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FDIC Federal Register Citations
[Federal Register: September 25, 2008 (Volume 73, Number 187)]
[Rules and Regulations]
[Page 55432-55435]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25se08-2]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 303, 308, and 309
RIN 3064-AD25
Deposit Insurance Requirements After Certain Conversions;
Definition of ``Corporate Reorganization;'' Optional Conversions
(``Oakar Transactions''); Additional Grounds for Disapproval of Changes
in Control; and Disclosure of Certain Supervisory Information
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Final rule.
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[[Page 55433]]
SUMMARY: The FDIC is issuing a final rule that amends certain of its
regulations by conforming them to Federal statutes amended by the
Financial Services Regulatory Relief Act of 2006, the Federal Deposit
Insurance Reform Act of 2005 and the Federal Deposit Insurance Reform
Conforming Amendments Act of 2005. On January 14, 2008, the FDIC
adopted, an interim rule and requested public comment on, amendments to
its regulations to implement such changes. Having received no comments
on the interim rule, the FDIC is confirming the interim rule as final
without change.
DATES: Effective September 25, 2008, the interim rule published January
14, 2008 (73 FR 2143) is confirmed as final without change.
FOR FURTHER INFORMATION CONTACT: Brett A. McCallister, Review Examiner
(816) 234-8099 x4223, in the Division of Supervision and Consumer
Protection; or Ryan K. Clougherty, Attorney, (202) 898-3843, Richard
Bogue, Counsel, (202) 898-3726, or Robert C. Fick, Counsel, (202) 898-
8962, in the Legal Division.
SUPPLEMENTARY INFORMATION:
I. Background
On October 13, 2006, the President signed into law the
Financial
Services Regulatory Relief Act of 2006 (``FSRRA'').\1\ The stated
purpose of FSRRA is to reduce regulatory burden and improve
productivity for financial institutions. Several provisions of FSRRA
amend statutes that the FDIC has implemented through its Rules and
Regulations (``Rules'').\2\ Additionally, Congress enacted the Federal
Deposit Insurance Reform Act of 2005 (``Reform Act'') \3\ and the
Federal Deposit Insurance Reform Conforming Amendments Act of 2005
(``Amendments Act''),\4\ which consolidated the two former deposit
insurance funds into a single deposit insurance fund.
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\1\ Pub. L. 109-351, 12 STAT. 1966 (Oct. 13, 2006).
\2\ Chapter III of Title 12 of the Code of Federal
Regulations.
\3\ Pub. L. 109-171, 120 STAT. 9 (Feb. 8, 2006).
\4\ Pub. L. 109-173, 119 STAT. 3601 (Feb. 15, 2006).
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In January of 2008, the FDIC adopted an interim rule, and
requested
public comment on, amendments to its rules to conform them to Federal
statutes as amended by the FSRRA, the Reform Act and the Amendments
Act. Having received no comments, the FDIC is now issuing a final rule
that is identical to the interim rule.
II. Regulatory Amendments
A. Deposit Insurance Requirements After Certain Conversions
Section 5(i)(5) of the Home Owners' Loan Act (``HOLA'') \5\
generally authorizes any Federal savings association that was chartered
and in operation before November 12, 1999 and that had branches in one
or more states, to convert into one or more national or state banks,
each of which may encompass one or more of the existing branches.
Section 608(a) of FSRRA amended section 5(i)(5) of the HOLA to require
that if such a conversion results in more than one national or state
bank, each resulting bank must obtain deposit insurance from the FDIC
pursuant to section 5(a) of the Federal Deposit Insurance Act (``FDI
Act'').\6\
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\5\ 12 U.S.C. 1464(i)(5).
\6\ 12 U.S.C. 1815(a).
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Subpart B of Part 303 of the FDIC's Rules sets forth the
procedures
for applying for deposit insurance. Section 303.20 describes the scope
of subpart B to include applications for deposit insurance for, among
other institutions, proposed depository institutions. The final rule
amends section 303.20 to expressly confirm the applicability of subpart
B of Part 303 to banks that result from conversions of Federal savings
associations under section 5(i)(5) of the HOLA.
B. Definition of Corporate Reorganization
Section 606 of the FSRRA made two changes to the Bank Merger
Act
\7\ with respect to mergers that solely involve an insured depository
institution and one or more of its affiliates (``Affiliate Mergers'').
First, for Affiliate Mergers, section 606 amended section 18(c)(4) of
the FDI Act \8\ by eliminating the requirement that the appropriate
Federal banking agency request competitive factors reports from either
the other Federal banking agencies or the Attorney General of the
United States.\9\ Prior to FSRRA the responsible Federal banking agency
had to request competitive factors reports for Affiliate Mergers.
Second, section 606 revised section 18(c)(6) of the FDI Act \10\ by
eliminating the post-approval waiting period for Affiliate Mergers.
Prior to FSRRA the applicant in an Affiliate Merger had to wait up to
thirty days after obtaining the agency's approval before it could
consummate the transaction.
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\7\ 12 U.S.C. 1828(c).
\8\ 12 U.S.C. 1828(c)(4).
\9\ Notwithstanding this change, the responsible Federal
banking
agency retains the ability to request competitive factors reports if
the circumstances warrant.
\10\ 12 U.S.C. 1828(c)(6).
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The FDIC's regulations at 12 CFR 303.61(b), formerly provided
a
definition of ``corporate reorganization'' that identified a class of
mergers that generally do not raise competitive concerns and,
therefore, do not require the same level of competitive analysis as
other mergers subject to the Bank Merger Act. Such mergers are less
burdensome on applicants. 12 CFR 303.61(b) defined ``corporate
reorganization'' to include (i) mergers between an insured institution
and its subsidiary or its holding company and (ii) mergers between
institutions and entities that were ``commonly-owned.'' Institutions
were ``commonly-owned'' if more than 50% of the voting stock of each is
owned by the same entity. The changes made by section 606 of the FSRRA,
however, indicate that there are no competitive concerns for a class of
mergers that is broader than the class identified by the FDIC's Rule as
corporate reorganizations. Specifically, FSRRA indicates that there are
no competitive concerns for mergers that solely involve an insured
depository institution and one or more affiliates. While the term
``corporate reorganization'' is only used in subpart D as one of
several illustrative examples of the types of mergers covered by the
Bank Merger Act, the definition could cause confusion as to how it
relates to Affiliate Mergers.
The final rule amends the definition of ``corporate
reorganization'' found at 12 CFR 303.61(b) in order to conform it to
the changes made by FSRRA and to avoid confusion about the need for
competitive analyses and post-approval waiting periods for any merger
that solely involves an insured depository institution and one or more
of its affiliates.
C. Optional Conversions
Before it was repealed, the former section 5(d)(3) of the FDI
Act
\11\ generally authorized a member of one insurance fund to merge with
a member of the other fund without changing the funds that insured the
deposits of the two institutions. This type of merger was referred to
as an ``Optional Conversion'' in both section 5(d)(3) of the FDI Act
and in section 303.63(d) of the FDIC's Rules; it was also commonly
known as an ``Oakar Transaction.'' Section 303.63(d) of the FDIC's
Rules formerly required the applicant in an Optional Conversion to
identify the
[[Page 55434]]
merger as an ``Optional Conversion'' in its application.
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\11\ 12 U.S.C. 1815(d)(3) (repealed 2006).
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On March 31, 2006, pursuant to the Reform Act and the
Amendments
Act, the former Savings Association Insurance Fund (``SAIF'') and the
former Bank Insurance Fund (``BIF'') were consolidated into a single
fund, the Deposit Insurance Fund. In addition, the Amendments Act
repealed section 5(d)(3) of the FDI Act effective with the merger of
the two funds.\12\ Following the consolidation of the two funds into
one by the Reform Act and the repeal of section 5(d)(3) of the FDI Act
by the Amendments Act, Optional Conversions are no longer possible. The
final rule amends section 303.63 by removing paragraph (d) Optional
conversions. The removed paragraph formerly read as follows:
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\12\ See section 8(a)(4) of the Amendments Act, Pub. L.
109-173
(2006).
(d) Optional conversions. If the proposed merger transaction
is
an optional conversion, the merger application shall include a
statement that the proposed merger transaction is a transaction
covered by section 5(d)(3) of the FDI Act (12 U.S.C. 1815(d)(3).
D. Additional Grounds for Disapproval of a Change in Control
Section 705 of FSRRA amended section 7(j)(7) of the FDI Act
\13\ by
adding an additional ground for the disapproval of a proposed
acquisition of control of a bank. The additional ground for disapproval
is if the future prospects of the institution might jeopardize the
financial stability of the bank or prejudice the interests of the
depositors of the bank.
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\13\ 12 U.S.C. 1817(j)(7).
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Section 308.111 of the FDIC's Rules lists the statutory
grounds for
disapproval of a proposed acquisition of control of an insured state
nonmember bank. The final rule amends section 308.111(c) to reflect the
addition of unfavorable future prospects of the institution as a ground
for disapproval of a proposed acquisition under the FSRRA.
E. Disclosure of Certain Supervisory Information
Section 707 of FSRRA amended section 7(a)(2) of the FDI Act
\14\ by
adding a new subsection (C) that expanded the authority of the Federal
banking agencies to furnish examination reports and other confidential
supervisory information to (1) any other Federal and State agencies
with supervisory or regulatory authority over the depository
institution or entity, (2) officers, directors and receivers of such
depository institution or entity, and (3) any other person that the
Federal banking agency determines to be appropriate.
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\14\ 12 U.S.C. 1817(a)(2).
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Part 309 of the FDIC's Rules governs the disclosure of
confidential
information. Paragraph (b)(3) of section 309.6 entitled ``Disclosure of
exempt records,'' previously authorized the disclosure of exempt
records to Federal financial institution supervisory agencies and
certain other agencies.
Since section 707 of FSRRA authorized additional disclosures
of
certain supervisory information, the final rule amends section
309.6(b)(3) to add those additional disclosures to the disclosures
previously authorized.
III. Regulatory Analysis and Procedure
A. Solicitation of Comments on Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act (``GLBA'') \15\
requires
the FDIC to use ``plain language'' in all proposed and final rules
published after January 1, 2000. The FDIC invited comments on whether
the interim rule is clearly stated and effectively organized, and how
the FDIC might make the text easier to understand. The FDIC received no
comments addressing how the proposed rule might be changed to reflect
the requirements of GLBA.
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\15\ 12 U.S.C. 4809.
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B. Administrative Procedure Act
The final rule takes effect upon publication in the Federal
Register. The final rule conforms the FDIC's regulations to several
statutory provisions that were amended by FSRRA on October 13, 2006 and
by the Reform Act and the Amendments Act effective on March 31, 2006.
The statutory amendments made by FSRRA, the Reform Act, and the
Amendments Act continue in effect. The amendments to the FDIC's
regulations made by the final rule are identical to those made by the
interim rule, effective January 14, 2008.
The amendments to the FDIC's regulations made by the interim
rule,
and adopted in this final rule, generally reflect the language
contained in the amended statutes without interpretation. The
amendments made by the final rule effect no substance changes beyond
those already effected by Federal statute. Although solicitation of
public comment prior to the effectiveness of these regulatory
amendments was unnecessary, the FDIC nonetheless requested public
comment on the interim rule. The FDIC received no comments.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA'') requires that each
Federal
agency either certify that a proposed rule would not, if adopted in
final form, have a significant economic impact on a substantial number
of small entities or prepare an initial regulatory flexibility analysis
of the proposal and publish the analysis for comment.\16\ However,
pursuant to section 603(a) of the RFA a regulatory flexibility analysis
is only required when an agency is required to publish a notice of
proposed rulemaking for a proposed rule. Since the regulatory
amendments made by the final rule are effective upon publication in the
Federal Register, and since no notice of proposed rulemaking is
required to be published, no regulatory flexibility analysis is
required.
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\16\ See 5 U.S.C. 603.
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D. Paperwork Reduction Act
No new collections of information pursuant to the Paperwork
Reduction Act \17\ are contained in the final rule.
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\17\ 44 U.S.C. 3501.
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List of Subjects
12 CFR Part 303
Administrative practice and procedure, Bank deposit
insurance,
Banks, Banking, Reporting and recordkeeping requirements, Savings
associations.
12 CFR Part 308
Administrative practice and procedure, Bank deposit
insurance,
Banks, Banking, Claims, Crime, Equal access to justice, Fraud,
Investigations, Lawyers, Penalties.
12 CFR Part 309
Banks, Banking, Credit, Freedom of information, Privacy.
PARTS 303, 308, 309--[AMENDED]
Authority and Issuance
0
For the reasons set forth in the preamble, under the authority of 12
U.S.C. 1820 G, the interim rule amending parts 303, 308, and 309 of
Chapter III of the title 12 of the Code of Federal Regulations which
was published at 73 FR 2143 on January 14, 2008, is adopted as a final
rule without change.
By Order of the Board of Directors.
Dated at Washington, DC, the 18th day of September 2008.
[[Page 55435]]
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E8-22327 Filed 9-24-08; 8:45 am]
BILLING CODE 6714-01-P
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