 Filed 12-19-95; 8:45 am]
BILLING CODE 4810-33-P
