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Home > News & Events > Financial Institution Letters




Financial Institution Letters



[Federal Register: May 19, 2000 (Volume 65, Number 98)]
[Proposed Rules]               
[Page 31961-32002]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19my00-29]                         


[[Page 31961]]

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Part II





Department of the Treasury





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Office of the Comptroller of the Currency



Office of the Thrift Supervision



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Federal Reserve System

Federal Deposit Insurance Corporation





12 CFR Parts 35, 207, 346, 533



Disclosure and Reporting of CRA-Related Agreements; Proposed Rule


[[Page 31962]]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 35

[Docket No. 00-11]
RIN 1557-AB85

FEDERAL RESERVE SYSTEM

12 CFR Part 207

[Regulation G; Docket No. R-1069]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 346

RIN 3064-AC33

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 533

[Docket No. 2000-44]
RIN 1550-AB32

 
Disclosure and Reporting of CRA-Related Agreements

AGENCIES: Office of the Comptroller of the Currency (OCC); Board of 
Governors of the Federal Reserve System (Board); Federal Deposit 
Insurance Corporation (FDIC); Office of Thrift Supervision (OTS).

ACTION: Joint notice of proposed rulemaking.

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SUMMARY: The OCC, Board, FDIC, and OTS (collectively, the agencies) are 
requesting comment on a proposed rule that implements provisions of the 
recently enacted Gramm-Leach-Bliley Act (the GLB Act or the Act). These 
provisions require nongovernmental entities or persons, insured 
depository institutions, and affiliates of insured depository 
institutions that are parties to certain agreements that are in 
fulfillment of the Community Reinvestment Act of 1977 to make the 
agreements available to the public and the appropriate agency and file 
annual reports concerning the agreements with the appropriate agency. 
These provisions are contained in section 711 of the Act and are 
codified as section 48 of the Federal Deposit Insurance Act (FDI Act).
    The rule identifies the types of written agreements that are 
covered by section 711 of the GLB Act (referred to as covered 
agreements) and defines many of the terms used in the statute. The rule 
also describes how the parties to a covered agreement must make the 
agreement available to the public and the appropriate agencies and 
explains the type of information that must be included in the annual 
report filed by a party to a covered agreement.
    The agencies solicit comments on all aspects of the proposed rule, 
including the specific areas discussed below. The agencies will issue a 
final rule after considering comments received.

DATES: Comments must be received on or before July 21, 2000.

ADDRESSES:
    OCC: Comments should be addressed to Communications Division, 
Office of the Comptroller of the Currency, 250 E Street, SW, Third 
floor, Washington, DC 20219, Attention: Docket No. 00-11. In addition, 
comments may be sent by facsimile transmission to fax number (202) 874-
5274 or by Internet mail to regs.comments@occ.treas.gov. Comments will 
be available for public inspection and photocopying at the same 
location.
    Board: Comments directed to the Board should refer to Docket No. R-
1069 and may be mailed to Ms. Jennifer J. Johnson, Secretary, Board of 
Governors of the Federal Reserve System, 20th and C Streets, NW, 
Washington, DC 20551 or mailed electronically to 
regs.comments@federalreserve.gov. Comments addressed to Ms. Johnson 
also may be delivered to the Board's mailroom between 8:45 a.m. and 
5:15 p.m. and, outside those hours, to the security control room. Both 
the mailroom and the security control room are accessible from the 
Eccles Building courtyard entrance, located on 20th Street between 
Constitution Avenue and C Street, NW. Members of the public may inspect 
comments in room MP-500 of the Martin Building between 9:00 a.m. and 5 
p.m. on weekdays.
    FDIC: Written comments should be addressed to Robert E. Feldman, 
Executive Secretary, Attention: Comments/OES, Federal Deposit Insurance 
Corporation, 550 17th Street, NW, Washington, DC 20429. Comments may be 
hand delivered to the guard station at the rear of the 550 17th Street 
Building (located on F Street) on business days between 7 a.m. and 5 
p.m. (Fax number: (202) 898-3838). Comments may be inspected and 
photocopied in the FDIC Public Information Center, Room 100, 801 17th 
Street, NW, Washington, DC, between 9 a.m. and 4:30 p.m. on business 
days.
    Comments may be submitted electronically over the Internet at 
www.fdic.gov. Further information concerning this option may be found 
below at the ``FDIC's Electronic Public Comment Site.'' Comments also 
may be mailed electronically to comments@fdic.gov.
    OTS: Send comments to Manager, Dissemination Branch, Information 
Management & Services Division, Office of Thrift Supervision, 1700 G 
Street, NW, Washington, DC 20552, Attention Docket No. 2000-44. Hand 
deliver comments to Public Reference Room, 1700 G Street, NW, lower 
level, from 9 a.m. to 5 p.m. on business days. Send facsimile 
transmissions to FAX number (202) 906-7755 or (202) 906-6959 (if the 
comment is over 25 pages). Send e-mails to public.info@ots.treas.gov 
and include your name and telephone number. Interested persons may 
inspect comments at 1700 G Street, NW, from 10 a.m. until 4 p.m. on 
Tuesdays and Thursdays.

FOR FURTHER INFORMATION CONTACT:
    OCC: Michael S. Bylsma, Director, Community and Consumer Law (202) 
874-5750; or Karen O. Solomon, Director, Legislative and Regulatory 
Activities (202) 874-5090.
    Board: Scott G. Alvarez, Associate General Counsel (202) 452-3583, 
Kieran J. Fallon, Senior Counsel (202) 452-5270, or Andrew Miller, 
Senior Attorney (202) 452-3428, Legal Division; Glenn E. Loney, Deputy 
Director (202) 452-3585, or James H. Mann, Attorney (202) 452-3667, 
Division of Consumer and Community Affairs; Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, NW, 
Washington, DC 20551. For users of Telecommunications Device for the 
Deaf (``TDD'') only, contact Janice Simms at (202) 452-4984.
    FDIC: Deanna S. Caldwell, Community Affairs Officer (202) 736-0141; 
A. Ann Johnson, Counsel, Regulation and Legislation Section (202) 898-
3573; or Joan M. Bateman, Review Examiner (202) 736-0187.
    OTS: Richard Bennett, Counsel (Banking and Finance), (202) 906-
7409; Karen Osterloh, Assistant Chief Counsel, (202) 906-6639; or 
Richard R. Riese, Director, Compliance Policy, (202) 906-6134, Office 
of Thrift Supervision, 1700 G Street, NW, Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Executive Summary of Proposed Rule

    Section 711 of the GLB Act (Pub. L. 106-102, 113 Stat. 1338 (1999)) 
added a new section 48 to the FDI Act (12 U.S.C. 1831y) entitled ``CRA 
Sunshine Requirements.'' Section 711 applies to written agreements that 
(1) are made in

[[Page 31963]]

fulfillment of the Community Reinvestment Act of 1977 (CRA),\1\ (2) 
involve funds or other resources of an insured depository institution 
or affiliate with an aggregate value of more than $10,000 in a year, or 
loans with an aggregate principal value of more than $50,000 in a year, 
and (3) are entered into by an insured depository institution or 
affiliate of an insured depository institution and a nongovernmental 
entity or person. Section 711 does not, however, cover any agreement 
with a nongovernmental entity or person that has not had a CRA contact 
with the insured depository institution or affiliate or a banking 
agency, such as agreements entered into by entities or persons that 
solicit charitable contributions or other funds without regard to the 
CRA. Under section 711, the parties to a covered agreement must make 
the agreement available to the public and the appropriate agency. The 
parties also must file a report annually with the appropriate agency 
concerning the disbursement, receipt and use of funds or other 
resources under the agreement.
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    \1\ 12 U.S.C. 2901 et seq.
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    The proposed rule defines various terms necessary for determining 
which agreements are covered agreements and provides guidance for 
determining when a CRA contact has been made for purposes of 
identifying the parties whose agreements are covered by the rule. The 
proposed rule also describes the manner and scope of the Act's 
disclosure and annual reporting requirements.
    Section 711 and the proposed rule apply only to agreements that are 
in writing. To be covered, a written agreement may be an understanding 
or agreement and need not be a legally binding contract.
    Importantly, section 711 applies only to written agreements that 
are ``made pursuant to, or in connection with, the fulfillment of the 
Community Reinvestment Act.'' Section 711 defines ``fulfillment'' of 
the CRA as a ``list of factors'' that the appropriate agency determines 
have a material impact on the agency's decision to approve or 
disapprove an application for a deposit facility under the CRA or to 
assign a CRA examination rating. The agencies propose to adopt for this 
purpose the list of factors identified by the agencies in the CRA 
regulations jointly issued by the agencies (CRA Regulations).\2\ These 
factors include providing the types of loans considered in evaluating 
CRA performance, providing community development services, making CRA 
qualified investments, fulfilling a CRA strategic plan, providing 
retail banking services as described in the CRA Regulations, and 
providing or refraining from providing comments or testimony to an 
agency concerning the CRA performance of an insured depository 
institution.
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    \2\ See 12 CFR 25.21-25.29 (OCC); 12 CFR 228.21-228.29 (Board); 
12 CFR 345.21-345.29 (FDIC); 12 CFR 563e.21-563e.29 (OTS).
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    The GLB Act exempts specific types of agreements from coverage, 
even if these agreements would otherwise meet the definition of a 
covered agreement. In particular, the Act and the proposed rule do not 
apply to any individual mortgage loan. The Act and proposed rule also 
do not apply to any specific contract or commitment for any type of 
loan or extension of credit to individuals, businesses, farms or other 
entities if the funds are loaned at rates that are not substantially 
below market rates and the purpose of the loan or extension of credit 
does not include any re-lending of the borrowed funds to third parties.
    In addition, as noted above, the Act exempts from coverage any 
agreement with a nongovernmental entity or person that has not 
commented on, testified about, or discussed with the insured depository 
institution, or otherwise contacted the institution, concerning the 
CRA. The proposed rule adopts the exemption as written in the statute 
and includes several examples of contacts that would be exempt under 
this provision as well as contacts that would not qualify for this 
exemption. An example of a contact that would qualify for this 
exemption is the dissemination of a similar fundraising letter to 
insured depository institutions and other businesses in the community 
encouraging all businesses in the community to meet their obligation to 
assist in making the community a better place to live and work. A CRA 
contact would be made, and a related agreement would not be exempt 
under this provision, if the entity or person had, for example, 
submitted comments to an agency concerning the CRA performance of the 
insured depository institution, contacted the institution or any 
affiliate about providing (or refraining from providing) CRA-related 
comments to an agency concerning the institution, or contacted the 
institution or any affiliate about the CRA performance of the 
institution.
    The GLB Act requires those agreements that are covered by section 
711, and that are not exempt, to be made available to the public and 
the appropriate agency. Section 711 provides that these disclosure 
obligations apply only to covered agreements entered into after 
November 12, 1999. Section 711 also requires that the agencies' rules 
for ensuring compliance with the Act's requirements not impose undue 
burden on the parties. Accordingly, the rule proposes to require 
disclosure of covered agreements and to define the scope of annual 
reports in a manner that fulfills the requirements of section 711 while 
at the same time adopting simple procedures that reduce duplicative 
reporting and rely on existing reports prepared by the parties for 
their own use or to fulfill other requirements.
    The rule proposes that each party to a covered agreement be allowed 
to fulfill the public disclosure requirement of section 711 by making 
the agreement available to any member of the public on request, and 
allows each party to recover reasonable copying and mailing costs in 
responding to these requests. An insured depository institution may 
fulfill its public disclosure obligation by placing a copy of the 
agreement in the institution's CRA public file and making it available 
in the same manner as other information in the CRA public file.
    The proposed rule also requires that each insured depository 
institution or affiliate that enters into a covered agreement file a 
complete copy of the agreement with the appropriate agency within 30 
days of entering into the agreement. To avoid duplication of efforts 
and reduce burden, the rule would allow a nongovernmental entity or 
person to fulfill its obligation to make a covered agreement available 
to the appropriate agency by providing a copy to the agency upon the 
agency's request.
    In addition to making covered agreements available, the GLB Act 
requires that annual reports be filed regarding resources provided and 
used under the agreement. These annual reporting obligations apply only 
to covered agreements entered into on or after May 12, 2000. For 
nongovernmental entities or persons, the type of information required 
to be included in an annual report depends on how the entity or person 
used the funds or resources received under the covered agreement. If a 
nongovernmental entity or person allocates and uses the funds or 
resources received under a covered agreement for a specific purpose, 
the person's annual report would have to provide a description of the 
specific purpose and state the amount used for the specific purpose. If 
the entity or person uses the funds or resources received under the 
covered agreement for other or general purposes (e.g., general 
operating expenses), the rule proposes that the annual report provide

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the detailed, itemized list described in section 711 of how such funds 
were used during the year. This list involves disclosure of the total 
amount of resources used by the person or entity for compensation of 
officers, directors, and employees; administrative expenses; travel 
expenses; entertainment expenses; consulting and professional fees; and 
other expenses or uses.
    In keeping with section 711, the proposed rule includes a number of 
provisions designed to reduce the potential reporting burden of 
nongovernmental entities or persons. For example, the rule requires a 
nongovernmental entity or person to file an annual report only for a 
year in which the entity or person has received funds under a covered 
agreement. In addition, the annual report filed by a nongovernmental 
entity or person may consist of, or incorporate, a report that the 
entity or person has prepared for other purposes--such as a Federal or 
state tax return or annual financial statements--if the report provides 
the information required by the rule. To facilitate the use of reports 
that are prepared for other purposes, the rule would allow parties to 
file their annual reports on either a fiscal year or calendar year 
basis. If a nongovernmental entity or person is a party to five or more 
covered agreements, the entity or person may file a single, 
consolidated annual report relating to all of the agreements. 
Furthermore, a nongovernmental entity or person may fulfill its annual 
reporting requirements by sending its annual reports to the insured 
depository institution or affiliate that is a party to the agreement 
with a request that the institution or affiliate file the reports with 
the appropriate agency.
    Under the GLB Act, the annual report filed by an insured depository 
institution or affiliate generally must include information on the 
amount, terms and conditions of any payments, fees, or loans provided 
by the institution or affiliate under the covered agreement, as well as 
payments, fees or loans received by the institution or affiliate under 
the agreement. The annual report of an insured depository institution 
or affiliate also must provide aggregate data on any loans, 
investments, or services provided under the covered agreement by each 
party to the agreement. The rule includes these requirements. The rule 
would allow an insured depository institution or affiliate that is a 
party to 5 or more covered agreements to file a single, consolidated 
annual report for all of the agreements. In addition, if an insured 
depository institution and affiliate are parties to the same covered 
agreement, the institution and affiliate may file a consolidated annual 
report for the agreement.
    Section 711 does not authorize any agency to enforce the provisions 
of any covered agreement, and the proposed rule adopts this provision. 
The GLB Act, however, provides that a covered agreement may become 
unenforceable if the appropriate agency determines that a 
nongovernmental entity or person that is a party to the agreement has 
willfully failed to comply in a material way with the Act's disclosure 
and reporting requirements and the entity or person, after receiving 
notice, fails to comply with the Act after a reasonable period of time. 
The proposed rule includes this provision and clarifies that, in these 
circumstances, the covered agreement becomes unenforceable only by the 
nongovernmental entity or person that has willfully and materially 
failed to comply with section 711.
    The Act requires the agencies to consult and coordinate with each 
other in drafting the proposed rule to assure, to the extent possible, 
that the regulations of each agency are consistent and comparable. The 
agencies have gone beyond these requirements and have developed the 
proposed rule on an interagency basis. The agencies believe the 
adoption of a uniform rule should assist the public in complying with 
the requirements of the Act. Furthermore, as required by the Act, the 
agencies have sought to ensure that the proposed rule does not place an 
undue burden on the parties to covered agreements and protects 
proprietary and confidential information to the maximum extent 
consistent with the language and purpose of the Act.
    The agencies request comment on all aspects of the proposed rule, 
including the specific provisions and issues highlighted in this 
preamble, and will incorporate comments received into the final rule as 
appropriate. The agencies recognize that insured depository 
institutions, affiliates, and nongovernmental entities and persons can 
not identify agreements that are covered by section 711 until, in 
particular, the agencies adopt the list of factors that are considered 
to be in ``fulfillment'' of the CRA. Accordingly, the agencies propose 
to act expeditiously to adopt a rule in final form following conclusion 
of the comment period. Once a final rule is adopted, the parties to 
covered agreements will be expected promptly to disclose any agreement 
that is covered by section 711 and was entered into after November 12, 
1999, and file an annual report for any covered agreement entered into 
on or after May 12, 2000, in accordance with the requirements of the 
final rule. The agencies request comment on how the parties to covered 
agreements entered into after these dates, but before issuance of the 
final rule, should be required to comply with the requirements of the 
final rule.

II. Detailed Explanation of Proposed Rule

    This section provides a more detailed discussion of the proposed 
rule and includes examples that are designed to assist users in 
understanding the scope and application of the proposed rule. The 
examples included in the preamble are not exclusive. The agencies 
request comment on whether the examples included in the preamble are 
useful and whether additional examples would prove helpful. The 
proposed rule includes examples only of situations that would and would 
not constitute a CRA contact by a nongovernmental entity or person. 
These examples relating to CRA contact are part of the rule. The 
agencies request comment on whether examples illustrating other parts 
of the rule should be incorporated into the text of the regulation.
    In keeping with the goal of consistency among the agencies' rules 
and to facilitate compliance, the proposed rule uses the term ``insured 
depository institution'' rather than ``bank'' or ``savings 
association.'' As discussed below, the rule identifies the specific 
agency or agencies with whom a covered agreement and its related annual 
reports should be filed, and the agency or agencies that would be 
considered a relevant supervisory agency for a covered agreement.
    For ease of reference, the rule and the remaining portions of this 
preamble refer to a ``nongovernmental entity or person'' as a 
``person.'' \3\ The terms ``nongovernmental entity or person'' and 
``person,'' as well as several other terms used in the rule, are 
defined in section ____.8 of the proposed rule. The rule generally 
defines a nongovernmental entity or person to mean any company or 
individual other than the Federal government, a state, local or tribal 
government, or an insured depository institution or affiliate. The 
agencies request comment on whether users would find it more helpful to 
have this section of definitions at the beginning of the rule.
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    \3\ The OTS rule, however, refers to a ``nongovernmental entity 
or person'' as a ``NGEP.''
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    The following description applies to each agency's proposed rule. 
Since the

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rule of each agency will be codified at a different part of the Code of 
Federal Regulations, the following description references the proposed 
rule using only the proposed rule's section numbers.

A. Definition of Covered Agreement

    Section ____.2 of the proposed rule defines which agreements are 
covered by the rule and the term ``fulfillment of the CRA.'' The Act's 
exemptions from the definition of a covered agreement also are set 
forth in section ____.2.
1. Covered Agreements
    The proposed rule defines a covered agreement as any contract, 
arrangement, or understanding that meets all of the following four 
criteria:
     The agreement is in writing;
     The agreement is made pursuant to, or in connection with, 
the fulfillment of the CRA, as defined in section ____.2(c) of the 
proposed rule;
     The parties to the agreement include (1) an insured 
depository institution or an affiliate of an insured depository 
institution, and (2) a person; and
     The agreement provides for the insured depository 
institution or affiliate to provide cash payments, grants, or other 
consideration (other than loans) having an aggregate value of more than 
$10,000 in any calendar year, or to make loans in an aggregate 
principal amount of more than $50,000 in any calendar year.
    The proposed rule clarifies that an agreement may be a covered 
agreement even if the agreement is not legally binding on the parties. 
Under the proposed rule, an exchange of written correspondence 
reflecting a mutual agreement or a written agreement that lacks the 
consideration necessary for it to be a legally binding contract would 
constitute a covered agreement if the agreement meets the four criteria 
discussed above. Moreover, to be covered, an agreement may be with an 
insured depository institution or any affiliate of an insured 
depository institution, including a bank holding company or a nonbank 
affiliate.
    The following examples illustrate when a written contract, 
arrangement or understanding may exist under the rule. The proposed 
rule does not attempt to specifically define what constitutes a 
``contract,'' ``arrangement,'' or ``understanding.''

    Example 1: An organization sends a letter to an insured 
depository institution requesting that the institution provide a 
$15,000 grant to the organization. The insured depository 
institution responds in writing and agrees to provide the grant in 
connection with its annual grant program. The exchange of letters 
constitutes a written understanding. This written understanding 
would be a covered agreement under the proposed rule if the 
agreement is made pursuant to, or in connection with, the 
fulfillment of the CRA and the agreement is not otherwise exempt 
under section ____.2(b).
    Example 2: An organization issues a general, written 
solicitation for charitable contributions to businesses in its local 
community. An insured depository institution makes a $20,000 
charitable contribution by check to the organization in response to 
the solicitation. The insured depository institution does not have 
any written contract, arrangement or understanding with the 
organization concerning the donation. The general request for funds 
and the check are not themselves a contract, arrangement or 
understanding. Since there is no other written agreement between the 
insured depository institution and the organization, there is no 
covered agreement between the entities.
    Example 3: A bank holding company unilaterally issues a press 
release announcing that its subsidiary banks have established a goal 
of making $100 million of community development grants in low-and 
moderate-income (LMI) neighborhoods over the next 5 years. The 
unilateral pledge is not a contract, arrangement or understanding 
entered into with a person and, therefore, is not a covered 
agreement.
    Example 4: An association of community groups and an affiliate 
of an insured depository institution orally agree that the affiliate 
will seek to make $100,000 in grants available to the organization's 
constituent members over the next year. The oral agreement is not 
reduced to writing. Oral agreements are not within the scope of the 
statute and, accordingly, the agreement is not a covered agreement.

    The agencies invite comment on whether the rule should define the 
terms ``contract,'' ``arrangement'' and ``understanding'' and, if so, 
what those definitions should be. The agencies also request comment on 
whether any of the examples provided above should be modified or 
amended, and whether additional examples would be useful.
2. Exemptions for Certain Agreements
    Section 711 specifically exempts certain types of agreements from 
coverage even if they otherwise meet the definition of a covered 
agreement. Section ____.2(b) of the proposed rule implements these 
exemptions.
a. Qualifying Loans
    The first statutory exemption is for any individual mortgage loan. 
Under this exemption, any mortgage loan made by an insured depository 
institution or affiliate to any individual or entity is exempt from the 
requirements of section 711. This exemption is available for any 
mortgage loan, regardless of the identity of the borrower, the type of 
real estate securing the loan, or the rate charged on the loan.
    The statute also exempts from coverage ``any specific contract or 
commitment for a loan or extension of credit to individuals, 
businesses, farms, or other entities if the funds are loaned at rates 
[that are] not substantially below market rates and if the purpose of 
the loan or extension of credit does not include any re-lending of the 
borrowed funds to other parties.'' \4\ Under the statute, this 
exemption is available for any type of loan to any individual or entity 
if the loan meets the market rate and re-lending restrictions of the 
statute.
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    \4\ 12 U.S.C. 1831y(e)(1)(B)(ii).
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    The agencies request comment on the application of this exemption 
to agreements that involve a commitment to make one or more loans or 
extensions of credit that meet the market rate and re-lending 
restrictions of the statute. In particular, comment is requested on 
whether this exemption provides an exemption only for a specific 
commitment to make a loan or extension or credit. Under this 
interpretation, the exemption would be available for a commitment by an 
insured depository institution or affiliate to provide a specific loan 
or extension of credit to one or more individuals or entities that is 
on market terms and not for purposes of re-lending, such as a loan 
commitment typically made in the course of providing a line of credit 
to a small business. The agencies also request comment on whether this 
exemption includes an exemption for a commitment to make multiple loans 
that meet the Act's restrictions. Under this interpretation, a 
commitment to make any number or amount of loans that meet the Act's 
restrictions over a period of time would be exempt from coverage. The 
agencies request comment on which interpretation of the exemption is 
more consistent with the language and purposes of the Act.
    To be entirely exempt under the proposed rule, an agreement must be 
exclusively a loan, extension of credit or loan commitment that meets 
the requirements of the exemption. However, as discussed further below, 
if an agreement includes a loan, extension of credit or loan commitment 
that meets the rule's requirements to be exempt and also provides for 
the insured depository institution or affiliate to provide other funds 
or resources, the value of the exempt loan, extension of credit or loan 
commitment may be excluded in determining whether the

[[Page 31966]]

agreement is in fulfillment of the CRA and meets the Act's dollar 
thresholds.\5\
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    \5\ The agencies note, however, that if the other consideration 
is provided to reduce the effective interest rate paid on the loan 
or extension of credit to a rate that is substantially below the 
market rate, the loan or extension of credit would not itself be 
exempt from coverage.
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    The following examples illustrate these provisions of the proposed 
rule:

    Example 1: An insured depository institution provides a $1 
million mortgage loan to an organization pursuant to a written 
agreement. The agreement is an individual mortgage loan and is 
exempt from coverage under the rule, regardless of the interest rate 
on the loan or whether the purpose of the loan was for re-lending.
    Example 2: An affiliate of an insured depository institution 
provides a $500,000 working capital loan to a small business 
pursuant to a written agreement. The loan is made on market terms 
and the purposes of the loan do not include re-lending. The 
agreement is exempt from coverage under the rule.
    Example 3: An insured depository institution enters into a 
written agreement with a community development organization to make 
$250 million in small business loans in the community over the next 
five years. The loans would be made on market terms and not for 
purposes of re-lending. Each small business loan made by the insured 
depository institution pursuant to the agreement is exempt from 
coverage. The agreement by the insured depository institution with 
the association, however, is not a commitment to make a specific 
loan or extension of credit and would not be exempt under one 
interpretation of the exemption. This commitment to make loans would 
be exempt under the other interpretation of the exemption.
    Example 4: A business organization receives a mortgage loan from 
an affiliate of an insured depository institution pursuant to a 
written agreement. The agreement also provides that the affiliate 
will make a $12,000 investment in a local community development 
corporation the following month. The agreement is not an exempt 
agreement under the rule because it is not exclusively a mortgage 
loan. Although the mortgage loan may be excluded when considering if 
the agreement meets the Act's dollar thresholds, the agreement would 
meet these thresholds because it provides for the affiliate to make 
other payments in excess of $10,000 in a calendar year.

    The agencies request comment on these exemptions. In particular, 
comment is invited on whether a mortgage loan includes any loan secured 
by real estate, or only a loan that is secured by real estate and made 
for the purchase or improvement of the real estate or for the 
refinancing of such a loan. Comment also is invited on whether the 
agencies should define when loans are made at ``substantially below 
market rates'' and, if so, what that definition should be. For example, 
should the agencies provide that the relevant market rate for a loan is 
the rate that would be charged on a comparable transaction (e.g., a 
construction loan, permanent financing, a small business loan, or an 
unsecured consumer loan) with a comparable person (e.g., a person with 
similar financial resources and credit history) that is not a party to 
the agreement? In addition, should the agencies provide a formula for 
determining whether a loan bears a rate that is substantially below the 
market rate? Such a formula could provide, for example, that a rate is 
substantially below the market rate if it is more than a specified 
percentage (e.g., 10 percent) or number of basis points (e.g., 200 
basis points) below the rate that would be charged in a comparable 
transaction.
    The agencies also request comment on whether the rule should 
provide guidance on when a loan is made ``for purposes of re-lending'' 
and what constitutes ``re-lending'' under the rule. For example, should 
the rule provide that the purposes of a loan are determined by 
reference to the underlying loan documents or by whom the documents 
refer to as the lender?
b. Agreements With Persons Who Have Not Made a CRA Contact
    Section 711 also exempts from coverage any agreement entered into 
by an insured depository institution or affiliate with a person who has 
not commented on, testified about, or discussed with the institution, 
or otherwise contacted the institution, concerning the CRA. This 
provision broadly exempts from all of the provisions of section 711 any 
agreement by an insured depository institution or affiliate with a 
person that has not had a contact concerning the CRA (CRA contact). The 
Conference Report for the Act indicates that a wide range of 
organizations that solicit funds without regard to the CRA may benefit 
from this exemption, including civil rights groups, community groups 
providing housing or other services in low-income neighborhoods, the 
American Legion, and community theater groups.\6\
---------------------------------------------------------------------------

    \6\ See H.R. Conf. Rep. No. 106-434 at 179 (1999).
---------------------------------------------------------------------------

    The proposed rule adopts the exemptive language contained in 
section 711. In addition, the proposed rule provides examples of 
actions by a person that would constitute a CRA contact under the rule 
and examples of actions that would not constitute a CRA contact under 
the rule. These examples are intended to illustrate different types of 
actions that are or are not CRA contacts based on the wording and 
purpose of the exemption and the scope of the statutory exemption. 
These examples are not exclusive. For ease of reference, the proposed 
rule divides the examples of actions that constitute a CRA contact into 
two categories: contacts with an agency and contacts with an insured 
depository institution or affiliate.
    As discussed below, the agencies request comment on various aspects 
of this exemption. In particular, the agencies invite comment on 
whether the rule should provide a more detailed definition of the 
exemption. The agencies also request comment on whether the examples 
provided are appropriate and useful and, if so, whether other examples 
should be included or areas addressed with examples.
    CRA Contact with an Agency. As a general matter, a person has made 
a CRA contact if the person submits written or oral comments or 
testimony to an agency concerning the record of performance or future 
performance under the CRA of an insured depository institution or CRA 
affiliate.\7\ If a person had this type of contact with an agency and 
subsequently enters into an agreement with the insured depository 
institution or any affiliate of the insured depository institution that 
meets the requirements of section 711, the agreement is not exempt.
---------------------------------------------------------------------------

    \7\ As discussed further below, a contact concerning the 
performance of a ``CRA affiliate'' of an insured depository 
institution is considered to be a contact concerning the CRA 
performance of the insured depository institution.
---------------------------------------------------------------------------

    ``Comments'' and ``testimony'' refer to any type of written 
submission or oral statement by a person to an agency. The terms 
include the submission of written materials to an agency in connection 
with an application by an insured depository institution or company for 
a deposit facility or an examination of an insured depository 
institution under the CRA, and oral statements made by a person to an 
agency during a public or private meeting held concerning a transaction 
or CRA examination.
    The rule provides two examples of contacts with an agency that 
would not constitute a CRA contact. The first example involves a person 
that provides written or oral comments or testimony to an agency in 
response to a direct request by the agency for comments or testimony 
from that person. In such circumstances, the contact would result due 
to an action by the agency and imposing the rule's requirements on the 
person might impede the agency's ability to obtain necessary or useful 
information. This example of a direct request for comments or testimony 
does not apply, however, to comments or

[[Page 31967]]

testimony that are provided in response to a general invitation by an 
agency for public comments (e.g., a Federal Register notification) in 
connection with a CRA performance evaluation or an application for a 
deposit facility.
    The second example provides that a person does not make a CRA 
contact with an agency by making a statement concerning an insured 
depository institution at a widely attended conference or seminar on a 
general topic, even if representatives of an agency were in attendance 
at the conference or seminar when the statement was made. A public or 
private meeting or hearing relating to one or more insured depository 
institutions or a transaction to acquire a deposit facility is not 
considered a widely attended conference or seminar on a general topic.
    CRA Contact with Insured Depository Institution or Affiliate. 
Contacts by a person with an insured depository institution or 
affiliate will not cause an agreement to become subject to the 
requirements of section 711 unless the contact is a CRA contact. The 
rule provides several examples of the types of contacts with an insured 
depository institution or affiliate that are CRA contacts and that 
would make the exemption unavailable.
    The first example involves a contact with an insured depository 
institution or affiliate about providing (or refraining from providing) 
written or oral comments or testimony to an agency concerning the 
record of performance or future performance under the CRA of the 
insured depository institution.
    The second example involves a contact with an insured depository 
institution or affiliate about providing (or refraining from providing) 
written comments to the institution that would have to be included in 
the institution's CRA public file. Under the agencies' CRA Regulations, 
a written comment generally must be placed in an institution's CRA 
public file if it specifically relates to the institution's performance 
in helping to meet community credit needs.\8\ Because this information 
is intended for consideration by the agencies in the course of a CRA 
examination or evaluation of an application for a deposit facility, the 
submission of comments for inclusion in an institution's CRA public 
file is considered a CRA contact.
---------------------------------------------------------------------------

    \8\ See 12 CFR 25.43(a)(1) (OCC); 12 CFR 228.43(a)(1) (Board); 
12 CFR 345.43(a)(1) (FDIC); 12 CFR 563e.43(a)(1) (OTS).
---------------------------------------------------------------------------

    The third example involves a contact with an insured depository 
institution or affiliate concerning the CRA rating of the insured 
depository institution, or the CRA record of performance of the insured 
depository institution.
    The fourth example involves a contact with an insured depository 
institution or affiliate concerning actions that should be taken to 
improve the CRA performance of the insured depository institution.
    The fifth example involves a contact with an insured depository 
institution or affiliate concerning any obligation or responsibility 
that the insured depository institution may have to meet the banking 
needs of its community. In this example, the contact occurs while the 
insured depository institution or an affiliate of the institution has 
an application for a deposit facility pending before an agency or is 
undergoing a publicly announced CRA performance examination.
    If a person has one of the contacts described above and 
subsequently enters into a covered agreement with the insured 
depository institution or any affiliate of the insured depository 
institution, the agreement is not exempt under the rule. The rule and 
the examples do not contemplate that a discussion or contact must 
include any particular words or phrases, such as ``Community 
Reinvestment Act,'' ``CRA'' or ``CRA rating'' in order to be a CRA 
contact. Instead, the substance and context of the discussion or 
contact are the controlling factors.
    Under the examples included in the rule, a person would not have a 
CRA contact by sending a similar fundraising letter to an insured 
depository institution or affiliate and other businesses in the 
community encouraging all businesses in the community to meet their 
obligation to assist in making the local community a better place to 
live and work. In addition, a person would not make a CRA contact by 
sending a general offering circular to financial institutions offering 
to sell a portfolio of loans and having discussions with a particular 
insured depository institution concerning the loan portfolio if no 
reference to the CRA or the institution's CRA performance is made in 
the offering circular or in the parties' discussions.\9\ A person also 
would not make a CRA contact with an insured depository institution or 
affiliate by making a statement concerning the institution or affiliate 
before a widely attended conference or seminar on a general topic, even 
if representatives of the institution or affiliate were in attendance 
at the conference or seminar when the statement was made.
---------------------------------------------------------------------------

    \9\ A CRA contact would occur under the proposed rule, however, 
if the offering materials indicated that the loans in the mortgage 
pool would receive favorable consideration by the agencies under the 
CRA, or if the parties discussed how the transaction would improve 
the institution's CRA performance.
---------------------------------------------------------------------------

    The agencies request comment on whether the rule should more 
specifically define the terms of the exemption for persons that have 
not made a CRA contact or more specifically define when a CRA contact 
has occurred and, if so, how a CRA contact should be defined. The 
agencies also request comment on the examples of a CRA contact included 
in the rule, including whether any of the examples should be amended or 
deleted or whether additional examples should be provided. For example, 
the agencies request comment on whether a CRA contact under the Act 
includes a general discussion about the CRA that does not involve any 
discussion of the performance of an insured depository institution 
under the CRA or obligation of the institution to serve the banking 
needs of its community.
    In addition, the agencies request comment on whether the rule can 
and should be limited to exclude from the scope of CRA contacts 
discussions with an insured depository institution or affiliate 
concerning whether particular loans, services, investments or community 
development activities are generally eligible for consideration by an 
agency under the CRA Regulations. The marketing of products and 
services to insured depository institutions frequently may include a 
general statement of whether the product or service is eligible for 
credit under the CRA. If the rule were limited in this manner, then the 
situation described in section ____.2(b)(2)(iii)(D) of the rule would 
not be a CRA contact even if the offering circular included a statement 
that the loans included in the loan pool were of the type that could be 
considered by an agency under the CRA Regulations. A discussion of 
whether or how loans, services, investments or activities would impact 
a particular institution's CRA rating or performance would, however, 
continue to be considered a CRA contact.
    The agencies also request comment on whether the rule can and 
should be limited to cover only contacts that involve providing CRA-
related comments or testimony to an agency or discussions with an 
insured depository institution or affiliate about providing (or 
refraining from providing) such comments or testimony to an agency. If 
the rule was limited in this fashion, the actions described in section 
____.2(b)(2)(ii)(B)(3), (4) and (5) would not constitute a CRA contact 
because

[[Page 31968]]

the person did not submit CRA-related comments or testimony to an 
agency or discuss with or contact the insured depository institution or 
any affiliate about providing (or refraining from providing) CRA-
related comments or testimony to an agency.
    Additionally, the agencies request comment on whether there should 
be a temporal relationship between a CRA contact and when an agreement 
is made. In this regard, under the proposed rule, a covered agreement 
entered into in 2001 between an insured depository institution and a 
person would not be exempt if the person had submitted a comment to an 
agency concerning the CRA performance of the institution several years 
earlier. Section 711, however, appears to have been intended to apply 
to agreements that result from, or were influenced by, a CRA contact. 
Where a CRA contact occurs a significant period of time before the 
negotiation of an agreement, however, there may be no link or influence 
between the CRA contact and the agreement. Furthermore, the passage of 
time may make it difficult for the parties to a covered agreement to 
determine or effectively track whether a CRA contact occurred at all.
    For these reasons, the agencies specifically request comment on 
whether the rule should require that a CRA contact occur within a 
specified period, such as two years (or a shorter or longer period), 
before the parties entered into the agreement. Similarly, the agencies 
request comment on whether a CRA contact should include a contact that 
occurs after the parties enter into an agreement, such as within 90 
days after the beginning of the term of the agreement, at any time 
during the term of the agreement, or some other period of time. For 
example, if a person provides comments or testimony to an agency 
concerning the CRA performance of an insured depository institution 
after entering into an agreement with the institution, would the 
person's actions suggest that the agreement and the comments or 
testimony were linked?
    The agencies also request comment on how the rule and the exemption 
discussed above should apply in circumstances where a covered agreement 
involves several parties and a CRA contact has been made by or 
concerning only one of the parties. For example, how should the rule 
apply where several nongovernmental entities or persons enter into a 
covered agreement with an insured depository institution and only one 
of the entities or persons has made a CRA contact? Similarly, how 
should the rule apply where a nongovernmental entity or person has a 
CRA contact concerning one insured depository institution and 
subsequently enters into a covered agreement jointly with the 
institution and several other unaffiliated insured depository 
institutions? In addition, how should the rule and exemption apply 
where a person has a CRA contact with an agency but the relevant 
insured depository institution or affiliate does not know the contact 
occurred?
c. Request for Comment on Additional Exemptions
    The agencies recognize that the language of section 711 and, 
accordingly, the types of agreements captured under the proposed rule 
are broad. The agencies are concerned that, in light of this breadth, 
certain agreements that were not intended to be covered by the Act may 
be considered covered agreements under the proposed rule. For example, 
supervisory experience suggests that insured depository institutions 
enter into a wide variety of contracts in their normal day-to-day 
operations that, directly or indirectly, relate to activities 
considered by the agencies in connection with a CRA evaluation. During 
the negotiation of these contracts and as an incident to the underlying 
business transaction, the parties may discuss whether the activities 
contemplated by the contract are viewed favorably under the agencies' 
CRA Regulations, involve loans within the institution's CRA assessment 
area, or would otherwise improve the institution's CRA performance. 
These types of contacts would be CRA contacts under the proposed rule 
and a related business agreement would be covered if the agreement was 
in fulfillment of the CRA and met the other criteria to be a covered 
agreement.
    The Act grants the Board the ability to determine, by regulation, 
that specific types of contacts are exempt and, consequently, that a 
related agreement is not covered by section 711. The agencies 
specifically invite comment on whether and how the Board should 
exercise its exemptive authority in this area, including whether there 
are particular types of CRA contacts that occur and that, given their 
context and purpose, do not implicate the concerns of the Act. For 
example, if the proposed definition of CRA contact is retained in the 
final rule, should the Board exercise its discretion in this area to 
provide an exemption for CRA contacts that occur in connection with the 
purchase of loans by an insured depository institution or affiliate on 
an arm's length basis in the secondary market even where the 
negotiation of the agreement included a general discussion of the 
effect of the transaction on the CRA performance of the insured 
depository institution? Are there other types of contacts that occur in 
connection with the ordinary day-to-day business of an insured 
depository institution or affiliate that should be exempted from 
coverage because, for example, the CRA contact does not involve any 
coercive aspect or was initiated by the insured depository institution? 
If so, how could such an exemption or exemptions be framed narrowly to 
exclude only those types of contacts (and related agreements) that are 
not within the intended scope of the Act?
3. Fulfillment of the CRA
    Under the GLB Act, a written agreement is a covered agreement only 
if it is ``made pursuant to, or in connection with the fulfillment of 
the Community Reinvestment Act of 1977.'' \10\ The Act defines 
``fulfillment'' of the CRA to mean ``a list of factors that the 
appropriate Federal banking agency determines have a material impact on 
the agency's decision to (A) approve or disapprove an application for a 
deposit facility [under the CRA]; or (B) to assign a rating to an 
insured depository institution [under the CRA].'' \11\
---------------------------------------------------------------------------

    \10\ 12 U.S.C. 1831y(e)(1)(A).
    \11\ Id. at 1831y(e)(2).
---------------------------------------------------------------------------

    The Conference Report for the GLB Act indicates that the list of 
factors should include ``a full enumeration of the relevant factors 
that [an] agency reviews and considers in examining the performance of 
an insured financial institution in connection with the CRA, including 
any and all items a regulator would attach importance to in determining 
the evaluation under the [CRA] of the performance of a financial 
institution.'' \12\ The agencies' CRA Regulations set forth the 
criteria that the agencies consider in evaluating the CRA performance 
of an insured depository institution for purposes of assigning a CRA 
rating to an institution and evaluating an application by an 
institution or company for a deposit facility under the CRA.\13\ These 
regulations permit the agencies to consider broadly the lending, 
investment and service activities of an insured depository institution 
in evaluating the institution's performance under the CRA.
---------------------------------------------------------------------------

    \12\ H.R. Conf. Rep. No. 106-434 at 179 (1999).
    \13\ See 12 CFR 25.21-25.29 (OCC); 12 CFR 228.21-228.29 (Board); 
12 CFR 345.21-345.29 (FDIC); 12 CFR 563e.21-563e.29 (OTS).
---------------------------------------------------------------------------

    For these reasons, the proposed rule would define the list of 
factors for purposes of section 711 generally by

[[Page 31969]]

reference to the criteria enumerated in Subpart B of the CRA 
Regulations jointly issued by the agencies. These criteria reflect the 
factors that the agencies previously have determined have a material 
impact on an agency's assignment of a CRA rating and assessment of the 
CRA factor in decisions to approve or disapprove an application for a 
deposit facility. These factors are summarized in the proposed rule as 
follows:
    (1) Home purchase, home improvement, small business, small farm, 
community development, and consumer lending as described in the lending 
test portion of the CRA Regulations, including loan purchases, loan 
commitments, and letters of credit;
    (2) Making investments, deposits, or grants, or acquiring 
membership shares that have as their primary purpose community 
development, as described in the investment test portion of the CRA 
Regulations;
    (3) Delivering retail banking services, as described in the service 
test portion of the CRA Regulations;
    (4) Providing community development services, as described in the 
service test portion of the CRA Regulations;
    (5) For a wholesale or limited-purpose insured depository 
institution, community development lending, qualified investments, and 
community development services, as described in the community 
development test portion of the CRA Regulations for wholesale or 
limited-purpose insured depository institutions;
    (6) For small insured depository institutions, the lending and 
other activities described in the small insured depository institution 
performance standard of the CRA Regulations; \14\
---------------------------------------------------------------------------

    \14\ The terms wholesale insured depository institution, 
limited-purpose insured depository institution, and small insured 
depository institution refer to a wholesale, limited-purpose or 
small bank or savings association as defined in Subpart A of the 
relevant agency's CRA Regulations. See 12 CFR 25.12(o), (t) and (w) 
(OCC); 12 CFR 228.12(o), (t), and (w) (Board); 12 CFR 345.12(o), 
(t), and (w) (FDIC); and 12 CFR 563e.12(n), (s), and (v) (OTS). An 
agreement that involves the performance of activities by a 
wholesale, limited-purpose or small insured depository institution 
is in fulfillment of the CRA only if the agreement involves the 
performance of one of the activities within the scope of the 
relevant performance test or standard for the particular type of 
institution.
---------------------------------------------------------------------------

    (7) For an insured depository institution whose CRA performance is 
evaluated on the basis of a strategic plan, any element of that plan as 
described in the strategic plan portion of the CRA Regulations;
    (8) Providing or refraining from providing written or oral comments 
or testimony to any agency concerning the record of performance or 
future performance under the CRA of an insured depository institution 
that is a party to the agreement or an affiliate of a party to the 
agreement; and
    (9) Providing or refraining from providing written comments to an 
insured depository institution that is a party to the agreement or an 
affiliate of a party to the agreement that would have to be included in 
the institution's CRA public file.
    An activity is within the factors enumerated in paragraphs (1) 
through (7) if it would be considered by the agencies under the 
relevant performance test or standard in the CRA Regulations.\15\ These 
activities may be conducted by an insured depository institution that 
is a party to the agreement or an affiliate of a party to the 
agreement.\16\ In addition, an agreement would be considered in 
fulfillment of the CRA if any of these activities is performed by a 
nongovernmental entity or person that is a party to the agreement and 
an insured depository institution receives favorable consideration for 
the activities under the CRA.
---------------------------------------------------------------------------

    \15\ Thus, for example, an agreement that relates to the 
consumer lending activities of an insured depository institution 
would be considered to be in fulfillment of the CRA if the 
institution's consumer lending activities were considered by the 
appropriate agency at the institution's most recent CRA examination. 
Under the CRA Regulations, an institution's consumer lending 
activities are considered in certain circumstances by an agency if 
such lending constitutes a substantial majority of the institution's 
business or the institution has elected to have its consumer lending 
activities considered by the appropriate agency. See 12 CFR 25.22(a) 
(OCC); 12 CFR 228.22(d) (Board); 12 CFR 345.22(a) (FDIC); 12 CFR 
563.22(a) (OTS).
    \16\ As discussed further below, a ``CRA affiliate'' of an 
insured depository institution is viewed as part of the insured 
depository institution. Accordingly, activities performed by a CRA 
affiliate of an insured depository institution are considered to be 
performed by the insured depository institution.
---------------------------------------------------------------------------

    The proposed rule's list of factors also includes providing (or 
refraining from providing) CRA-related comments or testimony to an 
agency or written comments to an insured depository institution that 
must be included in the institution's CRA public file. The agencies' 
CRA Regulations generally require the agencies to consider comments 
received from the public or included in an insured depository 
institution's CRA public file when evaluating the CRA performance of 
the institution.\17\ The CRA Regulations also require an agency to 
consider written or oral comments submitted to the agency when acting 
on applications for a deposit facility.\18\ Accordingly, such comments 
and testimony are among the factors that may have a material impact on 
an agency's decision to assign a CRA rating or evaluation under the CRA 
of an application for a deposit facility.
---------------------------------------------------------------------------

    \17\ See 12 CFR 25.21(b)(6) and 25.43(a)(1) (OCC); 12 CFR 
228.21(b)(6) and 228.43(a)(1) (Board); 12 CFR 345.21(b)(6) and 
345.43(a)(1) (FDIC); 12 CFR 563e.21(b)(6) and 563e.43(a)(1) (OTS).
    \18\ See 12 CFR 25.29(c) (OCC); 12 CFR 228.29(b) (Board); 12 CFR 
345.29(c) (FDIC); 12 CFR 563e.29(c) (OTS).
---------------------------------------------------------------------------

    While the level of activity that will have a material effect on a 
CRA rating or an application decision varies with the circumstances 
involving the particular insured depository institution, the GLB Act by 
its terms requires that the agencies identify the list of factors that 
have a material impact on an agency's decision to assign a CRA rating 
or to approve an application for a deposit facility under the CRA. The 
Act does not appear to incorporate a quantitative threshold for the 
agencies to use in defining the list of factors that are material to 
such a decision. Instead, the GLB Act explicitly sets a threshold 
dollar level for the minimum amount of activities that must be 
performed in order for an agreement to be covered by section 711. As 
discussed below, these value thresholds are $10,000 in cash payments, 
grants or other consideration and $50,000 in loans. For these reasons, 
the proposed rule provides that an agreement is in fulfillment of the 
CRA if it pertains to a ``factor'' that the agencies determine is 
``material'' to an institution's rating or application--such as the 
institution's lending--rather than to a level of performance that the 
agencies determine is material to the CRA evaluation of that insured 
depository institution.
    The agencies request comment on this reading of section 711 and on 
whether the list of factors properly identifies the ``factors'' that 
are material to a CRA evaluation. The agencies also request comment on 
whether the agencies have interpreted the statutory mandate to identify 
the ``list of factors that * * * have a material impact'' on an 
agency's decision to assign a CRA rating and to approve or disapprove 
an application under the CRA in a manner consistent with the language 
and purposes of section 711. In particular, comment is invited on 
whether the proposed list of factors that are considered to be in 
fulfillment of the CRA can and should be expanded, restricted, or 
altered consistent with the language and purpose of the Act. For 
example, although the agencies consider an insured depository 
institution's lending in all geographic areas and to borrowers of all 
income ranges for certain purposes in evaluating the institution's CRA 
performance, can and should the rule's

[[Page 31970]]

list of factors focus on those types of lending (and other activities) 
that are reasonably likely to receive favorable consideration under the 
CRA Regulations, such as certain types of lending in LMI areas or to 
LMI borrowers?
    The terms of a written agreement generally determine whether the 
contract, arrangement or understanding is in fulfillment of the CRA. 
However, the parties to a written agreement may not evade coverage 
under the Act by reaching an oral understanding that a party will 
submit (or refrain from submitting) oral or written CRA-related 
comments or testimony to an agency or written comments to an insured 
depository institution that would have to be included in the 
institution's CRA public file and excluding this understanding from the 
terms of the written agreement. In addition, if an agreement includes a 
loan, extension of credit or loan commitment that, if done separately, 
would be exempt from coverage and also provides for the insured 
depository institution or affiliate to provide other funds or 
resources, the parties may exclude the exempt loan, extension of credit 
or loan commitment when determining if the agreement is in fulfillment 
of the CRA.
    The following are examples of agreements that would be in 
fulfillment of the CRA under the proposed rule. Unlike the examples of 
CRA contacts, these examples are not included in the proposed rule. 
Each example illustrates only the fulfillment criteria of the rule and 
assumes that the agreement meets the other requirements necessary to be 
considered a covered agreement. In this regard, even if an agreement is 
in fulfillment of the CRA, it may still be exempt from coverage under 
the rule if it is an exempt loan or loan commitment, or if the person 
that is a party to the agreement has not had a CRA contact.

    Example 1: An insured depository institution enters into an 
agreement with a local business organization that provides for the 
institution to make $500,000 in small business loans to third 
parties in the institution's assessment area in the next two years. 
The agreement is in fulfillment of the CRA because an institution's 
small business lending activity is considered as part of the lending 
test under the CRA Regulations. The agreement might still be exempt 
from coverage depending on the scope of the exemption for loan 
commitments.
    Example 2: An insured depository institution enters into an 
agreement with a development corporation to invest $1 million in a 
project the purpose of which is the revitalization of an LMI 
neighborhood within the institution's assessment area. The agreement 
is in fulfillment of the CRA because the investment is a qualified 
investment under the CRA Regulations and would be considered as part 
of the investment test under the CRA Regulations.
    Example 3: An insured depository institution enters into an 
agreement with a supermarket chain that provides for the institution 
to open a branch in certain of the chain's stores. The agreement is 
in fulfillment of the CRA because an institution's record of opening 
and closing branches is evaluated in the context of the distribution 
of its branches as part of the service test under the CRA 
Regulations.
    Example 4: An insured depository institution enters into a 
written agreement with an organization to provide the organization 
with a $25,000 donation to assist in covering the organization's 
general operating expenses. A representative of the organization 
orally agrees that, in return for the contribution, the organization 
will submit a comment to or testify before the appropriate agency in 
support of the institution's recently announced proposal to merge 
with another insured depository institution. The written agreement 
is in fulfillment of the CRA because the organization orally agreed 
in connection with the agreement to provide comments or testimony to 
an agency concerning the CRA record of performance of the 
institution.

    The following are examples of agreements that would not be in 
fulfillment of the CRA under the proposed rule:

    Example 5: An insured depository institution enters into an 
agreement with a local theater company for the institution to make a 
$20,000 charitable donation to the company for each of the next five 
years. The agreement is not in fulfillment of the CRA because the 
donation does not have community development as its primary purpose 
and, thus, would not be considered a qualified investment under the 
CRA Regulations.
    Example 6: An insured depository institution enters into an 
agreement with a neighborhood association to donate 100 hours of 
employee time to the organization's annual effort to clean up the 
neighborhood. The agreement is not in fulfillment of the CRA because 
the services are not considered community development services or 
other qualifying services under the CRA Regulations.

    The agencies note that the proposed rule's list of factors does not 
include performance of activities designed to ensure compliance with 
Federal laws that prohibit discriminatory or other illegal credit 
practices, such as the Equal Credit Opportunity Act (15 U.S.C. 1691 et 
seq.) and the Fair Housing Act (42 U.S.C. 3601 et seq.). Although the 
agencies consider evidence of these practices in evaluating an insured 
depository institution's performance under the CRA, the agencies are 
concerned that including such activities in the list of factors could 
have an unintended and detrimental impact on compliance and enforcement 
of the fair lending laws.\19\ The agencies specifically request comment 
on whether this view is correct, or whether the list of factors should 
be expanded to include activities designed to ensure compliance with 
the fair lending laws.
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    \19\ For example, a requirement that an insured depository 
institution publicly disclose an agreement to use ``mystery 
shoppers'' to test the institution's compliance with the fair 
lending laws or to settle a fair lending complaint could deter the 
institution from entering into such agreements.
---------------------------------------------------------------------------

    Comment also is solicited on whether the list of factors should be 
expanded to include other activities. For example, the proposed rule's 
list of factors does not specifically include the provision of advisory 
or consulting services concerning CRA-related activities. Should the 
rule include a reference to these or other activities?
4. Value
    A written agreement is a covered agreement only if it calls for an 
insured depository institution or affiliate to provide to one or more 
persons cash payments, grants, or other consideration of more than 
$10,000 in any calendar year, or to make loans that have an aggregate 
principal amount of more than $50,000 in any calendar year. The 
statutory threshold is based on the total value of payments and loans 
provided under the agreement and does not require that these payments 
or loans be made to a party to the agreement.\20\ Accordingly, under 
the proposed rule, all cash payments, grants, consideration or loans 
provided by an insured depository institution or affiliate under the 
agreement, including amounts provided to individuals or entities that 
are not parties to the agreement, would be considered in determining 
whether an agreement meets the rule's dollar thresholds. However, if an 
agreement includes a loan, extension of credit or loan commitment that, 
if done separately, would be exempt from coverage and also provides for 
the institution or affiliate to provide other funds or resources, the 
parties may exclude the exempt loan, extension of credit or loan 
commitment when determining if the agreement meets the dollar 
thresholds of the rule. See discussion under II.A.2.a. above concerning 
qualifying loans.
---------------------------------------------------------------------------

    \20\ See 12 U.S.C. 1831y(e)(1)(A)(i).
---------------------------------------------------------------------------

    Under the proposal, an agreement that provides for payments to be 
made in any calendar year in excess of the dollar thresholds 
established by the statute is a covered agreement for its entire term. 
The agencies believe that using a calendar year period for these 
calculations should facilitate

[[Page 31971]]

compliance with the rule by providing all parties to a covered 
agreement a uniform basis for determining whether the agreement is 
covered by the rule and because the terms of an agreement may not 
coincide with the parties' fiscal years. The agencies invite comment on 
whether another 12-month period would provide a more appropriate basis 
for these calculations.
    The following are examples of the value provisions of the proposed 
rule. These examples illustrate only the application of the dollar 
thresholds of the proposed rule.

    Example 1: An insured depository institution enters into an 
agreement with a small business investment company pursuant to which 
the institution will invest $25,000 in the company. The agreement 
meets the dollar threshold criterion to be a covered agreement 
because the institution will provide more than $10,000 in funds 
(other than loans) under the agreement.
    Example 2: An insured depository institution and a community 
organization enter into a written agreement pursuant to which the 
institution will invest $1 million in a state-sponsored investment 
fund that supports affordable housing initiatives for LMI 
individuals. The community organization will not receive any funds 
or other resources from the insured depository institution or its 
affiliates under the agreement. The agreement meets the dollar 
threshold criterion for a covered agreement under the proposed rule.
    Example 3: An affiliate of an insured depository institution 
provides a $100,000 loan to an association of small businesses 
pursuant to a written agreement. The loan is on market terms and not 
for purposes of re-lending. The agreement also provides for the 
affiliate to make a $5,000 grant to the local chamber of commerce's 
small business incubator. Because the loan is made on market terms 
and not for purposes of re-lending, the loan would be an exempt 
agreement under the proposed rule if it were a separate agreement. 
Accordingly, the value of the loan may be excluded in determining 
the value of the agreement. After excluding the loan, the agreement 
would not meet the dollar criterion of the rule.
    Example 4: An insured depository institution and a community 
development corporation enter into a written agreement that requires 
an affiliate of the insured depository institution to provide the 
organization with a grant of $5,000 in 2000, $8,000 in 2001, and 
$11,000 in 2002. The agreement exceeds the dollar threshold 
criterion of the rule because the agreement provides for payments in 
excess of $10,000 during 2002. Assuming the agreement meets the 
other requirements of the rule and is not otherwise exempt, the 
agreement is a covered agreement for its entire term.

    The agencies request comment on how the dollar thresholds in the 
statute should be applied in situations where an agreement does not 
have a specific term or does not specify a timetable for the 
disbursement of funds or resources under the agreement. For example, if 
an agreement provides that an insured depository institution will make 
$40,000 in grants over a 5-year period, but does not specify the years 
in which the grants will be made, should the rule create a presumption 
that the entire sum ($40,000) is provided in the first year of the 
agreement or assume that the value is paid in equal yearly installments 
of $8,000? An alternative approach would rely on how the payments are 
actually made under the agreement. Under this alternative approach, if 
the payments under the agreement actually exceeded $10,000 in a 
calendar year, the agreement would then become a covered agreement.
    The agencies also invite comment on whether the rule should provide 
guidance on how to determine the value of an agreement that does not 
specify the amount of payments, grants, loans or other consideration to 
be provided under the agreement, such as an agreement for an insured 
depository institution to open a branch or to begin offering a new loan 
product.
5. Related Agreements Considered a Single Agreement
    In two circumstances, section 711 of the GLB Act requires that 
separate agreements or contracts be aggregated for purposes of 
determining whether the agreements--taken as a whole--meet the 
definition of a covered agreement.\21\ Section ____.3 of the rule 
implements these requirements. If separate agreements are considered a 
single agreement under section ____.3, the combined agreement must 
still meet the criteria to be a covered agreement to be covered by the 
rule. Loans, extensions of credit and loan commitments that are 
specifically excluded from the definition of covered agreement under 
____.2(b) of the rule are not required to be aggregated with other 
agreements.
---------------------------------------------------------------------------

    \21\ See 12 U.S.C.1831y(e)(1) and (2).
---------------------------------------------------------------------------

a. Agreements Entered Into by the Same Parties
    Section ____.3(a) provides that all written contracts, 
arrangements, or understandings that are entered into by an insured 
depository institution or affiliate of an insured depository 
institution will be considered to be part of a single agreement if the 
contracts, arrangements, or understandings are entered into with the 
same person within a 12-month period and each agreement is in 
fulfillment of the CRA. This aggregation rule applies to all written 
agreements entered into during the 12-month period by the same person 
on the one hand, and any part of the same organization, including an 
insured depository institution and any of its affiliates, on the other 
hand.

    Example 1: In April, an insured depository institution enters 
into a written agreement with Community Development Organization, 
Inc. pursuant to which the institution makes an $8,000 investment in 
the organization. In November of the same year, an affiliate of the 
insured depository institution and Community Development 
Organization, Inc. enter into a written agreement under which the 
affiliate makes an additional $8,000 investment in the organization. 
For purposes of this example, both investments are assumed to be 
qualified investments under the CRA Regulations and considered in 
the evaluation of the institution's CRA performance. The separate 
agreements must be aggregated under the rule and the combined 
agreement meets the $10,000 dollar threshold of the rule. 
Accordingly, the agreements are jointly considered a covered 
agreement.
    Example 2: In September, an insured depository institution 
orally agrees to donate $15,000 of computer equipment to a local 
housing organization. In December, the institution and organization 
enter into a written agreement for the institution to make a $5,000 
CRA qualified investment in local housing project that is eligible 
for low-income housing tax credits. The agreements do not need to be 
aggregated under the rule because the September agreement was not in 
writing.
    Example 3: In February, an insured depository institution enters 
into a written agreement with Partnership A for the institution to 
make a $9,000 grant to Partnership A for the purpose of 
rehabilitating affordable-housing units. In August of the same year, 
an affiliate of the insured depository institution enters into a 
written agreement with Partnership A under which the affiliate makes 
a payment of $9,000 so that its employees may have access to the 
child care center operated by Partnership A. The August agreement is 
not in fulfillment of the CRA. Accordingly, the two agreements would 
not be aggregated under the rule.
b. Substantively Related Contracts
    Section 711 requires the aggregation of separate but 
``substantively related contracts'' even where the contracts are 
entered into with different persons. \22\ Unlike the aggregation rule 
discussed above, the rule aggregating ``substantively related 
contracts'' applies only to separate, written contracts and does not 
apply to other types of written arrangements or understandings.
---------------------------------------------------------------------------

    \22\ See 12 U.S.C. 1831y(e)(1)(A)(ii).
---------------------------------------------------------------------------

    The rule defines written contracts entered into by an insured 
depository institution or any of its affiliates as ``substantively 
related'' if the contracts were negotiated in a coordinated

[[Page 31972]]

fashion. The rule does not require that the separate contracts each be 
in fulfillment of the CRA or that the parties to the contracts (other 
than the banking organization) be the same. Thus, the rule prevents 
parties from evading the disclosure and reporting obligations of the 
statute by separating out from an agreement payments or grants that may 
---------------------------------------------------------------------------
not themselves be in fulfillment of the CRA.

    Example 1: Two housing organizations jointly approach an insured 
depository institution to obtain funding. A representative of the 
insured depository institution meets with both organizations at the 
same time to discuss their funding needs. The institution enters 
into a written contract with one organization to provide it with 
$9,000 for the purpose of rehabilitating affordable housing units. 
The institution enters into a separate written contract with the 
other organization to provide the organization with an unrestricted 
grant of $9,000. Because the contracts were negotiated in a 
coordinated fashion, the contracts must be aggregated under the 
rule. When aggregated, the contracts would meet the statute's 
$10,000 dollar threshold and each contract would be a covered 
agreement.
    Example 2: A bank holding company announces its intention to 
acquire an insured depository institution. A Florida-based group and 
a California-based group independently approach the bank holding 
company to seek funding for specific projects and separately 
negotiate written contracts with the bank holding company. The 
contracts would not be aggregated under the rule, and each contract 
would be a covered agreement only if that contract on its own met 
the requirements of the rule.
    The agencies request comment on the aggregation rules included in 
section ____.3, including the proposed definition of ``substantively 
related contracts'' and whether there are alternative definitions that 
would achieve the purposes of the statute. The agencies also request 
comment on how these aggregation rules should apply when a CRA contact 
has not occurred prior to one of the agreements or was made by only one 
of the persons that is a party to the agreements. For example, when a 
single person enters into two agreements with an insured depository 
institution during a 12-month period, but engages in a CRA contact 
between the first and second agreement, should the first agreement be 
excluded from aggregation because a CRA contact had not occurred at the 
time it was entered into? Alternatively, should the agreements be 
aggregated because a CRA contact occurred prior to the second agreement 
and the agreements otherwise meet the requirements for aggregation 
under the rule? Similarly, should substantively related contracts 
entered into by separate persons be aggregated under the rule only if 
each person had engaged in a CRA contact?
6. CRA Affiliate Treated as Insured Depository Institution
    The CRA Regulations provide that an insured depository institution, 
at its election, may request that an agency consider certain activities 
conducted by an affiliate in evaluating the CRA performance of the 
insured depository institution.\23\ In these circumstances, the 
selected activities of the affiliate are viewed as activities of the 
insured depository institution.
---------------------------------------------------------------------------

    \23\ See CRA lending test (12 CFR 25.22(c), 228.22(c), 345.22(c) 
and 563e.22(c)); CRA investment test (12 CFR 25.23(c), 228.23(c), 
345.23(c) and 563e.23(c)); CRA service test (12 CFR 25.24(c), 
228.24(c), 345.24(c) and 563e.24(c)); CRA community development test 
for wholesale and limited-purpose institutions (12 CFR 25.25(d), 
228.25(d), 345.25(d) and 5632.25(d)); and CRA strategic plans (12 
CFR 25.27(c), 228.27(c), 245.27(c) and 563e.27(c)).
---------------------------------------------------------------------------

    The proposed rule generally considers a contact concerning this 
type of affiliate, referred to as a ``CRA affiliate,'' of an insured 
depository institution to be the equivalent of a contact concerning an 
insured depository institution (see section ____.2(b)(2)). Similarly, 
an agreement is considered to be in fulfillment of the CRA if it 
concerns the performance of any of the activities listed in section 
____.2(c) by a ``CRA affiliate'' of an insured depository institution 
(see section ____.2(c)).
    The proposed rule defines a ``CRA affiliate'' as any company that 
is an affiliate of an insured depository institution and whose 
activities were considered by an agency in assessing the CRA 
performance of the institution at the institution's most recent CRA 
examination.\24\ Under the rule, a company is considered a CRA 
affiliate only to the extent its activities were taken into account in 
the CRA evaluation of an affiliated insured depository institution.
---------------------------------------------------------------------------

    \24\ See Proposed Rule, section ____.8(c).

    Example 1: A person submits a written comment to an agency 
concerning the lending performance under the CRA of a mortgage 
company that is affiliated with an insured depository institution. 
The insured depository institution elected, in accordance with the 
agencies' CRA Regulations, to have the lending activities of the 
mortgage company considered in the institution's most recent CRA 
performance evaluation. The mortgage affiliate, therefore, is 
considered a CRA affiliate with respect to its lending activities. 
Accordingly, the agreement is in fulfillment of the CRA for purposes 
of section 711 and the person has engaged in a CRA contact under 
section ____.2(b)(2) because the selected activities of a CRA 
affiliate and contacts with an agency regarding a CRA affiliate are 
considered activities of and contacts concerning an insured 
depository institution.
    Example 2: An affiliate of an insured depository institution 
engages in mortgage lending and provides credit counseling services. 
The insured depository institution elected to have only the mortgage 
lending activities of the affiliate considered in its most recent 
CRA performance evaluation. The affiliate and a community group 
enter into an agreement that provides for the affiliate to provide 
credit counseling services in the local community. The agreement is 
not in fulfillment of the CRA because the affiliate is not 
considered a CRA affiliate with respect to its credit counseling 
activities.

    To assist persons in complying with the rule, section ____.2(e) of 
the proposed rule requires that an insured depository institution or 
affiliate inform the other parties to a covered agreement if the 
agreement concerns the activities of a CRA affiliate. The institution 
or affiliate must provide this notification not later than the time the 
agreement is entered into if the affiliate is a CRA affiliate at that 
time.
    Because the status of an affiliate of an insured depository 
institution may change, an agreement that concerns the activities of an 
affiliate may become a covered agreement after the date the parties 
enter into the agreement. For example, a person may enter into an 
agreement that concerns the lending activities of a newly formed 
affiliate. If an insured depository institution subsequently elects to 
have the lending activities of the new affiliate considered during its 
next CRA performance examination, the affiliate would become a CRA 
affiliate. In such circumstances, the proposed rule requires the 
insured depository institution or affiliate to inform the other parties 
to the agreement that the affiliate has become a CRA affiliate within a 
reasonable period of time after the change of status occurs.
    Where an agreement concerns the activities of an affiliate that 
becomes a CRA affiliate, the agreement would be in fulfillment of the 
CRA only once the affiliate becomes a CRA affiliate. If the agreement 
met the other requirements of the rule, the agreement would become a 
covered agreement at that time. Section ____.2(e) clarifies that in 
these circumstances the parties to the agreement have no disclosure or 
reporting obligations under the rule until the agreement becomes a 
covered agreement. In applying the disclosure and reporting 
requirements of the rule, the agreement would be considered to have 
been entered into on the date it became a covered agreement.
    The agencies request comment on the proposed rule's treatment of 
CRA affiliates, including whether the

[[Page 31973]]

requirement that an insured depository institution or affiliate inform 
the other parties when an agreement concerns a CRA affiliate is useful 
and practicable. The agencies also request comment on whether the rule 
should provide a similar notice procedure for agreements that involve 
an activity of an insured depository institution, such as consumer 
lending, that the institution elects for the first time to be 
considered under the CRA during the term of the agreement. \25\ In 
addition, the agencies request comment on whether there is an 
appropriate and less burdensome way for the rule to determine whether 
an affiliate is a CRA affiliate at the time the parties enter into an 
agreement.
---------------------------------------------------------------------------

    \25\ See footnote 15 above.
---------------------------------------------------------------------------

B. Disclosure of Covered Agreements

    Section 711 requires that each party to a covered agreement fully 
disclose the agreement in its entirety and make the full text of the 
agreement available to the public and the appropriate agency with 
supervisory responsibility over the relevant insured depository 
institution.
1. Disclosure to the Public
    The proposed rule requires that each party to a covered agreement 
make a complete copy of the agreement available to any member of the 
public upon request. The rule would permit an insured depository 
institution to fulfill its public disclosure obligation by placing a 
copy of a covered agreement in the institution's CRA public file and 
making it available in accordance with the procedures set forth in the 
CRA Regulations relating to public files. \26\
---------------------------------------------------------------------------

    \26\ See 12 CFR 25.43 (OCC); 12 CFR 228.43 (Board); 12 CFR 
345.43 (FDIC); 12 CFR 563e.43 (OTS).
---------------------------------------------------------------------------

    A party may make a covered agreement available to any individual or 
entity that requests the agreement by mailing it to the requestor, and 
the proposal would specifically permit the party to charge the 
requestor for the costs of copying and mailing the agreement, so long 
as the fees are reasonable. The proposal does not otherwise specify or 
require a party to employ any particular method in responding to 
requests from the public for a covered agreement. For example, a party 
also could make an agreement available to an individual or entity with 
access to the Internet by posting the agreement on a publicly 
accessible website or to members of the public within a local 
geographic area by making the agreement available for inspection at an 
office within that area.
    The proposed rule provides that a party's obligation to make a 
covered agreement available to the public terminates 12 months after 
the end of the term of the covered agreement. The agencies believe that 
this time period would permit interested members of the public adequate 
time to obtain a covered agreement from the parties, while not placing 
an undue recordkeeping burden on the parties to covered agreements. 
Members of the public would continue to be able to obtain copies of a 
covered agreement from the relevant supervisory agency under the 
Freedom of Information Act (5 U.S.C. 552 et seq.) after this 12-month 
period.
    The agencies request comment on all aspects of the proposed rule's 
public disclosure requirements. Comment is sought on whether the rule 
should include illustrative examples of how a party may make an 
agreement available to a member of the public and, if so, whether there 
are additional methods (other than those discussed above) that should 
be allowed for making an agreement available to the public. For 
example, should the rule explicitly allow a person to arrange for 
another entity or individual to make the person's covered agreements 
available to the public, or allow a party to recover reasonable fees 
for searching its records for a covered agreement? Comment also is 
requested on whether affiliates of insured depository institutions 
should be permitted to disclose an agreement to the public by placing 
the agreement in the CRA public file of an affiliated insured 
depository institution. In addition, comment is invited on whether it 
is reasonable, appropriate and consistent with the statute to rely on 
access to covered agreements through the agencies for public disclosure 
requests made more than 12 months after the term of the agreement and 
whether this period should be longer or shorter.
2. Filing of Covered Agreement by Insured Depository Institutions With 
Agencies
    The rule requires each insured depository institution and affiliate 
that is a party to a covered agreement to provide a complete copy of 
the agreement to each relevant supervisory agency (as defined below) 
within 30 days after the parties enter into the agreement. If two or 
more insured depository institutions or affiliates are parties to the 
same agreement, the institutions and affiliates may jointly file a copy 
of the agreement with the relevant supervisory agencies.
3. Persons Must Make Covered Agreements Available to Agency
    Section 711 requires each party to a covered agreement to make the 
agreement available to the appropriate agency. Because the relevant 
supervisory agencies would receive a copy of any covered agreement from 
the insured depository institution or affiliate that is a party to the 
agreement, the rule provides that a nongovernmental entity or person 
may fulfill its statutory obligation in this area by providing, upon 
request from the relevant supervisory agency, a complete copy of the 
agreement to the agency. The copy must be provided to the agency within 
30 days of the agency's request. As with disclosure to the public, the 
rule provides that a person's obligation to make an agreement available 
to an agency terminates 12 months after the end of the term of the 
agreement.
    The agencies believe this procedure will reduce regulatory burden 
and avoid duplicative filings. At the same time, this procedure 
requires persons to make copies of covered agreements available to the 
agencies consistent with the statute.
4. Relevant Supervisory Agency
    The Act requires that parties to a covered agreement make the 
agreement available to, and file annual reports with, the appropriate 
Federal banking agency with supervisory responsibility over the 
relevant insured depository institution. The proposed rule uses the 
term ``relevant supervisory agency'' to identify the appropriate agency 
for a particular covered agreement. Under the rule, the ``relevant 
supervisory agency'' is--
     The OCC in the case where--
    * The parties to the agreement include a national bank or 
subsidiary of a national bank; or
    * A national bank or subsidiary or CRA affiliate of a national bank 
provides funds or resources under the agreement;
     The Board in the case where--
    * The parties to the agreement include a state member bank, 
subsidiary of a state member bank, bank holding company, or subsidiary 
of a bank holding company (other than an insured depository institution 
or subsidiary thereof); or
    * A state member bank or subsidiary or CRA affiliate of a state 
member bank provides funds or resources under the agreement;
     The FDIC in the case where--
    * The parties to the agreement

[[Page 31974]]

include a state nonmember bank or subsidiary of a state nonmember bank; 
or
    * A state nonmember bank or subsidiary or CRA affiliate of a state 
nonmember bank provides funds or resources under the agreement; or
     The OTS in the case where--
    * The parties to the agreement include a savings association, 
subsidiary of a savings association, savings and loan holding company 
or subsidiary of a savings and loan holding company; or
    * A savings association or subsidiary or CRA affiliate of a savings 
association provides funds or resources under the agreement.

The agencies believe this definition will ensure that a covered 
agreement and its related annual reports are filed with the agency or 
agencies that have supervisory authority over the insured depository 
institution or affiliate that is involved with the agreement, either as 
a party or as a source of funds or resources paid under the agreement.
    More than one agency may be the relevant supervisory agency with 
respect to a single covered agreement. For example, if a national bank, 
state nonmember bank, and a savings association provide funds pursuant 
to a covered agreement entered into by their parent bank holding 
company, the OCC, FDIC, OTS, and Board would each be a relevant 
supervisory agency for the agreement. The agencies solicit comment on 
the proposed rule's definition of ``relevant supervisory agency,'' 
including whether there are alternative definitions that might reduce 
the filing burdens of parties while ensuring the appropriate agencies 
receive the filings contemplated by the Act.
5. Treatment of Confidential or Proprietary Information
    Covered agreements may contain confidential or proprietary 
information the disclosure of which may cause competitive or other harm 
to one or more of the parties to the agreement. Section 711 of the Act 
directs the agencies to ensure that the implementing regulations ``do 
not impose an undue burden on the parties [to a covered agreement] and 
that proprietary and confidential information is protected.'' \27\ This 
provision must be read in harmony with other provisions of section 711 
that require that a covered agreement ``shall be in its entirety fully 
disclosed, and the full text thereof made available * * * to the 
public.'' Other provisions of section 711 require the reporting of the 
terms and value of covered agreements, the identity of the parties to 
the agreement, and the uses of funds and resources provided under 
covered agreements.
---------------------------------------------------------------------------

    \27\ 12 U.S.C. 1831y(h)(2)(A).
---------------------------------------------------------------------------

    In light of these provisions, and in order to ensure the uniform 
disclosure of covered agreements under the Act by the parties and the 
agencies, the proposed rule would allow a party to a covered agreement 
to request a determination from the relevant supervisory agency whether 
the agency could withhold specific portions of the agreement from 
public disclosure. In considering these requests, the agencies will 
apply the procedures and standards of the Freedom of Information Act (5 
U.S.C. 552 et seq.) (FOIA), which governs public access to all records 
of an agency, including documents filed with the agency by third 
parties. If the relevant supervisory agency determines that it could 
withhold specific portions of the covered agreement from public 
disclosure under FOIA, the proposed rule would permit the parties to 
the agreement to also withhold those specific portions of the agreement 
from any copies of the agreement directly made available to the public. 
A party could withhold from public disclosure only those limited 
portions of a covered agreement determined to be exempt from public 
disclosure under FOIA by the relevant supervisory agency.
    In applying the standards under FOIA, the agencies note that 
section 711 may require disclosure of some types of information that an 
agency might normally be able to withhold from disclosure under FOIA. 
In light of the directive of section 711, the agencies may not be able 
to withhold under FOIA--or permit a party to withhold from public 
disclosure--many of the provisions contained in a covered agreement. 
For example, the agencies might not be able to permit a party to 
withhold the amount of payments or loans to be made under the 
agreement, the persons receiving such payments or loans, and the terms 
of any such payments or loans. It may be possible that only limited 
types of information could be withheld from public disclosure under the 
proposed rule. Such information might include, for example, individual 
account numbers or information detailing a particular institution's 
proprietary underwriting criteria.
    The agencies welcome comment on whether covered agreements are 
likely to contain confidential or proprietary information the 
disclosure of which would harm the parties to the agreement given the 
definition of covered agreements. The agencies also request comment on 
whether, and if so to what degree, such information may be withheld 
from public disclosure under section 711. If covered agreements 
typically contain particular types of information that may properly be 
withheld from public disclosure under section 711, should the rule 
specify these types of information and allow the parties to withhold 
this information without seeking prior agency review or in lieu of the 
agency review process? The agencies also invite comment on whether the 
proposed agency review process is useful and practicable and whether 
there are alternative or additional procedures that the agencies can 
and should implement under section 711 to protect confidential and 
proprietary information. The agencies also invite comment on whether 
the rule should specifically permit a party that has requested agency 
review of a covered agreement to delay disclosing the agreement to the 
public until the agency rules on the request.
6. Disclosure Limited to Covered Agreements Entered Into After November 
12, 1999
    The proposed rule's disclosure obligations apply only to covered 
agreements entered into after November 12, 1999, the effective date of 
section 711 of the GLB Act. Under the rule, a written modification, 
amendment, renewal, or extension of an agreement creates a new 
agreement. Thus, if an agreement entered into before November 12, 1999, 
is modified, amended, renewed or extended after that date, the parties 
must disclose the entire new agreement if it otherwise meets the 
criteria to be a covered agreement. Disclosure is not required if the 
pre-November 12, 1999, agreement expressly provided for the renewal or 
extension and established the terms of the agreement during the renewal 
or extension period.

    Example: An insured depository institution and a community 
organization enter into a written agreement in January 1999 that 
calls for the institution to place an ATM in the local community by 
December 2000. In September 2000, the parties enter into a written 
modification of the agreement that calls for the institution to 
establish a full-service branch rather than an ATM. If the modified 
agreement meets the criteria to be a covered agreement, the modified 
agreement must be disclosed in accordance with the rule.

C. Annual Reports

    The Act requires each person, insured depository institution, or 
affiliate of an insured depository institution that is a party to a 
covered agreement to file a report relating to the covered agreement.

[[Page 31975]]

These annual reporting obligations apply only to covered agreements 
entered into on or after May 12, 2000.\28\
---------------------------------------------------------------------------

    \28\ See the discussion above concerning the treatment of 
agreements entered into prior to May 12, 2000, that are modified, 
amended, renewed, or extended after that date.
---------------------------------------------------------------------------

1. No Report Required by Person That Does Not Receive Funds or 
Resources
    The proposed rule requires that each party to a covered agreement 
file an annual report for the fiscal years during the term of the 
agreement. The rule does not, however, require a nongovernmental entity 
or person to file an annual report with respect to a particular covered 
agreement for any fiscal year during which the person did not receive 
any funds under the covered agreement. The agencies believe that 
requiring an annual report in such circumstances would not further the 
purpose of the statute because the person would not have received any 
funds or resources under the agreement during the fiscal year. Under 
the proposed rule, however, each insured depository institution and 
affiliate that is a party to a covered agreement must file an annual 
report each year during the term of the agreement. The agencies request 
comment on whether this reporting exemption for persons is appropriate.

    Example 1: A savings association and a community development 
organization that rehabilitates affordable housing in the 
association's assessment area enter into a covered agreement 
pursuant to which the association will invest $100,000 in the 
organization over three years. The investment will be used to 
support a rehabilitation project that is expected to take three 
years to complete. If the savings association provides the full 
$100,000 in the first year of the agreement, the organization must 
file an annual report with the OTS for the fiscal year in which it 
received the $100,000. The organization is not required to file an 
annual report with the OTS for its subsequent fiscal years during 
the term of the agreement.
    Example 2: A state non-member bank enters into a covered 
agreement with a community organization to make $1 million in 
community development grants in the community over the next two 
years. The community organization will not receive any funds or 
other resources under the agreement (including under the grants as 
they are made). The agreement is a covered agreement and must be 
made available to the public and the FDIC. In addition, the state 
non-member bank must file annual reports concerning grants made and 
actions taken under the agreement. The community organization is not 
required, however, to file any annual reports concerning the 
agreement because the organization receives no funds or resources 
under the agreement.
    Example 3: An insured depository institution and an organization 
enter into a written agreement pursuant to which the institution 
commits to make $10 million in small business loans in the local 
community over the next three years. The loans would be made at 
market rates and would not be for purposes of re-lending. The 
organization would not receive any funds or resources under the 
agreement, including under the loans as they are made. Even if a 
commitment by an insured depository institution to make multiple 
loans on market terms and not for purposes of re-lending is a 
covered agreement (see Part I.A.2 above), the organization would not 
have to file any annual report concerning the agreement because it 
would receive no funds or resources under the agreement. Under the 
proposed rule, the institution would have to file an annual report 
during the term of the agreement indicating the aggregate amount and 
number of loans made during the year under the agreement. Each 
individual loan made pursuant to the commitment would be exempt from 
coverage and, accordingly, each borrower would have no reporting 
obligation under the rule.
2. Contents of Annual Report Filed by Persons
    Section 711 requires that the annual report filed by a 
nongovernmental entity or person provide a detailed, itemized 
accounting of how the person used any funds or resources received under 
the covered agreement during the previous year. The proposed rule would 
allow this detailed accounting to be provided in two ways: a 
description of the specific purpose or purposes for which the funds 
were used, or a segmentation of funds used for general purposes in a 
pre-defined list of expense categories.
a. Specific Purpose Funds and Resources
    The first reporting method applies to funds or other resources that 
a person receives under a covered agreement and allocates and uses for 
a specific purpose. Specific purpose funds or resources are those that 
a person targets and uses for a distinct program, the purchase of a 
distinct asset, or the payment of a distinct expense. For example, a 
person would use this reporting method if, pursuant to the terms of the 
covered agreement or otherwise, the person specifically allocated and 
used the funds received under a covered agreement for a particular loan 
program, to purchase computers, to sponsor a particular seminar, or to 
pay the salary of a particular person. A specific purpose must be a 
purpose that is more limited than the categories of expenses enumerated 
below for the reporting of general purpose funds. In other words, funds 
or resources are not allocated or used for a specific purpose if they 
are allocated or used for general operational expenses, to support the 
organization's general activities in the community, or to cover general 
compensation, administrative, travel, entertainment, consulting or 
professional expenses.
    Under the proposed rule, funds or resources allocated and used for 
a specific purpose must be segregated in the annual report from funds 
used for general purposes. For funds received under a covered agreement 
and allocated and used for a specific purpose, a person's annual report 
must provide the following information: (1) A description of each 
specific purpose for which the funds or resources were used during the 
fiscal year; and (2) the amount of funds or resources used for each 
specific purpose during the fiscal year.
    Example 1: An organization receives $15,000 from an insured 
depository institution under a covered agreement. The organization 
allocates and uses the $15,000 to sponsor a seminar on affordable 
housing initiatives. The organization's annual report for the fiscal 
year would report that it received $15,000, that it used the $15,000 
to sponsor the seminar, and provide a brief description of the 
seminar.
    Example 2: A community group receives $50,000 from an insured 
depository institution under a covered agreement. During its fiscal 
year, the community group specifically allocates and uses $45,000 of 
the funds to purchase computer equipment and the remaining $5,000 is 
used for general operating expenses. The group's annual report for 
the fiscal year must state that the group received $50,000 under the 
agreement during the fiscal year and that $45,000 was used to 
purchase computer equipment. In addition, the annual report must 
provide the detailed, itemized list of expenses described below 
because some funds were used for general purposes.
b. All Other Funds and Resources
    Funds or other resources received under a covered agreement may be 
used for general purposes or unspecified purposes. The second reporting 
method addresses funds or resources that are received under a covered 
agreement and that are not allocated and used for a specific purpose. 
Under this method, the reporting person must provide a detailed, 
itemized list of how the reporting person has used its funds during the 
fiscal year. This list must include, at a minimum, the amount of funds 
used during the fiscal year for--
     Compensation of officers, directors, and employees;
     Administrative expenses;
     Travel expenses;
     Entertainment expenses;
     Payment of consulting and professional fees; and
     Other expenses and uses.

The annual report may reflect the total amount of funds from all 
sources that

[[Page 31976]]

the person used during the fiscal year for the types of expenses listed 
above. The annual report must, however, specify the total amount of 
funds that the person received under the covered agreement and that 
were used for general or unspecified purposes. The agencies may 
determine from this information the proportion of general purpose funds 
received under the covered agreement that were used for each category 
of expenses listed above.

    Example: In March, a person receives an unrestricted grant of 
$15,000 under a covered agreement. The person includes the funds in 
its general operating budget and does not allocate and use the funds 
for a specific purpose. The person's annual report for the fiscal 
year must state that the person received $15,000 of general purpose 
funds. The annual report also must indicate the total amount of 
funds and resources that the person used during the fiscal year for 
compensation, administrative expenses, travel expenses, 
entertainment expenses, consulting and professional fees, and other 
expenses and uses.
c. Use of Other Reports
    As noted above, section 711 directs the agencies to ensure that 
regulations implementing that section ``do not impose an undue burden 
on the parties.'' The legislative history also indicates that the 
agencies should allow reporting parties to use reports prepared for 
other purposes to fulfill the annual reporting requirements.\29\ 
Accordingly, the proposed rule does not require that a person's annual 
report be prepared on a special form or in a particular format. 
Instead, the rule provides that a person's annual report may consist of 
or incorporate reports or documents that the person has prepared for 
public, internal or other purposes so long as the documents filed with 
the relevant supervisory agency contain all of the information required 
by the rule. For example, a person's annual report may consist of a 
Federal or state tax return, a report prepared for the person's members 
or shareholders, or the person's financial statements if such documents 
provide the information required by the rule.
---------------------------------------------------------------------------

    \29\ See H.R. Conf. Rep. No. 106-434 at 179 (1999).
---------------------------------------------------------------------------

    In this regard, the agencies have reviewed several tax forms 
commonly filed by tax-exempt nonprofit organizations. Internal Revenue 
Form 990, which is the Federal tax return form for certain tax-exempt 
nonprofit organizations, requires the filing organization to provide 
information that is at least as detailed, and in some cases more 
detailed, than the list of expenses contained in section 711. In 
particular, Form 990 requires a tax-exempt organization to separately 
state the amount that the organization spent during the tax year on 
compensation of officers, directors, trustees and key employees; 
salaries and wages of other employees; professional fundraising fees; 
accounting fees; legal fees; supplies; telephone; postage and shipping; 
occupancy; printing and publications; travel; conferences, conventions 
and meetings; and an itemized list of other uses. Since these 
categories of expenses include and are more specific than the list of 
expenses required to be provided for general purpose funds, a person 
may use a properly completed Form 990 to fulfill the rule's reporting 
requirements for general purpose funds. Other forms or reports also may 
be used, separately or in combination, to fulfill the rule's reporting 
requirements so long as they contain, in total, the information 
required by the rule.
d. Consolidated Annual Reports Permitted
    The GLB Act requires the agencies to permit persons that are 
parties to a large number of covered agreements to file a consolidated 
annual report relating to all of the covered agreements.\30\ 
Accordingly, section ____.5 of the proposed rule permits a person that 
is a party to 5 or more covered agreements to file a single 
consolidated report covering all of the person's covered agreements. A 
person's consolidated report must identify the person filing the report 
and each agreement covered by the report. All other information 
required by the rule may be provided on an aggregate basis for all 
agreements covered by the annual report. Any consolidated report must 
be filed with all of the relevant supervisory agencies for the covered 
agreements included in the report.

    \30\ See 12 U.S.C. 1831y(h)(2)(B).
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    Example: A community development organization is a party to six 
separate covered agreements with six unaffiliated insured depository 
institutions. Under each agreement, the organization receives 
$15,000 to fund the rehabilitation of a specific low-income housing 
project identified in the agreement. The organization allocates and 
uses all of the funds for the specified purpose. If the organization 
elects to file a consolidated annual report, the consolidated report 
must (1) identify the organization and the six covered agreements, 
(2) state that the organization received $90,000 under the 
agreements, and (3) state that the person allocated and used the 
$90,000 to fund the rehabilitation project and provide a description 
of the project.
e. Specific Request for Comments
    The agencies invite comment on all aspects of the proposed rule's 
annual reporting requirements for nongovernmental entities and persons. 
The agencies also specifically request comment on the following:
     Are the rule's reporting requirements for specific purpose 
funds and resources reasonable and appropriate? Would the proposed rule 
limit the burden associated with reporting funds or resources received 
for a specific purpose? Should the regulation provide additional 
guidance as to when a person has allocated and used funds or resources 
for a specific purpose or allow, rather than require, a person to use 
this reporting method when it allocates and uses funds for a specific 
purpose?
     Should the detailed, itemized list of uses contained in 
the proposed rule be expanded to include other categories of uses or 
expenses, such as grants or loans made, or services provided, to 
others?
     Are there additional information items that should be 
included in annual reports? For example, should a person be required to 
state in each annual report the aggregate amount of funds or resources 
that the person has received to date under the covered agreement?
     Should the agencies permit a person to file a consolidated 
annual report if the person is a party to 2 or more covered agreements?
     Where a covered agreement provides for an institution or 
affiliate to take several actions including making a specific loan 
that, if agreed to separately, would be exempt from coverage under the 
rule, can and should the agencies allow the person's annual report to 
exclude information concerning the loan that would otherwise be exempt 
under the rule?
     Are there additional ways that the agencies could reduce 
the reporting burden on persons consistent with the language and 
purposes of the Act? For example, should the agencies issue optional 
sample reporting forms that might be used by a person, insured 
depository institution or affiliate?
3. Contents of Annual Report of Insured Depository Institutions and 
Affiliates
    The annual reporting requirements for insured depository 
institutions and affiliates are largely specified in section 711. The 
annual report for an insured depository institution or affiliate must 
identify the entity filing the report and identify the covered 
agreement to which the annual report relates. In addition, the annual 
report must provide--

     The aggregate amount of payments, fees and loans (listed 
separately)

[[Page 31977]]

provided by the insured depository institution or affiliate under the 
agreement to any other party during the fiscal year;
     The aggregate amount of payments, fees and loans (listed 
separately) received by the insured depository institution or affiliate 
under the agreement from any other party during the fiscal year;
     A description of the terms and conditions of any payments, 
fees, or loans provided to, or received from, another party under the 
agreement; and
     The aggregate amount and number of loans, amount and 
number of investments, and amount of services provided under the 
covered agreement to any person that is not a party to the agreement--
    * By the insured depository institution or affiliate; and
    * By any other party to the agreement, unless such information is 
not known to the insured depository institution or affiliate or will be 
contained in an annual report filed by a person.

These informational requirements track those established by the 
statute.
    The rule would allow an insured depository institution and an 
affiliate that are parties to the same covered agreement to file a 
single, consolidated report for the agreement. In addition, to reduce 
burden, the proposed rule would allow an insured depository institution 
or affiliate that is a party to 5 or more covered agreements to file a 
single consolidated report relating to all of the agreements.
    The agencies request comment on whether an insured depository 
institution or affiliate should be permitted to file a consolidated 
report if it is a party to 2 or more covered agreements, and whether 
the rule can and should allow an insured depository institution or 
affiliate to not file an annual report for any fiscal year in which the 
institution or affiliate did not provide or receive any payments, fees 
or loans under the agreement. The agencies invite comment on whether 
the rule should provide additional guidance concerning the level of 
detail required to be provided in the annual report of an insured 
depository institution or affiliate, and whether there are additional 
ways the agencies could reduce the reporting burden of insured 
depository institutions and affiliates consistent with the Act. For 
example, are there ways the agencies could reduce the reporting burden 
for agreements that involve loans that are themselves exempt from 
coverage?
4. When and Where Must Annual Reports Be Filed
    The proposed rule provides that each party to a covered agreement 
must prepare and file an annual report with the relevant supervisory 
agency for the fiscal year in which the party enters into the agreement 
and each subsequent fiscal year during the term of the covered 
agreement. \31\ The agencies have adopted a fiscal year reporting 
period to allow the parties to coordinate preparation of their annual 
reports with other documents or reports that typically are prepared on 
a fiscal year basis, such as income tax returns and financial 
statements. However, to provide parties with maximum flexibility, the 
rule also permits a party to elect to use the calendar year as their 
fiscal year for purposes of the rule. \32\ The agencies request comment 
on whether providing the option of fiscal year or calendar year 
reporting would reduce regulatory burden or whether the rule should 
require reporting on a calendar year basis. In addition, the agencies 
request comment on whether a person should be required to file an 
annual report after the end of a covered agreement's term if, by that 
time, the person has not completely used all the funds or resources 
received under the agreement.
---------------------------------------------------------------------------

    \31\ As discussed in II.C.1. above, the proposed rule would not 
require a nongovernmental entity or person to file an annual report 
during the term of a covered agreement if the entity or person did 
not receive any funds or resources under the agreement in that 
fiscal year.
    \32\ See Proposed Rule section __.8(f). The rule also provides 
that the ``fiscal year'' for an individual or entity that does not 
have a fiscal year is the calendar year.
---------------------------------------------------------------------------

    Each party to a covered agreement must file its annual report for a 
fiscal year with each relevant supervisory agency within 6 months of 
the end of the party's fiscal year. Under section 711 and the rule, a 
person may fulfill this filing requirement by providing its annual 
report to the insured depository institution or affiliate that is a 
party to the agreement within 5 months of the end of the person's 
fiscal year with instructions for the institution or affiliate to file 
the report with all of the relevant supervisory agencies on behalf of 
the person. An insured depository institution or affiliate that 
receives an annual report from a person in this manner must forward it 
to the relevant supervisory agencies within 30 days.
    This method of filing allows the annual reports of a person and an 
insured depository institution or affiliate that relate to the same 
covered agreement to be filed together. It also reduces the likelihood 
that annual reports will be filed with the wrong agency because the 
insured depository institution or affiliate will know its relevant 
supervisory agency while the nongovernmental entity or person may not.
    The agencies invite comment on the filing requirements of the rule. 
In particular, the agencies request comment on whether the 5- and 6-
month filing windows will provide the parties sufficient time to 
prepare their annual reports and whether there are additional ways that 
the agencies might reduce the filing burdens of parties consistent with 
the Act.

D. Compliance Provisions

    Section 711 specifically provides that nothing in that section 
authorizes the agencies to enforce the provisions of any covered 
agreement. The proposed rule incorporates this provision. (See section 
____.7(e)) This is consistent with the long-standing policy of the 
agencies that CRA-related agreements entered into between insured 
depository institutions (or their affiliates) and persons are private 
matters between the parties and are not enforced by the agencies.
    The agencies may enforce compliance by insured depository 
institutions and affiliates with the disclosure and reporting 
requirements of section 711 using the cease and desist and other 
enforcement powers granted in section 8 of the FDI Act. \33\ Section 8 
of the FDI Act, however, applies only to insured depository 
institutions, affiliates and institution-affiliated parties, as defined 
in the FDI Act. The provisions of section 8 of the FDI Act, therefore, 
generally do not apply to nongovernmental entities or persons that are 
parties to a covered agreement. Section 711 instead includes special 
compliance provisions applicable to nongovernmental entities or persons 
that are party to a covered agreement. \34\
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    \33\ See 12 U.S.C. 1818.
    \34\ Other Federal statutes outside the banking laws also may 
provide for penalties if an insured depository institution, 
affiliate, or person fails to comply with the disclosure and 
reporting requirements of the Act. See 18 U.S.C. 1001.
---------------------------------------------------------------------------

    Under these provisions, the material and willful failure of a 
person to comply with section 711 may cause the related covered 
agreement to be unenforceable. In particular, under the Act, if the 
appropriate agency determines that a person has willfully failed to 
comply with section 711 in a material way, and the person does not 
comply with the law after receiving notice and a reasonable period of 
time, the agreement thereafter is unenforceable by operation of section 
711. The Act specifically provides that inadvertent or de minimis

[[Page 31978]]

reporting errors will not subject the filing party to any penalty. The 
rule requires the agencies to provide a person written notice and an 
opportunity to respond before determining the person has not complied 
with the rule, and allows the person at least 90 days to correct a 
willful and material violation. The agencies request comment on whether 
this written notice should be sent to all the parties to the agreement.
    The rule also clarifies that, in these circumstances, the agreement 
becomes unenforceable only by the party that has willfully and 
materially failed to comply with the rule. Any other party to the 
agreement may continue to enforce the agreement against the 
noncomplying party. The agencies believe this construction is the most 
consistent reading of the language and purpose of the Act. The agencies 
note that an alternative construction could encourage persons to 
violate the statute in an attempt to avoid performance under a legally 
binding contract, thereby frustrating the purpose of the statute. If 
the insured depository institution or affiliate elects not to enforce 
the covered agreement against the noncomplying person, the appropriate 
agency may assist the institution or affiliate in identifying a 
successor person to assume the responsibilities of the person under a 
covered agreement that has become unenforceable.
    Section 711 also provides that, if an individual diverts funds or 
resources received under a covered agreement for his or her personal 
financial gain and contrary to the purposes of the agreement, the 
appropriate agency may order the individual to disgorge the funds and/
or prohibit the individual from being a party to any covered agreement 
for up to 10 years. As noted above, the Act specifically provides that 
it does not authorize the agencies to enforce any provision of a 
covered agreement. If, however, a court or other body of competent 
jurisdiction determines that an individual has diverted funds or 
resources for personal financial gain and contrary to the purposes of 
the agreement, the agencies may take one of the actions specified in 
the statute.

E. Other Definitions and Rule of Construction

    Section ____.8 of the proposed rule defines other terms used in the 
rule. Because section 711 amended the FDI Act, the rule provides that 
the terms ``insured depository institution,'' ``control,'' ``Federal 
banking agency'' and ``appropriate Federal banking agency'' have the 
same meaning as in the FDI Act.\35\
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    \35\ The agencies note that the definition of ``insured 
depository institution'' in the FDI Act includes special-purpose 
insured depository institutions that are not subject to the CRA. 
See, e.g., 12 CFR 228.11(c)(3). An agreement that relates to the 
activities of a special-purpose insured depository institution, 
however, would not be in fulfillment of the CRA and, thus, would not 
be a covered agreement under the rule.
---------------------------------------------------------------------------

1. ``Person'' and ``Nongovernmental Entity or Person''
    Section 711 of the GLB Act applies only to agreements entered into 
by a ``nongovernmental entity or person'' with an insured depository 
institution or affiliate. For ease of reference, the rule uses the term 
``person'' instead of the phrase ``nongovernmental entity or person.'' 
(The OTS rule, however, refers to a ``nongovernmental entity or 
person'' as a ``NGEP.'') As a general matter, the rule defines a 
``person'' to mean any individual or entity other than the U.S. 
government, a state government, a unit of local government, an Indian 
tribe, or any department, agency, or instrumentality of such a 
governmental entity. A ``person'' does not include a federally 
chartered public corporation that receives federal funds appropriated 
specifically for that corporation. A nongovernmental entity that is 
affiliated with, or receives funding from, such a federally chartered 
public corporation, however, would be considered a ``person'' under the 
rule, unless the entity independently qualified for an exclusion.
    The proposal also would not treat insured depository institutions 
and their affiliates as persons. Section 711 appears to draw a 
distinction between insured depository institutions (and their 
affiliates) and nongovernmental entities and persons and imposes 
separate obligations on insured depository institutions (and their 
affiliates) and nongovernmental entities or persons.
    The agencies request comment on the proposed definition of 
``nongovernmental entity or person,'' including whether specific types 
of entities should be added or removed from the list of entities and 
individuals excluded from the definition of the term.
2. Affiliate and Control
    The term ``affiliate'' is defined in the FDI Act by reference to 
the Bank Holding Company Act. Under the Bank Holding Company Act, an 
affiliate is any company that controls, is controlled by, or is under 
common control with another company. A company generally is considered 
to control another entity if it owns or controls 25 percent or more of 
any class of the other entity's voting securities.
    The proposed rule creates a special rule of construction that would 
apply in situations where an insured depository institution has filed 
an application with an agency to become affiliated or merge with 
another entity. In such circumstances, a person may have a CRA contact 
and enter into an agreement with the acquiring insured depository 
institution (or holding company thereof) concerning the CRA performance 
of the target institution. The agencies believe these types of contacts 
constitute a CRA contact under section 711 and that any agreement 
resulting from such contact is a covered agreement if it otherwise 
meets the requirements of section 711. Accordingly, the rule provides 
that an insured depository institution is deemed to be an affiliate of 
any company that would be under common control or merged with the 
institution pursuant to a transaction that is pending before an agency. 
This rule of construction applies only where the agency application is 
pending at both the time an agreement is entered into and the time when 
a triggering CRA contact occurs.

    Example: A bank holding company files an application with the 
Board to acquire control of an additional insured depository 
institution. While the application is pending, an organization 
contacts the bank holding company to discuss perceived deficiencies 
in the CRA performance record of the insured depository institution 
to be acquired. The bank holding company and the organization enter 
into a written agreement that provides for the target institution to 
increase its level of community development grants by $1 million per 
year for the next three years. The target institution would be 
considered an ``affiliate'' of the bank holding company under the 
proposed rule. Accordingly, the agreement would be a covered 
agreement because the organization had a CRA contact with the 
holding company concerning the CRA record of performance of an 
affiliated insured depository institution.
3. Term of agreement
    Under the rule, the duration of a party's obligation to make a 
covered agreement publicly available and to file annual reports 
concerning the agreement is based on the term of the covered agreement. 
As a general matter, the term of an agreement ends on the agreement's 
termination date established by the parties. Agreements that do not 
establish a termination date are deemed for purposes of the proposed 
rule to terminate on the last date on which any party makes any 
payments or provides any loan or other

[[Page 31979]]

resources under the agreement. The rule gives the agencies discretion, 
in appropriate circumstances, to determine that the term of such an 
agreement is a shorter or longer period. The appropriate agency could 
exercise this discretion, for example, where a one-time grant is made 
to a person late in a year with the clear expectation that the funds 
would be used in the next year. In such circumstances, the agency could 
require the person to file an annual report for the next year.

III. Placement of Proposed Rule

    The agencies propose to implement section 711 by adding a new part 
to their regulations.\36\ These new parts would be separate from the 
agencies' CRA Regulations. The agencies believe this placement is 
appropriate because section 711 of the GLB Act amended the FDI Act, and 
not the CRA, and is independent of the CRA and the CRA Regulations. The 
agencies note, however, that because section 711 concerns CRA-related 
agreements, the proposed rule includes several cross-references to the 
CRA Regulations. The agencies request comment on whether users would 
find it more convenient if the proposed rule was incorporated into the 
agencies' existing CRA Regulations and, if so, how the agencies could 
make clear that the rule does not in any way affect the CRA.
---------------------------------------------------------------------------

    \36\ See 12 CFR Part 35 (OCC); 12 CFR Part 207 (Board); 12 CFR 
Part 346 (FDIC); and 12 CFR Part 533 (OTS).
---------------------------------------------------------------------------

IV. Regulatory Flexibility Act Analysis

    OCC: In accordance with section 3(a) of the Regulatory Flexibility 
Act (5 U.S.C. 603(a)), the OCC is publishing the following initial 
regulatory flexibility analysis with this proposed rulemaking.
    The proposed rule would implement provisions of section 711 of the 
GLB Act. A description of the reasons why action by the OCC is being 
considered and a statement of the objectives of, and legal basis for, 
the proposed rule are contained in the Supplementary Information.
    The proposed rule includes reporting requirements that would apply 
to all insured depository institutions, including national banks, 
affiliates of insured depository institutions, including national bank 
subsidiaries, and persons that enter into covered agreements (as 
defined by the proposed rule). The proposed rule requires insured 
depository institutions, affiliates, and persons that enter into a 
covered agreement to make the agreement available to members of the 
public and to the appropriate agency, and to file an annual report with 
the appropriate agency concerning the disbursement and use of funds 
under the agreement.
    These reporting provisions are required by section 711 of the GLB 
Act and apply regardless of the size of the insured depository 
institution, affiliate, or person. Section 711 does not authorize the 
OCC to provide an exemption for covered agreements based on the size of 
any entity within the scope of its provisions. The Act, however, 
directs the OCC and the other agencies to ensure that the proposed rule 
does not impose an undue burden on the parties to covered agreements. 
The proposed rule includes several provisions, described in detail in 
the Supplementary Information that are designed to limit the potential 
impact of the proposed rule on insured depository institutions, 
affiliates and persons or entities of any size. For example, the rule 
gives entities and persons flexibility in determining how to make a 
covered agreement available to the public. In addition, the proposed 
rule would allow persons to use reports that have been prepared for 
other purposes, such as tax returns and financial statements, to 
fulfill the annual reporting requirement. The rule also allows an 
insured depository institution, affiliate, or person that is a party to 
5 or more covered agreements to prepare a single, consolidated annual 
report relating to all of the agreements.
    As noted above, the proposed rule applies to insured depository 
institutions, affiliates, and persons that enter into covered 
agreements. These agreements are entered into by private parties, are 
not enforced by the OCC and, to date, have not been required to be 
disclosed to the OCC. In addition, the OCC and the other agencies have 
specifically requested comment on the scope of the proposed rule and 
will issue a final rule after review of public comments. Accordingly, 
the OCC cannot estimate at this time the total number of national banks 
or their subsidiaries that would be subject to the requirements of the 
rule and the number of such entities that would be considered small 
entities. Similarly, the OCC cannot estimate at this time the total 
number of persons that may enter into a covered agreement with these 
entities, and therefore be subject to the requirements of the rule.
    The OCC specifically seeks comment on the likely burden that the 
proposed rule would impose on national banks and other entities within 
the OCC's supervisory jurisdiction that are subject to it and on 
persons who enter into covered agreements with those entities.
    Board: In accordance with section 3(a) of the Regulatory 
Flexibility Act (5 U.S.C. 603(a)), the Board must publish an initial 
regulatory flexibility analysis with this proposed rulemaking. The 
proposed rule would implement provisions of section 711 of the GLB Act. 
A description of the reasons why action by the Board is being 
considered and a statement of the objectives of, and legal basis for, 
the proposed rule are contained in the supplementary material provided 
above.
    The proposed rule includes reporting requirements that would apply 
to all insured depository institutions, affiliates of insured 
depository institutions, and persons that enter into covered agreements 
(as defined by the proposed rule). The proposed rule requires insured 
depository institutions, affiliates, and persons that enter into a 
covered agreement to make the agreement available to members of the 
public and to the appropriate agency, and to file an annual report with 
the appropriate agency concerning the disbursement and use of funds 
under the agreement.
    These reporting provisions are required by section 711 of the GLB 
Act and would apply regardless of the size of the insured depository 
institution, affiliate, or person. The Act does not authorize the Board 
to provide an exemption for covered agreements based on the size of the 
insured depository institution, affiliate or person that enters into 
the agreement.
    The Act, however, directs the Board and the other agencies to 
ensure that the proposed rule does not impose an undue burden on the 
parties to covered agreements and the proposed rule includes several 
provisions that are designed to limit the potential impact of the 
proposed rule on insured depository institutions, affiliates and 
persons, including small institutions, affiliates and persons. For 
example, the rule gives entities and persons flexibility in determining 
how to make a covered agreement available to the public. In addition, 
the proposed rule would allow persons to use reports that have been 
prepared for other purposes, such as tax returns and financial 
statements, to fulfill the annual reporting requirement. The rule also 
allows insured depository institutions, affiliates, and persons that 
are a party to 5 or more covered agreements to prepare a single, 
consolidated annual report relating to all of the agreements.
    As noted above, the proposed rule applies only to insured 
depository institutions, affiliates, and persons that

[[Page 31980]]

enter into covered agreements. These agreements are entered into by 
private parties, are not enforced by the Board and, to date, have not 
been required to be disclosed to the Board. In addition, the Board and 
the other agencies have specifically requested comment on the scope of 
the proposed rule and will issue a final rule after review of public 
comments. Accordingly, the Board cannot estimate at this time the total 
number of state member banks, bank holding companies, and nonbank 
subsidiaries of a bank holding company that would be subject to the 
requirements of the rule and the number of such entities that would be 
considered small entities. Similarly, the Board cannot estimate at this 
time the total number of persons that may enter into a covered 
agreement with the types of entities listed above and, thereby, be 
subject to the requirements of the rule or the number of such persons 
that would be considered small entities.
    The Board specifically seeks comment on the likely burden that the 
proposed rule would impose on insured depository institutions and 
affiliates within the Board's supervisory jurisdiction and on persons 
who enter into covered agreements with such entities.
    FDIC: Consistent with the Regulatory Flexibility Act (5 U.S.C. 601-
612) (RFA), the FDIC is required to publish an initial regulatory 
flexibility analysis relating to the proposed rule. The proposed rule 
would implement provisions of section 711 of the GLB Act and would 
apply to all insured depository institutions, affiliates of insured 
depository institutions, and persons that enter into the types of 
covered agreements described in section 711 and in the proposed rule.
    Material contained in the Supplementary Information section of this 
document contains statements about the legal basis for and objectives 
of the FDIC in proposing this rule. The GLB Act incorporates disclosure 
and reporting requirements applicable to all insured depository 
institutions, affiliates, and persons that enter into covered 
agreements. Insured depository institutions, affiliates, and persons 
must make the covered agreements available to the general public and to 
the appropriate supervisory agency. They must also file an annual 
report with the appropriate supervisory agency describing the 
disbursement, receipt, and use of the funds under the agreement. The 
GLB Act does not provide exemptions for the reporting or disclosure 
requirements based on the size of the insured depository institution, 
affiliate, or person; similarly the GLB Act does not authorize the FDIC 
to provide for exemptions.
    Because the GLB Act requires the agencies to ensure that the 
proposed rule does not impose an undue burden on the parties to a 
covered agreement, the proposed rule contains provisions that limit the 
potential impact on insured depository institutions, affiliates, and 
persons. For example, the proposed rule provides flexibility to 
entities and persons regarding the way a covered agreement is made 
available to the public. Insured depository institutions are permitted 
to disclose covered agreements to the public by placing it in their CRA 
public files, and parties may satisfy their obligation to make covered 
agreements available to the public, in part, by posting the agreement 
on a publicly available Internet website. Although the GLB Act states 
that parties to a covered agreement must make the agreement available 
to an agency, the proposed rule requires a person that is a party to an 
agreement to disclose the covered agreement to an agency upon the 
agency's request for a copy of the agreement. In addition, the proposed 
rule would allow persons to use reports that have been prepared for 
other purposes, such as tax returns and financial statements, to 
fulfill the annual reporting requirement. Recognizing that many tax 
returns and financial statements are based on fiscal year reporting 
periods, the proposed regulation permits either a fiscal or calendar 
year reporting period so that parties may coordinate their required 
annual report with other reports or filings. The rule also would permit 
insured depository institutions, affiliates, and persons that are 
parties to 5 or more covered agreements to file a single, consolidated 
report relating to all of the agreements and would allow insured 
depository institutions and affiliates that are parties to the same 
covered agreement to file a single consolidated report. Finally, the 
proposed rule does not require annual reports to be prepared on a 
special form or in a particular format. All of these provisions were 
developed to minimize the impact and burden the proposed rule would 
have on parties to a covered agreement.
    Before passage of the GLB Act, parties to covered agreements were 
not required to disclose the agreements to the FDIC; therefore, at this 
time, the FDIC cannot estimate the total number of insured state non-
member banks, affiliates of state non-member banks, or persons that 
would be subject to the requirements of the proposed rule. Similarly, 
the FDIC cannot predict which parties to covered agreements may be 
classified as small businesses or entities. Although the FDIC and the 
other agencies have requested comment on the scope of the proposed 
rules, presently, the FDIC cannot determine whether the proposed rule 
would have a significant economic impact on a substantial number of 
small entities. The FDIC requests comment on the likely significance of 
the economic impact the proposed rule would impose on FDIC-supervised 
banks and affiliates and on persons who enter into a covered agreement.
    OTS: The Regulatory Flexibility Act requires federal agencies to 
either prepare an initial regulatory flexibility analysis (IRFA) with a 
proposed rule or certify that the proposed rule would not have a 
significant economic impact on a substantial number of small entities. 
OTS cannot, at this time, determine whether this proposed rule would 
have a significant economic impact on a substantial number of small 
entities. Therefore, OTS includes the following IRFA.
    A description of the reasons why OTS is considering this action and 
a statement of the objectives of, and legal basis for, this proposed 
rule, are contained in the supplementary materials provided above.

A. Small Entities to Which the Proposed Rule Would Apply

    The proposed rule would apply to the following types of entities if 
they are a party to a covered agreement: (1) Savings associations; (2) 
certain affiliates of savings associations; \37\ and (3) 
nongovernmental entities or persons that enter into covered agreements 
with savings associations or affiliates of savings associations. The 
proposed rule would apply regardless of the size of the savings 
association, affiliate, or persons.
---------------------------------------------------------------------------

    \37\ OTS's rule applies to the following affiliates: savings and 
loan holding companies and companies that are controlled by savings 
associations or savings and loan holding companies.
---------------------------------------------------------------------------

    OTS is unable to estimate how many covered agreements exist, how 
many savings associations, affiliates of savings associations, or 
persons are parties to such covered agreements, or how many parties to 
covered agreements are ``small businesses'' or ``small organizations'' 
under the Regulatory Flexibility Act. To date, parties to such 
agreements have not had to disclose or report the agreements to OTS. 
Generally, neither OTS nor any other Federal agency is a party to 
covered agreements. Finally, OTS does not enforce such agreements. 
Thus, OTS does not have information about these agreements.
    OTS has very limited information that would assist in an estimate. 
According

[[Page 31981]]

to December 31, 1999 data, OTS calculates that of the approximately 
1,100 savings associations, a maximum of 486 are small savings 
associations. Small savings associations are generally defined, for 
Regulatory Flexibility Act purposes, as those with assets under $100 
million. 13 CFR 121.201, Division H (1999). OTS also calculates that 
these 486 savings associations hold approximately 100 subordinate 
organizations that could possibly qualify as small entities. OTS 
further calculates that a maximum of 205 savings and loan holding 
companies could possibly qualify as small entities. OTS does not have 
data on how many of these subordinate organizations or holding 
companies may actually qualify as small entities. Nor does OTS have 
data on how many other affiliates of savings associations exist (e.g., 
companies that are under common control with a savings association), 
how many of these affiliates are affiliates of small savings 
associations, or how many of these affiliates are themselves small 
entities. OTS does not know how many persons have entered into covered 
agreements with savings associations or affiliates of savings 
associations or how many of these persons are small entities.
    OTS specifically seeks comment on the number and size of savings 
associations, affiliates of savings associations, and persons that are 
parties to covered agreements. OTS also seeks comment on how many 
covered agreements may currently exist and approximately how many will 
be entered into each year in the future.

B. Requirements of the Proposed Rule

    As described more fully in the supplementary material provided 
above, the proposed rule contains new disclosure and reporting 
requirements. Most of the requirements are mandated by section 711 of 
the GLB Act. The GLB Act, however, directs the Federal banking agencies 
to ensure that the regulations prescribed by the agency do not impose 
an undue burden on the parties.
    The primary requirements under the proposed rule involve disclosure 
and reporting of covered agreements. The proposal would require each 
party to a covered agreement to disclose the agreement to the public by 
making a complete copy available to any individual or entity upon 
request. It would also require each savings association or affiliate 
that is a party to the covered agreement to provide a copy to each 
relevant supervisory agency (as defined in the proposal) and would 
require each person that is a party to provide a copy to each relevant 
supervisory agency upon request.
    To minimize the disclosure burden, the proposal would:
     Terminate the public disclosure requirement and the 
requirement for a person to provide a copy to the relevant supervisory 
agencies upon request 12 months after the end of the term of the 
covered agreement;
     Not mandate any particular method for disclosing the 
agreement to the public;
     Allow each party to charge reasonable copying and mailing 
fees when it discloses an agreement to the public;
     Allow a savings association to publicly disclose by 
placing a copy of the covered agreement in its CRA public file and 
making it available under the public file procedures;
     Require a person to provide a copy to the relevant 
supervisory agencies only if the agency requests a copy; and
     Allow two or more insured depository institutions or 
affiliates that are parties to a covered agreement to jointly file with 
each relevant supervisory agency.
    The proposal would require each party to a covered agreement to 
file an annual report with each relevant supervisory agency concerning 
the disbursement, receipt, and uses of funds or other resources under 
the covered agreement. To minimize the reporting burden, the proposal 
would:
     Not mandate any particular form for the annual report;
     Allow each party to report on its own fiscal year basis;
     Exempt a person from filing a report for a fiscal year if 
the person does not receive any funds or resources during that year;
     Provide simplified reporting procedures for persons that 
allocate and use funds or other resources under a covered agreement for 
a specific purpose;
     Allow a person's report to consist of, or incorporate, 
reports prepared for other purposes, such as tax forms and financial 
statements;
     Permit a savings association, affiliate, or person that is 
a party to five or more covered agreements to file a single 
consolidated annual report covering all of the covered agreements, 
aggregating certain information;
     Allow a savings association and its affiliates that are 
parties to the same covered agreement to file a single consolidated 
report; and
     Allow a person to file its report with the insured 
depository institution or affiliate that is a party to the agreement 
(rather than with the relevant supervisory agency).
    It is possible that savings associations, affiliates, and persons 
have already established recordkeeping and other policies and practices 
that would already enable them to partly or fully meet the requirements 
of this proposed rule. To the extent that existing practices and 
available resources are insufficient, parties to covered agreements 
would need professional skills to comply with this proposed rule. To 
disclose covered agreements, parties may need clerical and computer 
personnel. To prepare required reports, parties may need personnel with 
these skills, as well as personnel skilled in financial and legal 
matters. Some degree of personnel training may be necessary, such as to 
enable employees to determine when they enter into covered agreements, 
and how to retain, record, and compile information about agreements to 
disclose and report them.
    OTS does not have a practicable or reliable basis for quantifying 
the costs of this proposed rule, or of any alternatives to the rule. 
The requirements are too new for those subject to the law to have 
learned what the law requires and decide how to proceed. OTS cannot 
predict how savings associations, affiliates, and persons would comply 
with the proposed rule. For example, OTS cannot assess the extent to 
which savings associations, affiliates, and persons would avoid 
entering into covered agreements as a result of a final rule.
    Rather than merely guess at the regulatory burden of this proposed 
rule, OTS solicits comment on these burdens and on ways to minimize the 
burdens, consistent with the GLB Act.

C. Significant Alternatives

    The requirements in the proposed rule parallel those in the GLB 
Act. The proposed rule would clarify the statutory requirements in some 
areas and restate the requirements in a more understandable manner in 
other areas. It would not impose any substantially different 
requirements.
    Congress has decided that ``each'' insured depository institution, 
affiliate, or person that is a party to a covered agreement must 
disclose and report the agreement. The GLB Act does not expressly 
authorize OTS to exempt small savings associations, affiliates, or 
persons from these requirements. OTS does not interpret the statute to 
permit such an exemption.
    The supplementary material provided above describes and solicits 
comment on a number of alternatives that would reduce the regulatory 
burden. These include:

[[Page 31982]]

     Limiting the types of agreements that are covered by the 
rule (e.g., defining ``CRA contacts,'' ``fulfillment of CRA,'' and the 
calculation of value more narrowly, or defining the statutory 
exemptions for certain types of loans, extensions of credit and 
commitments more broadly);
     Simplifying the procedures for parties to delete 
proprietary and confidential information;
     Limiting which parties to an agreement must comply with 
the disclosure and reporting requirements in multi-party agreements 
(e.g., not applying the requirements to parties that have not made CRA 
contacts, have not been the subject of CRA contacts, or do not know 
that CRA contacts have occurred); and
     Providing more flexible reporting requirements (e.g., 
allowing parties to two or more agreements to use consolidated 
reporting procedures, permitting affiliated persons that are parties to 
the same covered agreement to file a consolidated report, allowing 
persons to elect to report on specific purpose funds or resources under 
the itemized reporting procedures, and exempting savings associations 
and affiliates from filing a report for a fiscal year if the savings 
association or affiliate has not had transactions to report).
    OTS requests comment on whether these or other alternatives would 
reduce the burdens and whether any exceptions for small institutions 
would be appropriate.

D. Other Matters

    These proposed requirements do not appear to duplicate or overlap 
with any other Federal rules. To the extent that required information 
is already contained in reports prepared for other purposes, the 
proposed rule allows a person's report to consist of, or incorporate, 
these existing reports.
    OTS lacks sufficient information about the contents of covered 
agreements, however, to conclude whether the proposed requirements 
conflict with other Federal rules. One area of potential conflict is 
the rule's requirement to make a ``complete copy'' of a covered 
agreement available to the public and to the relevant supervisory 
agencies. OTS solicits specific comment on whether covered agreements 
contain information that savings associations, affiliates, or persons 
may be barred from disclosing under other Federal rules (e.g., private 
customer information), or may be permitted to refrain from disclosing 
to the public or a Federal banking agency under other Federal rules 
(e.g., proprietary information). OTS also generally seeks comment on 
any Federal rules that may duplicate, overlap, or conflict with the 
proposal.

V. Executive Order 12866 Determination

    OCC: The Comptroller of the Currency has determined that this 
proposed rule does not constitute a significant regulatory action for 
the purpose of Executive Order 12866. Reporting and disclosure are 
mandated by section 711 of the GLB Act. The proposed rule closely 
follows the requirements of that statute. As described in the 
Supplementary Information, however, the proposal also contains 
regulatory options designed to minimize costs and burdens, where 
feasible and consistent with the statute. The OCC invites national 
banks and the public to provide specific cost estimates and related 
data that would contribute to the accuracy of the OCC's evaluations of 
the costs of the requirements in the rule.
    OTS: OTS has determined that this proposed rule does not constitute 
a significant regulatory action for the purpose of Executive Order 
12866. Reporting and disclosure are mandated by section 711 of the GLB 
Act. Many of the proposed provisions closely follow the requirements of 
this section. OTS has exercised its discretion, to the extent possible, 
to propose regulatory options to minimize costs and burdens. 
Nevertheless, OTS acknowledges that the rule would impose costs on 
insured depository institutions, affiliates, and nongovernmental 
entities or persons by requiring these entities to disclose and report 
on agreements. Therefore, OTS invites the thrift industry and the 
public to provide any cost estimates and related data that they think 
would be useful to the agency in evaluating the overall costs of the 
rule.

VI. Paperwork Reduction Act

    The information collection and reporting requirements of the 
proposed rule are described in II. above. In summary, the proposed rule 
requires persons, insured depository institutions, and affiliates of 
insured depository institutions that are parties to covered agreements 
(as defined by the proposed rule) to make the agreements available to 
the public and the relevant supervisory agencies and to file annual 
reports relating to the agreements with the relevant supervisory 
agencies. These reporting and disclosure requirements are required 
under Title VII of the GLB Act (Pub. L. 106-102, 113 Stat. 1465 
(1999)), which adds new section 48 to the Federal Deposit Insurance Act 
(12 U.S.C. 1831y).
    The proposed rule requires each person, insured depository 
institution, and affiliate of an insured depository institution that is 
a party to a covered agreement to make a complete copy of the agreement 
available to the public on request at any time during the term of the 
agreement and 12 months after the term of the agreement (proposed 
____.4(b)). Accordingly, each party must retain a copy of the agreement 
for that period. Any party to a covered agreement may request that the 
relevant supervisory agency determine whether certain portions of the 
agreement may be exempt from disclosure under the Freedom of 
Information Act (5 U.S.C. 552 et seq.) prior to making the agreement 
available to the public (proposed ____.4(b)(1)(ii)).
    An insured depository institution or affiliate of an insured 
depository institution that enters into a covered agreement must file a 
copy of the agreement with the supervisory agency within 30 days of 
entering into the agreement (proposed ____.4(c)(2)(i)). A person must 
make the agreement available to the relevant supervisory agency upon 
request (proposed ____.4(c)(1)).
    The proposed rule also requires each person, insured depository 
institution, or affiliate of an insured depository institution that is 
a party to a covered agreement to file an annual report that relates to 
the agreement for each fiscal year during the term of the agreement 
with the relevant supervisory agency of the insured depository 
institution or affiliate that is a party to the agreement (proposed 
____.5(b)). The annual report of a person must include (1) the name and 
address of the person filing the report, (2) the names of the parties 
to the agreement, and (3) the amount of funds or resources received 
during the fiscal year (proposed ____.5(d)). The annual report of an 
insured depository institution or affiliate must include (1) the name 
and principal place of business of the institution or affiliate, (2) 
sufficient information to identify the covered agreement for which the 
annual report is being filed, and (3) information on payments and other 
resources provided or received under the agreement (proposed 
____.5(e)). The proposed rule allows a person to send its annual report 
either to the relevant supervisory agency of each insured depository 
institution or affiliate that is a party to the agreement or to an 
insured depository institution or affiliate that is a party to the 
agreement. The insured depository institution or affiliate must send 
the annual report of a person to the relevant supervisory agency within 
30 days of receiving the report (proposed ____.5(f)(2)(ii)).

[[Page 31983]]

    Finally, an insured depository institution or affiliate that is a 
party to a covered agreement that concerns the performance of any 
activity of a CRA affiliate (as defined in ----.8(c)) is required to 
notify each person that is a party to the agreement that the agreement 
concerns a CRA affiliate (proposed ____.2(d)).
    The agencies request public comment on all aspects of the 
collections of information contained in this proposed rule, including 
how burdensome it would be for persons, insured depository 
institutions, and affiliates to comply with each of the reporting and 
disclosure requirements of the proposed rule.
    The estimated total annual reporting and disclosure burden of the 
proposed rule will depend on the number of covered agreements. The 
agreements that trigger the disclosure and reporting requirements of 
the proposed rule, however, are entered into by private parties on a 
voluntary basis, are not enforced by the agencies and, to date, have 
not been required to be disclosed to the agencies. As a result, the 
agencies cannot accurately estimate at this time the total number of 
insured depository institutions, affiliates or persons that are parties 
to covered agreements or the total number of covered agreements that 
may be subject to the disclosure and reporting requirements of the 
rule. The agencies also are unable to identify a reasonable proxy for 
estimating the number of covered agreements. Solely for purposes of 
complying with the requirements of the Paperwork Reduction Act, each 
agency has computed the estimate of annual paperwork burden assuming 
that 50 percent of the insured depository institutions it regulates are 
parties to one covered agreement. In addition, the agencies have 
assumed that one person is a party to each of these agreements. The 
agencies specifically request comment on these assumptions, the total 
number of persons, insured depository institutions, and affiliates that 
may be parties to covered agreements, and the total number of covered 
agreements that may be subject to the disclosure and reporting 
requirements of the rule.
    The agencies also invite comment on:
    (1) Whether the collections of information contained in the notice 
of proposed rulemaking are necessary for the proper performance of each 
agency's functions, including whether the information has practical 
utility;
    (2) The accuracy of each agency's estimate of the burden of the 
proposed information collections;
    (3) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (4) Ways to minimize the burden of the information collections on 
respondents, including the use of automated collection techniques or 
other forms of information technology; and
    (5) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchases of services to provide information.
    The agencies will revisit these estimates when they have more 
information on the scope of the rule and the number of potential 
respondents and covered agreements. The revised estimates will also 
reflect all comments received concerning the burden estimates. 
Respondents/recordkeepers are not required to respond to these 
collections of information unless the agencies display a currently 
valid Office of Management and Budget (OMB) control number. The 
agencies are currently requesting their respective control numbers for 
these information collections from OMB.
    OCC: The collection of information requirements contained in the 
Regulation will be submitted to the OMB in accordance with the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3507). Comments on the 
collections of information should be sent to the Communications 
Division, Office of the Comptroller of the Currency, 250 E Street, SW, 
Third Floor, Attention: 1557-to be assigned, Washington, DC 20219, with 
a copy to the Office of Management and Budget, Paperwork Reduction 
Project (1557-to be assigned), Washington, DC 20503.
    The potential respondents include national banks, subsidiaries of 
national banks, and nongovernmental entities or persons.
    Estimated number of financial institution respondents: 1,200. 
Estimated number of nongovernmental entity or person respondents: 
1,200.
    Estimated average annual burden hours for all disclosure and 
reporting requirements of the proposed rule per financial institution 
respondent per agreement: 6 hours.
    Estimated burden hours for all disclosure and reporting 
requirements of the proposed rule per nongovernmental entity or person 
per agreement: 4 hours.
    Estimated total annual reporting and disclosure burden: 12,000 
hours.
    Board: In accordance with section 3506 of the Paperwork Reduction 
Act of 1995 (44 U.S.C. Ch. 35; 5 CFR 1320, appendix A.1), the Board 
reviewed the Regulation under the authority delegated to the Board by 
the OMB. Comments on the collections of information should be sent to 
Mary M. West, Federal Reserve Board Clearance Officer, Division of 
Research and Statistics, Mail Stop 97, Board of Governors of the 
Federal Reserve System, Washington, DC 20551, with a copy to the Office 
of Management and Budget, Paperwork Reduction Project (7100-to be 
assigned), Washington, DC 20503.
    The potential respondents are state member banks, bank holding 
companies, affiliates of bank holding companies other than savings 
associations, national banks, insured nonmember banks, and subsidiaries 
of such associations and banks, and nongovernmental entities or 
persons.
    Estimated number of financial institution respondents: 507.
    Estimated number of nongovernmental entity or person respondents: 
507.
    Estimated average annual burden hours for all disclosure and 
reporting requirements of the proposed rule per financial institution 
respondent per agreement: 6 hours.
    Estimated burden hours for all disclosure and reporting 
requirements of the proposed rule per nongovernmental entity or person 
per agreement: 4 hours.
    Estimated total annual reporting and disclosure burden: 5,070 
hours.
    FDIC: The collections of information contained in the Regulation 
will be submitted to the OMB in accordance with the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3507). The FDIC will use any comments received 
to develop its new burden estimates. Comments on the collections of 
information should be sent to Steven F. Hanft, Assistant Executive 
Secretary (Regulatory Analysis), Federal Deposit Insurance Corporation, 
F-4080, 550 17th Street, NW, Washington, DC 20429, with a copy to the 
Office of Management and Budget, Paperwork Reduction Project (3064-to 
be assigned), Washington, DC 20503.
    The potential respondents are insured nonmember banks, subsidiaries 
of insured nonmember banks, and nongovernmental entities or persons.
    Estimated number of financial institution respondents: 2,850.
    Estimated number of nongovernmental entity or person respondents: 
2,850.
    Estimated average annual burden hours for all disclosure and 
reporting requirements of the proposed rule per financial institution 
respondent per agreement: 6 hours.

[[Page 31984]]

    Estimated burden hours for all disclosure and reporting 
requirements of the proposed rule per nongovernmental entity or person 
per agreement: 4 hours.
    Estimated total annual reporting and disclosure burden: 28,500 
hours.
    OTS: The collection of information requirements contained in the 
Regulation will be submitted to the OMB in accordance with the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3507). The OTS will use any 
comments received to develop its new burden estimates. Comments on the 
collection of information should be sent to the Dissemination Branch 
(1550-to be assigned), Office of Thrift Supervision, 1700 G Street, NW, 
Washington, DC 20552, with a copy to the Office of Management and 
Budget, Paperwork Reduction Project (1550-to be assigned), Washington, 
DC 20503.
    The potential respondents are savings and loan holding companies, 
savings associations, companies controlled by savings and loan holding 
companies and savings associations, and nongovernmental entities or 
persons.
    Estimated number of financial institution respondents: 552.
    Estimated number of nongovernmental entity or person respondents: 
552.
    Estimated average annual burden hours for all disclosure and 
reporting requirements of the proposed rule per financial institution 
respondent per agreement: 6 hours.
    Estimated burden hours for all disclosure and reporting 
requirements of the proposed rule per nongovernmental entity or person 
per agreement: 4 hours.
    Estimated total annual reporting and disclosure burden: 5,520 
hours.

VII. Solicitation of Comments Regarding the Use of ``Plain 
Language''

    Section 722 of the GLB Act requires the agencies to use ``plain 
language'' in all proposed and final rules published after January 1, 
2000. The agencies invite comments about how to make the proposed rule 
easier to understand, including answers to the following questions:
    (1) Have the agencies organized the material in an effective 
manner? If not, how could the material be better organized?
    (2) Are the terms of the rule clearly stated? If not, how could the 
terms be more clearly stated?
    (3) Does the rule contain technical language or jargon that is 
unclear? If so, which language requires clarification?
    (4) Would a different format (with respect to the grouping and 
order of sections and use of headings) make the rule easier to 
understand? If so, what changes to the format would make the rule 
easier to understand?
    (5) Would increasing the number of sections (and making each 
section shorter) clarify the rule? If so, which portions of the rule 
should be changed in this respect?
    (6) What additional changes would make the rule easier to 
understand?
    The agencies also solicit comment about whether it would be 
appropriate and useful to include in the rule the examples discussed in 
this preamble. The agencies note that creating safe harbors in the rule 
may generate certain problems over time due to changes in technology or 
business practices. Are there alternatives that the agencies should 
consider to illustrate the terms in the rule?

VIII. FDIC's Electronic Public Comment Site

    The FDIC has included a page on its web site to facilitate the 
submission of electronic comments in response to this general 
solicitation (the EPC site). The EPC site provides an alternative to 
the written letter and may be a more convenient way for you to submit 
your comments. Commenting through the EPC site will assist the FDIC to 
more accurately and efficiently analyze comments submitted 
electronically. If you submit your comments through the EPC site your 
comments will receive the same consideration that they would receive if 
submitted in hard copy to the FDIC's street address. Information 
provided through the EPC site will be used by the FDIC only to assist 
in its analysis of the proposed regulation. The FDIC will not use an 
individual's name or any other personal identifier of an individual to 
retrieve records or information submitted through the EPC site. Like 
comments submitted in hard copy to the FDIC's street address, EPC site 
comments will be made available in their entirety (including the 
commenter's name and address if the commenter chooses to provide them) 
for public inspection.
    The EPC site will be available on the FDIC's home page at http://
www.fdic.gov. You will be able to provide comments directly on any of 
the sections of the proposed regulation as well as the specific 
questions that have been asked in the preceding Supplementary 
Information section. You will also be able to view the regulation and 
Supplementary Information sections that related to your comments 
directly on the site. Because the GLB Act requires promulgation of this 
regulation, the FDIC encourages you to provide written comments in the 
spaces provided. Written comments enable the FDIC to thoughtfully 
consider possible changes to the proposed regulation.
    The FDIC is also interested in your feedback on the EPC site. We 
have provided a space for you to comment on the site itself. Answers to 
this question will help the FDIC evaluate the EPC site for use in 
future rulemaking.
    At the conclusion of the EPC site you will have an opportunity to 
provide us with your name, indicate whether you are an individual, 
insured depository institution, financial holding company, community-
based organization, trade association, government agency, or other, and 
provide the name of the organization you represent, if applicable. 
Whether you choose to respond to these questions is entirely up to you. 
Any responses received may help the FDIC to better understand the 
public comments it receives.

IX. Unfunded Mandates Act of 1995

    OCC: Section 202 of the Unfunded Mandates Reform Act of 1995, 2 
U.S.C. 1532 (Unfunded Mandates Act), requires that an agency prepare a 
budgetary impact statement before promulgating a rule that includes a 
Federal mandate that may result in expenditures by state, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 of the Unfunded Mandates Act also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule.
    The proposed rule would not apply to state, local or tribal 
governments. Although the proposed rule would apply to insured 
depository institutions, affiliates, and nongovernmental entities and 
persons, OCC is not required to assess the effects of its regulatory 
actions on the private sector to the extent such regulations 
incorporate requirements specifically set forth in law. 2 U.S.C. 1531. 
Many of the proposed provisions closely follow the requirements of 
Section 711 of the GLBA. Moreover, the proposal contains regulatory 
options designed to minimize costs and burdens. Therefore, the OCC has 
determined that this proposed rule will not result in expenditures by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year. Accordingly, 
the OCC has not prepared a budgetary impact statement or specifically 
addressed the regulatory alternatives considered.

[[Page 31985]]

    OTS: Section 202 of the Unfunded Mandates Reform Act of 1995, 2 
U.S.C. 1532 (Unfunded Mandates Act), requires that an agency prepare a 
budgetary impact statement before promulgating a rule that includes a 
Federal mandate that may result in expenditures by state, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 of the Unfunded Mandates Act also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule.
    The proposed rule would not apply to state, local or tribal 
governments. Although the proposed rule would apply to insured 
depository institutions, affiliates, and nongovernmental entities and 
persons, OTS is not required to assess the effects of its regulatory 
actions on the private sector to the extent such regulations 
incorporate requirements specifically set forth in law. 2 U.S.C. 1531. 
Many of the proposed provisions closely follow the requirements of 
section 711 of the GLB Act. Moreover, OTS has exercised its discretion, 
to the extent possible, to propose regulatory options to minimize costs 
and burdens. Therefore, the OTS has determined that this proposed rule 
will not result in expenditures by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. Accordingly, the OTS has not prepared 
a budgetary impact statement or specifically addressed the regulatory 
alternatives considered.

List of Subjects

12 CFR Part 35

    Community development, Credit, Freedom of information, Investments, 
National banks, Reporting and recordkeeping requirements.

12 CFR Part 207

    Banks, banking, Community development, Federal Reserve System, 
Holding companies, Reporting and recordkeeping requirements.

12 CFR Part 346

    Banks, banking, Community development, and Reporting and 
recordkeeping.

12 CFR Part 533

    Administrative practice and procedure, Business and industry, 
Community development, Confidential business information, Credit, 
Freedom of information, Holding companies, Investments, Mortgages, 
Nonprofit organizations, Penalties, Reporting and recordkeeping 
requirements, Savings association.

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons set out in the joint preamble, the OCC proposes to 
amend title 12, chapter I, of the Code of Federal Regulations by adding 
a new part 35 to read as follows:

PART 35--DISCLOSURE AND REPORTING OF CRA RELATED AGREEMENTS

Sec.
35.1   Purpose and scope.
35.2   Definition of covered agreement.
35.3   Related agreements considered a single agreement.
35.4   Disclosure of covered agreements.
35.5   Annual reports.
35.6   Release of information under FOIA.
35.7   Compliance provisions.
35.8   Other definitions and rules of construction.

    Authority: 12 U.S.C. 1831y.


Sec. 35.1  Purpose and scope.

    (a) General. This part implements section 711 of the Gramm-Leach-
Bliley Act (12 U.S.C. 1831y). That section requires any nongovernmental 
entity or person, insured depository institution, and affiliate of an 
insured depository institution that enters into a covered agreement to:
    (1) Make the covered agreement available to the public and the 
appropriate Federal banking agency; and
    (2) File an annual report with the appropriate Federal banking 
agency concerning the covered agreement.
    (b) The provisions of this part are enforced by the OCC with 
respect to national banks and their subsidiaries.


Sec. 35.2  Definition of covered agreement.

    (a) General definition. A covered agreement is any contract, 
arrangement, or understanding (whether or not legally binding) that 
meets all of the following criteria:
    (1) The agreement is in writing.
    (2) The parties to the agreement include:
    (i) An insured depository institution or an affiliate of an insured 
depository institution; and
    (ii) A nongovernmental entity or person (referred to hereafter as a 
person).
    (3) The agreement provides for the insured depository institution 
or any affiliate to:
    (i) Provide to one or more individuals or entities (whether or not 
parties to the agreement) cash payments, grants, or other consideration 
(except loans) that have an aggregate value of more than $10,000 in any 
calendar year; or
    (ii) Make to one or more individuals or entities (whether or not 
parties to the agreement) loans that have an aggregate principal amount 
of more than $50,000 in any calendar year.
    (4) The agreement is made pursuant to, or in connection with, the 
fulfillment of the Community Reinvestment Act of 1977 (12 U.S.C. 2901 
et seq.) (CRA), as defined in paragraph (c) of this section.
    (b) Agreements that are not covered agreements-- (1) Certain loans. 
A covered agreement does not include:
    (i) Any individual mortgage loan; or
    (ii) Any specific contract or commitment for a loan or extension of 
credit to individuals, businesses, farms, or other entities if:
    (A) The funds are loaned at rates not substantially below market 
rates; and
    (B) The purpose of the loan or extension of credit does not include 
any re-lending of the borrowed funds to third parties.
    (2) Agreements where there has not been a CRA contact--(i)General. 
A covered agreement does not include any agreement entered into by an 
insured depository institution or affiliate of an insured depository 
institution with a person who has not commented on, testified about, or 
discussed with the institution, or otherwise contacted the institution, 
concerning the CRA.
    (ii) Examples of CRA contact. The following are examples of CRA 
contacts. These examples are not exclusive and other actions by a 
person may also make the exemption in paragraph (b)(2)(i) of this 
section unavailable. If a person engages in any of the following 
actions and subsequently enters into an agreement with the insured 
depository institution or any affiliate of the institution, the 
agreement is not exempt under paragraph (b)(2)(i) of this section.
    (A) CRA contact with a Federal banking agency. (1) The person 
submits a written comment to a Federal banking agency that discusses 
the record of performance or future performance under the CRA of an 
insured depository institution or any CRA affiliate of the institution.
    (2) The person provides oral testimony or comments to a Federal 
banking agency concerning the record of performance or future 
performance under the CRA of an insured depository institution or any 
CRA affiliate of the institution.
    (B) CRA contact with insured depository institution or affiliate. 
(1) The person has a discussion with, or otherwise contacts, an insured

[[Page 31986]]

depository institution or any affiliate of the institution about 
providing (or refraining from providing) written or oral comments or 
testimony to any Federal banking agency concerning the record of 
performance or future performance under the CRA of the institution or 
any CRA affiliate of the institution.
    (2) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
about providing (or refraining from providing) written comments to the 
institution that must be included in the institution's CRA public file.
    (3) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning the CRA rating of the institution, or the CRA record of 
performance of the institution or any CRA affiliate of the institution.
    (4) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning actions that should be taken to improve the CRA performance 
of the institution or any CRA affiliate of the institution.
    (5) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning any obligation or responsibility that the institution or any 
CRA affiliate of the institution may have to meet the banking needs of 
its community and the discussion or contact occurs while the 
institution or any affiliate has an application for a deposit facility 
pending at a Federal banking agency or is undergoing a publicly 
announced CRA performance examination.
    (iii) Examples of actions that are not CRA contacts. The following 
are examples of actions that are not CRA contacts. The actions 
described in these examples would not, by themselves, cause the 
exemption in paragraph (b)(2)(i) of this section to be unavailable. 
These examples are not exclusive.
    (A) A person provides comments or testimony concerning an insured 
depository institution or affiliate to a Federal banking agency in 
response to a direct request by the agency for comments or testimony 
from that person. Direct requests for comments or testimony do not 
include a general invitation by a Federal banking agency for comments 
or testimony from the public in connection with a CRA performance 
evaluation of, or application for a deposit facility by, an insured 
depository institution or an application by a company to acquire an 
insured depository institution.
    (B) A person makes a statement concerning an insured depository 
institution or affiliate at a widely attended conference or seminar 
regarding a general topic. A public or private meeting, public hearing, 
or other meeting regarding one or more specific institutions or 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (C) A person sends a similar fundraising letter to insured 
depository institutions and to other businesses in its community. The 
letter encourages all businesses in the community to meet their 
obligation to assist in making the local community a better place to 
live and work.
    (D) A person sends a general offering circular to financial 
institutions offering to sell a portfolio of loans. An insured 
depository institution that receives the offering circular discusses 
with the person whether the loans are in the institution's local 
community. No reference to the CRA or the institution's CRA performance 
is made in the offering circular or in the discussions of the parties.
    (c) Fulfillment of the CRA--(1) General. Fulfillment of the CRA 
means the list of factors that the Federal banking agencies have 
determined have a material impact on an agency's decision:
    (i) To approve or disapprove an application for a deposit facility 
(as defined in section 803 of the CRA (12 U.S.C. 2902)); or
    (ii) To assign a rating to an insured depository institution under 
section 807 of the CRA (12 U.S.C. 2906).
    (2) List of factors. The list of factors referred to in paragraph 
(c)(1) of this section means the performance of any of the following 
activities by an insured depository institution or CRA affiliate that 
is a party to the agreement or that is an affiliate of a party to the 
agreement or by any person that is a party to the agreement:
    (i) Providing or refraining from providing written or oral comments 
or testimony to any Federal banking agency concerning the record of 
performance or future performance under the CRA of an insured 
depository institution or CRA affiliate that is a party to the 
agreement or an affiliate of a party to the agreement or written 
comments that are required to be included in the CRA public file of any 
such insured depository institution;
    (ii) Home-purchase, home-improvement, small business, small farm, 
community development, and consumer lending, as described in 
Sec. 25.22, including loan purchases, loan commitments, and letters of 
credit;
    (iii) Making investments, deposits, or grants, or acquiring 
membership shares, that have as their primary purpose community 
development, as described in Sec. 25.23;
    (iv) Delivering retail banking services, as described in 
Sec. 25.24(d);
    (v) Providing community development services, as described in 
Sec. 25.24(e);
    (vi) In the case of a wholesale or limited-purpose insured 
depository institution, community development lending, including 
originating and purchasing loans and making loan commitments and 
letters of credit, making qualified investments, or providing community 
development services, as described in Sec. 25.25(c);
    (vii) In the case of a small insured depository institution, any 
lending or other activity described in Sec. 25.26(a); or
    (viii) In the case of an insured depository institution that is 
evaluated on the basis of a strategic plan, any element of the 
strategic plan, as described in Sec. 25.27(f).
    (d) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns the performance of any activity of a CRA 
affiliate described in paragraph (c) of this section must notify each 
person that is a party to the agreement that the agreement concerns a 
CRA affiliate. The insured depository institution or affiliate must 
provide this notice prior to the time the agreement is entered into if 
the affiliate is a CRA affiliate at that time, or within a reasonable 
time after the affiliate becomes a CRA affiliate if the affiliate is 
not a CRA affiliate at the time the agreement is entered into.
    (e) Disclosure and reporting of certain existing agreements that 
become covered agreements. An agreement that concerns the performance 
of any activity described in paragraph (c) of this section by an 
affiliate may become a covered agreement after it is entered into if 
the affiliate subsequently becomes a CRA affiliate. In that event, the 
disclosure and reporting obligations under Secs. 35.4 and 35.5 begin on 
the date that the agreement becomes a covered agreement and do not 
apply to the period prior to that date.


Sec. 35.3  Related agreements considered a single agreement.

    The following rules must be applied in determining whether a 
written contract, arrangement, or understanding is a covered agreement 
under Sec. 35.2.
    (a) Contracts, arrangements, or understandings entered into by same

[[Page 31987]]

parties. All written contracts, arrangements, or understandings to 
which an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement if the contracts, arrangements, or understandings:
    (1) Are entered into with the same person;
    (2) Were entered into within the same 12-month period; and
    (3) Are each in fulfillment of the CRA.
    (b) Substantively related contracts. All written contracts to which 
an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement, without regard to whether the other parties to the contracts 
are the same or whether each such contract is in fulfillment of the 
CRA, if the contracts were negotiated in a coordinated fashion and a 
person is a party to each contract.


Sec. 35.4  Disclosure of covered agreements.

    (a) Effective date. This section applies only to covered agreements 
entered into after November 12, 1999.
    (b) Disclosure of covered agreements to the public--(1) Disclosure 
required. (i) Each person and each insured depository institution or 
affiliate that enters into a covered agreement must make a complete 
copy of the covered agreement available to any individual or entity 
upon request.
    (ii) In disclosing a covered agreement to the public under 
paragraph (b)(1)(i) of this section, a person, insured depository 
institution, or affiliate may withhold from disclosure only those 
portions of an agreement that the relevant supervisory agency 
determines are exempt from disclosure under the Freedom of Information 
Act (5 U.S.C. 552 et seq.).
    (2) Duration of obligation. The obligation to disclose a covered 
agreement terminates 12 months after the end of the term of the 
agreement.
    (3) Reasonable copy and mailing fees. Each person and each insured 
depository institution or affiliate may charge an individual or entity 
that requests a copy of a covered agreement a reasonable fee not to 
exceed the cost of copying and mailing the agreement.
    (4) Use of CRA public file by insured depository institution. An 
insured depository institution may fulfill its obligation under this 
paragraph (b) by placing a copy of the covered agreement in the insured 
depository institution's CRA public file and making the agreement 
available in accordance with the procedures set forth in Sec. 35.43.
    (c) Disclosure of covered agreements to the relevant supervisory 
agency--(1) Disclosure by person. Each person that is a party to a 
covered agreement must provide a complete copy of the agreement to the 
relevant supervisory agency within 30 days of receiving a request from 
the agency for the agreement. This obligation terminates 12 months 
after the end of the term of the covered agreement.
    (2) Disclosure by insured depository institution or affiliate--(i) 
Filing with the relevant supervisory agency. Each insured depository 
institution or affiliate that is a party to a covered agreement must 
provide a copy of the agreement to each relevant supervisory agency 
within 30 days after the date the insured depository institution or 
affiliate enters into the agreement.
    (ii) Joint filings. In the event that two or more insured 
depository institutions or affiliates are parties to a covered 
agreement, the insured depository institution(s) and affiliate(s) may 
jointly file a copy of the covered agreement with each relevant 
supervisory agency. Any joint filing must identify the insured 
depository institution(s) and affiliate(s) for whom the covered 
agreement is being filed.
    (d) Relevant supervisory agency. For purposes of this section and 
Sec. 35.5, the ``relevant supervisory agency'' for a covered agreement 
means the appropriate Federal banking agency for--
    (1) Each insured depository institution (or subsidiary thereof) 
that is a party to the covered agreement;
    (2) Each insured depository institution (or subsidiary thereof) or 
CRA affiliate that makes payments or loans or provides services that 
are subject to the covered agreement; and
    (3) Any company (other than an insured depository institution or 
subsidiary thereof) that is a party to the covered agreement.


Sec. 35.5  Annual reports.

    (a) Effective date. This section applies only to covered agreements 
entered into on or after May 12, 2000.
    (b) Annual report required. Each person and each insured depository 
institution or affiliate that is a party to a covered agreement must 
file an annual report with each relevant supervisory agency concerning 
the disbursement, receipt, and uses of funds or other resources under 
the covered agreement.
    (c) Duration of reporting requirement--(1) General. An annual 
report under this section must be filed with each relevant supervisory 
agency for:
    (i) The fiscal year in which the parties enter into the covered 
agreement; and
    (ii) Each fiscal year during the term of the covered agreement.
    (2) Exception for person that has not received any funds or 
resources. A person is not required to file an annual report for a 
covered agreement for any fiscal year during the term of the agreement 
in which the person did not receive any funds or other resources under 
the agreement.
    (d) Annual reports filed by person--(1) General. The annual report 
filed by a person under this section must include the following:
    (i) The name and mailing address of the person filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The amount of funds or resources received under the covered 
agreement during the fiscal year; and
    (iv) The information required by paragraphs (d)(2) and (d)(3) of 
this section concerning the use of funds received under the covered 
agreement.
    (2) Reporting for funds or resources allocated and used for a 
specific purpose. For funds or other resources that the person received 
during the fiscal year under the covered agreement and allocated and 
used for a specific purpose during the fiscal year, the annual report 
must:
    (i) Describe each specific purpose for which the funds or resources 
were used during the fiscal year; and (ii) State the amount of funds or 
resources used during the fiscal year for each specific purpose.
    (3) Funds or resources used for other purposes. For all funds or 
resources that the person received during the fiscal year under the 
covered agreement and did not use for a specific purpose, the annual 
report must:
    (i) State the amount received during the fiscal year; and
    (ii) Provide a detailed, itemized list of how the funds or 
resources were used during the fiscal year, including the total amount 
used for:
    (A) Compensation of officers, directors, and employees;
    (B) Administrative expenses;
    (C) Travel expenses;
    (D) Entertainment expenses;
    (E) Payment of consulting and professional fees; and
    (F) Other expenses or uses.
    (4) Use of other reports. The annual report filed by a person may 
consist of, or incorporate, a report prepared for any other purpose, 
such as an Internal Revenue Service form, a state tax form,

[[Page 31988]]

a report to members or shareholders, financial statements, or other 
report, so long as the annual report contains all of the information 
required by this paragraph (d).
    (5) Consolidated reports permitted. A person that is a party to 
five or more covered agreements may file with each relevant supervisory 
agency a single consolidated annual report covering all the covered 
agreements. Any consolidated report must contain all the information 
required by this paragraph (d). The information required to be reported 
under paragraph (d)(1)(iii), (d)(2), and (d)(3) of this section may be 
reported on an aggregate basis for all covered agreements.
    (e) Annual report filed by insured depository institution or 
affiliate--(1) General. The annual report filed by an insured 
depository institution or affiliate must include the following:
    (i) The name and principal place of business of the insured 
depository institution or affiliate filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans provided by the insured depository 
institution or affiliate under the covered agreement to any other party 
to the agreement during the fiscal year;
    (iv) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans received by the insured depository 
institution or affiliate under the covered agreement from any other 
party to the agreement during the fiscal year;
    (v) A general description of the terms and conditions of any 
payments, fees, or loans reported under paragraphs (e)(1)(iii) and (iv) 
of this section, or, in the event such terms and conditions are set 
forth:
    (A) In the covered agreement, a statement identifying the covered 
agreement and the date the agreement was filed with the relevant 
supervisory agency; or
    (B) In a previous annual report filed by the insured depository 
institution or affiliate, a statement identifying the date the report 
was filed with the relevant supervisory agency; and
    (vi) The aggregate amount and number of loans, aggregate amount and 
number of investments, and aggregate amount of services provided under 
the covered agreement to any individual or entity not a party to the 
agreement:
    (A) By the insured depository institution or affiliate during its 
fiscal year; and
    (B) By any other party to the agreement, unless such information is 
not known to the insured depository institution or affiliate filing the 
report or such information is or will be contained in the annual report 
filed by a person under paragraph (d) of this section.
    (2) Consolidated reports permitted--(i) Party to large number of 
agreements. An insured depository institution or affiliate that is a 
party to five or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency covering all the 
covered agreements.
    (ii) Affiliated entities party to the same agreement. An insured 
depository institution and its affiliates that are parties to the same 
covered agreement may file a single consolidated annual report relating 
to the agreement with each relevant supervisory agency for the covered 
agreement.
    (iii) Content of report. Any consolidated annual report must 
contain all the information required by this paragraph (e). The amounts 
and data required to be reported under paragraph (e)(1)(iii), (iv), and 
(vi) of this section may be reported on an aggregate basis for all 
covered agreements.
    (f) Time and place of filing--(1) General. Each party must file its 
annual report with each relevant supervisory agency for the covered 
agreement no later than six months following the end of the fiscal year 
covered by the report.
    (2) Alternative method of fulfilling annual reporting requirement 
for a person. (i) A person may fulfill the filing requirements of this 
section by providing the following materials to an insured depository 
institution or affiliate that is a party to the agreement no later than 
five months following the end of the person's fiscal year:
    (A) A copy of the person's annual report required under paragraph 
(d) of this section for the fiscal year; and
    (B) Written instructions that the insured depository institution or 
affiliate promptly forward the annual report to the relevant 
supervisory agency or agencies on behalf of the person.
    (ii) An insured depository institution or affiliate that receives 
an annual report from a person pursuant to paragraph (f)(2)(i) of this 
section must file the report with the relevant supervisory agency or 
agencies on behalf of the person within 30 days.


Sec. 35.6  Release of information under FOIA.

    The OCC will make covered agreements and annual reports available 
to the public in accordance with the Freedom of Information Act (5 
U.S.C. 552 et seq.) and the OCC's Rules Regarding the Availability of 
Information (12 CFR part 4). A party to a covered agreement may request 
confidential treatment of proprietary and confidential information in a 
covered agreement or an annual report under those procedures.


Sec. 35.7  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations. (1) If the OCC determines that a person has willfully 
failed to comply in a material way with Secs. 35.4 or 35.5, the OCC 
will notify the person in writing of that determination and provide the 
person a period of 90 days (or such longer period as the OCC finds to 
be reasonable under the circumstances) to comply.
    (2) If the person does not comply within the time period 
established by the OCC, the agreement shall thereafter be unenforceable 
by that person by operation of section 48 of the Federal Deposit 
Insurance Act (12 U.S.C. 1831y).
    (3) The OCC may assist any insured depository institution or 
affiliate that is a party to a covered agreement that is unenforceable 
by a person by operation of section 48 of the Federal Deposit Insurance 
Act (12 U.S.C. 1831y) in identifying a successor to assume the person's 
responsibilities under the agreement.
    (b) Diversion of funds. If a court or other body of competent 
jurisdiction determines that funds or resources received under a 
covered agreement have been diverted contrary to the purposes of the 
covered agreement for an individual's personal financial gain, the OCC 
may take either or both of the following actions:
    (1) Order the individual to disgorge the diverted funds or 
resources received under the agreement;
    (2) Prohibit the individual from being a party to any covered 
agreement for a period not to exceed 10 years.
    (c) Notice and opportunity to respond. Before making a 
determination under paragraph (a)(1) of this section, or taking any 
action under paragraph (b) of this section, the OCC will provide 
written notice and an opportunity to present information to the OCC 
concerning any relevant facts or circumstances relating to the matter.
    (d) Inadvertent or de minimis errors. Inadvertent or de minimis 
errors in annual reports or other documents filed with the OCC under 
Secs. 35.4 or 35.5 will not subject the reporting party to any penalty.

[[Page 31989]]

    (e) Enforcement of provisions in covered agreements. No provision 
of this part shall be construed as authorizing the OCC to enforce the 
provisions of any covered agreement.


Sec. 35.8  Other definitions and rules of construction.

    (a) Affiliate. ``Affiliate'' means:
    (1) Any company that controls, is controlled by, or is under common 
control with another company; and
    (2) For the purpose of determining whether an agreement is a 
covered agreement under Sec. 35.2, an ``affiliate'' includes any 
company that would be under common control or merged with another 
company on consummation of any transaction pending before a Federal 
banking agency at the time:
    (i) The parties enter into the agreement; and
    (ii) The person that is a party to the agreement makes a CRA 
contact, as described in Sec. 35.2(b)(2).
    (b) Control. ``Control'' is defined in section 2(a) of the Bank 
Holding Company Act (12 U.S.C. 1841(a)).
    (c) CRA affiliate. A ``CRA affiliate'' of an insured depository 
institution is any company that is an affiliate of an insured 
depository institution to the extent, and only to the extent, that the 
activities of the affiliate were considered by the appropriate Federal 
banking agency when evaluating the CRA performance of the institution 
at its most recent CRA examination.
    (d) CRA public file. For purposes of this part, ``CRA public file'' 
means the public file maintained by an insured depository institution 
and described in Sec. 25.43.
    (e) Federal banking agency; appropriate Federal banking agency. The 
terms ``Federal banking agency'' and ``appropriate Federal banking 
agency'' have the same meanings as in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813).
    (f) Fiscal year. (1) The fiscal year for a person that does not 
have a fiscal year shall be the calendar year;
    (2) Any person, insured depository institution, or affiliate that 
has a fiscal year may elect to have the calendar year be its fiscal 
year for purposes of this part.
    (g) Insured depository institution. ``Insured depository 
institution'' has the same meaning as in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813).
    (h) Nongovernmental entity or person. (1) General. A 
``nongovernmental entity or person'' is any partnership, association, 
trust, joint venture, joint stock company, corporation, limited 
liability corporation, company, firm, society, other organization, or 
individual.
    (2) Exclusions. A nongovernmental entity or person does not 
include:
    (i) The United States government, a state government, a unit of 
local government (including a county, city, town, township, parish, 
village, or other general-purpose subdivision of a state) or an Indian 
tribe or tribal organization established under Federal, state or Indian 
tribal law (including the Department of Hawaiian Home Lands), or a 
department, agency, or instrumentality of any such entity;
    (ii) A federally-chartered public corporation that receives federal 
funds appropriated specifically for that corporation;
    (iii) An insured depository institution or affiliate of an insured 
depository institution; or
    (iv) An officer, director, employee, or representative (acting in 
his or her capacity as an officer, director, employee, or 
representative) of an entity listed in paragraphs (h)(2)(i) through 
(iii) of this section.
    (i) Party. The term ``party'' with respect to a covered agreement 
means each person and each insured depository institution or affiliate 
that entered into the agreement.
    (j) Person. For purposes of this part, a ``person'' is any 
nongovernmental entity or person.
    (k) Term of agreement. An agreement that does not by its terms 
establish a termination date is considered to terminate on the last 
date on which any party to the agreement makes any payment or provides 
any loan or other resources under the agreement, unless the appropriate 
Federal banking agency otherwise notifies each party in writing.

    Dated: May 10, 2000.
John D. Hawke, Jr.,
Comptroller of the Currency.

Federal Reserve System

12 CFR Chapter II

Authority and Issuance

    For the reasons set out in the joint preamble, Title 12, Chapter 
II, of the Code of Federal Regulations is proposed to be amended by 
adding a new part 207 to read as follows:

PART 207--DISCLOSURE AND REPORTING OF CRA-RELATED AGREEMENTS 
(REGULATION G)

Sec.
207.1   Purpose and scope of this part.
207.2   Definition of covered agreement.
207.3   Related agreements considered a single agreement.
207.4   Disclosure of covered agreements.
207.5   Annual reports.
207.6   Release of information under FOIA.
207.7   Compliance provisions.
207.8   Other definitions and rules of construction used in this 
part.

    Authority: 12 U.S.C. 1831y.


Sec. 207.1  Purpose and scope of this part.

    (a) General. This part implements section 711 of the Gramm-Leach-
Bliley Act (12 U.S.C. 1831y). That section requires any nongovernmental 
entity or person, insured depository institution, and affiliate of an 
insured depository institution that enters into a covered agreement 
to--
    (1) Make the covered agreement available to the public and the 
appropriate Federal banking agency; and
    (2) File an annual report with the appropriate Federal banking 
agency concerning the covered agreement.
    (b) The provisions of this part are enforced by the Board with 
respect to state member banks, bank holding companies, and affiliates 
of bank holding companies, other than banks, savings associations and 
subsidiaries of banks and savings associations.


Sec. 207.2  Definition of covered agreement.

    (a) General definition. A covered agreement is any contract, 
arrangement, or understanding (whether or not legally binding) that 
meets all of the following criteria--
    (1) The agreement is in writing.
    (2) The parties to the agreement include--
    (i) An insured depository institution or an affiliate of an insured 
depository institution; and
    (ii) A nongovernmental entity or person (referred to hereafter as a 
person).
    (3) The agreement provides for the insured depository institution 
or any affiliate to--
    (i) Provide to one or more individuals or entities (whether or not 
parties to the agreement) cash payments, grants, or other consideration 
(except loans) that have an aggregate value of more than $10,000 in any 
calendar year; or
    (ii) Make to one or more individuals or entities (whether or not 
parties to the agreement) loans that have an aggregate principal amount 
of more than $50,000 in any calendar year.
    (4) The agreement is made pursuant to, or in connection with, the 
fulfillment of the Community Reinvestment Act of 1977 (12 U.S.C. 2901 
et seq.) (CRA), as defined in paragraph (c) of this section.

[[Page 31990]]

    (b) Agreements that are not covered agreements--(1) Certain loans. 
A covered agreement does not include--
    (i) Any individual mortgage loan; or
    (ii) Any specific contract or commitment for a loan or extension of 
credit to individuals, businesses, farms, or other entities if--
    (A) The funds are loaned at rates not substantially below market 
rates; and
    (B) The purpose of the loan or extension of credit does not include 
any re-lending of the borrowed funds to third parties.
    (2) Agreements where there has not been a CRA contact. (i) General. 
A covered agreement does not include any agreement entered into by an 
insured depository institution or affiliate of an insured depository 
institution with a person who has not commented on, testified about, or 
discussed with the institution, or otherwise contacted the institution, 
concerning the CRA.
    (ii) Examples of CRA contact. The following are examples of CRA 
contacts. These examples are not exclusive and other actions by a 
person may also make the exemption in paragraph (b)(2)(i) of this 
section unavailable. If a person engages in any of the following 
actions and subsequently enters into an agreement with the insured 
depository institution or any affiliate of the institution, the 
agreement is not exempt under paragraph (b)(2)(i) of this section.
    (A) CRA contact with a Federal banking agency. (1) The person 
submits a written comment to a Federal banking agency that discusses 
the record of performance or future performance under the CRA of an 
insured depository institution or any CRA affiliate of the institution.
    (2) The person provides oral testimony or comments to a Federal 
banking agency concerning the record of performance or future 
performance under the CRA of an insured depository institution or any 
CRA affiliate of the institution.
    (B) CRA contact with insured depository institution or affiliate. 
(1) The person has a discussion with, or otherwise contacts, an insured 
depository institution or any affiliate of the institution about 
providing (or refraining from providing) written or oral comments or 
testimony to any Federal banking agency concerning the record of 
performance or future performance under the CRA of the institution or 
any CRA affiliate of the institution.
    (2) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
about providing (or refraining from providing) written comments to the 
institution that must be included in the institution's CRA public file.
    (3) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning the CRA rating of the institution, or the CRA record of 
performance of the institution or any CRA affiliate of the institution.
    (4) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning actions that should be taken to improve the CRA performance 
of the institution or any CRA affiliate of the institution.
    (5) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning any obligation or responsibility that the institution or any 
CRA affiliate of the institution may have to meet the banking needs of 
its community and the discussion or contact occurs while the 
institution or any affiliate has an application for a deposit facility 
pending at a Federal banking agency or is undergoing a publicly 
announced CRA performance examination.
    (iii) Examples of actions that are not CRA contacts. The following 
are examples of actions that are not CRA contacts. The actions 
described in these examples would not, by themselves, cause the 
exemption in paragraph (b)(2)(i) of this section to be unavailable. 
These examples are not exclusive.
    (A) A person provides comments or testimony concerning an insured 
depository institution or affiliate to a Federal banking agency in 
response to a direct request by the agency for comments or testimony 
from that person. Direct requests for comments or testimony do not 
include a general invitation by a Federal banking agency for comments 
or testimony from the public in connection with a CRA performance 
evaluation of, or application for a deposit facility by, an insured 
depository institution or an application by a company to acquire an 
insured depository institution.
    (B) A person makes a statement concerning an insured depository 
institution or affiliate at a widely attended conference or seminar 
regarding a general topic. A public or private meeting, public hearing, 
or other meeting regarding one or more specific institutions or 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (C) A person sends a similar fundraising letter to insured 
depository institutions and to other businesses in its community. The 
letter encourages all businesses in the community to meet their 
obligation to assist in making the local community a better place to 
live and work.
    (D) A person sends a general offering circular to financial 
institutions offering to sell a portfolio of loans. An insured 
depository institution that receives the offering circular discusses 
with the person whether the loans are in the institution's local 
community. No reference to the CRA or the institution's CRA performance 
is made in the offering circular or in the discussions of the parties.
    (c) Fulfillment of the CRA--(1) General. Fulfillment of the CRA 
means the list of factors that the Federal banking agencies have 
determined have a material impact on an agency's decision--
    (i) To approve or disapprove an application for a deposit facility 
(as defined in section 803 of the CRA (12 U.S.C. 2902)); or
    (ii) To assign a rating to an insured depository institution under 
section 807 of the CRA (12 U.S.C. 2906).
    (2) List of factors. The list of factors referred to in paragraph 
(c)(1) of this section means the performance of any of the following 
activities by an insured depository institution or CRA affiliate that 
is a party to the agreement or that is an affiliate of a party to the 
agreement or by any person that is a party to the agreement--
    (i) Providing or refraining from providing written or oral comments 
or testimony to any Federal banking agency concerning the record of 
performance or future performance under the CRA of an insured 
depository institution or CRA affiliate that is a party to the 
agreement or an affiliate of a party to the agreement or written 
comments that are required to be included in the CRA public file of any 
such insured depository institution;
    (ii) Home-purchase, home-improvement, small business, small farm, 
community development, and consumer lending, as described in 
Sec. 228.22 of Regulation BB (12 CFR 228.22), including loan purchases, 
loan commitments, and letters of credit;
    (iii) Making investments, deposits, or grants, or acquiring 
membership shares, that have as their primary purpose community 
development, as described in Sec. 228.23 of Regulation BB (12 CFR 
228.23);
    (iv) Delivering retail banking services, as described in 
Sec. 228.24(d) of Regulation BB (12 CFR 228.24(d));
    (v) Providing community development services, as described in

[[Page 31991]]

Sec. 228.24(e) of Regulation BB (12 CFR 228.24(e));
    (vi) In the case of a wholesale or limited-purpose insured 
depository institution, community development lending, including 
originating and purchasing loans and making loan commitments and 
letters of credit, making qualified investments, or providing community 
development services, as described in Sec. 228.25(c) of Regulation BB 
(12 CFR 228.25(c));
    (vii) In the case of a small insured depository institution, any 
lending or other activity described in Sec. 228.26(a) of Regulation BB 
(12 CFR 228.26(a)); or
    (viii) In the case of an insured depository institution that is 
evaluated on the basis of a strategic plan, any element of the 
strategic plan, as described in Sec. 228.27(f) of Regulation BB (12 CFR 
228.27(f)).
    (d) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns the performance of any activity of a CRA 
affiliate described in paragraph (c) of this section must notify each 
person that is a party to the agreement that the agreement concerns a 
CRA affiliate. The insured depository institution or affiliate must 
provide this notice prior to the time the agreement is entered into if 
the affiliate is a CRA affiliate at that time, or within a reasonable 
time after the affiliate becomes a CRA affiliate if the affiliate is 
not a CRA affiliate at the time the agreement is entered into.
    (e) Disclosure and reporting of certain existing agreements that 
become covered agreements. An agreement that concerns the performance 
of any activity described in paragraph (c) of this section by an 
affiliate may become a covered agreement after it is entered into if 
the affiliate subsequently becomes a CRA affiliate. In that event, the 
disclosure and reporting obligations under Secs. 207.4 and 207.5 begin 
on the date that the agreement becomes a covered agreement and do not 
apply to the period prior to that date.


Sec. 207.3  Related agreements considered a single agreement.

    The following rules must be applied in determining whether a 
written contract, arrangement, or understanding is a covered agreement 
under Sec. 207.2.
    (a) Contracts, arrangements, or understandings entered into by same 
parties. All written contracts, arrangements, or understandings to 
which an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement if the contracts, arrangements, or understandings--
    (1) Are entered into with the same person;
    (2) Were entered into within the same 12-month period; and
    (3) Are each in fulfillment of the CRA.
    (b) Substantively related contracts. All written contracts to which 
an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement, without regard to whether the other parties to the contracts 
are the same or whether each such contract is in fulfillment of the 
CRA, if the contracts were negotiated in a coordinated fashion and a 
person is a party to each contract.


Sec. 207.4  Disclosure of covered agreements.

    (a) Effective date. This section applies only to covered agreements 
entered into after November 12, 1999.
    (b) Disclosure of covered agreements to the public--(1) Disclosure 
required. (i) Each person and each insured depository institution or 
affiliate that enters into a covered agreement must make a complete 
copy of the covered agreement available to any individual or entity 
upon request.
    (ii) In disclosing a covered agreement to the public under 
paragraph (b)(1)(i) of this section, a person, insured depository 
institution, or affiliate may withhold from disclosure only those 
portions of an agreement that the relevant supervisory agency 
determines are exempt from disclosure under the Freedom of Information 
Act (5 U.S.C. 552 et seq.).
    (2) Duration of obligation. The obligation to disclose a covered 
agreement terminates 12 months after the end of the term of the 
agreement.
    (3) Reasonable copy and mailing fees. Each person and each insured 
depository institution or affiliate may charge an individual or entity 
that requests a copy of a covered agreement a reasonable fee not to 
exceed the cost of copying and mailing the agreement.
    (4) Use of CRA public file by insured depository institution. An 
insured depository institution may fulfill its obligation under this 
paragraph (b) by placing a copy of the covered agreement in the insured 
depository institution's CRA public file and making the agreement 
available in accordance with the procedures set forth in section 
Sec. 228.43 of Regulation BB (12 CFR 228.43).
    (c) Disclosure of covered agreements to the relevant supervisory 
agency--(1) Disclosure by person. Each person that is a party to a 
covered agreement must provide a complete copy of the agreement to the 
relevant supervisory agency within 30 days of receiving a request from 
the agency for the agreement. This obligation terminates 12 months 
after the end of the term of the covered agreement.
    (2) Disclosure by insured depository institution or affiliate. (i) 
Filing with the relevant supervisory agency. Each insured depository 
institution or affiliate that is a party to a covered agreement must 
provide a copy of the agreement to each relevant supervisory agency 
within 30 days after the date the insured depository institution or 
affiliate enters into the agreement.
    (ii) Joint filings. In the event that two or more insured 
depository institutions or affiliates are parties to a covered 
agreement, the insured depository institution(s) and affiliate(s) may 
jointly file a copy of the covered agreement with each relevant 
supervisory agency. Any joint filing must identify the insured 
depository institution(s) and affiliate(s) for whom the covered 
agreement is being filed.
    (d) Relevant supervisory agency. For purposes of this section and 
Sec. 207.5, the ``relevant supervisory agency'' for a covered agreement 
means the appropriate Federal banking agency for--
    (1) Each insured depository institution (or subsidiary thereof) 
that is a party to the covered agreement;
    (2) Each insured depository institution (or subsidiary thereof) or 
CRA affiliate that makes payments or loans or provides services that 
are subject to the covered agreement; and
    (3) Any company (other than an insured depository institution or 
subsidiary thereof) that is a party to the covered agreement.


Sec. 207.5  Annual reports.

    (a) Effective date. This section applies only to covered agreements 
entered into on or after May 12, 2000.
    (b) Annual report required. Each person and each insured depository 
institution or affiliate that is a party to a covered agreement must 
file an annual report with each relevant supervisory agency concerning 
the disbursement, receipt, and uses of funds or other resources under 
the covered agreement.
    (c) Duration of reporting requirement--(1) General. An annual 
report under this section must be filed with each relevant supervisory 
agency for--
    (i) The fiscal year in which the parties enter into the covered 
agreement; and (ii) Each fiscal year during the term of the covered 
agreement.
    (2) Exception for person that has not received any funds or 
resources. A person is not required to file an annual report for a 
covered agreement for any

[[Page 31992]]

fiscal year during the term of the agreement in which the person did 
not receive any funds or other resources under the agreement.
    (d) Annual reports filed by person--(1) General. The annual report 
filed by a person under this section must include the following--
    (i) The name and mailing address of the person filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The amount of funds or resources received under the covered 
agreement during the fiscal year; and
    (iv) The information required by paragraphs (d)(2) and (d)(3) of 
this section concerning the use of funds received under the covered 
agreement.
    (2) Reporting for funds or resources allocated and used for a 
specific purpose. For funds or other resources that the person received 
during the fiscal year under the covered agreement and allocated and 
used for a specific purpose during the fiscal year, the annual report 
must--
    (i) Describe each specific purpose for which the funds or resources 
were used during the fiscal year; and
    (ii) State the amount of funds or resources used during the fiscal 
year for each specific purpose.
    (3) Funds or resources used for other purposes. For all funds or 
resources that the person received during the fiscal year under the 
covered agreement and did not use for a specific purpose, the annual 
report must--
    (i) State the amount received during the fiscal year; and
    (ii) Provide a detailed, itemized list of how the funds or 
resources were used during the fiscal year, including the total amount 
used for--
    (A) Compensation of officers, directors, and employees;
    (B) Administrative expenses;
    (C) Travel expenses;
    (D) Entertainment expenses;
    (E) Payment of consulting and professional fees; and
    (F) Other expenses or uses.
    (4) Use of other reports. The annual report filed by a person may 
consist of, or incorporate, a report prepared for any other purpose, 
such as an Internal Revenue Service form, a state tax form, a report to 
members or shareholders, financial statements, or other report, so long 
as the annual report contains all of the information required by this 
paragraph (d).
    (5) Consolidated reports permitted. A person that is a party to 
five or more covered agreements may file with each relevant supervisory 
agency a single consolidated annual report covering all the covered 
agreements. Any consolidated report must contain all the information 
required by this paragraph (d). The information required to be reported 
under paragraph (d)(1)(iii), (d)(2), and (d)(3) of this section may be 
reported on an aggregate basis for all covered agreements.
    (e) Annual report filed by insured depository institution or 
affiliate--(1) General. The annual report filed by an insured 
depository institution or affiliate must include the following--
    (i) The name and principal place of business of the insured 
depository institution or affiliate filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans provided by the insured depository 
institution or affiliate under the covered agreement to any other party 
to the agreement during the fiscal year;
    (iv) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans received by the insured depository 
institution or affiliate under the covered agreement from any other 
party to the agreement during the fiscal year;
    (v) A general description of the terms and conditions of any 
payments, fees, or loans reported under paragraphs (e)(1)(iii) and (iv) 
of this section, or, in the event such terms and conditions are set 
forth--
    (A) In the covered agreement, a statement identifying the covered 
agreement and the date the agreement was filed with the relevant 
supervisory agency; or
    (B) In a previous annual report filed by the insured depository 
institution or affiliate, a statement identifying the date the report 
was filed with the relevant supervisory agency; and
    (vi) The aggregate amount and number of loans, aggregate amount and 
number of investments, and aggregate amount of services provided under 
the covered agreement to any individual or entity not a party to the 
agreement--
    (A) By the insured depository institution or affiliate during its 
fiscal year; and
    (B) By any other party to the agreement, unless such information is 
not known to the insured depository institution or affiliate filing the 
report or such information is or will be contained in the annual report 
filed by a person under paragraph (d) of this section.
    (2) Consolidated reports permitted. (i) Party to large number of 
agreements. An insured depository institution or affiliate that is a 
party to five or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency covering all the 
covered agreements.
    (ii) Affiliated entities party to the same agreement. An insured 
depository institution and its affiliates that are parties to the same 
covered agreement may file a single consolidated annual report relating 
to the agreement with each relevant supervisory agency for the covered 
agreement.
    (iii) Content of report. Any consolidated annual report must 
contain all the information required by this paragraph (e). The amounts 
and data required to be reported under paragraphs (e)(1)(iii), (iv), 
and (vi) of this section may be reported on an aggregate basis for all 
covered agreements.
    (f) Time and place of filing--(1) General. Each party must file its 
annual report with each relevant supervisory agency for the covered 
agreement no later than six months following the end of the fiscal year 
covered by the report.
    (2) Alternative method of fulfilling annual reporting requirement 
for a person. (i) A person may fulfill the filing requirements of this 
section by providing the following materials to an insured depository 
institution or affiliate that is a party to the agreement no later than 
five months following the end of the person's fiscal year--
    (A) A copy of the person's annual report required under paragraph 
(d) of this section for the fiscal year; and
    (B) Written instructions that the insured depository institution or 
affiliate promptly forward the annual report to the relevant 
supervisory agency or agencies on behalf of the person.
    (ii) An insured depository institution or affiliate that receives 
an annual report from a person pursuant to paragraph (f)(2)(i) of this 
section must file the report with the relevant supervisory agency or 
agencies on behalf of the person within 30 days.


Sec. 207.6  Release of information under FOIA.

    The Board will make covered agreements and annual reports available 
to the public in accordance with the Freedom of Information Act (5 
U.S.C. 552 et seq.) and the Board's Rules Regarding the Availability of 
Information (12 CFR part 261). A party to a covered agreement may 
request

[[Page 31993]]

confidential treatment of proprietary and confidential information in a 
covered agreement or an annual report under those procedures.


Sec. 207.7  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations. (1) If the Board determines that a person has willfully 
failed to comply in a material way with Secs. 207.4 or 207.5, the Board 
will notify the person in writing of that determination and provide the 
person a period of 90 days (or such longer period as the Board finds to 
be reasonable under the circumstances) to comply.
    (2) If the person does not comply within the time period 
established by the Board, the agreement shall thereafter be 
unenforceable by that person by operation of section 48 of the Federal 
Deposit Insurance Act (12 U.S.C. 1831y).
    (3) The Board may assist any insured depository institution or 
affiliate that is a party to a covered agreement that is unenforceable 
by a person by operation of section 48 of the Federal Deposit Insurance 
Act (12 U.S.C. 1831y) in identifying a successor to assume the person's 
responsibilities under the agreement.
    (b) Diversion of funds. If a court or other body of competent 
jurisdiction determines that funds or resources received under a 
covered agreement have been diverted contrary to the purposes of the 
covered agreement for an individual's personal financial gain, the 
Board may take either or both of the following actions--
    (1) Order the individual to disgorge the diverted funds or 
resources received under the agreement;
    (2) Prohibit the individual from being a party to any covered 
agreement for a period not to exceed 10 years.
    (c) Notice and opportunity to respond. Before making a 
determination under paragraph (a)(1) of this section, or taking any 
action under paragraph (b) of this section, the Board will provide 
written notice and an opportunity to present information to the Board 
concerning any relevant facts or circumstances relating to the matter.
    (d) Inadvertent or de minimis errors. Inadvertent or de minimis 
errors in annual reports or other documents filed with the Board under 
Secs. 207.4 or 207.5 will not subject the reporting party to any 
penalty.
    (e) Enforcement of provisions in covered agreements. No provision 
of this part shall be construed as authorizing the Board to enforce the 
provisions of any covered agreement.


Sec. 207.8  Other definitions and rules of construction used in this 
part.

    (a) Affiliate. ``Affiliate'' means--
    (1) Any company that controls, is controlled by, or is under common 
control with another company; and
    (2) For the purpose of determining whether an agreement is a 
covered agreement under Sec. 207.2, an ``affiliate'' includes any 
company that would be under common control or merged with another 
company on consummation of any transaction pending before a Federal 
banking agency at the time--
    (i) The parties enter into the agreement; and
    (ii) The person that is a party to the agreement makes a CRA 
contact, as described in Sec. 207.2(b)(2).
    (b) Control. ``Control'' is defined in section 2(a) of the Bank 
Holding Company Act (12 U.S.C. 1841(a)).
    (c) CRA affiliate. A ``CRA affiliate'' of an insured depository 
institution is any company that is an affiliate of an insured 
depository institution to the extent, and only to the extent, that the 
activities of the affiliate were considered by the appropriate Federal 
banking agency when evaluating the CRA performance of the institution 
at its most recent CRA examination.
    (d) CRA public file. For purposes of this part, ``CRA public file'' 
means the public file maintained by an insured depository institution 
and described in Sec. 228.43 of Regulation BB (12 CFR 228.43).
    (e) Federal banking agency; appropriate Federal banking agency. The 
terms ``Federal banking agency'' and ``appropriate Federal banking 
agency'' have the same meanings as in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813).
    (f) Fiscal year. (1) The fiscal year for a person that does not 
have a fiscal year shall be the calendar year;
    (2) Any person, insured depository institution, or affiliate that 
has a fiscal year may elect to have the calendar year be its fiscal 
year for purposes of this part.
    (g) Insured depository institution. ``Insured depository 
institution'' has the same meaning as in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813).
    (h) Nongovernmental entity or person--(1) General. A 
``nongovernmental entity or person'' is any partnership, association, 
trust, joint venture, joint stock company, corporation, limited 
liability corporation, company, firm, society, other organization, or 
individual.
    (2) Exclusions. A nongovernmental entity or person does not 
include--
    (i) The United States government, a state government, a unit of 
local government (including a county, city, town, township, parish, 
village, or other general-purpose subdivision of a state) or an Indian 
tribe or tribal organization established under Federal, state or Indian 
tribal law (including the Department of Hawaiian Home Lands), or a 
department, agency, or instrumentality of any such entity;
    (ii) A federally-chartered public corporation that receives federal 
funds appropriated specifically for that corporation;
    (iii) An insured depository institution or affiliate of an insured 
depository institution; or
    (iv) An officer, director, employee, or representative (acting in 
his or her capacity as an officer, director, employee, or 
representative) of an entity listed in paragraphs (h)(2)(i) through 
(iii) of this section.
    (i) Party. The term ``party'' with respect to a covered agreement 
means each person and each insured depository institution or affiliate 
that entered into the agreement.
    (j) Person. For purposes of this part, a ``person'' is any 
nongovernmental entity or person.
    (k) Term of agreement. An agreement that does not by its terms 
establish a termination date is considered to terminate on the last 
date on which any party to the agreement makes any payment or provides 
any loan or other resources under the agreement, unless the appropriate 
Federal banking agency otherwise notifies each party in writing.

    By order of the Board of Governors of the Federal Reserve 
System, May 10, 2000.
Jennifer J. Johnson,
Secretary of the Board

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

    For the reasons set out in the joint preamble, Title 12, Chapter 
III, of the Code of Federal Regulations is proposed to be amended by 
adding a new part 346 to read as follows:

PART 346--DISCLOSURE AND REPORTING OF CRA-RELATED AGREEMENTS

Sec.
346.1   Purpose and scope of this part.
346.2   Definition of covered agreement.
346.3   Related agreements considered a single agreement.
346.4   Disclosure of covered agreements.
346.5   Annual reports.
346.6   Release of information under FOIA.
346.7   Compliance provisions.

[[Page 31994]]

346.8   Other definitions and rules of construction used in this 
part.

    Authority: 12 U.S.C. 1831y.


Sec. 346.1  Purpose and scope of this part.

    (a) General. This part implements section 711 of the Gramm-Leach-
Bliley Act, Pub. L. 106-102, section 711, 113 Stat. 1465 (1999) (12 
U.S.C. 1831y). That section requires any nongovernmental entity or 
person, insured depository institution, and affiliate of an insured 
depository institution that enters into a covered agreement to:
    (1) Make the covered agreement available to the public and the 
appropriate federal banking agency; and
    (2) File an annual report with the appropriate federal banking 
agency concerning the covered agreement.
    (b) The provisions of this part are enforced by the FDIC with 
respect to a state nonmember insured bank or a foreign bank having an 
insured branch.


Sec. 346.2  Definition of covered agreement.

    (a) General definition. A covered agreement is any contract, 
arrangement, or understanding (whether or not legally binding) that 
meets all of the following criteria:
    (1) The agreement is in writing.
    (2) The parties to the agreement include:
    (i) An insured depository institution or an affiliate of an insured 
depository institution; and
    (ii) A nongovernmental entity or person (referred to hereafter as a 
person).
    (3) The agreement provides for the insured depository institution 
or any affiliate to:
    (i) Provide to one or more individuals or entities (whether or not 
parties to the agreement) cash payments, grants, or other consideration 
(except loans) that have an aggregate value of more than $10,000 in any 
calendar year; or
    (ii) Make to one or more individuals or entities (whether or not 
parties to the agreement) loans that have an aggregate principal amount 
of more than $50,000 in any calendar year.
    (4) The agreement is made pursuant to, or in connection with, the 
fulfillment of the Community Reinvestment Act of 1977 (12 U.S.C. 2901 
et seq.) (CRA), as defined in paragraph (c) of this section.
    (b) Agreements that are not covered agreements--(1) Certain loans. 
A covered agreement does not include:
    (i) Any individual mortgage loan; or
    (ii) Any specific contract or commitment for a loan or extension of 
credit to individuals, businesses, farms, or other entities if:
    (A) The funds are loaned at rates not substantially below market 
rates; and
    (B) The purpose of the loan or extension of credit does not include 
any re-lending of the borrowed funds to third parties.
    (2) Agreements where there has not been a CRA contact. (i) General. 
A covered agreement does not include any agreement entered into by an 
insured depository institution or affiliate of an insured depository 
institution with a person who has not commented on, testified about, or 
discussed with the institution, or otherwise contacted the institution, 
concerning the CRA.
    (ii) Examples of CRA contact. The following are examples of CRA 
contacts. These examples are not exclusive and other actions by a 
person may also make the exemption in paragraph (b)(2)(i) of this 
section unavailable. If a person engages in any of the following 
actions and subsequently enters into an agreement with the insured 
depository institution or any affiliate of the institution, the 
agreement is not exempt under paragraph (b)(2)(i) of this section.
    (A) CRA contact with a federal banking agency. (1) The person 
submits a written comment to a federal banking agency that discusses 
the record of performance or future performance under the CRA of an 
insured depository institution or any CRA affiliate of the institution.
    (2) The person provides oral testimony or comments to a federal 
banking agency concerning the record of performance or future 
performance under the CRA of an insured depository institution or any 
CRA affiliate of the institution.
    (B) CRA contact with insured depository institution or affiliate. 
(1) The person has a discussion with, or otherwise contacts, an insured 
depository institution or any affiliate of the institution about 
providing (or refraining from providing) written or oral comments or 
testimony to any federal banking agency concerning the record of 
performance or future performance under the CRA of the institution or 
any CRA affiliate of the institution.
    (2) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
about providing (or refraining from providing) written comments to the 
institution that must be included in the institution's CRA public file.
    (3) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning the CRA rating of the institution, or the CRA record of 
performance of the institution or any CRA affiliate of the institution.
    (4) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning actions that should be taken to improve the CRA performance 
of the institution or any CRA affiliate of the institution.
    (5) The person has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning any obligation or responsibility that the institution or any 
CRA affiliate of the institution may have to meet the banking needs of 
its community and the discussion or contact occurs while the 
institution or any affiliate has an application for a deposit facility 
pending at a federal banking agency or is undergoing a publicly 
announced CRA performance examination.
    (iii) Examples of actions that are not CRA contacts. The following 
are examples of actions that are not CRA contacts. The actions 
described in these examples would not, by themselves, cause the 
exemption in paragraph (b)(2)(i) of this section to be unavailable. 
These examples are not exclusive.
    (A) A person provides comments or testimony concerning an insured 
depository institution or affiliate to a federal banking agency in 
response to a direct request by the agency for comments or testimony 
from that person. Direct requests for comments or testimony do not 
include a general invitation by a federal banking agency for comments 
or testimony from the public in connection with a CRA performance 
evaluation of, or application for a deposit facility by, an insured 
depository institution or an application by a company to acquire an 
insured depository institution.
    (B) A person makes a statement concerning an insured depository 
institution or affiliate at a widely attended conference or seminar 
regarding a general topic. A public or private meeting, public hearing, 
or other meeting regarding one or more specific institutions or 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (C) A person sends a similar fundraising letter to insured 
depository institutions and to other businesses in its community. The 
letter encourages all businesses in the community to meet their 
obligation to assist in making the local community a better place to 
live and work.
    (D) A person sends a general offering circular to financial 
institutions offering to sell a portfolio of loans. An insured 
depository institution that receives the offering circular discusses 
with the

[[Page 31995]]

person whether the loans are in the institution's local community. No 
reference to the CRA or the institution's CRA performance is made in 
the offering circular or in the discussions of the parties.
    (c) Fulfillment of the CRA--(1) General. Fulfillment of the CRA 
means the list of factors that the federal banking agencies have 
determined have a material impact on an agency's decision:
    (i) To approve or disapprove an application for a deposit facility 
(as defined in section 803 of the CRA (12 U.S.C. 2902)); or
    (ii) To assign a rating to an insured depository institution under 
section 807 of the CRA (12 U.S.C. 2906).
    (2) List of factors. The list of factors referred to in paragraph 
(c)(1) of this section means the performance of any of the following 
activities by an insured depository institution or CRA affiliate that 
is a party to the agreement or that is an affiliate of a party to the 
agreement or by any person that is a party to the agreement:
    (i) Providing or refraining from providing written or oral comments 
or testimony to any federal banking agency concerning the record of 
performance or future performance under the CRA of an insured 
depository institution or CRA affiliate that is a party to the 
agreement or an affiliate of a party to the agreement or written 
comments that are required to be included in the CRA public file of any 
such insured depository institution;
    (ii) Home-purchase, home-improvement, small business, small farm, 
community development, and consumer lending, as described in 12 CFR 
345.22, including loan purchases, loan commitments, and letters of 
credit;
    (iii) Making investments, deposits, or grants, or acquiring 
membership shares, that have as their primary purpose community 
development, as described in 12 CFR 345.23;
    (iv) Delivering retail banking services, as described in 12 CFR 
345.24(d);
    (v) Providing community development services, as described in 12 
CFR 345.24(e);
    (vi) In the case of a wholesale or limited-purpose insured 
depository institution, community development lending, including 
originating and purchasing loans and making loan commitments and 
letters of credit, making qualified investments, or providing community 
development services, as described in 12 CFR 345.25(c);
    (vii) In the case of a small insured depository institution, any 
lending or other activity described in 12 CFR 345.26(a); or
    (viii) In the case of an insured depository institution that is 
evaluated on the basis of a strategic plan, any element of the 
strategic plan, as described in 12 CFR 345.27(f).
    (d) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns the performance of any activity of a CRA 
affiliate described in paragraph (c) of this section must notify each 
person that is a party to the agreement that the agreement concerns a 
CRA affiliate. The insured depository institution or affiliate must 
provide this notice prior to the time the agreement is entered into if 
the affiliate is a CRA affiliate at that time, or within a reasonable 
time after the affiliate becomes a CRA affiliate if the affiliate is 
not a CRA affiliate at the time the agreement is entered into.
    (e) Disclosure and reporting of certain existing agreements that 
become covered agreements. An agreement that concerns the performance 
of any activity described in paragraph (c) of this section by an 
affiliate may become a covered agreement after it is entered into if 
the affiliate subsequently becomes a CRA affiliate. In that event, the 
disclosure and reporting obligations under Secs. 346.4 and 346.5 begin 
on the date that the agreement becomes a covered agreement and do not 
apply to the period prior to that date.


Sec. 346.3  Related agreements considered a single agreement.

    The following rules must be applied in determining whether a 
written contract, arrangement, or understanding is a covered agreement 
under Sec. 346.2.
    (a) Contracts, arrangements, or understandings entered into by same 
parties. All written contracts, arrangements, or understandings to 
which an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement if the contracts, arrangements, or understandings:
    (1) Are entered into with the same person;
    (2) Were entered into within the same 12-month period; and
    (3) Are each in fulfillment of the CRA.
    (b) Substantively related contracts. All written contracts to which 
an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement, without regard to whether the other parties to the contracts 
are the same or whether each such contract is in fulfillment of the 
CRA, if the contracts were negotiated in a coordinated fashion and a 
person is a party to each contract.


Sec. 346.4  Disclosure of covered agreements.

    (a) Effective date. This section applies only to covered agreements 
entered into after November 12, 1999.
    (b) Disclosure of covered agreements to the public--(1) Disclosure 
required. (i) Each person and each insured depository institution or 
affiliate that enters into a covered agreement must make a complete 
copy of the covered agreement available to any individual or entity 
upon request.
    (ii) In disclosing a covered agreement to the public under 
paragraph (b)(1)(i) of this section, a person, insured depository 
institution, or affiliate may withhold from disclosure only those 
portions of an agreement that the relevant supervisory agency 
determines are exempt from disclosure under the Freedom of Information 
Act (5 U.S.C. 552 et seq.).
    (2) Duration of obligation. The obligation to disclose a covered 
agreement terminates 12 months after the end of the term of the 
agreement.
    (3) Reasonable copy and mailing fees. Each person and each insured 
depository institution or affiliate may charge an individual or entity 
that requests a copy of a covered agreement a reasonable fee not to 
exceed the cost of copying and mailing the agreement.
    (4) Use of CRA public file by insured depository institution. An 
insured depository institution may fulfill its obligation under this 
paragraph (b) by placing a copy of the covered agreement in the insured 
depository institution's CRA public file and making the agreement 
available in accordance with the procedures set forth in 12 CFR 345.43.
    (c) Disclosure of covered agreements to the relevant supervisory 
agency--(1) Disclosure by person. Each person that is a party to a 
covered agreement must provide a complete copy of the agreement to the 
relevant supervisory agency within 30 days of receiving a request from 
the agency for the agreement. This obligation terminates 12 months 
after the end of the term of the covered agreement.
    (2) Disclosure by insured depository institution or affiliate. (i) 
Filing with the relevant supervisory agency. Each insured depository 
institution or affiliate that is a party to a covered agreement must 
provide a copy of the agreement to each relevant supervisory agency 
within 30 days after the date the insured depository institution or 
affiliate enters into the agreement.
    (ii) Joint filings. In the event that two or more insured 
depository institutions or affiliates are parties to a covered 
agreement, the insured depository institution(s) and affiliate(s) may 
jointly

[[Page 31996]]

file a copy of the covered agreement with each relevant supervisory 
agency. Any joint filing must identify the insured depository 
institution(s) and affiliate(s) for whom the covered agreement is being 
filed.
    (d) Relevant supervisory agency. For purposes of this section and 
Sec. 346.5, the ``relevant supervisory agency'' for a covered agreement 
means the appropriate federal banking agency for:
    (1) Each insured depository institution (or subsidiary thereof) 
that is a party to the covered agreement;
    (2) Each insured depository institution (or subsidiary thereof) or 
CRA affiliate that makes payments or loans or provides services that 
are subject to the covered agreement; and
    (3) Any company (other than an insured depository institution or 
subsidiary thereof) that is a party to the covered agreement.


Sec. 346.5  Annual reports.

    (a) Effective date. This section applies only to covered agreements 
entered into on or after May 12, 2000.
    (b) Annual report required. Each person and each insured depository 
institution or affiliate that is a party to a covered agreement must 
file an annual report with each relevant supervisory agency concerning 
the disbursement, receipt, and uses of funds or other resources under 
the covered agreement.
    (c) Duration of reporting requirement--(1) General. An annual 
report under this section must be filed with each relevant supervisory 
agency for:
    (i) The fiscal year in which the parties enter into the covered 
agreement; and
    (ii) Each fiscal year during the term of the covered agreement.
    (2) Exception for person that has not received any funds or 
resources. A person is not required to file an annual report for a 
covered agreement for any fiscal year during the term of the agreement 
in which the person did not receive any funds or other resources under 
the agreement.
    (d) Annual reports filed by person--(1) General. The annual report 
filed by a person under this section must include the following:
    (i) The name and mailing address of the person filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The amount of funds or resources received under the covered 
agreement during the fiscal year; and
    (iv) The information required by paragraphs (d)(2) and (d)(3) of 
this section concerning the use of funds received under the covered 
agreement.
    (2) Reporting for funds or resources allocated and used for a 
specific purpose. For funds or other resources that the person received 
during the fiscal year under the covered agreement and allocated and 
used for a specific purpose during the fiscal year, the annual report 
must:
    (i) Describe each specific purpose for which the funds or resources 
were used during the fiscal year; and
    (ii) State the amount of funds or resources used during the fiscal 
year for each specific purpose.
    (3) Funds or resources used for other purposes. For all funds or 
resources that the person received during the fiscal year under the 
covered agreement and did not use for a specific purpose, the annual 
report must:
    (i) State the amount received during the fiscal year; and
    (ii) Provide a detailed, itemized list of how the funds or 
resources were used during the fiscal year, including the total amount 
used for:
    (A) Compensation of officers, directors, and employees;
    (B) Administrative expenses;
    (C) Travel expenses;
    (D) Entertainment expenses;
    (E) Payment of consulting and professional fees; and
    (F) Other expenses or uses.
    (4) Use of other reports. The annual report filed by a person may 
consist of, or incorporate, a report prepared for any other purpose, 
such as an Internal Revenue Service form, a state tax form, a report to 
members or shareholders, financial statements, or other report, so long 
as the annual report contains all of the information required by this 
paragraph (d).
    (5) Consolidated reports permitted. A person that is a party to 
five or more covered agreements may file with each relevant supervisory 
agency a single consolidated annual report covering all the covered 
agreements. Any consolidated report must contain all the information 
required by this paragraph (d). The information required to be reported 
under paragraphs (d)(1)(iii), (d)(2), and (d)(3) of this section may be 
reported on an aggregate basis for all covered agreements.
    (e) Annual report filed by insured depository institution or 
affiliate--(1) General. The annual report filed by an insured 
depository institution or affiliate must include the following:
    (i) The name and principal place of business of the insured 
depository institution or affiliate filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans provided by the insured depository 
institution or affiliate under the covered agreement to any other party 
to the agreement during the fiscal year;
    (iv) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans received by the insured depository 
institution or affiliate under the covered agreement from any other 
party to the agreement during the fiscal year;
    (v) A general description of the terms and conditions of any 
payments, fees, or loans reported under paragraphs (e)(1)(iii) and (iv) 
of this section, or, in the event such terms and conditions are set 
forth:
    (A) In the covered agreement, a statement identifying the covered 
agreement and the date the agreement was filed with the relevant 
supervisory agency; or
    (B) In a previous annual report filed by the insured depository 
institution or affiliate, a statement identifying the date the report 
was filed with the relevant supervisory agency; and
    (vi) The aggregate amount and number of loans, aggregate amount and 
number of investments, and aggregate amount of services provided under 
the covered agreement to any individual or entity not a party to the 
agreement:
    (A) By the insured depository institution or affiliate during its 
fiscal year; and
    (B) By any other party to the agreement, unless such information is 
not known to the insured depository institution or affiliate filing the 
report or such information is or will be contained in the annual report 
filed by a person under paragraph (d) of this section.
    (2) Consolidated reports permitted. (i) Party to large number of 
agreements. An insured depository institution or affiliate that is a 
party to five or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency covering all the 
covered agreements.
    (ii) Affiliated entities party to the same agreement. An insured 
depository institution and its affiliates that are parties to the same 
covered agreement may file a single consolidated annual report relating 
to the agreement with each relevant supervisory agency for the covered 
agreement.

[[Page 31997]]

    (iii) Content of report. Any consolidated annual report must 
contain all the information required by this paragraph (e). The amounts 
and data required to be reported under paragraphs (e)(1)(iii), (iv), 
and (vi) of this section may be reported on an aggregate basis for all 
covered agreements.
    (f) Time and place of filing--(1) General. Each party must file its 
annual report with each relevant supervisory agency for the covered 
agreement no later than six months following the end of the fiscal year 
covered by the report.
    (2) Alternative method of fulfilling annual reporting requirement 
for a person. (i) A person may fulfill the filing requirements of this 
section by providing the following materials to an insured depository 
institution or affiliate that is a party to the agreement no later than 
five months following the end of the person's fiscal year:
    (A) A copy of the person's annual report required under paragraph 
(d) of this section for the fiscal year; and
    (B) Written instructions that the insured depository institution or 
affiliate promptly forward the annual report to the relevant 
supervisory agency or agencies on behalf of the person.
    (ii) An insured depository institution or affiliate that receives 
an annual report from a person pursuant to paragraph (f)(2)(i) of this 
section must file the report with the relevant supervisory agency or 
agencies on behalf of the person within 30 days.


Sec. 346.6  Release of information under FOIA.

    The FDIC will make covered agreements and annual reports available 
to the public in accordance with the Freedom of Information Act (5 
U.S.C. 552 et seq.) and the FDIC's rules regarding Disclosure of 
Information (12 CFR part 309). A party to a covered agreement may 
request confidential treatment of proprietary and confidential 
information in a covered agreement or an annual report under those 
procedures.


Sec. 346.7  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations. (1) If the FDIC determines that a person has willfully 
failed to comply in a material way with Secs. 346.4 or 346.5, the FDIC 
will notify the person in writing of that determination and provide the 
person a period of 90 days (or such longer period as the FDIC finds to 
be reasonable under the circumstances) to comply.
    (2) If the person does not comply within the time period 
established by the FDIC, the agreement shall thereafter be 
unenforceable by that person by operation of section 48 of the Federal 
Deposit Insurance Act (12 U.S.C. 1831y).
    (3) The FDIC may assist any insured depository institution or 
affiliate that is a party to a covered agreement that is unenforceable 
by a person by operation of section 48 of the Federal Deposit Insurance 
Act (12 U.S.C. 1831y) in identifying a successor to assume the person's 
responsibilities under the agreement.
    (b) Diversion of funds. If a court or other body of competent 
jurisdiction determines that funds or resources received under a 
covered agreement have been diverted contrary to the purposes of the 
covered agreement for an individual's personal financial gain, the FDIC 
may take either or both of the following actions:
    (1) Order the individual to disgorge the diverted funds or 
resources received under the agreement;
    (2) Prohibit the individual from being a party to any covered 
agreement for a period not to exceed 10 years.
    (c) Notice and opportunity to respond. Before making a 
determination under paragraph (a)(1) of this section, or taking any 
action under paragraph (b) of this section, the FDIC will provide 
written notice and an opportunity to present information to the FDIC 
concerning any relevant facts or circumstances relating to the matter.
    (d) Inadvertent or de minimis errors. Inadvertent or de minimis 
errors in annual reports or other documents filed with the FDIC under 
Secs. 346.4 or 346.5 will not subject the reporting party to any 
penalty.
    (e) Enforcement of provisions in covered agreements. No provision 
of this part shall be construed as authorizing the FDIC to enforce the 
provisions of any covered agreement.


Sec. 346.8  Other definitions and rules of construction used in this 
part.

    (a) Affiliate. ``Affiliate'' means:
    (1) Any company that controls, is controlled by, or is under common 
control with another company; and
    (2) For the purpose of determining whether an agreement is a 
covered agreement under Sec. 346.2, an ``affiliate'' includes any 
company that would be under common control or merged with another 
company on consummation of any transaction pending before a federal 
banking agency at the time:
    (i) The parties enter into the agreement; and
    (ii) The person that is a party to the agreement makes a CRA 
contact, as described in Sec. 346.2(b)(2).
    (b) Control. ``Control'' is defined in section 2(a) of the Bank 
Holding Company Act (12 U.S.C. 1841(a)).
    (c) CRA affiliate. A ``CRA affiliate'' of an insured depository 
institution is any company that is an affiliate of an insured 
depository institution to the extent, and only to the extent, that the 
activities of the affiliate were considered by the appropriate Federal 
banking agency when evaluating the CRA performance of the institution 
at its most recent CRA examination.
    (d) CRA public file. For purposes of this part, ``CRA public file'' 
means the public file maintained by an insured depository institution 
and described in 12 CFR 345.43.
    (e) Federal banking agency; appropriate federal banking agency. The 
terms ``federal banking agency'' and ``appropriate federal banking 
agency'' have the same meanings as in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813).
    (f) Fiscal year. (1) The fiscal year for a person that does not 
have a fiscal year shall be the calendar year;
    (2) Any person, insured depository institution, or affiliate that 
has a fiscal year may elect to have the calendar year be its fiscal 
year for purposes of this part.
    (g) Insured depository institution. ``Insured depository 
institution'' has the same meaning as in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813).
    (h) Nongovernmental entity or person--(1) General. A 
``nongovernmental entity or person'' is any partnership, association, 
trust, joint venture, joint stock company, corporation, limited 
liability corporation, company, firm, society, other organization, or 
individual.
    (2) Exclusions. A nongovernmental entity or person does not 
include:
    (i) The United States government, a state government, a unit of 
local government (including a county, city, town, township, parish, 
village, or other general-purpose subdivision of a state) or an Indian 
tribe or tribal organization established under federal, state or Indian 
tribal law (including the Department of Hawaiian Home Lands), or a 
department, agency, or instrumentality of any such entity;
    (ii) A federally-chartered public corporation that receives federal 
funds appropriated specifically for that corporation;
    (iii) An insured depository institution or affiliate of an insured 
depository institution; or
    (iv) An officer, director, employee, or representative (acting in 
his or her capacity as an officer, director,

[[Page 31998]]

employee, or representative) of an entity listed in paragraphs 
(h)(2)(i) through (iii) of this section.
    (i) Party. The term ``party'' with respect to a covered agreement 
means each person and each insured depository institution or affiliate 
that entered into the agreement.
    (j) Person. For purposes of this part, a ``person'' is any 
nongovernmental entity or person.
    (k) Term of agreement. An agreement that does not by its terms 
establish a termination date is considered to terminate on the last 
date on which any party to the agreement makes any payment or provides 
any loan or other resources under the agreement, unless the appropriate 
federal banking agency otherwise notifies each party in writing.

By order of the Board of Directors.

    Federal Deposit Insurance Corporation.
    Dated at Washington, DC, this 10th day of May, 2000.
Robert E. Feldman,
Executive Secretary.

Department of the Treasury

Office of Thrift Supervision

12 CFR Chapter V

Authority and Issuance

    For the reasons set out in the joint preamble, OTS proposes to 
amend Title 12, Chapter V, of the Code of Federal Regulations by adding 
a new part 533 to read as follows:

PART 533--DISCLOSURE AND REPORTING OF CRA-RELATED AGREEMENTS

Sec.
533.1   Purpose and scope of this part.
533.2   Definition of covered agreement.
533.3   Related agreements considered a single agreement.
533.4   Disclosure of covered agreements.
533.5   Annual reports.
533.6   Release of information under FOIA.
533.7   Compliance provisions.
533.8   Other definitions and rules of construction used in this 
part.

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, and 1831y.


Sec. 533.1  Purpose and scope of this part.

    (a) General. This part implements section 711 of the Gramm-Leach-
Bliley Act (12 U.S.C. 1831y). That section requires any nongovernmental 
entity or person, insured depository institution, and affiliate of an 
insured depository institution that enters into a covered agreement 
to--
    (1) Make the covered agreement available to the public and the 
appropriate Federal banking agency; and
    (2) File an annual report with the appropriate Federal banking 
agency concerning the covered agreement.
    (b) The provisions of this part are enforced by OTS with respect to 
savings associations, savings and loan holding companies, and companies 
that are controlled by savings associations or savings and loan holding 
companies.


Sec. 533.2  Definition of covered agreement.

    (a) General definition. A covered agreement is any contract, 
arrangement, or understanding (whether or not legally binding) that 
meets all of the following criteria--
    (1) The agreement is in writing.
    (2) The parties to the agreement include--
    (i) An insured depository institution or an affiliate of an insured 
depository institution; and
    (ii) A nongovernmental entity or person (referred to as a NGEP).
    (3) The agreement provides for the insured depository institution 
or any affiliate to--
    (i) Provide to one or more individuals or entities (whether or not 
parties to the agreement) cash payments, grants, or other consideration 
(except loans) that have an aggregate value of more than $10,000 in any 
calendar year; or
    (ii) Make to one or more individuals or entities (whether or not 
parties to the agreement) loans that have an aggregate principal amount 
of more than $50,000 in any calendar year.
    (4) The agreement is made pursuant to, or in connection with, the 
fulfillment of the Community Reinvestment Act of 1977 (12 U.S.C. 2901 
et seq.) (CRA), as defined in paragraph (c) of this section.
    (b) Agreements that are not covered agreements. (1) Certain loans. 
A covered agreement does not include--
    (i) Any individual mortgage loan; or
    (ii) Any specific contract or commitment for a loan or extension of 
credit to individuals, businesses, farms, or other entities if--
    (A) The funds are loaned at rates not substantially below market 
rates; and
    (B) The purpose of the loan or extension of credit does not include 
any re-lending of the borrowed funds to third parties.
    (2) Agreements where there has not been a CRA contact. (i) General. 
A covered agreement does not include any agreement entered into by an 
insured depository institution or affiliate of an insured depository 
institution with a NGEP who has not commented on, testified about, or 
discussed with the institution, or otherwise contacted the institution, 
concerning the CRA.
    (ii) Examples of CRA contact. The following are examples of CRA 
contacts. These examples are not exclusive and other actions by a NGEP 
may also make the exemption in paragraph (b)(2)(i) of this section 
unavailable. If a NGEP engages in any of the following actions and 
subsequently enters into an agreement with the insured depository 
institution or any affiliate of the institution, the agreement is not 
exempt under paragraph (b)(2)(i) of this section.
    (A) CRA contact with a Federal banking agency. (1) The NGEP submits 
a written comment to a Federal banking agency that discusses the record 
of performance or future performance under the CRA of an insured 
depository institution or any CRA affiliate of the institution.
    (2) The NGEP provides oral testimony or comments to a Federal 
banking agency concerning the record of performance or future 
performance under the CRA of an insured depository institution or any 
CRA affiliate of the institution.
    (B) CRA contact with insured depository institution or affiliate. 
(1) The NGEP has a discussion with, or otherwise contacts, an insured 
depository institution or any affiliate of the institution about 
providing (or refraining from providing) written or oral comments or 
testimony to any Federal banking agency concerning the record of 
performance or future performance under the CRA of the institution or 
any CRA affiliate of the institution.
    (2) The NGEP has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
about providing (or refraining from providing) written comments to the 
institution that must be included in the institution's CRA public file.
    (3) The NGEP has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning the CRA rating of the institution, or the CRA record of 
performance of the institution or any CRA affiliate of the institution.
    (4) The NGEP has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning actions that should be taken to improve the CRA performance 
of the institution or any CRA affiliate of the institution.
    (5) The NGEP has a discussion with, or otherwise contacts, an 
insured depository institution or any affiliate of the institution 
concerning any obligation or responsibility that the institution or any 
CRA affiliate of the institution may have to meet the banking needs of 
its community and the discussion or contact occurs while the

[[Page 31999]]

institution or any affiliate has an application for a deposit facility 
pending at a Federal banking agency or is undergoing a publicly 
announced CRA performance examination.
    (iii) Examples of actions that are not CRA contacts. The following 
are examples of actions that are not CRA contacts. The actions 
described in these examples would not, by themselves, cause the 
exemption in paragraph (b)(2)(i) of this section to be unavailable. 
These examples are not exclusive.
    (A) A NGEP provides comments or testimony concerning an insured 
depository institution or affiliate to a Federal banking agency in 
response to a direct request by the agency for comments or testimony 
from that NGEP. Direct requests for comments or testimony do not 
include a general invitation by a Federal banking agency for comments 
or testimony from the public in connection with a CRA performance 
evaluation of, or application for a deposit facility by, an insured 
depository institution or an application by a company to acquire an 
insured depository institution.
    (B) A NGEP makes a statement concerning an insured depository 
institution or affiliate at a widely attended conference or seminar 
regarding a general topic. A public or private meeting, public hearing, 
or other meeting regarding one or more specific institutions or 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (C) A NGEP sends a similar fundraising letter to insured depository 
institutions and to other businesses in its community. The letter 
encourages all businesses in the community to meet their obligation to 
assist in making the local community a better place to live and work.
    (D) A NGEP sends a general offering circular to financial 
institutions offering to sell a portfolio of loans. An insured 
depository institution that receives the offering circular discusses 
with the NGEP whether the loans are in the institution's local 
community. No reference to the CRA or the institution's CRA performance 
is made in the offering circular or in the discussions of the parties.
    (c) Fulfillment of the CRA. (1) General. Fulfillment of the CRA 
means the list of factors that the Federal banking agencies have 
determined have a material impact on an agency's decision--
    (i) To approve or disapprove an application for a deposit facility 
(as defined in section 803 of the CRA (12 U.S.C. 2902)); or (ii) To 
assign a rating to an insured depository institution under section 807 
of the CRA (12 U.S.C. 2906).
    (2) List of factors. The list of factors referred to in paragraph 
(c)(1) of this section means the performance of any of the following 
activities by an insured depository institution or CRA affiliate that 
is a party to the agreement or that is an affiliate of a party to the 
agreement or by any NGEP that is a party to the agreement--
    (i) Providing or refraining from providing written or oral comments 
or testimony to any Federal banking agency concerning the record of 
performance or future performance under the CRA of an insured 
depository institution or CRA affiliate that is a party to the 
agreement or an affiliate of a party to the agreement or written 
comments that are required to be included in the CRA public file of any 
such insured depository institution;
    (ii) Home-purchase, home-improvement, small business, small farm, 
community development, and consumer lending, as described in 
Sec. 563e.22 of this chapter, including loan purchases, loan 
commitments, and letters of credit;
    (iii) Making investments, deposits, or grants, or acquiring 
membership shares, that have as their primary purpose community 
development, as described in Sec. 563e.23 of this chapter;
    (iv) Delivering retail banking services, as described in 
Sec. 563e.24(d) of this chapter;
    (v) Providing community development services, as described in 
Sec. 563e.24(e) of this chapter;
    (vi) In the case of a wholesale or limited-purpose insured 
depository institution, community development lending, including 
originating and purchasing loans and making loan commitments and 
letters of credit, making qualified investments, or providing community 
development services, as described in Sec. 563e.25(c) of this chapter;
    (vii) In the case of a small insured depository institution, any 
lending or other activity described in Sec. 563e.26(a) of this chapter; 
or
    (viii) In the case of an insured depository institution that is 
evaluated on the basis of a strategic plan, any element of the 
strategic plan, as described in Sec. 563e.27(f) of this chapter.
    (d) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns the performance of any activity of a CRA 
affiliate described in paragraph (c) of this section must notify each 
NGEP that is a party to the agreement that the agreement concerns a CRA 
affiliate. The insured depository institution or affiliate must provide 
this notice prior to the time the agreement is entered into if the 
affiliate is a CRA affiliate at that time, or within a reasonable time 
after the affiliate becomes a CRA affiliate if the affiliate is not a 
CRA affiliate at the time the agreement is entered into.
    (e) Disclosure and reporting of certain existing agreements that 
become covered agreements. An agreement that concerns the performance 
of any activity described in paragraph (c) of this section by an 
affiliate may become a covered agreement after it is entered into if 
the affiliate subsequently becomes a CRA affiliate. In that event, the 
disclosure and reporting obligations under Secs. 533.4 and 533.5 begin 
on the date that the agreement becomes a covered agreement and do not 
apply to the period prior to that date.


Sec. 533.3  Related agreements considered a single agreement.

    The following rules must be applied in determining whether a 
written contract, arrangement, or understanding is a covered agreement 
under Sec. 533.2.
    (a) Contracts, arrangements, or understandings entered into by same 
parties. All written contracts, arrangements, or understandings to 
which an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement if the contracts, arrangements, or understandings--
    (1) Are entered into with the same NGEP;
    (2) Were entered into within the same 12-month period; and
    (3) Are each in fulfillment of the CRA.
    (b) Substantively related contracts. All written contracts to which 
an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement, without regard to whether the other parties to the contracts 
are the same or whether each such contract is in fulfillment of the 
CRA, if the contracts were negotiated in a coordinated fashion and a 
NGEP is a party to each contract.


Sec. 533.4  Disclosure of covered agreements.

    (a) Effective date. This section applies only to covered agreements 
entered into after November 12, 1999.
    (b) Disclosure of covered agreements to the public. (1) Disclosure 
required. (i) Each NGEP and each insured depository institution or 
affiliate that enters into a covered agreement must make a complete 
copy of the covered agreement available to any individual or entity 
upon request.

[[Page 32000]]

    (ii) In disclosing a covered agreement to the public under 
paragraph (b)(1)(i) of this section, a NGEP, insured depository 
institution, or affiliate may withhold from disclosure only those 
portions of an agreement that the relevant supervisory agency 
determines are exempt from disclosure under the Freedom of Information 
Act (5 U.S.C. 552 et seq.).
    (2) Duration of obligation. The obligation to disclose a covered 
agreement terminates 12 months after the end of the term of the 
agreement.
    (3) Reasonable copy and mailing fees. Each NGEP and each insured 
depository institution or affiliate may charge an individual or entity 
that requests a copy of a covered agreement a reasonable fee not to 
exceed the cost of copying and mailing the agreement.
    (4) Use of CRA public file by insured depository institution. An 
insured depository institution may fulfill its obligation under this 
paragraph (b) by placing a copy of the covered agreement in the insured 
depository institution's CRA public file and making the agreement 
available in accordance with the procedures set forth in Sec. 563e.43 
of this chapter.
    (c) Disclosure of covered agreements to the relevant supervisory 
agency. (1) Disclosure by NGEP. Each NGEP that is a party to a covered 
agreement must provide a complete copy of the agreement to the relevant 
supervisory agency within 30 days of receiving a request from the 
agency for the agreement. This obligation terminates 12 months after 
the end of the term of the covered agreement.
    (2) Disclosure by insured depository institution or affiliate. (i) 
Filing with the relevant supervisory agency. Each insured depository 
institution or affiliate that is a party to a covered agreement must 
provide a copy of the agreement to each relevant supervisory agency 
within 30 days after the date the insured depository institution or 
affiliate enters into the agreement.
    (ii) Joint filings. In the event that two or more insured 
depository institutions or affiliates are parties to a covered 
agreement, the insured depository institution(s) and affiliate(s) may 
jointly file a copy of the covered agreement with each relevant 
supervisory agency. Any joint filing must identify the insured 
depository institution(s) and affiliate(s) for whom the covered 
agreement is being filed.
    (d) Relevant supervisory agency. For purposes of this section and 
Sec. 533.5, the relevant supervisory agency for a covered agreement 
means the appropriate Federal banking agency for--
    (1) Each insured depository institution (or subsidiary thereof) 
that is a party to the covered agreement;
    (2) Each insured depository institution (or subsidiary thereof) or 
CRA affiliate that makes payments or loans or provides services that 
are subject to the covered agreement; and
    (3) Any company (other than an insured depository institution or 
subsidiary thereof) that is a party to the covered agreement.


Sec. 533.5  Annual reports.

    (a) Effective date. This section applies only to covered agreements 
entered into on or after May 12, 2000.
    (b) Annual report required. Each NGEP and each insured depository 
institution or affiliate that is a party to a covered agreement must 
file an annual report with each relevant supervisory agency concerning 
the disbursement, receipt, and uses of funds or other resources under 
the covered agreement.
    (c) Duration of reporting requirement. (1) General. An annual 
report under this section must be filed with each relevant supervisory 
agency for--
    (i) The fiscal year in which the parties enter into the covered 
agreement; and (ii) Each fiscal year during the term of the covered 
agreement.
    (2) Exception for NGEP that has not received any funds or 
resources. A NGEP is not required to file an annual report for a 
covered agreement for any fiscal year during the term of the agreement 
in which the NGEP did not receive any funds or other resources under 
the agreement.
    (d) Annual reports filed by NGEP. (1) General. The annual report 
filed by a NGEP under this section must include the following--
    (i) The name and mailing address of the NGEP filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The amount of funds or resources received under the covered 
agreement during the fiscal year; and
    (iv) The information required by paragraphs (d)(2) and (d)(3) of 
this section concerning the use of funds received under the covered 
agreement.
    (2) Reporting for funds or resources allocated and used for a 
specific purpose. For funds or other resources that the NGEP received 
during the fiscal year under the covered agreement and allocated and 
used for a specific purpose during the fiscal year, the annual report 
must--
    (i) Describe each specific purpose for which the funds or resources 
were used during the fiscal year; and
    (ii) State the amount of funds or resources used during the fiscal 
year for each specific purpose.
    (3) Reporting for funds or resources used for other purposes. For 
all funds or resources that the NGEP received during the fiscal year 
under the covered agreement and did not use for a specific purpose, the 
annual report must--
    (i) State the amount received during the fiscal year; and
    (ii) Provide a detailed, itemized list of how the funds or 
resources were used during the fiscal year, including the total amount 
used for--
    (A) Compensation of officers, directors, and employees;
    (B) Administrative expenses;
    (C) Travel expenses;
    (D) Entertainment expenses;
    (E) Payment of consulting and professional fees; and
    (F) Other expenses or uses.
    (4) Use of other reports. The annual report filed by a NGEP may 
consist of, or incorporate, a report prepared for any other purpose, 
such as an Internal Revenue Service form, a state tax form, a report to 
members or shareholders, financial statements, or other report, so long 
as the annual report contains all of the information required by this 
paragraph (d).
    (5) Consolidated reports permitted. A NGEP that is a party to five 
or more covered agreements may file with each relevant supervisory 
agency a single consolidated annual report covering all the covered 
agreements. Any consolidated report must contain all the information 
required by this paragraph (d). The information required to be reported 
under paragraphs (d)(1)(iii), (d)(2), and (d)(3) of this section may be 
reported on an aggregate basis for all covered agreements.
    (e) Annual report filed by insured depository institution or 
affiliate. (1) General. The annual report filed by an insured 
depository institution or affiliate must include the following--
    (i) The name and principal place of business of the insured 
depository institution or affiliate filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans provided by the insured depository 
institution or affiliate under the covered agreement to

[[Page 32001]]

any other party to the agreement during the fiscal year;
    (iv) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans received by the insured depository 
institution or affiliate under the covered agreement from any other 
party to the agreement during the fiscal year;
    (v) A general description of the terms and conditions of any 
payments, fees, or loans reported under paragraphs (e)(1)(iii) and 
(e)(1)(iv) of this section, or, in the event such terms and conditions 
are set forth--
    (A) In the covered agreement, a statement identifying the covered 
agreement and the date the agreement was filed with the relevant 
supervisory agency; or
    (B) In a previous annual report filed by the insured depository 
institution or affiliate, a statement identifying the date the report 
was filed with the relevant supervisory agency; and
    (vi) The aggregate amount and number of loans, aggregate amount and 
number of investments, and aggregate amount of services provided under 
the covered agreement to any individual or entity not a party to the 
agreement--
    (A) By the insured depository institution or affiliate during its 
fiscal year; and
    (B) By any other party to the agreement, unless such information is 
not known to the insured depository institution or affiliate filing the 
report or such information is or will be contained in the annual report 
filed by a NGEP under paragraph (d) of this section.
    (2) Consolidated reports permitted. (i) Party to large number of 
agreements. An insured depository institution or affiliate that is a 
party to five or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency covering all the 
covered agreements.
    (ii) Affiliated entities party to the same agreement. An insured 
depository institution and its affiliates that are parties to the same 
covered agreement may file a single consolidated annual report relating 
to the agreement with each relevant supervisory agency for the covered 
agreement.
    (iii) Content of report. Any consolidated annual report must 
contain all the information required by this paragraph (e). The amounts 
and data required to be reported under paragraphs (e)(1)(iii), 
(e)(1)(iv), and (e)(1)(vi) of this section may be reported on an 
aggregate basis for all covered agreements.
    (f) Time and place of filing. (1) General. Each party must file its 
annual report with each relevant supervisory agency for the covered 
agreement no later than six months following the end of the fiscal year 
covered by the report.
    (2) Alternative method of fulfilling annual reporting requirement 
for a NGEP. (i) A NGEP may fulfill the filing requirements of this 
section by providing the following materials to an insured depository 
institution or affiliate that is a party to the agreement no later than 
five months following the end of the NGEP's fiscal year--
    (A) A copy of the NGEP's annual report required under paragraph (d) 
of this section for the fiscal year; and
    (B) Written instructions that the insured depository institution or 
affiliate promptly forward the annual report to the relevant 
supervisory agency or agencies on behalf of the NGEP.
    (ii) An insured depository institution or affiliate that receives 
an annual report from a NGEP pursuant to paragraph (f)(2)(i) of this 
section must file the report with the relevant supervisory agency or 
agencies on behalf of the NGEP within 30 days.


Sec. 533.6  Release of information under FOIA.

    OTS will make covered agreements and annual reports available to 
the public in accordance with the Freedom of Information Act (5 U.S.C. 
552 et seq.), OTS's rules (part 505 of this chapter), and the 
Department of Treasury's rules (31 CFR part 1). A party to a covered 
agreement may request confidential treatment of proprietary and 
confidential information in a covered agreement or an annual report 
under those procedures.


Sec. 533.7  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations. (1) If OTS determines that a NGEP has willfully failed to 
comply in a material way with Secs. 533.4 or 533.5, OTS will notify the 
NGEP in writing of that determination and provide the NGEP a period of 
90 days (or such longer period as OTS finds to be reasonable under the 
circumstances) to comply.
    (2) If the NGEP does not comply within the time period established 
by OTS, the agreement shall thereafter be unenforceable by that NGEP by 
operation of section 48 of the Federal Deposit Insurance Act (12 U.S.C. 
1831y).
    (3) OTS may assist any insured depository institution or affiliate 
that is a party to a covered agreement that is unenforceable by a NGEP 
by operation of section 48 of the Federal Deposit Insurance Act (12 
U.S.C. 1831y) in identifying a successor to assume the NGEP's 
responsibilities under the agreement.
    (b) Diversion of funds. If a court or other body of competent 
jurisdiction determines that funds or resources received under a 
covered agreement have been diverted contrary to the purposes of the 
covered agreement for an individual's personal financial gain, OTS may 
take either or both of the following actions--
    (1) Order the individual to disgorge the diverted funds or 
resources received under the agreement;
    (2) Prohibit the individual from being a party to any covered 
agreement for a period not to exceed 10 years.
    (c) Notice and opportunity to respond. Before making a 
determination under paragraph (a)(1) of this section, or taking any 
action under paragraph (b) of this section, OTS will provide written 
notice and an opportunity to present information to OTS concerning any 
relevant facts or circumstances relating to the matter.
    (d) Inadvertent or de minimis errors. Inadvertent or de minimis 
errors in annual reports or other documents filed with OTS under 
Secs. 533.4 or 533.5 will not subject the reporting party to any 
penalty.
    (e) Enforcement of provisions in covered agreements. No provision 
of this part shall be construed as authorizing OTS to enforce the 
provisions of any covered agreement.


Sec. 533.8  Other definitions and rules of construction used in this 
part.

    (a) Affiliate. Affiliate means--
    (1) Any company that controls, is controlled by, or is under common 
control with another company; and
    (2) For the purpose of determining whether an agreement is a 
covered agreement under Sec. 533.2, an affiliate includes any company 
that would be under common control or merged with another company on 
consummation of any transaction pending before a Federal banking agency 
at the time--
    (i) The parties enter into the agreement; and
    (ii) The NGEP that is a party to the agreement makes a CRA contact, 
as described in Sec. 533.2(b)(2).
    (b) Control. Control is defined in section 2(a) of the Bank Holding 
Company Act (12 U.S.C. 1841(a)).
    (c) CRA affiliate. A CRA affiliate of an insured depository 
institution is any company that is an affiliate of an insured 
depository institution to the extent, and only to the extent, that the 
activities of the affiliate were considered by the appropriate Federal 
banking agency when evaluating the CRA performance of the institution 
at its most recent CRA examination.

[[Page 32002]]

    (d) CRA public file. For purposes of this part, CRA public file 
means the public file maintained by an insured depository institution 
and described in Sec. 563e.43 of this chapter.
    (e) Federal banking agency; appropriate Federal banking agency. The 
terms Federal banking agency and appropriate Federal banking agency 
have the same meanings as in section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813).
    (f) Fiscal year. (1) The fiscal year for a NGEP that does not have 
a fiscal year shall be the calendar year;
    (2) Any NGEP, insured depository institution, or affiliate that has 
a fiscal year may elect to have the calendar year be its fiscal year 
for purposes of this part.
    (g) Insured depository institution. Insured depository institution 
has the same meaning as in section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813).
    (h) Nongovernmental entity or person. (1) General. A 
nongovernmental entity or person or NGEP is any partnership, 
association, trust, joint venture, joint stock company, corporation, 
limited liability corporation, company, firm, society, other 
organization, or individual.
    (2) Exclusions. A nongovernmental entity or person does not 
include--
    (i) The United States government, a state government, a unit of 
local government (including a county, city, town, township, parish, 
village, or other general-purpose subdivision of a state) or an Indian 
tribe or tribal organization established under Federal, state or Indian 
tribal law (including the Department of Hawaiian Home Lands), or a 
department, agency, or instrumentality of any such entity;
    (ii) A federally-chartered public corporation that receives federal 
funds appropriated specifically for that corporation;
    (iii) An insured depository institution or affiliate of an insured 
depository institution; or
    (iv) An officer, director, employee, or representative (acting in 
his or her capacity as an officer, director, employee, or 
representative) of an entity listed in paragraphs (h)(2)(i), 
(h)(2)(ii), or (h)(2)(iii) of this section.
    (i) Party. The term party with respect to a covered agreement means 
each NGEP and each insured depository institution or affiliate that 
entered into the agreement.
    (j) Term of agreement. An agreement that does not by its terms 
establish a termination date is considered to terminate on the last 
date on which any party to the agreement makes any payment or provides 
any loan or other resources under the agreement, unless the appropriate 
Federal banking agency otherwise notifies each party in writing.

    Dated: May 10, 2000.

    By the Office of Thrift Supervision.
Ellen Seidman,
Director.
[FR Doc. 00-12337 Filed 5-18-00; 8:45 am]
BILLING CODE 4810-33-U; 6210-01-U; 6714-01-U; 6720-01-U


Last Updated 06/01/2000 communications@fdic.gov