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Financial Institution Letters


[Federal Register: January 10, 2001 (Volume 66, Number 7)]
[Rules and Regulations]               
[Page 2051-2113]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ja01-22]                         


[[Page 2051]]

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Part II





Department of the Treasury

Federal Reserve System

Federal Deposit Insurance Corporation





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Office of the Comptroller of the Currency



Office of Thrift Supervision



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12 CFR Parts 35, 207, 346, 533



Disclosure and Reporting of CRA-Related Agreements; Final Rules


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 35

[Docket No. 00-34]
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. 2000-107]
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 final rule.

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SUMMARY: The OCC, Board, FDIC, and OTS (collectively, the agencies) are 
publishing final rules to implement the CRA sunshine provisions of 
section 48 of the Federal Deposit Insurance Act. These provisions 
require nongovernmental entities or persons (NGEPs), 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 
were contained in section 711 of the Gramm-Leach-Bliley Act.
    The rule identifies the types of written agreements that are 
covered by section 48 (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.

EFFECTIVE DATE: This joint rule is effective April 1, 2001.

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, Office of the Comptroller of the Currency, 
250 E Street, SW, Washington, DC 20219.
    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, James H. Mann, Senior Attorney (202) 452-2412, 
or Kathleen C. Ryan, Senior Attorney (202) 452-3667, Division of 
Consumer and Community Affairs; For users of Telecommunications Device 
for the Deaf (*TDD*) only, contact Janice Simms at (202) 452-4984; 
Board of Governors of the Federal Reserve System, 20th Street and 
Constitution Avenue, NW, Washington, DC 20551.
    FDIC: Deanna Caldwell, Senior Policy Analyst (202) 942-3366, or 
Robert Mooney, Assistant Director (202) 942-3378, Division of 
Compliance and Consumer Affairs; or A. Ann Johnson, Counsel, Regulation 
and Legislation Section (202) 898-3573, Federal Deposit Insurance 
Corporation, 550 17th Street, NW, Washington, DC 20429.
    OTS: Richard Bennett, Counsel (Banking and Finance), (202) 906-
7409; or Karen Osterloh, Assistant Chief Counsel, (202) 906-6639; 
Office of Thrift Supervision, 1700 G Street, NW, Washington, DC 20552.

SUPPLEMENTARY INFORMATION: The contents of this preamble are listed in 
the following outline:

I. Background
II. Overview of Comments Received
III. Detailed Explanation of Final Rule
    A. Definition of Covered Agreement
    B. Disclosure of Covered Agreements
    C. Annual Reports
    D. Effective Dates of Disclosure and Reporting Requirements
    E. Compliance Provisions
    F. Other Definitions and Rules of Construction
IV. Regulatory Flexibility Act Analysis
V. Executive Order 12866 Determination
VI. Paperwork Reduction Act
VII. Comments Regarding the Use of "Plain Language''
VIII. Unfunded Mandates Act of 1995
IX. Compliance Chart

I. Background

    Section 711 of the GLB Act (Pub. L. 106-102, 113 Stat. 1338 (1999)) 
added a new section 48 to the Federal Deposit Insurance Act (12 U.S.C. 
1831y) (FDI Act) entitled "CRA Sunshine Requirements.'' Section 48 
applies to written agreements that (1) are made in 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 48 does not, however, cover any agreement with a 
nongovernmental entity or person that has not had a CRA contact with an 
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 48, the parties to a covered agreement must make the 
agreement available to the public and the appropriate agency. The 
parties also must file a report annually with the appropriate agency 
concerning the disbursement, receipt and use of funds or other 
resources under the agreement.
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    \1\ 12 U.S.C. 2901 et seq.
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    On May 19, 2000, the agencies published a joint notice of proposed 
rulemaking in the Federal Register (65 FR 31962, May 19, 2000) to 
implement section 48. The joint notice requested comment on all aspects 
of the proposed rule and on a wide variety of specific topics 
identified in the Supplementary Information accompanying the proposal.

II. Overview of Comments Received

    The agencies collectively received more than 800 comments from the 
public on the proposed rule, although many commenters submitted copies 
of the same comments to each of the agencies. Comments were received 
from a wide variety of sources including members of Congress; state and 
local government officials; banks, savings associations and their 
holding companies and other affiliates; community-based and non-profit 
organizations, including national and regional associations whose 
membership is composed of such organizations; trade associations; other 
businesses; and individuals.

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    These comments addressed to some degree nearly all aspects of the 
proposed rule. A number of these comments are described in more detail 
in the description of the final rule below. This section provides a 
brief overview of the comments and is not intended to represent a 
detailed summary of all of the comments. The agencies have carefully 
reviewed and considered the information and views provided by all 
commenters.
    Commenters generally requested additional guidance on the types of 
actions that would constitute a written arrangement or understanding 
between an insured depository institution or affiliate and a NGEP. Many 
commenters supported the proposed rule's definition of "fulfillment of 
the CRA,'' while others asserted that the proposed definition was too 
broad.\2\ In this regard, a number of commenters expressed concern that 
the proposed rule could require the disclosure of, and reporting on, a 
wide range of agreements between banking organizations and NGEPs that 
are not directly related to or affected by the CRA. They also expressed 
concern that the proposed rule could discourage banking organizations 
from entering into agreements with NGEPs to provide loans, investments 
or banking services in their local communities.
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    \2\ The proposed rule generally defined "fulfillment of the 
CRA'' by reference to the full list of factors that the agencies 
consider in evaluating the CRA performance of an insured depository 
institution or in acting on an application for a deposit facility 
under the CRA, as described in the lending, investment and service 
tests set forth in the CRA regulations jointly adopted by the 
agencies ("CRA Regulations''). See 12 CFR Part 25 (OCC); 12 CFR 
Part 228 (Board); 12 CFR Part 345 (FDIC); 12 CFR Part 563e (OTS).
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    Many commenters addressed the exemption included in the statute and 
the proposed rule for agreements that are entered into by an insured 
depository institution or affiliate with a NGEP that has not 
"commented on, testified about, or discussed with the institution, or 
otherwise contacted the institution, concerning the Community 
Reinvestment Act.'' \3\ Most commenters that addressed this issue 
requested that the agencies clarify the types of actions by a NGEP that 
would constitute a CRA contact as described in the statutory exemption. 
Some commenters recommended that the agencies define a CRA contact to 
include only CRA-related contacts by a NGEP with a Federal banking 
agency or discussions with an insured depository institution or 
affiliate about such contacts. Commenters also urged that the agencies 
clarify that certain types of discussions with an institution or 
affiliate, such as a general discussion by a NGEP with an institution 
concerning the eligibility of products or services for consideration 
under the CRA, were not CRA contacts (and were therefore exempt) within 
the meaning of the statute. Other commenters asserted that the statute 
did not allow the agencies to limit CRA contacts only to those that 
occur with a Federal banking agency and that Congress intended a CRA 
contact to encompass a broad range of CRA-related contacts including 
discussions by a NGEP with an insured depository institution or 
affiliate concerning the CRA.
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    \3\ See 12 U.S.C. 1831y(e)(1)(B)(iii).
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    A number of commenters also argued that a CRA contact must be with 
an appropriate official or representative of the insured depository 
institution or affiliate. A significant number of commenters also urged 
that a CRA contact be recognized only if the contact occurred within a 
specified period of time before the parties entered into the agreement. 
Some commenters expressed concern that, without these or other 
limitations, the statute or proposed rule would impose a substantial 
burden on persons claiming the exemption and make the exemption 
virtually meaningless. Other commenters asserted that the agencies 
lacked the authority to require that a CRA contact be temporally 
related to a CRA-related agreement.
    A number of commenters argued that the statute or the proposed rule 
imposed a substantial burden on persons who engage in discussions with 
banking organizations concerning the CRA or petition the Federal 
banking agencies for action related to the CRA. These commenters argued 
that these burdens could chill the public's exercise of free speech or 
right to petition the government as protected by the Constitution.
    Commenters generally supported the provisions of the proposed rule 
that sought to streamline the disclosure and annual reporting 
obligations of the parties to a covered agreement to the extent 
consistent with the statute. For example, commenters widely supported 
the proposed rule's provisions giving insured depository institutions, 
affiliates and NGEPs flexibility in making covered agreements available 
to the public and allowing insured depository institutions, affiliates 
and NGEPs that are party to a number of covered agreements the ability 
to file a single, consolidated annual report relating to all of the 
agreements.
    Commenters also generally supported the provisions of the proposed 
rule that required a NGEP to make its covered agreements available to 
an agency only upon request. Some commenters requested that insured 
depository institutions and affiliates also be permitted to make 
covered agreements available to the appropriate agency upon request, or 
that the agencies further streamline the agency disclosure obligations 
applicable to institutions and affiliates. Commenters requested that 
the agencies streamline the process for determining what information 
contained in a covered agreement may be withheld from public 
disclosure, such as by identifying categories of information that could 
be withheld from public disclosure without prior agency review.
    Commenters overwhelmingly supported the proposed rule's provisions 
allowing NGEPs to use Federal tax forms and other reports to fulfill 
the reporting requirements of the rule. Comments were mixed concerning 
the proposed rule's provisions governing the reporting of specific 
purpose funds received by a NGEP, with some commenters supporting this 
reporting method and others asserting that the method was burdensome or 
not authorized by the statute.
    Commenters also supported the provisions of the rule that provided 
that a NGEP is not required to file an annual report for any year in 
which NGEP did not receive funds under a covered agreement. Several 
commenters requested that the agencies provide a similar exemption from 
the annual reporting requirements to insured depository institutions 
and affiliates.

III. Detailed Explanation of Final Rule

    This section provides a more detailed discussion of the comments 
received on the proposal, the changes made by the agencies in response 
to comments, and the other provisions of the final rule. As with the 
proposal, the final rule uses the term "insured depository 
institution,'' rather than "bank'' or "savings associations,'' to 
facilitate compliance and consistency among the agencies' rules. 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.
    The final rule and the remaining portions of this preamble also 
refer to a "nongovernmental'' entity or person'' as a "NGEP.'' The 
final rule uses this term, rather than the term "person,'' to avoid 
confusion over the scope of the rule. The term "nongovernmental entity 
or person'' or "NGEP'' is defined in section ____.11 of the rule 
generally to include

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any company or individual other than the Federal government; a state, 
local or tribal government; an insured depository institution or 
affiliate; or a representative of any of the foregoing.
    The Supplementary Information accompanying the proposed rule 
included examples illustrating the scope and application of the 
proposed rule. Commenters generally favored having examples that 
provide additional guidance concerning the rule's provisions. Some 
commenters requested that the agencies clarify or amend certain 
examples, and commenters were divided on whether the agencies should 
incorporate all examples into the final rule.
    The final rule includes examples illustrating some of the key 
provisions of the rule, including the definition of a "CRA 
communication,'' the scope of the exemptions for qualifying loan 
agreements, and the information required to be provided in the annual 
report of an NGEP. The examples included in the rule are part of the 
rule and compliance with an example, to the extent applicable, 
constitutes compliance with the rule. (See section ____.1(d).) The 
examples included in the rule illustrate only the scope and application 
of the particular topic addressed by the example and do not illustrate 
any other topic or issue that may arise under the rule.
    The agencies also have included in this preamble examples that 
illustrate other provisions of the rule. The agencies have not included 
these other examples in the final rule because fewer questions appear 
to arise in connection with these provisions and, thus, including the 
examples in the rule could make the rule longer without providing a 
commensurate level of benefit. The agencies, however, have included 
these examples in the preamble to illustrate the manner in which the 
agencies expect to interpret the rule in these areas. To further assist 
members of the public in complying with the rule, the agencies have 
included in this preamble a chart that summarizes the disclosure and 
reporting requirements of the rule. This chart, which is not part of 
the rule, is located at Part IX of this preamble.
    By operation of law, the regulations of the agencies implementing 
section 48 shall take effect on the first day of the calendar quarter 
which begins on or after the date on which the regulations are 
published in final form, which is April 1, 2001.\4\
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    \4\ 12 U.S.C. 4802(b).
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    The agencies requested comment on whether the rule should remain, 
as proposed, in a separate part of each agency's regulations or be 
incorporated into the agencies' existing CRA Regulations. Commenters 
generally favored keeping the rule separate from the CRA Regulations. 
In addition, section 48 amended the FDI Act, and not the CRA, and is 
independent of the CRA and the CRA Regulations. Accordingly, the final 
rule is promulgated as a new part to each agency's regulations. Section 
____.1(c) of the final rule provides that nothing in the final rule 
affects in any way the CRA, the agencies' CRA Regulations, or any 
agency's interpretations or administration of the CRA or the CRA 
Regulations.
    The following description applies to the rule of each agency. Since 
each agency's rule will be codified at a different part of the Code of 
Federal Regulations, the following description references the rule 
using only the section numbers used in the rule.

A. Definition of Covered Agreement

    Section ____.2 of the rule defines which agreements are covered by 
the rule and includes the Act's exemptions from the definition of a 
covered agreement for qualified loan agreements.
1. Covered Agreements
    The proposed rule defined a covered agreement as any contract, 
arrangement, or understanding that meets all of the following four 
criteria:
     The agreement is in writing;
     The agreement is made pursuant to, or in connection with, 
the fulfillment of the CRA, as defined by the rule (see section __.4);
     The parties to the agreement include (1) one or more 
insured depository institutions or affiliates of an insured depository 
institution, and (2) one or more NGEPs; and
     The agreement provides for the insured depository 
institution or affiliate to provide cash payments, grants, or other 
consideration (except 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 final rule retains these four criteria for coverage. The final 
rule also provides that, in order for an agreement to be covered, one 
of the NGEPs that is a party to the agreement must have had a CRA 
communication (as defined in section __.3) prior to the time the 
parties entered into the agreement. As noted above, section 48 
specifically exempts from coverage any agreement entered into by an 
institution or affiliate with a NGEP who has not had a CRA 
communication. The agencies believe that structuring this statutory 
exemption as an affirmative requirement for coverage makes the rule 
easier to understand without affecting the scope of the rule. The scope 
of the exemption for agreements with a NGEP that has not had a CRA 
communication is discussed in detail below.
    A covered 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. Section 48 and the rule apply 
only to written contracts, arrangements or understandings, and do not 
apply to oral contracts or agreements.
    Some commenters requested that the agencies provide additional 
guidance concerning when written communications between a NGEP and an 
insured depository institution or affiliate would constitute a 
"contract, arrangement or understanding.'' In addition, some 
commenters asserted that the rule should apply only to legally 
enforceable contracts, while comments were mixed on whether the rule 
should apply to unilateral lending or investment pledges made by an 
insured depository institution or affiliate in response to previous 
actions by a NGEP.
    As noted above, section 48 by its terms applies not only to written 
contracts, but also to written arrangements and written understandings 
that are entered into by an insured depository institution or affiliate 
with a NGEP and that otherwise meet the statutory criteria to be a 
covered agreement. For this reason, the agencies have not limited the 
final rule to legally binding written contracts. Other written 
agreements that do not constitute a legally binding contract, but that 
reflect a mutual arrangement or understanding between an insured 
depository institution or affiliate and a NGEP would be a covered 
agreement if they meet the other criteria set forth in the rule.\5\ A 
written arrangement or understanding may be reflected by one or more 
documents.
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    \5\ 12 U.S.C. 1831y(a) and (e)(1).
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    The agencies have included three examples in the final rule that 
illustrate when a written arrangement or understanding would and would 
not exist. (See section ____.2(b).) Example 1 involves a NGEP that 
meets with an insured depository institution and states that the 
institution needs to make more community development investments in the 
NGEP's community. The NGEP and institution, however, do not reach an 
agreement concerning the community

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development investments the institution should make in the community, 
and the parties do not reach any mutual arrangement or understanding. 
The institution later unilaterally issues a press release that 
announces the institution has established a general goal of making $100 
million of community grants in low- and moderate-income neighborhoods 
in the institution's community over the next 5 years and does not 
identify the NGEP. Since there was no agreement or understanding 
between the institution and NGEP, and the institution acted 
unilaterally to establish its investment goal, Example 1 states that 
the press release issued by the institution is not a written 
arrangement or understanding.
    In Example 2, a NGEP meets with an insured depository institution 
and states that the institution needs to offer new loan programs in the 
NGEP's community. The NGEP and the insured depository institution reach 
a mutual understanding that the institution will provide $10 million in 
additional loans in low- and moderate-income neighborhoods in the 
NGEP's community. The insured depository institution tells the NGEP 
that it will issue a press release announcing the program and 
subsequently issues a press release that incorporates the key terms of 
the mutual understanding between the institution and NGEP. The press 
release reflects the mutual arrangement or understanding between the 
NGEP and the insured depository institution and is, therefore, a 
written arrangement or understanding.
    In Example 3, a NGEP sends a letter to an insured depository 
institution requesting that the institution provide a $15,000 grant to 
the NGEP. The insured depository institution responds in writing and 
agrees to provide the grant to the NGEP in connection with its annual 
grant program. Since the exchange of letters reflects an understanding 
or arrangement between the insured depository institution and the NGEP, 
the agreement would be a covered agreement if it meets the other 
criteria set forth in the rule including, in particular, the 
requirement that the NGEP have had a CRA communication.
    These examples are not exclusive and other written exchanges may or 
may not constitute a written arrangement or understanding depending on 
the facts and circumstances of the particular situation.
2. Loan Agreements That Are Not Covered Agreements
    Section 48(e)(1)(B) specifically exempts certain types of loan 
agreements from coverage even if they otherwise meet the definition of 
a covered agreement. Section ____.2(c) of the final rule implements 
these exemptions.
    a. Mortgage 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 48. This exemption is 
available for any mortgage loan, regardless of the identity of the 
borrower or the rate charged on the loan.
    The agencies requested comment on what types of loans would qualify 
as a "mortgage loan'' for purposes of this statutory exemption. A 
number of commenters addressed this issue, with the vast majority 
stating that the exemption should be available for any loan that is 
secured by real estate. A few commenters asserted that the agencies 
should define a mortgage loan to include any loan the proceeds of which 
are used for real estate-related purposes, even if the loan was not 
secured by real estate. Some commenters also contended that investments 
in mortgage-backed securities or other types of real estate investments 
should be exempt under this provision.
    The final rule provides that this statutory exemption is available 
to any individual loan that is secured by real estate. The real estate 
securing the loan may be used for residential or commercial purposes, 
and the loan does not need to have been obtained for purposes of 
purchasing or improving the real estate. Since section 48 specifically 
provides that this exemption is available only to mortgage loans, an 
agreement to make a real-estate related investment (including an 
investment in mortgage-backed securities) or to make a loan that is not 
secured by real estate is not exempt under this provision, although 
such agreements may be exempt from coverage under other provisions of 
the rule.
    Section ____.2(d) of the final rule provides examples illustrating 
the rule's exemptions for qualifying loan agreements. The first example 
(Example 1) illustrates the exemption for any individual mortgage loan. 
In this example, an insured depository institution provides an 
organization with a $1 million loan pursuant to a written agreement. 
The loan is secured by real estate that is owned or to-be-acquired by 
the organization. Accordingly, Example 1 states that the agreement is 
exempt from coverage regardless of the interest rate on the loan or 
whether the loan was made for purposes of re-lending.
    b. Specific Contracts or Commitments for Qualifying Loans. 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." \6\ Under the statute, this 
exemption is available for any type of loan to any individual or entity 
if the loan meets the market rate and re-lending restrictions of the 
statute.
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    \6\ 12 U.S.C. 1831y(e)(1)(B)(ii).
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    The agencies requested comment on whether this exemption covers 
only a specific commitment to make a qualifying loan or extension of 
credit (such as a loan commitment typically made in the course of 
providing a line of credit to a small business), or also would provide 
an exemption for a commitment to make multiple loans that meet the 
Act's restrictions. The agencies also requested comment on whether the 
agencies should define when a loan is made at "substantially below 
market rates'' or for purposes of re-lending. Most commenters that 
addressed these issues requested that the agencies provide additional 
guidance concerning the phrases "substantially below market rates'' 
and "for purposes of re-lending,'' and some of these commenters 
suggested definitions for these phrases. Comments were mixed on whether 
the exemption was available only to a specific contract or commitment 
for an individual loan or if it also would cover a general commitment 
by an insured depository institution to make multiple loans over a 
period of time.
    After carefully reviewing the language and purposes of section 48 
and the comments received, the agencies have determined that the 
exemption in section ____.2(c)(2) is available only with respect to a 
specific contract or commitment by an insured depository institution to 
make a single loan or extension of credit that meets the Act's market-
rate and re-lending restrictions, and does not cover an agreement or 
commitment by an institution or affiliate to make multiple loans or 
extensions of credit. The agencies also have amended the rule to 
provide that a loan is made for "purposes of re-lending'' only if the 
loan application or other loan documents indicate that the borrower 
intends or is authorized to use the borrowed funds to make a loan or

[[Page 2056]]

extension of credit to one or more third parties.
    The final rule retains the statute's restriction that the loan or 
extension of credit may not be made at a rate that is substantially 
below market rates. In determining whether a loan or extension of 
credit is made at "substantially below market rates,'' an institution 
should compare the rate charged on the loan or extension of credit to 
the rate the institution has or would charge a comparable borrower 
(e.g., a NGEP with similar financial resources and credit history) on a 
comparable type of transaction (e.g., a construction loan, permanent 
financing, small business loan, or unsecured consumer loan). Since the 
rates charged on particular types of loans vary over time and may vary 
depending on the location of the lender and borrower, the agencies have 
not included in the rule a fixed formula for determining whether a loan 
or extension is made at "substantially below market rates.''
    Examples 2, 3 and 4 in section ____.2(c) of the rule illustrate the 
scope and application of this exemption. In Example 2, an insured 
depository institution commits to provide a $500,000 line of credit to 
a small business pursuant to a written agreement. The example provides 
that the loan is made at a rate within the range of rates offered by 
the institution to other similarly situated small businesses in the 
market and the loan documentation does not indicate that the borrower 
intends or is authorized to re-lend the borrowed funds. Accordingly, 
the example states that this commitment for an individual loan is 
exempt under section ____.2(c)(2) of the rule.
    In Example 3, a small business obtains a $75,000 small business 
loan, documented in writing, from an insured depository institution. 
The institution offers its borrowers small business loans that are 
guaranteed by the Small Business Administration (SBA) and the loan is 
made under this loan program. The loan documentation does not indicate 
that the borrower intends or is authorized to re-lend the funds to any 
third-party. Although the rate charged by the institution on the loan 
is well below that charged by the institution on commercial loans, the 
rate is within the range of rates that the institution would charge a 
similarly situated small business for a similar loan under the 
institution's SBA loan program. Accordingly, the example states that 
the loan is not made at substantially below market rates and is exempt 
from coverage under section ____.2(c)(2) of the rule.
    Example 4 involves a bank holding company that enters into a 
written agreement with a community development organization. The 
agreement provides for the insured depository institutions owned by the 
bank holding company to make $250 million in small business loans in 
their communities over the next 5 years. Since the agreement provides 
for the institutions to make multiple loans, the agreement is not a 
specific contract or commitment for a loan or extension of credit and, 
thus, is not exempt from coverage under section ____.2(c)(2) of the 
rule. The example notes, however, that each small business loan made 
pursuant to this general commitment would be exempt from coverage if 
the loan separately meets market rate and re-lending restrictions of 
the exemption.
    To be entirely exempt from coverage under section ____.2(c)(1) or 
(2) of the rule, an agreement must be exclusively a loan, extension of 
credit or loan commitment that meets the requirements of the relevant 
exemption. The rule provides, however, that if an agreement includes a 
loan, extension of credit or loan commitment that, if documented 
separately, would meet the rule's requirements to be exempt and also 
provides for the insured depository institution or affiliate to provide 
other funds or resources, the exempt loan, extension of credit or loan 
commitment may be excluded for purpose of determining whether the 
agreement meets the Act's dollar thresholds or is in fulfillment of the 
CRA. (See section ____.2(e).)\7\
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    \7\ The agencies note, however, that if the other consideration 
would reduce the effective interest rate paid on the loan or 
extension of credit to a rate that is substantially below the market 
rate, the loan or extension of credit would not itself be exempt 
from coverage.
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3. CRA Communication
    Section 48(e)(1)(B)(iii) provides a statutory exemption from the 
CRA Sunshine provisions for "any agreement entered into by an insured 
depository institution or affiliate with a [NGEP] who has not commented 
on, testified about, or discussed with the institution, or otherwise 
contacted the institution, concerning the Community Reinvestment Act of 
1977.'' This exemption for agreements with persons who have not had a 
CRA contact was included in section ____.2(b)(2) of the proposed rule, 
which contained an exemption that restated the statutory language in 
section 48(e)(1)(B)(iii). Section ____.2(b)(2) also provided examples 
of actions that would constitute a CRA contact and other examples of 
actions that would not be considered a CRA contact.
    The preamble invited comment on this aspect of the proposal, 
including comment on whether the agencies should provide a more 
detailed definition of the exemption and on several alternative 
approaches to defining CRA contact. Nearly all commenters requested 
that the agencies change the definition of CRA contact in the proposed 
rule to explain the breadth of the exemption, to provide additional 
clarity regarding what constitutes a CRA contact, or to exempt 
specifically certain types of contacts. Many commenters underscored the 
importance of a rule that allowed persons to determine before entering 
into an agreement whether or not they have had a CRA contact and 
qualify for the exemption. While many commenters expressed concern 
about various aspects of the proposal on CRA contact, commenters were 
divided on how to address these concerns.
    A significant number of commenters argued that the agencies should 
define a CRA contact to cover only providing CRA-related comments or 
testimony to an agency and discussions with an insured depository 
institution or affiliate about providing (or refraining from providing) 
such comments or testimony. There was also significant support for an 
alternative that would have excluded discussions with an insured 
depository institution or affiliate concerning whether particular 
loans, services, investment or community development activities are 
generally eligible for consideration by an agency under the CRA 
Regulations. Others argued that only conversations related specifically 
to the CRA performance record of an institution should be covered.
    A significant number of commenters advocated exempting contacts 
that are incidental to ordinary business dealings, which were perceived 
as outside the intended scope of the statute. Others advocated 
exempting certain types of "routine inquiries,'' such as inquiries 
about what an institution's CRA rating is or about the CRA statute or 
rule.
    Some commenters, on the other hand, supported a broad 
interpretation of CRA contact that would cover general discussions of 
the CRA. A small number of commenters supported a broad interpretation 
of CRA contact while also advocating that the agencies narrow other 
aspects of the definition of a covered agreement, such as the 
definition of fulfillment.
    In addition to these issues regarding the scope of the exemption, 
many commenters urged the agencies to

[[Page 2057]]

address other issues raised by the CRA contact definition. In 
particular, a number of commenters suggested that the agencies indicate 
who at the relevant institution or affiliate and who at the NGEP must 
have a CRA contact or have knowledge that a CRA contact has occurred, 
or require a temporal or other connection between the CRA contact and 
negotiation of a CRA agreement.
    As explained more fully below, the final rule incorporates changes 
in three areas to address comments regarding the definition of CRA 
contact. In summary, in order to identify contacts that have a 
relationship to an agreement and to avoid imposing substantial burden 
on parties entitled to claim the exemption, the final rule adopts a 
definition of "CRA communication'' that has three parts. First, the 
rule adds clarity regarding the type of communication that is 
considered to concern the CRA; second, the rule provides that the 
institution and the NGEP must have knowledge of the CRA communication 
and specifies who must have that knowledge; third, the rule recognizes 
a temporal relationship between the communication and the agreement.
    In addition, the final rule relocates and rewords the CRA 
communication provision from an exemption for NGEPs that have not had a 
CRA communication to a requirement in the definition of a covered 
agreement that the agreement be with a NGEP that has had a CRA 
communication. The final rule also refers to a CRA contact as a "CRA 
communication.'' This relocation and rewording makes the final rule 
easier to read and understand and does not have any substantive effect.
    a. Definition of CRA Communication. In considering the scope of the 
exemption in section 48(e)(1)(B)(iii) for NGEPs that have not had a 
contact concerning the CRA, the agencies have carefully considered the 
words of the statute and the purpose of the exemption as well as the 
comments received by the agencies. The Conference Report for the Act 
indicates that this exemption was designed to provide an exemption from 
the requirements of the CRA Sunshine provisions for a wide range of 
organizations that solicit funds without regard to the CRA. The 
Conference Report lists as examples of the types of groups that might 
qualify for this exemption civil rights groups, community groups 
providing housing or other services in low-income neighborhoods, 
veterans groups, and community theater groups.\8\
---------------------------------------------------------------------------

    \8\ See H.R. Conf. Rep. No. 106-434 at 179 (1999).
---------------------------------------------------------------------------

    The final rule clarifies the definition of a CRA communication by 
adding specificity that was drawn from the examples published in the 
original proposal and in the preamble to the original proposal. Under 
the final rule, a CRA communication is defined to include any of the 
following five types of contacts:
     Any written or oral comment or testimony provided to a 
Federal banking agency concerning the adequacy of the performance under 
the CRA of the insured depository institution, any affiliated insured 
depository institution or any CRA affiliate;\9\
---------------------------------------------------------------------------

    \9\ As discussed more fully below, a "CRA affiliate'' is an 
affiliate of an insured depository institution whose activities are 
considered in evaluating the CRA performance of the institution. 
Accordingly, it is viewed as part of the insured depository 
institution for these purposes.
---------------------------------------------------------------------------

     Any written comment submitted to the insured depository 
institution that discusses the adequacy of the performance under the 
CRA of the institution and that must be included in the institution's 
CRA public file;
     Any discussion or other contact with an insured depository 
institution or any affiliate about providing or refraining from 
providing written or oral comments or testimony to any Federal banking 
agency concerning the adequacy of the performance under the CRA of the 
insured depository institution, any affiliated insured depository 
institution or any CRA affiliate;
     Any discussion or other contact with an insured depository 
institution or any affiliate about providing or refraining from 
providing written comments that concern the adequacy of the 
institution's CRA performance and that must be included in the 
institution's CRA public file; and
     Any discussion or other contact with an insured depository 
institution or affiliate about the adequacy of the performance under 
the CRA of the insured depository institution, any affiliated insured 
depository institution, or any CRA affiliate.
    The first four types of contacts include contacts with a Federal 
banking agency or with an institution or affiliate about contacting a 
Federal banking agency, as well as written communications that, under 
existing rules, must be retained by an institution in its CRA public 
file. The final rule includes a fifth type of contact that relates to 
any discussion or other contact with an institution or affiliate about 
the adequacy of the institution's performance under the CRA.
    In adopting this fifth type of contact, the agencies have carefully 
considered the suggestion of a number of commenters that CRA 
communications be limited to the first four types of agency contacts or 
to discussions with an institution regarding agency contacts. The 
agencies note that the exemption in section 48(e) for a NGEP that has 
not had a CRA communication, by its terms, is available only if the 
NGEP has not "discussed with the institution, or otherwise contacted 
the institution, concerning the CRA.'' By its terms, the exemption 
appears to contemplate that, in order to qualify for the exemption, the 
NGEP not have had discussions or contacts "concerning the CRA.'' 
Contacts "concerning the CRA'' would cover discussions that are not 
limited to discussions regarding providing testimony or comments to an 
agency.
    In order to explain what type of contact is covered by the words 
"concerning the CRA,'' the final rule includes the fifth category for 
discussions or other contacts about the "adequacy'' of the 
institution's performance under the CRA. This reference was included to 
indicate that a contact that is related to how well or how poorly an 
institution is fulfilling its obligation to help meet the credit needs 
of the institution's community as evaluated under the CRA is one of the 
types of contacts that would be most likely to influence a CRA 
agreement, and, consequently, would be a CRA communication that 
disqualifies a NGEP from claiming the exemption in section 
48(e)(1)(B)(iii).
    To help illustrate when a discussion or contact relates to the 
adequacy of an institution's CRA performance, the final rule contains 
several examples of contacts that would be covered and several examples 
of contacts that would be exempt.\10\ These examples address only the 
content of a CRA communication and assume that all other requirements 
regarding the communication (and agreement) are otherwise satisfied.
---------------------------------------------------------------------------

    \10\ Some commenters argued that the examples in the proposed 
rule were helpful in illustrating the scope of the CRA contact 
exemption and requested additional examples. Other commenters argued 
that the examples would broadly discourage certain kinds of contacts 
and should be eliminated. Section ____.1(d) of the final rule states 
that the examples included in the rule are not exclusive, and the 
agencies believe that, on this basis, the examples are a useful 
illustration of the scope of the rule.
---------------------------------------------------------------------------

    Three examples address contacts that are CRA communications and, 
consequently, would cause a written agreement involving the NGEP to be 
a covered agreement. In the first example, a NGEP files a written 
comment with a Federal banking agency in response to a general agency 
request for comments on an application to open a new branch.

[[Page 2058]]

The comment filed by the NGEP states that the applicant insured 
depository institution has successfully addressed the credit needs of 
its community. In the second example, a NGEP states to an executive 
officer of an insured depository institution that the institution must 
improve its CRA performance. Both of these examples illustrate a 
contact in which the CRA performance record of the institution is 
specifically mentioned.
    The statute does not require that a specific reference to the 
Community Reinvestment Act of 1977 be made in order to represent a CRA 
communication, and, in fact, a number of commenters indicated that 
discussions leading to agreements often do not include a specific 
reference to the CRA because the context of the negotiation makes clear 
that the agreement is intended to address CRA performance. To 
illustrate this, an example of a CRA communication has been included 
that involves an oral discussion in which the NGEP claims that the 
institution needs to make more mortgage loans in low- and moderate-
income neighborhoods. The connection with the CRA is indicated by the 
reference to the action requested, which involves activities that are 
often the focus of CRA performance evaluations, along with a statement 
indicating an obligation that the institution take this action, an 
obligation that is considered to arise out of CRA evaluations.
    The final rule also includes several examples of contacts that are 
not considered to be CRA communications. One example involves a fund-
raising letter sent by a NGEP to an insured depository institution and 
to other businesses in the community encouraging all businesses in the 
community to meet their obligation to make the community a better place 
to live by supporting the fund-raising efforts of the NGEP. This 
example illustrates that a fund-raising letter that is widely 
distributed in a way that does not imply an obligation under the CRA is 
not itself considered to be a CRA communication. Similarly, a contact 
by a NGEP with an insured depository institution to simply determine 
what rating the institution received at its most recent CRA performance 
examination would not, by itself, constitute a discussion concerning 
the adequacy of the institution's performance.
    A number of commenters advocated clarifying that the definition of 
CRA communication would not include marketing efforts for products or 
services that might relate to CRA activities. The rule contains two 
examples that illustrate that general marketing efforts and general 
discussions regarding the eligibility of products and services for CRA 
consideration are not considered to be CRA communications unless the 
communication includes a discussion concerning the adequacy of the 
particular institution's CRA performance.
    One example involves a discussion by a NGEP with an insured 
depository institution regarding whether particular loans, services, 
investments, community development activities or other activities are 
generally eligible for consideration by a Federal banking agency under 
the CRA, without any discussion of the adequacy of the CRA performance 
of the insured depository institution or affiliate.
    Another example illustrates a situation in which the NGEP combines 
a general marketing discussion with a discussion of the eligibility of 
particular loans for consideration under the CRA, but without any 
discussion of the adequacy of the CRA performance record of the 
institution or obligation of the institution to take any action related 
to the CRA. In this example, the NGEP engages in the sale or purchase 
of loans in the secondary market and sends a general offering circular 
to financial institutions offering to sell or purchase a portfolio of 
loans. The NGEP then meets with the institution and discusses whether 
specific loans are generally eligible for consideration under the CRA, 
including which loans are made in the institution's community, without 
discussing the CRA performance or obligations of the institution. The 
agencies believe that purchases and sales of loans in the secondary 
market are typically done in the manner illustrated in the example and, 
therefore, generally do not involve a CRA communication.
    The final rule also retains two examples contained in the proposed 
rule regarding other matters. One illustrates that statements made at a 
widely attended conference on a general topic (but not a meeting or 
hearing regarding a specific institution, affiliate or transaction) are 
not considered to be CRA communications. Statements made at widely 
attended conferences on general topics are not likely to be effective 
in influencing CRA agreements and cannot be effectively monitored.
    The other example illustrates that statements made in response to a 
direct request to the specific NGEP from a Federal banking agency (but 
not a general request for comment in connection with an application for 
approval of a transaction or an examination) are not considered to be 
CRA communications. Some commenters suggested that this example be 
deleted because it suggested a preference for statements made by NGEPs 
that have been directly contacted by a banking agency over NGEPs that 
provide information to the agency in the course of a general 
solicitation of public comment. The final rule retains the example 
because the agencies believe that it is important to the agencies' 
ability to meet their statutory obligations under the CRA that the 
agencies obtain information regarding the credit needs of the community 
from sources that include NGEPs that may enter into agreements with 
insured depository institutions. In these circumstances, the contact 
results due to an action by the agency, not an attempt by the NGEP to 
influence the agency or obtain a CRA agreement. Imposing the rule's 
requirements on the NGEP in this context might discourage cooperation 
between NGEPs and the agencies and impede the ability of the agencies 
to obtain useful information regarding the banking and credit needs of 
communities.
    b. Knowledge of CRA Communications. To define when a NGEP has had a 
CRA communication with an insured depository institution for purposes 
of the exemption provided in section 48(e)(1)(B)(iii), it is essential 
to know when a communication is "with the [insured depository] 
institution'' and when it is by a NGEP. In other words, it is essential 
to know who speaks for the institution and for the NGEP. The statute is 
silent on this point.
    A number of commenters suggested that the rule apply only to CRA 
communications that occur with designated officers of the insured 
depository institution or affiliate, such as the CRA compliance officer 
or persons that negotiate covered agreements. In circumstances where 
the individuals involved in or responsible for negotiating agreements 
do not know that a CRA communication has occurred, commenters claimed 
that it would be difficult, if not impossible, for institutions and 
NGEPs to know whether they properly claimed the exemption or were, in 
fact, in violation of the CRA Sunshine provisions.
    For example, casual conversations between a bank teller and a 
customer who is also an employee of a business consulting firm might 
involve CRA activities of the bank and meet a broad reading of the 
proposed definition of CRA contact. Commenters were concerned that, if 
so, the contact could cause a written agreement between the institution 
and business consulting firm

[[Page 2059]]

to be a covered agreement even though the conversation had no influence 
over the agreement because officials of the institution and of the NGEP 
responsible for negotiating the agreement were not aware of the 
conversation.
    To address this, a number of commenters urged the agencies to 
include a requirement that officers of the institution and of the NGEP 
responsible for negotiating agreements have knowledge of the CRA 
communication. Others suggested that contacts include only 
communications with executive officers and the CRA compliance officer 
of insured institutions and with senior officers of NGEPs.
    As noted above, the CRA Sunshine provisions do not indicate who a 
NGEP must contact at an insured depository institution or affiliate in 
order to have been considered to have made a CRA contact for purposes 
of the exemption in section 48(e). The statute is also silent on who 
speaks for a NGEP that is an organization or company, rather than an 
individual.
    The agencies believe that a CRA communication can only have an 
effect on an institution's willingness to enter into an agreement or on 
the terms of an agreement if the communication is with or is known to 
individuals at the organization who are either involved in negotiating 
the agreement or have authority or responsibility for such agreements. 
These are the individuals that speak for the institution and represent 
the institution in its decision making. Moreover, these are the 
individuals that are the most likely to have communications regarding 
the CRA that could lead to or affect the types of agreements that the 
CRA Sunshine provisions are intended to cover.
    There is no evidence in the terms of the CRA Sunshine provisions or 
in the legislative history for those provisions that Congress intended 
to deny the exemption based on CRA contacts that are not known to the 
individuals that are involved with or have the authority to influence 
the negotiation of CRA agreements. In fact, the example referred to in 
the legislative history of the type of organization the exemption was 
designed to protect is a large youth organization with national 
membership.\11\ Given the size, scope and nature of the organization, 
it is impossible to believe that members of that organization have 
not--at some time and in some capacity--had contacts with insured 
depository institutions regarding the CRA. Without a requirement in the 
rule that attributes CRA communications only to members of the 
organization that have authority or responsibility for negotiating 
agreements on behalf of that organization, this organization identified 
in the legislative history would not be able to claim the exemption.
---------------------------------------------------------------------------

    \11\ See H.R. Conf. Rep. No. 106-434 at 179 (1999); 145 Cong. 
Rec. S13887 (daily ed. Nov. 4, 1999).
---------------------------------------------------------------------------

    Moreover, there would be significant burden imposed on both banking 
organizations and NGEPs if organizations and NGEPs are not entitled to 
rely on the exemption in section 48(e)(1)(B)(iii) because of a CRA 
communication between any employee at the organization with any member 
of a NGEP. To assure that no unauthorized contacts occur and that 
agreements are properly exempt under section 48(e)(1)(B)(iii), a 
banking organization and NGEP would be required to monitor all contacts 
by all employees and members of the organization and NGEP. Even in 
organizations of only moderate size, this could entail tracking 
contacts by thousands of employees at a single banking organization. 
The burden from this monitoring effort is likely to be overwhelming 
with few benefits because few if any CRA communications that result in 
CRA agreements are likely to occur among individuals at the 
organization other than those individuals with authority and 
responsibility for these agreements.
    For these reasons, the final rule modifies the proposed rule to 
require that, in order to be a CRA communication that disqualifies a 
NGEP from the exemption in section 48(e)(1)(B)(iii), specified 
individuals at the institution or affiliate and at the NGEP must have 
knowledge of the communication.
    Under the final rule, an insured depository institution or 
affiliate is considered to have knowledge of a CRA communication with a 
NGEP if any of the following representatives of the institution or 
affiliate have knowledge of the contact with the NGEP:
     An employee who approves, directs, authorizes or 
negotiates the agreement with the NGEP;
     An employee who is designated with responsibility for 
compliance with the CRA and who knows that the institution or any 
affiliate of the institution is negotiating, intends to negotiate, or 
has been informed by the NGEP that it expects to request that the 
institution or affiliate negotiate an agreement with the NGEP; or
     An executive officer of the institution or affiliate and 
who knows that the institution or any affiliate of the institution is 
negotiating, intends to negotiate, or has been informed by the NGEP 
that it expects to request that the institution or affiliate negotiate 
an agreement with the NGEP.
    In addition to contacts between an institution or affiliate and a 
NGEP, there are several types of CRA contacts that arise in the agency 
review process or the CRA examination process or that involve records 
that the institution is responsible for maintaining. These contacts are 
of such importance that the institution is deemed by the final rule to 
have knowledge of the communication. In particular, an institution or 
affiliate is deemed under the final rule to have knowledge of any 
testimony provided to a Federal banking agency at a public meeting or 
hearing and of any written comment submitted to the insured depository 
institution that must be and has been included in the institution's CRA 
public file. An institution or affiliate is also considered under the 
final rule to have knowledge of any comment (written or oral) that has 
been made by a NGEP to a Federal banking agency if the comment is 
conveyed in writing by the agency to the insured depository institution 
or affiliate.
    The rule establishes a parallel knowledge requirement for a NGEP. A 
NGEP is considered to have knowledge of a CRA communication if any of 
the following have knowledge of the contact:
     A director, employee or member of the NGEP who approves, 
directs, authorizes or negotiates the agreement with the insured 
depository institution of affiliate;
     A person who functions as an executive officer of the NGEP 
and who knows that the NGEP is negotiating or intends to negotiate an 
agreement with the insured depository institution or affiliate; or
     Where the NGEP is an individual, the individual.
    For purposes of this requirement, an executive officer of an 
institution, affiliate or NGEP is defined as provided in Regulation O 
to include any person that participates or has authority to participate 
in the major policymaking functions of the institution, affiliate or 
NGEP, regardless of the person's title (see 12 CFR 215.2(e)). In 
addition, persons who serve as counsel to or agent for an insured 
depository institution or NGEP are considered to be acting for the 
insured depository institution or NGEP for purposes of receiving 
written comments or testimony from an agency.
    Under the final rule, the designated individuals are not required 
personally to have had the CRA communication. Instead, a CRA 
communication is

[[Page 2060]]

covered if the communication involved or is known to one of the 
designated individuals. The individuals identified in the rule at the 
insured depository institution or affiliate and at the NGEP are the 
individuals who either are involved in or are responsible for CRA 
agreements. A CRA communication with an employee of an insured 
depository institution, affiliate or NGEP that is not known to the 
individuals that negotiate an agreement or to a person with authority 
to intervene in the negotiation of an agreement is unlikely to 
influence the agreement in any way. The knowledge requirement also 
significantly reduces the burden on insured depository institutions, 
affiliates and NGEPs to monitor contacts of employees or members that 
play no role or have no influence in the negotiations or decisions 
regarding agreements.
    c. Timing of CRA Communications. A majority of commenters argued 
that the final rules should require a temporal relationship between the 
CRA communication and the agreement. These commenters contended that a 
communication that occurs long before or anytime after an agreement has 
been entered into does not influence the terms of an agreement or 
encourage an institution to enter into an agreement. Consequently, 
commenters argued that taking account of CRA communications that are 
distant in time from the date of an agreement would be contrary to the 
purpose of the exemption granted in section 48(e)(1)(B)(iii), which 
they argued was to exempt any agreement with an NGEP that has not 
attempted to use the CRA to negotiate the agreement. These commenters 
argued that only CRA communications that occur during some period prior 
to the date of the agreement be considered to be CRA contacts. 
Commenters suggested periods that varied from 30 days to 2 years prior 
to the agreement, with some arguing that only contacts that occur 
during the public comment period for an agency's review of a 
transaction or a CRA examination be considered.
    Many commenters also contended that failure to adopt a temporal 
connection between a CRA communication and a covered agreement would 
forever disqualify a NGEP for the exemption based on one CRA 
communication, regardless of when it occurred, its influence on a 
written agreement or how circumstances may have changed. They argued 
that this would significantly chill free speech and the right to 
provide comments to a Federal agency.
    On the other hand, several commenters argued that section 
48(e)(1)(B)(iii) by its terms does not provide any limitation on the 
timing of a CRA communication, and that the exemption is available only 
to a NGEP that has not had a CRA communication with an agency or 
insured depository institution at any time. These commenters believed 
that the agencies have no authority to adopt a temporal requirement.
    The agencies have taken particular care in considering the views 
presented by commenters on this matter. A purpose of the CRA Sunshine 
provisions is to provide public disclosure of agreements that are in 
fulfillment of the CRA in order to allow the public and Congress to 
monitor how resources paid under these agreements are used.\12\ The 
exemption in section 48(e)(1)(B)(iii) was included in order to provide 
relief from the reporting and disclosure provisions for agreements with 
NGEPs that have not had a discussion concerning the CRA. Thus, the 
agencies believe that the purposes of the exemption and of the CRA 
Sunshine provisions generally assume a connection between the CRA 
communication and the covered agreement.
---------------------------------------------------------------------------

    \12\ See, e.g., 145 Cong. Rec. S13877-78 (daily ed. Nov. 4, 
1999).
---------------------------------------------------------------------------

    As a practical matter, in the case of agreements that are intended 
to be covered by the CRA Sunshine provisions, CRA communications 
normally occur during the period in which the agreement is discussed or 
negotiated, which is a relatively short period immediately before the 
agreement is reached. Indeed, it is during this negotiating period that 
communications regarding the CRA have the most effect on whether a CRA 
agreement will be reached and on what will be the purpose and the terms 
of the agreement.
    This view was supported by commenters representing insured 
depository institutions as well as commenters representing NGEPs, most 
of whom indicated that CRA communications occurred regularly during the 
negotiation period for CRA agreements. This view is also consistent 
with one of the purposes of the CRA Sunshine provisions, which was to 
allow monitoring of agreements that result from contacts concerning the 
CRA.
    The exemption provided in section 48(e)(1)(B)(iii) would, over 
time, become meaningless if the exemption is lost because of statements 
concerning the CRA that are made long before or after an agreement has 
been reached. Without a temporal relationship, all persons that 
potentially may have agreements with insured depository institutions or 
their affiliates regarding activities that receive favorable 
consideration under the CRA would likely feel compelled to maintain 
records that allow them to determine whether a CRA contact had ever 
been made by any person in the organization in order to ensure that the 
NGEP is in compliance with the exemption and the CRA Sunshine 
provisions. This would represent a significant recordkeeping burden on 
persons, including businesses, community organizations and individuals, 
that the exemption was intended to benefit. For many of these 
organizations, this would mean tracking and reviewing contacts from 
numerous employees or members on a continuous and long-term basis.
    This heavy burden is inconsistent with the purpose of the 
exemption. It is also inconsistent with the directive in the CRA 
Sunshine provision that the agencies prescribe regulations designed to 
ensure and monitor compliance with the CRA Sunshine provisions without 
imposing an undue burden on the parties.
    The agencies believe that recognizing a temporal relationship is an 
effective and objective method for identifying CRA communications that 
are most likely to have influenced the shape or the existence of an 
agreement. Conversely, by not covering communications made at a time 
that is distant from or after the agreement, the final rule 
substantially reduces the potential that communications that are 
unrelated to an agreement will be covered without excluding 
communications that have the most direct effect on the agreement. 
Moreover, a temporal relationship focuses on the fact that in nearly 
all, if not all, cases CRA communications are made during the period in 
which the potential for an agreement is discussed and the agreement is 
negotiated. Thus, a temporal relationship supports the purpose of the 
CRA Sunshine provisions, including the exemption in section 
48(e)(1)(B)(iii), of identifying and exempting NGEPs that have not made 
CRA communications in an effort to obtain or negotiate a CRA agreement.
    For these reasons, the final rule provides a time frame designed to 
recognize the connection between the communication and the agreement. 
To be deemed not to have had a CRA communication under section 
48(e)(1)(B)(iii), a NGEP must not have had a CRA communication within 3 
years prior to entering into the agreement in the case of oral or 
written communications with a Federal banking agency. The NGEP also 
must not have

[[Page 2061]]

had within the 3 years prior to the agreement any written CRA 
communication with the relevant insured depository institution or any 
of its affiliates. In addition, the NGEP must not have had within the 3 
years prior to the agreement any oral communication with the relevant 
insured depository institution or any of its affiliates about providing 
(or refraining from providing) comments or testimony to a Federal 
banking agency or comments to the institution's CRA public file where 
such communications occur in connection with a request to, or agreement 
by, the institution or affiliate to take any action that is in 
fulfillment of the CRA. Finally, the NGEP must not have had any other 
oral CRA communication with the relevant insured depository institution 
or any of its affiliates concerning the adequacy of the institution's 
CRA performance within one year prior to entering into the agreement.
    The agencies selected the three year period for communications with 
an agency, certain types of discussions with an institution or 
affiliate about providing testimony or comments to an agency, and other 
written contacts with an institution or affiliate based on several 
considerations. In this regard, existing regulations generally require 
an insured depository institution to maintain written comments in its 
CRA public file for a period of three years.\13\ The agencies' 
examination schedules also generally call for the agencies to evaluate 
the CRA performance of large insured depository institutions every 3 
years. Regulations issued by the Office of Management and Budget and 
applicable to Federal agencies also discourage any collection of 
information that would require regulated entities to retain records for 
more than three years.\14\
---------------------------------------------------------------------------

    \13\ See 12 CFR 25.43(a)(1) (OCC); 12 CFR 228.43(a)(1) (Board); 
12 CFR 345.43(a)(1) (FDIC); and 12 CFR 563e.43(a)(1)(OTS).
    \14\ See 5 CFR 1320.5(d)(2)(iv).
---------------------------------------------------------------------------

    The agencies selected the one year period for oral communications 
with an insured depository or affiliate (other than those relating to 
agency comments or testimony under the circumstances described above) 
based on several other considerations. One consideration was that many 
commenters suggested a time period in the one year range. Also, a 
shorter time period for oral communications with an insured depository 
institution or affiliate recognizes that, as a practical matter, oral 
communications are harder to monitor and remember than written 
communications. The agencies believe, however, that insured depository 
institutions and affiliates are more likely to document and remember 
oral communications with a NGEP that concern providing comments or 
testimony to a Federal banking agency where such communications also 
involve a request to, or agreement by, the institution or affiliate to 
take additional actions in fulfillment of the CRA. Accordingly, the 
agencies have included such oral communications in the three year 
period described above.
    The agencies believe these time frames provide reasonable assurance 
that the communication and the agreement are not connected and would 
not impose an undue burden on the parties. Moreover, commenters 
indicated that where a CRA communication occurs it is most often occurs 
immediately before the parties enter into an agreement. This contact 
period is well within the time periods adopted by the rule.
    d. Additional Exemptions. A number of commenters requested that the 
Board exercise the authority granted by the CRA Sunshine provisions to 
provide exemptions for certain types of agreements that may involve a 
CRA communication.\15\ In particular, commenters requested exemptions 
for law firms and consulting firms, trade associations, owners of real 
estate that enter into sale or lease agreements with banks, community 
development financial institutions (CDFIs), and participants in the 
secondary loan market such as government-sponsored enterprises.
---------------------------------------------------------------------------

    \15\ See 12 U.S.C. 48(h)(3)(B).
---------------------------------------------------------------------------

    The agencies believe that many of the concerns raised by these 
commenters are addressed by modifications made to the fulfillment, CRA 
communication and other sections of the rule. In addition, a wide range 
of agreements between insured depository institutions and affiliates 
and law firms will not be covered under the final rule because the 
definition of "nongovernmental entity or person'' in the final rule 
excludes any person or entity that is acting as a representative of an 
insured depository institution or affiliate. (See section ____.11.) 
Accordingly, many agreements between law firms and insured depository 
institutions and affiliates would not be considered covered agreements 
because the agreement provides that the law firm will be acting as a 
representative of the institution or affiliate.
    In order for agreements to be covered agreements, the NGEP must 
have had a CRA communication with an insured depository institution or 
affiliate that is a party to the agreement or an affiliate of a party 
to the agreement and the agreement must be made pursuant to, or in 
connection with, the fulfillment of the CRA, as described below. The 
agencies believe that most traditional consulting agreements that 
insured depository institutions and affiliates enter into will not meet 
both of these requirements.
    CDFIs that are insured depository institutions or affiliates of 
insured depository institutions are not covered by the CRA Sunshine 
provisions to the extent that they have agreements with other insured 
depository institutions or affiliates. CDFIs that are not insured 
depository institutions or affiliates thereof are considered NGEPs 
under the rule (see section ____.11.), and there appears to be no 
reason to provide a special exemption for this class of NGEPs. In light 
of the other changes and clarifications incorporated in the final rule, 
the Board also has not adopted any additional exceptions. The Board 
retains the authority to grant exemptions from the CRA communication 
provisions if experience in administering these provisions demonstrate 
that such action is appropriate.
4. Fulfillment of the CRA for Purposes of the CRA Sunshine Provisions
    The CRA Sunshine requirements of section 48 of the FDI Act apply 
only to covered agreements. To be a covered agreement, section 48(e)(1) 
requires that the agreement be made pursuant to, or in connection with, 
"the fulfillment of the Community Reinvestment Act.'' Section 48(e)(2) 
defines "fulfillment'' for this purpose as "a list of factors that 
the appropriate Federal banking agency determines have a material 
impact on the agency's decision'' to approve or disapprove an 
application for a deposit facility under section 803 of the CRA or to 
assign a rating to an insured depository institution under section 807 
of the CRA.
    In defining fulfillment for purposes of the CRA Sunshine 
provisions, the agencies proposed the lending, investment, and service 
activities enumerated in the agencies' CRA Regulations as the list of 
factors that have a material impact on the relevant agency 
decisions.\16\ This list of factors is:
---------------------------------------------------------------------------

    \16\ 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).
---------------------------------------------------------------------------

    (1) Home purchase, home improvement, small business, small farm, 
community development, and consumer lending as described in the lending 
test portion of the CRA

[[Page 2062]]

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 a small insured depository institution, the lending and 
other activities described in the small insured depository institution 
performance standard of the CRA Regulations; and
    (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.
    The proposed rule also provided that an agreement was in 
fulfillment of the CRA if it called for any NGEP to provide or refrain 
from providing written or oral comments or testimony to any Federal 
banking agency concerning the 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.\17\
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    \17\ The CRA Regulations generally require the agencies to 
consider public comments and comments included in an institution's 
CRA public file when evaluating an institution's CRA performance. In 
addition, the CRA Regulations require the agencies to consider 
written or oral comments submitted to the agency when acting on 
applications for a deposit facility.
---------------------------------------------------------------------------

    Some commenters suggested that this list of factors was too broad 
and covered normal business arrangements that were not intended to be 
covered by the CRA Sunshine provisions. In particular, commenters 
suggested that, by referring to a list of factors that includes all 
home mortgage loans wherever and to whomever made, the proposal could 
cover activities for which no CRA performance credit would ordinarily 
be granted to the lending institution.
    A number of commenters also argued that the agencies should only 
consider an activity to be in fulfillment of CRA if the activity is 
itself "material'' to the CRA performance rating of an insured 
depository institution or to an evaluation of its CRA performance in an 
application for a deposit facility. These commenters suggested, among 
other options, that an agreement be considered to be in fulfillment of 
CRA only if it involved loans in more than one of the assessment areas 
served by the insured depository institution, loans of significant 
amounts based on the size of the institution, or activities that would 
change the CRA rating of the institution.
    The CRA Sunshine statute specifically defines "fulfillment'' to 
mean "a list of factors that the appropriate Federal banking agency 
determines have a material impact on the agency's decision'' to act on 
an application for a deposit facility or assign a CRA rating. Under the 
terms of the statute, the agency must identify factors that have a 
material impact. The statute determines the threshold of amounts of 
resources that are sufficient to trigger the CRA Sunshine requirements. 
For this reason, the agencies did not adopt the suggestion of 
commenters that the agencies modify the list of factors to include a 
measure of the size of an activity.
    The agencies recognize, on the other hand, that the list of factors 
in the original proposal was very broad and could be read to cover 
activities that do not implicate the purposes of the CRA Sunshine 
provisions. To address this, the final rule has been amended to provide 
that performance of a listed activity, other than providing or 
refraining from providing CRA-related comments to an agency or 
providing comments that must be included in the institution's CRA 
public file, is considered to be in fulfillment of the CRA for purposes 
of the CRA Sunshine provisions only if the activity is of the type that 
is likely to receive favorable consideration by a Federal banking 
agency in evaluating the performance under the CRA of the insured 
depository institution that is a party or an affiliate of a party to 
the agreement.
    This is intended as a general test that does not turn on whether or 
not the activity in fact receives credit at the next CRA performance 
examination or is considered as part of a review of CRA performance in 
a future application for a deposit facility. Instead, an insured 
depository institution or NGEP can make this judgment on the basis of 
general experience with the CRA performance review process for the 
particular type of insured depository institution. An insured 
depository institution is likely to receive favorable consideration for 
an activity if the activity (1) received favorable consideration at the 
institution's previous CRA performance examination, (2) would address a 
deficiency that an agency cited in the most recent public evaluation of 
the CRA performance of the institution, or (3) is of the type that is 
favorably considered by the agencies in reviewing the CRA performance 
of comparable insured depository institutions. For example, under item 
(3), an activity conducted by a small, wholesale or limited-purpose 
insured depository institution (as defined in the CRA Regulations) 
would likely receive favorable consideration if the agencies favorably 
consider such an activity when reviewing the CRA performance of other 
small, wholesale or limited-purpose institutions, respectively.
    Home mortgage lending in low- and moderate-income neighborhoods in 
an insured depository institution's assessment area typically is 
considered favorably. On the other hand, home mortgage lending in 
middle- and upper-income neighborhoods, while taken into account in 
determining the size and scope of an institution's lending activities 
under the CRA Regulations, generally does not receive favorable 
consideration. However, the context in which the insured depository 
institution operates may dictate otherwise. For example, this would be 
the case if the institution operates only in middle- and upper-income 
areas or makes loans only in high cost areas.
    In focusing on activities that are likely to receive favorable 
consideration, the agencies recognize that there is a difference 
between the purpose of the CRA Regulations, which must broadly take 
account of the context in which an insured depository institution 
operates, and the purpose of the CRA Sunshine provisions. The agencies 
do not intend the list of factors under the CRA Sunshine provisions in 
any way to indicate any change in the information that the agencies 
review under the CRA Regulations or to affect in any way the manner in 
which examinations are conducted or CRA performance ratings given. 
Accordingly, section ____.4 specifically provides that the term 
"fulfillment of the CRA'' is only defined for purposes of the CRA 
Sunshine regulation. In addition, as discussed above, section ____.1(c) 
provides that the final rule does not affect in any way the CRA, the 
CRA Regulations or any agency's interpretations or

[[Page 2063]]

administration of the CRA or CRA Regulations.
    As noted above, the final rule also provides that the list of 
factors representing fulfillment of the CRA for purposes of the CRA 
Sunshine provisions includes providing or refraining from providing 
oral or written comments or testimony to an agency concerning the 
performance under the CRA of an insured depository institution that is 
a party to an agreement or that is an affiliate of a party to an 
agreement. Providing or refraining from providing written comments 
concerning the performance under the CRA of an insured depository 
institution that is a party to an agreement or that is an affiliate of 
a party to an agreement where the comments must be included in the 
institution's CRA public file also is always a factor that represents 
fulfillment of the CRA. Providing oral or written comments or testimony 
to an agency concerning the adequacy of an institution's CRA 
performance or providing written comments that must be included in the 
institution's CRA public file are activities that are always considered 
to be in fulfillment of the CRA under the final rule, without regard to 
whether the communication comments favorably or unfavorably on the CRA 
performance of the institution.
    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 avoid coverage 
under the Act by reaching an oral understanding, such as, for example, 
an 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.
    Commenters generally supported the original proposal to exclude 
from the list of factors activities designed to ensure compliance with 
the 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.). Commenters 
generally agreed that inclusion of these activities in the list of 
factors could have an unintended and detrimental impact on compliance 
with and enforcement of the fair lending laws by, for example, 
discouraging agreements to hire "mystery shoppers'' to test the 
institution's compliance with the fair lending laws or agreements to 
settle a fair lending complaint and improve fair lending performance. 
Accordingly, the list of factors has not been changed to include these 
or other activities.
5. Value
    An agreement is subject to the CRA Sunshine provisions 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 for under the agreement and does not require that these 
payments or loans actually be made to a party to the agreement.\18\
---------------------------------------------------------------------------

    \18\ See 12 U.S.C. 1831y(e)(1)(A)(i).
---------------------------------------------------------------------------

    The final rule follows the proposed rule in providing that 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, will be considered in determining whether an agreement meets 
the rule's dollar thresholds. However, the rule provides that 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 section ____.2(e)(2) of the rule and the 
discussion under section III.A.2.b. above concerning qualifying loans).
    Under the final rule, 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 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 final rule provides that the annual value of an agreement that 
does not have a fixed schedule of payments is considered to be the 
entire value of the agreement. (See section ____.2(e)(1).) Commenters 
were mixed in their view of how to determine the value of a multi-year 
agreement that does not specify when payments should be made. Some 
commenters believed that the annual value of these agreements should be 
determined by amortizing the total value over the life of the 
agreement, or by reference to actual disbursements, while others 
suggested that the entire value be credited to the first year of the 
agreement. The final rule credits the entire value of this type of 
agreement to the first year of the agreement. This approach is the 
easiest to calculate and is the least likely to cause an agreement 
unexpectedly to become a covered agreement.
    The agencies requested comment on how to value 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. Commenters that addressed this issue 
suggested allowing the parties to estimate the value of the agreement 
in these cases or to assume that the agreement had no value.
    In circumstances where an agreement does not specify the amount of 
payments, grants, loans or other consideration to be provided under the 
agreement, the agencies believe that the parties must reasonably 
estimate the value of the agreement. The final rule allows insured 
depository institutions that choose to report a list of covered 
agreements to report the estimated value of the agreement at that time 
(see section III.B.3. below).
    The following are examples of the value provisions of the rule. 
These examples, which are not included in the rule, illustrate only the 
application of the dollar thresholds of the rule, and assume that the 
agreement otherwise qualifies as a covered agreement.

    Example 1: An insured depository institution enters into a 
written agreement with a small business investment company pursuant 
to which the institution will invest $25,000 in the company. Since 
the agreement does not establish a schedule of payments, the entire 
$25,000 is deemed to be provided in the first year. Accordingly, the 
agreement meets the dollar threshold criterion to be a covered 
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 low- and 
moderate-income individuals during the next year. The community 
organization will not receive any funds or other resources from the 
insured depository institution or its affiliates under the

[[Page 2064]]

agreement. The agreement meets the value threshold criterion for a 
covered agreement under the proposed rule because the value of the 
agreement for purposes of the CRA Sunshine provisions does not 
depend on who receives payments or resources under the agreement.
    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 rule if it were a separate agreement (see 
section ____.2(c)(2)). 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 NGEP 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 2001, $8,000 in 2002, and $11,000 in 2003. The agreement 
exceeds the dollar threshold criterion of the rule because the 
agreement provides for payments in excess of $10,000 during 2003. 
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.
6. Related Agreements Considered a Single Agreement
    In two circumstances, section 48(e) 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.\19\ The agencies received very few comments 
concerning the aggregation provisions of the proposed rule. Some 
commenters stated that the aggregation rules should be deleted or 
should apply only when necessary to prevent circumvention of the CRA 
Sunshine provisions. The agencies have retained the aggregation rules 
included in the final rule because the CRA Sunshine provisions require 
the aggregation of agreements in certain circumstances, and excluding 
the aggregation principles from the final rule would require 
institutions and NGEPs to consult both the statute and the rule to 
determine compliance with those provisions.
---------------------------------------------------------------------------

    \19\ See 12 U.S.C.1831y(e)(1) and (2).
---------------------------------------------------------------------------

    Other commenters requested clarification of certain aspects of the 
aggregation rules. Those matters are addressed below.
    a. Agreements entered into by the same parties. Under the final 
rule, 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 NGEP 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 NGEP 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. The following examples illustrate this aggregation 
principle and assume that a CRA communication has occurred before each 
agreement.

    Example 1: In November, 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 April of the next 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. 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 January of the following year, the 
institution and organization enter into a written agreement for the 
institution to make a $5,000 CRA qualified investment in a 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 48(e)(1)(A)(ii) 
requires the aggregation of separate but "substantively related 
contracts'' even where the contracts are entered into with different 
NGEPs. 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.
    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 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 avoiding 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. The following examples 
illustrate this aggregation principle and assume that a CRA 
communication occurred before each contract.

    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.
7. Multiparty Agreements
    The agencies requested comment on how the rule should apply in 
circumstances where a covered agreement involves several parties and a 
CRA communication has been made by or concerning only one of the 
parties. This issue arises where several NGEPs enter into a covered 
agreement with an insured depository institution and only one of the 
entities or persons has made a CRA communication or where a NGEP has a 
CRA communication concerning one insured depository institution and

[[Page 2065]]

subsequently enters into a covered agreement jointly with the 
institution and several other unaffiliated insured depository 
institutions. Several commenters indicated that the disclosure and 
reporting requirements of the rule should only apply to parties to a 
covered agreement that have engaged in a CRA communication.
    The final rule provides that a NGEP that is a party to a covered 
agreement that involves multiple NGEPs is not required to comply with 
the requirements of the rule if two requirements are met. (See section 
____.3(d).) First, the NGEP must not have had a CRA communication 
concerning any insured depository institution or affiliate that is a 
party to, or an affiliate of a party to, the agreement. Second, no 
officer, employee or representative of the NGEP identified in section 
____.3(b)(4) of the rule may have knowledge at the time the agreement 
is entered into that another NGEP that is a party to the agreement has 
had a CRA communication. Similarly, an insured depository institution 
or affiliate that is a party to a covered agreement that involves 
multiple insured depository institutions or affiliates is not subject 
to the disclosure and reporting requirements if (1) no NGEP that is a 
party to the agreement has had a CRA communication with or concerning 
the institution or affiliate, and (2) no officer or employee of the 
institution or affiliate identified in section ----.3(b)(3)(i) has 
knowledge that the NGEP has had a CRA communication with another 
insured depository institution or affiliate that is a party to the 
agreement. In the context of multiparty agreements, covering parties 
that have knowledge of a CRA communication by other parties to the 
agreement assures that parties do not avoid the requirements of the CRA 
Sunshine provisions by refraining from making a CRA communication 
because the party is aware that the communication has already been made 
by another party.

B. Disclosure of Covered Agreements

    Section 48(a) 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.\21\ The disclosure requirements of section 48 apply only 
to covered agreements entered into after November 12, 1999.\22\
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    \21\ 12 U.S.C. 1831y(a).
    \22\ The rule includes special transition provisions governing 
the disclosure of covered agreements entered into after November 12, 
1999, but before the effective date of the rule. See section III.D 
below.
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1. Disclosure to the Public
    Section ____.6 of the final 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. A covered agreement must be made 
available during the entire term of the agreement and the 12 month 
period following expiration of the agreement, without regard to whether 
funds are paid or received under the agreement during the year in which 
a request for the agreement is made. A party may charge the requestor 
for the costs of copying and sending an agreement, so long as the fees 
are reasonable.
    Commenters generally supported having maximum flexibility to make 
covered agreements available to the public and to charge requestors 
reasonable fees to cover the costs of making covered agreements 
available.\23\ Accordingly, the final rule does not prescribe any 
particular method a party must employ in making a covered agreement 
available to the public. The agencies expect that parties to covered 
agreements will employ methods of making agreements available that will 
not require requestors to go through unreasonable efforts to obtain the 
agreements. For example, a party may make a covered agreement available 
to any individual or entity by mailing it to the requestor. A party 
also may 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 at an office within 
that area. In addition, a party may choose to publish a list of its 
covered agreements and provide the full text of an agreement only to 
any individual or entity that requests a particular agreement 
identified in the list.
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    \23\ Some commenters questioned whether a party to a covered 
agreement may also charge a requestor for the cost of searching its 
records for covered agreements. The final rule, like the provisions 
of the CFA Regulations governing the public availability of 
information in an insured depository institution's CRA public file, 
does not authorize the recovery of search costs. See 12 CFR 25.43 
(OCC); 12 CFR 228.43 (Board); 12 CFR 345.43 (FDIC); 12 CFR 563e.43 
(OTS).
---------------------------------------------------------------------------

    Several commenters requested clarification concerning how a party 
should comply with the statute's public disclosure requirement when a 
covered agreement consists of or involves multiple documents. For 
example, commenters questioned whether all of the supporting 
documentation relating to a loan or grant must be disclosed. The final 
rule follows the statute and requires only that the written contract, 
arrangement, or understanding be disclosed and does not require the 
disclosure or supporting documentation. When the covered agreement 
consists of a single document, that document must be disclosed. When 
the covered agreement consists of or is reflected by multiple 
documents, the party may disclose all of the written documentation 
relating to the agreement or only those documents that set forth the 
primary terms of the agreement, including (1) the names and addresses 
of the parties to the agreement; (2) the amount of any payments, fees, 
loans, or other consideration to be made or provided by any party to 
the agreement; (3) any description of how the funds or other resources 
provided under the agreement are to be used; and (4) the term of the 
agreement (if the agreement establishes a term).
    Several commenters requested that the rule establish a fixed period 
of time, such as 30 days, within which a party must respond to a 
request for a covered agreement. The final rule follows the text of 
section 48 and does not specify a time period for responding to public 
requests for an agreement. The agencies expect that the parties will 
promptly respond to requests from the public for covered agreements.
    As with the proposed rule, the final rule gives discretion to an 
insured depository institution to fulfill its public disclosure 
obligation by placing a copy of a covered agreement in its CRA public 
file and making it available in accordance with the procedures set 
forth in the CRA Regulations relating to public files. Several 
commenters recommended that affiliates of insured depository 
institutions that are parties to covered agreement also be permitted to 
disclose a covered agreement to the public by placing it in the CRA 
public file of an affiliated insured depository institution. The final 
rule allows affiliates to fulfill their disclosure obligations in this 
manner so long as the affiliated insured depository institution then 
makes the agreement publicly available in accordance with the rules 
governing public disclosure of information in the CRA public file. When 
an affiliate relies on the CRA public file of an insured depository 
institution affiliate to fulfill the disclosure obligations of the 
rule, it must refer members of the public that

[[Page 2066]]

request a copy of the affiliate's covered agreements to the affiliated 
insured depository institution.
    The proposed rule provided that the parties' obligation to make a 
covered agreement publicly available terminated 12 months after the end 
of the term of the agreement, and the agencies requested comment on 
whether this time period should be shorter or longer. Several 
commenters stated that the time period proposed was reasonable, while 
others advocated a shorter time period or no time period at all after 
the term of an agreement. In order to fulfill the purposes of section 
48, the agencies believe that the parties to a covered agreement must 
make the agreement available to the public for a reasonable period of 
time. After reviewing the comments received, the final rule continues 
to require covered agreements to be available to the public for a 
period of 12 months after the term of the agreement.
2. Treatment of Confidential and Proprietary Information
    Section 48(h)(2)(A) directs the agencies to ensure that their 
implementing regulations "do not impose undue burden on the parties 
[to a covered agreement] and that proprietary and confidential 
information is protected.''\24\ This provision must be read in harmony 
with section 48(a), which requires that a covered agreement "shall be 
in its entirety fully disclosed, and the full text thereof made 
available * * * to the public.''\25\ Other provisions of section 48 
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.
---------------------------------------------------------------------------

    \24\ 12 U.S.C. 1831y(h)(2)(A).
    \25\ 12 U.S.C. 1831y(a).
---------------------------------------------------------------------------

    The proposed rule provided that a party could withhold information 
contained in a covered agreement from public disclosure only if the 
party received a determination from the relevant supervisory agency 
that such information could be withheld by the agency under the Freedom 
of Information Act (5 U.S.C. 552) (FOIA). The agencies noted, moreover, 
that the Act's directive that terms of covered agreements be made 
available to the public could require disclosure of some types of 
information that an agency might normally be able to withhold from 
disclosure under the FOIA.
    The agencies requested comment on a number of issues associated 
with the disclosure of potentially confidential and proprietary 
information in covered agreements, including the likelihood that 
covered agreements would contain confidential and proprietary 
information, whether FOIA standards should be applied in determining 
whether information can be withheld, and whether alternative procedures 
could be adopted.
    Commenters indicated that covered agreements may often contain 
information they ordinarily consider to be confidential or proprietary, 
such as information about new and innovative programs an insured 
depository institution is offering, underwriting standards for loans, 
competitive pricing information, or personal data that would otherwise 
be protected under applicable privacy rules. Some commenters expressed 
concern that the requirement to disclose publicly covered agreements 
could harm their competitive position or dissuade insured depository 
institutions and their affiliates from entering into agreements with 
NGEPs that are in fulfillment of the CRA.
    Many commenters indicated that requesting a determination of 
whether information can be withheld from disclosure from the relevant 
supervisory agencies would be burdensome and time consuming. They 
suggested the agencies streamline the process for obtaining such 
determinations or, alternatively, provide a list of information that a 
party could withhold from disclosure without obtaining an agency 
determination. Many commenters expressed support for using the FOIA as 
the standard for determining whether information can be withheld from 
public disclosure.
    In light of the comments received, the agencies have revised the 
procedures for withholding information from public disclosure to 
clarify the process for determining whether information can be withheld 
from public disclosure and limit the circumstances in which the 
relevant supervisory agency is involved in making the determination. As 
discussed above, section 48 directs that certain information in covered 
agreements be disclosed. Accordingly, the final rule requires the 
disclosure of the following information contained in a covered 
agreement:
     The names and addresses of the parties to the agreement;
     The amount of any payments, fees, loans, or other 
consideration to be made or provided by any party to the agreement;
     Any description of how the funds or other resources 
provided under the agreement are to be used;
     The term of the agreement (if the agreement establishes a 
term); and
     Any other information that the relevant supervisory agency 
determines is not properly exempt from public disclosure.
    The agencies anticipate making a determination that additional 
information in a covered agreement must be disclosed only in response 
to a specific request for such a determination. (See section 
____.6(b)(4).) Any such request must be in writing and submitted to the 
relevant supervisory agency in accordance with its rules concerning the 
availability of information.\26\
---------------------------------------------------------------------------

    \26\ See, 12 CFR Part 4 (OCC); 12 CFR Part 261 (Board); 12 CFR 
Part 309 (FDIC); 12 CFR Part 505 and 31 CFR Part 1 (OTS).
---------------------------------------------------------------------------

    The final rule allows a party to a covered agreement to withhold 
from public disclosure any information not described above if the party 
believes the relevant supervisory agency could withhold that 
information under The FOIA. There is no requirement that the party 
obtain a determination from the relevant supervisory agency that such 
information can be withheld. Standards the agencies use to determine 
whether they can withhold information in their records from public 
disclosure records are contained in subsection (b) of The FOIA (5 
U.S.C. 552(b)).
    With regard to the disclosure of information the agencies receive 
under the final rule, including copies of covered agreements and annual 
reports, section ____.8 provides that such information will be made 
available in accordance with The FOIA and the rules regarding the 
availability of information of the relevant supervisory agency.
3. Filing of Covered Agreement With Agencies
    Section 48(a) also requires each party to a covered agreement to 
make the agreement available to the appropriate agency. The proposed 
rule required each insured depository institution or affiliate that is 
a party to a covered agreement to file a complete copy of the agreement 
with each relevant supervisory agency within 30 days after entering 
into the agreement. NGEPs were obligated to file a covered agreement 
with a relevant supervisory agency within 30 days of receiving a 
request from the agency.
    Some commenters requested that the agencies allow insured 
depository institutions and affiliates, like NGEPs, to make a covered 
agreement available to the relevant supervisory agency only upon an 
agency's request. Others suggested that the rule allow insured 
depository institutions and affiliates the option of filing with the 
agencies either

[[Page 2067]]

copies of covered agreements or a list of their covered agreements. 
Commenters also suggested that the agencies allow insured depository 
institutions and affiliates to file covered agreements with the 
agencies on a periodic basis, such as once each quarter or once each 
year, rather than 30 days after entering into each agreement, or by 
placing agreements in an institution's CRA public file.
    The agencies believe that it is important for the agencies to 
receive notice when parties enter into a covered agreement and to be 
able to gain prompt access to the covered agreement. Such notice and 
access allow the agencies to monitor compliance by the parties with the 
disclosure and reporting requirements of section 48 and respond to 
requests from interested members of the public for copies of, or 
information related to, covered agreements. The agencies, however, have 
sought to streamline the agency disclosure obligations imposed on 
insured depository institutions and affiliates in a manner consistent 
with these principles.
    In particular, the final rule allows an insured depository 
institution or affiliate to fulfill its agency disclosure obligation by 
filing, within 60 days after the end of each calendar quarter, either a 
complete copy of each covered agreement entered into during the 
calendar quarter, or a list of all covered agreements entered into 
during the calendar quarter. If the institution or affiliate elects to 
file a list of agreements with the agency, the list must provide the 
following information concerning each covered agreement entered into 
during the relevant calendar quarter:
     The name and address of each party to the agreement;
     The date the agreement was entered into;
     The estimated total value of all payments, fee, loans and 
other considerations to be provided by the institution or any affiliate 
under the agreement; and
     The date the agreement terminates.
    An institution or affiliate that files a list of covered agreements 
with the relevant supervisory agency must provide any relevant 
supervisory agency a complete copy of any covered agreement referenced 
in the list within 7 calendar days of receiving a request from the 
agency for the agreement. The rule allows an agency to request a copy 
of an agreement referenced in a list for up to 36 months after the term 
of the agreement. The final rule also continues to allow insured 
depository institutions and affiliates that are parties to the same 
covered agreement to file jointly the appropriate documents with each 
relevant supervisory agency.
    NGEPs that are parties to covered agreements must make a complete 
copy of each agreement available to any relevant supervisory agency on 
the agency's request. The NGEP must provide the requesting agency with 
a copy of the agreement within 30 calendar days of the agency's 
request. As with disclosure to the public, a NGEP's obligation to make 
an agreement available to an agency terminates 12 months after the end 
of the agreement's term.
    Whenever an insured depository institution, affiliate or NGEP files 
a copy of a covered agreement with an agency-either at the agency's 
request or, in the case of an institution or affiliate, as part of a 
quarterly filing-the institution, affiliate or NGEP must provide the 
agency with a complete copy of the agreement. If the party proposes to 
withhold information contained in the agreement, the party must also 
file a public version of the agreement that excludes such information 
and provide an explanation justifying the exclusions under the FOIA. 
The agencies will not keep information confidential under the FOIA that 
a party would be required to disclose to the public under section 48. 
Accordingly, the parties may not propose to withhold, and the agencies 
will not withhold under the FOIA, the types of information in a covered 
agreement that a party must make publicly available under section 
____.6(b)(3) of the rule.
4. Relevant Supervisory Agency
    The final rule continues to use the term "relevant supervisory 
agency'' to identify the appropriate agency for a particular covered 
agreement. The agencies have moved the definition of this term from 
section ____.6 of the rule to the general definitions section (section 
____.11) because the term is used in multiple sections of the rule. The 
agencies otherwise have made no substantive changes to the definition. 
Under the rule, the "relevant supervisory agency'' for a covered 
agreement is:
     The OCC in the case where--

--The parties to the agreement include a national bank or subsidiary of 
a national bank; or
     A national bank or subsidiary or CRA affiliate of a 
national bank provides funds or resources under the agreement;

     The Board in the case where--

-- The parties to the agreement include a state member bank, subsidiary 
of a state member bank, bank holding company, or subsidiary of a bank 
holding company (other than an insured depository institution or 
subsidiary thereof); or
--A state member bank or subsidiary or CRA affiliate of a state member 
bank provides funds or resources under the agreement;

     The FDIC in the case where--

-- The parties to the agreement include a state nonmember bank or 
subsidiary of a state nonmember bank; or
--A state nonmember bank or subsidiary or CRA affiliate of a state 
nonmember bank provides funds or resources under the agreement; or

     The OTS in the case where--

-- The parties to the agreement include a savings association, 
subsidiary of a savings association, savings and loan holding company 
or subsidiary of a savings and loan holding company; or
--A savings association or subsidiary or CRA affiliate of a savings 
association provides funds or resources under the agreement.

    Under the definition, 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.
    Several commenters expressed concern that requiring filings with 
multiple agencies under these circumstances could increase the burden 
of complying with the statute. Some commenters asserted that the rule 
should allow all filings to be made with one regulatory body, such as 
the Federal Financial Institutions Examinations Council, and asserted 
that such a procedure would reduce burden or help ensure the consistent 
review of confidential and proprietary information that may be 
contained in a covered agreement.
    Section 48 directs that the "appropriate Federal banking agency'' 
receive agreements and annual reports under the statute. The agencies 
continue to believe that the rule properly identifies the appropriate 
Federal banking agency for a covered agreement by ensuring 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.

[[Page 2068]]

C. Annual Reports

    The Act requires each NGEP, insured depository institution, or 
affiliate of an insured depository institution that is a party to a 
covered agreement to file a report at least annually concerning 
disbursement, receipt and use of funds under the covered agreement. 
Section ____.7 of the final rule implements these annual reporting 
requirements. The rule's annual reporting obligations apply only to 
covered agreements entered into on or after May 12, 2000.\27\
---------------------------------------------------------------------------

    \27\ The rule includes special transition provisions governing 
the filing of annual reports that relate to the fiscal year of any 
party to a covered agreement that ends prior to January 1, 2001. See 
section III.D below.
---------------------------------------------------------------------------

    The proposed rule required each party to a covered agreement to 
file an annual report for the fiscal year that the agreement was 
entered into and each subsequent fiscal year during the term of the 
agreement. The proposal also provided that a NGEP did not have to file 
an annual report for any fiscal year during the term of a covered 
agreement if the NGEP did not receive any funds under the covered 
agreement in that year.
    Commenters generally supported the reporting exception provided to 
NGEPs. Several commenters requested that the agencies also provide 
insured depository institutions and affiliates a similar exception from 
the annual reporting requirement for years in which an institution or 
affiliate does not make or receive payments, fees, or loans under a 
covered agreement.
    Section 48 requires a NGEP that is a party to a covered agreement 
to file a report at least once a year providing "an accounting of the 
use of funds received pursuant to'' the covered agreement during the 
preceding 12-month period.\28\ The Act requires an insured depository 
institution or affiliate that is a party to a covered agreement to file 
an annual report concerning funds or other resources provided or 
received by the institution or affiliate under the agreement and any 
loans, investments, or services provided by any party under the 
agreement during the preceding 12-month period.\29\
---------------------------------------------------------------------------

    \28\ See U.S.C. 1831y(c)(1).
    \29\ See U.S.C. 1831y(b).
---------------------------------------------------------------------------

    In light of these requirements and the comments received, the final 
rule provides that a NGEP must file an annual report for each fiscal 
year in which the NGEP receives or uses funds or other resources under 
a covered agreement. Because the statute focuses on both the receipt 
and use of funds by a NGEP under a covered agreement, the agencies have 
modified the rule to require a NGEP to file an annual report for any 
fiscal year in which the NGEP uses funds received under a covered 
agreement, even if the funds were not received in that year. An insured 
depository institution or affiliate must file an annual report for a 
fiscal year if the institution or affiliate made or received any 
payments, fees, or loans under a covered agreement during the fiscal 
year, or has data that must be reported on loans, investments, and 
services provided by any party to the agreement during the fiscal year.
    These requirements ensure that a party files an annual report for 
each year that the party has information that must be provided to the 
relevant supervisory agency, and that an annual report is not filed for 
any fiscal year where the relevant party has no information that must 
be reported. The agencies note that a NGEP must file an annual report 
for a fiscal year if it received or used any funds or other resources 
under the covered agreement during the fiscal year, even if the amount 
of funds or resources received or used are less than the value 
thresholds discussed above for defining a covered agreement. Any annual 
report must be filed with each relevant supervisory agency for the 
covered agreement.
    The following examples illustrate these reporting requirements:

    Example 1: A savings association and a community development 
organization enter into a 3-year covered agreement pursuant to which 
the association will invest $100,000 in the organization. The 
savings association in fact provides $95,000 to the organization in 
the first year of the agreement and the remaining $5,000 to the 
organization in the second year of the agreement, and the 
organization uses the funds in the fiscal years that they are 
received. The organization must file an annual report with the OTS 
for each of the first two fiscal years of the agreement because the 
organization received and used funds under the agreement in those 
years. The savings association also must file an annual report for 
each of the first fiscal two years of the agreement since it made 
payments in those years. Because the organization does not receive 
or use funds under the covered agreement during the third year of 
the agreement, the organization and savings association would not be 
required to file an annual report with the OTS for that year.
    Example 2: A state nonmember bank enters into a covered 
agreement with a community organization to make $1 million in 
community development grants in the community over the next 5 years. 
The community organization will not receive any funds or other 
resources under the agreement (including under the grants as they 
are made), nor will it provide any services under the agreement. 
Both parties must make the covered agreement available to the public 
and the FDIC. In addition, the state nonmember bank must file an 
annual report for any year in which it makes payments 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 and uses 
no funds or resources under the agreement.
1. Annual Reports Filed by NGEPs
    Section 48(c) requires each NGEP that is a party to a covered 
agreement to file a report at least annually with the appropriate 
banking agency providing an accounting of how the NGEP used any funds 
received under the covered agreement during the previous year. The 
proposed rule required the annual report filed by a NGEP to set forth 
(1) the name and mailing address of the NGEP, (2) information 
sufficient to identify the covered agreement for which the report is 
filed, such as by providing the names of the parties to the agreement 
and the date it was entered into or by providing a copy of the 
agreement, and (3) the amount of funds received by the NGEP under the 
covered agreement during the fiscal year. The final rule retains these 
information requirements.
    a. Itemized List of Uses of Funds. Section 48(c) requires that the 
annual report of a NGEP provide a detailed, itemized accounting of how 
the NGEP used during the previous year any funds or resources received 
under the covered agreement. The proposed rule required the accounting 
to be provided in one of two ways--either a description of the specific 
purpose or purposes for which the funds were used, or an itemized list 
of the amount of general purpose funds used for pre-defined expense 
categories. The proposed rule required a NGEP to use the specific 
purpose reporting method for any funds or other resources that the NGEP 
received and allocated for a specific purpose. Under the specific 
purpose reporting method, the NGEP would provide in its annual report a 
description of each specific purpose for which the funds or resources 
were used during the fiscal year; and the amount of funds or resources 
used for each specific purpose during the fiscal year.
    For funds or other resources that were used for general or 
unspecified purposes, the proposed rule required the NGEP to report the 
amount of funds used during the fiscal year for each category of 
expenses included in the detailed, itemized list set forth in section 
48(c)(3). These categories required the NGEP to report the aggregate 
amount of funds used during the fiscal year for compensation of 
officers, directors, and employees; administrative expenses; travel 
expenses; entertainment expenses;

[[Page 2069]]

payment of consulting and professional fees; and other expenses and 
uses.
    Commenters generally supported the itemized list and recommended 
that the agencies not use their statutory authority to expand the list 
of expense categories included in section 48(c)(3). The comments 
received concerning the proposed specific purpose reporting method were 
mixed. Some commenters supported the streamlined reporting procedures 
for specific purpose funds because they believed it would require the 
reporting of less information than the itemized list of expenses. Some 
commenters that supported this reporting method requested that the 
agencies provide NGEPs with the option of using the specific purpose 
reporting method or the detailed itemized list to report the use of 
specific purpose funds.
    Several commenters opposed the specific purpose reporting method on 
the basis that section 48(c) does not provide for this type of 
reporting. In addition, some commenters expressed concern that the 
proposed rule's definition of specific purpose funds was too broad or 
unclear or requested additional guidance on when a NGEP receives and 
uses funds or other resources for a specific purpose.
    Section 48(c)(1) requires a NGEP to provide annually "an 
accounting of the use of funds received pursuant to each [covered] 
agreement during the preceding 12-month period.'' \30\ Section 48(c)(3) 
provides that this annual accounting "shall include a detailed, 
itemized list of the uses to which such funds have been made, including 
compensation, administrative expenses, travel, entertainment, 
consulting and professional fees paid, and such other categories, as 
determined by regulation by the appropriate Federal banking agency.'' 
\31\ The final rule implements these requirements by providing that the 
annual report of an NGEP must provide a detailed, itemized list of how 
any funds or other resources received by the NGEP at any time under the 
covered agreement were used during the fiscal year using the categories 
of expenses included in section 48. Unlike the proposal, the list must 
disclose how the NGEP during the fiscal year used any funds or 
resources received under the covered agreement, including funds or 
resources that were received in a previous fiscal year but that were 
not used in that fiscal year. The agencies have modified the rule in 
this way to more closely track the provisions of section 48.
---------------------------------------------------------------------------

    \30\ 12 U.S.C. 1831y(c)(1).
    \31\ 12 U.S.C. 1831y(c)(3).
---------------------------------------------------------------------------

    Under section 48 and the rule, the itemized list of expenses must 
include, at a minimum, the amount of funds used during the fiscal year 
for--
     Compensation of officers, directors, and employees;
     Administrative expenses;
     Travel expenses;
     Entertainment expenses;
     Payment of consulting and professional fees; and
     Other expenses and uses (specify expense or use).
    The annual report may reflect the total amount of funds from all 
sources that the NGEP used during the fiscal year for the types of 
expenses listed above. The agencies may determine from this and other 
information included in the annual report the proportion of funds that 
the NGEP received under the covered agreement that were used for each 
category of expenses listed above. If a NGEP uses funds under a covered 
agreement for certain categories of expenses, such as "travel 
expenses,'' the annual report need only reflect the amount used for 
that category.
    The agencies also believe that it is appropriate and consistent 
with the statute to allow a NGEP, where possible, to provide a more 
detailed accounting of how it used funds received under a covered 
agreement. A more detailed accounting can be provided when a NGEP 
allocates and uses funds received under a covered agreement for a 
specific purpose that is more limited than the categories of expenses 
listed above, i.e., it is for a specific expense in one of the 
categories listed above.
    A specific purpose would not include a general statement that funds 
were received, for example, for services rendered or to fund a general 
program or to fund a project that involved spending in multiple 
categories from the more detailed list. Instead, as explained below, 
the final rule clarifies that this reporting option is available only 
if the NGEP allocated and used the funds received under the agreement 
for a purpose that is at least as specific and limited as a category of 
expenses in the itemized list, such as to purchase a computer or to 
fund a specific trip.
    Accordingly, the final rule allows a NGEP that allocates and uses 
funds received under a covered agreement for a specific purpose to 
report how it used such funds by using the detailed, itemized list, or 
stating the amount received and used for the specific purpose and 
providing a brief description of the specific purpose. In the event a 
NGEP chooses to use the more specific reporting option, the NGEP must 
use the detailed, itemized list to report the use of any funds that 
were not allocated and used for a specific purpose.
    The final rule includes examples illustrating these reporting 
provisions. (See section ____.7(d)(5).) The first example involves a 
NGEP that receives $15,000 under a covered agreement and uses these 
funds to support its general operations during the fiscal year. In 
these circumstances, the NGEP's annual report must state that it 
received $15,000 during the fiscal year under the agreement and provide 
the total amount of funds and resources that the NGEP used during the 
fiscal year for each category of expenses included in the detailed, 
itemized list (i.e., for compensation, administrative, travel and 
entertainment expenses, consulting and professional fees, and other 
expenses and uses).
    The second example involves an organization that receives $15,000 
under a covered agreement and allocates and uses these funds during the 
fiscal year to purchase computer equipment to support its activities. 
Because the organization allocated and used the funds for a purpose 
that is more narrow and limited than the categories of expenses in the 
itemized list, the organization would have the option of reporting 
either the total amount it used during the year for each type of 
expense in the itemized list of expenses described above, or a 
statement that it used the $15,000 to purchase computer equipment.
    The third example involves a group that receives funds under a 
covered agreement and uses some of these funds during the fiscal year 
for a specific purpose (to fund a particular business trip) and some of 
the funds for other purposes. Since the group did not use all of the 
funds for a specific purpose, the group's annual report must provide 
the amount that the group used during the year for each category of 
expenses in the itemized list. The group also could report that it 
allocated and used a specified portion of the funds for the business 
trip and briefly describe the trip.
    b. Use of Other Reports. As noted above, section 48(h)(2)(A) 
directs the agencies to ensure that their regulations implementing 
section 48 "do not impose an undue burden on the parties.'' \32\ The 
Conference Report for the Act also indicates that the agencies should 
allow reporting parties to use reports prepared for other purposes to 
fulfill the annual reporting

[[Page 2070]]

requirements.\33\ Accordingly, the final rule does not require that a 
NGEP's annual report be prepared on a special form or in a particular 
format. Instead, the final rule provides that a NGEP's annual report 
may consist of or incorporate reports or documents that the NGEP 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.
---------------------------------------------------------------------------

    \32\ 12 U.S.C. 1831y(h)(2)(A).
    \33\ See H.R. Conf. Rep. No. 106-434 at 179 (1999).
---------------------------------------------------------------------------

    The preamble to the proposed rule indicated that the agencies had 
reviewed several tax forms commonly filed by tax-exempt nonprofit 
organizations and noted that Internal Revenue Service Return of 
Organization Exempt From Income Tax on Form 990 requires the filer to 
provide information that is at least as detailed, and in some cases 
more detailed, than the list of expenses required under section 48(c). 
Accordingly, the preamble to the proposed rule specifically indicated 
that NGEPs could use a completed Form 990 to provide the information 
required by the rule.
    Commenters expressed overwhelming support for allowing NGEPs to use 
documents prepared for other purposes to fulfill the rule's reporting 
requirements. Commenters in particular praised the agencies for 
allowing NGEPs to use a Form 990 to fulfill their reporting obligations 
and many requested that the agencies incorporate this guidance in the 
text of the final rule. In response to these requests, the rule 
expressly allows a NGEP to use a Form 990 to provide the information 
required by the rule and includes an example illustrating how a NGEP 
could use a Form 990 to provide the expense information required by the 
rule. (See section ____.7(d)(3) and (d)(5)(i).)
    Some commenters also requested that the agencies clarify whether a 
NGEP could use other tax forms, such as Short Form Return of 
Organization Exempt From Income Tax on Form 990EZ, to fulfill its 
annual reporting obligation. The final rule continues to provide that 
the annual report of a NGEP may consist of or incorporate any report or 
Federal or state tax form so long as the documents submitted, when 
taken as a whole, contain all of the information required by the rule. 
Accordingly, a NGEP could incorporate a copy of an IRS Form 990EZ in 
its annual report. However, unless the form contains all the 
information required by the rule, the NGEP must supplement the form 
with the additional information necessary to fulfill the rule's 
reporting requirements.
    c. Consolidated Annual Reports Permitted. The proposed rule 
permitted a NGEP that is a party to 5 or more covered agreements to 
file a single consolidated report covering all of the NGEP's covered 
agreements. The agencies requested comment on whether consolidated 
reports should be permitted when a NGEP is party to 2 or more covered 
agreements. Commenters generally expressed support for permitting a 
NGEP to file consolidated reports when it is a party to 2 or more 
agreements, and the final rule makes that change.
    A NGEP's consolidated report must identify the NGEP filing the 
report and each agreement covered by the report. In addition, in order 
to facilitate the tracking of payments under covered agreements, the 
final rule requires that any consolidated annual report filed by a NGEP 
indicate the amount the NGEP received under each covered agreement 
included in the report during the fiscal year. 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. The rule includes an example of the 
type of information that must be included in a consolidated annual 
report filed by a NGEP. (See section ____.7(d)(5)(iv).)
2. Annual Reports Filed by Insured Depository Institutions and 
Affiliates
    The annual reporting requirements for insured depository 
institutions and affiliates are largely specified in section 48(b) and 
the final rule, like the proposal, includes these requirements. The 
annual report for an insured depository institution or affiliate must 
identify the entity filing the report and identify the covered 
agreement to which the annual report relates. In addition, the annual 
report must provide:
     The aggregate amount of payments, fees and loans (listed 
separately) provided by the insured depository institution or affiliate 
under the agreement to any other party during the fiscal year;
     The aggregate amount of payments, fees and loans (listed 
separately) received by the insured depository institution or affiliate 
under the agreement from any other party during the fiscal year;
     A description of the terms and conditions of any payments, 
fees, or loans provided to, or received from, another party under the 
agreement; and
     The aggregate amount and number of loans, amount and 
number of investments, and amount of services provided under the 
covered agreement to any NGEP 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 another party.

    These informational requirements track those established by the 
statute.
    The rule allows an insured depository institution and an affiliate 
that are parties to the same covered agreement to file a single, 
consolidated report for the agreement. The proposed rule also allowed 
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. To reduce burden and in response to comments, 
the final rule allows insured depository institutions or affiliates 
that are a party to 2 or more covered agreements to file a consolidated 
annual report.
    The proposed rule would have permitted the consolidated report of 
an insured depository institution or affiliate to provide aggregate 
data on the amount of payments, fees and loans provided and received by 
the institution or affiliate under all agreements included in the 
report, and on the loans, investment and services provided by the other 
parties to all of the agreements included in the report. In order to 
facilitate the tracking of payments made by insured depository 
institutions and affiliates under covered agreements, the final rule 
requires that any consolidated report filed by an institution or 
affiliate state the amount of payments, fees, and loans provided by the 
institution or affiliate under each covered agreement included in the 
report. The final rule continues to allow a consolidated report to 
provide aggregate information concerning any payments, fees and loans 
received by the institution or affiliate under all of the agreements 
included in the report, and concerning any loans, investments and 
services provided by other parties to the agreements included in the 
report.
3. When and Where Must Annual Reports Be Filed
    The final rule adopts the approach for filing annual reports taken 
in the proposed rule and provides that each party to a covered 
agreement generally must prepare and file an annual report with each 
relevant supervisory agency for the fiscal year in which the party 
enters into the agreement and each

[[Page 2071]]

subsequent fiscal year during the term of the covered agreement. In 
order to provide maximum flexibility, the final rule also permits a 
party to elect to use the calendar year as its fiscal year for purposes 
of the rule. Using a fiscal year reporting period permits a party to 
coordinate preparation of its annual reports with other documents or 
reports that typically are prepared on a fiscal year basis. Commenters 
generally supported this approach and the agencies have made no changes 
to the proposed rule.
    As in the proposal, 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. Some commenters 
requested additional time to prepare and file annual reports. The 
agencies believe allowing 6 months for the filing of annual reports 
gives the parties to a covered agreement a reasonable amount of time to 
gather the information necessary from the previous fiscal year and 
prepare the report. In addition, the time period is similar to the time 
period that parties have to prepare tax forms and annual reports 
relating to the previous fiscal year. For example, IRS rules generally 
require an IRS Form 990 to be filed by the 15th day of the 5th month 
after the end of an organization's fiscal year.
    Consistent with section 48(c)(2), the rule allows a NGEP to fulfill 
its filing requirement by providing its annual report to the insured 
depository institution or affiliate that is a party to the agreement. 
In response to comments, the agencies have revised the rule to allow a 
NGEP up to 6 months (rather than 5) after the end of its fiscal year to 
provide a copy of its annual report to the appropriate insured 
depository institution or affiliate. Any NGEP that uses this filing 
option must instruct the institution or affiliate to file the report 
with all of the relevant supervisory agencies on behalf of the NGEP. An 
insured depository institution or affiliate that receives an annual 
report from a NGEP in this manner must forward it to the relevant 
supervisory agencies within 30 days. This procedure 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 NGEP may not.

D. Effective Dates of Disclosure and Reporting Requirements

    As discussed above, the disclosure provisions of section 48 apply 
to all covered agreements entered into after November 12, 1999, and the 
annual reporting provisions apply to all covered agreements entered 
into on or after May 12, 2000.
1. Agreements That Are Amended or Renewed After Statutory Dates
    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 in 
accordance with the rule's requirements if the agreement meets the 
criteria to be a covered agreement.

    Example: An insured depository institution and a community 
organization entered into a written agreement in January 1999 that 
calls for the institution to place an ATM in the local community by 
January 2001. In September 2000, the parties entered 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, each party 
must disclose the modified agreement in accordance with the rule and 
the insured depository institution must file any annual reports 
required by the rule concerning the agreement. (The organization 
would not be required to file an annual report because it does not 
receive any funds or resources under the agreement.)
2. Transition Rules
    Section ____.10 of the final rule contains special transition 
provisions governing the disclosure and reporting for covered 
agreements that were entered into after the dates set forth above, but 
before April 1, 2001, the effective date of the final rule.
    a. Disclosure to Public. The final rule provides that a covered 
agreement that was entered into after November 12, 1999, and that 
terminates before April 1, 2001, the effective date of the rule, must 
be made publicly available in accordance with the procedures in section 
____.6 of the rule until April 1, 2002, one year after the effective 
date of the rule. The agencies believe this requirement provides the 
public with a reasonable opportunity to obtain copies of the agreements 
consistent with the requirements of section 48. Parties to such covered 
agreements are not required to make the agreements available to the 
public until the final rule becomes effective.
    b. Disclosure to Relevant Supervisory Agency. The final rule 
requires a NGEP to make any covered agreement that was entered into 
after November 12, 1999, and that terminates prior to April 1, 2001, 
available to the relevant supervisory agency upon request until April 
1, 2002. Insured depository institutions and affiliates that are a 
party to any such agreement must make the agreement available to the 
relevant supervisory agency by June 30, 2001, by providing the agency 
either a copy of the agreement or a list identifying the agreement in 
accordance with section ____.6(d) of the rule.
    c. Annual Reporting. The final rule also includes a special 
transition rule for annual reports that relate to fiscal years that end 
on or before December 31, 2000. Under this provision, if an insured 
depository institution, affiliate or NGEP is a party to a covered 
agreement that was entered into between May 12, 2000, and December 31, 
2000, and has a fiscal year that ends within that period, the 
institution, affiliate or NGEP must file an annual report concerning 
the covered agreement with the relevant supervisory agency by June 30, 
2001, relating to that fiscal year.\34\ The annual report must provide 
the information described in section ____.7 of the rule. For any fiscal 
year that ends after December 31, 2000, the party would follow the 
reporting procedures in section ____.7 of the rule.

    \34\ A NGEP may comply with this requirement by providing a copy 
of the annual report by June 30, 2001, to an insured depository 
institution or affiliate that is a party to the agreement in 
accordance with section ____.7(f)(2).
---------------------------------------------------------------------------

    Example. On May 30, 2000, a NGEP and insured depository 
institution entered into a covered agreement for the institution to 
make a grant of $30,000 in two $15,000 installments. The first 
installment was made on June 15, 2000 and the second on December 15, 
2000. The fiscal year of the NGEP ended on June 30, 2000. The NGEP 
is required to file an annual report for its fiscal year that ended 
June 30, 2000, no later than June 30, 2001. This report would 
reflect the June 15, 2000, payment received by the NGEP. Under 
section ____.7 of the rule, the NGEP would then file a second annual 
report by December 31, 2001, for its fiscal year ending June 30, 
2001. This second annual report would reflect the December 15, 2000, 
payment.

E. Compliance Provisions

    The final rule makes no substantive changes to the compliance 
provisions that were proposed. Section 48(g) specifically provides that 
nothing in section 48 authorizes the agencies to enforce the provisions 
of any covered agreement. The proposed rule incorporated this provision 
and the final rule retains it. (See section ____.9(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 NGEPs are private matters between the parties 
and are not enforced by the agencies.

[[Page 2072]]

    Some commenters objected that the compliance provisions in section 
____.9 (a) through (c) only apply to NGEPs and do not apply to insured 
depository institutions and affiliates. The agencies may enforce 
compliance by insured depository institutions and affiliates with the 
disclosure and reporting requirements of section 48 using the cease and 
desist and other enforcement powers granted in section 8 of the FDI 
Act.\35\ 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 NGEPs that are parties to a 
covered agreement. Section 48(f) instead includes special compliance 
provisions applicable to NGEPs that are party to a covered 
agreement.\36\
---------------------------------------------------------------------------

    \35\ See 12 U.S.C. 1818.
    \36\ Other Federal statutes outside the banking laws also may 
provide for penalties if an insured depository institution, 
affiliate, or NGEP fails to comply with the agency disclosure and 
reporting requirements of section 48 or includes false information 
in a filing made with an agency under section 48. See, e.g. 18 
U.S.C. 1001.
---------------------------------------------------------------------------

    Under these provisions, the material and willful failure of a NGEP 
to comply with section 48 may cause the related covered agreement to be 
unenforceable. In particular, under the section 48(f)(1), if the 
appropriate agency determines that a NGEP has willfully failed to 
comply with section 48 in a material way, and the NGEP does not comply 
with the law after receiving notice and a reasonable period of time to 
correct the area of noncompliance, the agreement thereafter is 
unenforceable by operation of section 48.
    Consistent with section 48(f)(3), the rule provides that 
inadvertent or de minimis errors in reports or other documents filed 
with an agency under the rule will not subject the filing party to any 
penalty. The rule requires the agencies to provide a NGEP written 
notice and an opportunity to respond before determining the NGEP has 
not complied with the rule, and allows the NGEP at least 90 days to 
correct a willful and material violation.
    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 
interpretation that is most consistent with the language and purpose of 
the Act. The agencies note that an alternative construction could 
encourage NGEPs 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 NGEP, the appropriate agency may assist the institution or 
affiliate in identifying a successor NGEP to assume the 
responsibilities of the NGEP under a covered agreement that has become 
unenforceable.
    Section 48(f)(1)(B) 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, section 48 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.

F. Other Definitions and Rules of Construction

1. Nongovernmental Entity or Person
    Section 48 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 
"NGEP'' instead of the phrase "nongovernmental entity or person.'' 
Some commenters requested that the agencies exclude certain types of 
entities or organizations from the definition of NGEP, including 
government-sponsored enterprises, credit unions, and quasi-public 
entities.
    The final rule adopts the definition of nongovernmental entity or 
person as proposed. The agencies believe this definition properly 
identifies those entities and persons that are not governmental 
entities and persons and, therefore, are within the meaning of the 
statutory term "nongovernmental entity or person.'' Under the rule, a 
NGEP means 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 
NGEP 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 not 
be considered a NGEP under the rule, unless the entity independently 
qualified for an exclusion.
    The final rule also does not treat insured depository institutions 
and their affiliates as NGEPs. Section 48 draws a distinction between 
insured depository institutions and their affiliates, on one hand, and 
NGEPs on the other hand, and imposes separate obligations on these two 
groups.
2. Affiliate
    The final rule adopts the term "affiliate'' as proposed. The term 
is defined in the FDI Act by reference to the Bank Holding Company 
Act.\37\ 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.
---------------------------------------------------------------------------

    \37\ 12 U.S.C. 1813(w)(6); 12 U.S.C. 1841(k).
---------------------------------------------------------------------------

    The final rule retains the 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 NGEP may have a CRA 
communication and enter into an agreement with the acquiring insured 
depository institution (or holding company thereof) concerning the 
adequacy of the CRA performance of the target institution. The agencies 
believe these types of contacts constitute a CRA communication under 
section 48 and that any agreement resulting from such communication is 
a covered agreement if it otherwise meets the requirements of section 
48. 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 
communication occurs. An example illustrating this point is provided in 
section ____.3(c)(1)(iv) of the final rule.
3. CRA Affiliate Treated as Insured Depository Institution
    The CRA Regulations provide that an insured depository institution, 
at its

[[Page 2073]]

election, may request that an agency consider certain activities 
conducted by an affiliate in evaluating the CRA performance of the 
insured depository institution.\38\ In these circumstances, the 
selected activities of the affiliate are viewed as activities of the 
insured depository institution. Accordingly, the proposed rule provided 
that a contact concerning this type of affiliate, referred to as a 
"CRA affiliate,'' to be the equivalent of a contact concerning an 
insured depository institution. Similarly, the proposed rule provided 
that an agreement would be considered to be in fulfillment of the CRA 
if it concerned the performance of any of the activities in the list of 
factors performed by a "CRA affiliate'' of an insured depository 
institution.
---------------------------------------------------------------------------

    \38\ 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 agencies requested comment on the treatment of CRA affiliates 
and how agreements should be treated that relate to affiliates that are 
not CRA affiliates at the time an agreement is entered into, but become 
CRA affiliates during the term of an agreement. Commenters generally 
did not object to the definition of CRA affiliate or treating 
activities of such an affiliate as the activities of the insured 
depository institution for purposes of the CRA Sunshine provisions. 
However, several commenters objected to an existing agreement becoming 
a covered agreement during the term of an agreement as a result of the 
designation of an affiliate as a CRA affiliate.
    In light of the comments, section ____.11(c) of the final 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 prior to the agreement. In 
addition, the rule provides that an insured depository institution or 
affiliate may designate a company as a "CRA affiliate'' at any time 
prior to the time a covered agreement is entered into by informing the 
NGEP that is a party to the agreement of such designation. Section 
____.4(b) of the final 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. The agencies are of the 
view that an agreement that relates to an affiliate that is not a CRA 
affiliate at the time the parties enter into an agreement cannot become 
a covered agreement if the affiliate becomes a CRA affiliate during the 
term of the agreement.

    Example 1: The director of a NGEP submits a written comment to a 
Federal banking agency concerning the adequacy of the CRA lending 
performance of a mortgage company that is affiliated with an insured 
depository institution. One year later, the director of the NGEP 
negotiates an agreement with the mortgage company for it to provide 
$100 million in mortgage loans in low- and moderate-income 
neighborhoods in the next year. 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. The agreement is in fulfillment of the CRA 
for purposes of section 48 and the NGEP has engaged in a CRA 
communication under section ____.3(a)(1) 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. Accordingly, the agreement is a 
covered agreement.
    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. Accordingly, the agreement is not a covered agreement.
4. Term of Agreement
    Under the final 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 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 NGEP 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 NGEP to file an annual 
report for the next year.

IV. Regulatory Flexibility Act Analysis

Office of the Comptroller of the Currency

    The Regulatory Flexibility Act (5 U.S.C. 604) requires an agency to 
publish a final regulatory flexibility analysis when promulgating a 
final rule that was subject to notice and comment, unless the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. The OCC believes that this rule 
will not have a significant economic impact on a substantial number of 
small national banks, national bank subsidiaries, or NGEPs that are 
party to covered agreements with national banks or their subsidiaries. 
This final rule restates the statutory requirements and includes 
provisions designed to reduce the regulatory burden on entities and 
persons of all sizes. The OCC has prepared the following final 
regulatory flexibility analysis because the Gramm-Leach-Bliley Act 
imposes requirements that are new to the OCC and those subject to the 
rule, and because the OCC is unable at this time to estimate 
definitively the economic impact of compliance with the new 
requirements of the rule.
Need for and Objectives of Rule
    As discussed above, this rule implements the CRA Sunshine 
provisions of section 48 of the Federal Deposit Insurance Act (12 
U.S.C. 1831y), which was enacted by section 711 of the Gramm-Leach-
Bliley Act (Pub. L. 106-102, 113 Stat. 1465 (1999)). The rule's 
objectives are to inform insured depository institutions, affiliates of 
insured depository institutions, and NGEPs on how to comply with 
section 48 by:
    (1) Identifying those agreements that are covered by section 48, 
including describing the circumstances in which an agreement is in 
fulfillment of the CRA;
    (2) Providing procedures for the disclosure of covered agreements 
to the public and the relevant supervisory agency; and
    (3) Providing procedures for preparing and filing annual reports 
relating to covered agreements with the relevant supervisory agency.

[[Page 2074]]

New Compliance Requirements
    The final rule contains new compliance requirements that require 
insured depository institutions, affiliates, and NGEPs 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 
48 and apply regardless of the size of the insured depository 
institution, affiliate, or NGEP. The agencies have sought to reduce 
burden of complying with these requirements wherever possible and 
consistent with section 48.
Comments on the Initial Regulatory Flexibility Analysis
    Although few commenters addressed the initial regulatory 
flexibility analysis specifically, many commenters addressed the 
regulatory burdens associated with complying with the final rule. Many 
commenters noted that section 48 was broadly worded and commended the 
agencies' efforts to clarify which agreements are subject to section 48 
and how a party to a covered agreement may comply with the statute's 
disclosure and reporting obligations. Many commenters, however, 
expressed concern that the scope of agreements that were covered by the 
proposed rule would result in coverage of a wide range of agreements 
between banking organizations and NGEPs that were not intended to be 
subject to the disclosure and reporting requirements of section 48. 
Many commenters also expressed concern that the statute and the rule 
would discourage banking organizations from entering into agreements 
with NGEPs to provide loans, investments or banking services in their 
local communities.
    Commenters also provided specific comments on the disclosure and 
annual reporting procedures of the proposed rule. These comments are 
discussed in detail in part III. Commenters generally supported 
granting the parties to covered agreements maximum flexibility in 
disclosing covered agreements to the public and allowing the parties to 
charge reasonable fees for making covered agreements available. Some 
commenters requested clarification concerning how a party should comply 
with the public disclosure requirements when a covered agreement 
consists of multiple documents. Some commenters supported requiring the 
public disclosure period to terminate 12 months after the term of the 
agreement, as proposed, while others recommended a shorter time period 
or no time period at all after the term of the agreement.
    Many commenters expressed concern that the procedures in the 
proposed rule for obtaining a determination from an agency that 
information in covered agreements may be withheld from public 
disclosure was vague and overly complicated. Commenters also expressed 
concern with the requirement that an insured depository institution and 
affiliate file each covered agreement with the relevant supervisory 
agency within 30 days of entering into the agreement.
    Several commenters objected to the proposed rule's requirement that 
a NGEP that receives and uses funds or other resources for a specific 
purposes must follow reporting procedures that are different from the 
detailed, itemized list that is described in section 48, while others 
supported the proposal. Commenters also requested additional detail on 
the circumstances in which funds or other resources are received for a 
specific purpose. Commenters overwhelmingly supported the proposed 
rule's provisions allowing NGEPs to use Federal tax forms and other 
reports to fulfill the reporting requirements of the rule.
    Several commenters requested that insured depository institutions 
and affiliates have an exception for filing annual reports for fiscal 
years in which they have no information to report. Some commenters also 
requested that a form be adopted for insured depository institutions 
and affiliates to use in filing annual reports. In addition, commenters 
generally supported the option of filing consolidated reports for 
NGEPs, insured depository institutions, and affiliates that are parties 
to two or more covered agreements.
Minimizing Impact on Small Institutions
    Section 48 directs the OCC and the other agencies to ensure that 
the rule does not impose an undue burden on the parties to covered 
agreements. The final rule includes several provisions that are 
designed to reduce the burden and minimize the impact of the rule on 
insured depository institutions, affiliates and NGEPs, including small 
institutions, affiliates and NGEPs. Many of the provisions of the 
proposed rule that were supported by commenters were retained in the 
final rule and other provisions were added in response to comments 
received by the OCC and the other agencies.
    The final rule gives parties to covered agreements flexibility in 
determining how to make a covered agreement available to the public. 
The rule permits an insured depository institution or affiliate to use 
the institution's CRA public file to disclose covered agreements to the 
public. Parties to covered agreements also may charge a requestor 
reasonable fees for the cost of copying and mailing covered agreements. 
In response to comments received, the final rule provides a streamlined 
method parties may follow to determine whether information in a covered 
agreement can be withheld from public disclosure and additional 
guidance on the types of information that must be disclosed.
    The rule requires a NGEP to file a covered agreement with a 
relevant supervisory agency only upon request of the agency. In 
addition, in response to comments, the final rule allows an insured 
depository institution or affiliate to make a covered agreement 
available to the relevant supervisory agency by either filing a copy of 
the covered agreement with the agency or filing with the agency a list 
that briefly describes the covered agreements to which the institution 
or affiliate is a party. These filings must be made 60 days after the 
end of the relevant calendar quarter. The final rule also permits two 
or more insured depository institutions and affiliates that are parties 
to the same covered agreement to file jointly the information that must 
be disclosed to the relevant supervisory agency.
    The final rule provides exceptions to the annual reporting 
requirements for NGEPs and insured depository institutions and 
affiliates under certain circumstances. It also permits parties to 
covered agreements to file their annual reports on either a fiscal year 
or calendar year basis. The rule also allows an insured depository 
institution, affiliate, or NGEP that is a party to 2 or more covered 
agreements to prepare a single, consolidated annual report concerning 
all of the covered agreements.
    NGEPs are permitted to incorporate into their annual reports other 
reports that have been prepared for other purposes, such as tax returns 
and financial statements, to fulfill the annual reporting requirement. 
The final rule also permits NGEPs that receive and use funds for a 
specific purpose (that is, a purpose that is more specific and limited 
than the reporting categories listed in the regulation) either to 
provide a detailed, itemized list of the uses of funds by the NGEP or a 
brief description of the use and the amount of funds used for the 
specific purpose. NGEPs are permitted to file an annual

[[Page 2075]]

report with the relevant supervisory agency by filing it directly with 
the agency or by filing it with the insured depository institution or 
affiliate that is a party to the covered agreement with instructions to 
forward the annual report to the relevant supervisory agency.
Entities and Persons Covered
    The OCC's final rule applies to national banks, subsidiaries of 
national banks and NGEPs that enter into covered agreements with a 
national bank or a national bank subsidiary. Section 48 does not 
authorize the OCC to provide an exemption for covered agreements based 
on the size of the insured depository institution, affiliate or NGEP 
that enters into the agreement.
    The OCC and the other agencies requested estimates of the burden 
the proposed rule would impose on insured depository institutions and 
affiliates and NGEPs. One large bank estimated that it was a party to 
over 500 agreements in 1999 that would have been considered covered 
agreements under the proposed rule. A national organization that 
promotes the availability of credit and capital in underserved 
communities commented that it and its 720 community organization 
members have negotiated 300 "CRA agreements'' with insured depository 
institutions and their affiliates.
    The agreements that trigger the disclosure and reporting 
requirements of the final rule 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. The OCC believes 
that larger national banks and NGEPs are likely to be party to more 
covered agreements than smaller national banks and NGEPs. The OCC and 
the other agencies have modified the rule in several respects in order 
to clarify the types of agreements that are covered by section 48, and 
the types of agreements that are exempt from coverage. Although some 
commenters submitted estimates of the number of covered agreements they 
would be a party to under the proposed rule, the OCC does not believe 
the information provided to date is sufficiently comprehensive to 
enable it to estimate definitively the total number of national banks, 
subsidiaries, or NGEPs that are parties to covered agreements.

Federal Reserve System

    The Regulatory Flexibility Act (5 U.S.C. 604) requires an agency to 
publish a final regulatory flexibility analysis when promulgating a 
final rule that was subject to notice and comment, unless the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. The Board believes that this 
rule will not have a significant economic impact on a substantial 
number of small state member banks, bank holding companies, affiliates 
of bank holding companies, and NGEPs that are a party to a covered 
agreement with any of the foregoing. This final rule restates the 
statutory requirements and includes provisions designed to reduce the 
regulatory burden on entities and persons of all sizes. The Board has 
prepared the following final regulatory flexibility analysis because 
the Gramm-Leach-Bliley Act imposes requirements that are new to the 
Board and those subject to the rule, and because the Board is unable at 
this time to estimate definitively the economic impact of compliance 
with the new requirements of the rule.
Need for and Objectives of Rule
    As discussed above, this rule implements the CRA Sunshine 
provisions of section 48 of the Federal Deposit Insurance Act (12 
U.S.C. 1831y), which was enacted by section 711 of the Gramm-Leach-
Bliley Act (Pub. L. 106-102, 113 Stat. 1465 (1999)). The rule's 
objectives are to inform insured depository institutions, affiliates of 
insured depository institutions, and NGEPs on how to comply with 
section 48 by:
    (1) Identifying those agreements that are covered by section 48, 
including describing the circumstances in which an agreement is in 
fulfillment of the CRA;
    (2) Providing procedures for the disclosure of covered agreements 
to the public and the relevant supervisory agency; and
    (3) Providing procedures for preparing and filing annual reports 
relating to covered agreements with the relevant supervisory agency.
New Compliance Requirements
    The final rule contains new compliance requirements that require 
insured depository institutions, affiliates, and NGEPs 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 
48 and apply regardless of the size of the insured depository 
institution, affiliate, or NGEP. The agencies have sought to reduce 
burden of complying with these requirements wherever possible and 
consistent with section 48.
Comments on the Initial Regulatory Flexibility Analysis
    Although few commenters addressed the initial regulatory 
flexibility analysis specifically, many commenters addressed the 
regulatory burdens associated with complying with the final rule. Many 
commenters noted that section 48 was broadly worded and commended the 
agencies' efforts to clarify which agreements are subject to section 48 
and how a party to a covered agreement may comply with the statute's 
disclosure and reporting obligations. Many commenters, however, 
expressed concern that the scope of agreements that were covered by the 
proposed rule would result in coverage of a wide range of agreements 
between banking organizations and NGEPs that were not intended to be 
subject to the disclosure and reporting requirements of section 48. 
Many commenters also expressed concern that the statute and the rule 
would discourage banking organizations from entering into agreements 
with NGEPs to provide loans, investments or banking services in their 
local communities. Commenters also provided specific comments on the 
disclosure and annual reporting procedures of the proposed rule. These 
comments are discussed in detail in part III. Commenters generally 
supported granting the parties to covered agreements maximum 
flexibility in disclosing covered agreements to the public and allowing 
the parties to charge reasonable fees for making covered agreements 
available. Some commenters requested clarification concerning how a 
party should comply with the public disclosure requirements when a 
covered agreement consists of multiple documents. Some commenters 
supported requiring the public disclosure period to terminate 12 months 
after the term of the agreement, as proposed, while others recommended 
a shorter time period or no time period at all after the term of the 
agreement.
    Many commenters expressed concern that the procedures in the 
proposed rule for obtaining a determination from an agency that 
information in covered agreements may be withheld from public 
disclosure was vague and overly complicated. Commenters also expressed 
concern with the requirement that an insured depository institution and 
affiliate file each covered agreement with the relevant supervisory 
agency within 30 days of entering into the agreement.

[[Page 2076]]

    Several commenters objected to the proposed rule's requirement that 
a NGEP that receives and uses funds or other resources for a specific 
purposes must follow reporting procedures that are different from the 
detailed, itemized list that is described in section 48, while others 
supported the proposal. Commenters also requested additional detail on 
the circumstances in which funds or other resources are received for a 
specific purpose. Commenters overwhelmingly supported the proposed 
rule's provisions allowing NGEPs to use Federal tax forms and other 
reports to fulfill the reporting requirements of the rule.
    Several commenters requested that insured depository institutions 
and affiliates have an exception for filing annual reports for fiscal 
years in which they have no information to report. Some commenters also 
requested that a form be adopted for insured depository institutions 
and affiliates to use in filing annual reports. In addition, commenters 
generally supported the option of filing consolidated reports for 
NGEPs, insured depository institutions, and affiliates that are parties 
to two or more covered agreements.
Minimizing Impact on Small Institutions
    Section 48 directs the Board and the other agencies to ensure that 
the rule does not impose an undue burden on the parties to covered 
agreements. The final rule includes several provisions that are 
designed to reduce the burden and minimize the impact of the rule on 
insured depository institutions, affiliates and NGEPs, including small 
institutions, affiliates and NGEPs. Many of the provisions of the 
proposed rule that were supported by commenters were retained in the 
final rule and other provisions were added in response to comments 
received by the Board and the other agencies.
    The final rule gives parties to covered agreements flexibility in 
determining how to make a covered agreement available to the public. 
The rule permits an insured depository institution or affiliate to use 
the institution's CRA public file to disclose covered agreements to the 
public. Parties to covered agreements also may charge a requestor 
reasonable fees for the cost of copying and mailing covered agreements. 
In response to comments received, the final rule provides a streamlined 
method parties may follow to determine whether information in a covered 
agreement can be withheld from public disclosure and additional 
guidance on the types of information that must be disclosed.
    The rule requires a NGEP to file a covered agreement with a 
relevant supervisory agency only upon request of the agency. In 
addition, in response to comments, the final rule allows an insured 
depository institution or affiliate to make a covered agreement 
available to the relevant supervisory agency by either filing a copy of 
the covered agreement with the agency or filing with the agency a list 
that briefly describes the covered agreements to which the institution 
or affiliate is a party. These filings must be made 60 days after the 
end of the relevant calendar quarter. The final rule also permits two 
or more insured depository institutions and affiliates that are parties 
to the same covered agreement to file jointly the information that must 
be disclosed to the relevant supervisory agency.
    The final rule provides exceptions to the annual reporting 
requirements for NGEPs and insured depository institutions and 
affiliates under certain circumstances. It also permits parties to 
covered agreements to file their annual reports on either a fiscal year 
or calendar year basis. The rule also allows an insured depository 
institution, affiliate, or NGEP that is a party to 2 or more covered 
agreements to prepare a single, consolidated annual report concerning 
all of the covered agreements.
    NGEPs are permitted to incorporate into their annual reports other 
reports that have been prepared for other purposes, such as tax returns 
and financial statements, to fulfill the annual reporting requirement. 
The final rule also permits NGEPs that receive and use funds for a 
specific purpose either to provide a detailed, itemized list of the 
uses of funds by the NGEP or a brief description of the use and the 
amount of funds used for the specific purpose. NGEPs are permitted to 
file an annual report with the relevant supervisory agency by filing it 
directly with the agency or by filing it with the insured depository 
institution or affiliate that is a party to the covered agreement with 
instructions to forward the annual report to the relevant supervisory 
agency.
Entities and Persons Covered
    The Board's final rule applies only to the following parties to 
covered agreements: (1) State member banks and subsidiaries of state 
member banks, (2) bank holding companies, (3) affiliates of bank 
holding companies, other than banks, savings associations and 
subsidiaries of banks and savings associations, and (4) NGEPs that 
enter into covered agreements with any company listed in (1) through 
(3). Section 48 does not authorize the Board to provide an exemption 
for covered agreements based on the size of the insured depository 
institution, affiliate or NGEP that enters into the agreement.
    The Board requested estimates of the burden the proposed rule would 
impose on insured depository institutions and affiliates and NGEPs. One 
large bank estimated that it was a party to over 500 agreements in 1999 
that would have been considered covered agreements under the proposed 
rule. A national organization that promotes the availability of credit 
and capital in underserved communities commented that it and its 720 
community organization members have negotiated 300 "CRA agreements'' 
with insured depository institutions and their affiliates.
    The agreements that trigger the disclosure and reporting 
requirements of the final rule 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. The Board believes 
that larger banking organizations and NGEPs are likely to be party to a 
higher proportion of covered agreements than smaller banking 
organizations and NGEPs. Although some commenters submitted estimates 
of the number of covered agreements they would be a party to under the 
proposed rule, the Board and the other agencies have modified the rule 
in several respects in order to clarify the types of agreements that 
are covered by section 48, and the types of agreements that are exempt 
from coverage. The Board does not believe it has received enough 
information at this time to estimate definitively the total number of 
insured depository institutions, affiliates or NGEPs that are parties 
to covered agreements.

Federal Deposit Insurance Corporation

    Subject to certain exceptions, the Regulatory Flexibility Act (5 
U.S.C. 601-612) (RFA) requires an agency to prepare a final regulatory 
flexibility analysis in conjunction with its issuance of a final rule. 
If the agency certifies that the rule will not have a significant 
economic impact on a substantial number of small entities, a final 
regulatory flexibility analysis is not required.\39\ At the time of 
issuance of

[[Page 2077]]

the proposed rule, the FDIC was unable to certify that the rule would 
not have a significant economic impact on a substantial number of small 
entities. Although the final rule contains provisions designed to 
reduce the burden of regulatory compliance by all parties to covered 
agreements, the FDIC lacks sufficient information to certify that the 
final rule will not have a significant economic impact on a substantial 
number of small entities. Therefore, pursuant to section 604 of the 
RFA, the FDIC provides the following final regulatory flexibility 
analysis.
---------------------------------------------------------------------------

    \39\ The RFA defines the term "small entity'' in 5 U.S.C. 601 
by reference to definitions published by the Small Business 
Administration (SBA). The SBA has defined a "small entity'' for 
banking purposes as a national or commercial bank, savings 
institution or credit union with less than $100 million in assets. 
See 13 CFR 121.201.
---------------------------------------------------------------------------

Need for and Objectives of the Rule
    The final rule implements Sec. 48 of the Federal Deposit Insurance 
Act (FDIA) addressing disclosure and reporting requirements for certain 
agreements related to the CRA. Section 48(h) requires the Federal 
banking agencies to publish regulations applicable to insured 
depository institutions, their affiliates, and NGEPs relating to:
     The types of agreements covered by the rule;
     The procedures for implementing the disclosure 
requirements related to agreements covered by the rule; and
     The procedures for implementing the annual reporting 
requirements related to agreements covered by the rule.
Small Entities to Which the Final Rule Will Apply
    The final rule applies to all FDIC-insured state nonmember banks 
(and their affiliates), including those insured state nonmember banks 
with assets of under $100 million. As of September 2000, 3,331 (of 
5,130 total) FDIC-insured state nonmember banks had assets of under 
$100 million. The final rule also applies to NGEPs that enter into 
covered agreements with insured depository institutions or their 
affiliates.
    Section 48 does not authorize the FDIC to create exemptions for 
disclosure or reporting requirements based on the asset size of either 
an insured depository institution (or its affiliate) or a NGEP; 
therefore, the FDIC did not establish alternative compliance standards 
for small entities.
    Because agreements like those that will trigger the disclosure and 
reporting requirements of the final rule have not been previously 
disclosed or monitored by the FDIC, the FDIC lacks sufficient 
information to estimate the total number of insured state nonmember 
banks (or their affiliates) and NGEPs that may be parties to covered 
agreements.
Initial Regulatory Flexibility Analysis and Related Burden Reduction 
Measures
    In its initial regulatory flexibility analysis, the FDIC 
specifically requested information on the likely significance of the 
economic impact the proposed rule would impose on state nonmember 
banks, their affiliates, and NGEPs who enter into covered agreements. 
Following publication of the proposed rule, the FDIC received 
approximately 200 comment letters. Although none of the commenters 
specifically responded to the questions raised in the initial 
regulatory flexibility section of the proposed rule, many commenters 
addressed the regulatory burdens associated with the disclosure and 
reporting requirements described in the proposed rule. They also 
requested clarification regarding the types of agreements that would be 
subject to the rule and advocated implementation of a more streamlined 
way to protect confidential or proprietary information from disclosure. 
(For a more complete discussion of the comments received, see the 
analysis contained in Part II of the Supplementary Information section 
of the preamble.)
    Section 48 of the FDIA requires insured depository institutions, 
their affiliates, and NGEPs that are parties to covered agreements: to 
make the agreements available to the public and to the relevant 
supervisory agency (as defined in the rule), and to file an annual 
report related to covered agreements with the relevant supervisory 
agency.
    Section 48(h)(2)(A) of the FDIA further requires the Federal 
banking agencies to prescribe implementing regulations that do not 
impose an undue burden on parties to covered agreements. In accordance 
with both this statutory mandate and with the comments received in 
response to the proposed rule, in the final rule, the FDIC sought to 
minimize the burden on all parties to covered agreements--including 
small entities.
    A brief description of some of the burden reduction measures 
related to the final rule's disclosure and reporting requirements 
follows. (For a more detailed discussion explanation of these and other 
burden reduction measures adopted in the final rule, see the analysis 
contained in Part III of the Supplementary Information section of the 
preamble.)
    The rule minimizes burden in its disclosure requirements by 
offering parties to covered agreements flexibility in making these 
agreements available to public. No one single method of disclosure is 
prescribed. NGEPs need only disclose covered agreements when a request 
for the agreement is made. One way that insured depository institutions 
(or affiliates) may meet their agency disclosure obligations is by 
filing a quarterly list of covered agreements with the relevant 
supervisory agency, with the actual agreement to be provided upon the 
request of the agency. If two or more insured depository institutions 
or their affiliates are parties to a covered agreement, they are 
permitted to jointly disclose the agreements to the relevant 
supervisory agency. Further, an insured depository institution and its 
affiliates may use the institution's CRA public file as a disclosure 
mechanism. All parties to covered agreements are permitted to collect 
reasonable fees associated with the disclosure of these agreements. For 
clarity, the rule contains a list of items contained in a covered 
agreement that may not be withheld from disclosure, but it allows 
parties to request an agency determination concerning whether other 
information properly may be withheld.
    The rule minimizes burden in its reporting requirements by 
providing certain exceptions to the annual reporting requirement for 
both NGEPs and for insured depository institutions and their 
affiliates. Annual reports may be filed to reflect either a calendar 
year or fiscal year accounting system. A NGEP may use certain tax forms 
and other reports to satisfy its reporting requirement and also may 
meet its reporting obligations by filing the report with the insured 
depository institution (or affiliate) that is a party to the agreement. 
The rule permits consolidated annual reporting if insured depository 
institutions, their affiliates, or NGEPs are parties to at least two 
covered agreements.
Reporting, Recordkeeping, and Other Compliance Requirements
    The final rule contains disclosure and reporting requirements 
applicable to all FDIC-insured state nonmember banks, affiliates of 
state nonmember banks, and non-governmental entities or persons that 
are parties to covered agreements. Parties to covered agreements are 
required to make the agreements available to the public and to the 
relevant supervisory agency and to report annually to the relevant 
supervisory agency concerning the covered agreements. (For a more 
detailed explanation of the disclosure requirements of the final rule, 
see the explanation contained in Part III, B of the Supplementary 
Information section of the preamble. For a more detailed

[[Page 2078]]

explanation of the reporting requirements of the final rule, see the 
explanation contained in Part III, C of the Supplementary Information 
section of the preamble.)
    The final rule does not establish specific recordkeeping procedures 
for parties to covered agreements. The FDIC anticipates that the 
parties will employ recordkeeping policies and practices sufficient to 
allow retrieval of covered agreements as necessary for compliance with 
the disclosure and annual reporting requirements of the final rule.
    Although the final rule contains provisions to minimize the 
compliance burden on parties to covered agreements, it is possible that 
insured state nonmember banks (and their affiliates) and NGEPs may 
require professional skills in recognizing the existence of a covered 
agreement; and in compiling materials responsive to annual reporting 
requirements of the final rule.

Office of Thrift Supervision

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires federal 
agencies to prepare a final regulatory flexibility analysis (RFA) with 
a final rule that was subject to notice and comment, unless the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities. OTS believes that this rule 
will not have a significant economic impact on a substantial number of 
small savings associations and their subsidiaries, savings and loan 
holding companies, affiliates of savings associations and savings and 
loan holding companies (other than bank holding companies, banks, and 
subsidiaries of bank holding companies and banks), or NGEPs that enter 
into covered agreements with any of the foregoing because the burden 
imposed on small entities stems in large part from the GLB Act, rather 
than the final rule. This final rule restates the statutory 
requirements and includes clarifications designed to reduce the 
regulatory burden on savings associations, affiliates, and NGEPs of all 
sizes, as discussed below. OTS has prepared the following RFA because 
the GLB Act imposes requirements that are new to OTS, the thrift 
industry, and others, and because OTS is uncertain of the economic 
impact of compliance with the new requirements.
1. Statement of Need and Objectives
    A description of the reasons why OTS is adopting this final rule 
and a statement of the objectives of, and legal basis for, the final 
rule, are contained in the Supplementary Information above.
2. Small Entities to Which the Final Rule Applies
    OTS's final rule applies to the following types of entities if they 
are a party to a covered agreement:
    (1) Savings associations and their subsidiaries;
    (2) Savings and loan holding companies
    (3) Affiliates of savings associations and savings and loan holding 
companies, other than bank holding companies; banks; and subsidiaries 
of bank holding companies and banks; and
    (4) NGEPs that enter into covered agreements with any company 
listed in (1), (2), or (3).
    The final rule would apply regardless of the size of the savings 
association, affiliate, or NGEP.
    Small savings associations are generally defined, for Regulatory 
Flexibility Act purposes, as those with assets of $100 million or less. 
13 CFR 121.201, Division H (2000). As of the publication of the 
proposed rule, OTS calculated that of the approximately 1,100 savings 
associations, a maximum of 486 were small savings associations. OTS 
also calculated that these 486 savings associations held approximately 
100 subordinate organizations that could possibly qualify as small 
entities. OTS further calculated that a maximum of 205 savings and loan 
holding companies could possibly qualify as small entities.\40\
---------------------------------------------------------------------------

    \40\ It is likely that the number of small SLHCs is 
significantly less than 205. In a recent notice of proposed 
rulemaking, OTS applied a newly promulgated Small Business 
Administration (SBA) standard for determining whether holding 
companies are small. OTS estimated there were 88 small SLHCs under 
the asset-based definition in the SBA's rule (i.e., holding company 
structures holding assets of less than $100 million), or 150 small 
SLHCs using the revenue-based definition in the SBA's rule. See 
Savings and Loan Holding Companies Notice of Significant 
Transactions or Activities and OTS Review of Capital Adequacy, 65 
Fed. Reg. 64,392, 64,397 (October 27, 2000) (applying SBA rule 13 
CFR 121.201).
---------------------------------------------------------------------------

    The initial RFA (IRFA) published in the proposed rule explained 
that to date, parties to covered agreements have not had to disclose or 
report 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 did not have information about these 
agreements. OTS sought comments to enable it to make an accurate burden 
estimate including the number and size of savings associations, 
affiliates, and NGEPs that are parties to covered agreements, and the 
number of covered agreements that currently exist and would likely be 
entered into each year in the future.
    OTS received many comments on the proposed rule addressing its 
potentially broad application. A few NGEPs specifically noted that 
three of the largest community advocacy organizations have 720, 1,200, 
and 3,600 members, respectively. Commenters noted that each of these 
members is a potential NGEP. Community advocacy organizations are just 
one of many types of NGEPs subject to the rule.
    A substantial number of NGEPs commented that there were hundreds, 
if not thousands, of covered agreements. Commenters estimated that one 
large community advocacy organization alone had 300 covered agreements, 
including more than $1 trillion in loans and investments for low- and 
moderate-income communities. Commenters estimated another community 
advocacy organization had a dozen agreements. A very large financial 
institution estimated that it had more than 500 covered agreements in 
effect in 1999. A federal savings association indicated that it entered 
into 42 covered agreements with 38 community groups during the first 
six months since the GLB Act was enacted. A local government indicated 
that it had $1.3 billion in loans or grants in 60,000 separate 
transactions that potentially were covered, including 15,000 
transactions with one large financial institution alone.
    While this information provides anecdotal evidence that a 
potentially large number of savings associations, affiliates, and NGEPs 
of all sizes are parties to a potentially large number of covered 
agreements, it does not enable OTS to make a reliable estimate of the 
burden of the final rule.
3. Reporting, Recordkeeping, and Other Compliance Requirements of the 
Final Rule
    As described more fully elsewhere in the Supplementary Information 
above, the primary requirements of the final rule involve the 
disclosure and reporting of covered agreements. The final rule requires 
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 also requires each savings association or affiliate 
that is a party to a covered agreement to provide a copy to each 
relevant supervisory agency (as defined in the rule) and requires each 
NGEP that is a party to provide a copy to each relevant supervisory 
agency upon request. The final rule also requires each party to a 
covered agreement to file an annual report with each relevant 
supervisory agency concerning the disbursement, receipt, and uses of 
funds

[[Page 2079]]

or other resources under the covered agreement. Most of these 
requirements are mandated by section 48 of the FDI Act.
    Savings associations, affiliates, and NGEPs may already have 
recordkeeping and other policies and practices that would already 
enable them to partly or fully meet the requirements of this final 
rule. To the extent that existing practices and available resources are 
insufficient, parties to covered agreements would need professional 
skills to comply with this final rule. To disclose covered agreements, 
parties may need clerical and computer personnel. To prepare required 
reports and disclosures, parties may need personnel with these skills, 
as well as personnel skilled in financial, accounting, and legal 
matters. Some degree of personnel training may be necessary, such as to 
enable employees to determine when parties enter into covered 
agreements, and how to retain, record, redact, and compile information 
about agreements.
    OTS cannot predict exactly how savings associations, affiliates, 
and NGEPs will comply with the final rule since the requirements are 
new. For example, OTS cannot assess the extent to which savings 
associations, affiliates, and NGEPs will avoid entering into covered 
agreements as a result of the final rule. A common concern expressed by 
commenters was that the statute and rule would have precisely this 
effect.
    As discussed below, the final rule contains many provisions 
designed to minimize the compliance burden. These provisions are 
consistent with the directive in section 48(h)(2)(A) of the FDI Act 
that the Federal banking agencies ensure that the regulations 
prescribed do not impose an undue burden on the parties.
4. Significant Issues Raised in Response to Initial Regulatory 
Flexibility Analysis and Changes Made to Minimize Burden
    The issues raised by the commenters addressing burden in general 
are described elsewhere in the Supplementary Information. Many NGEPs 
and insured depository institutions commented that the disclosure and 
reporting burdens would be heavy. The issues that were raised by 
commenters that specifically relate to the rule's impact on small 
businesses were the following:
     Tracking and reporting on covered agreements would require 
many NGEPs, particularly small ones, to hire outside CPAs for the first 
time. One NGEP estimated that an additional 100,000 or more nonprofits 
would find it necessary to hire outside CPA firms, and that the 
paperwork, accounting, and bookkeeping costs would amount to at least 
$3,000 annually for each nonprofit or $300 million annually for all.
     Disclosing and reporting covered agreements would require 
additional staff, both for NGEPs and insured depository institutions. 
One estimate was that a total of at least 5,000 additional bank 
employees would be needed. One financial institution indicated it would 
need at least one additional full-time employee. Several NGEPs 
indicated that nonprofits reliant on volunteers could least afford 
additional staff.
    The proposed rule contained several provisions designed to avoid 
undue burdens. The final rule contains additional provisions that 
should minimize the need for new accounting systems and additional 
staff.
    With regard to the disclosure burden, the final rule:
     Terminates the public disclosure requirement and the 
requirement for a NGEP to provide a copy to the relevant supervisory 
agencies upon request 12 months after the end of the term of the 
covered agreement.
     Does not mandate any particular method for disclosing the 
agreement to the public.
     Allows each party to charge reasonable copying and mailing 
fees when it discloses an agreement to the public.
     Requires an NGEP to provide a copy to the relevant 
supervisory agencies only if the agency requests a copy.
     Allows a savings association or affiliate to file with the 
relevant supervisory agencies a copy of a covered agreement 60 days 
after the end of each calendar quarter. (The proposed rule would have 
required filing 30 days after entering into the agreement.)
     Allows a savings association or affiliate to elect to file 
a list of its covered agreements, rather than the actual agreement with 
the relevant supervisory agencies. It would be required to submit a 
complete copy of an agreement only upon a request from the agency. (The 
proposed rule would not have offered the option of a list.)
     Allows a savings association or affiliate to publicly 
disclose by placing a copy of the covered agreement in its CRA public 
file and the savings association making it available under the public 
file procedures. (The proposed rule would not have extended this option 
to affiliates.)
     Allows two or more insured depository institutions or 
affiliates that are parties to a covered agreement to jointly file with 
each relevant supervisory agency.
     Enhances the protections for proprietary and confidential 
information. (The final rule, unlike the proposed rule, permits the 
parties to redact information before making agreements publicly 
available without the need for prior agency review and approval. It 
also lists the specific information that parties may not redact to 
provide clearer guidance. Finally, it provides procedures for parties 
to submit both redacted and unredacted copies to the agencies to 
facilitate release of information in accordance with FOIA and related 
safeguards.)
     Contains transition provisions to ease compliance with 
disclosure requirements for agreements entered into prior to the 
effective date of the final rule. (The proposed rule had no transition 
provisions.)
    With regard to the reporting burden, the final rule:
     Does not mandate any particular form for the annual 
report.
     Allows each party to report on its own fiscal year basis 
or on the calendar year.
     Exempts a NGEP from filing a report for a fiscal year if 
the NGEP does not receive or use any funds or resources during that 
year.
     Exempts an institution or affiliate from filing a report 
for a fiscal year if the institution or affiliate does not receive or 
provide any payments, fees, or loans during that year and has no data 
to report on loans, investments, and services provided by a party to 
the agreement. An institution or affiliate has no data to report on 
another party's activities if it does not know of the information or 
the information is contained in another party's annual report. (The 
proposed rule would not have included this exemption.)
     Provides the option of special purpose reporting 
procedures rather than a detailed, itemized list for NGEPs that 
allocate and use funds or other resources under a covered agreement. 
(The proposed rule contained similar provisions but would have made 
special purpose reporting mandatory where applicable.)
     Allows a NGEP's report to consist of, or incorporate, 
reports prepared for other purposes, such as IRS Form 990 and financial 
statements. (The proposed rule contained similar provisions, but would 
not have specifically referred to IRS Form 990.)
     Permits a savings association, affiliate, or NGEP that is 
a party to two or more covered agreements to file a single consolidated 
annual report covering all its covered agreements, aggregating certain 
information. (The proposed rule only would have allowed

[[Page 2080]]

consolidated reporting for entities that are parties to five or more 
covered agreements.)
     Allows a savings association and its affiliates that are 
parties to the same covered agreement to file a single consolidated 
report.
     Allows a NGEP 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, allotting six months 
to do so. The institution must then forward the report to the relevant 
supervisory agency within 30 days.
     Contains transition provisions to ease compliance with 
reporting requirements for agreements entered into prior to the 
effective date of the final rule. (The proposed rule had no transition 
provisions.)
    The final rule also:
     Clarifies, through examples, that a covered agreement 
(including a written pledge) must reflect a mutual arrangement or 
understanding.
     Excludes an agreement from the definition of covered 
agreement if no NGEP that is a party has a CRA communication. (The 
final rule's definition of "CRA communication'' is narrower than the 
proposed rule's definition of "CRA contact'' in three ways: (1) The 
types of communications that concern the CRA are somewhat clarified and 
narrowed; (2) CRA communications must be known about by particular 
employees and officers of the parties (in some instances, a depository 
institution or affiliate may be deemed to have knowledge); and (3) CRA 
communications must occur no earlier than one to three years prior to 
entering into the agreement depending on the type of CRA 
communication.)
     Does not subject a party to a multiparty agreement to the 
requirements of the rule if the party has not had a CRA communication 
and does not know about any CRA communication among other parties to 
the agreement. (The proposed rule would have had no comparable 
provision.)
     Clarifies that agreements that relate to activities of 
affiliates that are not CRA affiliates at the time a covered agreement 
is entered into are not covered.
     Implements the "fulfillment'' provision to cover 
activities of the type that are likely to receive favorable 
consideration by a Federal banking agency in evaluating the performance 
under the CRA of the insured depository institution that is a party to 
the agreement or an affiliate of a party to the agreement. (The 
proposed rule would not have had implemented the provision in this 
manner.)
     Provides flexibility to the parties to determine the value 
of an agreement that does not specify the amount of payments, grants, 
loans, or other consideration.
     Excludes from the definition of covered agreement any 
individual loan secured by real estate.
     Excludes from the definition of covered agreement, 
specific contracts or commitments for a loan or extension of credit if 
certain requirements are met, provides flexibility to the parties to 
determine if the loans are "substantially below market rates,'' and 
clarifies that the terms of the loan application and other loan 
documents establish whether the restriction against relending is 
satisfied.
     In determining whether an agreement that combines an 
exempt loan and other consideration is covered, the exempt loan may be 
excluded from consideration.
5. Significant Alternatives to the Final Rule
    The requirements in the final rule parallel those in the GLB Act. 
The final rule clarifies the statutory requirements in some areas and 
restates the requirements in a more understandable manner in other 
areas. The final rule does not impose any requirements that differ 
substantially from the statute. Since the requirements are set by 
statute, OTS has only limited discretion to consider alternatives. To 
the extent that OTS does have discretion, it has exercised that 
discretion to minimize the burden as discussed above.
    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 
NGEPs from these requirements. OTS does not interpret the statute to 
permit such an exemption.
6. Duplicative, Overlapping, or Conflicting Federal Rules
    This final rule does 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 final rule allows 
a NGEP's report to consist of, or incorporate, these existing reports. 
The final rule also allows insured depository institutions and 
affiliates to use the CRA public file established under the CRA 
Regulations as a mechanism for disclosing agreements. The rule is not 
intended to otherwise affect the CRA.
    OTS lacks sufficient information about the contents of covered 
agreements, however, to conclude whether the final requirements 
conflict with other Federal rules. One area of potential conflict on 
which comment was solicited was the rule's requirement to make a 
"complete copy'' of a covered agreement available to the public and to 
the relevant supervisory agencies. OTS solicited 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 sought comment on any Federal rules 
that may duplicate, overlap, or conflict with the proposal.
    Several commenters indicated that covered agreements are likely to 
contain proprietary and confidential information. Several commenters 
requested that the final rule accord full FOIA protections to 
information in covered agreements. As discussed above, the agencies 
have enhanced the procedures for protecting proprietary and 
confidential information in the final rule.

V. Executive Order 12866 Determination

    OCC: The Comptroller of the Currency has determined that this final 
rule does not constitute a "significant regulatory action'' for 
purposes of Executive Order 12866 because it does not satisfy any of 
the elements of the definition of "significant regulatory action'' 
provided by the Executive Order.
    OTS: OTS has determined that this final rule does not constitute a 
significant regulatory action for the purpose of Executive Order 12866. 
Reporting and disclosure are mandated by section 48 of the FDI Act. 
Most of the final rule's provisions closely follow the requirements of 
this section. OTS has exercised its discretion, to the extent possible, 
to minimize costs and burdens. While OTS acknowledges that the rule 
will impose costs on insured depository institutions, affiliates, and 
NGEPs by requiring these entities to disclose and report on covered 
agreements, OTS believes that the impact of the rule does not meet the 
thresholds of the Executive Order.

VI. Paperwork Reduction Act

    The agencies may not conduct or sponsor, and an organization is not

[[Page 2081]]

required to respond to, an information collection unless it displays a 
currently valid Office of Management and Budget (OMB) control number. 
The OMB control numbers are listed below:

OCC: 1557-0219
Board: 7100-0298
FDIC: 3064-0139
OTS: 1550-0105

    The agencies sought comment on all aspects of the burden estimates 
for the information collections in the reporting and disclosure 
provisions of the proposed rule, including how burdensome it would be 
for NGEPs, insured depository institutions, and affiliates of insured 
depository institutions to comply with the burden elements. Many 
commenters suggested, in response to specific proposed sections, that 
the disclosure and reporting requirements of the rule would impose 
significant burden on them. Several asserted that the agencies had 
underestimated the burden associated with complying with the rule.
    Many commenters recommended changes in the procedures of the 
proposed rule for disclosing covered agreements to the public and the 
relevant supervisory agencies and for submitting annual reports 
relating to covered agreements. The agencies have addressed several of 
these concerns by amending the relevant provisions of the rule as 
discussed above.
    The final rule contains four disclosure requirements and two 
reporting requirements for insured depository institutions and 
affiliates of insured depository institutions, as well as three 
disclosure requirements and one reporting requirement for NGEPs. Below 
is a brief summary of the paperwork burdens implemented by this final 
rule.
    The final rule requires each NGEP, insured depository institution, 
and affiliate of an insured depository institution that is a party to a 
covered agreement to make the agreement available to the public upon 
request at any time during the term of the agreement and continuing 
until 12 months after the term of the agreement (Secs. ____.6(b)(1) and 
____.6(b)(5)).
    A NGEP is required to disclose a covered agreement to the relevant 
supervisory agency within 30 days of a request from the agency 
(Secs. ____.6(c)(1)). An insured depository institution or affiliate 
that enters into a covered agreement must, within 60 days after the 
close of the relevant calendar quarter, provide to each relevant 
supervisory agency either (1) a complete copy of each agreement entered 
into during the calendar quarter (Secs. ____.6(d)(1)(i)), or (2) a list 
of all covered agreements entered into during the calendar quarter 
(Secs. ____.6(d)(1)(ii)). Some commenters felt that allowing insured 
depository institutions or affiliates to submit a list of their covered 
agreements would help to decrease burden on the organization. If an 
institution or affiliate submits a list of its agreement, the 
institution or affiliate must provide any relevant supervisory agency 
with a complete copy of any covered agreement referenced in the list 
within 7 calendar days of receiving a request from the agency 
(Secs. ____.6(d)(2)). The obligation of an institution or affiliate to 
provide an agency with a copy of a covered agreement referenced in a 
list terminates 36 months after the term of the agreement.
    The final rule also requires each NGEP that is a party to a covered 
agreement to file an annual report that relates to the agreement for 
each fiscal year that the NGEP receives or uses funds received under 
the agreement (Secs. ____.7(b)). Each insured depository institution or 
affiliate that is a party to a covered agreement must file an annual 
report for each fiscal year that the institution or affiliate makes or 
receives payments under the agreement or has data to report on loans, 
investments or services provided under the agreement (Secs. ____.7(b)). 
Annual reports must be filed with each relevant supervisory agency for 
the covered agreement. The content requirements for the annual report 
for NGEPs, and insured depository institutions and affiliates of an 
insured depository institutions are contained in (Secs. ____.7(d)) and 
(Secs. ____.7(e)) respectively. The insured depository institution or 
affiliate must submit its annual report to the relevant supervisory 
agency within 6 months of the end of its fiscal year. A NGEP must, 
within 6 months of the end of its fiscal year, either file its annual 
report with each relevant supervisory agency directly or an insured 
depository institution or affiliate that is a party to the agreement 
with instructions for the institution or affiliate to file it with the 
relevant supervisory agency. The insured depository institution or 
affiliate must submit the annual report of a NGEP to each relevant 
supervisory agency within 30 days of receiving the report 
(Secs. ____.7(f)(2)(ii)).
    Finally, an insured depository institution or affiliate that is a 
party to a covered agreement that concerns the performance of any 
activity identified in section ____.4 (fulfillment) of a CRA affiliate 
is required to notify each NGEP that is a party to the agreement that 
the agreement concerns a CRA affiliate (Secs. ____.4(b)).
    The estimated total annual reporting and disclosure burden of the 
final rule will depend on the number of covered agreements. The 
agencies specifically requested comment on the total number of NGEPs, 
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 received few estimates from NGEPs, insured depository 
institutions and affiliates concerning the number of agreements to 
which they are parties that would be covered under the rule. One large 
bank estimated that it was a party to over 500 agreements in 1999 that 
would have been considered covered agreements under the proposed rule. 
A national organization that promotes the availability of credit and 
capital in underserved communities commented that it and its 720 
community organization members have negotiated 300 "CRA agreements'' 
with insured depository institutions and their affiliates.
    The agreements that trigger the disclosure and reporting 
requirements of the final rule 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. The agencies believe 
that larger banking organizations and NGEPs are likely to be party to a 
higher proportion of covered agreements than smaller banking 
organizations and NGEPs. Although some commenters provided estimates on 
the number of covered agreements that might exist under the proposed 
rule, as noted above, the final rule clarifies in several important 
areas the types of agreements that are covered by section 48, and the 
types of agreements that are exempt from coverage.
    Accordingly, the agencies do not believe they have received enough 
information at this time to definitively estimate the total number of 
insured depository institutions, affiliates or NGEPs 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. Nevertheless, 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 each insured 
depository institution it regulates is involved, either as a party or 
as a source of funds, with two covered agreements. This would take

[[Page 2082]]

into account that large banking organizations may be parties to 
substantially more covered agreements and many small banking 
organizations may be party to no covered agreements. In addition, the 
agencies have assumed that one NGEP is a party to each of these 
agreements. After the agencies have gained some experience with 
collecting information under the rule, they will re-examine the 
paperwork burden.
    There are other requirements for NGEPs, insured depository 
institutions, and affiliates of an insured depository institutions 
which are not considered to be paperwork requirements. These 
requirements are discussed in detail in the regulation text and earlier 
in this preamble.
    OCC: OMB has reviewed and approved the collections of information 
contained in the rule under control number 1557-0219, in accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). OMB 
clearance will expire on July 31, 2003.
    The potential respondents include national banks and subsidiaries 
of national banks, and NGEPs that are a party to a covered agreement 
with any of the foregoing.
    Estimated number of financial institution respondents: 2,400.
    Estimated number of NGEP respondents: 4,800.
    Estimated average annual burden hours for financial institution 
respondents per agreement: 9 hours.
    Estimated burden hours for NGEPs per agreement: 6 hours.
    Estimated total annual reporting and disclosure burden: 72,000 
hours.
    Board: In accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3506; 5 CFR 1320, appendix A.1), the Board approved the rule 
under the authority delegated to the Board by the OMB. The OMB control 
number is 7100-0298. OMB clearance will expire on January 31, 2004.
    The potential respondents are state member banks and subsidiaries 
of 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 NGEPs that are a party to a covered agreement with any of 
the foregoing.
    Estimated number of financial institution respondents: 994.
    Estimated number of NGEP respondents: 1,988.
    Estimated average annual burden hours for financial institution 
respondents per agreement: 9 hours.
    Estimated burden hours for NGEPs per agreement: 6 hours.
    Estimated total annual reporting and disclosure burden: 29,820 
hours.
    FDIC: OMB has reviewed and approved the collections of information 
contained in the rule under control number 3064-0139, in accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). OMB 
clearance will expire on July 31, 2003.
    The potential respondents are insured nonmember banks, subsidiaries 
of insured nonmember banks, and NGEPs that are a party to a covered 
agreement with any of the foregoing.
    Estimated number of financial institution respondents: 5,130.
    Estimated number of NGEP respondents: 10,260.
    Estimated average annual burden hours for financial institution 
respondents per agreement: 9 hours.
    Estimated burden hours for NGEPs per agreement: 6 hours.
    Estimated total annual reporting and disclosure burden: 153,900 
hours.
    OTS: OMB has reviewed and approved the collections of information 
contained in the rule under control number 1550-0105, in accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). OMB 
clearance will expire on July 31, 2003.
    The potential respondents are savings associations and their 
subsidiaries, savings and loan holding companies, affiliates of savings 
associations and savings and loan holding companies other than bank 
holding companies, banks and subsidiaries of bank holding companies, 
and NGEPs that are a party to a covered agreement with any of the 
foregoing.
    Estimated number of financial institution respondents: 1,075.
    Estimated number of NGEP respondents: 2,150.
    Estimated average annual burden hours for financial institution 
respondents per agreement: 9 hours.
    Estimated burden hours for NGEPs respondents per agreement: 6 
hours.
    Estimated total annual reporting and disclosure burden: 32,250 
hours.
    The agencies have a continuing interest in the public's opinion 
regarding collections of information. Members of the public may submit 
comments, at any time, regarding any aspect of these collections of 
information. Comments may be sent to:
    OCC: Jessie Dunaway, Clearance Officer, Office of the Comptroller 
of the Currency, 250 E Street, SW., Mailstop 8-4, Washington, DC 20219.
    Board: Mary M. West, Federal Reserve Board Clearance Officer, 
Mailstop 97, Division of Research and Statistics, Board of Governors of 
the Federal Reserve System, Washington, DC 20551.
    FDIC: Steven F. Hanft, Assistant Executive Secretary (Regulatory 
Analysis), Federal Deposit Insurance Corporation, Room F-4080, 550 17th 
Street, NW., Washington, DC 20429.
    OTS: Dissemination Branch (1550-0106), Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552.
    A copy of all comments should also be sent to the Office of 
Management and Budget, Paperwork Reduction Project (include OMB control 
number), Washington, DC 20503.

VII. Comments Regarding the Use of "Plain Language''

    Section 722 of the Gramm-Leach-Bliley Act requires the agencies to 
use "plain language'' in all final rules published after January 1, 
2000. The agencies requested comments on whether the proposed rule 
meets the plain language standard, whether changes should be made to 
the organization or format of the rule and whether terms used in the 
rule are clear.
    Some commenters recommended that agencies move the section that 
defines terms used in the rule to the front of the rule. The agencies 
believe that including the substantive provisions of the rule, 
including the key definitions of what agreements are "covered 
agreements'' and "in fulfillment of the CRA,'' at the front of the 
rule will assist users in rapidly identifying whether a particular 
agreement meets the requirements to be a covered agreement. 
Accordingly, the agencies have not moved the section including other 
definitions to the front of the rule. Some commenters requested that 
the agencies clarify the scope of certain terms used in the proposed 
rule or examples included in the proposed rule or accompanying 
SUPPLEMENTARY INFORMATION. These comments are addressed in Part III of 
this preamble.

VIII. Unfunded Mandates Act of 1995

    OCC: Section 202 of the Unfunded Mandates 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.
    This final rule does not apply to state, local or tribal 
governments. The OCC is not required to assess the effects of its 
regulatory actions on the private sector

[[Page 2083]]

to the extent those regulations incorporate requirements specifically 
set forth in law. 2 U.S.C. 1531. The provisions in the final rule 
incorporate the requirements of Section 711 of the GLBA. Moreover, as 
described elsewhere in the Supplementary Information, the final rule 
contains provisions intended to minimize costs and burdens on the 
private sector entities to which it applies. Therefore, the OCC has 
determined that this 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 and, accordingly, has 
not prepared a budgetary impact statement.
    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 final rule does not apply to state, local or tribal 
governments. Although the final rule applies to insured depository 
institutions, affiliates, and NGEPs, 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. Most of the final rule's provisions closely follow 
the requirements of section 711 of the GLB Act. Moreover, OTS has 
exercised its discretion, to the extent possible, to minimize costs and 
burdens. Therefore, OTS has determined that this final 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, OTS has not prepared a budgetary impact statement or 
specifically addressed the regulatory alternatives considered.

IX. Compliance Chart

             Disclosure of Covered Agreements to the Public
------------------------------------------------------------------------
                                                     Insured Depository
                                      NGEP             Institution or
                                                          affiliate
------------------------------------------------------------------------
Which agreements must be      Covered agreements    Covered agreements
 disclosed to the public?      entered into after    entered into after
                               11/12/99.             11/12/99.
When does my duty to           4/1/01.............  4/1/01.
 disclose a covered
 agreement to the public
 begin?
What event triggers my        An individual or      An individual or
 obligation to disclose a      entity must request   entity must request
 covered agreement to a        you to make a         you to make a
 member of the public?         covered agreement     covered agreement
                               available.            available.
How do I disclose a covered   You must promptly     You must promptly
 agreement to the public?      make a copy of the    make a copy of the
                               covered agreement     covered agreement
                               available. You may    available. You may
                               withhold              withhold
                               information that is   information that is
                               confidential and      confidential and
                               proprietary under     proprietary under
                               FOIA standards.       FOIA standards.
                               However, you must     However, you must
                               disclose certain      disclose certain
                               enumerated items of   enumerated items of
                               information           information
                               identified at Sec.    identified at Sec.
                               .6(b)(3).             .6(b)(3).
                                                    An IDI or affiliate
                                                     may make an
                                                     agreement available
                                                     by placing a copy
                                                     of the covered
                                                     agreement in the
                                                     IDI's CRA public
                                                     file. The IDI must
                                                     make the agreement
                                                     available in
                                                     accordance with the
                                                     CRA rule on public
                                                     files.
When does my duty to          Twelve months after   Twelve months after
 disclose a covered            the end of the term   the end of the term
 agreement to the public       of the agreement.     of the agreement.
 end?                          However, if your      However if your
                               agreement             agreement
                               terminated before 4/  terminated before 4/
                               1/01, your            1/01, your
                               obligation to         obligation to
                               disclose terminates   disclose terminates
                               4/1/02.               4/1/02.
------------------------------------------------------------------------


   Disclosure of Covered Agreements to the Relevant Supervisory Agency
                                  (RSA)
------------------------------------------------------------------------
                                                     Insured Depository
                                      NGEP             Institution or
                                                          affiliate
------------------------------------------------------------------------
What agreements must be       Covered agreements    Covered agreements
 disclosed to the RSA?.        entered into after    entered into after
                               11/12/99.             11/12/99.
When does my duty to          4/1/01..............  4/1/01.
 disclose a covered
 agreement to the RSA begin?.
When must I disclose a        You must disclose     You must disclose
 covered agreement to the      your covered          your covered
 RSA?.                         agreement to the      agreement to the
                               RSA within 30 days    RSA within 60 days
                               after the RSA         of the end of the
                               requests a copy of    calendar quarter in
                               the agreement.        which the agreement
                                                     is entered into.
                                                     However, if your
                                                     agreement
                                                     terminated before 4/
                                                     1/01, you must
                                                     disclose your
                                                     agreement to the
                                                     RSA by 6/30/01.

[[Page 2084]]


How do I disclose a covered   You must provide the  You must provide the
 agreement to the RSA?.        RSA with a complete   RSA with a complete
                               copy of the           copy of the
                               agreement. If you     agreement. If you
                               propose the           propose the
                               withholding of any    withholding of any
                               information that      information that
                               can be withheld       can be withheld
                               from disclosure       from disclosure
                               under FOIA, you       under FOIA, you
                               must also provide a   must also provide a
                               public version of     public version of
                               the agreement that    the agreement that
                               excludes such         excludes such
                               information and an    information and an
                               explanation           explanation
                               justifying the        justifying the
                               exclusion. The        exclusion. The
                               public version must   public version must
                               include the           include the
                               information           information
                               identified at Sec.    identified at Sec.
                               .6(b)(3).             .6(b)(3).
                                                    Alternatively, you
                                                     may provide a list
                                                     of all covered
                                                     agreements that you
                                                     entered into during
                                                     the calendar
                                                     quarter, and
                                                     include the
                                                     information
                                                     described at Sec.
                                                     .6(d)(1)(ii). If
                                                     the RSA requests a
                                                     copy of an
                                                     agreement
                                                     referenced in the
                                                     list, you must
                                                     provide a copy of
                                                     the agreement and a
                                                     public version (if
                                                     applicable) within
                                                     seven calendar
                                                     days.
When does my duty to          Twelve months after   If you file a list,
 disclose a covered            the end of the term   your obligation to
 agreement to the RSA end?.    of the agreement.     provide a copy of
                               However, if your      an agreement
                               agreement             referenced in the
                               terminated before 4/  list terminates
                               1/01, you must make   thirty-six months
                               the agreement         after the end of
                               available to the      the term of the
                               RSA until 4/l/02.     agreement.
------------------------------------------------------------------------


                             Annual Reports
------------------------------------------------------------------------
                                                     Insured Depository
                                      NGEP             Institution or
                                                          Affiliate
------------------------------------------------------------------------
What agreements are subject   Covered agreements    Covered agreements
 to annual reporting           entered into on or    entered into on or
 requirements?                 after 5/12/00.        after 5/12/00.
What periods require an       You must file a       You must file a
 annual report?                report for each       report for each
                               fiscal year in        fiscal year in
                               which you receive     which you have any
                               or use funds or       reportable data
                               other resources       concerning the
                               under the covered     covered agreement
                               agreement.            described in Sec.
                              Alternatively, you     .7(e)(1)(iii),
                               may file your         (e)(1)(iv) or
                               report on a           (e)(1)(vi).
                               calendar year basis.  Alternatively, you
                                                     may file your
                                                     report on a
                                                     calendar year
                                                     basis.
When must I file the annual   For fiscal years      For fiscal years
 report?                       that end on or        that end on or
                               after 1/1/01, you     after 1/1/01, you
                               must file the         must file the
                               report with each      report with each
                               RSA within six        RSA within six
                               months after the      months after the
                               end of the fiscal     end of the fiscal
                               year covered by the   year covered by the
                               report.               report.
                              Alternatively, you    If a NGEP has
                               may, within this      provided its report
                               six month period,     to you, you must
                               provide the report    also file that
                               to an IDI or          report with the
                               affiliate that is a   RSA(s)on behalf of
                               party to the          the NGEP within 30
                               agreement. You must   days of receipt.
                               include written
                               instructions
                               requiring the IDI
                               or affiliate to
                               promptly forward
                               the report to the
                               RSA(s).
                              For fiscal years      For fiscal years
                               that end between 5/   that end between 5/
                               12/00 and 12/31/00,   12/00 and 12/31/00,
                               you must file the     you must file the
                               report with each      report with each
                               RSA (or with an IDI   RSA no later than 6/
                               or affiliate that     30/01.
                               is party to the
                               agreement) no later
                               than 6/30/01.
May I file a consolidated     If you are a party    If you are a party
 annual report?                to two or more        to two or more
                               covered agreements,   covered agreements,
                               you may file a        you may file a
                               single consolidated   single consolidated
                               annual report         annual report
                               concerning all the    concerning all the
                               covered agreements.   covered agreements.
                                                    If you and your
                                                     affiliates are
                                                     parties to the same
                                                     covered agreement,
                                                     you may file a
                                                     single consolidated
                                                     annual report
                                                     relating to the
                                                     agreement.
What must I include in the    You must include the  You must include the
 annual report?                information           information
                               described at Sec.     described at Sec.
                               .7(d).                .7(e).
------------------------------------------------------------------------

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 associations.

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons set out in the joint preamble, Title 12, Chapter I, 
of the Code of Federal Regulations is amended by adding a new part 35 
to read as follows:

[[Page 2085]]

PART 35--DISCLOSURE AND REPORTING OF CRA-RELATED AGREEMENTS

Sec.
35.1   Purpose and scope of this part.
35.2   Definition of covered agreement.
35.3   CRA communications.
35.4   Fulfillment of the CRA.
35.5   Related agreements considered a single agreement.
35.6   Disclosure of covered agreements.
35.7   Annual reports.
35.8   Release of information under FOIA.
35.9   Compliance provisions.
35.10   Transition provisions.
35.11   Other definitions and rules of construction used in this 
part.

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


Sec. 35.1  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, or 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) Scope of this part. The provisions of this part apply to 
national banks, subsidiaries of national banks, and nongovernmental 
entities or persons that enter into covered agreements with a national 
bank or a subsidiary of a national bank.
    (c) Relation to Community Reinvestment Act. This part does not 
affect in any way the Community Reinvestment Act of 1977 (12 U.S.C. 
2901 et seq.), part 25 of this chapter (Community Reinvestment Act and 
Interstate Deposit Production Regulations) or the OCC's interpretations 
or administration of that Act or regulation.
    (d) Examples.--(1) The examples in this part are not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part.
    (2) Examples in a paragraph illustrate only the issue described in 
the paragraph and do not illustrate any other issues that may arise in 
this part.


Sec. 35.2  Definition of covered agreement.

    (a) General definition of covered agreement. A covered agreement is 
any contract, arrangement, or understanding that meets all of the 
following criteria--
    (1) The agreement is in writing.
    (2) The parties to the agreement include--
    (i) One or more insured depository institutions or affiliates of an 
insured depository institution; and
    (ii) One or more nongovernmental entities or persons (referred to 
hereafter as NGEPs).
    (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 Sec. 35.4.
    (5) The agreement is with a NGEP that has had a CRA communication 
as described in Sec. 35.3 prior to entering into the agreement.
    (b) Examples concerning written arrangements or understandings.--
(1) Example 1. A NGEP meets with an insured depository institution and 
states that the institution needs to make more community development 
investments in the NGEP's community. The NGEP and insured depository 
institution do not reach an agreement concerning the community 
development investments the institution should make in the community, 
and the parties do not reach any mutual arrangement or understanding. 
Two weeks later, the institution unilaterally issues a press release 
announcing that it has established a general goal of making $100 
million of community development grants in low- and moderate-income 
neighborhoods served by the insured depository institution over the 
next 5 years. The NGEP is not identified in the press release. The 
press release is not a written arrangement or understanding.
    (2) Example 2. A NGEP meets with an insured depository institution 
and states that the institution needs to offer new loan programs in the 
NGEP's community. The NGEP and the insured depository institution reach 
a mutual arrangement or understanding that the institution will provide 
additional loans in the NGEP's community. The institution tells the 
NGEP that it will issue a press release announcing the program. Later, 
the insured depository institution issues a press release announcing 
the loan program. The press release incorporates the key terms of the 
understanding reached between the NGEP and the insured depository 
institution. The written press release reflects the mutual arrangement 
or understanding of the NGEP and the insured depository institution and 
is, therefore, a written arrangement or understanding.
    (3) Example 3. An NGEP sends a letter to an insured depository 
institution requesting that the institution provide a $15,000 grant to 
the NGEP. 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 arrangement or 
understanding.
    (c) Loan agreements that are not covered agreements. A covered 
agreement does not include--
    (1) Any individual loan that is secured by real estate; or
    (2) Any specific contract or commitment for a loan or extension of 
credit to an individual, business, farm, or other entity, or group of 
such individuals or entities, if--
    (i) The funds are loaned at rates that are not substantially below 
market rates; and
    (ii) The loan application or other loan documentation does not 
indicate that the borrower intends or is authorized to use the borrowed 
funds to make a loan or extension of credit to one or more third 
parties.
    (d) Examples concerning loan agreements.--(1) Example 1. An insured 
depository institution provides an organization with a $1 million loan 
that is documented in writing and is secured by real estate owned or 
to-be-acquired by the organization. The agreement is an individual 
mortgage loan and is exempt from coverage under paragraph (c)(1) of 
this section, regardless of the interest rate on the loan or whether 
the organization intends or is authorized to re-loan the funds to a 
third party.
    (2) Example 2. An insured depository institution commits to provide 
a $500,000 line of credit to a small business that is documented by a 
written agreement. The loan is made at rates that are within the range 
of rates offered by the institution to similarly situated small 
businesses in the market and the loan documentation does not indicate 
that the small business intends or is authorized to re-lend the 
borrowed funds. The agreement is exempt from coverage under paragraph 
(c)(2) of this section.
    (3) Example 3. An insured depository institution offers small 
business loans that are guaranteed by the Small Business Administration 
(SBA). A small business obtains a $75,000 loan,

[[Page 2086]]

documented in writing, from the institution under the institution's SBA 
loan program. The loan documentation does not indicate that the 
borrower intends or is authorized to re-lend the funds. Although the 
rate charged on the loan is well below that charged by the institution 
on commercial loans, the rate is within the range of rates that the 
institution would charge a similarly situated small business for a 
similar loan under the SBA loan program. Accordingly, the loan is not 
made at substantially below market rates and is exempt from coverage 
under paragraph (c)(2) of this section.
    (4) Example 4. A bank holding company enters into a written 
agreement with a community development organization that provides that 
insured depository institutions owned by the bank holding company will 
make $250 million in small business loans in the community over the 
next 5 years. The written agreement is not a specific contract or 
commitment for a loan or an extension of credit and, thus, is not 
exempt from coverage under paragraph (c)(2) of this section. Each small 
business loan made by the insured depository institution pursuant to 
this general commitment would, however, be exempt from coverage if the 
loan is made at rates that are not substantially below market rates and 
the loan documentation does not indicate that the borrower intended or 
was authorized to re-lend the funds.
    (e) Agreements that include exempt loan agreements. If an agreement 
includes a loan, extension of credit or loan commitment that, if 
documented separately, would be exempt under paragraph (c) of this 
section, the exempt loan, extension of credit or loan commitment may be 
excluded for purposes of determining whether the agreement is a covered 
agreement.
    (f) Determining annual value of agreements that lack schedule of 
disbursements. For purposes of paragraph (a)(3) of this section, a 
multi-year agreement that does not include a schedule for the 
disbursement of payments, grants, loans or other consideration by the 
insured depository institution or affiliate, is considered to have a 
value in the first year of the agreement equal to all payments, grants, 
loans and other consideration to be provided at any time under the 
agreement.


Sec. 35.3  CRA communications.

    (a) Definition of CRA communication. A CRA communication is any of 
the following--
    (1) Any written or oral comment or testimony provided to a Federal 
banking agency concerning the adequacy of the performance under the CRA 
of the insured depository institution, any affiliated insured 
depository institution, or any CRA affiliate.
    (2) Any written comment submitted to the insured depository 
institution that discusses the adequacy of the performance under the 
CRA of the institution and must be included in the institution's CRA 
public file.
    (3) Any discussion or other contact with the insured depository 
institution or any affiliate about--
    (i) Providing (or refraining from providing) written or oral 
comments or testimony to any Federal banking agency concerning the 
adequacy of the performance under the CRA of the insured depository 
institution, any affiliated insured depository institution, or any CRA 
affiliate;
    (ii) Providing (or refraining from providing) written comments to 
the insured depository institution that concern the adequacy of the 
institution's performance under the CRA and must be included in the 
institution's CRA public file; or
    (iii) The adequacy of the performance under the CRA of the insured 
depository institution, any affiliated insured depository institution, 
or any CRA affiliate.
    (b) Discussions or contacts that are not CRA communications--(1) 
Timing of contacts with a Federal banking agency. An oral or written 
communication with a Federal banking agency is not a CRA communication 
if it occurred more than 3 years before the parties entered into the 
agreement.
    (2) Timing of contacts with insured depository institutions and 
affiliates. A communication with an insured depository institution or 
affiliate is not a CRA communication if the communication occurred--
    (i) More than 3 years before the parties entered into the 
agreement, in the case of any written communication;
    (ii) More than 3 years before the parties entered into the 
agreement, in the case of any oral communication in which the NGEP 
discusses providing (or refraining from providing) comments or 
testimony to a Federal banking agency or written comments that must be 
included in the institution's CRA public file in connection with a 
request to, or agreement by, the institution or affiliate to take (or 
refrain from taking) any action that is in fulfillment of the CRA; or
    (iii) More than 1 year before the parties entered into the 
agreement, in the case of any other oral communication not described in 
paragraph (b)(2)(ii).
    (3) Knowledge of communication by insured depository institution or 
affiliate.--(i) A communication is only a CRA communication under 
paragraph (a) of this section if the insured depository institution or 
its affiliate has knowledge of the communication under this paragraph 
(b)(3)(ii) or (b)(3)(iii) of this section.
    (ii) Communication with insured depository institution or 
affiliate. An insured depository institution or affiliate has knowledge 
of a communication by the NGEP to the institution or its affiliate 
under this paragraph only if one of the following representatives of 
the insured depository institution or any affiliate has knowledge of 
the communication--
    (A) An employee who approves, directs, authorizes, or negotiates 
the agreement with the NGEP; or
    (B) An employee designated with responsibility for compliance with 
the CRA or executive officer if the employee or executive officer knows 
that the institution or affiliate is negotiating, intends to negotiate, 
or has been informed by the NGEP that it expects to request that the 
institution or affiliate negotiate an agreement with the NGEP.
    (iii) Other communications. An insured depository institution or 
affiliate is deemed to have knowledge of--
    (A) Any testimony provided to a Federal banking agency at a public 
meeting or hearing;
    (B) Any comment submitted to a Federal banking agency that is 
conveyed in writing by the agency to the insured depository institution 
or affiliate; and
    (C) Any written comment submitted to the insured depository 
institution that must be and is included in the institution's CRA 
public file.
    (4) Communication where NGEP has knowledge. A NGEP has a CRA 
communication with an insured depository institution or affiliate only 
if any of the following individuals has knowledge of the 
communication--
    (i) A director, employee, or member of the NGEP who approves, 
directs, authorizes, or negotiates the agreement with the insured 
depository institution or affiliate;
    (ii) A person who functions as an executive officer of the NGEP and 
who knows that the NGEP is negotiating or intends to negotiate an 
agreement with the insured depository institution or affiliate; or
    (iii) Where the NGEP is an individual, the NGEP.
    (c) Examples of CRA communications.--(1) Examples of actions that 
are CRA communications. The following are examples of CRA

[[Page 2087]]

communications. These examples are not exclusive and assume that the 
communication occurs within the relevant time period as described in 
paragraph (b)(1) or (b)(2) of this section and the appropriate 
representatives have knowledge of the communication as specified in 
paragraphs (b)(3) and (b)(4) of this section.
    (i) Example 1. A NGEP files a written comment with a Federal 
banking agency that states than an insured depository institution 
successfully addresses the credit needs of its community. The written 
comment is in response to a general request from the agency for 
comments on an application of the insured depository institution to 
open a new branch and a copy of the comment is provided to the 
institution.
    (ii) Example 2. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution must 
improve its CRA performance.
    (iii) Example 3. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution needs to 
make more mortgage loans in low- and moderate-income neighborhoods in 
its community.
    (iv) Example 4. A bank holding company files an application with a 
Federal banking agency to acquire an insured depository institution. 
Two weeks later, the NGEP meets with an executive officer of the bank 
holding company to discuss the adequacy of the performance under the 
CRA of the target insured depository institution. The insured 
depository institution was an affiliate of the bank holding company at 
the time the NGEP met with the target institution. (See Sec. 35.11(a).) 
Accordingly, the NGEP had a CRA communication with an affiliate of the 
bank holding company.
    (2) Examples of actions that are not CRA communications. The 
following are examples of actions that are not by themselves CRA 
communications. These examples are not exclusive.
    (i) Example 1. A NGEP provides to a Federal banking agency comments 
or testimony concerning an insured depository institution or affiliate 
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 (as defined in 
section 803 of the CRA (12 U.S.C. 2902(3)) by, an insured depository 
institution or an application by a company to acquire an insured 
depository institution.
    (ii) Example 2. 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, 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (iii) Example 3. A NGEP, such as a civil rights group, community 
group providing housing and other services in low- and moderate-income 
neighborhoods, veterans organization, community theater group, or youth 
organization, sends a 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 by 
supporting the fundraising efforts of the NGEP.
    (iv) Example 4. A NGEP discusses with an insured depository 
institution or affiliate whether particular loans, services, 
investments, community development activities, or other activities are 
generally eligible for consideration by a Federal banking agency under 
the CRA. The NGEP and insured depository institution or affiliate do 
not discuss the adequacy of the CRA performance of the insured 
depository institution or affiliate.
    (v) Example 5. A NGEP engaged in the sale or purchase of loans in 
the secondary market sends a general offering circular to financial 
institutions offering to sell or purchase a portfolio of loans. An 
insured depository institution that receives the offering circular 
discusses with the NGEP the types of loans included in the loan pool, 
whether such loans are generally eligible for consideration under the 
CRA, and which loans are made to borrowers in the institution's local 
community. The NGEP and insured depository institution do not discuss 
the adequacy of the institution's CRA performance.
    (d) Multiparty covered agreements.--(1) A NGEP that is a party to a 
covered agreement that involves multiple NGEPs is not required to 
comply with the requirements of this part if--
    (i) The NGEP has not had a CRA communication; and
    (ii) No representative of the NGEP identified in paragraph (b)(4) 
of this section has knowledge at the time of the agreement that another 
NGEP that is a party to the agreement has had a CRA communication.
    (2) An insured depository institution or affiliate that is a party 
to a covered agreement that involves multiple insured depository 
institutions or affiliates is not required to comply with the 
disclosure and annual reporting requirements in Secs. 35.6 and 35.7 
if--
    (i) No NGEP that is a party to the agreement has had a CRA 
communication concerning the insured depository institution or any 
affiliate; and
    (ii) No representative of the insured depository institution or any 
affiliate identified in paragraph (b)(3) of this section has knowledge 
at the time of the agreement that an NGEP that is a party to the 
agreement has had a CRA communication concerning any other insured 
depository institution or affiliate that is a party to the agreement.


Sec. 35.4  Fulfillment of the CRA.

    (a) List of factors that are in fulfillment of the CRA. Fulfillment 
of the CRA, for purposes of this part, means the following list of 
factors--
    (1) Comments to a Federal banking agency or included in CRA public 
file. Providing or refraining from providing written or oral comments 
or testimony to any Federal banking agency concerning the 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; or
    (2) Activities given favorable CRA consideration. Performing any of 
the following activities if the activity is of the type that is likely 
to receive favorable consideration by a Federal banking agency in 
evaluating the performance under the CRA of the insured depository 
institution that is a party to the agreement or an affiliate of a party 
to the agreement--
    (i) Home-purchase, home-improvement, small business, small farm, 
community development, and consumer lending, as described in Sec. 25.22 
(12 CFR 25.22), including loan purchases, loan commitments, and letters 
of credit;
    (ii) Making investments, deposits, or grants, or acquiring 
membership shares, that have as their primary purpose community 
development, as described in Sec. 25.23 (12 CFR 25.23);
    (iii) Delivering retail banking services, as described in 
Sec. 25.24(d) (12 CFR 25.24(d));

[[Page 2088]]

    (iv) Providing community development services, as described in 
Sec. 25.24(e) (12 CFR 25.24(e));
    (v) 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) (12 CFR 25.25(c));
    (vi) In the case of a small insured depository institution, any 
lending or other activity described in Sec. 25.26(a) (12 CFR 25.26(a)); 
or
    (vii) 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) (12 CFR 25.27(f)).
    (b) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns any activity described in paragraph (a) of this 
section of a CRA affiliate must, prior to the time the agreement is 
entered into, notify each NGEP that is a party to the agreement that 
the agreement concerns a CRA affiliate.


Sec. 35.5  Related agreements considered a single agreement.

    The following rules must be applied in determining whether an 
agreement is a covered agreement under Sec. 35.2.
    (a) Agreements entered into by same parties. All written agreements 
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 agreements--
    (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. 35.6  Disclosure of covered agreements.

    (a) Applicability 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. Each NGEP and each insured depository institution or 
affiliate that enters into a covered agreement must promptly make a 
copy of the covered agreement available to any individual or entity 
upon request.
    (2) Nondisclosure of confidential and proprietary information 
permitted. In responding to a request for a covered agreement from any 
individual or entity under paragraph (b)(1) of this section, a NGEP, 
insured depository institution, or affiliate may withhold from public 
disclosure confidential or proprietary information that the party 
believes the relevant supervisory agency could withhold from disclosure 
under the Freedom of Information Act (5 U.S.C. 552 et seq.) (FOIA).
    (3) Information that must be disclosed. Notwithstanding paragraph 
(b)(2) of this section, a party must disclose any of the following 
information that is contained in a covered agreement--
    (i) The names and addresses of the parties to the agreement;
    (ii) The amount of any payments, fees, loans, or other 
consideration to be made or provided by any party to the agreement;
    (iii) Any description of how the funds or other resources provided 
under the agreement are to be used;
    (iv) The term of the agreement (if the agreement establishes a 
term); and
    (v) Any other information that the relevant supervisory agency 
determines is not properly exempt from public disclosure.
    (4) Request for review of withheld information. Any individual or 
entity may request that the relevant supervisory agency review whether 
any information in a covered agreement withheld by a party must be 
disclosed. Any requests for agency review of withheld information must 
be filed, and will be processed in accordance with, the relevant 
supervisory agency's rules concerning the availability of information 
(see subpart B of part 4 of the OCC's rules regarding the availability 
of information under the Freedom of Information Act (12 CFR part 4, 
subpart B).
    (5) Duration of obligation. The obligation to disclose a covered 
agreement to the public terminates 12 months after the end of the term 
of the agreement.
    (6) 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.
    (7) Use of CRA public file by insured depository institution or 
affiliate. An insured depository institution and any affiliate of 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 if the institution makes the 
agreement available in accordance with the procedures set forth in 
Sec. 25.43 (12 CFR 25.43);
    (c) Disclosure by NGEPs of covered agreements to the relevant 
supervisory agency.--(1) Each NGEP that is a party to a covered 
agreement must provide the following within 30 days of receiving a 
request from the relevant supervisory agency--
    (i) A complete copy of the agreement; and
    (ii) In the event the NGEP proposes the withholding of any 
information contained in the agreement in accordance with paragraph 
(b)(2) of this section, a public version of the agreement that excludes 
such information and an explanation justifying the exclusions. Any 
public version must include the information described in paragraph 
(b)(3) of this section.
    (2) The obligation of a NGEP to provide a covered agreement to the 
relevant supervisory agency terminates 12 months after the end of the 
term of the covered agreement.
    (d) Disclosure by insured depository institution or affiliate of 
covered agreements to the relevant supervisory agency.--(1) In general. 
Within 60 days of the end of each calendar quarter, each insured 
depository institution and affiliate must provide each relevant 
supervisory agency with--
    (i)(A) A complete copy of each covered agreement entered into by 
the insured depository institution or affiliate during the calendar 
quarter; and
    (B) In the event the institution or affiliate proposes the 
withholding of any information contained in the agreement in accordance 
with paragraph (b)(2) of this section, a public version of the 
agreement that excludes such information (other than any information 
described in paragraph (b)(3) of this section) and an explanation 
justifying the exclusions; or
    (ii) A list of all covered agreements entered into by the insured 
depository institution or affiliate during the calendar quarter that 
contains--
    (A) The name and address of each insured depository institution or 
affiliate that is a party to the agreement;
    (B) The name and address of each NGEP that is a party to the 
agreement;

[[Page 2089]]

    (C) The date the agreement was entered into;
    (D) The estimated total value of all payments, fees, loans and 
other consideration to be provided by the institution or any affiliate 
of the institution under the agreement; and
    (E) The date the agreement terminates.
    (2) Prompt filing of covered agreements contained in list 
required.--(i) If an insured depository institution or affiliate files 
a list of the covered agreements entered into by the institution or 
affiliate pursuant to paragraph (d)(1)(ii) of this section, the 
institution or affiliate must provide any relevant supervisory agency a 
complete copy and public version of any covered agreement referenced in 
the list within 7 calendar days of receiving a request from the agency 
for a copy of the agreement.
    (ii) The obligation of an insured depository institution or 
affiliate to provide a covered agreement to the relevant supervisory 
agency under this paragraph (d)(2) terminates 36 months after the end 
of the term of the agreement.
    (3) Joint filings. In the event that 2 or more insured depository 
institutions or affiliates are parties to a covered agreement, the 
insured depository institution(s) and affiliate(s) may jointly file the 
documents required by this paragraph (d). Any joint filing must 
identify the insured depository institution(s) and affiliate(s) for 
whom the filings are being made.


Sec. 35.7  Annual reports.

    (a) Applicability 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) NGEPs. A NGEP must file 
an annual report for a covered agreement for any fiscal year in which 
the NGEP receives or uses funds or other resources under the agreement.
    (2) Insured depository institutions and affiliates. An insured 
depository institution or affiliate must file an annual report for a 
covered agreement for any fiscal year in which the institution or 
affiliate--
    (i) provides or receives any payments, fees, or loans under the 
covered agreement that must be reported under paragraphs (e)(1)(iii) 
and (iv) of this section; or
    (ii) has data to report on loans, investments, and services 
provided by a party to the covered agreement under the covered 
agreement under paragraph (e)(1)(vi) of this section.
    (d) Annual reports filed by NGEP--(1) Contents of report. 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) A detailed, itemized list of how any funds or resources 
received by the NGEP under the covered agreement 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 and uses (specify expense or use).
    (2) More detailed reporting of uses of funds or resources 
permitted--(i) In general. If a NGEP allocated and used funds received 
under a covered agreement for a specific purpose, the NGEP may fulfill 
the requirements of paragraph (d)(1)(iv) of this section with respect 
to such funds by providing--
    (A) A brief description of each specific purpose for which the 
funds or other resources were used; and
    (B) The amount of funds or resources used during the fiscal year 
for each specific purpose.
    (ii) Specific purpose defined. A NGEP allocates and uses funds for 
a specific purpose if the NGEP receives and uses the funds for a 
purpose that is more specific and limited than the categories listed in 
paragraph (d)(1)(iv) of this section.
    (3) 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 the Internal Revenue Service Return of Organization Exempt From 
Income Tax on Form 990, or any other Internal Revenue Service form, 
state tax form, report to members or shareholders, audited or unaudited 
financial statements, audit report, or other report, so long as the 
annual report filed by the NGEP contains all of the information 
required by this paragraph (d).
    (4) Consolidated reports permitted. A NGEP that is a party to 2 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 reported under 
paragraphs (d)(1)(iv) and (d)(2) of this section may be reported on an 
aggregate basis for all covered agreements.
    (5) Examples of annual report requirements for NGEPs--(i) Example 
1. A NGEP receives an unrestricted grant of $15,000 under a covered 
agreement, includes the funds in its general operating budget and uses 
the funds during its fiscal year. The NGEP's annual report for the 
fiscal year must provide the name and mailing address of the NGEP, 
information sufficient to identify the covered agreement, and state 
that the NGEP received $15,000 during the fiscal year. The report must 
also indicate the total expenditures made by the NGEP during the fiscal 
year for compensation, administrative expenses, travel expenses, 
entertainment expenses, consulting and professional fees, and other 
expenses and uses. The NGEP's annual report may provide this 
information by submitting an Internal Revenue Service Form 990 that 
includes the required information. If the Internal Revenue Service Form 
does not include information for all of the required categories listed 
in this part, the NGEP must report the total expenditures in the 
remaining categories either by providing that information directly or 
by providing another form or report that includes the required 
information.
    (ii) Example 2. An organization receives $15,000 from an insured 
depository institution under a covered agreement and allocates and uses 
the $15,000 during the fiscal year to purchase computer equipment to 
support its functions. The organization's annual report must include 
the name and address of the organization, information sufficient to 
identify the agreement, and a statement that the organization received 
$15,000 during the year. In addition, since the organization allocated 
and used the funds for a specific purpose that is more narrow and 
limited than the categories of expenses included in the detailed, 
itemized list of expenses, the organization would have the option of 
providing either the total amount it used during the year for each 
category of expenses included in paragraph (d)(1)(iv) of this section, 
or a statement that it used the $15,000 to purchase

[[Page 2090]]

computer equipment and a brief description of the equipment purchased.
    (iii) Example 3. 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 $5,000 of the 
funds to pay for a particular business trip and uses the remaining 
$45,000 for general operating expenses. The group's annual report for 
the fiscal year must include the name and address of the group, 
information sufficient to identify the agreement, and a statement that 
the group received $50,000. Because the group did not allocate and use 
all of the funds for a specific purpose, the group's annual report must 
provide the total amount of funds it used during the year for each 
category of expenses included in paragraph (d)(1)(iv) of this section. 
The group's annual report also could state that it used $5,000 for a 
particular business trip and include a brief description of the trip.
    (iv) Example 4. A community development organization is a party to 
two separate covered agreements with two unaffiliated insured 
depository institutions. Under each agreement, the organization 
receives $15,000 during its fiscal year and uses the funds to support 
its activities during that year. If the organization elects to file a 
consolidated annual report, the consolidated report must identify the 
organization and the two covered agreements, state that the 
organization received $15,000 during the fiscal year under each 
agreement, and provide the total amount that the organization used 
during the year for each category of expenses included in paragraph 
(d)(1)(iv) of this section.
    (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 (or a list identifying 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 another party under this section.
    (2) Consolidated reports permitted.--(i) Party to multiple 
agreements. An insured depository institution or affiliate that is a 
party to 2 or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency concerning 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)(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 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 
six 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. 35.8  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 under the Freedom of Information Act (12 CFR part 4, 
subpart B). 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. 35.9  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations.--(1) If the OCC determines that a NGEP has willfully 
failed to comply in a material way with Secs. 35.6 or 35.7, the OCC 
will notify the NGEP in writing of that determination and provide the 
NGEP a period of 90 days (or such longer period as the OCC finds to be 
reasonable under the circumstances) to comply.
    (2) If the NGEP does not comply within the time period established 
by the OCC, 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) The OCC 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

[[Page 2091]]

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. 35.6 or 35.7 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 OCC to enforce the 
provisions of any covered agreement.


Sec. 35.10  Transition provisions.

    (a) Disclosure of covered agreements entered into before the 
effective date of this part. The following disclosure requirements 
apply to covered agreements that were entered into after November 12, 
1999, and that terminated before April 1, 2001.
    (1) Disclosure to the public. Each NGEP and each insured depository 
institution or affiliate that was a party to the agreement must make 
the agreement available to the public under Sec. 35.6 until at least 
April 1, 2002.
    (2) Disclosure to the relevant supervisory agency.--(i) Each NGEP 
that was a party to the agreement must make the agreement available to 
the relevant supervisory agency under Sec. 35.6 until at least April 1, 
2002.
    (ii) Each insured depository institution or affiliate that was a 
party to the agreement must, by June 30, 2001, provide each relevant 
supervisory agency either--
    (A) A copy of the agreement under Sec. 35.6(d)(1)(i); or
    (B) The information described in Sec. 35.6(d)(1)(ii) for each 
agreement.
    (b) Filing of annual reports that relate to fiscal years ending on 
or before December 31, 2000. In the event that a NGEP, insured 
depository institution or affiliate has any information to report under 
Sec. 35.7 for a fiscal year that ends on or before December 31, 2000, 
and that concerns a covered agreement entered into between May 12, 
2000, and December 31, 2000, the annual report for that fiscal year 
must be provided no later than June 30, 2001, to--
    (1) Each relevant supervisory agency; or
    (2) In the case of a NGEP, to an insured depository institution or 
affiliate that is a party to the agreement in accordance with 
Sec. 35.7(f)(2).


Sec. 35.11  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. 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 NGEP that is a party to the agreement makes a CRA 
communication, as described in Sec. 35.3.
    (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 prior to the agreement. An insured 
depository institution or affiliate also may designate any company as a 
CRA affiliate at any time prior to the time a covered agreement is 
entered into by informing the NGEP that is a party to the agreement of 
such designation.
    (d) CRA public file. "CRA public file'' means the public file 
maintained by an insured depository institution and described in 
Sec. 25.43 (12 CFR 25.43).
    (e) Executive officer. The term "executive officer'' has the same 
meaning as in Sec. 215.2(e)(1) of Regulation O issued by the Board of 
Governors of the Federal Reserve System (12 CFR 215.2(e)(1)).
    (f) 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).
    (g) 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.
    (h) 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).
    (i) NGEP. "NGEP'' means a nongovernmental entity or person.
    (j) 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 (i)(2)(i) through 
(iii) of this section.
    (k) 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.
    (l) Relevant supervisory agency. 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

[[Page 2092]]

subsidiary thereof) that is a party to the covered agreement.
    (m) Term of agreement. An agreement that does not have a fixed 
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 relevant supervisory 
agency for the agreement otherwise notifies each party in writing.

    Dated: December 21, 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 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   CRA communications.
207.4   Fulfillment of the CRA.
207.5   Related agreements considered a single agreement.
207.6   Disclosure of covered agreements.
207.7   Annual reports.
207.8   Release of information under FOIA.
207.9   Compliance provisions.
207.10   Transition provisions.
207.11   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, or 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) Scope of this part. The provisions of this part apply to--
    (1) State member banks and their subsidiaries;
    (2) Bank holding companies;
    (3) Affiliates of bank holding companies, other than banks, savings 
associations and subsidiaries of banks and savings associations; and
    (4) Nongovernmental entities or persons that enter into covered 
agreements with any company listed in paragraph (b)(1) through (3) of 
this section.
    (c) Relation to Community Reinvestment Act. This part does not 
affect in any way the Community Reinvestment Act of 1977 (12 U.S.C. 
2901 et seq.), the Board's Regulation BB (12 CFR part 228), or the 
Board's interpretations or administration of that Act or regulation.
    (d) Examples.--(1) The examples in this part are not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part.
    (2) Examples in a paragraph illustrate only the issue described in 
the paragraph and do not illustrate any other issues that may arise in 
this part.


Sec. 207.2  Definition of covered agreement.

    (a) General definition of covered agreement. A covered agreement is 
any contract, arrangement, or understanding that meets all of the 
following criteria--
    (1) The agreement is in writing.
    (2) The parties to the agreement include--
    (i) One or more insured depository institutions or affiliates of an 
insured depository institution; and
    (ii) One or more nongovernmental entities or persons (referred to 
hereafter as NGEPs).
    (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 Sec. 207.4.
    (5) The agreement is with a NGEP that has had a CRA communication 
as described in Sec. 207.3 prior to entering into the agreement.
    (b) Examples concerning written arrangements or understandings.--
(1) Example 1. A NGEP meets with an insured depository institution and 
states that the institution needs to make more community development 
investments in the NGEP's community. The NGEP and insured depository 
institution do not reach an agreement concerning the community 
development investments the institution should make in the community, 
and the parties do not reach any mutual arrangement or understanding. 
Two weeks later, the institution unilaterally issues a press release 
announcing that it has established a general goal of making $100 
million of community development grants in low- and moderate-income 
neighborhoods served by the insured depository institution over the 
next 5 years. The NGEP is not identified in the press release. The 
press release is not a written arrangement or understanding.
    (2) Example 2. A NGEP meets with an insured depository institution 
and states that the institution needs to offer new loan programs in the 
NGEP's community. The NGEP and the insured depository institution reach 
a mutual arrangement or understanding that the institution will provide 
additional loans in the NGEP's community. The institution tells the 
NGEP that it will issue a press release announcing the program. Later, 
the insured depository institution issues a press release announcing 
the loan program. The press release incorporates the key terms of the 
understanding reached between the NGEP and the insured depository 
institution. The written press release reflects the mutual arrangement 
or understanding of the NGEP and the insured depository institution and 
is, therefore, a written arrangement or understanding.
    (3) Example 3. An NGEP sends a letter to an insured depository 
institution requesting that the institution provide a $15,000 grant to 
the NGEP. 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 arrangement or 
understanding.
    (c) Loan agreements that are not covered agreements. A covered 
agreement does not include--
    (1) Any individual loan that is secured by real estate; or
    (2) Any specific contract or commitment for a loan or extension of 
credit to an individual, business, farm, or other entity, or group of 
such individuals or entities, if--
    (i) The funds are loaned at rates that are not substantially below 
market rates; and
    (ii) The loan application or other loan documentation does not 
indicate that the borrower intends or is authorized to use the borrowed 
funds to make a loan or extension of credit to one or more third 
parties.

[[Page 2093]]

    (d) Examples concerning loan agreements.--(1) Example 1. An insured 
depository institution provides an organization with a $1 million loan 
that is documented in writing and is secured by real estate owned or 
to-be-acquired by the organization. The agreement is an individual 
mortgage loan and is exempt from coverage under paragraph (c)(1) of 
this section, regardless of the interest rate on the loan or whether 
the organization intends or is authorized to re-loan the funds to a 
third party.
    (2) Example 2. An insured depository institution commits to provide 
a $500,000 line of credit to a small business that is documented by a 
written agreement. The loan is made at rates that are within the range 
of rates offered by the institution to similarly situated small 
businesses in the market and the loan documentation does not indicate 
that the small business intends or is authorized to re-lend the 
borrowed funds. The agreement is exempt from coverage under paragraph 
(c)(2) of this section.
    (3) Example 3. An insured depository institution offers small 
business loans that are guaranteed by the Small Business Administration 
(SBA). A small business obtains a $75,000 loan, documented in writing, 
from the institution under the institution's SBA loan program. The loan 
documentation does not indicate that the borrower intends or is 
authorized to re-lend the funds. Although the rate charged on the loan 
is well below that charged by the institution on commercial loans, the 
rate is within the range of rates that the institution would charge a 
similarly situated small business for a similar loan under the SBA loan 
program. Accordingly, the loan is not made at substantially below 
market rates and is exempt from coverage under paragraph (c)(2) of this 
section.
    (4) Example 4. A bank holding company enters into a written 
agreement with a community development organization that provides that 
insured depository institutions owned by the bank holding company will 
make $250 million in small business loans in the community over the 
next 5 years. The written agreement is not a specific contract or 
commitment for a loan or an extension of credit and, thus, is not 
exempt from coverage under paragraph (c)(2) of this section. Each small 
business loan made by the insured depository institution pursuant to 
this general commitment would, however, be exempt from coverage if the 
loan is made at rates that are not substantially below market rates and 
the loan documentation does not indicate that the borrower intended or 
was authorized to re-lend the funds.
    (e) Agreements that include exempt loan agreements. If an agreement 
includes a loan, extension of credit or loan commitment that, if 
documented separately, would be exempt under paragraph (c) of this 
section, the exempt loan, extension of credit or loan commitment may be 
excluded for purposes of determining whether the agreement is a covered 
agreement.
    (f) Determining annual value of agreements that lack schedule of 
disbursements. For purposes of paragraph (a)(3) of this section, a 
multi-year agreement that does not include a schedule for the 
disbursement of payments, grants, loans or other consideration by the 
insured depository institution or affiliate, is considered to have a 
value in the first year of the agreement equal to all payments, grants, 
loans and other consideration to be provided at any time under the 
agreement.


Sec. 207.3  CRA communications.

    (a) Definition of CRA communication. A CRA communication is any of 
the following--
    (1) Any written or oral comment or testimony provided to a Federal 
banking agency concerning the adequacy of the performance under the CRA 
of the insured depository institution, any affiliated insured 
depository institution, or any CRA affiliate.
    (2) Any written comment submitted to the insured depository 
institution that discusses the adequacy of the performance under the 
CRA of the institution and must be included in the institution's CRA 
public file.
    (3) Any discussion or other contact with the insured depository 
institution or any affiliate about--
    (i) Providing (or refraining from providing) written or oral 
comments or testimony to any Federal banking agency concerning the 
adequacy of the performance under the CRA of the insured depository 
institution, any affiliated insured depository institution, or any CRA 
affiliate;
    (ii) Providing (or refraining from providing) written comments to 
the insured depository institution that concern the adequacy of the 
institution's performance under the CRA and must be included in the 
institution's CRA public file; or
    (iii) The adequacy of the performance under the CRA of the insured 
depository institution, any affiliated insured depository institution, 
or any CRA affiliate.
    (b) Discussions or contacts that are not CRA communications.--(1) 
Timing of contacts with a Federal banking agency. An oral or written 
communication with a Federal banking agency is not a CRA communication 
if it occurred more than 3 years before the parties entered into the 
agreement.
    (2) Timing of contacts with insured depository institutions and 
affiliates. A communication with an insured depository institution or 
affiliate is not a CRA communication if the communication occurred--
    (i) More than 3 years before the parties entered into the 
agreement, in the case of any written communication;
    (ii) More than 3 years before the parties entered into the 
agreement, in the case of any oral communication in which the NGEP 
discusses providing (or refraining from providing) comments or 
testimony to a Federal banking agency or written comments that must be 
included in the institution's CRA public file in connection with a 
request to, or agreement by, the institution or affiliate to take (or 
refrain from taking) any action that is in fulfillment of the CRA; or
    (iii) More than 1 year before the parties entered into the 
agreement, in the case of any other oral communication not described in 
paragraph (b)(2)(ii) of this section.
    (3) Knowledge of communication by insured depository institution or 
affiliate.--(i) A communication is only a CRA communication under 
paragraph (a) of this section if the insured depository institution or 
its affiliate has knowledge of the communication under this paragraph 
(b)(3)(ii) or (b)(3)(iii) of this section.
    (ii) Communication with insured depository institution or 
affiliate. An insured depository institution or affiliate has knowledge 
of a communication by the NGEP to the institution or its affiliate 
under this paragraph only if one of the following representatives of 
the insured depository institution or any affiliate has knowledge of 
the communication.
    (A) An employee who approves, directs, authorizes, or negotiates 
the agreement with the NGEP; or
    (B) An employee designated with responsibility for compliance with 
the CRA or executive officer if the employee or executive officer knows 
that the institution or affiliate is negotiating, intends to negotiate, 
or has been informed by the NGEP that it expects to request that the 
institution or affiliate negotiate an agreement with the NGEP.
    (iii) Other communications. An insured depository institution or 
affiliate is deemed to have knowledge of--

[[Page 2094]]

    (A) Any testimony provided to a Federal banking agency at a public 
meeting or hearing;
    (B) Any comment submitted to a Federal banking agency that is 
conveyed in writing by the agency to the insured depository institution 
or affiliate; and
    (C) Any written comment submitted to the insured depository 
institution that must be and is included in the institution's CRA 
public file.
    (4) Communication where NGEP has knowledge. A NGEP has a CRA 
communication with an insured depository institution or affiliate only 
if any of the following individuals has knowledge of the 
communication--
    (i) A director, employee, or member of the NGEP who approves, 
directs, authorizes, or negotiates the agreement with the insured 
depository institution or affiliate;
    (ii) A person who functions as an executive officer of the NGEP and 
who knows that the NGEP is negotiating or intends to negotiate an 
agreement with the insured depository institution or affiliate; or
    (iii) Where the NGEP is an individual, the NGEP.
    (c) Examples of CRA communications.--(1) Examples of actions that 
are CRA communications. The following are examples of CRA 
communications. These examples are not exclusive and assume that the 
communication occurs within the relevant time period as described in 
paragraph (b)(1) or (b)(2) of this section and the appropriate 
representatives have knowledge of the communication as specified in 
paragraphs (b)(3) and (b)(4) of this section.
    (i) Example 1. A NGEP files a written comment with a Federal 
banking agency that states than an insured depository institution 
successfully addresses the credit needs of its community. The written 
comment is in response to a general request from the agency for 
comments on an application of the insured depository institution to 
open a new branch and a copy of the comment is provided to the 
institution.
    (ii) Example 2. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution must 
improve its CRA performance.
    (iii) Example 3. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution needs to 
make more mortgage loans in low- and moderate-income neighborhoods in 
its community.
    (iv) Example 4. A bank holding company files an application with a 
Federal banking agency to acquire an insured depository institution. 
Two weeks later, the NGEP meets with an executive officer of the bank 
holding company to discuss the adequacy of the performance under the 
CRA of the target insured depository institution. The insured 
depository institution was an affiliate of the bank holding company at 
the time the NGEP met with the target institution. (See 
Sec. 207.11(a).) Accordingly, the NGEP had a CRA communication with an 
affiliate of the bank holding company.
    (2) Examples of actions that are not CRA communications. The 
following are examples of actions that are not by themselves CRA 
communications. These examples are not exclusive.
    (i) Example 1. A NGEP provides to a Federal banking agency comments 
or testimony concerning an insured depository institution or affiliate 
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 (as defined in 
section 803 of the CRA (12 U.S.C. 2902(3)) by, an insured depository 
institution or an application by a company to acquire an insured 
depository institution.
    (ii) Example 2. 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, 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (iii) Example 3. A NGEP, such as a civil rights group, community 
group providing housing and other services in low- and moderate-income 
neighborhoods, veterans organization, community theater group, or youth 
organization, sends a 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 by 
supporting the fundraising efforts of the NGEP.
    (iv) Example 4. A NGEP discusses with an insured depository 
institution or affiliate whether particular loans, services, 
investments, community development activities, or other activities are 
generally eligible for consideration by a Federal banking agency under 
the CRA. The NGEP and insured depository institution or affiliate do 
not discuss the adequacy of the CRA performance of the insured 
depository institution or affiliate.
    (v) Example 5. A NGEP engaged in the sale or purchase of loans in 
the secondary market sends a general offering circular to financial 
institutions offering to sell or purchase a portfolio of loans. An 
insured depository institution that receives the offering circular 
discusses with the NGEP the types of loans included in the loan pool, 
whether such loans are generally eligible for consideration under the 
CRA, and which loans are made to borrowers in the institution's local 
community. The NGEP and insured depository institution do not discuss 
the adequacy of the institution's CRA performance.
    (d) Multiparty covered agreements.--(1) A NGEP that is a party to a 
covered agreement that involves multiple NGEPs is not required to 
comply with the requirements of this part if--
    (i) The NGEP has not had a CRA communication; and
    (ii) No representative of the NGEP identified in paragraph (b)(4) 
of this section has knowledge at the time of the agreement that another 
NGEP that is a party to the agreement has had a CRA communication.
    (2) An insured depository institution or affiliate that is a party 
to a covered agreement that involves multiple insured depository 
institutions or affiliates is not required to comply with the 
disclosure and annual reporting requirements in Secs. 207.6 and 207.7 
if--
    (i) No NGEP that is a party to the agreement has had a CRA 
communication concerning the insured depository institution or any 
affiliate; and
    (ii) No representative of the insured depository institution or any 
affiliate identified in paragraph (b)(3) of this section has knowledge 
at the time of the agreement that an NGEP that is a party to the 
agreement has had a CRA communication concerning any other insured 
depository institution or affiliate that is a party to the agreement.


Sec. 207.4  Fulfillment of the CRA.

    (a) List of factors that are in fulfillment of the CRA. Fulfillment 
of the CRA, for purposes of this part, means the following list of 
factors--
    (1) Comments to a Federal banking agency or included in CRA public 
file. Providing or refraining from providing written or oral comments 
or testimony to any Federal banking agency concerning the performance 
under the CRA of an insured depository

[[Page 2095]]

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; or
    (2) Activities given favorable CRA consideration. Performing any of 
the following activities if the activity is of the type that is likely 
to receive favorable consideration by a Federal banking agency in 
evaluating the performance under the CRA of the insured depository 
institution that is a party to the agreement or an affiliate of a party 
to the agreement--
    (i) 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;
    (ii) 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);
    (iii) Delivering retail banking services, as described in 
Sec. 228.24(d) of Regulation BB (12 CFR 228.24(d));
    (iv) Providing community development services, as described in 
Sec. 228.24(e) of Regulation BB (12 CFR 228.24(e));
    (v) 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));
    (vi) 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
    (vii) 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)).
    (b) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns any activity described in paragraph (a) of this 
section of a CRA affiliate must, prior to the time the agreement is 
entered into, notify each NGEP that is a party to the agreement that 
the agreement concerns a CRA affiliate.


Sec. 207.5  Related agreements considered a single agreement.

    The following rules must be applied in determining whether an 
agreement is a covered agreement under Sec. 207.2.
    (a) Agreements entered into by same parties. All written agreements 
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 agreements--
    (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. 207.6  Disclosure of covered agreements.

    (a) Applicability 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. Each NGEP and each insured depository institution or 
affiliate that enters into a covered agreement must promptly make a 
copy of the covered agreement available to any individual or entity 
upon request.
    (2) Nondisclosure of confidential and proprietary information 
permitted. In responding to a request for a covered agreement from any 
individual or entity under paragraph (b)(1) of this section, a NGEP, 
insured depository institution, or affiliate may withhold from public 
disclosure confidential or proprietary information that the party 
believes the relevant supervisory agency could withhold from disclosure 
under the Freedom of Information Act (5 U.S.C. 552 et seq.) (FOIA).
    (3) Information that must be disclosed. Notwithstanding paragraph 
(b)(2) of this section, a party must disclose any of the following 
information that is contained in a covered agreement--
    (i) The names and addresses of the parties to the agreement;
    (ii) The amount of any payments, fees, loans, or other 
consideration to be made or provided by any party to the agreement;
    (iii) Any description of how the funds or other resources provided 
under the agreement are to be used;
    (iv) The term of the agreement (if the agreement establishes a 
term); and
    (v) Any other information that the relevant supervisory agency 
determines is not properly exempt from public disclosure.
    (4) Request for review of withheld information. Any individual or 
entity may request that the relevant supervisory agency review whether 
any information in a covered agreement withheld by a party must be 
disclosed. Any requests for agency review of withheld information must 
be filed, and will be processed in accordance with, the relevant 
supervisory agency's rules concerning the availability of information 
(see Sec. 261.12 of the Board's Rules Regarding the Availability of 
Information (12 CFR 261.12)).
    (5) Duration of obligation. The obligation to disclose a covered 
agreement to the public terminates 12 months after the end of the term 
of the agreement.
    (6) 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.
    (7) Use of CRA public file by insured depository institution or 
affiliate. An insured depository institution and any affiliate of 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 if the institution makes the 
agreement available in accordance with the procedures set forth in 
Sec. 228.43 of Regulation BB (12 CFR 228.43).
    (c) Disclosure by NGEPs of covered agreements to the relevant 
supervisory agency. (1) Each NGEP that is a party to a covered 
agreement must provide the following within 30 days of receiving a 
request from the relevant supervisory agency--
    (i) A complete copy of the agreement; and
    (ii) In the event the NGEP proposes the withholding of any 
information contained in the agreement in accordance with paragraph 
(b)(2) of this section, a public version of the agreement that excludes 
such information and an explanation justifying the exclusions. Any 
public version must include the information described in paragraph 
(b)(3) of this section.
    (2) The obligation of a NGEP to provide a covered agreement to the 
relevant supervisory agency terminates 12 months after the end of the 
term of the covered agreement.

[[Page 2096]]

    (d) Disclosure by insured depository institution or affiliate of 
covered agreements to the relevant supervisory agency--(1) In general. 
Within 60 days of the end of each calendar quarter, each insured 
depository institution and affiliate must provide each relevant 
supervisory agency with--
    (i)(A) A complete copy of each covered agreement entered into by 
the insured depository institution or affiliate during the calendar 
quarter; and
    (B) In the event the institution or affiliate proposes the 
withholding of any information contained in the agreement in accordance 
with paragraph (b)(2) of this section, a public version of the 
agreement that excludes such information (other than any information 
described in paragraph (b)(3) of this section) and an explanation 
justifying the exclusions; or
    (ii) A list of all covered agreements entered into by the insured 
depository institution or affiliate during the calendar quarter that 
contains--
    (A) The name and address of each insured depository institution or 
affiliate that is a party to the agreement;
    (B) The name and address of each NGEP that is a party to the 
agreement;
    (C) The date the agreement was entered into;
    (D) The estimated total value of all payments, fees, loans and 
other consideration to be provided by the institution or any affiliate 
of the institution under the agreement; and
    (E) The date the agreement terminates.
    (2) Prompt filing of covered agreements contained in list required. 
(i) If an insured depository institution or affiliate files a list of 
the covered agreements entered into by the institution or affiliate 
pursuant to paragraph (d)(1)(ii) of this section, the institution or 
affiliate must provide any relevant supervisory agency a complete copy 
and public version of any covered agreement referenced in the list 
within 7 calendar days of receiving a request from the agency for a 
copy of the agreement.
    (ii) The obligation of an insured depository institution or 
affiliate to provide a covered agreement to the relevant supervisory 
agency under this paragraph (d)(2) terminates 36 months after the end 
of the term of the agreement.
    (3) Joint filings. In the event that 2 or more insured depository 
institutions or affiliates are parties to a covered agreement, the 
insured depository institution(s) and affiliate(s) may jointly file the 
documents required by this paragraph (d). Any joint filing must 
identify the insured depository institution(s) and affiliate(s) for 
whom the filings are being made.


Sec. 207.7  Annual reports.

    (a) Applicability 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) NGEPs. A NGEP must file 
an annual report for a covered agreement for any fiscal year in which 
the NGEP receives or uses funds or other resources under the agreement.
    (2) Insured depository institutions and affiliates. An insured 
depository institution or affiliate must file an annual report for a 
covered agreement for any fiscal year in which the institution or 
affiliate--
    (i) provides or receives any payments, fees, or loans under the 
covered agreement that must be reported under paragraphs (e)(1)(iii) 
and (iv) of this section; or
    (ii) has data to report on loans, investments, and services 
provided by a party to the covered agreement under the covered 
agreement under paragraph (e)(1)(vi) of this section.
    (d) Annual reports filed by NGEP.--(1) Contents of report. 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) A detailed, itemized list of how any funds or resources 
received by the NGEP under the covered agreement 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 and uses (specify expense or use).
    (2) More detailed reporting of uses of funds or resources 
permitted--(i) In general. If a NGEP allocated and used funds received 
under a covered agreement for a specific purpose, the NGEP may fulfill 
the requirements of paragraph (d)(1)(iv) of this section with respect 
to such funds by providing--
    (A) A brief description of each specific purpose for which the 
funds or other resources were used; and
    (B) The amount of funds or resources used during the fiscal year 
for each specific purpose.
    (ii) Specific purpose defined. A NGEP allocates and uses funds for 
a specific purpose if the NGEP receives and uses the funds for a 
purpose that is more specific and limited than the categories listed in 
paragraph (d)(1)(iv) of this section.
    (3) 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 the Internal Revenue Service Return of Organization Exempt From 
Income Tax on Form 990, or any other Internal Revenue Service form, 
state tax form, report to members or shareholders, audited or unaudited 
financial statements, audit report, or other report, so long as the 
annual report filed by the NGEP contains all of the information 
required by this paragraph (d).
    (4) Consolidated reports permitted. A NGEP that is a party to 2 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 reported under 
paragraphs (d)(1)(iv) and (d)(2) of this section may be reported on an 
aggregate basis for all covered agreements.
    (5) Examples of annual report requirements for NGEPs--(i) Example 
1. A NGEP receives an unrestricted grant of $15,000 under a covered 
agreement, includes the funds in its general operating budget and uses 
the funds during its fiscal year. The NGEP's annual report for the 
fiscal year must provide the name and mailing address of the NGEP, 
information sufficient to identify the covered agreement, and state 
that the NGEP received $15,000 during the fiscal year. The report must 
also indicate the total expenditures made by the NGEP during the fiscal 
year for compensation, administrative expenses, travel expenses, 
entertainment expenses, consulting and professional fees, and other 
expenses and uses. The NGEP's annual report may provide this 
information by submitting an Internal Revenue Service Form 990 that 
includes the required information. If the Internal Revenue

[[Page 2097]]

Service Form does not include information for all of the required 
categories listed in this part, the NGEP must report the total 
expenditures in the remaining categories either by providing that 
information directly or by providing another form or report that 
includes the required information.
    (ii) Example 2. An organization receives $15,000 from an insured 
depository institution under a covered agreement and allocates and uses 
the $15,000 during the fiscal year to purchase computer equipment to 
support its functions. The organization's annual report must include 
the name and address of the organization, information sufficient to 
identify the agreement, and a statement that the organization received 
$15,000 during the year. In addition, since the organization allocated 
and used the funds for a specific purpose that is more narrow and 
limited than the categories of expenses included in the detailed, 
itemized list of expenses, the organization would have the option of 
providing either the total amount it used during the year for each 
category of expenses included in paragraph (d)(1)(iv) of this section, 
or a statement that it used the $15,000 to purchase computer equipment 
and a brief description of the equipment purchased.
    (iii) Example 3. 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 $5,000 of the 
funds to pay for a particular business trip and uses the remaining 
$45,000 for general operating expenses. The group's annual report for 
the fiscal year must include the name and address of the group, 
information sufficient to identify the agreement, and a statement that 
the group received $50,000. Because the group did not allocate and use 
all of the funds for a specific purpose, the group's annual report must 
provide the total amount of funds it used during the year for each 
category of expenses included in paragraph (d)(1)(iv) of this section. 
The group's annual report also could state that it used $5,000 for a 
particular business trip and include a brief description of the trip.
    (iv) Example 4. A community development organization is a party to 
two separate covered agreements with two unaffiliated insured 
depository institutions. Under each agreement, the organization 
receives $15,000 during its fiscal year and uses the funds to support 
its activities during that year. If the organization elects to file a 
consolidated annual report, the consolidated report must identify the 
organization and the two covered agreements, state that the 
organization received $15,000 during the fiscal year under each 
agreement, and provide the total amount that the organization used 
during the year for each category of expenses included in paragraph 
(d)(1)(iv) of this section.
    (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 (or a list identifying 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 another party under this section.
    (2) Consolidated reports permitted--(i) Party to multiple 
agreements. An insured depository institution or affiliate that is a 
party to 2 or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency concerning 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)(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 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 
six 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. 207.8  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 confidential treatment of proprietary and confidential 
information in a covered agreement or an annual report under those 
procedures.

[[Page 2098]]

Sec. 207.9  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations--(1) If the Board determines that a NGEP has willfully 
failed to comply in a material way with Secs. 207.6 or 207.7, the Board 
will notify the NGEP in writing of that determination and provide the 
NGEP a period of 90 days (or such longer period as the Board finds to 
be reasonable under the circumstances) to comply.
    (2) If the NGEP does not comply within the time period established 
by the Board, 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) The Board 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, 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. 207.6 or 207.7 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. 207.10  Transition provisions.

    (a) Disclosure of covered agreements entered into before the 
effective date of this part. The following disclosure requirements 
apply to covered agreements that were entered into after November 12, 
1999, and that terminated before April 1, 2001.
    (1) Disclosure to the public. Each NGEP and each insured depository 
institution or affiliate that was a party to the agreement must make 
the agreement available to the public under Sec. 207.6 until at least 
April 1, 2002.
    (2) Disclosure to the relevant supervisory agency--(i) Each NGEP 
that was a party to the agreement must make the agreement available to 
the relevant supervisory agency under Sec. 207.6 until at least April 
1, 2002.
    (ii) Each insured depository institution or affiliate that was a 
party to the agreement must, by June 30, 2001, provide each relevant 
supervisory agency either--
    (A) A copy of the agreement under Sec. 207.6(d)(1)(i); or
    (B) The information described in Sec. 207.6(d)(1)(ii) for each 
agreement.
    (b) Filing of annual reports that relate to fiscal years ending on 
or before December 31, 2000. In the event that a NGEP, insured 
depository institution or affiliate has any information to report under 
Sec. 207.7 for a fiscal year that ends on or before December 31, 2000, 
and that concerns a covered agreement entered into between May 12, 
2000, and December 31, 2000, the annual report for that fiscal year 
must be provided no later than June 30, 2001, to--
    (1) Each relevant supervisory agency; or
    (2) In the case of a NGEP, to an insured depository institution or 
affiliate that is a party to the agreement in accordance with 
Sec. 207.7(f)(2).


Sec. 207.11  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 NGEP that is a party to the agreement makes a CRA 
communication, as described in Sec. 207.3.
    (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 prior to the agreement. An insured 
depository institution or affiliate also may designate any company as a 
CRA affiliate at any time prior to the time a covered agreement is 
entered into by informing the NGEP that is a party to the agreement of 
such designation.
    (d) CRA public file. "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) Executive officer. The term "executive officer'' has the same 
meaning as in Sec. 215.2(e)(1) of the Board's Regulation O (12 CFR 
215.2(e)(1)).
    (f) 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).
    (g) 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.
    (h) 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).
    (i) NGEP. "NGEP'' means a nongovernmental entity or person.
    (j) 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

[[Page 2099]]

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 (i)(2)(i) through 
(iii) of this section.
    (k) 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.
    (l) Relevant supervisory agency. 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.
    (m) Term of agreement. An agreement that does not have a fixed 
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 relevant supervisory 
agency for the agreement otherwise notifies each party in writing.

    By order of the Board of Governors of the Federal Reserve 
System, December 21, 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 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   CRA communications.
346.4   Fulfillment of the CRA.
346.5   Related agreements considered a single agreement.
346.6   Disclosure of covered agreements.
346.7   Annual reports.
346.8   Release of information under FOIA.
346.9   Compliance provisions.
346.10   Transition provisions.
346.11   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 (12 U.S.C. 1831y). That section requires any nongovernmental 
entity or person, insured depository institution, or 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) Scope of this part. The provisions of this part apply to--
    (1) State nonmember insured banks;
    (2) Subsidiaries of state nonmember insured banks;
    (3) Nongovernmental entities or persons that enter into covered 
agreements with any company listed in paragraph (b)(1) and (2) of this 
section.
    (c) Relation to Community Reinvestment Act. This part does not 
affect in any way the Community Reinvestment Act of 1977 (12 U.S.C. 
2901 et seq.) or the FDIC's Community Reinvestment regulation found at 
12 CFR part 345, or the FDIC's interpretations or administration of 
that Act or regulation.
    (d) Examples.--(1) The examples in this part are not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part.
    (2) Examples in a paragraph illustrate only the issue described in 
the paragraph and do not illustrate any other issues that may arise in 
this part.


Sec. 346.2  Definition of covered agreement.

    (a) General definition of covered agreement. A covered agreement is 
any contract, arrangement, or understanding that meets all of the 
following criteria--
    (1) The agreement is in writing.
    (2) The parties to the agreement include--
    (i) One or more insured depository institutions or affiliates of an 
insured depository institution; and
    (ii) One or more nongovernmental entities or persons (referred to 
hereafter as NGEPs).
    (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 Sec. 346.4.
    (5) The agreement is with a NGEP that has had a CRA communication 
as described in Sec. 346.3 prior to entering into the agreement.
    (b) Examples concerning written arrangements or understandings--(1) 
Example 1. A NGEP meets with an insured depository institution and 
states that the institution needs to make more community development 
investments in the NGEP's community. The NGEP and insured depository 
institution do not reach an agreement concerning the community 
development investments the institution should make in the community, 
and the parties do not reach any mutual arrangement or understanding. 
Two weeks later, the institution unilaterally issues a press release 
announcing that it has established a general goal of making $100 
million of community development grants in low- and moderate-income 
neighborhoods served by the insured depository institution over the 
next 5 years. The NGEP is not identified in the press release. The 
press release is not a written arrangement or understanding.
    (2) Example 2. A NGEP meets with an insured depository institution 
and states that the institution needs to offer new loan programs in the 
NGEP's community. The NGEP and the insured depository institution reach 
a mutual arrangement or understanding that the institution will provide 
additional loans in the NGEP's community. The institution tells the 
NGEP that it will issue a press release announcing the program. Later, 
the insured depository institution issues a press release announcing 
the loan program. The press release incorporates the key terms of the 
understanding reached between the NGEP and the insured depository 
institution. The written press release reflects the mutual arrangement 
or understanding of the NGEP and the insured depository institution and 
is, therefore, a written arrangement or understanding.
    (3) Example 3. An NGEP sends a letter to an insured depository 
institution requesting that the institution provide a

[[Page 2100]]

$15,000 grant to the NGEP. 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 
arrangement or understanding.
    (c) Loan agreements that are not covered agreements. A covered 
agreement does not include--
    (1) Any individual loan that is secured by real estate; or
    (2) Any specific contract or commitment for a loan or extension of 
credit to an individual, business, farm, or other entity, or group of 
such individuals or entities if--
    (i) The funds are loaned at rates that are not substantially below 
market rates; and
    (ii) The loan application or other loan documentation does not 
indicate that the borrower intends or is authorized to use the borrowed 
funds to make a loan or extension of credit to one or more third 
parties.
    (d) Examples concerning loan agreements.--(1) Example 1. An insured 
depository institution provides an organization with a $1 million loan 
that is documented in writing and is secured by real estate owned or 
to-be-acquired by the organization. The agreement is an individual 
mortgage loan and is exempt from coverage under paragraph (c)(1) of 
this section, regardless of the interest rate on the loan or whether 
the organization intends or is authorized to re-loan the funds to a 
third party.
    (2) Example 2. An insured depository institution commits to provide 
a $500,000 line of credit to a small business that is documented by a 
written agreement. The loan is made at rates that are within the range 
of rates offered by the institution to similarly situated small 
businesses in the market and the loan documentation does not indicate 
that the small business intends or is authorized to re-lend the 
borrowed funds. The agreement is exempt from coverage under paragraph 
(c)(2) of this section.
    (3) Example 3. An insured depository institution offers small 
business loans that are guaranteed by the Small Business Administration 
(SBA). A small business obtains a $75,000 loan, documented in writing, 
from the institution under the institution's SBA loan program. The loan 
documentation does not indicate that the borrower intends or is 
authorized to re-lend the funds. Although the rate charged on the loan 
is well below that charged by the institution on commercial loans, the 
rate is within the range of rates that the institution would charge a 
similarly situated small business for a similar loan under the SBA loan 
program. Accordingly, the loan is not made at substantially below 
market rates and is exempt from coverage under paragraph (c)(2) of this 
section.
    (4) Example 4. A bank holding company enters into a written 
agreement with a community development organization that provides that 
insured depository institutions owned by the bank holding company will 
make $250 million in small business loans in the community over the 
next 5 years. The written agreement is not a specific contract or 
commitment for a loan or an extension of credit and, thus, is not 
exempt from coverage under paragraph (c)(2) of this section. Each small 
business loan made by the insured depository institution pursuant to 
this general commitment would, however, be exempt from coverage if the 
loan is made at rates that are not substantially below market rates and 
the loan documentation does not indicate that the borrower intended or 
was authorized to re-lend the funds.
    (e) Agreements that include exempt loan agreements. If an agreement 
includes a loan, extension of credit or loan commitment that, if 
documented separately, would be exempt under paragraph (c) of this 
section, the exempt loan, extension of credit or loan commitment may be 
excluded for purposes of determining whether the agreement is a covered 
agreement.
    (f) Determining annual value of agreements that lack schedule of 
disbursements. For purposes of paragraph (a)(3) of this section, a 
multi-year agreement that does not include a schedule for the 
disbursement of payments, grants, loans or other consideration by the 
insured depository institution or affiliate, is considered to have a 
value in the first year of the agreement equal to all payments, grants, 
loans and other consideration to be provided at any time under the 
agreement.


Sec. 346.3  CRA communications.

    (a) Definition of CRA communication. A CRA communication is any of 
the following--
    (1) Any written or oral comment or testimony provided to a Federal 
banking agency concerning the adequacy of the performance under the CRA 
of the insured depository institution, any affiliated insured 
depository institution, or any CRA affiliate.
    (2) Any written comment submitted to the insured depository 
institution that discusses the adequacy of the performance under the 
CRA of the institution and must be included in the institution's CRA 
public file.
    (3) Any discussion or other contact with the insured depository 
institution or any affiliate about--
    (i) Providing (or refraining from providing) written or oral 
comments or testimony to any Federal banking agency concerning the 
adequacy of the performance under the CRA of the insured depository 
institution, any affiliated insured depository institution, or any CRA 
affiliate;
    (ii) Providing (or refraining from providing) written comments to 
the insured depository institution that concern the adequacy of the 
institution's performance under the CRA and must be included in the 
institution's CRA public file; or
    (iii) The adequacy of the performance under the CRA of the insured 
depository institution, any affiliated insured depository institution, 
or any CRA affiliate.
    (b) Discussions or contacts that are not CRA communications--(1) 
Timing of contacts with a Federal banking agency. An oral or written 
communication with a Federal banking agency is not a CRA communication 
if it occurred more than 3 years before the parties entered into the 
agreement.
    (2) Timing of contacts with insured depository institutions and 
affiliates. A communication with an insured depository institution or 
affiliate is not a CRA communication if the communication occurred--
    (i) More than 3 years before the parties entered into the 
agreement, in the case of any written communication;
    (ii) More than 3 years before the parties entered into the 
agreement, in the case of any oral communication in which the NGEP 
discusses providing (or refraining from providing) comments or 
testimony to a Federal banking agency or written comments that must be 
included in the institution's CRA public file in connection with a 
request to, or agreement by, the institution or affiliate to take (or 
refrain from taking) any action that is in fulfillment of the CRA; or
    (iii) More than 1 year before the parties entered into the 
agreement, in the case of any other oral communication not described in 
paragraph (b)(2)(ii) of this section.
    (3) Knowledge of communication by insured depository institution or 
affiliate.--(i) A communication is only a CRA communication under 
paragraph (a) of this section if the insured depository institution or 
its affiliate has knowledge of the communication under this paragraph 
(b)(3)(ii) or (b)(3)(iii) of this section.
    (ii) Communication with insured depository institution or 
affiliate. An

[[Page 2101]]

insured depository institution or affiliate has knowledge of a 
communication by the NGEP to the institution or its affiliate under 
this paragraph only if one of the following representatives of the 
insured depository institution or any affiliate has knowledge of the 
communication--
    (A) An employee who approves, directs, authorizes, or negotiates 
the agreement with the NGEP; or
    (B) An employee designated with responsibility for compliance with 
the CRA or executive officer if the employee or executive officer knows 
that the institution or affiliate is negotiating, intends to negotiate, 
or has been informed by the NGEP that it expects to request that the 
institution or affiliate negotiate an agreement with the NGEP.
    (iii) Other communications. An insured depository institution or 
affiliate is deemed to have knowledge of--
    (A) Any testimony provided to a Federal banking agency at a public 
meeting or hearing;
    (B) Any comment submitted to a Federal banking agency that is 
conveyed in writing by the agency to the insured depository institution 
or affiliate; and
    (C) Any written comment submitted to the insured depository 
institution that must be and is included in the institution's CRA 
public file.
    (4) Communication where NGEP has knowledge. A NGEP has a CRA 
communication with an insured depository institution or affiliate only 
if any of the following individuals has knowledge of the 
communication--
    (i) A director, employee, or member of the NGEP who approves, 
directs, authorizes, or negotiates the agreement with the insured 
depository institution or affiliate;
    (ii) A person who functions as an executive officer of the NGEP and 
who knows that the NGEP is negotiating or intends to negotiate an 
agreement with the insured depository institution or affiliate; or
    (iii) Where the NGEP is an individual, the NGEP.
    (c) Examples of CRA communications--(1) Examples of actions that 
are CRA communications. The following are examples of CRA 
communications. These examples are not exclusive and assume that the 
communication occurs within the relevant time period as described in 
paragraph (b)(1) or (b)(2) of this section and the appropriate 
representatives have knowledge of the communication as specified in 
paragraphs (b)(3) and (b)(4) of this section.
    (i) Example 1. A NGEP files a written comment with a Federal 
banking agency that states than an insured depository institution 
successfully addresses the credit needs of its community. The written 
comment is in response to a general request from the agency for 
comments on an application of the insured depository institution to 
open a new branch and a copy of the comment is provided to the 
institution.
    (ii) Example 2. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution must 
improve its CRA performance.
    (iii) Example 3. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution needs to 
make more mortgage loans in low- and moderate-income neighborhoods in 
its community.
    (iv) Example 4. A bank holding company files an application with a 
Federal banking agency to acquire an insured depository institution. 
Two weeks later, the NGEP meets with an executive officer of the bank 
holding company to discuss the adequacy of the performance under the 
CRA of the target insured depository institution. The insured 
depository institution was an affiliate of the bank holding company at 
the time the NGEP met with the target institution. (See 
Sec. 346.11(a).) Accordingly, the NGEP had a CRA communication with an 
affiliate of the bank holding company.
    (2) Examples of actions that are not CRA communications. The 
following are examples of actions that are not by themselves CRA 
communications. These examples are not exclusive.
    (i) Example 1. A NGEP provides to a Federal banking agency comments 
or testimony concerning an insured depository institution or affiliate 
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 (as defined in 
section 803 of the CRA (12 U.S.C. 2902(3)) by, an insured depository 
institution or an application by a company to acquire an insured 
depository institution.
    (ii) Example 2. 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, 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (iii) Example 3. A NGEP, such as a civil rights group, community 
group providing housing and other services in low- and moderate-income 
neighborhoods, veterans organization, community theater group, or youth 
organization, sends a 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 by 
supporting the fundraising efforts of the NGEP.
    (iv) Example 4. A NGEP discusses with an insured depository 
institution or affiliate whether particular loans, services, 
investments, community development activities, or other activities are 
generally eligible for consideration by a Federal banking agency under 
the CRA. The NGEP and insured depository institution or affiliate do 
not discuss the adequacy of the CRA performance of the insured 
depository institution or affiliate.
    (v) Example 5. A NGEP engaged in the sale or purchase of loans in 
the secondary market sends a general offering circular to financial 
institutions offering to sell or purchase a portfolio of loans. An 
insured depository institution that receives the offering circular 
discusses with the NGEP the types of loans included in the loan pool, 
whether such loans are generally eligible for consideration under the 
CRA, and which loans are made to borrowers in the institution's local 
community. The NGEP and insured depository institution do not discuss 
the adequacy of the institution's CRA performance.
    (d) Multiparty covered agreements.--(1) A NGEP that is a party to a 
covered agreement that involves multiple NGEPs is not required to 
comply with the requirements of this part if--
    (i) The NGEP has not had a CRA communication; and
    (ii) No representative of the NGEP identified in paragraph (b)(4) 
of this section has knowledge at the time of the agreement that another 
NGEP that is a party to the agreement has had a CRA communication.
    (2) An insured depository institution or affiliate that is a party 
to a covered agreement that involves multiple insured depository 
institutions or affiliates is not required to comply with the 
disclosure and annual reporting requirements in Secs. 346.6 and 346.7 
if--

[[Page 2102]]

    (i) No NGEP that is a party to the agreement has had a CRA 
communication concerning the insured depository institution or any 
affiliate; and
    (ii) No representative of the insured depository institution or any 
affiliate identified in paragraph (b)(3) of this section has knowledge 
at the time of the agreement that an NGEP that is a party to the 
agreement has had a CRA communication concerning any other insured 
depository institution or affiliate that is a party to the agreement.


Sec. 346.4  Fulfillment of the CRA.

    (a) List of factors that are in fulfillment of the CRA. Fulfillment 
of the CRA, for purposes of this part, means the following list of 
factors--
    (1) Comments to a Federal banking agency or included in CRA public 
file. Providing or refraining from providing written or oral comments 
or testimony to any Federal banking agency concerning the 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; or
    (2) Activities given favorable CRA consideration. Performing any of 
the following activities if the activity is of the type that is likely 
to receive favorable consideration by a Federal banking agency in 
evaluating the performance under the CRA of the insured depository 
institution that is a party to the agreement or an affiliate of a party 
to the agreement--
    (i) 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;
    (ii) Making investments, deposits, or grants, or acquiring 
membership shares, that have as their primary purpose community 
development, as described in 12 CFR 345.23;
    (iii) Delivering retail banking services, as described in 12 CFR 
345.24(d);
    (iv) Providing community development services, as described in 12 
CFR 345.24(e);
    (v) 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);
    (vi) In the case of a small insured depository institution, any 
lending or other activity described in 12 CFR 345.26(a); or
    (vii) 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).
    (b) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns any activity described in paragraph (a) of this 
section of a CRA affiliate must, prior to the time the agreement is 
entered into, notify each NGEP that is a party to the agreement that 
the agreement concerns a CRA affiliate.


Sec. 346.5  Related agreements considered a single agreement.

    The following rules must be applied in determining whether an 
agreement is a covered agreement under Sec. 346.2.
    (a) Agreements entered into by same parties. All written agreements 
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 agreements--
    (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. 346.6  Disclosure of covered agreements.

    (a) Applicability 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. Each NGEP and each insured depository institution or 
affiliate that enters into a covered agreement must promptly make a 
copy of the covered agreement available to any individual or entity 
upon request.
    (2) Nondisclosure of confidential and proprietary information 
permitted. In responding to a request for a covered agreement from any 
individual or entity under paragraph (b)(1) of this section, a NGEP, 
insured depository institution, or affiliate may withhold from public 
disclosure confidential or proprietary information that the party 
believes the relevant supervisory agency could withhold from disclosure 
under the Freedom of Information Act (5 U.S.C. 552 et seq.) (FOIA).
    (3) Information that must be disclosed. Notwithstanding paragraph 
(b)(2) of this section, a party must disclose any of the following 
information that is contained in a covered agreement--
    (i) The names and addresses of the parties to the agreement;
    (ii) The amount of any payments, fees, loans, or other 
consideration to be made or provided by any party to the agreement;
    (iii) Any description of how the funds or other resources provided 
under the agreement are to be used;
    (iv) The term of the agreement (if the agreement establishes a 
term); and
    (v) Any other information that the relevant supervisory agency 
determines is not properly exempt from public disclosure.
    (4) Request for review of withheld information. Any individual or 
entity may request that the relevant supervisory agency review whether 
any information in a covered agreement withheld by a party must be 
disclosed. Any requests for agency review of withheld information must 
be filed, and will be processed in accordance with, the relevant 
supervisory agency's rules concerning the availability of information 
(see the FDIC's rules regarding Disclosure of Information (12 CFR part 
309)).
    (5) Duration of obligation. The obligation to disclose a covered 
agreement to the public terminates 12 months after the end of the term 
of the agreement.
    (6) 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.
    (7) Use of CRA public file by insured depository institution or 
affiliate. An insured depository institution and any affiliate of 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 if the institution makes the 
agreement available in accordance with the procedures set forth in 12 
CFR 345.43.
    (c) Disclosure by NGEPs of covered agreements to the relevant 
supervisory agency--(1) Each NGEP that is a party to a covered 
agreement must provide the

[[Page 2103]]

following within 30 days of receiving a request from the relevant 
supervisory agency--
    (i) A complete copy of the agreement; and
    (ii) In the event the NGEP proposes the withholding of any 
information contained in the agreement in accordance with paragraph 
(b)(2) of this section, a public version of the agreement that excludes 
such information and an explanation justifying the exclusions. Any 
public version must include the information described in paragraph 
(b)(3) of this section.
    (2) The obligation of a NGEP to provide a covered agreement to the 
relevant supervisory agency terminates 12 months after the end of the 
term of the covered agreement.
    (d) Disclosure by insured depository institution or affiliate of 
covered agreements to the relevant supervisory agency--(1) In general. 
Within 60 days of the end of each calendar quarter, each insured 
depository institution and affiliate must provide each relevant 
supervisory agency with--
    (i)(A) A complete copy of each covered agreement entered into by 
the insured depository institution or affiliate during the calendar 
quarter; and
    (B) In the event the institution or affiliate proposes the 
withholding of any information contained in the agreement in accordance 
with paragraph (b)(2) of this section, a public version of the 
agreement that excludes such information (other than any information 
described in paragraph (b)(3) of this section) and an explanation 
justifying the exclusions; or
    (ii) A list of all covered agreements entered into by the insured 
depository institution or affiliate during the calendar quarter that 
contains--
    (A) The name and address of each insured depository institution or 
affiliate that is a party to the agreement;
    (B) The name and address of each NGEP that is a party to the 
agreement;
    (C) The date the agreement was entered into;
    (D) The estimated total value of all payments, fees, loans and 
other consideration to be provided by the institution or any affiliate 
of the institution under the agreement; and
    (E) The date the agreement terminates.
    (2) Prompt filing of covered agreements contained in list 
required.--(i) If an insured depository institution or affiliate files 
a list of the covered agreements entered into by the institution or 
affiliate pursuant to paragraph (d)(1)(ii) of this section, the 
institution or affiliate must provide any relevant supervisory agency a 
complete copy and public version of any covered agreement referenced in 
the list within 7 calendar days of receiving a request from the agency 
for a copy of the agreement.
    (ii) The obligation of an insured depository institution or 
affiliate to provide a covered agreement to the relevant supervisory 
agency under this paragraph (d)(2) terminates 36 months after the end 
of the term of the agreement.
    (3) Joint filings. In the event that 2 or more insured depository 
institutions or affiliates are parties to a covered agreement, the 
insured depository institution(s) and affiliate(s) may jointly file the 
documents required by this paragraph (d). Any joint filing must 
identify the insured depository institution(s) and affiliate(s) for 
whom the filings are being made.


Sec. 346.7  Annual reports.

    (a) Applicability 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) NGEPs. A NGEP must file 
an annual report for a covered agreement for any fiscal year in which 
the NGEP receives or uses funds or other resources under the agreement.
    (2) Insured depository institutions and affiliates. An insured 
depository institution or affiliate must file an annual report for a 
covered agreement for any fiscal year in which the institution or 
affiliate--
    (i) provides or receives any payments, fees, or loans under the 
covered agreement that must be reported under paragraphs (e)(1)(iii) 
and (iv) of this section; or
    (ii) has data to report on loans, investments, and services 
provided by a party to the covered agreement under the covered 
agreement under paragraph (e)(1)(vi) of this section.
    (d) Annual reports filed by NGEP--(1) Contents of report. 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) A detailed, itemized list of how any funds or resources 
received by the NGEP under the covered agreement 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 and uses (specify expense or use).
    (2) More detailed reporting of uses of funds or resources 
permitted--(i) In general. If a NGEP allocated and used funds received 
under a covered agreement for a specific purpose, the NGEP may fulfill 
the requirements of paragraph (d)(1)(iv) of this section with respect 
to such funds by providing--
    (A) A brief description of each specific purpose for which the 
funds or other resources were used; and
    (B) The amount of funds or resources used during the fiscal year 
for each specific purpose.
    (ii) Specific purpose defined. A NGEP allocates and uses funds for 
a specific purpose if the NGEP receives and uses the funds for a 
purpose that is more specific and limited than the categories listed in 
paragraph (d)(1)(iv) of this section.
    (3) 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 the Internal Revenue Service Return of Organization Exempt From 
Income Tax on Form 990, or any other Internal Revenue Service form, 
state tax form, report to members or shareholders, audited or unaudited 
financial statements, audit report, or other report, so long as the 
annual report filed by the NGEP contains all of the information 
required by this paragraph (d).
    (4) Consolidated reports permitted. A NGEP that is a party to 2 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 reported under 
paragraphs (d)(1)(iv) and (d)(2) of this section may be reported on an 
aggregate basis for all covered agreements.
    (5) Examples of annual report requirements for NGEPs.--(i) Example 
1. A NGEP receives an unrestricted

[[Page 2104]]

grant of $15,000 under a covered agreement, includes the funds in its 
general operating budget, and uses the funds during its fiscal year. 
The NGEP's annual report for the fiscal year must provide the name and 
mailing address of the NGEP, information sufficient to identify the 
covered agreement, and state that the NGEP received $15,000 during the 
fiscal year. The report must also indicate the total expenditures made 
by the NGEP during the fiscal year for compensation, administrative 
expenses, travel expenses, entertainment expenses, consulting and 
professional fees, and other expenses and uses. The NGEP's annual 
report may provide this information by submitting an Internal Revenue 
Service Form 990 that includes the required information. If the 
Internal Revenue Service Form does not include information for all of 
the required categories listed in this part, the NGEP must report the 
total expenditures in the remaining categories either by providing that 
information directly or by providing another form or report that 
includes the required information.
    (ii) Example 2. An organization receives $15,000 from an insured 
depository institution under a covered agreement and allocates and uses 
the $15,000 during the fiscal year to purchase computer equipment to 
support its functions. The organization's annual report must include 
the name and address of the organization, information sufficient to 
identify the agreement, and a statement that the organization received 
$15,000 during the year. In addition, since the organization allocated 
and used the funds for a specific purpose that is more narrow and 
limited than the categories of expenses included in the detailed, 
itemized list of expenses, the organization would have the option of 
providing either the total amount it used during the year for each 
category of expenses included in paragraph (d)(1)(iv) of this section, 
or a statement that it used the $15,000 to purchase computer equipment 
and a brief description of the equipment purchased.
    (iii) Example 3. 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 $5,000 of the 
funds to pay for a particular business trip and uses the remaining 
$45,000 for general operating expenses. The group's annual report for 
the fiscal year must include the name and address of the group, 
information sufficient to identify the agreement, and a statement that 
the group received $50,000. Because the group did not allocate and use 
all of the funds for a specific purpose, the group's annual report must 
provide the total amount of funds it used during the year for each 
category of expenses included in paragraph (d)(1)(iv) of this section. 
The group's annual report also could state that it used $5,000 for a 
particular business trip and include a brief description of the trip.
    (iv) Example 4. A community development organization is a party to 
two separate covered agreements with two unaffiliated insured 
depository institutions. Under each agreement, the organization 
receives $15,000 during its fiscal year and uses the funds to support 
its activities during that year. If the organization elects to file a 
consolidated annual report, the consolidated report must identify the 
organization and the two covered agreements, state that the 
organization received $15,000 during the fiscal year under each 
agreement, and provide the total amount that the organization used 
during the year for each category of expenses included in paragraph 
(d)(1)(iv) of this section.
    (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 (or a list identifying 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 another party under this section.
    (2) Consolidated reports permitted--(i) Party to multiple 
agreements. An insured depository institution or affiliate that is a 
party to 2 or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency concerning 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)(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 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 
six 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.

[[Page 2105]]

    (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. 346.8  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. 346.9  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations.--(1) If the FDIC determines that a NGEP has willfully 
failed to comply in a material way with Secs. 346.4 or 346.5, the FDIC 
will notify the NGEP in writing of that determination and provide the 
NGEP a period of 90 days (or such longer period as the FDIC finds to be 
reasonable under the circumstances) to comply.
    (2) If the NGEP does not comply within the time period established 
by the FDIC, 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) The FDIC 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, 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. 346.6 or 346.7 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. 346.10  Transition provisions.

    (a) Disclosure of covered agreements entered into before the 
effective date of this part. The following disclosure requirements 
apply to covered agreements that were entered into after November 12, 
1999, and that terminated before April 1, 2001.
    (1) Disclosure to the public. Each NGEP and each insured depository 
institution or affiliate that was a party to the agreement must make 
the agreement available to the public under Sec. 346.6 until at least 
April 1, 2002.
    (2) Disclosure to the relevant supervisory agency.--(i) Each NGEP 
that was a party to the agreement must make the agreement available to 
the relevant supervisory agency under Sec. 346.6 until at least April 
1, 2002.
    (ii) Each insured depository institution or affiliate that was a 
party to the agreement must, by June 30, 2001, provide each relevant 
supervisory agency either--
    (A) A copy of the agreement under Sec. 346.6(d)(1)(i); or
    (B) The information described in Sec. 346.6(d)(1)(ii) for each 
agreement.
    (b) Filing of annual reports that relate to fiscal years ending on 
or before December 31, 2000. In the event that a NGEP, insured 
depository institution or affiliate has any information to report under 
Sec. 346.7 for a fiscal year that ends on or before December 31, 2000, 
and that concerns a covered agreement entered into between May 12, 
2000, and December 31, 2000, the annual report for that fiscal year 
must be provided no later than June 30, 2001, to--
    (1) Each relevant supervisory agency; or
    (2) In the case of a NGEP, to an insured depository institution or 
affiliate that is a party to the agreement in accordance with 
Sec. 346.7(f)(2).


Sec. 346.11  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 NGEP that is a party to the agreement makes a CRA 
communication, as described in Sec. 346.3.
    (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 prior to the agreement. An insured 
depository institution or affiliate also may designate any company as a 
CRA affiliate at any time prior to the time a covered agreement is 
entered into by informing the NGEP that is a party to the agreement of 
such designation.
    (d) CRA public file. "CRA public file'' means the public file 
maintained by an insured depository institution and described in 12 CFR 
345.43.
    (e) Executive officer. The term "executive officer'' has the same 
meaning as in Sec. 215.2(e)(1) of the Board of Governors of the Federal 
Reserve System's Regulation O (12 CFR 215.2(e)(1)).
    (f) 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).
    (g) 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.
    (h) 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).
    (i) NGEP. "NGEP'' means a nongovernmental entity or person.

[[Page 2106]]

    (j) 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.
    (k) Party. The term "party''. The authority citation for part 405 
continues to read as follows: with respect to a covered agreement means 
each NGEP and each insured depository institution or affiliate that 
entered into the agreement.
    (l) Relevant supervisory agency. 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.
    (m) Term of agreement. An agreement that does not have a fixed 
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 relevant supervisory 
agency for the agreement otherwise notifies each party in writing.

    By order of the Board of Directors, Federal Deposit Insurance 
Corporation.
    Dated at Washington, DC, this 21st day of December, 2000.
Robert E. Feldman,
Executive Secretary.

Department of Treasury

Office of Thrift Supervision

12 CFR Chapter V

Authority and Issuance

    For the reasons set out in the joint preamble, Title 12, Chapter V, 
of the Code of Federal Regulations is amended 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   CRA communications.
533.4   Fulfillment of the CRA.
533.5   Related agreements considered a single agreement.
533.6   Disclosure of covered agreements.
533.7   Annual reports.
533.8   Release of information under FOIA.
533.9   Compliance provisions.
533.10   Transition provisions.
533.11   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 (NGEP), insured depository institution, or 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) Scope of this part. The provisions of this part apply to--
    (1) Savings associations and their subsidiaries;
    (2) Savings and loan holding companies;
    (3) Affiliates of savings associations and savings and loan holding 
companies, other than bank holding companies, banks, and subsidiaries 
of bank holding companies and banks; and
    (4) NGEPs that enter into covered agreements with any company 
listed in paragraphs (b)(1) through (b)(3) of this section.
    (c) Relation to Community Reinvestment Act. This part does not 
affect in any way the Community Reinvestment Act of 1977 (CRA) (12 
U.S.C. 2901 et seq.), OTS's Community Reinvestment rule (12 CFR Part 
563e), or OTS's interpretations or administration of the CRA or 
Community Reinvestment rule.
    (d) Examples. (1) The examples in this part are not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part.
    (2) Examples in a paragraph illustrate only the issue described in 
the paragraph and do not illustrate any other issues that may arise in 
this part.


Sec. 533.2  Definition of covered agreement.

    (a) General definition of covered agreement. A covered agreement is 
any contract, arrangement, or understanding that meets all of the 
following criteria--
    (1) The agreement is in writing.
    (2) The parties to the agreement include--
    (i) One or more insured depository institutions or affiliates of an 
insured depository institution; and
    (ii) One or more NGEPs.
    (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 CRA, as defined in Sec. 533.4 of this part.
    (5) The agreement is with a NGEP that has had a CRA communication 
as described in Sec. 533.3 of this part prior to entering into the 
agreement.
    (b) Examples concerning written arrangements or understandings. (1) 
Example 1. A NGEP meets with an insured depository institution and 
states that the institution needs to make more community development 
investments in the NGEP's community. The NGEP and insured depository 
institution do not reach an agreement concerning the community 
development investments the institution should make in the community, 
and the parties do not reach any mutual arrangement or understanding. 
Two weeks later, the institution unilaterally issues a press release 
announcing that it has established a general goal of making $100 
million of community development grants in low- and

[[Page 2107]]

moderate-income neighborhoods served by the insured depository 
institution over the next 5 years. The NGEP is not identified in the 
press release. The press release is not a written arrangement or 
understanding.
    (2) Example 2. A NGEP meets with an insured depository institution 
and states that the institution needs to offer new loan programs in the 
NGEP's community. The NGEP and the insured depository institution reach 
a mutual arrangement or understanding that the institution will provide 
additional loans in the NGEP's community. The institution tells the 
NGEP that it will issue a press release announcing the program. Later, 
the insured depository institution issues a press release announcing 
the loan program. The press release incorporates the key terms of the 
understanding reached between the NGEP and the insured depository 
institution. The written press release reflects the mutual arrangement 
or understanding of the NGEP and the insured depository institution and 
is, therefore, a written arrangement or understanding.
    (3) Example 3. An NGEP sends a letter to an insured depository 
institution requesting that the institution provide a $15,000 grant to 
the NGEP. 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 arrangement or 
understanding.
    (c) Loan agreements that are not covered agreements. A covered 
agreement does not include--
    (1) Any individual loan that is secured by real estate; or
    (2) Any specific contract or commitment for a loan or extension of 
credit to an individual, business, farm, or other entity, or group of 
such individuals or entities, if--
    (i) The funds are loaned at rates that are not substantially below 
market rates; and
    (ii) The loan application or other loan documentation does not 
indicate that the borrower intends or is authorized to use the borrowed 
funds to make a loan or extension of credit to one or more third 
parties.
    (d) Examples concerning loan agreements. (1) Example 1. An insured 
depository institution provides an organization with a $1 million loan 
that is documented in writing and is secured by real estate owned or 
to-be-acquired by the organization. The agreement is an individual 
mortgage loan and is exempt from coverage under paragraph (c)(1) of 
this section, regardless of the interest rate on the loan or whether 
the organization intends or is authorized to re-loan the funds to a 
third party.
    (2) Example 2. An insured depository institution commits to provide 
a $500,000 line of credit to a small business that is documented by a 
written agreement. The loan is made at rates that are within the range 
of rates offered by the institution to similarly situated small 
businesses in the market and the loan documentation does not indicate 
that the small business intends or is authorized to re-lend the 
borrowed funds. The agreement is exempt from coverage under paragraph 
(c)(2) of this section.
    (3) Example 3. An insured depository institution offers small 
business loans that are guaranteed by the Small Business Administration 
(SBA). A small business obtains a $75,000 loan, documented in writing, 
from the institution under the institution's SBA loan program. The loan 
documentation does not indicate that the borrower intends or is 
authorized to re-lend the funds. Although the rate charged on the loan 
is well below that charged by the institution on commercial loans, the 
rate is within the range of rates that the institution would charge a 
similarly situated small business for a similar loan under the SBA loan 
program. Accordingly, the loan is not made at substantially below 
market rates and is exempt from coverage under paragraph (c)(2) of this 
section.
    (4) Example 4. A bank holding company enters into a written 
agreement with a community development organization that provides that 
insured depository institutions owned by the bank holding company will 
make $250 million in small business loans in the community over the 
next 5 years. The written agreement is not a specific contract or 
commitment for a loan or an extension of credit and, thus, is not 
exempt from coverage under paragraph (c)(2) of this section. Each small 
business loan made by the insured depository institution pursuant to 
this general commitment would, however, be exempt from coverage if the 
loan is made at rates that are not substantially below market rates and 
the loan documentation does not indicate that the borrower intended or 
was authorized to re-lend the funds.
    (e) Agreements that include exempt loan agreements. If an agreement 
includes a loan, extension of credit or loan commitment that, if 
documented separately, would be exempt under paragraph (c) of this 
section, the exempt loan, extension of credit or loan commitment may be 
excluded for purposes of determining whether the agreement is a covered 
agreement.
    (f) Determining annual value of agreements that lack schedule of 
disbursements. For purposes of paragraph (a)(3) of this section, a 
multi-year agreement that does not include a schedule for the 
disbursement of payments, grants, loans or other consideration by the 
insured depository institution or affiliate, is considered to have a 
value in the first year of the agreement equal to all payments, grants, 
loans and other consideration to be provided at any time under the 
agreement.


Sec. 533.3  CRA communications.

    (a) Definition of CRA communication. A CRA communication is any of 
the following--
    (1) Any written or oral comment or testimony provided to a Federal 
banking agency concerning the adequacy of the performance under the CRA 
of the insured depository institution, any affiliated insured 
depository institution, or any CRA affiliate.
    (2) Any written comment submitted to the insured depository 
institution that discusses the adequacy of the performance under the 
CRA of the institution and must be included in the institution's CRA 
public file.
    (3) Any discussion or other contact with the insured depository 
institution or any affiliate about--
    (i) Providing (or refraining from providing) written or oral 
comments or testimony to any Federal banking agency concerning the 
adequacy of the performance under the CRA of the insured depository 
institution, any affiliated insured depository institution, or any CRA 
affiliate;
    (ii) Providing (or refraining from providing) written comments to 
the insured depository institution that concern the adequacy of the 
institution's performance under the CRA and must be included in the 
institution's CRA public file; or
    (iii) The adequacy of the performance under the CRA of the insured 
depository institution, any affiliated insured depository institution, 
or any CRA affiliate.
    (b) Discussions or contacts that are not CRA communications. (1) 
Timing of contacts with a Federal banking agency. An oral or written 
communication with a Federal banking agency is not a CRA communication 
if it occurred more than 3 years before the parties entered into the 
agreement.
    (2) Timing of contacts with insured depository institutions and 
affiliates. A communication with an insured depository institution or 
affiliate is not a CRA communication if the communication occurred--

[[Page 2108]]

    (i) More than 3 years before the parties entered into the 
agreement, in the case of any written communication;
    (ii) More than 3 years before the parties entered into the 
agreement, in the case of any oral communication in which the NGEP 
discusses providing (or refraining from providing) comments or 
testimony to a Federal banking agency or written comments that must be 
included in the institution's CRA public file in connection with a 
request to, or agreement by, the institution or affiliate to take (or 
refrain from taking) any action that is in fulfillment of the CRA; or
    (iii) More than 1 year before the parties entered into the 
agreement, in the case of any other oral communication not described in 
paragraph (b)(2)(ii).
    (3) Knowledge of communication by insured depository institution or 
affiliate. (i) A communication is only a CRA communication under 
paragraph (a) of this section if the insured depository institution or 
its affiliate has knowledge of the communication under paragraph 
(b)(3)(ii) or (b)(3)(iii) of this section.
    (ii) Communication with insured depository institution or 
affiliate. An insured depository institution or affiliate has knowledge 
of a communication by the NGEP to the institution or its affiliate 
under this paragraph only if one of the following representatives of 
the insured depository institution or any affiliate has knowledge of 
the communication--
    (A) An employee who approves, directs, authorizes, or negotiates 
the agreement with the NGEP; or
    (B) An employee designated with responsibility for compliance with 
the CRA or executive officer if the employee or executive officer knows 
that the institution or affiliate is negotiating, intends to negotiate, 
or has been informed by the NGEP that it expects to request that the 
institution or affiliate negotiate an agreement with the NGEP.
    (iii) Other communications. An insured depository institution or 
affiliate is deemed to have knowledge of--
    (A) Any testimony provided to a Federal banking agency at a public 
meeting or hearing;
    (B) Any comment submitted to a Federal banking agency that is 
conveyed in writing by the agency to the insured depository institution 
or affiliate; and
    (C) Any written comment submitted to the insured depository 
institution that must be and is included in the institution's CRA 
public file.
    (4) Communication where NGEP has knowledge. A NGEP has a CRA 
communication with an insured depository institution or affiliate only 
if any of the following individuals has knowledge of the 
communication--
    (i) A director, employee, or member of the NGEP who approves, 
directs, authorizes, or negotiates the agreement with the insured 
depository institution or affiliate;
    (ii) A person who functions as an executive officer of the NGEP and 
who knows that the NGEP is negotiating or intends to negotiate an 
agreement with the insured depository institution or affiliate; or
    (iii) Where the NGEP is an individual, the NGEP.
    (c) Examples of CRA communications--(1) Examples of actions that 
are CRA communications. The following are examples of CRA 
communications. These examples are not exclusive and assume that the 
communication occurs within the relevant time period as described in 
paragraph (b)(1) or (b)(2) of this section and the appropriate 
representatives have knowledge of the communication as specified in 
paragraphs (b)(3) and (b)(4) of this section.
    (i) Example 1. A NGEP files a written comment with a Federal 
banking agency that states than an insured depository institution 
successfully addresses the credit needs of its community. The written 
comment is in response to a general request from the agency for 
comments on an application of the insured depository institution to 
open a new branch and a copy of the comment is provided to the 
institution.
    (ii) Example 2. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution must 
improve its CRA performance.
    (iii) Example 3. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution needs to 
make more mortgage loans in low- and moderate-income neighborhoods in 
its community.
    (iv) Example 4. A bank holding company files an application with a 
Federal banking agency to acquire an insured depository institution. 
Two weeks later, the NGEP meets with an executive officer of the bank 
holding company to discuss the adequacy of the performance under the 
CRA of the target insured depository institution. The insured 
depository institution was an affiliate of the bank holding company at 
the time the NGEP met with the target institution. (See Sec. 533.11(a) 
of this part.) Accordingly, the NGEP had a CRA communication with an 
affiliate of the bank holding company.
    (2) Examples of actions that are not CRA communications. The 
following are examples of actions that are not by themselves CRA 
communications. These examples are not exclusive.
    (i) Example 1. A NGEP provides to a Federal banking agency comments 
or testimony concerning an insured depository institution or affiliate 
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 (as defined in 
section 803 of the CRA (12 U.S.C. 2902(3)) by, an insured depository 
institution or an application by a company to acquire an insured 
depository institution.
    (ii) Example 2. 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, 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (iii) Example 3. A NGEP, such as a civil rights group, community 
group providing housing and other services in low- and moderate-income 
neighborhoods, veterans organization, community theater group, or youth 
organization, sends a 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 by 
supporting the fundraising efforts of the NGEP.
    (iv) Example 4. A NGEP discusses with an insured depository 
institution or affiliate whether particular loans, services, 
investments, community development activities, or other activities are 
generally eligible for consideration by a Federal banking agency under 
the CRA. The NGEP and insured depository institution or affiliate do 
not discuss the adequacy of the CRA performance of the insured 
depository institution or affiliate.
    (v) Example 5. A NGEP engaged in the sale or purchase of loans in 
the secondary market sends a general offering circular to financial 
institutions offering to sell or purchase a portfolio of loans. An 
insured depository institution that receives the offering circular 
discusses with the NGEP the types of

[[Page 2109]]

loans included in the loan pool, whether such loans are generally 
eligible for consideration under the CRA, and which loans are made to 
borrowers in the institution's local community. The NGEP and insured 
depository institution do not discuss the adequacy of the institution's 
CRA performance.
    (d) Multiparty covered agreements. (1) A NGEP that is a party to a 
covered agreement that involves multiple NGEPs is not required to 
comply with the requirements of this part if--
    (i) The NGEP has not had a CRA communication; and
    (ii) No representative of the NGEP identified in paragraph (b)(4) 
of this section has knowledge at the time of the agreement that another 
NGEP that is a party to the agreement has had a CRA communication.
    (2) An insured depository institution or affiliate that is a party 
to a covered agreement that involves multiple insured depository 
institutions or affiliates is not required to comply with the 
requirements in Secs. 533.6 and 533.7 if--
    (i) No NGEP that is a party to the agreement has had a CRA 
communication concerning the insured depository institution or any 
affiliate; and
    (ii) No representative of the insured depository institution or any 
affiliate identified in paragraph (b)(3) of this section has knowledge 
at the time of the agreement that an NGEP that is a party to the 
agreement has had a CRA communication concerning any other insured 
depository institution or affiliate that is a party to the agreement.


Sec. 533.4  Fulfillment of the CRA

    (a) List of factors that are in fulfillment of the CRA. Fulfillment 
of the CRA, for purposes of this part, means the following list of 
factors--
    (1) Comments to a Federal banking agency or included in CRA public 
file. Providing or refraining from providing written or oral comments 
or testimony to any Federal banking agency concerning the 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; or
    (2) Activities given favorable CRA consideration. Performing any of 
the following activities if the activity is of the type that is likely 
to receive favorable consideration by a Federal banking agency in 
evaluating the performance under the CRA of the insured depository 
institution that is a party to the agreement or an affiliate of a party 
to the agreement--
    (i) 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;
    (ii) 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;
    (iii) Delivering retail banking services, as described in 
Sec. 563.24(d) of this chapter;
    (iv) Providing community development services, as described in 
Sec. 563e.24(e) of this chapter;
    (v) 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;
    (vi) In the case of a small insured depository institution, any 
lending or other activity described in Sec. 563e.26(a) of this chapter; 
or
    (vii) 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.
    (b) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns any activity described in paragraph (a) of this 
section of a CRA affiliate must, prior to the time the agreement is 
entered into, notify each NGEP that is a party to the agreement that 
the agreement concerns a CRA affiliate.


Sec. 533.5  Related agreements considered a single agreement.

    The following rules must be applied in determining whether an 
agreement is a covered agreement under Sec. 533.2 of this part.
    (a) Agreements entered into by same parties. All written agreements 
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 agreements--
    (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. 533.6  Disclosure of covered agreements.

    (a) Applicability 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. Each NGEP and each insured depository institution or 
affiliate that enters into a covered agreement must make a copy of the 
covered agreement available to any individual or entity upon request.
    (2) Nondisclosure of confidential and proprietary information 
permitted. In responding to a request for a covered agreement from any 
individual or entity under paragraph (b)(1) of this section, a NGEP, 
insured depository institution, or affiliate may withhold from public 
disclosure confidential or proprietary information that the party 
believes the relevant supervisory agency could withhold from disclosure 
under the Freedom of Information Act (5 U.S.C. 552 et seq.) (FOIA).
    (3) Information that must be disclosed. Notwithstanding paragraph 
(b)(2) of this section, a party must disclose any of the following 
information that is contained in a covered agreement--
    (i) The names and addresses of the parties to the agreement;
    (ii) The amount of any payments, fees, loans, or other 
consideration to be made or provided by any party to the agreement;
    (iii) Any description of how the funds or other resources provided 
under the agreement are to be used;
    (iv) The term of the agreement (if the agreement establishes a 
term); and
    (v) Any other information that the relevant supervisory agency 
determines is not properly exempt from public disclosure.
    (4) Request for review of withheld information. Any individual or 
entity may request that the relevant supervisory agency review whether 
any information in a covered agreement withheld by a party must be 
disclosed. Any requests for agency review of withheld information must 
be filed, and will be processed in accordance with, the relevant 
supervisory agency's rules concerning the availability of

[[Page 2110]]

information (see part 505 of this chapter and the Department of 
Treasury's rules (31 CFR part 1)).
    (5) Duration of obligation. The obligation to disclose a covered 
agreement to the public terminates 12 months after the end of the term 
of the agreement.
    (6) 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.
    (7) Use of CRA public file by insured depository institution or 
affiliate. An insured depository institution and any affiliate of 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 if the institution makes the 
agreement available in accordance with the procedures set forth in 
Sec. 563e.43 of this chapter.
    (c) Disclosure by NGEPs of covered agreements to the relevant 
supervisory agency. (1) Each NGEP that is a party to a covered 
agreement must provide the following within 30 days of receiving a 
request from the relevant supervisory agency--
    (i) A complete copy of the agreement; and
    (ii) In the event the NGEP proposes the withholding of any 
information contained in the agreement in accordance with paragraph 
(b)(2) of this section, a public version of the agreement that excludes 
such information and an explanation justifying the exclusions. Any 
public version must include the information described in paragraph 
(b)(3) of this section.
    (2) The obligation to provide a covered agreement to the relevant 
supervisory agency terminates 12 months after the end of the term of 
the covered agreement.
    (d) Disclosure by insured depository institution or affiliate of 
covered agreements to the relevant supervisory agency. (1) In general. 
Within 60 days of the end of each calendar quarter, each insured 
depository institution and affiliate must provide each relevant 
supervisory agency with--
    (i)(A) A complete copy of each covered agreement entered into by 
the insured depository institution or affiliate during the calendar 
quarter; and
    (B) In the event the institution or affiliate proposes the 
withholding of any information contained in the agreement in accordance 
with paragraph (b)(2) of this section, a public version of the 
agreement that excludes such information (other than any information 
described in paragraph (b)(3) of this section) and an explanation 
justifying the exclusions; or
    (ii) A list of all covered agreements entered into by the insured 
depository institution or affiliate during the calendar quarter that 
contains--
    (A) The name and address of each insured depository institution or 
affiliate that is a party to the agreement;
    (B) The name and address of each NGEP that is a party to the 
agreement;
    (C) The date the agreement was entered into;
    (D) The estimated total value of all payments, fees, loans and 
other consideration to be provided by the institution or any affiliate 
of the institution under the agreement; and
    (E) The date the agreement terminates.
    (2) Prompt filing of covered agreements contained in list required. 
(i) If an insured depository institution or affiliate files a list of 
the covered agreements entered into by the institution or affiliate 
pursuant to paragraph (d)(1)(ii) of this section, the institution or 
affiliate must provide any relevant supervisory agency a complete copy 
and public version of any covered agreement referenced in the list 
within 7 calendar days of receiving a request from the agency for a 
copy of the agreement.
    (ii) The obligation of an insured depository institution or 
affiliate to provide a covered agreement to the relevant supervisory 
agency under this paragraph (d)(2) terminates 36 months after the end 
of the term of the covered agreement.
    (3) Joint filings. In the event that 2 or more insured depository 
institutions or affiliates are parties to a covered agreement, the 
insured depository institution(s) and affiliate(s) may jointly file the 
documents required by this paragraph (d) of this section. Any joint 
filing must identify the insured depository institution(s) and 
affiliate(s) for whom the filings are being made.


Sec. 533.7  Annual reports.

    (a) Applicability 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) NGEPs. A NGEP must file 
an annual report for a covered agreement for any fiscal year in which 
the NGEP receives or uses funds or other resources under the agreement.
    (2) Insured depository institutions and affiliates. An insured 
depository institution or affiliate must file an annual report for a 
covered agreement for any fiscal year in which the institution or 
affiliate--
    (i) Provides or receives any payments, fees, or loans under the 
covered agreement that must be reported under paragraphs (e)(1)(iii) 
and (e)(1)(iv) of this section; or
    (ii) Has data to report on loans, investments, and services 
provided by a party to the covered agreement under the covered 
agreement under paragraph (e)(1)(vi) of this section.
    (d) Annual reports filed by NGEP. (1) Contents of report. 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) A detailed, itemized list of how the funds or resources 
received by the NGEP under the covered agreement 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 and uses (specify expense or use).
    (2) More detailed reporting of uses of funds or resources 
permitted. (i) In general. If a NGEP allocated and used funds received 
under a covered agreement for a specific purpose, the NGEP may fulfill 
the requirements of paragraph (d)(1)(iv) of this section with respect 
to such funds by providing--
    (A) A brief description of each specific purpose for which the 
funds or other resources were used; and
    (B) The amount of funds or resources used during the fiscal year 
for each specific purpose.
    (ii) Specific purpose defined. A NGEP allocates and uses funds for 
a specific purpose if the NGEP receives and uses the funds for a 
purpose that is more specific and limited than the categories listed in 
paragraph (d)(1)(iv) of this section.

[[Page 2111]]

    (3) 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 the Internal Revenue Service Return of Organization Exempt From 
Income Tax on Form 990, or any other Internal Revenue Service form, 
state tax form, report to members or shareholders, audited or unaudited 
financial statements, audit report, or other report, so long as the 
annual report filed by the NGEP contains all of the information 
required by this paragraph (d).
    (4) Consolidated reports permitted. A NGEP that is a party to 2 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 reported under 
paragraphs (d)(1)(iv) and (d)(2) of this section may be reported on an 
aggregate basis for all covered agreements.
    (5) Examples of annual report requirements for NGEPs

    (i) Example 1. A NGEP receives an unrestricted grant of $15,000 
under a covered agreement, includes the funds in its general 
operating budget and uses the funds during its fiscal year. The 
NGEP's annual report for the fiscal year must provide the name and 
mailing address of the NGEP, information sufficient to identify the 
covered agreement, and state that the NGEP received $15,000 during 
the fiscal year. The report must also indicate the total 
expenditures made by the NGEP during the fiscal year for 
compensation, administrative expenses, travel expenses, 
entertainment expenses, consulting and professional fees, and other 
expenses and uses. The NGEP's annual report may provide this 
information by submitting an Internal Revenue Service Form 990 that 
includes the required information. If the Internal Revenue Service 
Form does not include information for all of the required categories 
listed in this part, the NGEP must report the total expenditures in 
the remaining categories either by providing that information 
directly or by providing another form or report that includes the 
required information.
    (ii) Example 2. An organization receives $15,000 from an insured 
depository institution under a covered agreement and allocates and 
uses the $15,000 during the fiscal year to purchase computer 
equipment to support its functions. The organization's annual report 
must include the name and address of the organization, information 
sufficient to identify the agreement, and a statement that the 
organization received $15,000 during the year. In addition, since 
the organization allocated and used the funds for a specific purpose 
that is more narrow and limited than the categories of expenses 
included in the detailed, itemized list of expenses, the 
organization would have the option of providing either the total 
amount it used during the year for each category of expenses 
included in paragraph (d)(1)(iv) of this section, or a statement 
that it used the $15,000 to purchase computer equipment and a brief 
description of the equipment purchased.
    (iii) Example 3. 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 
$5,000 of the funds to pay for a particular business trip and uses 
the remaining $45,000 for general operating expenses. The group's 
annual report for the fiscal year must include the name and address 
of the group, information sufficient to identify the agreement, and 
a statement that the group received $50,000. Because the group did 
not allocate and use all of the funds for a specific purpose, the 
group's annual report must provide the total amount of funds it used 
during the year for each category of expenses included in paragraph 
(d)(1)(iv) of this section. The group's annual report also could 
state that it used $5,000 for a particular business trip and include 
a brief description of the trip.
    (iv) Example 4. A community development organization is a party 
to two separate covered agreements with two unaffiliated insured 
depository institutions. Under each agreement, the organization 
receives $15,000 during its fiscal year and uses the funds to 
support its activities during that year. If the organization elects 
to file a consolidated annual report, the consolidated report must 
identify the organization and the two covered agreements, state that 
the organization received $15,000 during the fiscal year under each 
agreement, and provide the total amount that the organization used 
during the year for each category of expenses included in paragraph 
(d)(1)(iv) of this section.
    (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 
(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 (or a list identifying 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 another party under this section.
    (2) Consolidated reports permitted. (i) Party to multiple 
agreements. An insured depository institution or affiliate that is a 
party to 2 or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency concerning 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)(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

[[Page 2112]]

no later than six 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. 533.8  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. 533.9  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. 533.6 or 533.7 of this part, 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. 533.6 or 533.7 of this part 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. 533.10  Transition provisions.

    (a) Disclosure of covered agreements entered into before the 
effective date of this part. The following disclosure requirements 
apply to covered agreements that were entered into after November 12, 
1999, and that terminated before April 1, 2001.
    (1) Disclosure to the public. Each NGEP and each insured depository 
institution or affiliate that was a party to the agreement must make 
the agreement available to the public under Sec. 533.6 of this part 
until at least April 1, 2002.
    (2) Disclosure to the relevant supervisory agency. (i) Each NGEP 
that was a party to the agreement must make the agreement available to 
the relevant supervisory agency under Sec. 533.6 of this part until at 
least April 1, 2002.
    (ii) Each insured depository institution or affiliate that was a 
party to the agreement must, by June 30, 2001, provide each relevant 
supervisory agency either--
    (A) A copy of the agreement under Sec. 533.6(d)(1)(i) of this part; 
or
    (B) The information described in Sec. 533.6(d)(1)(ii) of this part 
for each agreement.
    (b) Filing of annual reports that relate to fiscal years ending on 
or before December 31, 2000. In the event that a NGEP, insured 
depository institution or affiliate has any information to report under 
Sec. 533.7 of this part for a fiscal that ends on or before December 
31, 2000, and that concerns a covered agreement entered into between 
May 12, 2000, and December 31, 2000, the annual report for that fiscal 
year must be provided, no later than June 30, 2001, to--
    (1) Each relevant supervisory agency; or
    (2) In the case of a NGEP, to an insured depository institution or 
affiliate that is a party to the agreement in accordance with 
Sec. 533.7(f)(2) of this part.


Sec. 533.11  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 
communication, as described in Sec. 533.3 of this part.
    (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 prior to the agreement. An insured 
depository institution or affiliate also may designate any company as a 
CRA affiliate at any time prior to the time a covered agreement is 
entered into by informing the NGEP that is a party to the agreement of 
such designation.
    (d) CRA public file. CRA public file means the public file 
maintained by an insured depository institution and described in 
Sec. 563.43 of this chapter.
    (e) Executive officer. The term executive officer has the same 
meaning as in Sec. 215.2(e)(1) of the Board of Governors of the Federal 
Reserve's Regulation O (12 CFR 215.2(e)(1)). In applying this 
definition under this part, the term savings association shall be used 
in place of the term bank.
    (f) 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).

[[Page 2113]]

    (g) 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.
    (h) 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).
    (i) Nongovernmental entity or person or NGEP--(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 (i)(2)(i), 
(i)(2)(ii), or (i)(2)(iii) of this section.
    (j) 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.
    (k) Relevant supervisory agency. 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.
    (l) Term of agreement. An agreement that does not have a fixed 
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 relevant supervisory 
agency for the agreement otherwise notifies each party in writing.

    Dated: December 20, 2000.

    By the Office of Thrift Supervision.
Ellen Seidman,
Director.
[FR Doc. 01-3 Filed 1-9-01; 8:45 am]
BILLING CODE 4810-33-U; 6210-01-U; 6714-01-U; 6720-01-U

Last Updated 02/01/2001 communications@fdic.gov