[Federal Register Volume 83, Number 170 (Friday, August 31, 2018)]
[Rules and Regulations]
[Pages 44451-44455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18610]
[[Page 44451]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 50
[Docket ID OCC-2018-0013]
RIN 1557-AE36
FEDERAL RESERVE SYSTEM
12 CFR Part 249
[Docket No. R-1616]
RIN 7100-AF10
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 329
RIN 3064-AE77
Liquidity Coverage Ratio Rule: Treatment of Certain Municipal
Obligations as High-Quality Liquid Assets
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury;
Board of Governors of the Federal Reserve System (Board); and Federal
Deposit Insurance Corporation (FDIC).
ACTION: Interim final rule with request for comment.
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SUMMARY: The OCC, the Board, and the FDIC (collectively, the agencies)
are jointly issuing and inviting comment on an interim final rule that
amends the agencies' liquidity coverage ratio (LCR) rule to treat
liquid and readily-marketable, investment grade municipal obligations
as high-quality liquid assets (HQLA). Section 403 of the Economic
Growth, Regulatory Relief, and Consumer Protection Act amends section
18 of the Federal Deposit Insurance Act and requires the agencies, for
purposes of their LCR rule and any other regulation that incorporates a
definition of the term ``high-quality liquid asset'' or another
substantially similar term, to treat a municipal obligation as HQLA
(that is a level 2B liquid asset) if that obligation is, as of the LCR
calculation date, ``liquid and readily-marketable'' and ``investment
grade.''
DATES: The interim final rule is effective on August 31, 2018. Comments
on the interim final rule must be received by October 1, 2018.
ADDRESSES: Comments should be directed to:
OCC: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal or email, if possible. Please use the title
``Liquidity Coverage Ratio Rule: Treatment of Certain Municipal
Obligations as High-Quality Liquid Assets'' to facilitate the
organization and distribution of the comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
www.regulations.gov. Enter ``Docket ID OCC-2018-0013'' in the Search
box and click ``Search.'' Click on ``Comment Now'' to submit public
comments. Click on the ``Help'' tab on the Regulations.gov home page to
get information on using Regulations.gov, including instructions for
submitting public comments.
Email: [email protected].
Mail: Legislative and Regulatory Activities Division,
Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-
218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, suite 3E-218,
Washington, DC 20219.
Fax: (571) 465-4326.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2018-0013'' in your comment. In general, OCC will enter
all comments received into the docket and publish the comments on the
Regulations.gov website without change, including any business or
personal information that you provide such as name and address
information, email addresses, or phone numbers. Comments received,
including attachments and other supporting materials, are part of the
public record and subject to public disclosure. Do not include any
information in your comment or supporting materials that you consider
confidential or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this rulemaking action by any of the following methods:
Viewing Comments Electronically: Go to
www.regulations.gov. Enter ``Docket ID OCC-2018-0013'' in the Search
box and click ``Search.'' Click on ``Open Docket Folder'' on the right
side of the screen. Comments and supporting materials can be viewed and
filtered by clicking on ``View all documents and comments in this
docket'' and then using the filtering tools on the left side of the
screen. Click on the ``Help'' tab on the Regulations.gov home page to
get information on using Regulations.gov. The docket may be viewed
after the close of the comment period in the same manner as during the
comment period.
Viewing Comments Personally: You may personally inspect
comments at the OCC, 400 7th Street SW, Washington, DC 20219. For
security reasons, the OCC requires that visitors make an appointment to
inspect comments. You may do so by calling (202) 649-6700 or, for
persons who are deaf or hearing-impaired, TTY, (202) 649-5597. Upon
arrival, visitors will be required to present valid government-issued
photo identification and submit to security screening in order to
inspect comments.
Board: When submitting comments, please consider submitting your
comments by email or fax because paper mail in the Washington, DC area
and at the Board may be subject to delay. You may submit comments,
identified by Docket No. R-1616 and RIN 7100-AF10, by any of the
following methods:
Agency website: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Email: [email protected]. Include docket
and RIN numbers in the subject line of the message.
FAX: (202) 452-3819 or (202) 452-3102.
Mail: Ann E. Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
Instructions: All public comments will be made available on the
Board's website at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons or
to remove personally identifiable information at the commenter's
request. Accordingly, comments will not be edited to remove any
identifying or contact information. Public comments may also be viewed
electronically or in paper in Room 3515, 1801 K Street NW (between 18th
and 19th Streets NW), Washington, DC 20006 between 9:00 a.m. and 5:00
p.m. on weekdays. For security reasons, the Board requires that
visitors make an appointment to inspect comments. You may do so by
calling (202) 452-3684. Upon arrival, visitors will be required to
present valid government-issued photo identification and to submit to
security screening in order to inspect and photocopy comments.
FDIC: You may submit comments, identified by FDIC RIN 3064-AE77, by
any of the following methods:
Agency website: http://www.FDIC.gov/regulations/laws/federal/.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments/Legal ESS, Federal Deposit Insurance
[[Page 44452]]
Corporation, 550 17th Street NW, Washington, DC 20429.
Hand Delivery: Comments may be hand-delivered to the guard
station at the rear of the 550 17th Street NW building (located on F
Street), on business days between 7:00 a.m. and 5:00 p.m.
Email: [email protected].
Instructions: Comments submitted must include ``FDIC'' and ``RIN
3064-AE77.'' Comments received will be posted without change to http://www.FDIC.gov/regulations/laws/federal/, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT:
OCC: Christopher McBride, Director, James Weinberger, Technical
Expert, or Ang Middleton, Bank Examiner (Risk Specialist), (202) 649-
6360, Treasury & Market Risk Policy; David Stankiewicz, Special
Counsel, Securities and Corporate Practices Division, (202) 649-5510;
Henry Barkhausen, Counsel, or Daniel Perez, Attorney, Legislative and
Regulatory Activities Division, (202) 649-5490; for persons who are
deaf or hearing-impaired, TTY, (202) 649-5597, Office of the
Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
Board: Constance Horsley, Deputy Associate Director, (202) 452-
5239, Peter Clifford, Manager, (202) 785-6057, J. Kevin Littler, Senior
Supervisory Financial Analyst, (202) 475-6677, or Christopher Powell,
Supervisory Financial Analyst, (202) 452-3442, Division of Banking
Supervision and Regulation; Laurie Schaffer, Associate General Counsel,
(202) 452-2272, Benjamin W. McDonough, Assistant General Counsel, (202)
452-2036, Steve Bowne, Senior Attorney, (202) 452-3900, or Laura Bain,
Senior Attorney, (202) 736-5546, Legal Division, Board of Governors of
the Federal Reserve System, 20th and C Streets NW, Washington, DC
20551. For the hearing impaired only, Telecommunication Device for the
Deaf (TDD), (202) 263-4869, Board of Governors of the Federal Reserve
System, 20th Street and Constitution Avenue NW, Washington, DC 20551.
FDIC: Bobby R. Bean, Associate Director, (202) 898-6705, Michael E.
Spencer, Chief, (202) 898-7041, Eric W. Schatten, Senior Policy
Analyst, (202) 898-7063, Andrew D. Carayiannis, Senior Policy Analyst,
(202) 898-6692, or Nana Ofori-Ansah, Capital Markets Policy Analyst,
(202) 898-3572, Capital Markets Branch, Division of Risk Management
Supervision; Suzanne J. Dawley, Counsel, (202) 898-6509
([email protected]), Andrew B. Williams, II, Counsel, (202) 898-3591,
or Alexander S. Bonander, Attorney (202) 898-3621, Supervision and
Corporate Operations Branch, Legal Division, Federal Deposit Insurance
Corporation, 550 17th Street NW, Washington, DC 20429. For the hearing
impaired only, Telecommunication Device for the Deaf (TDD), (800) 925-
4618.
SUPPLEMENTARY INFORMATION:
I. Background
The Office of the Comptroller of the Currency (OCC), the Board of
Governors of the Federal Reserve System (Board), and the Federal
Deposit Insurance Corporation (FDIC) (collectively, the agencies)
adopted the liquidity coverage ratio (LCR) rule \1\ in 2014. The LCR
rule established a quantitative liquidity requirement that is designed
to promote the short-term resilience of the liquidity risk profile of
large and internationally active banking organizations. The intent of
the agencies in issuing the LCR rule was to improve the banking
sector's ability to absorb shocks arising from financial and economic
stress and the measurement and management of liquidity risk.\2\ The LCR
rule generally applies to a bank holding company, savings and loan
holding company, or depository institution if: (1) It has total
consolidated assets equal to $250 billion or more; (2) it has total
consolidated on-balance sheet foreign exposure equal to $10 billion or
more; or (3) it is a depository institution with total consolidated
assets equal to $10 billion or more and is a consolidated subsidiary of
a firm that is subject to the LCR rule (each, a covered company).\3\
Covered companies generally must maintain an amount of high-quality
liquid assets (HQLA) equal to or greater than their projected total net
cash outflows over a prospective 30 calendar-day period.\4\ The LCR
rule defines three categories of HQLA--level 1, level 2A, and level 2B
liquid assets--and sets forth qualifying criteria for HQLA and
limitations for an asset's inclusion in the HQLA amount.
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\1\ 79 FR 61440 (October 10, 2014), codified at 12 CFR part 50
(OCC), 12 CFR part 249 (Board), and 12 CFR part 329 (FDIC).
\2\ Id.
\3\ See section 1 of the LCR rule.
\4\ The Board separately adopted a modified LCR requirement for
bank holding companies and certain savings and loan holding
companies that, in each case, (A) have $50 billion or more in total
consolidated assets and (B) are not internationally active (each, a
modified LCR holding company). Under the Board's LCR rule, modified
LCR holding companies must maintain an amount of HQLA equal to or
greater than 70 percent of their projected total net cash outflows
on the last business day of the applicable calendar month. 12 CFR
249 subpart G. This interim final rule's changes to the Board's LCR
rule also apply to modified LCR holding companies.
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In 2016, the Board amended its LCR rule to include certain U.S.
municipal securities as HQLA, subject to certain limitations (2016
Amendments).\5\ To qualify as level 2B liquid assets under the 2016
Amendments, the U.S. municipal securities must be general obligation
securities of public sector entities (i.e., a state, local authority,
or other governmental subdivision below the U.S. sovereign entity
level).\6\ Under the 2016 Amendments, a general obligation is defined
as a bond or similar obligation that is backed by the full faith and
credit of a public sector entity.\7\ To be treated as HQLA, the general
obligation securities also must: (1) Be investment grade under 12 CFR
part 1 as of the calculation date; (2) be issued or guaranteed by a
public sector entity whose obligations have a proven record as a
reliable source of liquidity in repurchase or sales markets during
stressed market conditions; \8\ and (3) not be an obligation of a
financial sector entity or a financial sector entity's consolidated
subsidiary, unless it is only guaranteed by a financial sector entity
or its consolidated subsidiary and otherwise eligible.\9\ The 2016
Amendments limited the inclusion of general obligation securities in
the HQLA amount to 5 percent of the covered company's total HQLA
amount.\10\ The 2016 Amendments also limited the inclusion of general
obligation securities of any single public sector entity to two times
the average daily trading volume during the previous four quarters of
all general obligation securities issued by that public sector
entity.\11\
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\5\ 81 FR 21223 (April 11, 2016), codified at 12 CFR part 249
(Board).
\6\ 12 CFR 249.20(c)(2).
\7\ 12 CFR 249.3.
\8\ This is demonstrated by (A) the market price of the security
or equivalent securities of the issuer declining by no more than 20
percent during a 30 calendar-day period of significant stress or (B)
the market haircut demanded by counterparties to secured lending and
secured funding transactions that are collateralized by the security
or equivalent securities of the issuer increasing by no more than 20
percentage points during a 30 calendar-day period of significant
stress. 12 CFR 249.20(c)(2).
\9\ Id.
\10\ 12 CFR 249.21.
\11\ 12 CFR 249.22(c).
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The Economic Growth, Regulatory Relief, and Consumer Protection Act
(EGRRCPA) was enacted on May 24, 2018.\12\ Section 403 of the EGRRCPA
amends section 18 of the Federal Deposit Insurance Act \13\ and
requires the agencies, for purposes of the LCR
[[Page 44453]]
rule and any other regulation that incorporates a definition of the
term ``high-quality liquid asset'' or another substantially similar
term, to treat a municipal obligation as HQLA that is a level 2B liquid
asset if that obligation is, as of the calculation date, (A) liquid and
readily-marketable and (B) investment grade. Section 403 defines
``investment grade'' as having the meaning given the term in Sec. 1.2
of title 12, Code of Federal Regulations, or any successor thereto.
Section 403 defines ``liquid and readily-marketable'' as having the
meaning given the term in Sec. 249.3 of title 12, Code of Federal
Regulations, or any successor thereto. Section 403 defines ``municipal
obligation'' as ``an obligation of--(i) a State or any political
subdivision thereof; or (ii) any agency or instrumentality of a State
or any political subdivision thereof.''
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\12\ Public Law 115-174, 132 Stat. 1296-1368 (2018).
\13\ 12 U.S.C. 1828(aa).
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II. Description of the Interim Final Rule
This interim final rule amends the agencies' LCR rule to implement
section 403 of the EGRRCPA. Section 403 requires the agencies to treat
a municipal obligation as a level 2B liquid asset if the obligation, as
of the calculation date, is liquid and readily-marketable and
investment grade.\14\ To effect this change, the interim final rule
makes certain amendments to each agency's LCR rule that incorporate the
provisions of section 403 of the EGRRCPA.
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\14\ 12 CFR part 50 (OCC), 12 CFR part 249 (Board), and 12 CFR
part 329 (FDIC).
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The interim final rule adds a definition to the agencies' rule for
the term ``municipal obligations,'' which, consistent with the EGRRCPA,
means an obligation of (1) a state or any political subdivision thereof
or (2) any agency or instrumentality of a state or any political
subdivision thereof.
The interim final rule amends the HQLA criteria with respect to
level 2B liquid assets by adding municipal obligations that, as of the
calculation date, are both (1) liquid and readily-marketable and (2)
investment grade (under 12 CFR part 1) to the list of assets that are
eligible for treatment as level 2B liquid assets.\15\ The OCC's
definition of ``investment grade'' under 12 CFR 1.2 provides that
``[i]nvestment grade means the issuer of a security has an adequate
capacity to meet financial commitments under the security for the
projected life of the asset or exposure. An issuer has an adequate
capacity to meet financial commitments if the risk of default by the
obligor is low and the full and timely repayment of principal and
interest is expected.'' \16\ A municipal obligation is required to meet
this definition of ``investment grade'' as of the calculation date to
be treated as a level 2B liquid asset under the interim final rule.
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\15\ 12 CFR 50.20 (OCC), 12 CFR 249.20 (FRB), and 12 CFR 329.20
(FDIC).
\16\ 12 CFR 1.2.
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Consistent with section 403, the interim final rule also amends the
definition of ``liquid and readily-marketable'' in the FDIC's and OCC's
rules so that the term has the same meaning given to it under the
Board's rules. Under this provision of the Board's rules, a ``liquid
and readily-marketable'' security is a security that is traded in an
active secondary market with: (1) More than two committed market
makers; (2) a large number of non-market maker participants on both the
buying and selling sides of transactions; (3) timely and observable
market prices; and (4) a high trading volume.\17\ As described above, a
municipal obligation is required to be liquid and readily-marketable as
of the date of calculation to be treated as a level 2B liquid asset
under the interim final rule.
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\17\ 12 CFR 249.3.
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As part of the interim final rule, the Board is rescinding the 2016
Amendments so that municipal obligations under the Board's LCR rule
will be treated consistently with section 403 of the EGRRCPA. As a
result of the above changes, covered companies will be able to count
municipal obligations as HQLA that qualify as level 2B liquid assets,
provided the municipal obligations meet the HQLA criteria under the LCR
rule.\18\ Accordingly, covered companies will have greater flexibility
in meeting the minimum requirements under the LCR rule as more types of
assets will be eligible as HQLA. For FDIC- and OCC-regulated
institutions, these changes will mark the first time that such
institutions may treat any municipal obligations as HQLA. For Board-
regulated institutions, these changes are expected to broaden the
number of municipal obligations that can be counted as HQLA. In
particular, for purposes of the types of assets eligible for treatment
as HQLA, municipal obligations will no longer be required to be general
obligation securities.\19\ As a result, many issuances of revenue bonds
will now qualify as municipal obligations.
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\18\ Corresponding changes will be made to the Complex
Institution Liquidity Monitoring Report (FR 2052a). These changes
will be described in a separate Federal Register notice.
\19\ Additionally, to count as HQLA, municipal obligations will
not (1) be required to be issued or guaranteed by a public sector
entity whose obligations have a proven record as a reliable source
of liquidity in repurchase or sales markets during stressed market
conditions, as demonstrated by the quantitative metrics included in
the 2016 Amendments; or (2) be prohibited from being an obligation
of a financial sector entity or a financial sector entity's
consolidated subsidiary. In addition, the amount of municipal
obligations that can be included in Board-regulated institutions'
HQLA amount will no longer be limited to 5 percent of the total HQLA
amount. The limit on the amount of municipal obligations of a single
issuer that may be included as eligible HQLA will also no longer
apply to Board-regulated institutions.
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Only municipal obligations that meet the LCR rule's definition for
liquid and readily-marketable and that are investment grade under 12
CFR part 1 will qualify for treatment as HQLA under this interim final
rule.\20\ The interim final rule does not otherwise affect covered
companies' obligations under the LCR rule.
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\20\ This interim final rule does not affect other requirements
under the LCR rule that serve to restrict HQLA, such as the 50
percent haircut for level 2B liquid assets under section 21(b) and
the restriction that level 2B assets cannot exceed more than 15
percent of the total HQLA amount. In addition, this interim final
rule does not affect the section 22 requirements, which address the
operational and generally applicable criteria for eligible HQLA.
With regard to net cash outflows, the interim final rule does not
affect the requirements under sections 32 and 33, which address the
calculation of outflow and inflow amounts, respectively.
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III. Request for Comment
The definition of ``municipal obligation'' and the criteria for
treating municipal obligations as level 2B liquid assets were
established by section 403 of the EGRRCPA. Consistent with section 403,
in what ways, if any, could the agencies clarify aspects of these
provisions (e.g., by clarifying the terms ``state'' or ``political
subdivision'')? The agencies invite comment on this question and all
other aspects of this interim final rule.
IV. Regulatory Analysis
A. Administrative Procedure Act and Effective Date
The agencies are issuing the interim final rule without prior
notice and the opportunity for public comment and the 30 day delayed
effective date ordinarily prescribed by the Administrative Procedure
Act (APA).\21\ Pursuant to section 553(b)(B) of the APA, general notice
and the opportunity for public comment are not required prior to the
issuance of a final rule if an agency, for good cause, finds (and
incorporates the finding and a brief statement of reasons therefor in
the rules issued) that ``notice and public procedure thereon are
impracticable, unnecessary, or contrary to the public interest.'' \22\
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\21\ 5 U.S.C. 553.
\22\ 5 U.S.C. 553(b)(B).
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[[Page 44454]]
As discussed above, this interim final rule implements the
provisions of section 403 of the EGRRCPA, which became effective on May
24, 2018, and directs the agencies to make certain changes to the
criteria for HQLA. The interim final rule adopts without change the
statutory definition for ``municipal obligations'' and the requirement
that municipal obligations be treated as level 2B liquid assets if the
obligations are liquid and readily-marketable and investment grade.
Because these changes to the LCR rule are mandated by the EGRRCPA, the
agencies have determined that publishing a notice of proposed
rulemaking is unnecessary. In addition, the agencies believe that the
public interest is best served by implementing Congress's legislative
directive as soon as possible because immediate implementation would
provide clarity to the public regarding the liquidity rules and would
be consistent with Congress's directive to the agencies under section
403(b) of the EGRRCPA to amend the LCR rule within 90 days after
enactment of the EGRRCPA.
The effective date of this interim final rule is August 31, 2018.
Pursuant to section 553(d)(3) of the APA, the required publication or
service of a substantive rule shall be made not less than 30 days
before its effective date, except as otherwise provided by the agency
for good cause found and published with the rule.\23\ For the reasons
described above in connection with APA section 553(b)(B), the agencies
find good cause to publish the rule with an immediate effective date.
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\23\ 5 U.S.C. 553(d).
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B. Riegle Community Development and Regulatory Improvement Act
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA),\24\ in determining the effective
date and administrative compliance requirements for a new regulation
that imposes additional reporting, disclosure, or other requirements on
insured depository institutions, each federal banking agency must
consider any administrative burdens that such regulation would place on
depository institutions and the benefits of such regulation. In
addition, section 302(b) of the RCDRIA \25\ requires such new
regulation to take effect on the first day of a calendar quarter that
begins on or after the date on which the regulations are published in
final form, with certain exceptions, including for good cause. For the
reasons described above in connection with the APA section 553(b)(B)
requirement, the agencies find good cause exists under section 302 of
RCDRIA to publish this interim final rule with an immediate effective
date.
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\24\ 12 U.S.C. 4802(a).
\25\ 12 U.S.C. 4802(b).
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While the agencies believe there is good cause to issue the rules
without advance notice and comment and with an immediate effective
date, the agencies are interested in the views of the public and
request comment on all aspects of the interim final rule.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
when a general notice of proposed rulemaking is not required. 5 U.S.C.
603 and 604. As noted previously, the agencies have determined that it
is unnecessary to publish a general notice of proposed rulemaking for
this interim final rule. Accordingly, the RFA's requirements relating
to an initial and final regulatory flexibility analysis do not apply.
Nonetheless, the agencies observe that in light of the way the interim
final rule operates, they believe that, with respect to the entities
subject to the interim final rule and within each agency's respective
jurisdiction, the interim final rule would not have a significant
economic impact on a substantial number of small entities.\26\
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\26\ Under regulations issued by the Small Business
Administration, a small entity includes a depository institution,
bank holding company, or savings and loan holding company with total
assets of $550 million or less and trust companies with total assets
of $38.5 million or less.
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D. Paperwork Reduction Act of 1995
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) states
that no agency may conduct or sponsor, nor is the respondent required
to respond to, an information collection unless it displays a currently
valid Office of Management and Budget control number. The agencies have
determined that this interim final rule does not create any new, or
revise any existing, collections of information pursuant to the
Paperwork Reduction Act.
E. Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded
Mandates Act), 2 U.S.C. 1532, requires the OCC to prepare a budgetary
impact statement before promulgating any final rule for which a general
notice of proposed rulemaking was published. As discussed above, the
OCC has determined that the publication of a general notice of proposed
rulemaking is unnecessary. Accordingly, this interim final rule is not
subject to section 202 of the Unfunded Mandates Act.
List of Subjects
12 CFR Part 50
Administrative practice and procedure, Banks, Banking, Liquidity,
Reporting and recordkeeping requirements, Savings associations.
12 CFR Part 249
Administrative practice and procedure, Banks, Banking, Federal
Reserve System, Holding companies, Liquidity, Reporting and
recordkeeping requirements.
12 CFR Part 329
Administrative practice and procedure, Banks, Banking, Federal
Deposit Insurance Corporation, FDIC, Liquidity, Reporting and
recordkeeping requirements.
Authority and Issuance
For the reasons stated in the preamble, the OCC amends 12 CFR part
50, the Board amends 12 CFR part 249, and the FDIC amends 12 CFR part
329 as follows:
Department of the Treasury
Office of the Comptroller of the Currency
PART 50--LIQUIDITY RISK MEASUREMENT STANDARDS
0
1. The authority citation for part 50 is revised to read as follows:
Authority: 12 U.S.C. 1 et seq., 93a, 481, 1818, 1828, and 1462
et seq.
0
2. Section 50.3 is amended by revising the definition for ``Liquid and
readily-marketable'' and adding the definition for ``Municipal
obligation'' in alphabetical order to read as follows:
Sec. 50.3 Definitions.
* * * * *
Liquid and readily-marketable has the meaning given the term in 12
CFR 249.3.
* * * * *
Municipal obligation means an obligation of:
(1) A state or any political subdivision thereof; or
(2) Any agency or instrumentality of a state or any political
subdivision thereof.
* * * * *
0
3. Section 50.20 is amended by:
0
a. Republishing paragraph (c) introductory text;
0
b. Removing the ``or'' at the end of paragraph (c)(1)(iii);
[[Page 44455]]
0
c. Removing the period at the end of paragraph (c)(2)(vi) and adding
``; or'' in its place; and
0
d. Adding paragraph (c)(3).
The republication and addition read as follows:
Sec. 50.20 High-quality liquid asset criteria.
* * * * *
(c) Level 2B liquid assets. An asset is a level 2B liquid asset if
the asset is liquid and readily-marketable and is one of the following
types of assets:
* * * * *
(3) A municipal obligation that is investment grade under 12 CFR
part 1 as of the calculation date.
Federal Reserve System
PART 249--LIQUIDITY RISK MEASUREMENT STANDARDS (REGULATION WW)
0
4. The authority citation for part 249 continues to read as follows:
Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1467a(g)(1),
1818, 1828, 1831p-1, 1831o-1, 1844(b), 5365, 5366, 5368.
0
5. Amend Sec. 249.3 by removing the definition for ``General
obligation'' and adding the definition for ``Municipal obligation'' in
alphabetical order to read as follows:
Sec. 249.3 Definitions.
* * * * *
Municipal obligation means an obligation of:
(1) A state or any political subdivision thereof; or
(2) Any agency or instrumentality of a state or any political
subdivision thereof.
* * * * *
0
6. Amend Sec. 249.20 by republishing paragraph (c) introductory text,
removing the ``or'' at the end of paragraph (c)(1)(iii), removing
paragraph (c)(2), redesignating paragraph (c)(3) as (c)(2), removing
the period at the end of newly redesignated paragraph (c)(2)(vi) and
adding ``; or'' in its place, and adding a new paragraph (c)(3) to read
as follows:
Sec. 249.20 High-quality liquid asset criteria.
* * * * *
(c) Level 2B liquid assets. An asset is a level 2B liquid asset if
the asset is liquid and readily-marketable and is one of the following
types of assets:
* * * * *
(3) A municipal obligation that is investment grade under 12 CFR
part 1 as of the calculation date.
Sec. 249.21 [Amended]
0
7. Amend Sec. 249.21 by:
0
a. Removing paragraph (b)(4);
0
b. Removing ``; plus'' at the end of paragraph (c)(2) and adding in its
place a period;
0
c. Removing paragraphs (c)(3), (f), and (g)(4);
0
d. Removing ``; plus'' at the end of paragraph (h)(2) and adding in its
place a period;
0
e. Removing paragraphs (h)(3) and (k); and
0
f. Redesignating paragraphs (g) through (j) as paragraphs (f) through
(i), respectively.
Sec. 249.22 [Amended]
0
8. Amend Sec. 249.22 by removing paragraph (c) and redesignating
paragraph (d) as paragraph (c).
Federal Deposit Insurance Corporation
PART 329--LIQUIDITY RISK MEASUREMENT STANDARDS
0
9. The authority citation for part 329 continues to read as follows:
Authority: 12 U.S.C. 1815, 1816, 1818, 1819, 1828, 1831p-1,
5412.
0
10. Section 329.3 is amended by revising the definition for ``Liquid
and readily-marketable'' and adding the definition for ``Municipal
obligation'' in alphabetical order to read as follows:
Sec. 329.3 Definitions.
* * * * *
Liquid and readily-marketable has the meaning given the term in 12
CFR 249.3.
* * * * *
Municipal obligation means an obligation of:
(1) A state or any political subdivision thereof; or
(2) Any agency or instrumentality of a state or any political
subdivision thereof.
* * * * *
0
11. Section 329.20 is amended by:
0
a. Republishing paragraph (c) introductory text;
0
b. Removing the ``or'' at the end of paragraph (c)(1)(iii);
0
c. Removing the period at the end of paragraph (c)(2)(vi) and adding
``; or'' in its place; and
0
d. Adding paragraph (c)(3).
The republication and addition read as follows:
Sec. 329.20 High-quality liquid asset criteria.
* * * * *
(c) Level 2B liquid assets. An asset is a level 2B liquid asset if
the asset is liquid and readily-marketable and is one of the following
types of assets:
* * * * *
(3) A municipal obligation that is investment grade under 12 CFR
part 1 as of the calculation date.
Dated: August 20, 2018.
Joseph M. Otting,
Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, August 21, 2018.
Ann E. Misback,
Secretary of the Board.
Dated at Washington, DC, on August 22, 2018.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Valerie Jean Best,
Assistant Executive Secretary.
[FR Doc. 2018-18610 Filed 8-30-18; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P