[Federal Register Volume 60, Number 166 (Monday, August 28, 1995)]
[Proposed Rules]
[Pages 44442-44449]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21160]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 60, No. 166 / Monday, August 28, 1995 /
Proposed Rules
[[Page 44442]]
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 500, 504, 510, 515, 529, 533, 543, 545 552, 556, 562,
563, 563d, 563g, 567, 571, 583, and 584
[No. 95-160]
RIN 1550-AA85
Regulatory Review
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Notice of proposed rulemaking; request for comment.
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SUMMARY: Pursuant to section 303(a) of the Community Development and
Regulatory Improvement Act of 1994 (CDRIA) and the Regulatory
Reinvention Initiative of the Vice President's National Performance
Review, the Office of Thrift Supervision (OTS) has reviewed chapter V
of the Code of Federal Regulations (CFR), where OTS regulations are
codified. OTS reviewed each regulation to determine whether it is
necessary, imposes the least possible burden consistent with safety and
soundness, and is written in a clear, straightforward manner.
As a result of this review, OTS has identified a number of
regulations that can be eliminated as duplicative or unnecessary. The
agency is today proposing to remove those sections from its
regulations. OTS has also identified a number of ways in which its
regulations could be streamlined or reorganized into a more user-
friendly document. Before proposing such structural changes, however,
the agency is today requesting comment on whether such changes would
sufficiently improve the CFR to merit the effort to make the changes
and the effort required from the industry to become familiar with the
new structure.
DATES: Comments must be received on or before October 27, 1995.
ADDRESSES: Send comments to Chief, Dissemination Branch, Records
Management and Information Policy, Office of Thrift Supervision, 1700 G
Street NW., Washington, D.C. 20552, Attention Docket No. 95-160. These
submissions may be hand-delivered to 1700 G Street NW., from 9:00 a.m.
to 5:00 p.m. on business days; they may be sent by facsimile
transmission to FAX Number (202) 906-7755. Comments will be available
for inspection at 1700 G Street NW., from 1:00 p.m. until 4:00 p.m. on
business days.
FOR FURTHER INFORMATION CONTACT: Therese L. Monahan, Project Manager,
Thrift Policy (202) 906-5740; or Valerie J. Lithotomos, Counsel
(Banking and Finance), Regulations and Legislation Division, Chief
Counsel's Office, (202) 906-6439, Office of Thrift Supervision, 1700 G
Street NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
I. Background
Today, the OTS is publishing the first in a series of proposals to
streamline, update, and generally improve its regulations. The OTS
conducted a comprehensive review of its regulations in the spring of
1995 pursuant to section 303 of CDRIA and the Administration's
Reinvention Initiative.1 In response to the Administration's
mandate to create grass roots partnerships and the desire to negotiate,
not dictate rules, OTS sought specific industry comments on regulatory
burden through town meetings and industry roundtable meetings held by
the Acting Director and Regional Directors. In addition, OTS obtained
further industry input from America's Community Bankers (ACB).2
The ACB surveyed some of its members and offered a summary of survey
findings to the OTS. ACB's survey collected industry feedback on OTS's
regulatory structure and various communication vehicles used to
disseminate OTS interpretations and guidance. ACB reported a generally
favorable response to OTS's overall plan to streamline and reorganize
its regulations in order to reduce regulatory burden.
\1\ See the Department of Treasury's Summary Report on the
President's Regulatory Reform Initiatives.
\2\ America's Community Bankers is a trade association
representing 2,000 savings associations and community financial
institutions and related business firms.
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OTS Staff in both the Washington and Regional Offices reviewed the
regulations and policy statements contained in chapter V of the CFR to
``streamline and modify those regulations and policies in order to
improve efficiency, reduce unnecessary costs, * * * eliminate
unwarranted constraints on credit availability [and] remove
inconsistencies and outmoded and duplicative requirements.'' 3
\3\ Section 303 of CDRIA, 12 U.S.C. 4803(a)(1)(A), (B).
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Preliminary staff recommendations for improvements to the
regulations were based on the following criteria:
Is the regulation current?
Can the regulation be eliminated without endangering
safety and soundness, diminishing consumer protection, or violating
statutory requirements?
Is the regulation's subject matter more suited for a
policy statement?
Is the regulation consistent with the regulations of the
other federal banking agencies?
Can the regulation be understood without consulting an
attorney?
Is the regulation written as a stand-alone regulation,
without confusing cross-references?
Is the regulation required by statute?
Are the regulations/parts/sections ordered in a logical
fashion?
This review identified a number of ways in which OTS's regulations
could be improved. The agency is undertaking a five-step process to
improve its regulations. Today's proposal reflects the first two steps
of that process.
First, the agency seeks public comment on a number of potential
ways OTS could streamline and restructure its regulations to make them
more user-friendly. These potential improvements, discussed in Section
II of this preamble, have been suggested by OTS Washington and Regional
staff. OTS is particularly interested in whether such reorganization
and restructuring would make OTS's regulations easier for the public to
use.
Second, the proposal seeks comment on the deletion of a number of
specific parts and sections the agency has identified as outdated or
unnecessary. These regulations are discussed more fully in Section III
of this preamble. The agency also seeks comment on some technical
modifications to its regulations, including changes made to update
cross-references and definitions.
[[Page 44443]]
As a third step in this reinvention of regulations, the agency
expects to issue over the next year a series of more substantive
proposals to make more significant changes in a number of key areas of
its regulations, including regulations governing lending, subsidiaries,
charter and by-laws, insurance, preemption, and adjustable-rate
mortgages. Comments received on the organizational changes proposed
today will also be considered in each of those more substantive
reviews.
The fourth step in this reinvention is OTS's participation in the
interagency review of its regulations, along with those of the other
federal banking agencies, with a view to implementing section 303(a)(2)
of CDRIA by making regulations and guidance implementing common
statutory provisions and supervisory policies more uniform. This review
is taking place under the auspices of the Federal Financial
Institutions Examination Council.
Finally, the agency has identified some regulations that would
require statutory changes before the regulation could be removed or
updated. These include removing the liquidity regulation at part 566,
which is required by section 6 of the HOLA, removing the requirement
that Federal savings associations maintain membership in a Federal Home
Loan Bank, which is required by section 5(f) of the HOLA, and providing
additional lending flexibility under the Qualified Thrift Lender test,
which is required by section 10(m) of the HOLA. The agency has
submitted potential legislative changes on these and other burdensome
statutory provisions to the Congress.
II. Request for Comment on Possible Reorganization of OTS
Regulations
OTS's current regulatory structure has evolved over the years in
response to sweeping statutory changes and changes in policy direction
based on the difference in the general condition and makeup of the
thrift industry. When chapter V of the CFR is viewed as a whole, some
subject areas are addressed in multiple areas of the regulations. For
example, a savings association considering whether to create a service
corporation or an operating subsidiary would currently, at a minimum,
look at Secs. 545.74, 545.81, 563.37, 563.41, and 571.21. An
institution considering a merger with another depository institution
might have to review regulations in parts 546, 552, and 563.
Historically, OTS's predecessor agency, the Federal Home Loan Bank
Board (FHLBB), looked at the source of statutory authority and charter
type of affected institutions in organizing subchapters of chapter V of
the CFR. Regulations in former subchapter B (12 CFR 520 et seq.) were
promulgated pursuant to the FHLBB's authority under the Federal Home
Loan Bank Act (FHLBA); regulations in subchapter C (12 CFR 540 et seq.)
were promulgated under the FHLBB's chartering authority for federal
savings associations under the Home Owner's Loan Act (HOLA); and
regulations in subchapter D (12 CFR 560 et seq.) were promulgated under
the FHLBB's authority as operating head of the Federal Savings and Loan
Insurance Corporation (FSLIC) under title IV of the National Housing
Act (NHA) for all FSLIC-insured institutions.
The Financial Institutions Reform, Recovery, and Enforcement Act
(FIRREA) created the OTS in 1989 and substantially overhauled the
statutes governing the regulation of savings associations. Title IV of
the NHA was repealed and some authorities under which the FHLBB had
issued regulations pursuant to the FHLBA and title IV of the NHA were
transferred to the HOLA, which itself was revised. The HOLA now serves
as the primary statutory authority for OTS regulation of all savings
associations, regardless of charter.
In October, 1989, OTS, the Federal Deposit Insurance Corporation
(FDIC), and the Federal Housing Finance Board divided up the
regulations of the former FHLBB and FSLIC among themselves in
accordance with their new statutory responsibilities. In November,
1989, OTS published a recodification of its regulations. This
recodification reflected some reorganization of the regulations into a
more user-friendly format, but because of time constraints did not
include a total structural overhaul.
From January, 1992 until January, 1993, OTS reviewed and revised
its regulations with a view to removing outdated and unnecessary
regulations. It held public hearings in February, 1992 and requested
industry comments on regulations that could be removed or modified. It
published a notice of proposed rulemaking in September, 1992 and
adopted a final regulation in January, 1993 that removed a number of
obsolete or redundant regulations. The agency did not propose as part
of that process to restructure the regulations, remove regulations that
duplicated statutory authority, or revise regulations setting forth
certain implied powers. At that time, the agency believed that such
changes could result in more confusion than benefit for those subject
to OTS regulations.4
\4\ See 57 FR 40350 (September 3, 1992).
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If the OTS were drafting its regulations on a totally clean slate,
the regulations would not be organized as they are now. However, the
cost of changing an existing and familiar structure could exceed the
benefit derived from creating a more logical organizational structure.
As part of the substantive review of major areas of OTS regulations
such as lending, subsidiaries, and corporate governance, OTS is
considering, and seeks public input on, how much restructuring related
regulations would help CFR users. Some specific types of reorganization
that would cut across subject areas are set forth below.
A. Should OTS Consolidate Common Definitions of General Applicability
now in Parts 541, 561, 563, and 583 in a new Part 501?
1. Background
Currently, several subchapters of OTS's regulations have
definitional parts. In the 1989 recodification of OTS's regulations,
the agency removed duplicative definitions from parts 541 (definitional
part for subchapter C) and 561 (definitional part for subchapter D) and
clarified that definitions in each of those parts applied to both
subchapters unless a specific regulation provided otherwise. Subchapter
F, the regulations for savings and loan holding companies, has its own
definitional part, part 583, with some duplicative, some unique, and
some slightly different definitions.
Other parts and sections, such as part 564 (Appraisals), part 567
(Capital), and Sec. 563.51 (Qualified Thrift Lender), contain
definitions that generally apply only to that part or section. Recent
OTS regulations have included definitions for new terms in the revised
section, in part because this is the common practice at the other
banking agencies. Some of these section- or part-specific regulations
have themselves been cross-referenced in other sections. For example,
the agency's transactions-with-affiliates regulation, 12 CFR 563.41,
defines ``subsidiary'' by referring to Sec. 567.1(dd), the capital
regulation, but defines ``savings association'' by referring to
Sec. 583.21, the definitions used for savings and loan holding
companies.
2. Possible Revision
The OTS is considering consolidating all definitions used or
referenced in more than one part or section into a new part 501.
Definitions used only in a particular part or section would remain with
that unit. Placing all common definitions in a new part 501 would
significantly simplify the structure of
[[Page 44444]]
OTS's regulations. We expect that it may save time for users searching
for a definition and trying to determine the regulations to which the
definition applies. It may also minimize confusion resulting from
duplicative or conflicting definitions of the same term and reduce the
amount of cross-referencing needed. As with any structural change,
users might experience initial confusion until they became familiar
with the new structure. When OTS did a similar consolidation of
definitions on a smaller scale in 1989, however, no major problems were
reported.
B. Should OTS Consolidate the Remaining Safety and Soundness
Regulations in Part 545 Into Part 563?
1. Background
In 1989, FIRREA amended both the HOLA and the Federal Deposit
Insurance Act (FDIA) in a number of ways that subjected both federally
and state chartered savings associations to similar requirements.
Additional statutory changes in the Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA) have resulted in more
similar authority and safety-and-soundness-based restrictions for state
and federally chartered entities. Under section 28 of the FDIA, the
type and amount of activities in which state-chartered savings
associations may engage without specific FDIC approval are tied more
closely to the types and levels of activities permitted for federal
savings associations.
As a result of these statutory changes and a general effort by OTS
to remove duplicative regulations and apply regulations consistently to
institutions regardless of charter type, most new safety-and-soundness-
based regulations have been placed in subchapter D, usually in part
563. Additionally, over the years a number of regulations found in
parts 545 and 563 have been written to include cross-references to
regulations found in the other part. For example, definitional parts
541 and 561 each already cross-reference their counterpart. The real
estate regulation for federal savings associations at Sec. 545.32
cross-references the agency's general real estate lending regulations
at Secs. 563.35(d), 563.100, and 563.101. Similarly, the regulation on
high loan-to-value loans by all savings associations found at
Sec. 563.37 cross-references restrictions found in the federal savings
association regulations at Sec. 545.38.
2. Possible Revisions
The OTS seeks input from the industry and other users of its
regulations on whether its regulations would be improved by
consolidating all safety-and-soundness-based regulations into part 563.
The purpose of this consolidation would be to simplify and streamline
the structure of OTS regulations, not to impose additional restrictions
on state-chartered institutions. If institutions find the current
structure familiar and workable, such a consolidation could create an
unnecessary burden. The agency is also concerned that such a
consolidation could be perceived as an attempt to increase the
regulatory burden on state-chartered associations, rather than an
attempt to consolidate requirements applicable to savings associations
regardless of their charters that are currently scattered in several
subchapters of chapter V.
As part of today's proposal, the agency is proposing to eliminate a
number of regulations applicable to federal savings associations that
merely cross-reference or duplicate requirements found in part 563. If
OTS decided to consolidate the regulations further, it would first
review the targeted regulations in part 545 to determine which safety-
and-soundness-based regulations or portions of those regulations
originally applicable to federal savings associations were appropriate
for all savings associations. Any remaining restrictions found to be
unnecessary would be removed from the regulations before the
regulations were consolidated into part 563.
C. Should OTS's Regulations Comprehensively Codify Thrift Powers or
Should OTS Delete Regulations That Only Repeat Statutory Authority or
set Forth an Implied Power?
1. Background
Chapter V of the CFR, where OTS's regulations are codified, is
inconsistent. It repeats some, but not all, statutory powers and
restrictions and some, but not all, implied powers and restrictions on
those powers. This has led to confusion.
In discussing regulations with OTS field personnel, some
institutions have indicated that they believe that chapter V of the CFR
is a self-contained document. Others, while recognizing that Chapter V
is not currently the sole repository of information on thrift powers,
believe that it would be more useful if it codified all implied and
statutory powers. Still others believe that Chapter V should be
simplified by removing all regulations that merely repeat statutory
authority.
a. Statutory powers. Over the years, the OTS and its predecessor,
the FHLBB, have generally omitted or removed regulations that do no
more than repeat statutory language or cite statutory authority in the
course of other regulatory burden reduction projects. The agency's view
has been that removing duplicative language from the regulations can
minimize necessary updating when Congress amends a statute.
Currently, OTS has specific regulations and portions of regulations
that repeat statutory language (e.g., Secs. 545.44 (mortgage
transactions with the Federal Home Loan Mortgage Corporation) and 584.3
(transactions with affiliates)). Other regulations repeat statutory
authority in one paragraph and then set limitations on that authority
in succeeding paragraphs (e.g., Secs. 545.39 (loans guaranteed under
the Foreign Assistance Act) and 545.46 (commercial loans)).
b. Implied powers. Some OTS regulations set forth an implied power
of savings associations (a power that is incidental to the exercise of
powers expressly set forth in statutes or regulations), such as
Secs. 545.17 (funds transfer services) and 556.12 (deposit assurance of
direct deposit of Social Security payments). Other implied powers of
savings associations, and interpretations of the scope of express
statutory powers, have not been codified as regulations. Savings
associations must look to legal opinions or regulatory handbooks for
information on these powers. This reflects the factually specific
manner in which issues on implied powers are usually first presented to
the agency. OTS's regulations have never completely reflected all of
savings associations' implied powers or restrictions on these powers.
2. Proposed revisions
OTS is considering which of two diametrically opposed approaches
might result in a more useful Chapter V.
The first alternative would be to include all statutory and implied
powers of thrifts in OTS regulations. This would create a
comprehensive, but significantly longer, regulatory document. A truly
self-contained document that includes a complete recitation of both
statutory and implied powers might be a valuable resource, but could
become quickly outdated as statutes are amended. Given the evolving
nature of the market for financial services, a comprehensive listing of
implied powers in the regulations would definitely require frequent
updating.
The second alternative would be to eliminate all regulations that
merely
[[Page 44445]]
repeat statutory powers or that list implied powers. Handbooks or legal
opinions would provide a more complete discussion. This would decrease
total CFR pages and streamline the regulations. A variation of this
alternative might be to increase specific citations to statutory
authority in the regulations but remove repetitions of statutory
language. A regulation could set forth the existence of implied powers
and the standards used to determine those powers.
Pending public comment on these alternatives, today's proposal
takes a middle position. It suggests deletion of several regulations
that merely refer to statutory authority without any additional
regulatory interpretation. Today's proposal would not, however, remove
those regulations that contain paragraphs setting forth both statutory
authority and regulatory restrictions on that authority because the OTS
seeks public input on whether this format is more helpful than
burdensome. The proposal also neither removes the regulations listing
certain implied powers of savings associations nor adds regulations
setting forth other implied powers.
D. Should Policy Statements in Parts 556 and 571 Be Deleted and Recast
Either as Regulations or Placed as Guidance Placed in the Appropriate
Regulatory Handbook?
1. Background
Parts 556 and 571 of the CFR contain policy statements adopted by
OTS or its predecessor agency, the FHLBB, after notice and comment
rulemaking. The original concept behind codifying policy statements in
the CFR was to make these agency interpretations and guidance readily
available to savings associations. Since 1989, however, OTS has been
gradually eliminating policy statements from these parts and
incorporating their substance either into regulations after notice and
comment rulemaking or as guidance in regulatory handbooks. These
handbooks are provided to all savings associations and are available to
others by subscription. The handbooks compile information from various
sources on current agency interpretations and guidance and contain more
detail than the CFR.
2. Possible Revisions
One alternative is to review each of the policy statements
currently appearing in the CFR and determine, after notice and comment,
whether it should be adopted as a regulation. Those not adopted as
regulations would be placed as guidance in the appropriate regulatory
handbooks. This would streamline the CFR and aid in providing a more
concise and less confusing organizational structure.
Another alternative would be to continue to include some policy
statements in Chapter V of the CFR where the agency believed that this
would be the best vehicle for acquainting savings associations and
other CFR users of the agency's most significant interpretations. The
agency seeks comments on what criteria would be most useful in choosing
which policy statements to codify, if this approach were chosen.
E. What is the Best Method of Communicating Different Types of
Information, Guidance, Policies, Restrictions, and Requirements?
1. Background
Savings associations that look only at the CFR for information on
OTS interpretive rules, policies, procedures, and guidance have barely
scratched the surface of available materials. New issues arise and are
addressed in fact-specific situations. Some are first presented by a
request for a legal opinion, others through an on-site examination,
others in discussions with an interagency task force. OTS also
communicates policy positions via Regulatory Handbooks, Transmittals,
Thrift and Regulatory Bulletins, legal opinions, Letters to Chief
Executive Officers (CEO Letters), preambles to regulations,
instructions to the Thrift Financial Report, press releases, and
speeches.
There are vast differences in the types and time sensitivity of
information communicated. It is not likely that the agency could ever
adopt just one form of communication. However, the agency is striving
to keep communications as clear, simple, and timely as possible.
Because not all methods of communication reach all of OTS's
audiences equally, confusion has arisen in some rapidly developing
areas. For example, OTS sent CEO Letters to savings associations
notifying them of delays in implementation of the interest-rate risk
component of the capital regulation while the agency developed an
appeals process. Law firms who needed that information in preparing
disclosure statements discussing capital requirements for those savings
associations did not receive this information directly. Some
discussions on the scope of regulations appear only in the preamble
accompanying those regulations when they are published in the Federal
Register, not in the CFR. The agency's communications on implied powers
usually take the form of legal opinions, which are available through
computerized legal databases that may not be regularly accessed by some
savings associations.
The agency has also heard complaints from some users that some of
the more informal means of communication, such as press releases,
speeches, and CEO letters are not indexed or numbered and are thus more
difficult to identify and obtain after issuance.
2. Request for Comment in Developing Possible Revisions
The agency is considering, and seeks public input on, establishing
standards for which means of communication would be preferred for
particular types of information. Among the criteria that could be used
in determining the appropriate method would be: (1) The urgency of
communicating the information; (2) the audience to be reached (both
primary and secondary audiences); (3) whether industry or public input
must be obtained through notice and comment rulemaking; and (4) whether
the situation to be addressed is evolving, increasing the likelihood
for changes in the agency's position. The agency is also considering
whether there are more ways in which the agency can receive and make
information available electronically.
III. Proposed Deletions and Modifications to Regulations
Set forth below are regulations that OTS is proposing to delete
because they are no longer useful. The OTS is also proposing to delete
cross-references to sections that are being deleted.
A. Regulations To Be Removed or Modified Because of Obsolescence or
Redundancy
1. Recordkeeping
a. Statements of Condition (562.3). The OTS is proposing to remove
the regulation requiring savings associations to publish an annual
statement of condition in a newspaper and to make such ``counter
statements'' available at each home and branch office. These
requirements have proven burdensome and unnecessary. The newspaper
publication requirement was added to parallel a statutory requirement
that national banks publish such statements of condition. That
requirement for national banks was repealed in 1994. The Acting
Director of OTS waived the requirement for savings associations to make
such publications in December, 1994.
The agency has found that counter statements are not often used by
savings
[[Page 44446]]
association customers and duplicate information already available. The
other federal banking agencies do not impose a similar requirement on
the depository institutions they regulate. A savings association
customer seeking such information may ask the savings association for
it, or may obtain the information from the OTS.
b. Filing and signature requirements (563g.5). The OTS proposes to
decrease the required number of copies of an offering circular filed in
connection with securities offerings under part 563g to reduce the
regulatory burden and associated costs. The number of required copies
of offering circulars would be reduced from 25 to 9.
2. Policy Statements (556.4, 556.6, 556.8, 556.9, 556.11, 556.14,
556.15)
As discussed above in Section II, the OTS is seeking comment on
whether it should remove all of its policy statements from the CFR,
adopting some as regulations after notice and comment and transferring
others to guidance. As part of its review, the OTS has identified a
number of policy statements that are either outdated, merely reflect
current business practice, or otherwise provide no meaningful guidance
beyond that contained in the regulations themselves. The agency is
proposing to delete those statements. Section 556.4 (Insurance)
duplicates sections 571.4 and 563.35. Section 556.8 (Suretyship)
duplicates section 545.103; section 556.9 (Imposition of late charges
and due-on-sale clauses) duplicates the contents of parts 590 and 591;
section 556.11 (Prepayment penalty on mortgage loans) reiterates
section 545.34(c); and section 556.14 (Chief executive officer of a
branch office) duplicates information found in the model bylaws for
Federal mutual associations. Section 556.6 (Savings accounts) is not
totally consistent with Regulation DD,5 and is otherwise outdated.
Section 556.15 (Drive-in and pedestrian facilities) contains some
outdated provisions and otherwise merely reiterates common business
practice.
\5\ 12 CFR Part 230 (1995).
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3. Operational Regulations
The OTS proposes to remove a number of obsolete or duplicative
regulations addressing a variety of operational issues for savings
associations.
a. Electronic Fund Transfers (Part 533). Part 533 provides that
electronic fund transfers by savings associations are subject to
Regulation E, 12 CFR part 205 (1995). OTS proposes to delete this part
in its entirety because it is unnecessary and may cause confusion. By
its terms, Regulation E applies to consumer electronic funds transfers
at all financial institutions, including savings associations. Other
regulations that apply to all financial or depository institutions are
not separately cross-referenced in OTS's regulations.
b. Withdrawal requests (545.15). The OTS is proposing to remove
this section because it imposes unnecessary restrictions.
c. Issuance of mutual capital certificates (545.18); Issuance of
net worth certificates (545.19); Borrowing, issuing obligations and
giving security (545.20); Employment contracts (545.122); Negotiable
order of withdrawal accounts authorized (563.8); and Form, return and
maturity of securities (563.72). These sections are proposed for
deletion because they either merely repeat that a savings association
has the authority to do something that is authorized elsewhere or that
the activity is subject to restrictions set forth in other regulations.
Section 545.18 repeats authority found in section 5(b)(5) of the HOLA
and refers to Sec. 563.74, which governs all mutual capital
certificates issued by savings associations. Section 545.19 repeats
authority found in section 13 of the FDIA. Section 545.20 repeats
authority found in section 5(b) of the HOLA. Section 545.122 duplicates
section 563.39. Section 563.8 repeats authority found in 12 U.S.C.
1832. Section 563.72 merely reiterates that securities approved by OTS
under other provisions are approved.
d. Financial futures transactions (545.136) and Financial options
transactions (545.137). These sections are proposed for deletion
because they merely reiterate that federal savings associations may
engage in these types of transactions subject to the limitations set
forth in 12 CFR Part 563, Subpart F. The agency is separately reviewing
Subpart F for potential future updating and revision.
e. Limitation on transaction of business (552.2-4). This section is
proposed for deletion because it merely reiterates that part 552 sets
forth when companies may engage in business as a Federal stock
association.
f. Membership in a Federal Home Loan Bank (563.49). This section
expired on April 19, 1995, and, thus, should be removed. Federal
savings associations are still required to maintain FHLB membership by
section 5(f) of the HOLA and the FHLBA.
4. Regulations on Savings and Loan Holding Companies and Affiliates
a. Loans and other transactions with affiliates and subsidiaries
(563.41(d)(1)). The statutory provisions limiting thrifts' full use of
the sister bank and thrift exemption provisions of sections 23A and 23B
of the Federal Reserve Act expired on December 31, 1994. OTS therefore
proposes to remove this parallel regulatory provision.
b. Transactions with affiliates (584.3). This section is proposed
for deletion because it merely sets forth a statutory restriction
without any regulatory interpretation or guidance.
c. Penalty for loss of QTL status (584.6). This section is proposed
for deletion because it duplicates the penalties stated in section
563.52, which OTS proposes to amend to refer to the statutory
penalties.
5. Organizational Revisions (Parts 500, 504, 515, and 529; Sections
510.1, 510.3, 543.12, 563d.200.30, and 584.11)
a. Simplification of Part 500. The OTS is proposing today to
simplify part 500, which sets forth its statutory authority and
organizational structure. The OTS proposes to delete sections 500.3,
500.4, and 500.5 and incorporate them into the general statement of
authority at Sec. 500.1. Because the current recitation of OTS's
structure is out of date, the OTS proposes to delete sections 500.11
through 500.17 and to modify section 500.10 accordingly. The OTS will
publish a notice setting forth its current organizational structure. As
that structure is modified in the future, revised notices will be
published.
b. National Security Information (Part 504). The OTS proposes to
delete part 504 in its entirety. Part 504 was issued by the FHLBB,
predecessor to the OTS, pursuant to the requirements of subpart E of
Executive Order 12356, April 2, 1982 (Order). The Order applies to the
Department of the Treasury, which has issued implementing regulations.
These regulations apply to the OTS as a component part of the Treasury
Department. Thus, the OTS proposes to delete this part because it is
unnecessary.
c. Use of Penalty Mail in the Location and Recovery of Missing
Children (Part 515). The Department of Justice's Office of Juvenile
Justice and Delinquency Prevention guidelines are promulgated pursuant
to the authority of Sec. 3220(a)(1) of title 39 of the United States
Code. Pursuant to Sec. 3220(a)(2), each ``executive department and
independent establishment of the Government of the United States shall
prescribe regulations under which penalty mail sent by such
[[Page 44447]]
department or establishment may be used in conformance with the
guidelines prescribed under paragraph (1).'' As a component of the
Treasury Department, rather than itself an executive department or
independent establishment, the OTS is subject to any regulations
Treasury may adopt on this topic. Accordingly, OTS proposes to remove
part 515.
d. Nondiscrimination in Federally Assisted Programs (Part 529). The
purpose of part 529 was to effectuate the provisions of title VI of the
Civil Rights Act of 1964, which prohibits, among other things,
discrimination in programs and activities receiving federal assistance.
The OTS is not authorized to extend any federal financial assistance to
any program or activity.
This part was initially adopted by the FHLBB. The FHLBB established
a Housing Opportunity Allowance Program in the early 1970's that
provided federal assistance through the Federal Home Loan Banks to
provide housing for low- and middle-income families. That program
effectively ceased to exist in 1978. Thus, part 529 is unnecessary and
the OTS proposes to delete it.
e. Miscellaneous Organizational Regulations (Sections 510.1,
510.3). Section 510.1 sets forth agency policy on ex parte
communications in contested applications. Section 510.1 is proposed for
deletion because it is confusing, not consistent with the
Administrative Procedure Act (APA), and does not reflect current agency
policy. This proposed deletion would not affect ex parte communications
in adjudicative proceedings under the APA, which are governed by part
509. OTS will review the procedures currently contained in Sec. 510.1
and transfer any remaining relevant provisions to the Applications
Processing Handbook. The OTS also proposes to delete section 510.3
because it is unnecessary. The section simply repeats the obvious:
organizational regulations of the OTS are to be read as a whole with
other regulations of the agency.
f. Bank Insurance Fund-insured Federal savings banks (543.12). This
regulation merely repeats OTS's statutory authority under section 5(o)
of the HOLA to issue a Federal charter to a former state-chartered
savings bank that will maintain its deposit insurance by the Bank
Insurance Fund. OTS proposes to delete the regulation.
g. Delegation of authority to the Chief Counsel (563d.200-30 and
563g.22). In order to provide greater organizational flexibility, the
OTS has been removing specific delegations of authority from its
regulations. Delegations of authority are now contained in Director's
Orders and do not need to be codified in regulation. Therefore, OTS
proposes to remove these regulations and issue the appropriate
delegations in Director's Orders.
h. Hearings (584.11). This regulation applies to hearings on
applications to the OTS regarding savings and loan holding companies.
The OTS is preparing a Thrift Bulletin setting forth the agency's
current procedures for hearings or other appeals on all types of
applications. Accordingly, the OTS proposes to remove Sec. 584.11.
B. Other Technical Amendments
1. Definition of Unimpaired Capital and Unimpaired Surplus (563.41 and
563.43)
In March, 1995, the OTS revised its definition of ``unimpaired
capital and unimpaired surplus'' for purposes of its loans-to-one-
borrower regulation 6, 12 CFR 563.93, to follow the newly revised
definition of ``capital and surplus'' promulgated by the Office of the
Comptroller of the Currency (OCC) 7 for its lending limits
regulation. Recently, the Board of Governors of the Federal Reserve
System has proposed to adopt the OCC definition of capital and surplus
for its insider lending regulations at Regulation O.8 To reduce
confusion, OTS is today proposing to adopt the same definition of
``unimpaired capital and surplus'' for transactions with affiliates and
insider lending regulations as it adopted for the loans-to-one-borrower
regulation. This will make these regulations consistent with the
proposed change to the Federal Reserve Board definition.
\6\ 60 FR 15861 (March 28, 1995), amending 12 CFR 563.93(b)(11).
\7\ See 60 FR 8526 (February 15, 1995).
\8\ 60 FR 19869 (April 20, 1995).
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2. Definition of Organization of Economic Cooperation and Development
(OECD)-based country (567.1(p))
The other federal banking agencies have proposed to modify the
definition of ``OECD-based country'' in their capital regulations and
guidelines to reflect a new standard for when the sovereign debt of a
country would qualify for the lowest risk-weight category under the
risk-based capital regulations.9 This proposed change is identical
to that proposed by the other agencies. It would add a requirement that
in order to qualify for the lowest risk weight category, such sovereign
debt must not have been restructured in the previous five years. For
purposes of this rule, an event of restructuring of external sovereign
debt generally would include renegotiations of terms arising from the
country's inability or unwillingness to meet its external debt service
obligations. Renegotiations of debt in the normal course of business
generally do not indicate transfer risk of the kind that would preclude
an OECD-based country from qualifying for lower risk-weight treatment.
One example of such a routine renegotiation would be a renegotiation to
allow the borrower to take advantage of a change in market conditions,
such as a decline in interest rates.
\9\ For a more complete discussion of the background for this
proposed change, see the proposed rule published by the OCC at 54 FR
45243 (September 1, 1994).
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IV. Executive Order 12866
The Director of the OTS has determined that this proposed rule does
not constitute a ``significant regulatory action'' for the purposes of
Executive Order 12866.
V. Regulatory Flexibility Act Analysis
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
OTS certifies that this proposal will not have a significant economic
impact on a substantial number of small entities. The proposal does not
impose any additional burdens or requirements upon small entities and
lowers several paperwork and other burdens on all savings associations.
VI. Unfunded Mandates Act of 1995
The OTS has determined that the requirements of this proposed 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, a budgetary impact statement is not required
under section 202 of the Unfunded Mandates Act of 1995.
List of Subjects
12 CFR Part 500
Organization and functions (Government agencies).
12 CFR Part 504
Classified information.
12 CFR Part 510
Administrative practice and procedure.
12 CFR Part 515
Infants and children, Postal service.
12 CFR Part 529
Administrative practice and procedure, Civil rights.
[[Page 44448]]
12 CFR Part 533
Consumer protection, Electronic funds transfers, Savings
associations.
12 CFR Part 543
Reporting and recordkeeping requirements, Savings associations.
12 CFR Part 545
Accounting, Consumer protection, Credit, Electronic funds
transfers, Investments, Manufactured homes, Mortgages, Reporting and
recordkeeping requirements, Savings associations.
12 CFR Part 552
Reporting and recordkeeping requirements, Savings associations,
Securities.
12 CFR Part 556
Savings associations.
12 CFR Part 562
Accounting, Reporting and recordkeeping requirements, Savings
associations.
12 CFR Part 563
Accounting, Advertising, Crime, Currency, Flood insurance,
Investments, Mortgages, Reporting and recordkeeping requirements,
Savings associations, Securities, Surety bonds.
12 CFR Part 563d
Authority delegations (Government agencies), Reporting and
recordkeeping requirements, Savings associations, Securities.
12 CFR Part 563g
Reporting and recordkeeping requirements, Savings associations,
Securities.
12 CFR Part 567
Capital, Savings associations.
12 CFR Part 571
Accounting, Conflicts of interest, Investments, Reporting and
recordkeeping requirements, Savings associations.
12 CFR Part 583
Holding companies, Savings associations.
12 CFR Part 584
Administrative practice and procedure, Holding companies, Reporting
and recordkeeping requirements, Savings associations, Securities.
Accordingly, and under the authority of 12 U.S.C. 1462a, the Office
of Thrift Supervision proposes to amend chapter V, title 12, 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 continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464.
Sec. 501.1 [Amended]
Secs. 500.3-500.5 [Removed]
2. The existing text of Sec. 500.1 is designated as paragraph (a),
the existing texts of Secs. 500.3, 500.4 and 500.5 are redesignated as
paragraphs (b), (c) and (d), respectively, of Sec. 500.1, and
Secs. 500.3, 500.4, and 500.5 are removed.
3. Section 500.10 is amended by adding two new sentences at the end
of the section to read as follows:
Sec. 500.10 The OTS or The Office.
* * * The Director directs and carries out the mission of the OTS
with the assistance of offices reporting directly to him. One of these
offices oversees the direct examination and supervision of savings
associations by regulatory staff to ensure the safety and soundness of
the industry.
Secs. 500.11-500.17 [Removed]
4. Sections 500.11 through 500.17 are removed.
PART 504--[REMOVED]
5. Part 504 is removed.
PART 510--MISCELLANEOUS ORGANIZATIONAL REGULATIONS
6. The authority citation for part 510 continues to read as
follows:
Authority: 5 U.S.C. 301; 12 U.S.C. 1462a, 1463, 1464.
Sec. 510.3 [Removed]
7. Section 510.3 is removed.
PART 515--[REMOVED]
8. Part 515 is removed.
SUBCHAPTER B--CONSUMER-RELATED REGULATIONS
PART 529--[REMOVED]
9. Part 529 is removed.
PART 533--[REMOVED]
10. Part 533 is removed.
PART 543--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL
MUTUAL ASSOCIATIONS
11. The authority citation for part 543 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et
seq.
Secs. 543.12-543.13 [Removed]
12. Sections 543.12 and 543.13 are removed.
PART 545--OPERATIONS
13. The authority citation for part 545 continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.
Secs. 545.15, 545.18-545.20, 545.44, 545.122, 545.136-
545.137 [Removed]
14. Sections 545.15, 545.18 through 545.20, 545.44, 545.122,
545.136 and 545.137 are removed.
PART 552--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL
STOCK ASSOCIATIONS
15. The authority citation for part 552 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.
Sec. 552.2-4 [Removed]
16. Section 552.2-4 is removed.
Sec. 552.6-2 [Amended]
17. Section 552.6-2 is amended by removing the phrase
``Sec. 545.122 of this subchapter'' in paragraph (b), and by adding in
lieu thereof the phrase ``Sec. 563.39 of this chapter''.
PART 556--STATEMENTS OF POLICY
18. The authority citation for part 556 continues to read as
follows:
Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1464, 1701j-3; 15 U.S.C.
1693-1693r.
Secs. 556.4, 556.6, 556.8-556.9, 556.11, 556.14-556.15 [Removed]
19. Sections 556.4, 556.6, 556.8 through 556.9, 556.11, and 556.14
through 556.15 are removed.
PART 562--REGULATORY REPORTING STANDARDS
20. The authority citation for part 562 continues to read as
follows:
Authority: 12 U.S.C. 1463.
Sec. 562.3 [Removed]
21. Section 562.3 is removed.
PART 563--OPERATIONS
22. The authority citation for part 563 continues to read as
follows:
[[Page 44449]]
Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468,
1817, 1828, 3806; 42 U.S.C. 4106.
Secs. 563.8, 563.49, 563.72 [Removed]
23. Sections 563.8, 563.49 and 563.72 are removed.
24. Section 563.41 is amended by removing the period at the end of
paragraph (b)(10)(iv) and adding a semicolon in its place, by adding
paragraph (b)(11), by removing paragraph (d)(1), by redesignating
paragraphs (d)(2) through (d)(7) as paragraphs (d)(1) through (d)(6),
respectively, and by removing the phrase ``After January 1, 1995, any''
in the introductory text of newly designated paragraph (d)(1) and
adding the word ``Any'' in its place, to read as follows:
Sec. 563.41 Loans and other transactions with affiliates and
subsidiaries.
* * * * *
(b) * * *
(11) The term capital stock and surplus of the savings association
means ``unimpaired capital and unimpaired surplus'' as defined at
Sec. 563.93(b)(11) of this part.
* * * * *
Sec. 563.42 [Amended]
25. Section 563.42 is amended by removing the phrase ``Sec. 563.41,
any bank, any savings association in a structure qualifying under
Sec. 563.41(d)(1) of this part or, after January 1, 1995,'' in
paragraph (d)(1), and by adding in lieu thereof the phrase
``Sec. 563.41 of this part, any bank, or''.
26. Section 563.43 is amended by adding paragraph (f) to read as
follows:
Sec. 563.43 Loans by savings associations to their executive officers,
directors and principal shareholders.
* * * * *
(f) References to the term ``unimpaired capital and unimpaired
surplus'' shall be deemed to refer to ``unimpaired capital and
unimpaired surplus'' as defined at Sec. 563.93(b)(11) of this part.
Sec. 563.52 [Amended]
27. Section 563.52 is amended by removing the phrase ``Sec. 584.6
of this chapter'' in paragraph (b), and by adding in lieu thereof the
phrase ``12 U.S.C. 1467a(m)''.
PART 563d--SECURITIES OF SAVINGS ASSOCIATIONS
28. The authority citation for part 563d is revised to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 78c(b), 78l,
78m, 78n, 78w, 78d-1.
Sec. 563d.200-30 [Removed]
29. Section 563d.200-30 is removed.
PART 563g--SECURITIES OFFERINGS
30. The authority citation for part 563g continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 78c(b), 78l,
78m, 78n, 78p, 78w.
31. Section 563g.5 is amended by revising paragraphs (b)(1) and
(b)(2) to read as follows:
Sec. 563g.5 Filing and signature requirements.
* * * * *
(b) Number of copies. (1) Unless otherwise required, any filing
under this part shall include nine copies of the document to be filed
with the OTS, as follows:
(i) Seven copies, which shall include one manually signed copy with
exhibits, three conformed copies with exhibits, and three conformed
copies without exhibits, to the Dissemination Branch, Records
Management and Information Policy; and
(ii) Two copies, which shall include one manually signed copy with
exhibits and one conformed copy, without exhibits, to the Regional
Director.
(2) Within five days after the effective date of an offering
circular or the commencement of a public offering after the effective
date, whichever occurs later, nine copies of the offering circular used
shall be filed with the OTS, as follows: seven copies to the
Dissemination Branch, Records Management and Information Policy, and
two copies to the Regional Director.
* * * * *
Sec. 563g.22 [Removed]
32. Section 563g.22 is removed.
PART 567--CAPITAL
33. The authority citation for part 567 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828
(note).
34. Section 567.1 is amended by revising the first two sentences of
paragraph (p) to read as follows:
Sec. 567.1 Definitions.
* * * * *
(p) OECD-based country. The term OECD-based country means a member
of the grouping of countries that are full members of the Organization
of Economic Cooperation and Development, plus countries that have
concluded special lending arrangements with the International Monetary
Fund (IMF) associated with the IMF's General Arrangements to Borrow,
but excludes any OECD country which has rescheduled its external
sovereign debt in the previous five years. These countries are
hereinafter referred to as OECD countries. * * *
* * * * *
PART 571--STATEMENTS OF POLICY
35. The authority citation for part 571 continues to read as
follows:
Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1462a, 1463, 1464.
Sec. 571.24 [Amended]
36. Section 571.24 is amended by removing the phrase ``parts 528
and 529'' in paragraph (a), and by adding in lieu thereof the phrase
``part 528''.
PART 583--DEFINITIONS
37. The authority citation for part 583 is revised to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468.
Sec. 583.17 [Amended]
38. Section 583.17 is amended by removing the phrase ``Sec. 584.6
of this subchapter'', and by adding in lieu thereof the phrase ``12
U.S.C. 1467a(m)''.
PART 584--REGULATED ACTIVITIES
39. The authority citation for part 584 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468.
Sec. 584.2a [Amended]
40. Section 584.2a is amended by removing the phrase ``Sec. 584.6
of this subchapter'' in paragraph (a)(2), and by adding in lieu thereof
the phrase ``12 U.S.C. 1467a(m)''.
Sec. 584.2-1 [Amended]
41. Section 584.2-1 is amended by removing the phrase ``Sec. 584.3
of this part'' where it appears in paragraphs (b)(2) and (b)(3)
introductory text, and by adding in lieu thereof the phrase ``12 U.S.C.
1467a(m)''.
Secs. 584.3, 584.6, 584.11 [Removed]
42. Sections 584.3, 584.6 and 584.11 are removed.
Dated: August 21, 1995.
By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 95-21160 Filed 8-25-95; 8:45 am]
BILLING CODE 6720-01-P
