E7-17459. Prohibited Service at Savings and Loan Holding Companies Extension of Expiration Date of Temporary Exemption

AGENCY:

Office of Thrift Supervision (OTS), Treasury.

ACTION:

Final rule.

SUMMARY:

OTS is amending its rules implementing section 19(e) of the Federal Deposit Insurance Act (FDIA), which prohibits any person who has been convicted of any criminal offense involving dishonesty, breach of trust, or money laundering (or who has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such an offense) from holding certain positions with respect to a savings and loan holding company (SLHC). Specifically, OTS is extending the expiration date of a temporary exemption granted to persons who held positions with respect to a SLHC as of the date of the enactment of section 19(e). The revised expiration date for the temporary exemption is March 1, 2008.

DATES:

Effective Date: The final rule is effective on September 4, 2007.

FOR FURTHER INFORMATION CONTACT:

Donna Deale, Director, Holding Companies and Affiliates, Supervision Policy, [phone], or Karen Osterloh, Special Counsel, Regulations and Legislation, [phone], Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

On May 8, 2007, OTS published an interim final rule adding 12 CFR part 585. This new part implemented section 19(e) of the FDIA, which prohibits any person who has been convicted of any criminal offense involving dishonesty, breach of trust, or money laundering (or who has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such an offense) from holding certain positions with a SLHC. Section 19(e) also authorizes the Director of OTS to provide exemptions from the prohibitions, by regulation or order, if the exemption is consistent with the purposes of the statute.

The interim final rule described the actions that are prohibited under the statute and prescribed procedures for applying for an OTS order granting a case-by-case exemption from the prohibition. The rule also provided regulatory exemptions to the prohibitions, including a temporary exemption for persons who held positions with respect to a SLHC on October 13, 2006, the date of enactment of section 19(e). This temporary exemption expires on September 5, 2007, unless a case-by-case exemption is filed prior to that expiration date.

OTS found that the temporary exemption was needed to ensure that the new prohibition did not needlessly disrupt SLHC operations by requiring the immediate termination of existing relationships. OTS designed this exemption to ensure that SLHCs would have sufficient time to determine which persons have convictions or pre-trial diversions involving the described criminal offenses, and to provide a meaningful opportunity for the SLHC or the prohibited person to demonstrate that the person's continued relationship with the SLHC is consistent with the purposes of the statute.

Since the publication of the interim final rule, some SLHCs have contacted OTS to indicate that they have not had adequate time to review all of their existing relationships and file for appropriate permanent exemptions. To avoid needless disruptions of these SLHC operations, OTS is extending the expiration date of the temporary exemption to March 1, 2008. OTS has concluded that this extension of the exemption is consistent with the purposes of section 19(e) of the FDIA.^[1]

Regulatory Findings

Notice and Comment and Effective Date

For the reasons set out in the interim final rule,^[2] OTS has concluded that: Notice and comment on this extension are unnecessary and contrary to the public interest under section 552(b)(B) of the Administrative Procedure Act; there is good cause for making the extension effective immediately under section 553(d) of the APA; and the delayed effective date requirements of section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (CDRIA) do not apply.

Regulatory Flexibility Act

For the reasons stated in the interim final rule,^[3] OTS has concluded that this extension does not require an initial regulatory flexibility analysis under the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), and that this extension should not have a significant impact on a substantial number of small entities, as defined in the RFA.

Paperwork Reduction Act

OTS has determined that this extension does not involve a change to collections of information previously approved under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.)

Unfunded Mandates Act of 1995

For the reasons stated in the interim final rule,^[4] OTS has determined that this extension will not result in expenditures by state, local, and tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year.

Executive Order 12866

OTS has determined that this extension is not a significant regulatory action under Executive Order 12866.

Plain Language

Section 722 of the Gramm-Leach-Bliley Act (12 U.S.C. 4809) requires the Agencies to use “plain language” in all final rules published after January 1, 2000. OTS believes that the final rule containing the extension is presented in a clear and straightforward manner.

List of Subjects in 12 CFR Part 585

• Administrative practice and procedure
• Holding companies, reporting and recordkeeping requirements, savings associations

Authority and Issuance

For the reasons in the preamble, OTS is amending part 585 of chapter V of title 12 of the Code of Federal Regulations as set forth below:

PART 585—PROHIBITED SERVICE AT SAVINGS AND LOAN HOLDING COMPANIES

1. The authority citation for 12 CFR part 585 continues to read as follows:

Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, and 1829(e).

2. Revise § 585.100(b)(2) introductory text to read as follows:

§ 585.100

Who is exempt from the prohibition under this part?

* * * * *

(b) Temporary exemption. * * *

* * * * *

(2) This exemption expires on March 1, 2008, unless the savings and loan holding company or the person files an application seeking a case-by-case exemption for the person under § 585.110 by that date. If the savings and loan holding company or the person files such an application, the temporary exemption expires on:

* * * * *

Dated: August 28, 2007.

By the Office of Thrift Supervision.

John M. Reich,

Director.

Footnotes

1.  OTS is continuing to review the public comments submitted on the interim final rule and plans to publish a final rule addressing these comments later this year.

2.  72 FR at 25953.

3.  72 FR at 25953-25954.

4.  72 FR at 25954.