Home > Regulation & Examinations > Laws & Regulations > FDIC Federal Register Citations




FDIC Federal Register Citations

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]]

-----------------------------------------------------------------------

Part II

Department of the Treasury




-----------------------------------------------------------------------


Office of the Comptroller of the Currency


Office of the Thrift Supervision


-----------------------------------------------------------------------




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]]

=======================================================================
-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\1\ 12 U.S.C. 2901 et seq.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\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).
---------------------------------------------------------------------------

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

[[Page 31964]]

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.
---------------------------------------------------------------------------

\3\ The OTS rule, however, refers to a ``nongovernmental entity
or person'' as a ``NGEP.''
---------------------------------------------------------------------------

The following description applies to each agency's proposed rule.
Since the

[[Page 31965]]

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:
<bullet> The agreement is in writing;
<bullet> 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;
<bullet> The parties to the agreement include (1) an insured
depository institution or an affiliate of an insured depository
institution, and (2) a person; and
<bullet> 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.
---------------------------------------------------------------------------

\4\ 12 U.S.C. 1831y(e)(1)(B)(ii).
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\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--
<bullet> 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;
<bullet> 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;
<bullet> 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
<bullet> 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--
<bullet> Compensation of officers, directors, and employees;
<bullet> Administrative expenses;
<bullet> Travel expenses;
<bullet> Entertainment expenses;
<bullet> Payment of consulting and professional fees; and
<bullet> 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).
---------------------------------------------------------------------------

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:
<bullet> 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?
<bullet> 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?
<bullet> 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?
<bullet> Should the agencies permit a person to file a consolidated
annual report if the person is a party to 2 or more covered agreements?
<bullet> 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?
<bullet> 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--

<bullet> 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;
<bullet> 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;
<bullet> A description of the terms and conditions of any payments,
fees, or loans provided to, or received from, another party under the
agreement; and
<bullet> 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\
---------------------------------------------------------------------------

\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\
---------------------------------------------------------------------------

\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:
<bullet> 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;
<bullet> Not mandate any particular method for disclosing the
agreement to the public;
<bullet> Allow each party to charge reasonable copying and mailing
fees when it discloses an agreement to the public;
<bullet> 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;
<bullet> Require a person to provide a copy to the relevant
supervisory agencies only if the agency requests a copy; and
<bullet> 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:
<bullet> Not mandate any particular form for the annual report;
<bullet> Allow each party to report on its own fiscal year basis;
<bullet> Exempt a person from filing a report for a fiscal year if
the person does not receive any funds or resources during that year;
<bullet> Provide simplified reporting procedures for persons that
allocate and use funds or other resources under a covered agreement for
a specific purpose;
<bullet> Allow a person's report to consist of, or incorporate,
reports prepared for other purposes, such as tax forms and financial
statements;
<bullet> 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;
<bullet> Allow a savings association and its affiliates that are
parties to the same covered agreement to file a single consolidated
report; and
<bullet> 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]]

<bullet> 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);
<bullet> Simplifying the procedures for parties to delete
proprietary and confidential information;
<bullet> 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
<bullet> 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 05/19/2000 regs@fdic.gov