[Federal Register Volume 59, Number 77 (Thursday, April 21, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9585]
[[Page Unknown]]
[Federal Register: April 21, 1994]
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DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 500, 545, 552, 563, 563b, 574
[No. 93-192]
Miscellaneous Technical Amendments
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Office of Thrift Supervision (OTS) is proposing several
technical corrections and clarifications to its regulations on home
loans and other real estate loans, its operating subsidiary regulation,
and its incorporation and standard conversion regulations. The OTS is
also proposing to amend its insider transactions rule and remove or
revise obsolete or superseded provisions concerning investment
limitations, stock ownership and remote service units. A waiver
provision is also being proposed.
DATES: Comments on this proposed rule must be received on or before May
23, 1994.
ADDRESSES: Comments should be sent to: Director, Information Services
Division, Public Affairs, Office of Thrift Supervision, 1700 G Street
NW., Washington DC 20552. Attention Docket No. 93-192. These
submissions may be hand delivered to 1700 G Street NW., from 9 a.m. to
5 p.m. on business days; they may be sent by facsimile transmission to
FAX number (202) 906-7755. Submissions must be received by 5 p.m. on
the day they are due in order to be considered by the OTS. Late-filed,
misaddressed, or misidentified submissions will not be considered in
this rulemaking. Comments will be available for public inspection at
1700 G Street, NW., from 1 to 4 p.m. on business days. Visitors will be
escorted to and from the Public Reference Room at established
intervals.
FOR FURTHER INFORMATION CONTACT: Mary Gottlieb, Senior Paralegal, (202)
906-7135, or Deborah Dakin, Assistant Chief Counsel, (202) 906-6445,
Regulations and Legislation Division, Chief Counsel's Office, Office of
Thrift Supervision, 1700 G Street, NW., Washington DC 20552.
SUPPLEMENTARY INFORMATION: The OTS is today proposing several technical
corrections to revise, clarify or remove obsolete or ambiguous
regulations.
Stock Loans
Section 205 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA)\1\ amended section 7(j)(9) of the
Federal Deposit Insurance Act and modified the reporting criteria and
procedures of that section, thereby superseding existing Sec. 574.5(b)
of OTS's regulations. Rather than amend Sec. 574.5(b) to conform to
amended section 7(j)(9), the OTS has chosen to rescind the regulation
because the statute is self-implementing and OTS finds it unnecessary
merely to repeat the statutory language.
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\1\Public Law 102-242, 105 Stat. 2236 (1991).
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Directors
Through its final rule on regulatory review,\2\ the OTS lowered the
number of directors required for a Federal savings association from
seven to five, consistent with the required number of national bank
directors. An additional reference in Sec. 552.3, which was overlooked
in the earlier rulemaking, is now being changed to conform with the new
requirement.
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\2\58 FR 4308 (Jan. 14, 1993).
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Operating Subsidiaries
The OTS has received questions regarding whether, under 12 CFR
545.81(d), a Federal savings association that wants a service
corporation it owned on November 30, 1992 (the effective date of the
operating subsidiary regulation) to be deemed an operating subsidiary
must file an application if the federal savings association was
ineligible for expedited treatment on November 30, 1992, but currently
is eligible for expedited treatment. The agency's intent was and
continues to be to require an application only if the association is
currently, rather than historically, ineligible for expedited
treatment. Similarly, the ownership language in the current regulation
has given rise to some confusion. The agency has consistently applied
this paragraph only to service corporations that the federal savings
association owned both on November 30, 1992 and on the date it seeks to
have the service corporation deemed an operating subsidiary, not to
service corporations owned by another entity on November 30, 1992.
The OTS is therefore proposing a clarifying technical amendment
restructuring Sec. 545.81(d). This replacement language more clearly
sets forth the requirements that apply when a federal savings
association that owned a service corporation on November 30, 1992,
wishes to have that service corporation deemed an operating subsidiary.
Insider Transactions
Pursuant to and in accordance with section 4(a) of the Home Owners'
Loan Act and section 106(b)(2)(H)(i) of the Bank Holding Company
Amendments Act of 1970,3 as revised by section 306(j) of the
Federal Deposit Insurance Corporation Improvement Act of 1991
(``FDICIA''),4 the OTS proposes to amend its regulation pertaining
to insider transactions by incorporating by means of cross-reference
subpart B of the Federal Reserve Board's Regulation O, 12 CFR part 215,
subpart B, as now or hereafter in effect.
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\3\12 U.S.C. 1972(2)(H)(i).
\4\Public Law 102-242, 105 Stat. 2359.
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Section 306(j) of FDICIA amended section 106 of the Bank Holding
Company Amendments Act of 1970 to make it applicable to all savings
banks and savings associations (as those terms are defined in section 3
of the Federal Deposit Insurance Act5). Subpart B of Regulation O
implements and refines the requirements of section 106 with respect to
banks that are members of the Federal Reserve System. Because savings
associations must also now comply with section 106, the OTS believes it
is appropriate and consistent with the goal of regulatory uniformity to
apply subpart B of Regulation O to savings associations as well.
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\5\12 U.S.C. 1813.
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Investments
Section 563.96, which restricts the amount savings associations may
invest in savings accounts and debt securities hedged with forward
commitments according to a complex formula set forth in the rule, is
being removed in light of the Federal Reserve Board's (FRB) final rule
on interbank liabilities.6 The FRB's final rule limits such
investments to 25% of capital. Since the FRB rule applies to savings
associations, Sec. 563.96 would be deleted as unnecessary.
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\6\57 FR 60086 (Dec. 18, 1992).
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Loan Documentation
The OTS is proposing to amend its interim final loan documentation
regulation to broaden eligibility to any institution that was assigned
a MACRO rating of 3 in its most recent report of examination and that
has obtained written permission from its Regional Director to employ
the exemption. The agency believes that this change is consistent with
both encouraging lending to creditworthy borrowers and maintaining
adequate safety and soundness safeguards.
Conversions
A conforming amendment is being made to the OTS's standard
conversion regulations to conform section 563b.3, restricting the
repurchase of stock and payment of dividends, to prompt corrective
action standards.
Remote Service Units
Section 545.141 governs the establishment of Remote Service Units
(RSUs)7 by federal savings associations. Technological and
regulatory changes since the regulation was last revised in 1983 have
made certain provisions unnecessary. First, Sec. 545.141(d), which
addresses privacy of account data concerning an RSU account, imposes
restrictions on federal savings associations that go further than those
applicable to other financial institutions. The OTS believes that
Regulation E of the Federal Reserve Board, 12 CFR part 205, which
governs electronic funds transfers by all financial institutions,
including savings associations, provides adequate protection for
consumer's interests in this area. Under 12 CFR 205.7(a)(9), an
institution must disclose to a consumer the circumstances under which
the financial institution in the ordinary course of business will
disclose information to third parties concerning the consumer's
account. Second, the OTS proposes to revise Sec. 545.141(e) to reflect
earlier revisions to 12 CFR part 568, ``Minimum Security Devices.''
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\7\An RSU is defined as an information processing device by
which information relating to financial services rendered to the
public is stored and transmitted, instantaneously or otherwise, to a
financial institution. The term RSU generally includes point of sale
terminals, merchant-operated terminals, cash dispensing machines and
automated teller machines.
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Waivers and Miscellaneous Changes
The agency is adding a provision expressly setting forth its
existing authority to waive any non-statutorily required regulation for
good cause. This authority is separate and apart from, and is not meant
to limit, the agency's statutorily based authority (e.g., under the
Depository Institutions Disaster Relief Act of 1992) to waive certain
regulations and its inherent authority to decide whether or not to take
enforcement actions against violations of its regulations. See Heckler
v. Chaney, 470 U.S. 821 (1985).
Sections 545.33, 545.35 and 563.93 are being amended to correct
internal references.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub.
L. 96-354, 5 U.S.C. 601), it is certified that this technical
regulation will not have a significant economic impact on a substantial
number of small savings associations, small service corporations or
other small entities. It merely revises or removes existing
inconsistencies or obsolete regulations.
Executive Order 12866
The Acting Director has determined that this document is not a
``significant regulatory action'' for purposes of Executive Order
12866.
Paperwork Reduction Act
The recordkeeping requirement contained in this proposed rule has
been submitted to the Office of Management and Budget in accordance
with the Paperwork Reduction Act (44 U.S.C. 3504(h)). The recordkeeping
requirement contained in this rule is found at 12 CFR 563.170(c). The
likely recordkeepers will be well- or adequately-capitalized savings
associations who received a MACRO rating of 1, 2 or 3 in their most
recent examinations. The estimated average reduction in burden
associated with the increase in the number of institutions eligible to
claim the exemption is .5 hours per recordkeeper. Comments concerning
the accuracy of this burden estimate and suggestions for reducing this
burden should be directed to the Office of Thrift Supervision, 1700 G
Street, NW., Washington, DC 20552 and to the Office of Management and
Budget, Paperwork Reduction Project (1550-0011), Washington, DC 20503.
List of Subjects
12 CFR Part 500
Organization and functions (Government agencies), Reporting and
recordkeeping requirements.
12 CFR Part 545
Accounting, Consumer protection, Credit, Electronic funds
transfers, Investments, Manufactured homes, Mortgages, Reporting and
recordkeeping requirements, Savings associations.
12 CFR Parts 552 and 563b
Reporting and recordkeeping requirements, Savings associations,
Securities.
12 CFR Part 563
Accounting, Advertising, Crime, Currency, Investments, Mortgages,
Reporting and recordkeeping requirements, Savings associations,
Securities, Surety bonds.
12 CFR Part 574
Administrative practice and procedure, Holding companies, Reporting
and recordkeeping requirements, Savings associations, Securities.
Accordingly, the Office of Thrift Supervision hereby proposes to
amend subchapters A, C and D, chapter V, title 12 of the Code of
Federal Regulations as set forth below.
SUBCHAPTER A--ORGANIZATION AND PROCEDURES
PART 500--ORGANIZATION AND CHANNELLING OF FUNCTIONS
1. The authority citation for part 500 is revised to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464.
1a. Section 500.30 is amended by adding a sentence at the end of
paragraph (a) to read as follows:
Sec. 500.30 General statement concerning procedures and forms.
(a) * * * The Director may, for good cause and to the extent
permitted by statute, waive the applicability of any provision of this
chapter.
* * * * *
SUBCHAPTER C--REGULATIONS FOR FEDERAL SAVINGS ASSOCIATIONS
PART 545--OPERATIONS
2. The authority citation for part 545 continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.
Sec. 545.33 [Amended]
3. Section 545.33 is amended by removing the phrase ``this
paragraph (e)'' in the first sentence of the introductory text to
paragraph (c), adding in lieu thereof the phrase ``this paragraph
(c)''.
Sec. 545.35 [Amended]
4. Section 545.35 is amended by removing the phrase ``this
paragraph (d)'' in the second sentence of paragraph (b), adding in lieu
thereof the phrase ``this paragraph (b)''.
5. Section 545.81 is amended by revising paragraph (d) heading,
paragraph (d)(1) introductory text, and paragraph (d)(2), and by adding
paragraph (d) introductory text to read as follows:
Sec. 545.81 Operating subsidiaries.
* * * * *
(d) Converting service corporations to operating subsidiaries. A
service corporation that on November 30, 1992 was owned by a Federal
savings association and engaged in activities permissible for a Federal
savings association to undertake directly; is owned by that Federal
savings association; engages solely in activities that a Federal
savings association may undertake directly; and meets the control
criteria set forth in this section, may be deemed to be an operating
subsidiary provided that:
(1) If the Federal savings association is eligible for ``expedited
treatment'' under Sec. 516.3 of this chapter, the Federal savings
association creates and maintains appropriate internal records. The
record shall consist of a certification by the Board of Directors of
the association containing:
* * * * *
(2) If the Federal savings association is not eligible for
``expedited treatment'' under Sec. 516.3 of this chapter, the Federal
savings association follows the application procedures set forth in
paragraph (c)(2) of this section and receives the OTS's prior written
approval. The corporation will be deemed to be an operating subsidiary
on the date of the OTS's written approval.
* * * * *
5a. Section 545.141 is amended by removing and reserving paragraph
(d); and by revising paragraph (e) to read as follows:
Sec. 545.141 Remote Service Units (RSUs).
* * * * *
(e) Security. A Federal savings association shall protect
electronic data against fraudulent alterations or disclosure. All RSUs
shall meet the minimum security devices requirements of part 568 of
this chapter.
* * * * *
PART 552--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL
STOCK ASSOCIATIONS
6. The authority citation for part 552 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.
Sec. 552.3 [Amended]
7. Section 552.3 is amended by removing the paragraph designation
for paragraph (a) and by removing the phrase ``fewer than seven'' in
section 7 of the federal stock charter form, and adding in lieu thereof
the phrase ``fewer than five''.
SUBCHAPTER D--REGULATIONS APPLICABLE TO ALL SAVINGS ASSOCIATIONS
PART 563--OPERATIONS
8. The authority citation for part 563 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468, 1817,
1828, 3806; 42 U.S.C. 4106; Public Law 102-242, sec. 306, 105 Stat.
2236, 2355 (1991).
9. Section 563.43 is amended by revising the introductory text and
by adding a new paragraph (e) to read as follows:
Sec. 563.43 Loans by savings associations to their executive officers,
directors and principal shareholders.
Pursuant to 12 U.S.C. 1463(a) and 1468, a savings association, its
subsidiaries and its insiders (as defined) shall be subject to the
restrictions contained in subparts A and B of 12 CFR part 215, the
Federal Reserve Board's Regulation O, with the exception of 12 CFR
215.13, in the same manner and to the same extent as if the association
were a bank and a member bank of the Federal Reserve System, except
that:
* * * * *
(e) References to the Reserve Bank or the Comptroller shall be
deemed to include the Director of the Office of Thrift Supervision.
Sec. 563.93 [Amended]
10. Section 563.93 is amended by removing the phrase ``paragraph
(b)(13) of this section'' in paragraph (f)(1) and adding in lieu
thereof the phrase ``paragraph (b)(11) of this section''.
Sec. 563.96 [Removed]
11. Section 563.96 is removed.
12. Section 563.170 is amended by revising paragraph (c)(10)(i)(B)
to read as follows:
Sec. 563.170 Examinations and audits; appraisals; establishment and
maintenance of records.
* * * * *
(c) * * *
(10) * * *
(i) * * *
(B) Eligible savings association means any savings association that
is well- or adequately-capitalized, as defined in 12 CFR part 565 and
was either:
(1) Assigned a CAMEL rating of 1 or 2 in its most recent report of
examination; or
(2) Assigned a CAMEL rating of 3 in its most recent report of
examination and has obtained written permission from the Regional
Director to employ this exemption.
* * * * *
PART 563b--CONVERSIONS FROM MUTUAL TO STOCK FORM
13. The authority citation for part 563b continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a; 15 U.S.C.
78c, 78l, 78m, 78n, 78w.
Sec. 563b.3 [Amended]
14. Section 563b.3 is amended by removing the phrase ``ratio of
regulatory capital (as defined in 12 CFR 567.1) to total liabilities
below 6%'' in paragraph (g)(3)(ii), and adding in lieu thereof the
phrase ``prompt corrective action category (as defined in 12 CFR part
565) to below adequately capitalized''.
PART 574--ACQUISITION OF CONTROL OF SAVINGS ASSOCIATIONS
15. The authority citation for part 574 continues to read as
follows:
Authority: 12 U.S.C. 1467a, 1817, 1831i.
Sec. 574.5 [Amended]
16. Section 574.5 is amended by removing the phrase ``and other
reports'' from the section heading; by removing paragraph (b); by
removing the phrase ``reports and'' from paragraph (c); and by
redesignating paragraph (c) as new paragraph (b).
Dated: October 1, 1993.
By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.
Editorial note: This document was received at the Office of the
Federal Register on April 15, 1994.
[FR Doc. 94-9585 Filed 4-20-94; 8:45 am]
BILLING CODE 6720-01-P
