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1997 Annual Report

Regulations Adopted and Proposed

F i n a l  R u l e s

Forms, Instructions and Reports
The FDIC’s systematic review of its regulations indicated a need to streamline Part 304 relating to forms, instructions and reports. The existing regulation had been in place since 1948. The FDIC revised the regulation by removing unneeded language while retaining the listing of forms and other information to satisfy the requirements of the Freedom of Information Act and the Federal Deposit Insurance Act. Approved:  January 21,1997 
Published:  February 21, 1997

Securities Disclosures
The FDIC amended Part 335 of its regulations regarding securities of nonmember insured banks. The revised rule incorporates by cross-reference the comparable regulations of the Securities and Exchange Commission (SEC), rather than continuing to maintain a separate, but substantially similar, body of rules. The amended regulation ensures that FDIC securities disclosure requirements remain substantially similar to those of the SEC.
Approved:     February 4, 1997
Published:    February 14, 1997

Bank Disclosure of Financial and Other Information
The FDIC, as part of its systematic review of regulations, amended Part 350 regarding the disclosure of financial and other information by insured nonmember banks. The amendment removes references to the obsolete savings bank Call Report, permits the annual report on annual independent audits and reporting requirements to be used as the annual disclosure statement in certain circumstances, and updates and clarifies certain other references in the rule.
Approved:     February 4, 1997
Published:     March 6, 1997

Recordkeeping and Confirmation Requirements for Securities Transactions
The FDIC amended Part 344 of its regulations governing recordkeeping and confirmation requirements for securities transactions for customers of an insured state bank or a foreign bank having an insured branch. The amended rule updated, clarified and streamlined the former rule and reduces regulatory burden. The most significant change was to provide a specific exemption from the rule for securities transactions conducted through separate registered broker/ dealers when fully disclosed to bank customers and with whom the customer has a direct contractual agreement.
Approved:     February 25, 1997
Published:    March 5, 1997

Government Securities Sales
The FDIC, together with the other bank and thrift regulatory agencies, adopted regulations regarding sales of government securities by depository institutions. The FDIC’s final rule (new Part 368) implements recent statutory changes authorizing the agencies to adopt rules providing consistent treatment for customers who purchase government securities. The new rule also minimizes regulatory burden to the extent feasible.
Approved:     March 11, 1997
Published:    March 19, 1997

Applications, Requests and Other Notices
The FDIC amended Part 303 of its regulations to streamline the supervision process and simplify communication channels regarding applications, requests, submittals and notices. As a result, the FDIC Division of Supervision and the Division of Compliance and Consumer Affairs will supervise groups of related insured institutions from one FDIC regional office.  
Approved:     March 25, 1997  
Published:    April 8, 1997

Insurance Assessments
Given the favorable conditions facing depository institutions and their insurance funds, the FDIC Board of Directors voted to maintain the low premium rates for banks and thrifts for the second half of 1997. Most insured institutions will continue to pay nothing for their deposit insurance coverage in the second half of the year, while the riskiest institutions will pay 27 cents for every $100 of assessable deposits.
Approved:    May 6, 1997
Published:    May 19, 1997

Fair Housing
The FDIC amended Part 338 of its regulations to more closely align its fair housing regulations with those of the other federal bank and thrift regulatory agencies. The amended rule reduces the burden on insured state nonmember banks in the areas of fair housing advertising, poster, and recordkeeping and reporting requirements.
Approved:     June 24, 1997
Published:    July 14, 1997

Prohibition Against Interstate Branches Primarily for Deposit Production
The FDIC, together with the Office of the Comptroller of the Currency and the Federal Reserve Board, amended Part 369 of its regulations to implement section 109 of the Riegle-Neal Interstate Banking and Branching Act of 1994. As required by this law, the new rule prohibits any bank from establishing or acquiring branches outside of its home state primarily for the purpose of deposit production. The final rule also provides guidelines for determining whether a bank is reasonably helping to meet the credit needs of the communities served by these branches.
Approved:     August 26, 1997
Published:    September 10, 1997

Transfers of Small Business Loan Obligations With Recourse
The FDIC, together with the Office of the Comptroller of the Currency and the Office of Thrift Supervision, amended Part 325 of its regulations that generally require banks to maintain risk-based capital against the full amount of assets transferred with recourse. Under the new rule, if certain conditions are met, qualifying institutions that sell small business obligations with recourse are required to maintain risk-based capital only against the amount of recourse retained. The new rule also states that the amount of recourse retained by a qualifying institution on transactions receiving this preferential capital treatment cannot exceed 15 percent of the banks total risk-based capital. The new rule essentially makes permanent an interagency rule in effect since 1995.
Approved:     September 18, 1997
Published:    October 24, 1997

 


I n t e r i m  R u l e s

 

Longer Examination Cycle for Certain Small Institutions
The FDIC, along with the other bank and thrift regulatory agencies, amended Part 337 of its regulations concerning the examination cycle for certain small insured institutions. The amendment implements provisions of the Riegle Community Development and Regulatory Improvement Act of 1994 and the Economic Growth and Regulatory Paperwork Reduction Act of 1996 authorizing the agencies to raise the asset limit that determines which institutions will be examined every 18 months rather than every 12 months.
Approved:     January 21, 1997
Published:    February 12, 1997

Risk-Based Capital for Market Risk
The FDIC adopted an interim rule amending Part 325 of its regulations regarding the risk-based capital rules for insured state nonmember banks with large trading portfolios. The amendment reduces regulatory burden because institutions will not have to develop and maintain two systems—an internal model and a standardized approach—when measuring market risk. The FDIC adopted the amendment jointly with the Federal Reserve Board and the Office of the Comptroller of the Currency, but also requested public comment.
Approved:     December 9, 1997
Published:    December 30, 1997


P r o p o s e d  R u l e s

 

Advertisement of Membership
The FDIC issued for public comment a proposed amendment to Part 328 of its regulations concerning the advertisement of membership. The proposed rule would consolidate the provisions that require FDIC-insured institutions to display official signs; extend to all insured depository institutions the official advertising statement that is currently required only for insured banks; streamline the exceptions to the required use of the official advertising statement; prohibit the use of the official advertising statement in advertisements concerning nondeposit products; and delegate to certain FDIC officials the authority to approve the translation of the official advertising statement into other languages.
Approved:     January 21, 1997
Published:     February 11, 1997

Resolution and Receivership Rules
The FDIC issued for public comment certain technical revisions to its regulation on resolutions and receiverships contained in Part 360. The FDIC proposed an amendment to correct a typographical error and another to remove an unnecessary section relating to security interests of Federal Home Loan Banks in FDIC-administered receiverships.    
Approved:     February 4, 1997
Published:    February 20, 1997

Uniformity in Risk-Based Capital Standards
The FDIC, along with the other bank and thrift regulatory agencies, issued for public comment amendments to Part 325 of its regulations regarding risk-based capital standards and leverage capital standards. The effect of the proposal would be to have uniform risk-based capital treatments for construction loans on presold residential properties, real estate loans secured by junior liens on 1-to-4 family residential properties, and investments in mutual funds. The proposal would result in uniform and simplified minimum Tier 1 leverage capital standards.
Approved:     February 4, 1997
Published:    October 27, 1997

Outreach Programs
The FDIC issued for public comment a proposed rule to Part 361 of its regulations that provide that the FDIC certify the eligibility of businesses and law firms for the minority and women’s contracting program. The purpose of the proposed amendment would be to replace a self-certification system with a more formal certification program. The proposed rule also would establish an outreach program for individuals with disabilities.
Approved:     March 25, 1997
Published:    April  14, 1997

Simplification of Deposit Insurance Rules
The FDIC proposed amendments to Part 330 of its regulations to clarify and simplify the deposit insurance regulations. The proposed rule includes many technical changes to the regulations, the most notable being the inclusion of common examples illustrating how the FDIC insures the most basic types of deposit accounts, primarily consumer accounts.
Approved:     April 29, 1997
Published:    May 14, 1997

Municipal Securities Dealers
The FDIC proposed to rescind Part 343 of its regulations that requires insured state nonmember banks that are municipal securities dealers to report certain information about people who are or seek to be municipal securities principals or municipal securities representatives. The FDIC determined that it is not required by law to issue its own regulations governing the professional qualification of these individuals and that the current regulation is unnecessary and duplicative.
Approved:     April 29, 1997
Published:    May 16, 1997

Notification of Changes in Insured Status
The FDIC issued for public comment amendments to Part 307 of its regulations to clarify that an insured depository institution must provide the FDIC with a certification of any partial or total assumption of deposits from another insured depository institution, unless the deposits assumed are from an institution in default.
Approved:     April 29, 1997
Published:    May 14, 1997

International Banking Activities
The FDIC issued for public comment amendments to various parts of its regulations regarding international banking activities. The proposed rules would allow well-managed, state nonmember banks with international operations to undertake a number of activities abroad without filing a formal application. The proposed rules also would clarify existing regulations for state-licensed, insured branches of foreign banks, and simplify regulations on the accounting treatment for foreign lending activities of state nonmember banks.
Approved:     June 24, 1997
Published:    July 15, 1997

Capital Treatment of  Servicing Assets
The FDIC, along with the other bank and thrift regulatory agencies, issued for public comment a proposed amendment to Part 325 of its regulations regarding the regulatory capital treatment of mortgage servicing assets. The proposed rule would ease limits on the volume of mortgage servicing assets that FDIC-supervised banks can recognize in calculating Tier 1 capital. The proposed rule also would align the terminology used in the FDIC’s capital standards more closely with that used under generally accepted accounting principals. This proposed rule was developed in response to a Financial Accounting Standards Board ruling that affects servicing assets.
Approved:     July 22, 1997
Published:    August 4, 1997

Activities and Investments of Insured State Depository Institutions
The FDIC issued for public comment a proposal to consolidate the securities activities regulation and the regulation governing the activities and investments of savings associations into Part 362 of the agency’s regulations, which governs activities and investments of insured state banks. The new Part 362 would provide streamlined notice procedures for certain real estate and equity securities activities and investments. The proposed rule would also provide safety and soundness guidelines relating to certain real estate activities and investments, as well as delete provisions, clarify language and promote consistency.
Approved:     August 26, 1997
Published:    September 12, 1997

Capital Standards for Unrealized Gains on Certain Equity Securities
The FDIC, along with the other bank and thrift regulatory agencies, issued for public comment a proposed amendment to Part 325 of its regulations regarding unrealized holding gains on certain equity securities. The proposed amendment would permit institutions to recognize Tier 2 capital limited amounts of unrealized gains on available for sale equity securities with readily determinable fair values.
Approved:     September 16, 1997
Published:     October 27, 1997

Treatment of Recourse and Direct Credit Substitutes
The FDIC, along with the other bank and thrift regulatory agencies, issued for comment a proposed amendment to Part 325 of its regulations regarding treatment of recourse arrangements and direct credit substitutes. Recourse arrangements arise when an institution retains all or part of the risk of loss on an asset or pool of assets it has sold to another party. A direct credit substitute is an arrangement, such as a guarantee, in which an institution assumes all or part of the risk of loss on an asset or asset pool owned by another party, even though the institution had not owned or sold the asset. The proposal would treat recourse obligations and direct credit substitutes consistently, and would use credit ratings and possibly certain other alternative approaches to match the risk-based capital assessment more closely to a banking organization's relative risk of loss in asset securitizations. The agencies intend that any final rules adopted that result in increased risk-based capital requirements apply only to transactions consummated after the effective date of the final rules.
Approved:     September 16, 1997
Published:    November 5, 1997

Applications, Requests and Other Notices
The FDIC issued for public comment amendments to Part 303 of its regulations, as well as other related sections of the regulations. The proposed amendments would streamline processing for well-managed and well-capitalized institutions, reduce regulatory burden, remove inconsistencies and outmoded requirements, and present the regulation in a more user-friendly format. The most significant feature of the proposed rule would expedite processing for most filings by well-managed and well-capitalized depository institutions, typically for deposit insurance, mergers, branches, trust powers, stock buy-backs, and certain foreign banking activities. An estimated 90 percent of banks supervised by the FDIC would be eligible.
Approved:     September 23, 1997
Published:     October 9, 1997

Interest on Deposits
The FDIC issued for comment a proposed amendment to Part 329 of its regulations regarding interest on deposits. The Federal Deposit Insurance Act requires that the FDIC prohibit insured nonmember banks and insured branches of foreign banks from paying interest or dividends on demand deposits. Under the proposed amendment, these institutions automatically would become subject to the exceptions to the prohibition adopted by the Federal Reserve Board for its member banks, regardless of whether the FDIC had issued or authorized the specific exception.
Approved:     October 6, 1997
Published:     October 16, 1997

 

W i t h d r a w n  P r o p o s e d  R u l e s

 

Prevention of Deposit Shifting
The FDIC withdrew a February 1997 proposal that would have prevented institutions from shifting deposits insured under the Savings Association Insurance Fund (SAIF) to deposits insured under the Bank Insurance Fund (BIF) in order to evade SAIF assessment rates. The FDIC withdrew the proposal for various reasons, including the elimination of the differential between BIF and SAIF assessment rates and the lack of evidence of significant deposit shifting.
Approved     July 22, 1997
Published:    July 29, 1997

Activities and Investments of  Insured State Banks
The FDIC withdrew a proposed amendment to Part 362 of its regulations that would have substituted a notice for an application for certain activities. At the same time, the FDIC proposed a new amendment to completely revise part 362 (click here).
Approved:     August 26, 1997
Published:    September 12, 1997

 

Executive Secretary Robert Feldman, shown here with staff member Gwen Alston before a Board of Directors meeting - Graphic Executive Secretary Robert Feldman, shown here with staff member Gwen Alston before a Board of  Directors meeting, is in charge of the FDIC’s office that manages the regulatory review  program.

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