FDIC Federal Register Citations

[Federal Register: June 16, 2003 (Volume 68, Number 115)]

[Proposed Rules]

[Page 35589-35612]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr16jn03-15]

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Office of the Comptroller of the Currency

12 CFR Chap. I

[Docket No. 03-10]

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

12 CFR Chap. II

[Docket No. R-1151]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Chap. III

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Chap. V

[No. 2003-20]

Regulatory Publication and Review Under the Economic Growth and Regulatory Paperwork

Reduction Act of 1996

AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury;

Board of Governors of the Federal Reserve System (Board); Federal

Deposit Insurance Corporation (FDIC); and Office of Thrift Supervision

(OTS), Treasury.

ACTION: Notice of regulatory review; request for comments.

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SUMMARY: The OCC, Board, FDIC, and OTS (``we'' or ``the Agencies'') are

beginning a review of our regulations to reduce burden imposed on

insured depository institutions, as required by section 2222 of the

Economic Growth and Regulatory Paperwork Reduction Act of 1996. We have

categorized our regulations for the purpose of the review and propose

to publish 12 categories of regulations for review between now and

2006. The categories, and the regulations that the Agencies consider to

be part of those categories, are detailed below. This review presents a

significant opportunity to consider the possibilities for burden

reduction among groups of similar regulations. We welcome comment on

the categories, the order of review, and all other aspects of the

project in order to maximize its effectiveness.

Today, we are publishing our first in a series of public releases,

comprising three of the categories--``Applications and Reporting,''

``Powers and Activities,'' and ``International Operations''--for public

comment so as to identify outdated, unnecessary, or unduly burdensome

regulatory requirements imposed on insured depository institutions.

Since we will publish a series of releases containing requests for

comment on the remaining categories, it is not recommended that burden

reduction comments be submitted now for any regulations in other

categories.

DATES: Written comments must be received no later than September 15, 2003.

ADDRESSES: Due to delays in paper mail delivery in the Washington area,

commenters may prefer to submit their comments by alternate means.

Comments should be directed to:

OCC: Public Information Room, Office of the Comptroller of the

Currency, 250 E Street, SW., Mailstop 1-5, Washington, DC 20219,

Attention: Docket No. 03-10. Comments will be available for public

inspection and photocopying at the same location. You can make an

appointment to inspect the comments by calling (202) 874-5043.

Facsimiles: Send facsimile transmissions to FAX Number (202) 874-4448.

E-mail: Send e-mails to regs.comments@occ.treas.gov.

Board: Comments should refer to Docket No. R-1151 and should be mailed

to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the

Federal Reserve System, 20th Street and Constitution Avenue, NW.,

Washington, DC 20551, or mailed electronically to

regs.comments@federalreserve.gov.

Members of the public may inspect comments in Room MP-500 of the Martin Building between

9 a.m. and 5 p.m. on weekdays in accordance with the Board's Rules Regarding

Availability of Information, 12 CFR part 261.

FDIC: Mail: Written comments should be addressed to Robert E. Feldman,

Executive Secretary, Attention: Comments, Federal Deposit Insurance

Corporation, 550 17th Street, NW., Washington, DC 20429. Delivery:

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. You also may

[[Page 35590]]

electronically mail comments to comments@fdic.gov. Public Inspection:

Comments may be inspected and photocopied in the FDIC Public

Information Center, Room 100, 801 17th Street, NW., Washington, DC

20429, between 9 a.m. and 4:30 p.m. on business days.

OTS: Mail: Send comments to Regulation Comments, Chief Counsel's

Office, Office of Thrift Supervision, 1700 G Street, NW., Washington,

DC 20552, Attention: No.2003-20. Delivery: Hand deliver comments to the

Guard's Desk, East Lobby Entrance, 1700 G Street, NW., from 9 a.m. to 4

p.m. on business days, Attention: Regulation Comments, Chief Counsel's

Office, Attention: No. 2003-20. Facsimiles: Send facsimile

transmissions to FAX Number (202) 906--6518, Attention: No. 2003-20. E-

Mail: Send e-mails to regs.comments@ots.treas.gov, Attention: No. 2003-

20 and include your name and telephone number. Availability of

Comments: OTS will post comments and the related index on the OTS

Internet site at www.ots.treas.gov. In addition, you may inspect

comments at the Public Reading Room, 1700 G Street, NW., by

appointment. To make an appointment for access, call (202) 906-5922,

send an e-mail to public.info@ots.treas.gov, or send a facsimile

transmission to (202) 906-7755. (Please identify the material you would

like to inspect to assist us in serving you.)

FOR FURTHER INFORMATION CONTACT:

OCC: Mark Tenhundfeld, Assistant Director, Legislative and Regulatory

Activities Division, (202) 874-5090; Lee Walzer, Counsel, Legislative

and Regulatory Activities Division, (202) 874-5090, Office of the

Comptroller of the Currency, 250 E St., SW., Washington, DC 20219.

Board: Patricia A. Robinson, Senior Counsel, Legal Division, (202) 452-

3005; Michael J. O'Rourke, Counsel, Legal Division, (202) 452-3288;

David G. Adkins, Supervisory Financial Analyst, Division of Banking

Supervision and Regulation, (202) 452-5259; Federal Reserve Board, 20th

St. and Constitution Ave., NW., Washington, DC 20551.

FDIC: Claude A. Rollin, Special Assistant to the Vice Chairman, (202)

898-8741; Steven D. Fritts, Associate Director, Division of Supervision

and Consumer Protection, (202) 898-3723; Ruth R. Amberg, Senior

Counsel, Legal Division, (202) 898-3736; Thomas Nixon, Senior Attorney,

Legal Division, (202) 898-8766; Federal Deposit Insurance Corporation,

550 17th St., NW., Washington, DC 20429.

OTS: Robyn Dennis, Manager, Thrift Policy, Supervision Policy (202)

906-5751; Karen Osterloh, Special Counsel, Regulations and Legislation

Division, Chief Counsel's Office, (202) 906-6639; Office of Thrift

Supervision, 1700 G Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Introduction

Congress enacted section 2222 of the Economic Growth and Regulatory

Paperwork Reduction Act of 1996 (Pub. L. 104-208, Sept. 30, 1996)

(EGRPRA), as part of an effort to minimize unnecessary government

regulation consistent with safety and soundness, consumer protection,

and other public policy goals. Under section 2222, 12 U.S.C. 3311, the

Agencies,\1\ jointly or individually, must categorize regulations by

type, such as ``consumer regulations'' or ``safety and soundness''

regulations. Once we have established the categories, we must provide

notice and ask for public comment on them. In particular, section 2222

requires that we ask the public to identify areas of the regulations

that are outdated, unnecessary, or unduly burdensome. The Agencies must

issue these publications for comment at regular intervals such that all

of the Agencies' categories of regulations are published for such

comment within a 10 year cycle. The first publication cycle will end in

September 2006. The EGRPRA review supplements and complements the

reviews of regulations that the Agencies conduct under other laws and

their internal policies.

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\1\ The National Credit Union Administration (NCUA) has

participated in the EGRPRA planning process and will separately

issue a request for comment. Since the Federal Financial

Institutions Examination Council (FFIEC) has not issued regulations

that impose burden on insured institutions, we have not separately

captioned the FFIEC in this notice.

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Section 2222 requires a two-part regulatory response. First, the

Agencies must publish in the Federal Register a summary of the comments

received, identifying the significant issues raised and discussing

those issues. Second, the Agencies must ``eliminate unnecessary

regulations to the extent that such action is appropriate.'' The

Agencies may prepare the regulatory response individually or jointly.

Section 2222 further requires the FFIEC to submit a report to the

Congress within 30 days after the Agencies publish the comment summary

and discussion in the Federal Register. This report must summarize any

significant issues raised by the public comments and the relative

merits of those issues. The report also must analyze whether the

appropriate Federal banking agency involved is able to address the

regulatory burdens associated with the issues by regulation, or whether

the burdens must be addressed by legislation.

II. The EGRPRA Review's Special Focus

The regulatory review required by section 2222 provides a

significant opportunity for the public and the Agencies to step back

and look at groups of related regulations and identify possibilities

for streamlining. The EGRPRA review's overall focus on the `forest' of

regulations will, we hope, offer a new perspective in identifying

opportunities to reduce regulatory burden. Of course, reducing

regulatory burden must be consistent with ensuring the continued safety

and soundness of insured depository institutions and appropriate

consumer protections.

EGRPRA also recognizes that burden reduction must be consistent

with our statutory mandates, many of which currently require certain

regulations. One of the significant aspects of the EGRPRA review

program is the recognition that effective burden reduction in certain

areas may require legislative change. We will be soliciting comment on,

and reviewing the comments and regulations carefully for, the

relationship among burden reduction, regulatory requirements, and

statutory mandates. This will be a key aspect of the FFIEC report to

the Congress.\2\

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\2\ Institutions are also subject to regulations issued by other

non-banking agencies, such as rules issued by the Department of

Housing and Urban Development (under Real Estate Settlement

Procedures Act of 1974) and by the Department of the Treasury (under

the Bank Secrecy Act including rules required by the USA PATRIOT

Act). The rules of these other agencies are beyond the scope of the

EGRPRA review and the Agencies' jurisdictions. To the extent the

Agencies receive comments raising significant issues regarding these

related rules, however, we intend to identify the issues in the

Report to Congress and will also notify the related agencies of the

substance of the relevant comments.

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The combination of considering the relationship of regulatory and

statutory change on regulatory burden with the section 2222 requirement

for grouping regulations by type provides the possibility for

particularly effective burden reduction. It may be possible to identify

statutes and regulations that share similar goals or complementary

methods such that the regulatory requirements could be combined and

overlapping requirements could be

[[Page 35591]]

eliminated. For example, it may be possible to combine certain types of

applications to eliminate duplication.

The EGRPRA review will complement the review to reduce burden and

to increase uniformity of regulations among the Agencies, pursuant to

section 303 of the Riegle Community Development and Regulatory

Improvement Act of 1994 (Pub. L. 103-325, Sept. 23, 1994, 12 U.S.C.

4803) (CDRI). The Agencies' section 2222 review will continue to try to

eliminate inconsistencies among their regulations, although complete

uniformity is not possible in light of differences in the types of

regulated entities and the statutes that apply to them.

The EGRPRA review can also significantly contribute to the

Agencies' ongoing efforts to reduce regulatory burden. For example,

since 1979, a formally adopted Federal Reserve policy has required the

Board to review each of its regulations at least once every five years

with a view toward eliminating, simplifying, or otherwise easing the

burden of each regulation.\3\ The FDIC has a similar requirement,

described in its policy ``Development and Review of FDIC Regulations

and Policies.'' \4\ See also: FDIC Chairman Powell's initiative

``Reducing Regulatory Burden'' at http://www.fdic.gov. Under OCC

policy in effect since the OCC undertook a comprehensive review of all

of its regulations to reduce regulatory burden in the mid-1990s, the

agency's regulation-writing process has sought to eliminate

``regulatory requirements that are not necessary to ensure the safety

and soundness of national banks, to support consumers' access to

financial services, or to accomplish other aspects of the OCC's

regulatory mission.'' \5\ See also, ``Remarks by John D. Hawke, Jr.,

Comptroller of the Currency, Before the Independent Community Bankers

of America, Orlando, Florida, March 4, 2003'' at http://www.occ.treas.gov/ftp/release/2003-17a.pdf.

Since the early 1990s OTS

has worked to reduce regulatory burden through various regulatory

review projects as well as Thrift Financial Report changes and

revisions to Applications forms. OTS strives to produce risk-focused,

efficient, and proactive regulations. OTS also, whenever possible,

tailors its regulations to risks posed by particular institutions and

writes its regulations and guidance in plain language.

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\3\ Board Statement of Policy Regarding Expanded Rulemaking

Procedures, 44 FR 3957, Jan. 19, 1979.

\4\ FDIC Law, Regulations and Related Acts, pp. 5057-5058.

\5\ OCC Bulletin 97-8 (January 7, 1997). Moreover, the OCC

recognizes that a ``one-size-fits-all'' approach to regulation can

be ineffective and burdensome, and tailors its regulations

accordingly, taking into account factors such as the size of an

institution. Id.

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Further, the Agencies address the issue of regulatory burden every

time they propose and adopt a rule. Under the Paperwork Reduction Act

of 1995 (44 U.S.C. 3501 et seq.), the Regulatory Flexibility Act (5

U.S.C. 601 et seq.) and internal agency policies, the Agencies examine

each rulemaking to minimize the burdens it might impose on the industry

and consider various alternatives.\6\

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\6\ The OCC and OTS also review regulations pursuant to

Executive Order 12866 and the Unfunded Mandates Reform Act of 1995

(Pub. L. 104-4).

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The Agencies also will use both the EGRPRA review and the

individual reviews to identify and reduce burdens on small

institutions. More than half of insured depository institutions are

small--having $150 million in assets or less--as defined by the Small

Business Administration. We are particularly concerned about burden on

small institutions. When a new regulation is created or an old

regulation is changed, small institutions must devote a large

percentage of their staffs' time to review the regulation to determine

if and how it will affect them. Compliance with a regulation also can

take large amounts of time that cannot be devoted to serving customers

or business planning. In a large institution, ensuring regulatory

compliance can take many more hours; however, those hours make up a

much smaller percentage of the institution's resources. In situations

where a regulation is aimed at an activity engaged in primarily by

large institutions, the compliance burden on small institutions can

outweigh its benefit.

Section 610 of the Regulatory Flexibility Act imposes a continuing

requirement on agencies to review regulations that may have a

significant economic impact on a substantial number of small entities,

within 10 years after a final rulemaking is published. Although not all

of the Agencies' rules must be reviewed pursuant to section 610, the

Agencies are undertaking to review rules to the extent possible under

the section 610 review criteria because of the importance of burden

reduction to the many small institutions we regulate.

III. The Agencies' Proposed Plan

The Agencies must categorize their regulations by type. Section

2222 gives us authority to determine categories, and suggests two

possible categories: ``consumer regulations'' and ``safety and

soundness.'' The Agencies have regulations on more than 100 subjects

covering a wide variety of topics from capital maintenance to the

privacy of consumer financial information. Some of these regulations

have been issued jointly and are as uniform as possible. Others were

issued separately by the Agencies but implement common statutes or

policies. These rules are listed as interagency rules to facilitate

comparisons. Some regulations are issued by a single agency but are

applicable to all types of insured institutions, such as the Board's

Equal Credit Opportunity regulation or the FDIC's Deposit Insurance

regulation. Other regulations are issued by a single agency and have

more limited applicability. These rules are listed under the name of

the issuing agency.

The Agencies propose to seek public comment on 12 categories of

their regulations that impose burden on insured institutions between

now and 2006.\7\ The categories, in alphabetical order, are:

Applications and Reporting; Banking Operations; Capital; Community

Reinvestment Act; Consumer Protection; Directors, Officers and

Employees; International Operations; Money Laundering; Powers and

Activities; Rules of Procedure; Safety and Soundness; and Securities.

We believe that these categories are logical groupings that are not so

broad that the number of regulations presented in any one category

would overwhelm potential commenters. The categories also reflect

recognized areas of industry interest and specialization, or are

particularly critical to the health of the banking system. We recognize

that our regulations could be categorized in other ways and welcome

recommendations about the categories and the regulations placed within

them.

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7\\ Consistent with section 2222's focus on reducing burden on

insured institutions, the Agencies' EGRPRA review will not involve

their internal organizational or operational regulations to the

extent that those regulations impose no, or minimal, burden on

insured institutions.

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Although joint publication is not required by section 2222, the

Agencies believe that joint publication of the regulation categories

for public comment will be the most effective method for achieving

EGRPRA's burden reduction goals. Joint publication and review also will

help maintain the uniformity of regulations among the Agencies where

possible. We are publishing three categories of rules for burden

reduction comment today and plan to publish the remaining nine

categories in roughly semiannual intervals, with 90-day comment periods

for categories under review, throughout

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the review period. We welcome recommendations on grouping the remaining

categories and the order in which to publish them.

After the conclusion of the comment period for each EGRPRA review

notice published in the Federal Register, the Agencies will review the

comments we have received and decide whether further action is

appropriate with respect to the categories of regulations included in

that notice. That decision will be made by the Agencies jointly in the

case of rules that we have issued jointly. Any rulemaking to amend or

revise those rules would similarly be undertaken jointly and the public

will be provided with an opportunity to comment on any proposed

amendment. This interagency rulemaking process will not, however,

include rules issued by only one agency. Comments that address specific

provisions of such a regulation will be carefully reviewed and

incorporated in the detailed review of the relevant regulation

conducted by the agency issuing the rule. Each agency will separately

determine whether amendments to its own rules are appropriate in light

of comments submitted during the EGRPRA review and, if so, will

separately initiate rulemakings to modify its rules. Consistent with

the spirit of CDRI, however, where individual agency rules implement

common statutory or supervisory policies, the Agencies will work

jointly to achieve uniformity.

The Agencies have prepared three charts to assist public

understanding of the organization of our section 2222 review. Chart A

presents the three categories of regulations about which we are

requesting burden reduction recommendations starting today. Chart B

identifies regulations affecting United States (U.S.) branches,

agencies, and representative offices of foreign banks, while Chart C

presents the remaining nine categories on which we will seek comment.

The categories in each of the charts are shown in numbered and shaded

horizontal bands. In each, the left column divides the categories into

more specific subject matter areas. The remaining columns are headed by

the different types of financial institutions (e.g., national banks,

etc. * * *).

Generally, by reading down a column, a particular type of

institution may identify the citation of the rule that applies to it.

When one agency's regulation applies to institutions for which it is

not the primary regulator, the citation for the subject is repeated

across the columns.\8\ Interagency regulations are listed first,

followed by regulations issued by the OCC, Board, FDIC, and OTS.

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\8\ The charts have been provided as a convenience for the

reader and should not be treated as a comprehensive listing of all

rules applicable to a particular institution.

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Foreign banks. Foreign banks operate in the U.S. both directly,

through branches and agencies, and indirectly, through bank and nonbank

subsidiaries. The U.S. operations of foreign banks as a whole do not

fit neatly into the categories of Charts A and C. Consequently, Chart B

supplements the International Operations category of Chart A by

identifying the major regulations that apply only to U.S. branches,

agencies, or representative offices of foreign banks. We have also

footnoted the ``Holding Company'' column of Chart A to include foreign

banks. (If a foreign bank operates a branch, agency or subsidiary

commercial lending company in the U.S., it is subject to the Bank

Holding Company Act as if it were a bank holding company.) \9\

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\9\ There are a number of regulations that apply to branch or

agency operations because of the type of activity in which the

office engages rather than because it is a branch or agency. These

regulations govern such areas as consumer protection, customer

privacy, and securities regulation. Foreign banks may wish to

comment on these regulations at such time as they are published for

comment.

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IV. Request for Burden Reduction Recommendations About the First Three

Categories of Regulations: ``Applications and Reporting,'' ``Powers and

Activities,'' and ``International Operations''

The Agencies are asking the public to identify and comment upon

areas of regulations within three categories--``Applications and

Reporting,'' ``Powers and Activities,'' and ``International

Operations''--that impose outdated, unnecessary, or unduly burdensome

regulatory requirements on insured depository institutions. It is not

necessary for the public to provide burden reduction recommendations

about categories of rules other than these three categories at this

time since we will publish the remaining categories before the end of

the first review cycle in 2006. Comments that cite particular

provisions or language, and provide reasons why such provisions should

be changed, would be most helpful to the Agencies' review efforts.

Suggested alternative provisions or language, where appropriate, would

also be helpful. If the implementation of a comment would require

modifying a statute that underlies the regulation, the comment should,

if possible, identify the needed statutory change.

Specific issues for commenters to consider. While all comments

related to any aspect of section 2222 are welcome, the Agencies

specifically invite comment on the following issues:

[sbull] Need for statutory change. Do the statutes impose

unnecessary requirements? Are any of the statutory requirements

underlying these categories imposing redundant, conflicting or

otherwise unduly burdensome regulatory requirements?

[sbull] Need and purpose of the regulations. Do the regulations in

these categories fulfill current needs? Have industry or other

circumstances changed since a regulation was written such that the

regulation is no longer necessary? Have there been shifts within the

industry or consumer actions that suggest a re-focus of the underlying

regulations? Do any of the regulations in these categories impose

burdens not required by their authorizing statutes?

[sbull] Overarching approaches / flexibility of the regulatory

standards. Generally, is there a different approach to regulating that

the Agencies could use that would achieve statutory goals while

imposing less burden? Do any of the regulations in these categories or

the statutes underlying them impose unnecessarily inflexible

requirements?

[sbull] Effect of the regulations on competition. Do any of the

regulations in these categories or the statutes underlying them create

competitive disadvantages for one part of the financial services

industry compared to another?

[sbull] Reporting, recordkeeping and disclosure requirements. Do

any of the regulations in these categories or the statutes underlying

them impose particularly burdensome reporting, recordkeeping or

disclosure requirements? Are any of these requirements similar enough

in purpose and use so that they could be consolidated? Which, if any,

of these requirements could be fulfilled electronically to reduce their

burden?

[sbull] Consistency and redundancy. Do any of the regulations in

these categories impose inconsistent or redundant regulatory

requirements that are not warranted by the circumstances?

[sbull] Clarity. Are the regulations in these categories and the

underlying statutes drafted in clear and easily understood language?

Are there specific regulations or underlying statutes that need

clarification?

[sbull] Burden on small insured institutions. The Agencies have a

particular interest in minimizing burden on small insured institutions

(those with assets of $150 million or less). The Agencies solicit

comment on whether any regulations within these categories should be

continued without change, or

[[Page 35593]]

amended or rescinded in order to minimize any significant economic

impact the regulations may have on a substantial number of small

insured institutions.

BILLING CODE 4810-33, 6210-01, 6714-01, 6720-01-P

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_____________________________________________

¹⁰ The Agencies have attempted to make these charts as user friendly as possible.  Inevitably, some oversimplification may have occurred.  The Agencies have developed these charts solely to facilitate the comment process.

¹¹ Foreign banking organizations that conduct banking operations in the U.S., either directly through branches and agencies or indirectly through U.S. bank subsidiaries or commercial lending company subsidiaries, generally are subject to the same regulatory regime as domestic bank holding companies.

¹² Regulations applicable solely to U.S. branches and agencies of foreign banks are addressed in Chart B.

¹³ Foreign banking organizations that conduct banking operations in the U.S., either directly through branches and agencies or indirectly through U.S. bank subsidiaries or commercial lending company subsidiaries, generally are subject to the same regulatory regime as domestic bank holding companies.

¹⁴ Community development regulations are being published for comment as part of the Powers and Activities category.

Dated: June 3, 2003.

John D. Hawke, Jr.,

Comptroller of the Currency.

By order of the Board of Governors of the Federal Reserve

System, June 9, 2003.

Jennifer J. Johnson,

Secretary of the Board.

By order of the Board of Directors.

Federal Deposit Insurance Corporation.

Dated in Washington, DC, this 10 day of June, 2003.

Robert E. Feldman,

Executive Secretary.

Dated: May 29, 2003.

James E. Gilleran,

Director, Office of Thrift Supervision.

[FR Doc. 03-15088 Filed 6-13-03; 8:45 am]

BILLING CODE 4810-33, 6210-01, 6714-01, 6720-01-P