[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 1998 Edition]
[From the U.S. Government Printing Office]


[[Page 1]]

          12



          Banks and Banking



          PARTS 300 TO 499

                         Revised as of January 1, 1998

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT
          AS OF JANUARY 1, 1998

          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration
          as a Special Edition of
          the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1998



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 12:
    Chapter III--Federal Deposit Insurance Corporation........       3
    Chapter IV--Export-Import Bank of the United States.......     397
  Finding Aids:
    Table of CFR Titles and Chapters..........................     449
    Alphabetical List of Agencies Appearing in the CFR........     465
    Redesignation Tables......................................     475
    List of CFR Sections Affected--Transferred Regulations 
        Formerly Appearing in Title 12 CFR, Chapter V.........     481
    List of CFR Sections Affected.............................     483

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   Cite this Code:  CFR

   To cite the regulations in this volume use title, part and
   section number. Thus,  12 CFR 303.0 refers to title 12, part
   303, section 0.

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 1998), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
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instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I), and Acts Requiring Publication 
in the Federal Register (Table II). A list of CFR titles, chapters, and 
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also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
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ELECTRONIC SERVICES

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    The Office of the Federal Register maintains a free electronic 
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Delivery), for public law numbers, Federal Register finding aids, and 
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                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 1998.

[[Page ix]]



                               THIS TITLE

    Title 12--Banks and Banking is composed of six volumes. The parts in 
these volumes are arranged in the following order: parts 1-199, 200-219, 
220-299, 300-499, 500-599, and part 600-end. The first volume containing 
parts 1-199 is comprised of chapter I--Comptroller of the Currency, 
Department of the Treasury. The second and third volumes containing 
parts 200-299 are comprised of chapter II--Federal Reserve System. The 
fourth volume containing parts 300-499 is comprised of chapter III--
Federal Deposit Insurance Corporation and chapter IV--Export-Import Bank 
of the United States. The fifth volume containing parts 500-599 is 
comprised of chapter V--Office of Thrift Supervision, Department of the 
Treasury. The sixth volume containing part 600-end is comprised of 
chapter VI--Farm Credit Administration, chapter VII--National Credit 
Union Administration, chapter VIII--Federal Financing Bank, chapter IX--
Federal Housing Finance Board, chapter XI--Federal Financial 
Institutions Examination Council, chapter XIV--Farm Credit System 
Insurance Corporation, chapter XV--Thrift Depositor Protection Oversight 
Board, chapter XVII--Office of Federal Housing Enterprise Oversight, 
Department of Housing and Urban Development and chapter XVIII--Community 
Development Financial Institutions Fund, Department of the Treasury. The 
contents of these volumes represent all of the current regulations 
codified under this title of the CFR as of January 1, 1998.

    Redesignation tables appear in the volumes containing parts 1-199, 
parts 300-499, parts 500-599, and part 600-end.

    For this volume, Gregory R. Walton was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

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[[Page 1]]



                       TITLE 12--BANKS AND BANKING




                  (This book contains parts 300 to 499)

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                                                                    Part

chapter iii--Federal Deposit Insurance Corporation..........         303


chapter iv--Export-Import Bank of the United States.........         400

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           CHAPTER III--FEDERAL DEPOSIT INSURANCE CORPORATION




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

              SUBCHAPTER A--PROCEDURE AND RULES OF PRACTICE
Part                                                                Page
300-302

[Reserved]

303             Applications, requests, submittals, 
                    delegations of authority, and notices 
                    required to be filed by statute or 
                    regulation..............................           5
304             Forms, instructions, and reports............          50
305-306

[Reserved]

307             Notification of changes of insured status...          54
308             Rules of practice and procedure.............          54
309             Disclosure of information...................         115
310             Privacy Act regulations.....................         127
311             Rules governing public observation of 
                    meetings of the Corporation's Board of 
                    Directors...............................         132
312             Assessment of fees upon entrance to or exit 
                    from the Bank Insurance Fund or the 
                    Savings Association Insurance Fund......         137
       SUBCHAPTER B--REGULATIONS AND STATEMENTS OF GENERAL POLICY
323             Appraisals..................................         143
324             Agricultural loan loss amortization.........         147
325             Capital maintenance.........................         149
326             Minimum security devices and procedures and 
                    Bank Secrecy Act compliance.............         194
327             Assessments.................................         196
328             Advertisement of membership.................         214
329             Interest on deposits........................         218
330             Deposit insurance coverage..................         221
331-332

[Reserved]

333             Extension of corporate powers...............         235
334

[Reserved]

335             Securities of nonmember insured banks.......         237
336             FDIC employees..............................         243
337             Unsafe and unsound banking practices........         247
338             Fair housing................................         259
339             Loans in areas having special flood hazards.         263

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340

[Reserved]

341             Registration of securities transfer agents..         267
342

[Reserved]

343             Insured State nonmember banks which are 
                    municipal securities dealers............         269
344             Recordkeeping and confirmation requirements 
                    for securities transactions.............         271
345             Community reinvestment......................         278
346             Foreign banks...............................         297
347             Foreign activities of insured State 
                    nonmember banks.........................         308
348             Management official interlocks..............         312
349             Reports and public disclosure of 
                    indebtedness of executive officers and 
                    principal shareholders to a State 
                    nonmember bank and its correspondent 
                    banks...................................         317
350             Disclosure of financial and other 
                    information by FDIC-insured State 
                    nonmember banks.........................         320
351             International operations....................         322
352             Nondiscrimination on the basis of handicap..         325
353             Suspicious activity reports.................         330
357             Determination of economically depressed 
                    regions.................................         332
359             Golden parachute and indemnification 
                    payments................................         332
360             Resolution and receivership rules...........         340
361             Minority and Women Outreach Program--
                    Contracting.............................         344
362             Activities and Investments of Insured State 
                    Banks...................................         346
363             Annual Independent Audits and Reporting 
                    Requirements............................         359
364             Standards for Safety and Soundness..........         368
365             Real Estate Lending Standards...............         371
366             Contractor Conflicts of Interest............         376
367             Suspension and Exclusion of Contractor and 
                    Termination of Contracts................         382
368             Government securities sales practices.......         391
369             Prohibition against use of interstate 
                    branches primarily for deposit 
                    production..............................         394

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              SUBCHAPTER A--PROCEDURE AND RULES OF PRACTICE





PARTS 300-302  [RESERVED]--Table of Contents






PART 303--APPLICATIONS, REQUESTS, SUBMITTALS, DELEGATIONS OF AUTHORITY, AND NOTICES REQUIRED TO BE FILED BY STATUTE OR REGULATION--Table of Contents




Sec.
303.0  Scope and definitions.
303.1  Application by nonmember bank, state savings association, and 
          Federal savings association for deposit insurance.
303.2  Applications by insured state nonmember bank to establish a 
          branch, move its main office or relocate a branch.
303.3  Application for conversion, merger, consolidation, assumption and 
          sale of asset transactions.
303.4  Change in bank control.
303.5  Applications concerning insurance fund conversions, prompt 
          corrective action, and other applications.
303.6  Application procedures.
303.7  Delegation of authority to the Director (DOS) and to the 
          associate directors, regional directors and deputy regional 
          directors to act on certain applications, requests, and 
          notices of acquisition of control.
303.8  Other delegations of authority.
303.9  Delegation of authority to act on certain enforcement matters.
303.10  Applications and enforcement matters where authority is not 
          delegated.
303.11  Confirmation, limitations, rescissions and special cases.
303.12  OMB control number assigned pursuant to the Paperwork Reduction 
          Act.
303.13  Applications and notices by savings associations.
303.14  Change in senior executive officer or board of directors.
303.15  Mutual-to-stock conversions of mutually owned state-chartered 
          savings banks.
    Authority:  12 U.S.C. 378, 1813, 1815, 1816, 1817(j), 1818, 1819 
(Seventh and Tenth), 1828, 1831e, 1831o, 1831p-1; 15 U.S.C. 1607.



Sec. 303.0  Scope and definitions.

    (a) Scope. This part prescribes:
    (1) Where applications, requests, and notices required to be filed 
by statute or regulation (hereinafter, collectively, applications) 
should be filed;
    (2) The contents of the application when the application is to be 
made by letter;
    (3) The location where forms and instructions may be obtained when 
the application is to be made on a form. This part also prescribes 
procedures to be followed by both the FDIC and applicants during the 
process of consideration of an application; and
    (4) Finally, this part sets forth delegations of authority by the 
FDIC's Board of Directors to the Director of the Division of Supervision 
and the Director of the Division of Compliance and Consumer Affairs, to 
their associate directors, to the regional directors and deputy regional 
directors of the Division of Supervision, and to the regional managers 
of the Division of Compliance and Consumer Affairs to act on certain 
applications and other matters pursuant to the conditions, where 
applicable, that limit such delegations.
    (b) Definitions. For purposes of this part:
    (1) Corporation or FDIC. The terms Corporation or FDIC shall mean 
the Federal Deposit Insurance Corporation.
    (2) Division or DOS. The terms division or DOS shall mean the 
Division of Supervision, or in the event the Division of Supervision is 
reorganized, such successor division.
    (3) DCA. The term DCA shall mean the Division of Compliance and 
Consumer Affairs, or in the event the Division of Compliance and 
Consumer Affairs is reorganized, such successor division.
    (4) Director (DOS). The term Director (DOS) shall mean the Director 
of the Division of Supervision, or in the event the title of Director of 
the Division of Supervision becomes obsolete, any official of equivalent 
or higher authority.
    (5) Director (DCA). The term Director (DCA) shall mean the Director 
of the Division of Compliance and Consumer Affairs, or in the event the 
title of Director of the Division of Compliance and Consumer Affairs 
becomes obsolete, any official of equivalent or higher authority.

[[Page 6]]

    (6) Associate director. The term associate director shall mean any 
associate director of the Division of Supervision or the Division of 
Compliance and Consumer Affairs, as appropriate, or in the event the 
title of associate director becomes obsolete, any official of equivalent 
authority within the respective divisions.
    (7) Regional director. The term regional director shall mean any 
regional director of the Division of Supervision, or in the event the 
title of regional director becomes obsolete, any official of equivalent 
authority within the Division of Supervision.
    (8) Deputy regional director. The term deputy regional director 
shall mean any deputy regional director of the Division of Supervision, 
or in those FDIC regions where there is no deputy regional director, an 
assistant regional director. In the event the title of deputy regional 
director or assistant regional director becomes obsolete, the term 
deputy regional director shall mean any official of equivalent authority 
within the same FDIC region of the Division of Supervision.
    (9) Regional manager. The term regional manager shall mean any 
regional manager in the Division of Compliance and Consumer Affairs, or 
in the event the title of regional manager becomes obsolete, any 
official of equivalent authority within the Division of Compliance and 
Consumer Affairs.
    (10) Associate General Counsel for Compliance and Enforcement. The 
term Associate General Counsel for Compliance and Enforcement shall mean 
the head of the Compliance and Enforcement Section of the Legal Division 
of the FDIC, or in the event the title of Associate General Counsel for 
Compliance and Enforcement becomes obsolete, any official of equivalent 
authority within the Legal Division. The authority delegated to the 
Associate General Counsel for Compliance and Enforcement may be 
exercised by the Deputy General Counsel for Supervision and Legislation 
or a counsel in the Compliance and Enforcement Section in the 
Washington, DC office.
    (11) Regional counsel. The term regional counsel shall mean a 
regional counsel of the Legal Division, or in the event the title of 
regional counsel becomes obsolete, any official of equivalent authority 
within the Legal Division. The authority delegated to a regional counsel 
may be exercised by a deputy regional counsel, a counsel, or any 
official of equivalent or higher authority in the Compliance and 
Enforcement Section of the Legal Division.
    (12) Appropriate FDIC region, appropriate FDIC regional office, 
appropriate regional director, appropriate deputy regional director, and 
appropriate regional counsel shall refer to the FDIC region, and the 
FDIC regional office, regional director, deputy regional director, and 
regional counsel, of the FDIC region, which the FDIC designates as 
follows:
    (i) When an institution or proposed institution that is the subject 
of an application, request, submittal, notice, or administrative action 
is not or will not be part of a group of related institutions, the 
appropriate region for the institution and any individual associated 
with the institution is the FDIC region in which the institution or 
proposed institution is or will be located; or
    (ii) When an institution or proposed institution that is the subject 
of an application, request, submittal, notice, or administrative action 
is or will be part of a group of related institutions, the appropriate 
region for the institution and any individual associated with the 
institution is the FDIC region in which the group's major policy and 
decision makers are located, or any other region the FDIC designates on 
a case-by-case basis.
    (13) Act. The term the Act shall mean the Federal Deposit Insurance 
Act (12 U.S.C. 1811 et seq.).
    (14) Institution-affiliated party. The term institution-affiliated 
party shall have the same meaning as provided in section 3(u) of the Act 
(12 U.S.C. 1813(u)).
    (15) Notification to primary regulator. The term notification to 
primary regulator shall mean a notice required under section 8(a)(2)(A) 
of the Act (12 U.S.C. 1818(a)(2)(A)).
    (16) Section 8(a) order. The term section 8(a) order shall mean an 
order terminating the insured status of a depository institution under 
section 8(a) of the Act (12 U.S.C. 1818(a)).
    (17) Notice of charges. The term notice of charges shall mean a 
notice of

[[Page 7]]

charges and of hearing setting forth the allegations of unsafe or 
unsound practices and/or violations and fixing the time and place of the 
hearing issued under section 8(b) of the Act (12 U.S.C. 1818(b)).
    (18) Section 8(b) order and cease-and-desist order. The terms 
section 8(b) order and cease-and-desist order shall mean a final order 
to cease and desist issued under section 8(b) of the Act (12 U.S.C. 
1818(b)).
    (19) Section 8(c) order and temporary cease-and-desist order. The 
terms section 8(c) order and temporary cease-and-desist order shall mean 
a temporary order to cease and desist issued under section 8(c) of the 
Act (12 U.S.C. 1818(c)).
    (20) Section 8(e) order. The term section 8(e) order shall mean a 
final order of removal or prohibition issued under section 8(e) of the 
Act (12 U.S.C. 1818(e)).
    (21) Section 8(e)(3) order and temporary order of suspension. The 
terms section 8(e)(3) order and temporary order of suspension shall mean 
a temporary order of suspension or prohibition issued under section 
8(e)(3) of the Act (12 U.S.C. 1818(e)(3)).
    (22) Section 8(g) order. The term section 8(g) order shall mean an 
order of suspension or prohibition issued under section 8(g) of the Act 
(12 U.S.C. 1818(g)).
    (23) Remote service facility. The term remote service facility shall 
mean an automated teller machine, cash dispensing machine, point-of-sale 
terminal, or other remote electronic facility where deposits are 
received, checks paid, or money lent.
    (24) Notice of assessment of civil money penalties. The term notice 
of assessment of civil money penalties shall mean a notice of assessment 
of civil penalties, findings of fact and conclusions of law, and order 
to pay issued pursuant to sections 7(a)(1), 7(j)(15), 8(i) or 18(j) of 
the Act (12 U.S.C. 1817(a)(1), 1817(j)(15), 1818(i), or 1828(j)), 
section 106(b) of the Bank Holding Company Act (12 U.S.C. 1972), section 
910(d) of the International Lending Supervision Act of 1983 (12 U.S.C. 
3909), or any other provision of law providing for the assessment of 
civil money penalties by the FDIC.
    (25) Amended order to pay. The term amended order to pay shall mean 
an order to forfeit and pay civil money penalties, the amount of which 
has been changed from that assessed in the original notice of assessment 
of civil money penalties.
    (26) Book capital. The term book capital shall mean total equity 
capital which is comprised of perpetual preferred stock, common stock, 
surplus, undivided profits and capital reserves, as those items are 
defined in the instructions of the Federal Financial Institutions 
Examination Council (FFIEC) for the preparation of Consolidated Reports 
of Condition and Income for insured banks.
    (27) Tier 1 capital. The term Tier 1 capital shall have the same 
meaning as provided in Sec. 325.2(m) of this chapter (12 CFR 325.2(m)).
    (28) Total assets. The term total assets shall have the same meaning 
as provided in Sec. 325.2(n) of this chapter (12 CFR 325.2(n)).
    (29) Adjusted Part 325 total assets. The term adjusted Part 325 
total assets shall mean adjusted 12 CFR part 325 total assets as 
calculated and reflected in the FDIC's Reports of Examination.
    (30) Protest. The term protest shall include any comment from the 
public which raises a negative issue relative to the Community 
Reinvestment Act (12 U.S.C. 2901 et seq.), whether or not it is labeled 
a protest and whether or not a hearing is requested; however, the term 
protest shall not include any such comment which the appropriate 
regional manager determines to be frivolous, or to have been filed for 
competitive reasons by a financial institution, or to have been filed 
primarily as a means of delaying action on the application, or any 
comment which raises negative Community Reinvestment Act issues between 
the commenter and the applicant that have been resolved.
    (31) Standard conditions. The term standard conditions refers to 
conditions that any delegate may include as a matter of routine in an 
order approving an application, whether or not the applicant has agreed 
to their inclusion. The following conditions, or variations thereof, are 
standard conditions:
    (i) That the applicant has obtained all necessary and final 
approvals from the appropriate state authority or other applicable 
authority;

[[Page 8]]

    (ii) That if the transaction does not take effect within a specified 
time limit, or unless, in the meantime, a request for an extension of 
time has been approved, the consent granted shall expire at the end of 
the said time period;
    (iii) That until the conditional commitment of the FDIC becomes 
effective, the FDIC retains the right to alter, suspend or withdraw its 
commitment should any interim development be deemed to warrant such 
action; and
    (iv) In the case of a merger transaction (as defined in 
Sec. 303.7(b)(1)), including a phantom merger or reorganization, that 
the proposed transaction not be consummated before the thirtieth 
calendar day after the date of the order approving the merger.
    (c) Authority delegated to regional manager. For purposes of this 
part, and where confirmed in writing, any authority delegated to the 
regional manager may also be exercised by his or her principal 
assistant.
    (d) Construction. Any singular term includes the plural, and the 
plural includes the singular, if such use would be appropriate. Any use 
of the masculine, feminine, or neuter gender shall encompass all three, 
if such use would be appropriate.
[59 FR 52660, Oct. 19, 1994, as amended at 60 FR 31384, June 15, 1995; 
62 FR 16664, Apr. 8, 1997]



Sec. 303.1  Application by nonmember bank, state savings association, and Federal savings association for deposit insurance.

    Application for deposit insurance by an existing or proposed 
nonmember bank,\1\ state savings association or Federal savings 
association should be filed with the appropriate regional director. The 
relevant application forms and instructions may be obtained from the 
appropriate FDIC regional office.
---------------------------------------------------------------------------

    \1\ A nonmember bank is a bank which is not a member of the Federal 
Reserve System.
---------------------------------------------------------------------------

[54 FR 53556, Dec. 29, 1989]



Sec. 303.2  Applications by insured state nonmember bank to establish a branch, move its main office or relocate a branch.

    (a) Application by an insured state nonmember bank (except a 
District bank) to establish and operate a new branch 2, to 
move its main office, or relocate a branch should be filed with the 
appropriate regional director. For purposes of this requirement, a 
branch relocation is a move within the same immediate neighborhood that 
does not substantially affect the nature of the business of the branch 
or the customers of the branch. Under this paragraph, situations where 
an insured state nonmember bank closes a branch in one location and 
opens a branch in another location outside the immediate neighborhood of 
the closed branch are considered the establishment of a new branch and 
the closing of an existing branch. Applications filed under this 
paragraph shall indicate whether they are to establish and operate a new 
branch, move a main office, or relocate a branch office. The application 
shall be mailed or delivered to the regional director on the date on 
which the notice required in Sec. 303.6(f)(1) is published or not more 
than 30 days subsequent to the first required publication of notice. The 
application shall be in letter form and shall contain the following 
information:
---------------------------------------------------------------------------

    \2\  The term branch includes any domestic branch or foreign branch 
as those terms are defined in section 3(o) of the Act, as amended (12 
U.S.C. 1813(o)).
---------------------------------------------------------------------------

    (1) The exact location of the proposed site, including street 
address (unless one has not been assigned to the location);
    (2) Details concerning any involvement in the proposal by an insider 
(a director, an officer, or a shareholder who directly or indirectly 
controls 5 or more percent of any class of the applicant's outstanding 
voting stock, or the associates and interests of any such person) of the 
bank, including any financial arrangements relating to fees, the 
acquisition of property, leasing of property, and construction 
contracts;
    (3) The impact of the proposal on the human environment, 
specifically, information on compliance with local zoning laws and 
regulations and the effect on traffic patterns;
    (4) A statement as to whether or not the site is included in or is 
eligible for inclusion in the National Register of Historic Places, 
including evidence

[[Page 9]]

that clearance has been obtained from the State Historic Preservation 
Officer;
    (5) Comments on any changes in services to be offered, the community 
to be served, or any other effect the proposal may have on the 
applicant's compliance with the Community Reinvestment Act; and
    (6) The name and address of and the date of publication in the 
newspaper in which notice required by Sec. 303.6(f)(1) is published.
In cases in which additional information is necessary for evaluation of 
the application, the applicant may be required to furnish specific 
information on an individual basis. Procedures regarding applications to 
establish or acquire a branch pursuant to section 38 of the Act, 12 
U.S.C. 1831o, are set forth at Sec. 303.5(e) of this part.
    (b) The appropriate regional director may delay processing, 
including extending the comment period, for good cause.
    (c) Special procedures for remote service facilities. (1) For 
purposes of this section, establishing means owning or leasing a remote 
service facility either individually or jointly.
    (2) An insured state nonmember bank or an insured state-licensed 
branch of a foreign bank whose most recent Community Reinvestment Act 
rating is Satisfactory or better and who desires to establish and 
operate or relocate a remote service facility (RSF) shall file a letter 
with the appropriate regional director. The letter shall contain the 
exact location of the proposed or relocated RSF, including street 
address (unless one has not been assigned to the location), and either a 
representation that the site of the proposed or relocated RSF is not 
included in or eligible for inclusion in the National Register of 
Historic Places or written verification that in the opinion of the 
appropriate state historic preservation officer the establishment or 
relocation of the RSF will have no adverse effect on a historic site. 
Unless the institution is notified otherwise by the FDIC within seven 
days of receipt of the letter, the institution may establish and operate 
or relocate the RSF. In the event that the institution cannot represent 
in good faith that the site of the proposed or relocated RSF is not 
included in or eligible for inclusion in the National Register of 
Historic Places or evidence that written verification has been obtained 
from the appropriate state historic preservation officer, the 
institution shall proceed pursuant to paragraph (c)(3) of this section.
    (3) An insured state nonmember bank or an insured state-licensed 
branch of a foreign bank whose most recent Community Reinvestment Act 
rating is not Satisfactory or better and who desires to establish and 
operate or relocate an RSF shall file the letter described in paragraph 
(c)(2) of this section and comply with the notice provisions of 
Sec. 303.6(f). Unless the institution is notified otherwise by the FDIC 
within 15 days after completion of processing of the letter, the 
institution may establish and operate or relocate the RSF; provided 
however, that in the event that a protest is filed with the FDIC or 
other objection is taken prior to completion of processing the letter, 
the institution shall not establish and operate or relocate the RSF 
until the FDIC provides written notice of its approval.
[54 FR 53556, Dec. 29, 1989, as amended at 58 FR 8216, Feb. 12, 1993; 59 
FR 4250, Jan. 31, 1994; 59 FR 43282, Aug. 23, 1994]



Sec. 303.3  Application for conversion, merger, consolidation, assumption and sale of asset transactions.

    (a) Merger, consolidation, asset acquisition or assumption 
transaction between insured depository institutions. Application by an 
insured depository institution for the consent of the Corporation to 
merge or consolidate with, acquire the assets of, or assume the 
liability to pay any deposits made in, another insured depository 
institution--when the resulting or assuming depository institution is to 
be an insured state nonmember bank (except a District bank or a savings 
bank supervised by the Director of the Office of Thrift Supervision), 
together with copies of all agreements or proposed agreements relating 
thereto, including the charter or articles of incorporation of the 
resulting or assuming depository institution, should be filed with the 
appropriate regional director. Procedures regarding applications to 
acquire an interest in

[[Page 10]]

any company or insured depository institution pursuant to section 38 of 
the Act, 12 U.S.C. 1831o, are set forth at Sec. 303.5(e) of this part.
    (b) Merger of Insured depository institution with noninsured bank or 
institution. Application by an insured depository institution for the 
consent of the Corporation to merge or consolidate with a noninsured 
bank or institution, or to convert into a noninsured institution, or to 
assume liability to pay any deposits made in, or similar liabilities of, 
any noninsured bank or institution, or to transfer assets to any 
noninsured bank or institution in consideration of the assumption of 
liability for any portion of the deposits made in such insured 
depository institution, together with copies of all agreements or 
proposed agreements relating thereto, should be filed with the 
appropriate regional director.
    (c) Conversion with diminution of capital or surplus. Application 
for the consent of the Corporation to convert into an insured state 
nonmember bank (except a District bank), when the conversion will result 
in the converted bank's having less capital stock or surplus than the 
converted bank at the time of the shareholders' meeting approving such 
conversion, together with copies of the charter and/or articles of 
association of the converted bank, should be filed with the appropriate 
regional director.
    (d) Applications for approval of transactions under section 5(d)(3) 
of the Federal Deposit Insurance Act (12 U.S.C. 1815(d)(3)). Application 
by an insured state nonmember bank for consent of the Corporation to 
enter into a transaction under section 5(d)(3) of the Federal Deposit 
Insurance Act shall be made by submitting a letter accompanying the 
merger application certifying:
    (1) That the application for approval is for a transaction under 
section 5(d)(3), and
    (2) That the transaction will not result in the transfer of any 
insured depository institution's Federal deposit insurance from one 
federal deposit insurance fund to the other federal deposit insurance 
fund.
    (e) The appropriate application forms and instructions, as well as 
instructions concerning notice to depositors, may be obtained upon 
request from the office of said regional director.
[54 FR 53556, Dec. 29, 1989, as amended at 57 FR 5815, Feb. 18, 1992; 58 
FR 8216, Feb. 12, 1993]



Sec. 303.4  Change in bank control.

    (a) Acquisition of control.\3\ Under the Change in Bank Control Act 
of 1978, acquisitions by a person \4\ or persons acting in concert with 
the power to vote 25 percent or more of a class of voting securities of 
an insured depository institution, unless exempted, require prior notice 
to the Corporation. In addition, a purchase, assignment, transfer, 
pledge, or other disposition of voting stock through which any person 
will acquire ownership, control, or the power to vote ten percent or 
more of a class of voting securities of an insured depository 
institution will be presumed to be an acquisition by such person of the 
power to direct that institution's management or policies if:
---------------------------------------------------------------------------

    \3\ Control is defined in section 7(j)(8)(B) of the Act as ``the 
power, directly or indirectly, to direct the management or policies of 
an insured bank or to vote over 25 percent or more of any class of 
voting securities of an insured bank.'' 12 U.S.C. 1817(j)(8)(B).
    \4\ Person is defined in section 7(j)(8)(A) of the Act as ``an 
individual or a corporation, partnership, trust, association, joint 
venture, pool, syndicate, sole proprietorship, unincorporated 
organization, or any other form of entity not specifically listed 
herein.'' 12 U.S.C. 1817(j)(8)(A).
---------------------------------------------------------------------------

    (1) The institution has issued any class of securities subject to 
the registration requirements of section 12 of the Securities Exchange 
Act of 1944 (15 U.S.C. 781); or
    (2) Immediately after the transaction, no other person will own a 
greater proportion of that class of voting securities.
Other transactions resulting in a person's control of less than 25 
percent of a class of voting shares of an insured depository institution 
would not result in control for purposes of the Act. An acquiring person 
may request an opportunity to contest any presumption established by 
this paragraph (a) of this section with respect to a proposed 
transaction. The Corporation will afford the person an opportunity to

[[Page 11]]

present views in writing, or, where appropriate, orally before its 
designated representatives either at informal conference discussions or 
at informal presentations of evidence.
    (b) Notices. (1) Notice of a proposed acquisition of control should 
be filed with the regional director of the FDIC region in which the 
depository institution in which stock is being acquired is located. The 
FDIC will not accept a notice unless the information provided is 
responsive to every item specified in paragraph 6 of the Change in Bank 
Control Act of 1978 (12 U.S.C. 1817(j)(6)) and every item prescribed in 
the appropriate FDIC forms. With respect to personal financial 
statements required by paragraph 6(b) of the Change in Bank Control Act 
of 1978, an acquiring person may include a current statement of assets 
and liabilities, as of a date not more than ninety days prior to the 
date the notice is filed, a brief income summary, and a statement of 
material changes since the date of the statement. The appropriate 
regional director, the Director (DOS), or the Board of Directors may 
require additional information with respect to personal financial 
statements.
    (2)(i) Except as otherwise provided in paragraph (b)(2)(ii) or 
(b)(2)(iii) of this section, within ten days after receiving 
confirmation that the appropriate FDIC regional office has accepted the 
notice, the acquiring person(s) shall publish an announcement of such 
acceptance in the business section of a newspaper having general 
circulation in the community in which the home office of the depository 
institution whose stock is sought to be acquired is located. Promptly 
thereafter, the acquiring person(s) shall send a copy of the newspaper 
announcement and the publisher's affidavit of publication to the 
regional director of the FDIC region in which the subject depository 
institution is located. The newspaper announcement shall contain the 
name(s) of the proposed acquirer(s), the name of the depository 
institution whose stock is sought to be acquired, and the date of 
acceptance by the FDIC of the notice of acquisition of control. The 
announcement shall also state that any person wishing to comment on the 
proposed change in control may do so by submitting written comments to 
the regional director of the FDIC at (give address of the regional 
office) within twenty days following the required newspaper publication 
or, if the FDIC has shortened the public comment period pursuant to 
paragraph (b)(3) of this section, within such shorter period.
    (ii) In a community in which there is no daily or weekly community 
newspaper, the acquiring person(s) may satisfy the publication 
requirement contained in paragraph (b)(2)(i) of this section by 
publishing the required newspaper announcement in either a county-wide 
newspaper (in the county in which the bank's home office is located) or, 
if there is no county-wide newspaper, in a state-wide newspaper.
    (iii) In the case of a notice filed in contemplation of a public 
tender offer subject to the requirements of the Securities Exchange Act 
of 1934 (15 U.S.C. 78m and 78n) and the FDIC's regulations governing 
tender offers (12 CFR 335.501 through 335.530), the acquiring person(s) 
shall publish the required newspaper announcement not later than the 
earliest of:
    (A) The commencement of the tender offer under Sec. 335.502 of the 
FDIC's regulations (12 CFR 335.502);
    (B) Other public announcement of the tender offer; or
    (C) Thirty-four days after the FDIC's acceptance of the notice of 
acquisition of control.
    (3)(i) In acting upon a proposed change in control, the FDIC shall 
consider all public comments received within twenty days following the 
required newspaper publication. At the FDIC's option, comments received 
after this twenty-day period may be, but need not be, considered.
    (ii) If the FDIC determines in writing that the newspaper 
publication or comment solicitation requirements of this paragraph would 
seriously threaten the safety or soundness of the depository institution 
to be acquired, including situations where the FDIC must act immediately 
in order to prevent the probable failure of the bank to be acquired, 
then the FDIC may:
    (A) Waive the publication requirement;

[[Page 12]]

    (B) Waive the public comment solicitation requirement; or
    (C) Act on the proposed change in control prior to the expiration of 
the public comment period.
    (iii) In other circumstances, for good cause, the FDIC may shorten 
the public comment period to a period of not less than ten days. Such 
good cause will exist only if the FDIC determines that circumstances 
beyond the control of the acquiring person or persons warrant a shorter 
period.
    (4) A notice of acquisition of control that is filed in 
contemplation of a public tender offer subject to sections 13(d) and 
14(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m and 78n) and 
the FDIC's regulations governing tender offers (12 CFR 335.501 through 
335.530) may be given confidential treatment for up to thirty-four days 
after the notice is accepted if:
    (i) The filing party requests confidential treatment under this rule 
and represents that a public announcement of the tender offer and the 
filing of appropriate forms with the FDIC will occur within thirty-four 
days from the acceptance of the notice; and
    (ii) The FDIC determines, in its discretion, that it is in the 
public interest to grant confidential treatment. In its discretion, the 
FDIC may grant confidential treatment under other circumstances when 
consistent with the purposes of the Change in Bank Control Act of 1978.
    (5) Nothing in this regulation shall affect any obligation which the 
acquiring person(s) may have to comply with the Federal securities laws 
or any other laws.
    (6)(i) Whenever a notice of a proposed acquisition of control is not 
filed in accordance with the Change in Bank Control Act of 1978 and 
these regulations, the acquiring person(s) shall, within ten days of 
being so directed by the FDIC, publish an announcement of the 
acquisition of control in the business section of a newspaper having 
general circulation in the community in which the home office of the 
depository institution involved is located. In a community in which 
there is no daily or weekly community newspaper, the required newspaper 
announcement may be published in a county-wide newspaper (in the county 
in which the depository institution's home office is located) or, if 
there is no county-wide newspaper, in a statewide newspaper.
    (ii) The newspaper announcement shall contain the name(s) of the 
acquire(s), the name of the depository institution involved, and the 
date of the acquisition of the stock. The announcement shall also 
contain a statement indicating that the FDIC is currently reviewing the 
acquisition of control. The announcement shall also state that any 
person wishing to comment on the change in control may do so by 
submitting written comments to the regional director of the FDIC at 
(give address of the regional office) within twenty days following the 
required newspaper publication.
    (c) Exempt transactions. The following transactions are not subject 
to the prior notice requirements of the Change in Bank Control Act of 
1978:
    (1) The acquisition of additional shares of an insured depository 
institution by a person who continuously since March 9, 1979, held power 
to vote 25 percent or more of the voting shares of that institution, or 
by a person who has acquired and maintained control of that institution 
after complying with the procedures of the Change in Bank Control Act;
    (2) The acquisition of additional shares of an insured depository 
institution by a person who under paragraph (a) of this section would be 
presumed to have controlled that institution continuously since March 9, 
1979, if:
    (i) The transaction will not result in that person's direct or 
indirect ownership or power to vote 25 percent or more of any class of 
voting securities of the institution; or
    (ii) In other cases, the Corporation determines that the person has 
controlled the institution since March 9, 1979;
    (3) The acquisition of shares in satisfaction of a debt previously 
contracted in good faith or through testate or intestate succession or 
bona fide gift; Provided, The acquirer advises the appropriate regional 
director within thirty days after the acquisition and provides such of 
the information specified in paragraph 6 of the Change in Bank

[[Page 13]]

Control Act as the regional director requests;
    (4) A transaction subject to approval under section 3 of the Bank 
Holding Company Act, section 18 of the Act or section 10 of the Home 
Owners' Loan Act;
    (5) A transaction described in sections 2(a)(5) or (3)(a)(5)(A) or 
(B) of the Bank Holding Company Act, (12 U.S.C. 1841(a)(5) or 1842 
(a)(5)) by a person there described;
    (6) A customary one-time proxy solicitation and receipt of pro-rata 
stock dividends; and
    (7) The acquisition of shares in foreign banks which have an insured 
branch or branches in the United States; Provided, however, That this 
exemption does not extend to the reports and information required under 
sections 7(j)(9), (10), and (12) of the Act.
[54 FR 53557, Dec. 29, 1989, as amended at 59 FR 52662, Oct. 19, 1994]



Sec. 303.5  Applications concerning insurance fund conversions, prompt corrective action, and other applications.

    (a) Conversion involving transfer of deposits between the Savings 
Association Insurance Fund (SAIF) and the Bank Insurance Fund (BIF). 
Application by any depository institutions to participate in a 
conversion transaction involving the transfer of deposits from the SAIF 
Fund to the BIF Fund or vice versa should be filed with the appropriate 
regional director. The application shall be in letter form, signed by 
representatives of each institution participating in the transaction, 
and shall contain the following information:
    (1) A description of the transaction;
    (2) A statement of condition of each institution as of the date of 
application;
    (3) A statement of condition of each institution as of May 1, 1989, 
with a notation as to the amount of net interest credited to total 
deposits during the period beginning May 1, 1989, and ending on the 
expected date of transfer;
    (4) The amount of deposits involved in the conversion transaction;
    (5) A pro forma balance sheet and income statement for each 
institution upon consummation of the transaction;
    (6) A listing of any other conversion in which either institution 
has participated since August 9, 1989, or any other conversion 
transaction in process at the time of filing; and
    (7) Any other information that the regional director may from time 
to time require.
    (b) Except as otherwise provided by rule or regulation, all 
applications, requests, and submittals for which no form of application 
has been prescribed by the Corporation should:
    (1) Be in writing;
    (2) (i) Be signed by the president, cashier, or managing officer of 
the depository institution in the case of:
    (A) An application by a depository institution whose insured status 
has been terminated under section 8 of the Federal Deposit Insurance Act 
(12 U.S.C. 1818) for permission to continue or resume its status as an 
insured depository institution; or
    (B) An application made by an insured depository institution under 
part 328 of this title; or
    (ii) Be signed by the applicant or a duly authorized agent in all 
other cases;
    (3) Contain a statement of the applicant's interest therein, a 
complete and concise statement of the action requested, and the reasons 
and facts relied upon as the basis for such requested action; and
    (4) (i) Be addressed to the appropriate regional director in the 
case of an application, request, or notice of acquisition of control 
from or relating to a particular bank or institution; or
    (ii) The Executive Secretary of the Corporation at the Corporation's 
Washington, DC headquarters in all other cases.
The applicant shall furnish such other pertinent information as may be 
required by the Corporation. Forms to be executed in conjunction with an 
application for consent to exercise trust powers may be obtained from 
the appropriate FDIC regional office.
    (c) In addition to the foregoing, an application by a depository 
institution whose insured status has been terminated under section 8 of 
the Act for permission to continue or resume its status as an insured 
depository institution should:

[[Page 14]]

    (1) Be accompanied by a certified copy of the resolution of its 
board of directors; and
    (2) Contain a statement that the depository institution's insured 
status has been terminated (including the date thereof and the basis 
therefor) and that the insurance of its deposits has not ceased.
    (d) Applications under Sec. 347.4 of this chapter to acquire or hold 
stock or other evidence of ownership in a foreign bank or other 
financial entity shall be submitted to the appropriate regional director 
in letter form and, unless otherwise directed by the Corporation, shall 
contain full information concerning the foreign bank or other financial 
entity including (unless previously furnished):
    (1) The cost, number, class of shares to be acquired, and the 
proposed carrying value of such shares on the books of the insured state 
nonmember bank;
    (2) A recent balance sheet and income statement of the foreign bank 
or other financial entity;
    (3) A brief description of the foreign bank's or other financial 
entity's business (including full information concerning any direct or 
indirect business transacted in the United States);
    (4) Lists of directors and principal officers (with address and 
principal business affiliation of each) and of all shareholders known to 
the issuing bank holding 10 percent or more of any class of the foreign 
bank's or other financial entity's stock or other evidence of ownership, 
and the amount held by each; and
    (5) Information concerning the rights and privileges of the various 
classes of shares outstanding.
    (e) Applications pursuant to section 38 of the Act and subpart B of 
part 325 of the FDIC's regulations (prompt corrective action). An 
application by any insured depository institution pursuant to section 38 
of the Act, 12 U.S.C. 1831o, and subpart B of part 325 of the FDIC's 
regulations, 12 CFR part 325, should be filed with the DOS regional 
director of the FDIC region in which the insured depository institution 
is located. The application shall be in letter form, except as otherwise 
provided in paragraphs (e)(1) through (5) of this section. Such letter 
shall be signed by the president, senior officer or a duly authorized 
agent of the insured depository institution and be accompanied by a 
certified copy of a resolution adopted by the institution's board of 
directors or trustees authorizing the application. Each application 
shall contain the information specified in paragraphs (e)(1) through (5) 
of this section and any other information requested by the Corporation.
    (1) Capital distributions. An application to repurchase, redeem, 
retire or otherwise acquire shares or ownership interests of the insured 
depository institution shall describe the proposal, the shares or 
obligations which are the subject thereof, and the additional shares or 
obligations of the institution which will be issued in at least an 
amount equivalent to the distribution. The application shall also 
explain how the proposal will reduce the institution's financial 
obligations or otherwise improve its financial condition. Where the 
proposed action also requires an application pursuant to section 18(i) 
of the Act (12 U.S.C. 1828 (i)), such application should be filed 
concurrently with or made a part of the application pursuant to section 
38 of the Act.
    (2) Acquisitions, branching, and new lines of business. Applications 
shall describe the proposal, state the date institution's capital 
restoration plan was accepted by its primary Federal regulator, describe 
the institution's status toward implementing the plan, and explain how 
the proposed action is consistent with and will further the achievement 
of the plan or otherwise further the purposes of section 38 of the FDI 
Act. Where the FDIC is not the applicant's primary Federal regulator, 
the application should also state whether approval has been requested 
from the applicant's primary Federal regulator, the date of such request 
and the disposition of the request, if any. Where the proposed action 
also requires applications pursuant to section 18 (c) or (d) of the FDI 
Act (12 U.S.C. 1828 (c) or (d) of the FDI Act (12 U.S.C. 1828 (c) or 
(d)), such applications should be filed concurrently with, or made a 
part of, the application filed pursuant to section 38 of the Act.

[[Page 15]]

    (3) Bonuses and increased compensation for senior executive 
officers. Applications shall list each proposed bonus or increase in 
compensation, and for the latter shall identify compensation for each of 
the twelve calendar months preceding the calendar month in which the 
institution became undercapitalized. Applications shall also state the 
date the institution's capital restoration plan was accepted by the 
FDIC, and describe any progress made in implementing the plan.
    (4) Payment of principal or interest on subordinated debt. 
Applications shall describe the proposed payment and provide an 
explanation of action taken under section 38(h)(3)(A)(ii) of the Act. 
The application shall also explain how such payments would further the 
purposes of section 38 of the Act. Existing approvals pursuant to 
requests filed under 18(i)(1) shall not be deemed to be the permission 
needed pursuant to section 38.
    (5) Restricted activities of Critically Undercapitalized 
Institutions. Applications to engage in any of the following activities 
shall describe the proposed activity and explain how the activity would 
further the purposes of section 38 of the Act:
    (i) Enter into any material transaction other than in the usual 
course of business including any action with respect to which the 
institution is required to provide notice to the appropriate Federal 
banking agency;
    (ii) Extend credit for any highly leverage transaction;
    (iii) Amend the institution's charter or bylaws, except to the 
extent necessary to carry out any other requirement of any law, 
regulation, or order;
    (iv) Make any material change in accounting methods;
    (v) Engage in any covered transaction (as defined in section 23A(b) 
of the Federal Reserve Act (12 U.S.C. 371A(b))); or
    (vi) Pay excessive compensation of bonuses.
[54 FR 53558, Dec. 29, 1989, as amended at 58 FR 8217, Feb. 12, 1993; 59 
FR 52662, Oct. 19, 1994]



Sec. 303.6  Application procedures.

    (a) Scope of section. Paragraphs (f) through (n) of this section 
apply to:
    (1) Applications for deposit insurance by proposed new depository 
institutions or operating non-insured institutions;
    (2) Applications by insured state nonmember banks to establish 
branches, including applications to establish remote service facilities 
by banks whose most recent Community Reinvestment Act rating is not 
Satisfactory or better or who cannot represent compliance with the 
National Historic Preservation Act;
    (3) Applications by insured state nonmember banks to move their main 
office or relocate their branch offices, including applications to 
relocate remote service facilities by banks whose most recent Community 
Reinvestment Act rating is not Satisfactory or better or who cannot 
represent compliance with the National Historic Preservation Act;
    (4) Applications to merge or to consolidate with, acquire the assets 
of, or assume the liability to pay any deposits made in, a bank or 
institution, when the resulting or assuming depository institution is to 
be an insured state nonmember bank, and all other applications to merge 
or to consolidate with, or to assume liabilities, which require the 
Corporation's prior approval under the Bank Merger Act (12 U.S.C. 
1828(c)); \6\ and
---------------------------------------------------------------------------

    \5\ [Reserved]
    \6\ Except as otherwise provided in paragraph (f)(1) of this 
section, the provisions of this Sec. 303.6 shall not be applicable to 
any proposed merger or assumption transaction which the Board of 
Directors of the Corporation determines must be acted upon immediately 
to prevent the probable default of one of the institutions involved or 
must be handled with expeditious action due to an existing emergency 
condition, as permitted by the Bank Merger Act (12 U.S.C. 1828(C)(6)).
---------------------------------------------------------------------------

    (5) Any other applications, requests or submittals which the Board 
of Directors of the FDIC in its sole discretion deems appropriate.

In the case of applications, requests, or submittals which come within 
Sec. 303.6(a)(5), the applicant will be notified at the time its 
application is accepted for filing that the procedures set forth in this 
section shall be followed in connection therewith.

[[Page 16]]

    (b) Investigations and examinations. With respect to all 
applications, requests, or submittals, the Board of Directors, or the 
Director (DOS) or the Director (DCA), or their associate directors, or 
the appropriate regional director, or the appropriate deputy regional 
director, or the appropriate regional manager acting under delegated 
authority may require any investigation or examination, or both, to be 
performed as deemed appropriate. Upon receipt of the report of any 
investigation or examination and any recommendations based on the 
report, the Board of Directors, or either director, or their associate 
directors, or the regional director, or the deputy regional director, or 
the regional manager acting within the scope of delegated authority will 
take any action determined necessary or appropriate under the 
circumstances.
    (c) Opportunity to present views. With respect to any application, 
the Corporation may afford the applicant or other properly interested 
persons, including government agencies, an opportunity to present views 
orally or in writing before or to its designated representative or 
representatives, either at informal conference discussions or at 
informal presentations of evidence.
    (d) Notice of disposition of applications. Prompt notice will be 
given of the grant or denial, in whole or in part, of any written 
application, petition, or other request of any interested person made in 
connection with any agency proceeding. In the case of a denial of an 
application by a federal savings association for deposit insurance, such 
notice will be sent to the Director of the Office of Thrift Supervision, 
and will be accompanied by a written statement giving specific reasons 
for the Corporation's determination with reference to the factors 
described in paragraphs (1), (2), (3), (4) and (5) of section 6 of the 
Act (12 U.S.C. 1816). In the case of any other denial, except in 
affirming a prior denial, or where the same is self-explanatory, such 
notice will be accompanied by a simple statement of the reasons 
therefor.
    (e) Opportunity to petition for reconsideration of a denied 
application, petition, or other request. (1) Within 15 days of its 
receipt of notice that its application, petition, or request has been 
denied, any applicant may petition the FDIC for reconsideration of such 
application, petition, or request (except an application, petition or 
request already previously denied upon reconsideration). The petition 
must be in writing and should:
    (i) Specify reasons why the FDIC should reconsider its action
    (ii) Set forth relevant, substantive information that for good cause 
was not previously set forth in the application, petition, or request to 
be reconsidered; and
    (iii) A petition or request relating to a safety and soundness 
matter should be filed with the appropriate regional director. A 
petition or request relating to compliance with consumer protection, 
fair lending, community reinvestment or civil rights laws should be 
filed with the appropriate regional manager. If a particular insured 
depository institution or insured branch of a foreign bank was not the 
subject of the application, petition, or request on which 
reconsideration is sought, the petition should be filed with the 
Executive Secretary of the FDIC at the FDIC's Washington, DC office.
    (2) (i) The Director (DOS) or the Director (DCA) or, where confirmed 
in writing by the appropriate Director, an associate director, or the 
appropriate regional director or deputy regional director, or the 
appropriate regional manager, or, in the case of a petition for 
reconsideration filed with the Executive Secretary, the General Counsel 
or his or her designee, shall determine whether the petition for 
reconsideration satisfies paragraphs (e)(1)(i) and (ii) of this section 
and shall promptly notify the petitioner of such determination.
    (ii) If, pursuant to paragraph (e)(2)(i) of this section, a petition 
for reconsideration is determined not to satisfy paragraphs (e)(1)(i) 
and (ii) of this section, an applicant may appeal such decision to the 
appropriate Director, and where confirmed in writing by that Director, 
to an associate director, or, in the case of a petition for 
reconsideration filed with the Executive Secretary, to the Chairperson 
of the FDIC or his or her designee. An applicant may not submit 
additional information

[[Page 17]]

or evidence with the appeal and the determination by the appropriate 
Director or associate director, or the Chairperson of the FDIC or his or 
her designee whether the petition satisfies paragraphs (e)(1)(i) and 
(ii) of this section is final, and not appealable to the Board of 
Directors.
    (iii) If a petition for reconsideration is determined to satisfy 
paragraphs (e)(1)(i) and (ii) of this section, then the previously 
denied application, petition, or request will be reconsidered:
    (A) By the Board of Directors if originally denied by the Board of 
Directors; or
    (B) By the appropriate director, or where confirmed in writing by 
the director, by an associate director, if originally denied by the 
director, associate director, regional director, deputy regional 
director, or regional manager.
    (iv) Decisions by either director or their associate directors on 
petitions for reconsideration are final and not appealable to the Board 
of Directors.
    (f) Notice of filing of application--(1) Notice by publication. (i) 
In the case of applications in connection with a merger transaction (as 
defined by the Bank Merger Act, 12 U.S.C. 1828(c)(3)), unless the 
Corporation determines it must act immediately in order to prevent the 
probable failure of one of the depository institutions involved, the 
applicant must publish notice of the proposed transaction on at least 
three occasions at approximately two week intervals in a newspaper of 
general circulation in the community or communities where the main 
offices of the banks or institutions involved are located, or if there 
is no such newspaper in the community, then in the newspaper of general 
circulation published nearest thereto. The last publication of the 
notice shall appear on the 30th day or the newspaper's publication date 
closest to 30 days after the first publication. The public shall have a 
minimum of 30 days from the date of first publication to comment on the 
application. Where the Corporation determines that an emergency exists 
which requires expeditious action, then notice shall be published twice 
during a 10 day period, first, as soon as possible after the Corporation 
notifies the applicant that the merger will be processed as an emergency 
requiring expeditious action and, second, on the 10th day or the 
newspaper's publication date closest to 10 days after the date of first 
publication. The public shall have a minimum of 10 days from the date of 
first publication to comment on the application. The published notice 
shall include the name and main office location of all banks or 
institutions involved in the transactions and the subject matter of the 
application. If it is contemplated that the continuing bank will operate 
the offices of the other depository institution(s) as branches, the 
following statement shall be added to the notice:
    It is contemplated that all of the offices of the above named 
institutions will continue to be operated (with the exception of 
[identity and location of each office which will not be operated]).
    (ii) In the case of all other applications described in paragraph 
(a) of this section, on the date the deposit insurance application form 
or the letter application required in Sec. 303.2 is mailed or delivered 
to the regional director or not more than 30 days prior to that date, 
the applicant shall publish notice or begin publication of notice if 
more than one notice is required, of the proposed transaction. Provided 
however, That no publication shall be required in connection with the 
granting of insurance to a new depository institution established 
pursuant to the resolution of a failed institution situation. 
Publication of notice shall be made at least once each week on the same 
day for two consecutive weeks for applications to move a main office or 
relocate a remote service facility and once for other applications 
described in paragraph (a) of this section and shall be in a newspaper 
of general circulation in the communities referred to below:
    (A) Applications to establish a branch, including a remote service 
facility. In the communities in which the home office and the domestic 
branch to be established are located; Foreign Branch: In the community 
in which the home office is located.
    (B) Applications to move a main office and relocate a branch 
(including a remote service facility). In the communities in which the 
home office, office to be

[[Page 18]]

closed, and office to be opened are located, provided that a foreign 
bank having an insured branch need only publish such notice in the 
communities in which the insured branch is located and is to be 
relocated.
    (C) Applications for deposit insurance. In the community in which 
the home bank office is or will be located, provided that a foreign bank 
making application for an insured branch need only publish such notice 
in the community in which the insured branch is to be located.

The published notice required by (f)(1) of this section shall include 
the name of the applicant, the subject matter of the application, and 
the location or locations at which the applicant proposes to engage in 
business.
    (iii) In all instances, immediately after final publication, the 
applicant shall advise the appropriate regional director that the 
publication requirements have been met.
    (2) Notice by posting. In the case of applications to move a main 
office or relocate a branch, in addition to the notice by publication 
described in paragraph (f)(1) of this section, notice of the publication 
shall be posted in the public lobby of the office(s) to be moved or 
relocated, if such public lobby exists, for at least 21 days beginning 
with the date of the last published notice required by paragraph (f)(1) 
of this section for applications to move a main office; and for at least 
15 days beginning with the date of the publication notice required by 
paragraph (f)(1) of this section for applications to relocate a branch.
    (3) Comments. Anyone who wishes to comment on an application may do 
so by filing comments in writing with the appropriate regional director 
at any time before the Corporation has completed processing the 
application. Processing will be completed, for applications other than 
applications to move a main office, to relocate a remote service 
facility and to merge, not less than 15 days after the publication of 
the notice required by paragraph (f)(1) of this section or 15 days after 
the Corporation's receipt of the application, whichever is later; for 
applications to move a main office or relocate a remote service 
facility, not less than 21 days after the last publication or 21 days 
after the Corporation's receipt of the application, whichever is later; 
for merger applications for which the Corporation has not determined it 
must act immediately in order to prevent the probable failure of one of 
the depository institutions involved, not less than 30 days after the 
first publication or, if the Corporation has determined that an 
emergency exists which requires expeditious action, not less than 10 
days after the first publication. This time period may be extended by 
the appropriate regional director for good cause. Such regional director 
shall report the reasons for such action to the Board of Directors.
    (4) Notice of right to comment. In order to fully apprise the public 
of its rights under paragraph (f)(3) of this section, the notice 
described in paragraph (f)(1) of this section shall include a statement 
describing the right to comment upon, or protest the granting of, the 
application. This notice shall consist of the following statement:
    Any person wishing to comment on this application may file his or 
her comments in writing with the regional director of the Federal 
Deposit Insurance Corporation at its regional office (address of the 
regional office) before processing of the application has been 
completed. Processing will be completed no earlier than the (main office 
moves and remote service facility relocations--21st; non-emergency 
mergers--30th; emergency mergers--10th; other applications described in 
paragraph (a) of this section--15th) day following (mergers--the first 
required publication; all other applications described in paragraph (a) 
of this section--either the date of the last required publication or the 
date of receipt of the application by the FDIC, whichever is later). The 
period may be extended by the regional director for good cause. The 
nonconfidential portion of the application file is available for 
inspection within one day following the request for such file. It may be 
inspected in the Corporation's regional office during regular business 
hours. Photocopies of information in the nonconfidential portion of the 
application file will be made available upon request. A schedule of 
charges for such copies can be obtained from the regional office.
    (5) Solicitation of comments by regional director. Whenever he deems 
it appropriate, the regional director may solicit comments from any 
person or institution which, in his opinion, might

[[Page 19]]

have an interest in or be affected by the pending application.
    (g) Public access to application file--(1) Inspection of application 
file. Any person may inspect the nonconfidential portions of an 
application file. For a period extending until 180 days after final 
disposition of an application, the nonconfidential portions of the file 
will be available for inspection in the regional office of the FDIC in 
which an application has been filed. During this period, the 
nonconfidential portion of the file will be produced for review not more 
than one working day after receipt by the regional office of the request 
(either written or oral) to see the file. Photocopies of the 
nonconfidential portions of the file will be available, upon request, to 
any person. A charge for making copies will be made in accordance with 
the fee schedule contained in Sec. 309.5(b) of this chapter. No charge 
will be imposed for the search for, and review of, the application file. 
One hundred and eighty (180) days after the final disposition of an 
application, the nonconfidential portions of an application file will be 
made available in accordance with the provisions of Sec. 309.5 of this 
chapter.
    (2) Nonconfidential portions of application file. Subject to the 
provisions of paragraph (g)(3) of this section, the following 
information in an application file will be available for public 
inspection:
    (i) The application with supporting data and supplementary 
information.
    (ii) Data, comments, and other information submitted by interested 
persons in favor of, or in opposition to, such application.
    (iii) Those portions of the investigation report prepared by the 
Corporation's field examiner in connection with the application which 
cover the convenience and needs of the community to be served by the 
applicant or applicants and either the future earnings prospects or the 
future prospects of the applicant or applicants.
    (iv) A summary assessment of the applicant or applicants, based on 
their Community Reinvestment Act examination.
    (v) Where a hearing has been held pursuant to paragraph (i) of this 
section, any evidence submitted pursuant to paragraph (j)(3) of this 
section and the hearing transcript described in paragraph (j)(5) of this 
section.
    (3) Withholding of confidential information. No material described 
in paragraph (g)(2) of this section shall be available if it is 
determined to be confidential under the provisions of 5 U.S.C. 552. The 
following information generally is considered confidential:
    (i) Personal information, the release of which would constitute a 
clearly unwarranted invasion of privacy.
    (ii) Commercial or financial information, the disclosure of which 
would result in substantial competitive harm to the submitter.
    (iii) Information the disclosure of which could seriously affect the 
financial condition of any financial institution.
    (h) Proceedings--(1) Requests for hearing or other proceeding. 
Anyone who has made a formal comment within the period specified in 
paragraph (f)(3) of this section may request a hearing or an oral 
presentation at the time of making the formal comment. If a hearing or 
an oral presentation is requested, the request must be accompanied by a 
brief statement by the person requesting the hearing or presentation of 
his or her interest in the application and of the matters which he or 
she wishes to discuss. If the Corporation determines that a hearing or 
other form of oral presentation should be allowed, the person making the 
request will be advised of the date, time, and location of the hearing 
or oral presentation.
    (2) Form of proceeding. The Corporation may, at its discretion, 
decide to hold a hearing on the application in accordance with paragraph 
(i) of this section; it may decide to hold an informal proceeding in 
accordance with paragraph (h)(3) of this section; or it may decide not 
to hold a hearing or an informal proceeding in which case, where there 
has been a request for an opportunity to be heard pursuant to paragraph 
(h)(1) of this section, it will so advise the applicant and all persons 
who requested an opportunity to be heard. A decision as to the form of 
proceeding to be held will be made not more than 30 days after a request 
for a hearing or oral presentation has been

[[Page 20]]

made pursuant to paragraph (h)(1) of this section.
    (3) Informal proceedings. If the Corporation decides to hold an 
informal proceeding, the regional director shall, not less than 10 days 
prior thereto, notify the applicant and each person who requested a 
hearing, or oral presentation in accordance with paragraph (h)(1) of 
this section, of the date, time, and place of the proceeding. The 
regional director may, if he deems it advisable, notify other persons 
who have expressed an interest in the application and invite them to 
attend. The proceeding may assume any form, including a meeting with 
Corporation representatives, at which the participants will be asked to 
present their views orally. The regional director shall also have the 
discretion to hold separate meetings with each of the participants where 
he deems it desirable.
    (i) Hearings. Hearings of the kind provided for in this paragraph 
will not generally be afforded the participants if they have had the 
opportunity to participate in prior hearings before the appropriate 
State authority which covered essentially the same issues or if the 
regional director determines that less formal proceedings would be 
adequate.
    (1) Notice of hearing--(i) Contents. If the Corporation determines 
that a hearing on the application is warranted, the regional director 
shall, not less than 10 days prior thereto, give notice of the 
scheduling of the hearing, and shall set forth in the notice the subject 
matter of the application, the significant issues to be presented, and 
the date, time, and place at which the hearing shall be held.
    (ii) To whom sent. The above notice shall be sent by registered or 
certified mail to the applicant and to each person who requested a 
hearing in accordance with paragraph (h)(1) of this section. The 
regional director may also notify other persons who have expressed an 
interest in the application and invite them to participate in the 
hearing.
    (2) Attendance at hearing. Each interested person who wishes to 
attend the hearing shall notify the regional director accordingly with 5 
days after the date upon which he receives the above notice. Unless he 
has already done so, he shall submit a brief written summary of the 
matters which he wishes to cover at the hearing, together with the 
number and names of witnesses he wishes to present. The applicant and 
other interested persons attending the hearing may be represented by 
counsel.
    (3) Presiding officer. The presiding officer at the hearing shall be 
the regional director, his designee, or such other person as may be 
named by the Board of Directors or the Director (DOS). The presiding 
officer shall have the authority to appoint a panel to assist him.
    (j) Hearing rules--(1) Order of presentation. The following schedule 
is intended to serve as a general guide to the conduct of the hearing. 
It is not fixed and may be varied at the discretion of the presiding 
officer. The presiding officer shall determine the order of opening and 
closing statements and presentations to be followed by all participants 
other than the applicant who in each instance shall have the opportunity 
to speak first.
    (i) Opening statements. The applicant and each other participant may 
make opening statements which should concisely state what the 
participant intends to show.
    (ii) Applicant's presentation. Following the opening statement(s), 
the applicant shall present its data and materials orally or in writing.
    (iii) Requester's presentation. Following the applicant's 
presentation, each person who requested the hearing shall present his 
data and materials orally or in writing. Those who requested the hearing 
may agree, with the approval of the presiding officer, to have one of 
their number make their presentation.
    (iv) Other interested persons. Following the evidence of the 
applicant and the requesters, the presiding officer will recognize other 
interested persons who may present their views with respect to the 
application under consideration.
    (v) Summary statement. After all the above presentations have been 
concluded, the applicant and each other participant may make a short 
concise rebuttal.

[[Page 21]]

    (2) Witnesses. Each participant is responsible for providing his own 
witnesses, including the payment of all expenses associated with their 
appearance at the hearing. All witnesses will be present on their own 
volition, but any person appearing as a witness may be subject to 
questioning by any participant, by the presiding officer, or by any 
member of the panel. The refusal of a witness to answer questions may be 
considered by the Corporation in determining the weight to be accorded 
the testimony of that witness. Witnesses shall not be sworn.
    (3) Evidence. The presiding officer shall have the authority to 
exclude data or materials which he deems to be improper, irrelevant, or 
repetitive. Formal rules of evidence shall not be applicable to these 
hearings. Documentary material submitted as evidence must be of a size 
consistent with ease of handling, transportation, and filing. Three 
copies of all such documentary material shall be furnished to the 
regional director, and any participant who specifically requests the 
same shall be furnished a copy at his own expense. While large exhibits 
may be used during the hearing, copies of such exhibits must be provided 
by the person in reduced size for submission as evidence.
    (4) Procedural questions. The presiding officer, or any designated 
member of the panel, shall determine all procedural questions not 
governed by this section. The presiding officer shall have the authority 
to limit the number of witnesses to be used by any person and to impose 
reasonable time limitations.
    (5) Transcript. A transcript of each hearing will be arranged for by 
the Corporation. The person or persons who requested the hearing will be 
expected to pay all the expenses of such service, including the 
furnishing of one copy of the transcript to the regional director. 
Provided, however, That the Corporation may, for good cause, waive this 
requirement in individual cases. Where a hearing is held at the 
Corporation's initiative, the Corporation shall bear the expense of such 
service. Copies of the transcript will be furnished to any interested 
person requesting the same at that person's expense.
    (6) The hearing record--(i) Contents. The nonconfidential portions 
of the application, as described in paragraph (c) of this section, shall 
automatically be a part of the hearing record.
    (ii) Closing the hearing record--additional statements. Any person 
who participates in the hearing may request that the hearing record 
remain open for 10 days following receipt of the transcript by the 
regional director during which time the person may submit corrected 
copies of the transcript, or additional written statements or materials 
which he agreed to furnish at the hearing, to the regional director. 
Such person shall simultaneously mail or have delivered copies of the 
corrected transcript or additional statements or materials to all other 
persons who participated in the hearing.
    (k) Disposition and notice thereof. (1) The final disposition of any 
application or other matter under this section need not be determined 
exclusively by, or be limited to, the information contained in the 
public file established by paragraph (g) of this section.
    (2) The applicant, and any other person who so requests in writing, 
shall be notified by the Board of Directors of the final disposition of 
the application or other matter. The Board of Directors shall also 
provide a statement of the reasons for the final disposition made.\7\
---------------------------------------------------------------------------

    \7\ Where final authority to dispose of an application or other 
matter has been delegated to the Director (DOS), an associate director, 
the regional directors and the deputy regional directors pursuant to 
Sec. 303.7, the delegate will provide the notice and statement described 
in this paragraph (k)(2).
---------------------------------------------------------------------------

    (l) Computation of time. Section 308.22 shall govern the computation 
of any period of time prescribed or allowed by this section.
    (m) Retained authority. In acting upon any particular application, 
the Board of Directors may by resolution adopt procedures which differ 
from this section when it deems it necessary and in the public interest 
to do so. Such resolution shall be made available for public inspection 
and copying in the Office

[[Page 22]]

of the Executive Secretary of the Corporation in accordance with the 
requirements of 5 U.S.C. 552(a)(2).
[54 FR 53559, Dec. 29, 1989, as amended by 59 FR 4250, Jan. 31, 1994; 59 
FR 43282, Aug. 23, 1994; 59 FR 52662, Oct. 19, 1994; 59 FR 66655, Dec. 
28, 1994]



Sec. 303.7  Delegation of authority to the Director (DOS) and to the associate directors, regional directors and deputy regional directors to act on certain 
          applications, requests, and notices of acquisition of control.

    The Board of Directors of the FDIC has delegated to officials in the 
Division of Supervision and other employees of the FDIC the authority on 
behalf of the Board of Directors to act (subject to the provisions of 
Sec. 303.10 of this part) on the following applications, requests, and 
notices of acquisition of control.
    (a) Applications for branches (including remote service facilities, 
courier services, foreign branches of domestic banks), relocations, and 
for trust and other banking powers--(1) Branch and relocation 
applications. (i) Authority is delegated to the Director (DOS), and 
where confirmed in writing by the director, to an associate director, or 
to the appropriate regional director or deputy regional director, to 
approve applications for consent to establish branch facilities 
(including remote service facilities, courier services and foreign 
branches of domestic banks) or relocations where the applicant satisfies 
the requisites listed in paragraph (a)(1)(iii) of this section and 
agrees in writing to comply with any condition imposed by the delegate 
other than those standard conditions listed in Sec. 303.0(b)(31).
    (ii) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director:
    (A) To deny applications for consent to establish branch facilities 
(including remote service facilities, courier services and foreign 
branches of domestic banks) or relocations; and
    (B) To approve such applications where the applicant satisfies the 
requisites listed in paragraph (a)(1)(iii) of this section but does not 
agree in writing to comply with any condition imposed by the delegate.
    (iii) The requisites which must be satisfied before the authority 
delegated by paragraphs (a)(1)(i) and (ii)(B) of this section to approve 
applications for consent to establish branch facilities or relocations 
may be exercised are:
    (A) The seven factors set forth in section 6 of the Act (12 U.S.C. 
1816) have been considered and favorably resolved (except that this 
requisite does not apply to applications to establish courier services);
    (B) The applicant meets the capital requirements set forth in 12 CFR 
part 325 and the FDIC's ``Statement of Policy on Capital'' or agrees in 
writing to increase capital so as to be in compliance with the 
requirements of 12 CFR part 325 before or at the consummation of the 
transaction which is the subject of the application, except that this 
requisite does not apply to applications to establish courier services, 
remote service facilities, and relocations of branches or main offices;
    (C) Any financial arrangements which have been made in connection 
with the proposed branch or relocation and which involve the applicant's 
directors, officers, major shareholders, or their interests, are fair 
and reasonable in comparison to similar arrangements that could have 
been made with independent third parties; and
    (D) The requirements of the National Historic Preservation Act (16 
U.S.C. 470), the National Environmental Policy Act (42 U.S.C. 4321), and 
the Community Reinvestment Act of 1977 (12 U.S.C. 2901 through 2905) and 
its applicable implementing regulation (12 CFR part 345) have been 
considered and favorably resolved (except that this requisite does not 
apply to applications to establish foreign branches): Provided, however, 
That the authority to approve an application may not be subdelegated to 
a regional director or deputy regional director where a protest (as that 
term is defined in Sec. 303.0(b)(30)) under the Community Reinvestment 
Act is filed.
    (2) Applications for consent to exercise trust and other banking 
powers. (i) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, or to 
the appropriate regional director or deputy regional director, to

[[Page 23]]

approve applications for the FDIC's consent to exercise trust or other 
banking powers where the applicant satisfies the requisites listed in 
paragraph (a)(2)(iii) of this section and agrees in writing to comply 
with any other conditions imposed by the delegate other than those 
standard conditions listed in Sec. 303.0(b)(31).
    (ii) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director:
    (A) To deny applications for trust or other banking powers; and
    (B) To approve such applications where the applicant satisfies the 
requisites listed in paragraph (a)(2)(iii) of this section but does not 
agree in writing to comply with any condition required by the delegate 
other than those standard conditions listed in Sec. 303.0(b)(31).
    (iii) The requisites which must be satisfied before the authority 
delegated by paragraphs (a)(2)(i) and (ii)(B) of this section to approve 
applications for trust or other banking powers may be exercised are:
    (A) The seven factors set forth in section 6 of the Act (12 U.S.C. 
1816) have been considered and favorably resolved;
    (B) The proposed management of the trust or other banking business 
is determined capable of satisfactorily handling the anticipated 
business; and
    (C) In regards to trust applications only, the applicant's board of 
directors has formally adopted Form 114--
    Statement of Principles of Trust Department Management.
    (b) Merger transactions. (1) Except as provided in paragraphs (b)(4) 
and (5) of this section and in Sec. 303.10(b) of this part, authority is 
delegated to the Director (DOS), and where confirmed in writing by the 
director, to an associate director, or the appropriate regional director 
or deputy regional director, to approve any application for permission 
to merge or consolidate with any other bank or institution or, either 
directly or indirectly, to acquire the assets of, or assume the 
liability to pay any deposits made in any other bank, institution, or 
branch of a foreign bank (hereafter merger transaction) where the 
applicant satisfies the requisites listed in paragraph (b)(7) of this 
section and (subject to paragraph (b)(6) of this section) where:
    (i) The resulting institution, upon consummation of the merger 
transaction, would not have more than 15% of the individual, partnership 
and corporate deposits held by commercial banks and/or thrift 
institutions, as may be appropriate, in the relevant market(s); or
    (ii) The resulting institution, upon consummation of the merger 
transaction, would not have more than 25% of the individual, partnership 
and corporate deposits held by commercial banks and/or thrift 
institutions, as may be appropriate, in the relevant market(s), and the 
Attorney General has determined that the proposed merger transaction 
would not have a significantly adverse effect on competition.
    (2) Except as provided in paragraph (b)(4) of this section, 
authority is delegated to the Director (DOS), and where confirmed in 
writing by the director, to an associate director, to approve 
applications for merger transactions where the resulting institution, 
upon consummation of the merger transaction, would not have more than 
35% of the individual, partnership and corporate deposits held by 
commercial banks and/or thrift institutions, as may be appropriate, in 
the relevant market(s), and the Attorney General has determined that the 
proposed merger transaction would not have a significantly adverse 
effect on competition.
    (3) In cases where applicable, the delegate will review any reports 
on the competitive factors involved in the merger transaction that the 
Comptroller of the Currency, the Board of Governors of the Federal 
Reserve System, the Director OTS and the Attorney General may have 
provided in response to a request for such reports by the FDIC. In the 
absence of a formal written opinion by the Attorney General, the 
delegate may also request the FDIC's General Counsel or designee to 
provide a formal written opinion on the question whether the merger 
transaction may have a significantly adverse effect on competition. 
However, the authority delegated under paragraphs (b)(1)(ii) and (2) of 
this section

[[Page 24]]

may not be exercised in the absence of a formal written opinion by the 
Attorney General where the resulting bank, upon consummation of the 
merger transaction, would have more than 15% of the individual, 
partnership, and corporate deposits held by commercial banks and/or 
thrift institutions, as may be appropriate, in the relevant market(s).
    (4) The delegations contained in paragraphs (b)(1) and (2) of this 
section to approve applications for merger transactions do not extend to 
such applications:
    (i) Falling within the scope of the probable failure or emergency 
provisions of 12 U.S.C. 1828(c)(6); or
    (ii) Where the resulting institution, upon consummation of the 
merger transaction, does not meet the capital requirements set forth in 
12 CFR part 325 and the FDIC's ``Statement of Policy on Capital.'' (If 
the applicant is a foreign bank, the delegated authority to approve does 
not extend to instances where, upon consummation of the merger 
transaction, the foreign bank's insured branch is not in compliance with 
12 CFR part 346.)
    (5) The authority to approve an application may not be subdelegated 
to a regional director or deputy regional director where a protest (as 
that term is defined in Sec. 303.0(b)(30)) under the Community 
Reinvestment Act is filed.
    (6) Where the merging institutions operate in different relevant 
market areas, then the limitations relative to market share percentages 
set forth in paragraphs (b)(1) and (2) of this section do not apply.
    (7) The requisites which must be satisfied before the authority 
delegated by paragraphs (b)(1) and (2) of this section to approve 
applications for merger transactions may be exercised are:
    (i) That the statutory factors contained in section 18(c)(5) (12 
U.S.C. 1828(c)(5) of the Act have been considered and favorably 
resolved; and
    (ii) Compliance with the National Environmental Policy Act (42 
U.S.C. 4321), the Community Reinvestment Act (12 U.S.C. 2901 through 
2905) and the applicable implementing regulation (12 CFR part 345 or any 
other applicable implementing regulation) have been considered and 
favorably resolved.
    (8) In approving an application for a merger transaction under this 
section, a delegate may impose any of the standard conditions listed in 
Sec. 303.0(b)(31), or any other condition to which the applicant has 
agreed in writing.
    (9) Notwithstanding any limitation or condition imposed by this 
section, the Director (DOS), and where confirmed in writing by the 
director, an associate director, or the appropriate regional director or 
deputy regional director is authorized to approve any transaction 
involving a merger facilitated by the Resolution Trust Corporation under 
its authority to assist savings associations in default or in danger of 
default, provided that the resulting entity from the merger is a state-
chartered insured non-member bank.
    (c) Notices of acquisition of control. (1) Authority is delegated to 
the Director (DOS), and where confirmed in writing by the director, to 
an associate director, or to the appropriate regional director or deputy 
regional director, to issue a written notice of the FDIC's intent not to 
disapprove an acquisition of control of an insured depository 
institution.
    (2) The authority delegated by paragraph (c)(1) of this section 
shall include the power:
    (i) To act in situations where information is submitted on 
acquisitions arising out of testate or intestate succession, bona fide 
gifts, or foreclosure;
    (ii) To extend notice periods;
    (iii) To determine the informational adequacy of a notice;
    (iv) To determine whether a notice should be filed under section 
7(j) of the Act (12 U.S.C. 1817(j)) by a person acquiring less than 25 
percent of any class of voting securities of an insured depository 
institution; and
    (v) To waive publication, waive or shorten the public comment 
period, or act on a proposed acquisition of control prior to the 
expiration of the public comment period, as provided in 12 CFR 
303.4(b)(3).
    (3) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, to 
disapprove an acquisition of control of an insured state depository 
institution.

[[Page 25]]

    (d) Deposit insurance applications--(1) Proposed or newly organized 
depository institutions. (i) Authority is delegated to the Director 
(DOS), and where confirmed in writing by the director, to an associate 
director, or subject to the limitations set forth in paragraph 
(d)(1)(iii) of this section, to the appropriate regional director or 
deputy regional director, to approve applications for deposit insurance 
by proposed or newly organized depository institutions, where the 
applicant satisfies the requisites listed in paragraph (d)(1)(ii) of 
this section, and agrees in writing to comply with any condition imposed 
by the delegate, other than those listed in paragraph (d)(4) of this 
section. Provided however; That the requisites listed in paragraph 
(d)(1)(ii) of this section do not apply to any transaction facilitated 
by the Resolution Trust Corporation under its authority to assist 
savings associations in default or in danger of default.
    (ii) The requisites which must be satisfied before the authority 
delegated by paragraph (d)(1)(i) of this section to approve applications 
for deposit insurance by proposed or newly organized depository 
institutions may be exercised are:
    (A) (1) As to Federal savings associations, factors (1) through (5) 
of the seven factors set forth in section 6 of the Act (12 U.S.C. 1816) 
have each been considered and favorably resolved, and the FDIC has 
received from the Director of the Office of Thrift Supervision the 
certificate required under section 5 of the Act (12 U.S.C. 1815);
    (2) As to all other depository institutions, each of the seven 
factors set forth in section 6 of the Act (12 U.S.C. 1816) has been 
considered and favorably resolved; and
    (B) The requirements set forth below are met:
    (1) Equity capital is not less than $1,000,000;
    (2) Legal fees and other expenses incurred in connection with the 
proposal are determined to be reasonable;
    (3) No unresolved management interlocks, as prohibited by the 
Depository Institution Management Interlocks Act (12 U.S.C. 3201 et 
seq.), part 348 of this chapter (12 CFR part 348) or any other 
applicable implementing regulation, exist;
    (4) The projected ratio of equity capital and reserves to assets, 
including projected profits and losses, is at least 10 percent at the 
end of the third year of operations;
    (5) Profitable operations are projected at least for the third year 
of operations;
    (6) The proposed aggregate direct and indirect investment in fixed 
assets is determined to be reasonable relative to the applicant's 
proposed equity capitalization, projected earnings capacity, and other 
pertinent bases of consideration;
    (7) Any financial arrangements made or proposed in connection with 
the proposed depository institution involving the applicant's directors, 
officers, 5 percent shareholders or their interests are determined to be 
fair and made on substantially the same terms as those prevailing at the 
time for comparable transactions with noninsiders and do not involve 
more than normal risk or present other unfavorable features. The 
applicant also must have fully disclosed, or agreed to disclose fully, 
any such arrangement to all of its proposed directors and shareholders 
prior to the opening of the depository institution;
    (8) Stock financing arrangements, fidelity coverage and accrual 
accounting conform to the guidelines established in the FDIC's policy 
statement on ``Applications for Deposit Insurance;'' and
    (9) Compliance with the National Historic Preservation Act (16 
U.S.C. 470), the National Environmental Policy Act (42 U.S.C. 4321), and 
the Community Reinvestment Act of 1977 (12 U.S.C. 2901 through 2905) and 
the applicable implementing regulation (12 CFR part 345 or any other 
implementing regulation) is adequate and favorably resolved.
    (iii) The authority to approve an application may not be 
subdelegated to a regional director or deputy regional director where:
    (A) A protest (as that term is defined in Sec. 303.0(b)(30)) under 
the Community Reinvestment Act is filed; or

[[Page 26]]

    (B) (1) There is direct or indirect financing, by proposed directors 
and officers and 5 percent or more shareholders, of more than 75 percent 
of the purchase price of the stock subscribed to by any one shareholder;
    (2) There is aggregate financing of stock subscriptions in excess of 
50 percent of the total capital offered, or
    (3) Warehoused or trusteed stock exceeds 10 percent of initial 
capital funds.
    (2) Operating noninsured depository institutions and state or 
privately insured institutions. (i) Authority is delegated to the 
Director (DOS), and where confirmed in writing by the director, to an 
associate director, or, for applicant institutions with total assets of 
less than $250,000,000, to the appropriate regional director or deputy 
regional director, to approve applications for deposit insurance by 
operating noninsured depository institutions, or state-insured or 
privately insured institutions where the applicant satisfies the 
requisites listed in paragraph (d)(2)(ii) of this section and agrees in 
writing to comply with any condition imposed by the delegate other than 
those listed in paragraph (d)(4) of this section.
    (ii) The requisites which must be satisfied before the authority 
delegated by paragraph (d)(2)(i) of this section to approve applications 
for deposit insurance by operating noninsured depository institutions 
may be exercised are:
    (A) The applicant is determined to be eligible for federal deposit 
insurance for the class of institution to which the applicant belongs in 
the state (as defined in 12 U.S.C. 1813(a)) in which the applicant is 
located;
    (B) The seven factors set forth in section 6 of the Act (12 U.S.C. 
1816) have been considered and favorably resolved;
    (C) The applicant meets the minimum capital requirements as set 
forth in part 325 of this chapter (12 CFR part 325) and the FDIC's 
``Statement of Policy on Capital'' or agrees in writing to increase 
capital so as to be in compliance with the requirements of 12 CFR part 
325 before or at the time deposit insurance becomes effective;
    (D) All management interlocks as prohibited by part 348 of this 
chapter (12 CFR part 348) or any other applicable implementing 
regulation have been resolved; and
    (E) The applicant has no fewer than five directors.
    (3) Banks withdrawing from Federal Reserve System. Authority is 
delegated to the Director (DOS), and where confirmed in writing by the 
director, to an associate director, or to the appropriate regional 
director and deputy regional director, to approve applications for 
deposit insurance by state nonmember banks that have withdrawn from 
membership in the Federal Reserve System where the applicant agrees in 
writing to comply with any condition imposed by the delegate other than 
those listed in paragraph (d)(4) of this section and satisfies the 
following requisites;
    (i) The seven factors set forth in section 6 of the Act (12 U.S.C. 
1816) have been considered and favorably resolved; and
    (ii) The bank has agreed to continue any corrective program imposed 
by the Board of Governors of the Federal Reserve System or previously 
agreed to by the bank where the bank is not in material compliance with 
that corrective program.
    (4) Conditions for exercise of delegated authority. The conditions 
which may be imposed by a delegate in approving applications for deposit 
insurance without affecting the authority granted under paragraphs 
(d)(1), (2), and (3) of this section are:
    (i) The applicant has provided a specific amount and a specific 
allocation of beginning paid-in capital;
    (ii) Any changes in proposed management or proposed ownership to the 
extent of 5 or more percent of stock, including new acquisitions of or 
subscriptions to 5 or more percent of stock shall be approved by the 
FDIC prior to the opening of the depository institution;
    (iii) The applicant adopts an accrual accounting system for 
maintaining the books of the depository institution;
    (iv) Where applicable, Federal deposit insurance will not become 
effective until the applicant has been established as a state bank (not 
a member of the Federal Reserve System), has authority to conduct a 
banking business, and its establishment and operation as

[[Page 27]]

a bank have been fully approved by the state banking authority;
    (v) Where applicable, federal deposit insurance will not become 
effective until the applicant has been established as a state savings 
association, has authority to conduct a savings association business, 
and its establishment and operation as a savings association have been 
fully approved by the appropriate state supervisory authority;
    (vi) Where applicable, a registered or proposed bank holding 
company, or a registered or proposed thrift holding company, has 
obtained approval of the Board of Governors of the Federal Reserve 
System to acquire voting stock control of the proposed bank prior to its 
opening;
    (vii) Where applicable, the applicant, has submitted any proposed 
contracts, leases, or ageements relating to construction or rental of 
permanent quarters to the appropriate regional director for review and 
comment;
    (viii) Where applicable, full disclosure has been made to all 
proposed directors and stockholders of the facts concerning the interest 
of any insider (one who is or stands to be a director, an officer, or an 
incorporator of an applicant or shareholder who directly or indirectly 
controls 5 or more percent of any class of the applicant's outstanding 
voting stock, or the associates and interests of any such person) in any 
transactions being effected or then contemplated, including the identity 
of the parties to the transaction and the terms and costs involved;
    (ix) The person(s) selected to serve as the principal operating 
officer(s) shall be acceptable to the regional director;
    (x) The applicant has obtained adequate blanket bond coverage;
    (xi) That the depository institution obtain an audit of its 
financial statements by an independent public accountant annually for at 
least the first three years after deposit insurance is effective, 
furnish a copy of any reports by the independent auditor (including any 
management letters) to the appropriate FDIC regional office within 15 
days after their receipt by the depository institution and notify the 
appropriate FDIC regional office within 15 days when a change in its 
independent auditor occurs; and
    (xii) Any standard condition (as defined in Sec. 303.0(b)(31)).
    (e) Applications pursuant to section 19 of the Act. (1) Authority is 
delegated to the Director (DOS), or where confirmed in writing by the 
director, to an associate director, or to the appropriate regional 
director or deputy regional director, to approve applications made by 
insured depository institutions pursuant to section 19 of the Act (12 
U.S.C. 1829) for participation, directly or indirectly, in any manner in 
the conduct of the affairs of an insured depository institution by any 
person who has been convicted or is hereafter convicted of any criminal 
offense involving dishonesty or a breach of trust; Provided however, 
That authority may not be delegated to the regional director or deputy 
regional director where the applicant depository institution's primary 
supervisory authority interposes any objection to such application.
    (2)(i) Authority is delegated to the Director (DOS), and where 
confirmed by writing by the director, to an associate director, to deny 
applications made by insured depository institutions pursuant to section 
19 of the Act.
    (ii) The authority delegated under paragraph (e)(2)(i) of this 
section shall be exercised only upon the concurrent certification by the 
Deputy General Counsel Supervision and Legislation, or the Associate 
General Counsel for Compliance and Enforcement that the action taken is 
not inconsistent with section 19 of the Act.
    (iii) An applicant may still request a hearing following a denial of 
the application under this paragraph in accordance with the provisions 
of part 308 of this chapter (12 CFR part 308).
    (3) The conditions which may be imposed by a delegate in approving 
applications pursuant to section 19, without affecting the authority 
granted under paragraph (e)(1) of this section are:
    (i) That an employee shall be bonded to the same extent as others in 
similar positions; and
    (ii) That, when deemed necessary, the prior consent of the 
appropriate regional director shall be required for

[[Page 28]]

any proposed significant changes in duties and/or responsibilities of 
the individual occurring within 12 months subsequent to the approval of 
the application.
    (f) Insurance fund conversions, applications pursuant to section 38 
of the Act (prompt corrective action), and other applications. (1) 
Authority is delegated to the Director (DOS), and where confirmed in 
writing by the director, to an associate director, or to the appropriate 
regional director or deputy regional director, to approve or to deny the 
following applications, requests or petitions:
    (i) Applications to establish and operate any new teller's window, 
drive-in facility, or any like office, as an adjunct to a main office or 
a branch office (including offices not considered branches under state 
law);
    (ii) Applications to operate temporary banking facilities as a 
public service for a period not to exceed ninety days during 
conventions, state and local fairs, college registration periods, and 
similar occasions, as well as during emergencies;
    (iii) Applications filed pursuant to section 18(i)(1) of the Act to 
reduce the amount or retire any part of common or preferred capital 
stock, or retire any part of capital notes or debentures;
    (iv) Requests for approval of any deviations from requirements 
prescribed by prior delegated action (to be acted upon by the delegate 
who acted previously in the matter);
    (v) Except as provided in Sec. 303.10(b)(1)(iii) of this part, 
applications for phantom mergers \8\ and other mergers which are 
corporate reorganizations, i.e., transactions involving institutions 
controlled by the same holding company or transactions involving 
institutions and their subsidiaries which would have no effect on 
competition or otherwise have significance under relevant statutory 
standards as set forth in 12 U.S.C. 1828(c);
---------------------------------------------------------------------------

    \8\ As used in this part 303, the term phantom merger applies to any 
merger or other transaction involving an existing operating institution 
and a newly chartered institution or corporation which is for the 
purpose of corporate reorganization and which would have no effect on 
competition or otherwise have significance under the relevant statutory 
standards as set forth in 12 U.S.C. 1828(c).
---------------------------------------------------------------------------

    (vi) Applications for deposit insurance filed by proposed state 
nonmember banks or savings associations which are formed in connection 
with a phantom merger;
    (vii) Requests to establish management official interlocks pursuant 
to 12 CFR 348.4(b) of this chapter or section 205(8) of the Depository 
Institutions Management Interlocks Act (except that a regional director 
or deputy regional director may deny such a request only if the request 
was made pursuant to 12 CFR 348.4(b)(3)); and
    (viii) Applications pursuant to section 29 of the Act (12 U.S.C. 
1831) for waiver of the prohibition on the acceptance or renewal of 
brokered deposits by troubled insured depository institutions.
    (ix) Applications filed pursuant to section 38 of the Act (prompt 
corrective action), including applications to make a capital 
distribution; applications for acquisitions, branching, and new lines of 
business (except that the delegation is limited to the authority as 
delegated to approve or deny any concurrent application filed pursuant 
to 18 (c) or (d)); applications to pay a bonus or increase compensation; 
applications for an exception to pay principal or interest on 
subordinated debt; and applications to engage in any restricted activity 
listed in Sec. 303.5(e)(5).
    (2) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director:
    (i) To deny a request to establish a management official interlock 
pursuant to any provision of either 12 CFR 348.4(b) of this chapter, or 
section 205(8) of the Depository Institutions Management Interlocks Act; 
and
    (ii) To approve or to deny applications for the acquisition and 
holding of stock or other evidences of ownership in a foreign bank or 
other financial entity that results in less than 25 percent ownership 
interest in such bank or entity.
    (3)(i) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, to 
approve an application

[[Page 29]]

made by an applicant pursuant to section 8(j) of the Act 12 U.S.C. 
1818(j)) for the termination or modification of a removal or prohibition 
order, which was issued by the Board after a hearing, on default, or by 
consent.
    (ii) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, to 
consent to an application pursuant to section 8(j) of the Act (12 U.S.C. 
1818(j)) to obtain the prior written approval of the FDIC to participate 
in the conduct of the affairs of a bank filed by an individual subject 
to a removal or prohibition order.
    (iii) Authority is delegated to the Director (DOS), or where 
confirmed in writing by the director, to an associate director, to deny 
an application made by an applicant pursuant to section 8(j) of the Act.
    (iv) The authority delegated under paragraphs (f)(3)(i), (ii), and 
(iii) of this section shall be exercised only upon the concurrent 
certification by the Deputy General Counsel for Supervision and 
Legislation, or the Associate General Counsel for Compliance and 
Enforcement that the action taken is not inconsistent with section 8(j) 
of the Act.
    (4)(i) Authority is delegated to the Director (DOS) and, where 
confirmed in writing by the director, to an associate director, or to 
the appropriate regional director or deputy regional director to approve 
or deny conversions involving transfers of deposits between the SAIF and 
BIF funds; Provided however, That where the basis for the conversion is 
that the transaction affects an insubstantial portion of the deposits of 
each institution, authority is not delegated to the regional director or 
deputy regional director where the total deposits transferred to or from 
either institution, accumulated with all other insurance fund transfers 
involving that institution since August 9, 1989, exceeds the lesser of 
35 percent of total deposits of either institution on May 1, 1989, plus 
net interest credited to the expected date of transfer, or the amount 
equal to total deposits of either institution on the expected date of 
transfer.
    (ii) The conditions that may be imposed in approving applications 
for insurance fund conversions without affecting the authority granted 
in Sec. 303.7(f)(4) of this section are:
    (A) That, upon consummation, the deposits involved in the 
transaction do not exceed 35%, on a cumulative basis with other deposits 
transferred between the SAIF and BIF funds, for either of the 
institutions involved, of the lesser of (1) total deposits as of May 1, 
1989, plus net interest credited during the period from May 1, 1989, to 
the date of transfer of the deposits, or (2) total deposits of the 
institution as of the date of transfer of the deposits; and
    (B) That applicable entrance and exit fees be paid pursuant to FDIC 
regulations.
    (5) Authority is delegated to the Director (DOS) and, where 
confirmed in writing by the director, to an associate director, or to 
the appropriate regional director or deputy regional director to:
    (i) Determine whether applicants requesting approval under section 
5(d)(3)(A)(i) of the Federal Deposit Insurance Act (12 U.S.C. 
1815(d)(3)(A)(i)) meet all minimum capital requirements contained in 12 
CFR part 325;
    (ii) Approve applications where the applicant satisfies the 
requirements specified in paragraph (f)(5)(i) of this section and the 
requirements of section 18(c) of the Federal Deposit Insurance Act (12 
U.S.C. 1828(c)); and
    (iii) Deny such applications if the requirements specified in 
paragraph (f)(5)(i) of this section are not met.
    (6) In approving an application, request or petition under any 
provision of this paragraph, a delegate may impose any of the standard 
conditions listed in Sec. 303.0(b)(31), or any other condition to which 
the applicant has agreed in writing.
    (g) Requests pursuant to section 18(k) of the Act. Authority is 
delegated to the Director, and where confirmed in writing by the 
Director, to an associate director, or to the appropriate regional 
director or deputy regional director, to approve or deny requests 
pursuant to section 18(k) of the Act to make:
    (1) Excess nondiscriminatory severance plan payments as provided by 
12 CFR 359.1(f)(2)(v); and

[[Page 30]]

    (2) Golden parachute payments permitted by 12 CFR 359.4.
[54 FR 53562, Dec. 29, 1989, as amended at 57 FR 5815, Feb. 18, 1992; 58 
FR 8217, Feb. 12, 1993; 59 FR 52663, Oct. 19, 1994; 61 FR 5930, Feb. 15, 
1996]



Sec. 303.8  Other delegations of authority.

    (a) Extensions of time. (1) Except as provided in paragraph (a)(2) 
of this section, authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, or to 
the appropriate regional director or deputy regional director, to 
approve and to deny requests for extensions of time, not to exceed one 
year on any one request relating to the same application, within which 
to perform acts or conditions required by prior FDIC action on 
depository institution applications.
    (2) Notwithstanding the delegations in paragraph (a)(1) of this 
section, no delegate shall have the authority to deny an extension of 
time request unless that delegate had authority to deny the original 
application upon which the extension of time is predicated.
    (b) Disclosure laws and regulations. (1) Except as provided in 
paragraph (b)(2) of this section, authority is delegated to the Director 
(DOS), and where confirmed in writing by the director, to an associate 
director, or to the appropriate regional director or deputy regional 
director, to act on disclosure matters under and pursuant to sections 
12, 13, 14, 17 and 17A of the Securities Exchange Act of 1934 (15 U.S.C. 
78) or parts 335 and 341 of this chapter (12 CFR parts 335 and 341).
    (2) Authority to act on disclosure matters is retained by the Board 
of Directors when such matters involve:
    (i) Exemption from disclosure requirements pursuant to section 12(h) 
of the Securities Exchange Act of 1934 (15 U.S.C. 781(h));
    (ii) Exemption from tender offer requirements pursuant to section 
14(d)(8) of the Securities Exchange Act of 1934 (15 U.S.C. 78n(d)(8)); 
or
    (iii) Exemption from registration requirements pursuant to section 
17A(c)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78q-
1(c)(1)).
    (c) Security devices and procedures and bank service arrangements. 
Authority is delegated to the Director (DOS) and where confirmed in 
writing by the director, to an associate director, or to the appropriate 
regional director or deputy regional director, to administer the 
provisions of part 326 of this chapter (12 CFR part 326).
    (d) In emergencies. For the purpose of assuring performance of, and 
continuity in the management functions and activities of the FDIC, the 
Board of Directors has delegated, to the extent deemed necessary, 
authority with respect to the management of the FDIC's affairs, to 
certain designated offices, such authority to be exercised only in the 
event of an emergency involving an enemy attack on the continental 
United States or other warlike occurrence which renders the Board of 
Directors unable to perform the management functions and activities 
normally performed by it.
    (e) Competitive factor reports. Authority is delegated to the 
Director (DOS), and where confirmed in writing by the director, to an 
associate director, or to the regional director or deputy regional 
director in the appropriate FDIC region in which the applicant 
depository institution \9\ is located, to furnish required reports to 
the Board of Governors of the Federal Reserve System, or the Comptroller 
of the Currency on the competitive factors involved in any merger 
required to be approved by one of those agencies, if the delegate is of 
the view that the proposed merger would not have a substantially adverse 
effect on competition.
---------------------------------------------------------------------------

    \9\ As used in paragraph (e) of this section, the term applicant 
depository institution means the institution which is applying for 
merger approval to the Board of Governors of the Federal Reserve System 
the Comptroller of the Currency, or the Director of OTS, whichever is 
appliable.
---------------------------------------------------------------------------

    (f) Agreements for pledge of assets by foreign banks. (1) Authority 
is delegated to the Director (DOS), and where confirmed in writing by 
the director, to an associate director, or to the appropriate regional 
director or deputy regional director, to enter into pledge agreements 
with foreign banks and depositories in connection with the pledge of 
asset requirements pursuant

[[Page 31]]

to 12 CFR 346.19. This authority shall also extend to the power to 
revoke such approval and require the dismissal of the depository.
    (2) Authority is delegated to the General Counsel or designee to 
modify the terms of the model deposit agreement used for such deposit 
agreements.
    (g) National Historic Preservation Act. (1) Authority is delegated 
to the Director (DOS), and where confirmed in writing by the director, 
to an associate director, or to the appropriate regional director or 
deputy regional director, to enter into memoranda of agreement pursuant 
to regulations of the Advisory Council of Historic Preservation which 
implement the National Historic Preservation Act (16 U.S.C. 470).
    (2) The Director (DOS) may limit the delegation of authority to the 
associate director, the regional director or deputy regional director to 
applications wherein the applicant has agreed in writing to conditions 
relating to the National Preservation Act which may be imposed by the 
FDIC.
    (h) Applications or notices for membership or resumption of 
business. Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, or to 
the appropriate regional director or deputy regional director, to 
provide comments on applications or notices for membership or 
commencement or resumption of business to the appropriate Federal 
banking agency pursuant to section 4 of the Act (12 U.S.C. 1814). Such 
comments, if provided, shall be provided within a reasonable time, not 
to exceed 30 days from the time such application or notice is received 
by the delegate. In the event that circumstances preclude comment within 
30 days, the delegate shall so notify the appropriate Federal banking 
agency within 30 days, giving an estimate of when comments may 
reasonably be expected.
    (i) Depository Institutions Disaster Relief Act of 1992 (DIDRA). (1) 
Authority is delegated to the Director (DOS), and where confirmed in 
writing by the director, to an associate director, or to the appropriate 
regional director or deputy regional director, to accept requests and 
issue orders permitting an insured depository institution to subtract 
from total assets the qualifying amount attributable to insurance 
proceeds for purposes of calculating compliance with the leverage limit 
prescribed under section 38 of the Act.
    (2) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, to act 
on requests for reconsideration of an order of denial issued pursuant to 
paragraph (i)(1) of this section.
    (3) The requisites which must be satisfied before the authority 
delegated in paragraphs (i)(1) and (i)(2) of this section may be 
exercised, provide that the insured depository institution:
    (i) Had its principal place of business within an area in which the 
President, pursuant to section 401 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5170), has determined 
that a major disaster exists;
    (ii) Derives more than 60 percent of its total deposits from persons 
who normally reside within, or whose principal place of business is 
normally within, areas of intense devastation caused by the major 
disaster;
    (iii) Was adequately capitalized, pursuant to section 38 of the Act, 
prior to the major disaster; and
    (iv) Has an acceptable plan for managing the increase in its total 
assets and total deposits.
    (4) The authority delegated under paragraphs (i)(1) and (i)(2) of 
this section shall be exercised only upon the concurrent certification 
of the Associate General Counsel for Compliance and Enforcement, or in 
cases where the regional director or deputy regional director issues the 
order, by the appropriate regional counsel, that the order is not 
inconsistent with section 38 of the Act.
[54 FR 53567, Dec. 29, 1989, as amended at 58 FR 8217, Feb. 12, 1993; 59 
FR 52663, Oct. 19, 1994]



Sec. 303.9  Delegation of authority to act on certain enforcement matters.

    (a) Actions pursuant to section 8(a) of the Act (12 U.S.C. 1818(a)). 
(1) Authority is delegated to the Director (DOS), and where confirmed in 
writing by the director, to an associate director, or to the appropriate 
regional director or

[[Page 32]]

deputy regional director, to issue notifications to primary regulator 
when the respondent bank's book capital is less than 2% of total assets; 
Provided however, That authority may not be delegated to the regional 
director or deputy regional director whenever the respondent bank has 
issued any mandatory convertible debt or any form of Tier 2 capital 
(such as limited life preferred stock/subordinated notes and 
debentures).
    (2) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, to issue 
notifications to primary regulator when the respondent bank's adjusted 
Tier 1 capital is less than 2% of adjusted part 325 total assets.
    (3) The authority delegated under paragraphs (a)(1) and (2) of this 
section shall be exercised only upon concurrent certification by the 
Associate General Counsel for Compliance and Enforcement, or, in cases 
where a regional director or deputy regional director issues 
notifications to primary regulator, by the appropriate regional counsel, 
that the allegations contained in the findings of unsafe or unsound 
practices or conditions, if proven, constitute a basis for the issuance 
of a notification to primary regulator pursuant to section 8(a) of the 
Act (12 U.S.C. 1818(a)).
    (b) Actions pursuant to section 8(b) of the Act (12 U.S.C. 1818(b)). 
(1) Authority is delegated to the Director (DOS), to the Director (DCA), 
and where confirmed in writing by either director, to an associate 
director, or to the appropriate regional director, deputy regional 
director or regional manager to issue:
    (i) Notices of charges; and
    (ii) Cease-and-desist orders (with or without a prior notice of 
charges) where the respondent bank or individual respondent consents to 
the issuance of the cease-and-desist order prior to the filing by an 
administrative law judge of proposed findings of fact, conclusions of 
law and recommended decision with the Executive Secretary of the FDIC.
    (2) The Director (DOS) and the Director (DCA) may issue a joint 
notice of charges or cease-and-desist order under paragraph (b)(1) of 
this section, where such notice or order addresses both safety and 
soundness and consumer compliance matters. A joint notice or order will 
require the signatures of both directors or, alternatively, the 
signatures of the appropriate regional director or deputy regional 
director and regional manager.
    (3) The authority delegated under paragraphs (b)(1) and (2) of this 
section shall be exercised only upon concurrent certification by the 
Associate General Counsel for Compliance and Enforcement or, in cases 
where a regional director, deputy regional director or regional manager 
issues the notice of charges or the stipulated cease-and-desist order, 
by the appropriate regional counsel, that the allegations contained in 
the notice of charges, if proven, constitute a basis for the issuance of 
a section 8(b) order, or that the stipulated cease-and-desist order is 
authorized under section 8(b) of the Act, and, upon its effective date, 
shall be a cease-and-desist order which has become final for purposes of 
enforcement pursuant to the Act.
    (c) Actions pursuant to section 8(c) of the Act (12 U.S.C. 1818(c)). 
(1) Authority is delegated to the Director (DOS), to the Director (DCA), 
and where confirmed in writing by either director, to an associate 
director, to issue temporary cease-and-desist orders.
    (2) The Director (DOS) and the Director (DCA) may issue a joint 
temporary cease-and-desist order where such order addresses both safety 
and soundness and consumer compliance matters. A joint notice or order 
will require the signatures of both directors or, alternatively, the 
signatures of the appropriate regional director or deputy regional 
director and regional manager.
    (3) The authority delegated under paragraphs (c)(1) and (2) of this 
section shall be exercised only upon concurrent certification by the 
Associate General Counsel for Compliance and Enforcement that the action 
is not inconsistent with section 8(c) of the Act (12 U.S.C. 1818(c)) and 
the temporary cease-and-desist order is enforceable in a United States 
District Court.
    (d) Actions pursuant to section 8(e) of the Act (12 U.S.C. 1818(e)). 
(1) Authority is delegated to the Director (DOS) or

[[Page 33]]

the Director (DCA), and where confirmed in writing by the director, to 
an associate director, to issue:
    (i) Notices of intention to remove an institution-affiliated party 
from office or to prohibit an institution-affiliated party from further 
participation in the conduct of the affairs of an insured depository 
institution pursuant to sections 8(e)(1) and (2) of the Act (12 U.S.C. 
1818(e)(1) and (2)), and temporary orders of suspension pursuant to 
section 8(e)(3) of the Act (12 U.S.C. 1818(e)(3)); and
    (ii) Orders of removal, suspension or prohibition from participation 
in the conduct of the affairs of an insured depository institution where 
the institution-affiliated party consents to the issuance of such orders 
prior to the filing by an administrative law judge of proposed findings 
of fact, conclusions of law and a recommended decision with the 
Executive Secretary of the FDIC.
    (2) The Director (DOS) and the Director (DCA) may issue joint 
notices and orders pursuant to paragraph (d)(1) of this section where 
such notice or order addresses both safety and soundness and consumer 
compliance matters. A joint notice or order will require the signatures 
of both directors or their associate directors.
    (3) The authority delegated under paragraphs (d)(1) and (2) of this 
section shall be exercised only upon concurrent certification by the 
Associate General Counsel for Compliance and Enforcement that the 
allegations contained in the notice of intent, if proven, constitute a 
basis for the issuance of a notice of intent pursuant to section 8(e) of 
the Act, or that the stipulated section 8(e) order is not inconsistent 
with section 8(e) of the Act, and, upon issuance, shall be an order 
which has become final for purposes of enforcement pursuant to the Act.
    (e) Actions pursuant to section 8(g) of the Act (12 U.S.C. 1818(g)). 
(1) Authority is delegated to the Director (DOS), to the Director (DCA), 
and where confirmed in writing by either director, to an associate 
director, to issue orders of suspension or prohibition to an 
institution-affiliated party who is charged in any information, 
indictment, or complaint as set forth in section 8(g) of the Act when 
such institution-affiliated party consents to the suspension or 
prohibition.
    (2) The Director (DOS) and the Director (DCA) may issue joint orders 
pursuant to paragraph (e)(1) of this section where such order addresses 
both safety and soundness and consumer compliance matters. A joint order 
will require the signatures of both directors or their associate 
directors.
    (3) The authority delegated under paragraphs (e)(1) and (2) of this 
section shall be exercised only upon concurrent certification by the 
Associate General Counsel for Compliance and Enforcement that the action 
taken is not inconsistent with section 8(g) of the Act (12 U.S.C. 
1818(g)) and the order is enforceable in a United States District Court 
pursuant to sections 8(i) and 8(j) of the Act (12 U.S.C. 1818 (i) and 
(j)).
    (f) Actions pursuant to section 8(p) of the Act (12 U.S.C. 1818(p)). 
(1) Authority is delegated to the Executive Secretary to issue consent 
orders terminating the insured status of insured depository institutions 
that have ceased to engage in the business of receiving deposits other 
than trust funds pursuant to section 8(p) of the Act (12 U.S.C. 
1818(p)).
    (2) The authority delegated under paragraph (f)(1) of this section 
shall be exercised only upon the recommendation and concurrence of the 
Director (DOS) or associate director and the Associate General Counsel 
for Compliance and Enforcement that the action taken is not inconsistent 
with section 8(p) of the Act.
    (g) Civil money penalties. (1)(i) Except as provided for in 
paragraph (g)(3) of this section, authority is delegated to the Director 
(DOS), to the Director (DCA), and where confirmed in writing by either 
director, to an associate director, to issue notices of assessment of 
civil money penalties.
    (ii) The authority delegated under paragraph (g)(1)((i) of this 
section shall be exercised only upon concurrent certification by the 
Associate General Counsel for Compliance and Enforcement that the 
allegations contained in the notice of assessment, if proven, constitute 
a basis for assessment of civil money penalties.

[[Page 34]]

    (2) The Director (DOS) and the Director (DCA) may issue joint 
notices pursuant to paragraph (g)(1) of this section where such notice 
addresses both safety and soundness and consumer compliance matters. A 
joint notice will require the signatures of both directors or their 
associate directors.
    (3) Authority is delegated to the General Counsel or designee for 
the levying and enforcement of civil money penalties under section 
7(a)(1) of the Act (12 U.S.C. 1817(a)(1)) for the late, inaccurate, 
false or misleading filing of Reports of Condition and Report of Income, 
and such other reports as the Board of Directors may require under the 
authority of that section. In the exercise of the delegated authority, 
the General Counsel or designee shall consult with the appropriate 
Director or associate director before imposing any penalty.
    (h) Directives and capital plans under section 38 of the Act (prompt 
corrective action) and part 325 of this chapter. (1) Authority is 
delegated to the Director (DOS), and where confirmed in writing by the 
director, to an associate director, or to the appropriate regional 
director or deputy regional director, to accept, to reject, to require 
new or revised capital restoration plans or to make any other 
determinations with respect to the implementation of capital restoration 
plans and, in accordance with subpart Q of part 308 of this chapter, to 
issue:
    (i) Notices of intent to issue capital directives;
    (ii) Directives to insured state nonmember banks that fail to 
maintain capital in accordance with the requirements contained in part 
325 of this chapter;
    (iii) Notices of intent to issue prompt corrective action 
directives, except directives issued pursuant to section 38(f)(2)(F)(ii) 
of the Act (12 U.S.C. 1831o(f)(2)(F)(ii));
    (iv) Directives to insured depository institutions pursuant to 
section 38 of the Act (12 U.S.C. 1831o), with or without the consent of 
the respondent bank to the issuance of the directive, except directives 
issued pursuant to section 38(f)(2)(F)(ii) of the Act (12 U.S.C. 
1831o(f)(2)(F)(ii));
    (v) Directives to insured depository institutions requiring 
immediate action or imposing proscriptions pursuant to section 38 of the 
Act (12 U.S.C. 1831o) and part 325 of this chapter, and in accordance 
with the requirements contained in Sec. 308.201(a)(2) of this chapter;
    (vi) Notices of intent to reclassify insured banks pursuant to 
Secs. 325.103(d) and 308.202 of this chapter;
    (vii) Directives to reclassify insured banks pursuant to 
Secs. 325.103(d) and 308.202 of this chapter with the consent of the 
respondent bank to the issuance of the directive; and
    (viii) Orders on request for informal hearings to reconsider 
reclassifications and designate the presiding officer at the hearing 
pursuant to Sec. 308.202 of this chapter.
    (2) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an Associate Director, to:
    (i) Issue notices of intent to issue a prompt corrective action 
directive ordering the dismissal from office of a director or senior 
executive officer pursuant to section 38(f)(2)(F)(ii) of the Act, (12 
U.S.C. 1831o(f)(2)(F)(ii)), and in accordance with the requirements 
contained in Sec. 308.203 of this chapter;
    (ii) Issue directives ordering the dismissal from office of a 
director or senior executive officer pursuant to section 38(f)(2)(F)(ii) 
of the Act, (12 U.S.C. 1831o(f)(2)(F)(ii));
    (iii) Issue orders of dismissal from office of a director or senior 
executive officer pursuant to section 38(f)(2)(F)(ii) of the Act, 12 
U.S.C. 1831o(f)(2)(F)(ii) where the individual consents to the issuance 
of such order prior to the filing of a recommendation by the presiding 
officer with the FDIC;
    (iv) Act on recommended decisions of presiding officers pursuant to 
a request for reconsideration of a reclassification in accordance with 
the requirements contained in Sec. 308.202 of this chapter;
    (v) Act on requests for rescission of a reclassification; and
    (vi) Act on appeals from immediately effective directives issued 
pursuant to section 38 of the Act, (12 U.S.C. 1831o) and Sec. 308.201 of 
this chapter.
    (3) Authority is delegated to the Executive Secretary of the FDIC to 
issue

[[Page 35]]

orders for informal hearings and designate presiding officers on 
directives issued pursuant to section 38(f)(2)(F)(ii) of the Act, 12 
U.S.C. 1831o(f)(2)(F)(ii).
    (4) The authority delegated under paragraphs (h)(1)(i) and (ii) of 
this section shall be exercised only upon the concurrent certification 
by the Associate General Counsel for Compliance and Enforcement, or in 
cases where a regional director or deputy regional director issues the 
notice of intent to issue a capital directive or capital directives, by 
the appropriate regional counsel, that the action taken is not 
inconsistent with the Act and part 325 of this chapter.
    (5) The authority delegated under paragraphs (h)(1) (iii), (iv), 
(v), (vi) and (vii) of this section shall be exercised only upon the 
concurrent certification by the Associate General Counsel for Compliance 
and Enforcement, or in cases where a regional director or deputy 
regional director issues the notice of intent to issue a prompt 
corrective action directive or prompt corrective action directives, or 
the notice of intent to reclassify or reclassification directive, by the 
appropriate regional counsel, that the allegations contained in the 
notice of intent, if proven, constitute a basis for the issuance of a 
final directive pursuant to section 38 of the Act, or that the issuance 
of a final directive is not inconsistent with section 38 of the Act.
    (6) The authority delegated under paragraph (h)(2) of this section 
shall be exercised only upon the concurrent certification by the 
Associate General Counsel for Compliance and Enforcement that the 
allegations contained in the notice of intent, if proven, constitute a 
basis for the issuance of a final directive pursuant to section 38 of 
the Act or that the issuance of a final directive is not inconsistent 
with section 38 of the Act or that the stipulated section 38 order is 
not inconsistent with section 38 and is an order which has become final 
for purposes of enforcement pursuant to the Act.
    (i) Investigations pursuant to section 10(c) of the Act (12 U.S.C. 
1820(c)). (1) Authority is delegated to the Director (DOS), to the 
Director (DCA), to the Director of the Division of Depositor and Asset 
Services, and where confirmed in writing by the director, to an 
associate director, or to the appropriate regional director, deputy 
regional director or regional manager, to issue an order of 
investigation pursuant to section 10(c) of the Act (12 U.S.C. 1820(c)) 
and subpart K of Part 308 (12 CFR 308.144 through 308.150).
    (2) Authority is delegated to the General Counsel, and where 
confirmed in writing by the General Counsel, to his designee, to issue 
an order of investigation pursuant to section 10(c) of the Act (12 
U.S.C. 1820(c)) and subpart K of Part 308 (12 CFR 308.144 through 
308.150).
    (3) In issuing an order of investigation that pertains to an open 
insured depository institution or an institution making application to 
become an insured depository institution, the authority delegated under 
paragraphs (i)(1) and (2) of this section shall be exercised only upon 
the concurrent execution of the order of investigation by the Director 
(DOS) or the Director (DCA), or their associate directors, or the 
appropriate regional director, deputy regional director or regional 
manager, and the General Counsel or designee. In the case of a joint 
order of investigation, such authority shall be exercised only upon the 
concurrent execution of the order of investigation by both directors, or 
their associate directors, or the appropriate regional director, deputy 
regional director and regional manager, and the General Counsel or 
designee.
    (j) Truth in Lending Act. (1) Authority is delegated to the Director 
(DCA), and where confirmed in writing by the director, to the associate 
director, or to the appropriate regional manager, to deny requests for 
relief from the requirements for reimbursement under section 608(a)(2) 
of the Truth in Lending Simplification and Reform Act (15 U.S.C. 
1607(e)(2)); Provided however, that a regional manager is not authorized 
to deny any request where the estimated amount of reimbursement is 
greater than $25,000.
    (2) Authority is delegated to the Director (DCA), and where 
confirmed in writing by the director, to an associate director:
    (i) To grant request for relief from the requirements for 
reimbursement

[[Page 36]]

under section 608(a)(2) of the Truth in Lending Simplification and 
Reform Act (15 U.S.C. 1670(a)(2)); and
    (ii) To act on applications for reconsideration of any action taken 
under paragraphs (j) (1) and (2) of this section.
    (3) The authority delegated under paragraphs (j) (1) and (2) of this 
section shall be exercised only upon concurrent certification by the 
Associate General Counsel for Compliance and Enforcement, or, in cases 
where a regional manager denies requests for relief, by the appropriate 
regional counsel, that the action taken is not inconsistent with the 
Truth in Lending Simplification and Reform Act.
    (k) Unilateral settlement offers. (1) Authority is delegated to the 
Director (DOS), to the Director (DCA), and where confirmed in writing by 
either director, to an associate director, to accept, deny or enter into 
negotiations for unilateral settlement offers with insured depository 
institutions, or with an institution-affiliated party, pertaining to a 
proceeding under 12 CFR part 308. In cases where a proceeding under 12 
CFR part 308 was issued jointly by DOS and DCA, both directors, or their 
associate directors, must agree to accept, deny or enter into 
negotiations for unilateral settlement offers with insured depository 
institutions or with an institution-affiliated party.
    (2) The authority delegated under paragraph (k)(1) of this section 
shall be exercised only upon concurrent certification by the Associate 
General Counsel for Compliance and Enforcement that the action taken is 
not inconsistent with the Act.
    (l) Acceptance of written agreements. (1) Authority is delegated to 
the Director (DOS), and where confirmed in writing by the director, to 
an associate director, to accept or enter into any written agreements 
with insured depository institutions, or any institution-affiliated 
party pertaining to any matter which may be addressed by the FDIC 
pursuant to section 8(a) of the Act (12 U.S.C. 1818(a)).
    (2) Authority is delegated to the Director (DOS), to the Director 
(DCA), and where confirmed in writing by either director, to an 
associate director, to accept or enter into any written agreements with 
insured depository institutions, or any institution-affiliated party 
pertaining to any safety and soundness or consumer compliance matter 
which may be addressed by the FDIC pursuant to section 8(b) of the Act 
(12 U.S.C. 1818(b)) or any other provision of the Act which addresses 
safety and soundness or consumer compliance matters. In cases which 
would address both safety and soundness and consumer compliance matters, 
the Directors, or their designees, may accept or enter into joint 
written agreements with insured depository institutions or institution-
affiliated parties.
    (3) The authority delegated under paragraphs (l) (1) and (2) of this 
section shall be exercised only upon concurrent certification by the 
Associate General Counsel for Compliance and Enforcement that the action 
taken is not inconsistent with sections 8 (a) and (b) of the Act.
    (m) Modifications and terminations of enforcement actions--(1) 
Sections 8(a), 8(b) and 8(c) (12 U.S.C. 1818 (a), (b) and (c)) actions 
upon failure or merger of a depository institution. (i) Authority is 
delegated to the Director (DOS), and where confirmed in writing by the 
director, to an associate director, or to the appropriate regional 
director or deputy regional director, to terminate outstanding section 
8(a) orders and agreements and to terminate actions and agreements which 
are pending pursuant to section 8(a) of the Act when the depository 
institution is closed by a Federal or state authority or merges into 
another institution.
    (ii) Authority is delegated to the Director (DOS), to the Director 
(DCA), and where confirmed in writing by either director, to an 
associate director, or to the appropriate regional director, deputy 
regional director or regional manager, to terminate outstanding section 
8(b) and section 8(c) orders and agreements and to terminate actions and 
agreements which are pending pursuant to sections 8(b) and 8(c) of the 
Act when the depository institution is closed by a Federal or state 
authority or merges into another institution. In cases where a joint 
order was issued by DOS and DCA, both directors, or their associate 
directors, or the appropriate

[[Page 37]]

regional director or deputy regional director and regional manager, must 
agree prior to the termination of outstanding 8(b) and 8(c) orders.
    (2) Section 8(a) (12 U.S.C. 1818(a)) actions issued by the Board of 
Directors. (i) Authority is delegated to the Director (DOS), and where 
confirmed in writing by the director, to an associate director, or to 
the appropriate regional director or deputy regional director, to modify 
or terminate notifications to primary regulator issued by the Board of 
Directors pursuant to section 8(a) of the Act where the respondent 
depository institution is in material compliance with such notification 
or for good cause shown.
    (ii) In cases where the Board of Directors has issued a notice of 
intent to terminate insured status pursuant to section 8(a) of the Act, 
authority is delegated to the Director (DOS), and where confirmed in 
writing by the director, to an associate director, or to the appropriate 
regional director or deputy regional director, to terminate the actions 
pending pursuant to such notice of intent to terminate insured status 
where the respondent depository institution is in material compliance 
with the applicable notification to primary regulator or for good cause 
shown.
    (3) Section 8(b) (12 U.S.C. 1818(b)) orders issued by the Board of 
Directors. Authority is delegated to the Director (DOS) or the Director 
(DCA), and where confirmed in writing by the director, to an associate 
director, or to the appropriate regional director, deputy regional 
director or regional manager, to terminate outstanding section 8(b) 
orders issued by the Board of Directors where either material compliance 
with the section 8(b) order has been achieved by the respondent 
depository institution or individual respondent or for good cause shown. 
In cases where an order issued by the Board addresses both safety and 
soundness and consumer compliance matters, both directors, or their 
designees, must agree prior to the termination of outstanding 8(b) 
orders.
    (4) Section 8(g) orders issued by the Board of Directors. Authority 
is delegated to the Director (DOS) or the Director (DCA), and where 
confirmed in writing by the director, to an associate director, to 
approve requests for modifications or terminations of section 8(g) 
orders issued by the Board of Directors.
    (5) Other matters not specifically addressed. For all other 
outstanding orders or pending actions not specifically addressed in 
paragraphs (m)(1), (m)(2), (m)(3) and (m)(4) of this section, the 
delegations of authority contained in paragraphs (a)(1), (a)(2), (b)(1), 
(c)(1), (d)(1), (e)(1), (g)(1), (g)(2), (h)(1), (h)(2), (l)(1), (l)(2), 
and (n) of this section shall be construed to include the authority to 
modify or terminate any outstanding notice, order, directive or 
agreement, as may be appropriate, issued pursuant to delegated authority 
and to terminate any pending action initiated pursuant to delegated 
authority.
    (6) Certification. Any modifications or terminations pursuant to 
paragraphs (m)(1), (m)(2), (m)(3), (m)(4), and (m)(5) of this section 
shall be exercised only upon concurrent certification by the Associate 
General Counsel for Compliance and Enforcement, or in cases where a 
regional director, deputy regional director or regional manager acts 
under delegated authority, by the appropriate regional counsel, that the 
action taken is not consistent with the Act.
    (n) Enforcement of outstanding orders. After consultation with the 
Director (DOS) or the Director (DCA), or an associate director, or the 
appropriate regional director, deputy regional director or regional 
manager, as may be appropriate, the General Counsel or designee is 
authorized to initiate and prosecute any action to enforce any effective 
and outstanding order or temporary order issued under 12 U.S.C. 1817, 
1818, 1820, 1828, 1829, 1831l, 1831o, 1972, or 3909, or any provision 
thereof, in the appropriate United States District Court.
    (o) Compliance plans under section 39 of the Act (standards for 
safety and soundness) and part 308 of this chapter. (1) Authority is 
delegated to the Director, and where confirmed in writing by the 
Director, to an associate director, or to the appropriate regional 
director or deputy regional director, to accept, to reject, to require 
new or revised compliance plans or to make any other

[[Page 38]]

determinations with respect to the implementation of compliance plans 
pursuant to subpart R of part 308 of this chapter.
    (2) Authority is delegated to the Director, and where confirmed in 
writing by the Director, to an associate director, to:
    (i) Issue notices of intent to issue an order requiring the bank to 
correct a safety and soundness deficiency or to take or refrain from 
taking other actions pursuant to section 39 of the Act (12 U.S.C. 1831p-
1) and in accordance with the requirements contained in 
Sec. 308.304(a)(1) of this chapter;
    (ii) Issue an order requiring the bank immediately to correct a 
safety and soundness deficiency or to take or refrain from taking other 
actions pursuant to section 39 of the Act (12 U.S.C. 1831p-1) and in 
accordance with the requirements contained in Sec. 308.304(a)(2) of this 
chapter; and
    (iii) Act on requests for modification or rescission of an order.
    (3) The authority delegated under paragraph (o)(1) of this section 
shall be exercised only upon the concurrent certification by the 
Associate General Counsel for Compliance and Enforcement, or in cases 
where a regional director or deputy regional director accepts, rejects 
or requires new or revised compliance plans or makes any other 
determinations with respect to compliance plans, by the appropriate 
regional counsel, that the action taken is not inconsistent with the 
Act.
    (4) The authority delegated under paragraph (o)(2) of this section 
shall be exercised only upon the concurrent certification by the 
Associate General Counsel for Compliance and Enforcement that the 
allegations contained in the notice of intent, if proven, constitute a 
basis for the issuance of a final order pursuant to section 39 of the 
Act or that the issuance of a final order is not inconsistent with 
section 39 of the Act or that the stipulated section 39 order is not 
inconsistent with section 39 and is an order which has become final for 
purposes of enforcement pursuant to the Act.
[59 FR 52663, Oct. 19, 1994, as amended at 60 FR 35683, July 10, 1995]



Sec. 303.10  Applications and enforcement matters where authority is not delegated.

    (a) Authority not specifically delegated is retained by the Board of 
Directors. (1) Except as otherwise provided in this part, or with 
respect to matters which generally involve conditions or circumstances 
requiring prompt action in the field for the better protection of the 
interests of the FDIC and to achieve flexibility and expedition in its 
operations and in the exercise of its functions in connection with the 
FDIC's litigation and liquidation matters and with the payment of claims 
for insured deposits, the Board of Directors does not delegate its 
authority and no delegations of final authority are made by the Board of 
Directors. Any person having a proper and direct concern therein may 
ascertain the scope of authority of any officer, agent or employee of 
the FDIC by communicating with the Executive Secretary of the FDIC.
    (2) In all cases where authority to act on applications, requests or 
enforcement matters listed in this part is not delegated to a Director, 
or to an associate director, or to a regional director, deputy regional 
director or regional manager''; the authority to act on such 
applications, requests, or enforcement matters remains vested in the 
Board of Directors of the FDIC. In addition, the Board of Directors 
retains the authority to act on any application, request or enforcement 
matter upon which any member of the Board of Directors wishes to act 
even if the authority to act on such application, request or enforcement 
matter has been delegated.
    (b) Applications and requests. Without limiting the Board of 
Directors' authority, the Board of Directors has retained the authority 
to act upon the following applications and requests:
    (1) Except as provided in Sec. 303.7(b)(9) of this part to deny 
applications for merger transactions, and to approve applications for 
merger transactions where:
    (i) The applicant does not agree in writing to comply with any 
conditions imposed by the FDIC (other than the standard condition listed 
in Sec. 303.0(b)(26) which may be imposed

[[Page 39]]

without the applicant's written agreement); or
    (ii) The resulting bank, upon consummation of the merger 
transaction, would have more than 35% of the individual, partnership and 
corporate deposits held by commercial banks and/or thrift institutions, 
as may be appropriate, in the relevant market(s); or
    (iii) Irrespective of the resulting market share, the Attorney 
General has determined that the proposed merger transaction may have a 
significantly adverse effect on competition; or
    (iv) The application (including an application for phantom bank 
merger or reorganization) falls within the probable failure or emergency 
provisions of section 18(c)(6) of the FDI Act, or the resultant bank 
does not meet the minimum capital requirements of part 325.
    (2) To deny applications for deposit insurance, and to approve 
applications for deposit insurance where:
    (i) The applicant does not agree in writing to comply with any 
condition imposed by the FDIC (other than the standard conditions listed 
in Secs. 303.0(b)(31), and 303.7(d)(4), which may be imposed without the 
applicant's written agreement), or
    (ii) The applicant depository institution is a United States branch 
of a foreign bank; and
    (3) To consider an application made by an insured depository 
institution pursuant to section 19 of the Act (12 U.S.C. 1829) for 
participation, directly or indirectly, in any manner in the conduct of 
the affairs of an insured depository institution or any person who has 
been convicted or is hereafter convicted of any criminal offense 
involving dishonesty or a breach of trust following a hearing held in 
accordance with the provisions of part 308 of this chapter (12 CFR part 
308).
    (c) Enforcement matters. Without limiting the Board of Directors' 
authority, the Board of Directors has retained the authority to act upon 
the following enforcement matters:
    (1) To issue: (i) Notifications to primary regulator when the 
respondent bank's book capital is at or above 2% of total assets and 
adjusted Tier 1 capital is at or above 2% of adjusted part 325 total 
assets;
    (ii) Notices of intent to terminate insured status; and
    (iii) Orders terminating insured status, pursuant to section 8(a) of 
the Act (12 U.S.C. 1818(a));
    (2) To issue cease-and-desist orders pursuant to section 8(b) of the 
Act (12 U.S.C. 1818(b)) when the respondent depository institution or 
individual does not consent to the issuance of such orders;
    (3) To issue: (i) Temporary orders of suspension and prohibition 
pursuant to section 8(e) of the Act (12 U.S.C. 1818(e)); and
    (ii) Orders of removal, suspension or prohibition from participation 
in the conduct of the affairs of an insured depository institution 
pursuant to section 8(e) of the Act (12 U.S.C. 1818(e)) when the 
individual does not consent to the issuance of such orders;
    (4) To issue orders of suspension or prohibition to an indicted 
director, officer or person participating in the conduct of the affairs 
of an insured depository institution and orders of removal or 
prohibition to a convicted director, officer or person participating in 
the conduct of the affairs of an insured depository institution pursuant 
to section 8(g) of the Act (12 U.S.C. 1818(g)) when such director, 
officer or person does not consent to the suspension or removal;
    (5) To issue final orders to pay civil money penalties where 
respondents do not consent to the assessment of civil money penalties 
and hearings have been held;
    (6) To deny requests for modifications or terminations of orders 
issued pursuant to section 8(g) of the Act (12 U.S.C. 1818(g)); and
    (7) To grant or deny requests for reinstatement to office, whether 
or not an informal hearing has been requested, pursuant to Sec. 308.203 
of this chapter.
[54 FR 53570, Dec. 29, 1989, as amended at 56 FR 23011, May 20, 1991; 58 
FR 8219, Feb. 12, 1993; 59 FR 52667, Oct. 19, 1994]



Sec. 303.11  Confirmation, limitations, rescissions and special cases.

    (a) Written confirmation, limitations or subsequent rescission. (1) 
The authority delegated in Secs. 303.7, 303.8 and 303.9 of this part by 
the Board of Directors to the associate director, the appropriate

[[Page 40]]

regional director or deputy regional director is subject, as to each 
associate director, regional director and deputy regional director, to 
written confirmation, limitations, or subsequent rescission of any 
confirmation, by the Director. Such written confirmation, limitations or 
rescissions shall be filed with the Executive Secretary of the FDIC at 
its offices in Washington, DC, and at the office of the regional 
director or deputy regional director concerned, and shall be available 
for public inspection by interested parties.
    (2) The conditions set forth in this part to which the exercise of 
delegated authority is subject are procedural in nature only, and shall 
not be construed as standards or criteria which will be used in 
determining the merits of a specific application, petition, request or 
enforcement matter.
    (b) Action under delegated authority not mandated. (1) The Director 
(DOS) or the Director (DCA) may, in writing, rescind the authority of an 
associate director, regional director, deputy regional director or 
regional manager to act on an application, request, notice of 
acquisition of control or enforcement matter, and may himself act on the 
same.
    (2)(i) An associate director, regional director, deputy regional 
director or regional manager may, in writing, recommend that the 
authority to act on an application, request, notice of acquisition of 
control or enforcement matter not be exercised by him; in such cases, 
the authority to act on such application, request, notice of acquisition 
of control or enforcement matter may be exercised by the Director (DOS) 
or the Director (DCA). The Director may, in writing, recommend that the 
authority to act on an application, request, notice of acquisition of 
control or enforcement matter may not be exercised by him; in such cases 
the Board of Directors will act on the application, request, notice of 
acquisition of control or enforcement matter.
    (ii) A regional counsel may, in writing, recommend that the 
authority to act on an application made by insured depository 
institutions pursuant to section 19 of the Act (12 U.S.C. 1829) or an 
enforcement matter not be exercised by him; in such cases the authority 
to act in such enforcement matters may be exercised by the Associate 
General Counsel for Compliance and Enforcement. The Associate General 
Counsel for Compliance and Enforcement may, in writing, recommend that 
the authority to act on an application pursuant to section 19 of the Act 
or enforcement matter not be exercised by him; in such cases, the Board 
of Directors will act on the application or enforcement matter.
    (iii) Upon determining not to act upon the application, request, 
notice of acquisition of control or enforcement matter under delegated 
authority, the regional manager, deputy regional director, regional 
director, associate director, or the Director (DOS) or the Director 
(DCA), and/or the regional counsel, or the Associate General Counsel for 
Compliance and Enforcement, as the case may be, shall forward the 
application, request, notice of acquisition of control or enforcement 
matter, together with his recommendations as to the disposition of such 
application, request, notice of acquisition of control or enforcement 
matter to the appropriate authority as determined by the rules set forth 
in paragraphs (b)(2) (i) and/or (ii) of this section.
    (c) Request for review. Any aggrieved party or person may request 
the Board of Directors to review any action taken under authority 
delegated in Secs. 303.7, 303.8 and 303.9 of this part.
[54 FR 53570, Dec. 29, 1989, as amended by 59 FR 52667, Oct. 19, 1994]



Sec. 303.12  OMB control number assigned pursuant to the Paperwork Reduction Act.

    (a) Purpose. This section collects and displays the control numbers 
assigned to information collection requirements of this part by the 
Office of Management and Budget pursuant to the Paperwork Reduction Act 
of 1980 (44 U.S.C. 3501 through 3520). The FDIC intends that this 
section comply with section 3507(f) of the Paperwork Reduction Act (44 
U.S.C. 3507(f)), which requires that agencies display a current control 
number assigned by the Director of the Office of Management and Budget 
for each agency information collection requirement.
    (b) Display.

[[Page 41]]



------------------------------------------------------------------------
    Section of 12 CFR part 303 where identified and        Current OMB  
                       described                           control No.  
------------------------------------------------------------------------
303.1..................................................        3064.0001
303.1..................................................        3064.0069
303.2..................................................        3064.0070
303.3..................................................        3064.0016
303.4(b)...............................................        3064.0019
------------------------------------------------------------------------

[54 FR 53571, Dec. 29, 1989]



Sec. 303.13  Applications and notices by savings associations.

    (a) Definitions. For the purposes of this section, the following 
definitions apply:
    (1) As used in paragraphs (b) and (c) of this section, the term 
activity includes acquiring or retaining any investment other than an 
equity investment.
    (2) Control means the power to vote, directly or indirectly, 25 per 
centum or more of any class of the voting stock of a company, the 
ability to control in any manner the election of a majority of a 
company's directors or trustees, or the ability to exercise a 
controlling influence over the management and policies of a company.
    (3) Corporate debt securities not of investment grade refers to any 
corporate debt security that when acquired was not rated among the four 
highest rating categories by at least one nationally recognized 
statistical rating organization. The term shall not include any 
obligation issued or guaranteed by a corporation that may be held by a 
federal savings association without limitation as to percentage of 
assets under subparagraphs (D), (E), or (F) of section 5(c)(1) of the 
Home Owners' Loan Act (12 U.S.C. 1464(c)(1)).
    (4) Equity investment means any equity security as defined herein; 
any partnership interest; any equity interest in real estate as defined 
herein; and any transaction which in substance falls into any of these 
categories, even though it may be structured as some other form of 
business transaction.
    (5) Equity interest in real estate means any form of direct or 
indirect ownership of any interest in real property (whether in the form 
of an equity interest, partnership, joint venture or other form) which 
is accounted for as an investment in real estate or real estate joint 
ventures under generally accepted accounting principles or is otherwise 
determined to be an investment in a real estate venture under Federal 
Financial Institutions Examination Council instructions for the 
preparation of reports of condition. The term equity interest in real 
estate shall not include:
    (i) An interest in real property that is primarily used or intended 
to be used for future expansion by a savings association, its 
subsidiaries, or its affiliates as offices or related facilities for the 
conduct of its business;
    (ii) An interest in real property that is acquired in satisfaction 
of a debt previously contracted in good faith, acquired by way of deed 
in lieu of foreclosure, or acquired in sales under judgments, decrees, 
or mortgages held by a savings association, provided that the property 
is not intended to be held for real estate investment purposes but is 
expected to be disposed of in a timely fashion as permitted by 
applicable law; and
    (iii) Interests in real property that are primarily in the nature of 
charitable contributions to community development.
    (6) Equity security means any stock, (other than adjustable rate 
preferred stock and money market (auction rate) preferred stock) 
certificate of interest or participation in any profit-sharing 
agreement, collateral-trust certificate, preorganization certificate or 
subscription, transferable share, investment contract, or voting-trust 
certificate; any security immediately convertible at the option of the 
holder without payment of substantial additional consideration into such 
a security; any security carrying any warrant or right to subscribe to 
or purchase any such security; and any certificate of interest or 
participation in, temporary or interim certificate for, or receipt for 
any of the foregoing. The term equity security does not include any of 
the foregoing if it is acquired through foreclosure or settlement in 
lieu of foreclosure.
    (7) Qualified affiliate means, in the case of a stock savings 
association, an affiliate other than a subsidiary or an insured 
depository institution; and, in the case of a mutual savings 
association, a subsidiary other than an insured depository institution, 
so long as

[[Page 42]]

all of the savings association's investments in, and extensions of 
credit to, the subsidiary are deducted from the savings association's 
capital.
    (8) The term service corporation means any corporation the capital 
stock of which is available for purchase only by savings associations.
    (9) A significant risk is understood to be present whenever there is 
a high probability that any insurance fund administered by the FDIC may 
suffer a loss.
    (10) Subsidiary means any corporation, partnership, business trust, 
association, joint venture, pool, syndicate or other similar business 
organization directly or indirectly controlled by a savings association. 
For the purposes of Sec. 303.13(f), the term does not include an insured 
depository institution as that term is defined in section 3(c)(2) of the 
Federal Deposit Insurance Act, (FDI Act, 12 U.S.C. 1813(c)(2)).
    (b) Engaging other than as agent on behalf of customers in 
activities not permissible for Federal savings associations--(1) After 
January 1, 1990, no state savings association may directly engage, other 
than as agent on behalf of its customers, in an activity that is not 
expressly authorized for federal savings associations by the Home 
Owners' Loan Act (12 U.S.C. 1461 et seq.) or any other statute, 
regulations issued by the Office of Thrift Supervision (OTS), official 
OTS Regulatory or Thrift Bulletins, or any order or interpretation 
issued in writing by OTS unless the state savings association obtains 
the approval of the FDIC. Any state savings association that wishes to 
obtain approval to initiate or continue such an activity, as well as any 
state savings association that wishes to make, or already has, 
nonresidential real property loans in an amount exceeding that described 
in section 5(c)(2)(B) of the HOLA (12 U.S.C. 1464(c)(2)(B)) must file a 
letter application with the DOS regional director for the region in 
which the state savings association's principal office is located. The 
letter application should contain the following information:
    (i) A brief description of the activity and the manner in which it 
is (or will be) conducted;
    (ii) A copy, if available, of any feasibility study, management 
plan, financial projections, business plan, or similar document 
concerning the conduct of the activity;
    (iii) An estimate of the present or expected dollar volume of the 
activity;
    (iv) Resolutions by the board of directors (or the board of trustees 
in a mutual association) of the savings association authorizing the 
conduct of such activity and the filing of this submission;
    (v) A current statement of the association's assets, liabilities, 
and capital on both a consolidated and a non-consolidated basis, 
respectively;
    (vi) A discussion by management of its analysis regarding the impact 
of the proposed activity on the association's earnings, capital 
adequacy, and general condition;
    (vii) A statement by the savings association of whether or not it is 
in compliance with the fully phased-in capital standards prescribed 
under section 5(t) of HOLA (12 U.S.C. 1464(t)), including a calculation 
of the relevant capital ratio; and
    (viii) A statement of the authority the savings association is 
relying upon for the conduct of the activity in the amount set forth in 
the letter application.

The regional director may request that the state savings association 
provide such other information as the director deems appropriate. 
Approval will not be granted if it is determined by the FDIC that 
engaging in the activity poses a significant risk to the affected 
deposit insurance fund. Furthermore, no savings association will be 
granted approval unless it is in compliance with the fully phased-in 
capital standards prescribed in section 5(t) of HOLA. Consequently, no 
application to engage in an activity after January 1, 1990 should be 
filed if a state association is not in compliance with the fully phased-
in capital requirements.
    (2) Paragraph (b)(1) of this section shall not be read to require 
the divestiture by a state savings association of any asset (including a 
nonresidential real estate loan) it had on its books prior to August 9, 
1989 despite the fact that such asset may be held in connection with the 
conduct of an activity for

[[Page 43]]

which the state savings association must obtain the FDIC's approval 
under Sec. 303.13(b)(1). A notice describing the activities and those 
assets is nevertheless required by this section.
    (c) Engaging other than as agent on behalf of customers in 
activities authorized for Federal savings associations but to an extent 
not so authorized--(1) Activities conducted as of December 29, 1989. (i) 
Any state savings association which as of December 29, 1989 is directly 
engaging, other than as agent on behalf of its customers, in an activity 
expressly authorized to all federal savings associations by statute or 
regulation adoped by OTS, or an official OTS Regulatory or Thrift 
Bulletin interpreting such statutes or regulations, in an amount in 
excess of that permitted to federal savings associations and intends to 
continue to do so after January 1, 1990, must file a notice, return 
receipt requested, with the DOS regional director for the region in 
which the state savings association's principal office is located. The 
notice must contain the same information that is required to be included 
in a letter application filed pursuant to Sec. 303.13(b)(1). The 
regional director may request such other information as the regional 
director deems appropriate. The notice must be received by the regional 
director no later than January 29, 1990.
    (ii) A state savings association which is, and continues to be, in 
compliance with the fully phased-in capital standards prescribed under 
section 5(t) of HOLA and which has filed notice with the FDIC pursuant 
to paragraph (c)(1)(i) of this section may continue the activities that 
are the subject of the 30-day notice in the amount set forth in the 
notice unless the FDIC notifies the state savings association to the 
contrary. No state savings association will be permitted to continue the 
activities at the level described in a notice filed pursuant to this 
section if it is determined that to do so poses a significant risk to 
the affected deposit insurance fund. A state savings association which 
is not in compliance with the fully phased-in capital standards as of 
December 29, 1989 must decrease the level of the activity to that 
allowed to a federal savings association in order for continuation of 
the activity to be permissible.
    (iii) Paragraph (c)(1) of this section shall not be read to require 
the divestiture by a state savings association of any asset it had on 
its books before August 9, 1989. A notice describing those assets is 
nevertheless required by this section if the assets are held in 
connection with the conduct of an activity in an amount that triggers 
notice under Sec. 303.13(c)(1)(i).
    (2) Initiation of activities after December 29, 1989. Any state 
savings association that intends to initiate activities of a type and in 
an amount described in paragraph (c)(1)(i) of this section must file a 
notice, return receipt requested, with the (DOS) regional director for 
the region in which the state savings association's principal office is 
located at least 60 days prior to the initiation of the level of the 
activity described in the notice. The notice must contain the same 
information required by Sec. 303.13(b)(1). The regional director may 
request such other information as the regional director deems 
appropriate. A state savings association that files a 60-day notice may 
initiate the level of activity as described in its notice 60 days after 
the FDIC accepts the notice as complete, or 60 days after the FDIC 
accepts as complete the additional information, if any, that has been 
requested provided that the association is in compliance with the fully 
phased-in capital standards prescribed in section 5(t) of HOLA and 
provided that the FDIC does not, prior to that date, pose an objection 
to the association doing so. A state savings association may inititate 
the level of activity described in its notice prior to the expiration of 
the 60-day period if so notified. The continued conduct of the 
activities as described in the notice is conditioned upon the 
association's continued compliance with the fully phased-in capital 
standards and the FDIC's continued non-objection to those activities.

The 60-day period may be extended upon notice to the state savings 
association if the notice as received is incomplete or the notice raises 
issues that require additional information or time for analysis. If the 
60-day period

[[Page 44]]

is extended, the state savings association may begin the conduct of the 
activities only upon receipt of written notification to that effect. No 
state savings association will be permitted to initiate activities 
subject to this paragraph if it is determined that to do so would pose a 
significant risk to the affected deposit insurance fund.
    (d) Equity investments--(1) General. No state savings association 
may directly acquire or retain any equity investment after August 9, 
1989 of a type or in an amount that is not expressly authorized for 
federal savings associations by HOLA, regulations issued by OTS, 
official OTS Regulatory or Thrift Bulletins, or any order or 
interpretation issued in writing by OTS. Any state savings association 
which, as of August 9, 1989, had one or more such equity investments 
must file an application, return receipt requested, with the DOS 
regional director for the region in which the state savings 
association's principal office is located no later than 30 days from 
December 29, 1989. The application shall:
    (i) Describe the obligor, type, amount, and book and market values 
of the equity investment;
    (ii) Set forth the association's plans to comply with the 
requirements of section 28(c) of the FDI Act to divest the investment as 
quickly as prudently possible, but in any event not later than July 1, 
1994;
    (iii) Describe the anticipated gain or loss (anticipated or 
realized) from the sale of the investment and the impact thereof on the 
association's capital (including capital ratios before and after their 
sale);
    (iv) Include a copy of a resolution by the board of directors, or 
board of trustees in the case of a mutual association, authorizing the 
filing of this submission; and
    (v) Request the FDIC's permission to accomplish divestiture in 
accordance with said plans.

The regional director may request such additional information as the 
regional director deems appropriate. Upon review of the application and 
such additional information as requested, and at any time during the 
divestiture period thereafter, the FDIC may impose such conditions and 
requirements as it deems appropriate in its sole discretion with regard 
to the divestiture of the equity investment, including requiring 
completion of divestiture in advance of July 1, 1994.
    (2) Service corporations--(i) General. Section 303.13(d)(1) 
notwithstanding, a state savings association may acquire or retain an 
equity investment in a service corporation, provided that the service 
corporation's activities are limited solely to those expressly 
authorized by HOLA or any other statute, regulations issued by OTS, 
official OTS Regulatory or Thrift Bulletins, or any order or 
interpretation issued in writing by OTS for all service corporations 
owned by federal savings associations and provided that the investment 
in such service corporation does not exceed that permissible for a 
federal savings association pursuant to statute or regulation of OTS. If 
either of these two conditions does not exist, the state association 
must file a letter application under paragraph (d)(2)(ii) of this 
section with the DOS regional director for the region in which the state 
savings association's principal office is located requesting permission 
to acquire or retain the equity investment in the service corporation in 
question.
    (ii) Content and filing of application. An application requesting 
permission to retain an equity investment in a service corporation in 
which a federal association could not invest that was held as of August 
9, 1989 must be filed with the regional office no later than January 29, 
1990. Approval of the acquisition or retention of an equity investment 
in a service corporation in which a federal association could not invest 
will not be granted if the state association is not in compliance with 
the fully phased-in capital standards prescribed by section 5(t) of 
HOLA. Consequently, no application to acquire or retain an equity 
investment in such a service corporation should be filed if a state 
association is not in compliance with these capital requirements. In 
addition, approval of the retention or acquisition of such investments 
will not be granted if the acquisition or retention is determined to 
pose a significant risk to the affected deposit insurance

[[Page 45]]

fund. If an application to retain an investment is denied, the state 
association must file a divestiture plan with the regional director 
requesting the FDIC's permission to accomplish divestiture in accordance 
with said plan.

The letter application required hereby should contain the information 
required by Sec. 303.13(b)(1), as it relates both to the service 
corporation and to its parent state savings association. In addition, 
the application should contain: A listing of the officers (contemplated 
officers) of the service corporation, a listing of any other 
shareholders of the service corporation (existing or prospective) and 
their respective holdings, and a listing of the locations (expected 
locations) of all of the offices of the service corporation. The 
regional director may request such other information as the regional 
director deems appropriate.
    (e) Corporate debt securities not of investment grade. 
Notwithstanding anything to the contrary in Sec. 303.13, no state or 
federal savings association may, directly or through a subsidiary (other 
than a subsidiary that is a qualified affiliate), acquire or retain 
after August 9, 1989 any corporate debt security that is not of 
investment grade. Any state or federal savings association which, as of 
August 9, 1989, held corporate debt securities not of investment grade 
must divest those securities as quickly as can prudently be done, but in 
no event later than July 1, 1994. Any state or federal savings 
association that must divest corporate debt securities shall file an 
application with the DOS regional director for the region in which the 
state or Federal savings association's principal office is located not 
later than 30 days from December 29, 1990. The application shall:
    (1) Describe the obligor, type, amount, and book and market values 
of the corporate debt securities;
    (2) Set forth the state or federal association's plans to comply 
with the requirements of section 28(d) of the FDI Act to divest the 
securities as quickly as prudently possible, but in any event not later 
than July 1, 1994;
    (3) Describe the gain or loss (anticipated or realized) from the 
sale of the securities and the impact thereof on the association's 
capital (including capital ratios before and after the sale);
    (4) Include a copy of the resolution by the board of directors, or 
the board of trustees in the case of a mutual association, authorizing 
the filing of this submission; and
    (5) Request the FDIC's permission to accomplish divestiture in 
accordance with said plans.

The regional director may request such additional information as the 
regional director deems appropriate. Upon review of the application and 
such additional information as requested, and at any time during the 
divestiture period thereafter, the FDIC may impose such conditions and 
requirements as it deems appropriate in its sole discretion with regard 
to the divestiture of the debt securities, including requiring 
completion of divestiture in advance of July 1, 1994.
    (f) Notice of acquisition or establishment of a subsidiary or the 
conduct of new activities through a subsidiary. (1) No insured savings 
association may establish or acquire a subsidiary, or conduct any new 
activity through a subsidiary, without providing the DOS regional 
director for the region in which the insured savings association's 
principal office is located prior notice of the association's intent to 
do so. Notice must be sent return receipt requested and be received by 
the regional director at least 30 days prior to the establishment or 
acquisition of the subsidiary or the commencement of the new activity. 
The notice shall contain the same information required to be in a letter 
application filed pursuant to Sec. 303.13(b)(1) plus the following:
    (i) A description of how the activities of the subsidiary will be 
funded;
    (ii) The amount of the insured savings association's investment in 
the subsidiary and the form of the investment;
    (iii) The percentage ownership the insured savings association will 
have in the subsidiary;
    (iv) A listing of the other owners of the subsidiary if any; and
    (v) In the case of the acquisition of an existing concern, the terms 
and conditions of the acquisition including an appraisal, assessment of 
value, or other substantiation of the purchase price

[[Page 46]]

and operating statements for the previous three years (if applicable).

If the insured savings association's filing with the OTS under section 
18(m)(1) of the FDI Act contains all of the information required, that 
filing may be submitted to the FDIC in satisfaction of this provision. 
In any case, the regional director may request such additional 
information as the regional director deems appropriate. In all such 
cases, the 30-day period will not begin to run until the response to the 
request for additional information is complete.
    (2) Any Federal savings bank that was chartered prior to October 15, 
1982 as a savings bank under state law, and any savings association that 
acquired its principal assets from such an institution, is not required 
to file prior notice in accordance with paragraph (f)(1) of this 
section.
    (3) Any insured savings association that had one or more 
subsidiaries prior to August 9, 1989 must file a notice with the DOS 
regional director for the region in which the insured savings 
association's principal office is located within 30 days from December 
29, 1989. The notice should set forth the name, location, and type of 
activity conducted by the subsidiary and the amount of the insured 
savings association's investment in the subsidiary.
    (4) Section 303.13(f)(1) notwithstanding, an insured savings 
assocaition may establish or acquire one or more subsidiaries whose sole 
purpose is to hold interests in real property acquired by the savings 
association that fit the description in Sec. 303.13(a)(5)(ii) provided 
that the savings association files a written notice, return receipt 
requested, with the DOS regional director for the region in which the 
savings association's principal office is located indicating that the 
association intends to establish or acquire one or more subsidiaries 
that will be engaged solely in the disposition of such property. Notice 
must be received by the regional director at least 30 days prior to the 
establishment or acquisition of any such subsidiary. An association that 
has filed a notice pursuant to this paragraph may thereafter establish 
or acquire additional such subsidiaries provided that each time within 
14 days after doing so the association notifies the regional director in 
writing. The notice shall identify the savings association, give the 
date of the initial notice, identify the new subsidiary, and state the 
value of the property at the time it was transferred to the subsidiary.
    (g) Notice by Federal savings associations conducting grandfathered 
activities. Any federal savings association authorized by section 
5(i)(4) of HOLA (12 U.S.C. 1464(i)(4)) to make any investment or engage 
in any activity not otherwise generally authorized to federal savings 
association by section 5 of HOLA must file a notice with the DOS 
regional director for the region in which the federal savings 
association's principal office is located within 30 days after December 
29, 1989 or within 30 days after the date the federal savings 
association is first able to rely upon section 5(i)(4) of HOLA as a 
result of the acquisition of an association that is covered by such 
section. The notice should briefly describe the activity or investment.
    (h) Delegations. The authority to act on applications and notices 
filed pursuant to Sec. 303.13, and to make any and all determinations 
called for in regard to the same, is delegated to the Director (DOS), 
and where confirmed in writing by the director, to an associate 
director, or to the regional director or deputy regional director.
(Approved by the Office of Management and Budget under control number 
3064-0104)
[54 FR 53548, Dec. 29, 1989, as amended at 55 FR 38042, Sept. 17, 1990; 
58 FR 64458, Dec. 8, 1993; 59 FR 52667, Oct. 19, 1994]



Sec. 303.14  Change in senior executive officer or board of directors.

    (a) Definitions. For the purposes of this section:
    (1) The term individual means any natural person, as well as any 
other entity and/or its employees substituted for such natural person.
    (2) The term insured nonmember bank means any bank, including any 
foreign bank having an insured branch the deposits of which are insured 
in accordance with the provisions of the Federal Deposit Insurance Act, 
which is not a

[[Page 47]]

member of the Federal Reserve System. The term does not include any 
institution chartered by the Comptroller of the Currency, any branch 
licensed by the Comptroller of the Currency, any District bank, or any 
federal savings bank.
    (3) The term senior executive officer means any individual who 
exercises significant influence over, or participates in, major 
policymaking decisions of an insured nonmember bank, without regard to 
title, salary, or compensation. The term includes, but is not limited 
to, the following positions: president, chief executive officer, chief 
managing official (in an insured state branch of a foreign bank), chief 
operating officer, chief financial officer, chief lending officer, or 
chief investment officer. The term also includes employees of entities 
retained by an insured nonmember bank to perform such functions in the 
insured nonmember bank, when such firm is hired in lieu of directly 
hiring the individuals.
    (4) The term troubled condition means any insured nonmember bank 
that:
    (i) Has been assigned a composite rating by the FDIC of 4 or 5 under 
the Uniform Financial Institutions Rating System, or, in the case of an 
insured state-licensed branch of a foreign bank (State branch), an 
equivalent rating;
    (ii) Is subject to a proceeding initiated by the FDIC for 
termination or suspension of deposit insurance;
    (iii) Is subject to a written agreement which requires action to 
improve or maintain the safety and soundness of the institution and 
which is issued by either the FDIC or by the appropriate state banking 
authority, a cease and desist order issued by either the FDIC or the 
appropriate state banking authority, a cease and desist order or 
proceeding initiated by either the FDIC or the appropriate state banking 
authority, or a capital directive issued by either the FDIC or the 
appropriate state banking authority; or
    (iv) Is informed in writing by the DOS regional director of the 
region in which the institution is located (appropriate regional 
director) or his or her designee, based on a visitation, examination, or 
report of condition, that it has been designated a troubled institution 
for the purposes of Sec. 303.14.
    (b) Prior Notice Requirement. An insured nonmember bank shall give 
the FDIC written notice at least 30 days prior to the effective date of 
any addition or replacement of a member of the board of directors (or a 
member of the board of trustees in an insured nonmember bank held in a 
mutual form of ownership) or the employment or change in 
responsibilities of any individual to a position as a senior executive 
officer if:
    (1) The bank has been chartered or the insured state branch has been 
licensed less than two years;
    (2) Within the two years preceding the proposed addition or 
employment;
    (i) The insured nonmember bank or any of its parents has undergone a 
change in control which required a notice under section 7(j) of the 
Federal Deposit Insurance Act or regulations issued pursuant to that 
statute; or
    (ii) The insured nonmember bank has undergone a transaction subject 
to section 3 of the Bank Holding Company Act or section 10 of the Home 
Owners Loan Act or regulations issued pursuant to either of those 
statutes;
    (3) The insured nonmember bank is not in compliance with the minimum 
capital requirements applicable to it and which are imposed by 12 CFR 
part 325 or by other regulatory action of the FDIC or the appropriate 
state banking authority; or
    (4) The insured nonmember bank is otherwise in a troubled condition.

In the case of the addition of a member of the board of directors or a 
change in senior executive officer in a foreign bank having an insured 
State branch, the notice requirement shall not apply to such additions 
and changes in the foreign bank parent, but only to changes in senior 
executive officers in the State branch. The notice requirement also does 
not apply in the case of an advisory director who is not elected by the 
shareholders of the bank or any of its parents, who is not authorized to 
vote on matters before the board of directors, and who provides solely 
general policy advice to the board of directors.
    (c) Procedures for notice of proposed change in Director or Senior 
Executive Officer--(1) Filing and acceptance. Notices shall be filed 
with the appropriate

[[Page 48]]

regional director and shall contain information pertaining to the 
competence, experience, character, or integrity of the individual with 
respect to whom the notice is submitted, as prescribed in the designated 
FDIC form, subject to the authority of the regional director or his or 
her designee to require additional information. Each individual on whose 
behalf the notice is filed must attest to the validity of the 
information filed which pertains to that individual. At the option of 
the individual, the information may be forwarded to the regional 
director by the individual; however, in such cases, the insured 
nonmember bank must file a notice to that effect. The 30-day notice 
period will begin to run on the date all required information is 
received by the appropriate regional director. The bank submitting the 
notice shall be notified of the date on which all such required 
information is received and the notice is accepted for processing.
    (2) Waiver of prior notice requirement--(i) Procedure for obtaining. 
Parties may petition the appropriate regional director for a waiver of 
the prior notice required under this section. Waiver may be granted if 
it is found that delay could harm the bank or the public interest. Any 
waiver shall not affect the authority of the FDIC to issue a notice of 
disapproval within 30 days of the waiver.
    (ii) Election of directors. In the case of the election of a new 
member of the board of directors at a meeting of the shareholders of an 
insured nonmember bank, such waiver is hereby granted, but a completed 
notice must be filed with the appropriate regional director within 48 
hours of the election.
    (3) Notice of intent not to disapprove. A proposed director or 
senior executive officer may begin service before the expiration of the 
30-day period if the FDIC notifies the bank and the individual in 
writing of the FDIC's intention not to disapprove the proposed addition 
or employment.
    (4) Commencement of service. A proposed senior executive officer or 
director may begin service upon the expiration of the 30-day period 
following acceptance of a complete notice, unless the FDIC issues a 
notice of disapproval before the end of the 30-day period.
    (d) Notice of disapproval. The FDIC may disapprove the individual's 
serving as a director or senior executive officer if it finds that the 
competence, experience, character, or integrity of the individual with 
respect to whom a notice under this section is submitted indicates that 
it would not be in the best interests of the depositors of the bank or 
in the best interests of the public to permit the individual to be 
employed by, or associated with, the bank. The notice of disapproval 
will advise the parties of their rights of appeal.
    (e) Delegations. The authority to issue notices of disapproval or 
notices of intent not to disapprove under this section; to grant waivers 
of the prior notice requirement; to determine the informational adequacy 
of a notice; to designate an insured nonmember bank as a troubled 
institution; and to determine when the 30-day period begins to run is 
delegated to the Director (DOS), and where confirmed in writing by the 
director, to an associate director, or to the regional director or 
deputy regional director.
[54 FR 53042, Dec. 27, 1989 as amended by 59 FR 52667, Oct. 19, 1994]



Sec. 303.15  Mutual-to-stock conversions of mutually owned state-chartered savings banks.

    (a) Prior notice requirement. In addition to complying with the 
substantive requirements in Sec. 333.4 of this chapter, an insured 
state-chartered mutually owned savings bank that proposes to convert 
from mutual to stock form shall file with the FDIC a notice of intent to 
convert to stock form and copies of all documents filed with state and 
federal banking and/or securities regulators in connection with the 
proposed conversion. An institution that is in the process of converting 
to stock form that has filed a proposed stock conversion application 
with the applicable state and federal regulators (or otherwise has 
initiated a stock conversion) prior to the effective date of this 
section shall file the required materials with the FDIC as soon as 
practicable. An insured mutual savings bank chartered by a state that 
does not

[[Page 49]]

require the filing of application materials to convert from mutual to 
stock form that proposes to convert to the stock form shall notify the 
FDIC of the proposed conversion and provide the materials requested by 
the FDIC.
    (b) Content and filing of notice--(1) Content of notice. The notice 
required to be filed under paragraph (a) of this section shall provide a 
description of the proposed conversion and include a copy of all notices 
or applications concerning the proposed conversion, including all 
attachments or appendices thereto, that have been filed with any state 
and federal banking and/or securities regulators. Copies of all 
agreements entered into as part of the mutual-to-stock conversion 
between the institution, its officers, directors/trustees and any other 
institution and/or its successors also must be provided.
    (2) Filing of notice. Notices shall be filed with the regional 
director (DOS) in the region in which the institution seeking to convert 
is headquartered at the same time as the conversion application 
materials are filed with the institution's primary state regulator.
    (c) Review by FDIC. (1) The FDIC shall review the materials 
submitted by the institution seeking to convert from mutual to stock 
form. The FDIC, in its discretion, may request any additional 
information it deems necessary to evaluate the proposed conversion and 
the institution shall provide such information to the FDIC 
expeditiously. Among the factors to be reviewed by the FDIC are:
    (i) The use of the proceeds from the sale of stock, as prescribed in 
the business plan;
    (ii) The adequacy of the disclosure materials;
    (iii) The participation of depositors in approving the transaction;
    (iv) The form of the proxy statement required for the vote of the 
depositors/members on the conversion;
    (v) Any increased compensation and other remuneration (including 
stock grants, stock option rights and other similar benefits) to be 
obtained by officers and directors/trustees of the bank in connection 
with the conversion;
    (vi) The adequacy and independence of the appraisal of the value of 
the mutual savings bank for purposes of determining the price of the 
shares of stock to be sold;
    (vii) The process by which the bank's trustees approved the 
appraisal, the pricing of the stock and the compensation arrangements 
for insiders;
    (viii) The nature and apportionment of stock subscription rights; 
and
    (ix) The bank's plans to fulfill its commitment to serving the 
convenience and needs of its community.
    (2) In reviewing the materials required to be submitted under this 
section, the FDIC will take into account the extent to which the 
proposed conversion conforms with the various provisions of the mutual-
to-stock conversion regulations of the Office of Thrift Supervision (12 
CFR Part 563b), as currently in effect at the time the FDIC reviews the 
required materials related to the proposed conversion. Any non-
conformity with those provisions will be closely scrutinized. Conformity 
with the OTS requirements, however, will not be sufficient for FDIC 
regulatory purposes if the FDIC determines that the proposed conversion 
would pose a risk to the institution's safety and soundness, violate any 
law or regulation or present a breach of fiduciary duty.
    (d) Notification of completed filing of materials. The FDIC shall 
notify the institution when all the required materials related to the 
proposed conversion have been filed with the FDIC and the notice is 
thereby complete for purposes of computing the time periods designated 
in paragraphs (e) and (g) of this section.
    (e) Notice of intent not to object. If the FDIC determines, in its 
discretion, that the proposed conversion would not pose a risk to the 
institution's safety and soundness, violate any law or regulation or 
present a breach of fiduciary duty, then the FDIC shall issue to the 
bank seeking to convert, within 60 days of receipt of a complete notice 
of proposed conversion or within 20 days after the last applicable state 
or other federal regulator has acted on the proposed conversion, 
whichever is later, a notice of intent not to object to the proposed 
conversion. The FDIC may, in its discretion, extend by written notice to 
the institution the initial 60-day period by an additional 60 days.

[[Page 50]]

    (f) Letter of objection. If the FDIC determines, in its discretion, 
that the proposed conversion poses a risk to the institution's safety 
and soundness, violates any law or regulation or presents a breach of 
fiduciary duty, then the FDIC shall issue a letter to the institution 
stating its objection(s) to the proposed conversion and advising the 
institution that the conversion shall not be consummated until such 
letter is rescinded. A copy of the letter of objection shall be 
furnished to the institution's primary state regulator and any other 
state or federal banking and/or securities regulator involved in the 
conversion. The letter of objection shall advise the institution of its 
right to petition the FDIC for reconsideration under Sec. 303.6(e). Such 
action shall not, in any way, prohibit the FDIC from taking any other 
action(s) that it may deem necessary.
    (g) Consummation of the conversion. An institution may consummate 
the proposed conversion upon either:
    (1) The receipt of a notice of intent not to object; or
    (2) The expiration of the 60-day period following acceptance of a 
complete notice by the FDIC or the 20-day period after the last 
applicable state or other federal regulator has acted on the proposed 
conversion, whichever is later, unless the FDIC issues a notice of 
objection before the end of that period and, in which case, the 
conversion shall not be consummated until such letter is rescinded. The 
FDIC may, in its discretion, extend by written notice to the institution 
the initial 60-day period by an additional 60 days.
[59 FR 61245, Nov. 30, 1994]



PART 304--FORMS, INSTRUCTIONS AND REPORTS--Table of Contents




Sec.
304.1  Purpose and scope.
304.2  Forms and instructions--general.
304.3  Certified statements.
304.4  Reports of condition and income.
304.5  Other forms.
304.6  [Reserved]
304.7  Display of control numbers.
Appendix A to Part 304--List of Forms
    Authority:  5 U.S.C. 552; 12 U.S.C. 1817, 1818, 1819, 1820; Public 
Law 102-242, 105 Stat. 2251 (12 U.S.C. 1817 note).
    Source:  51 FR 36684, Oct. 15, 1986, unless otherwise noted.



Sec. 304.1  Purpose and scope.

    This part is issued under section 552 of title 5 of the United 
States Code (5 U.S.C. 552), which requires that each agency shall make 
available to the public information pertaining to the description of 
forms available or the places at which forms may be obtained, and 
instructions as to the scope and content of reports and other 
submittals. The forms mentioned in this part are limited to those which 
are not already mentioned elsewhere within the rules and regulations of 
the Federal Deposit Insurance Corporation. However, appendix A to this 
part lists forms required by the FDIC and identifies the sections of 
FDIC's regulations where the forms are referenced.
[51 FR 36684, Oct. 15, 1986, as amended at 62 FR 4896, Feb. 3, 1997]



Sec. 304.2  Forms and instructions--general.

    Necessary forms with their related instructions to be used in 
connection with applications, reports, and other submittals can be 
obtained from FDIC regional offices--Division of Supervision. The FDIC 
regional offices are listed in the directory of the FDIC Law, 
Regulations and Related Acts looseleaf service, published by the FDIC. A 
listing of FDIC forms can also be obtained by writing to the FDIC, 
Division of Supervision, 550 17th Street, NW, Washington, D.C. 20429. 
The forms are also available in the FDIC Public Information Center at 
801 17th Street, NW, Washington, D.C. 20429.
[62 FR 4896, Feb. 3, 1997]



Sec. 304.3  Certified statements.

    The certified statements required to be filed by insured 
institutions under the provisions of section 7 of the Federal Deposit 
Insurance Act (12 U.S.C. 1817), as amended, shall be filed in accordance 
with part 327 of this chapter. The applicable forms are Form 6420/07A--
Form 6420/07H which show the computation of the semiannual assessment 
due to the Corporation from an insured depository institution. As 
provided for in part 327 of this chapter, the

[[Page 51]]

forms will be furnished to insured depository institutions by the 
Corporation twice each calendar year and the completed statement must be 
returned to the Corporation by each institution.
[62 FR 4896, Feb. 3, 1997]



Sec. 304.4  Reports of condition and income.

    (a) Description. Forms FFIEC 031, 032, 033, and 034, Consolidated 
Reports of Condition and Income, are quarterly reports for insured state 
nonmember banks (except District banks) of different asset sizes or with 
foreign offices, as appropriate, that are required to be prepared as of 
the close of business on the following report dates: March 31, June 30, 
September 30, and December 31. These reports are also known as the 
``Call Report.'' The Call Report includes a balance sheet, an income 
statement, and a statement of changes in equity capital of the reporting 
bank. Supporting schedules request additional detail with respect to 
charge-offs and recoveries, income from international operations, 
specific asset and liability accounts, off-balance sheet items, past due 
and nonaccrual assets, information for assessment purposes, and 
regulatory capital. All assets and liabilities, including contingent 
assets and liabilities, must be reported in, or otherwise taken into 
account in the preparation of, the Call Report. Reporting banks must 
also submit annually such information on small business and small farm 
lending as the FDIC may need to assess the availability of credit to 
these sectors of the economy. Call Reports must be prepared in 
accordance with the appropriate instructions contained in the Federal 
Financial Institutions Examination Council booklet entitled 
``Instructions--Consolidated Reports of Condition and Income''. The 
report forms, the instructions for completing the reports, and the 
accompanying materials will be furnished to all insured state nonmember 
banks (except District banks) by, or may be obtained upon request from, 
the Call Reports Analysis Unit, Division of Supervision, FDIC, 
Washington, D.C. 20429.
    (b) Submission of reports. All insured state nonmember banks (except 
District banks) shall file their completed reports by the method and 
with the appropriate collection agent for the FDIC as designated in the 
materials accompanying the report forms each quarter. Completed reports 
must be received no more than 30 calendar days after the report date, 
subject to the timely filing provisions set forth in the 
``Instructions--Consolidated Reports of Condition and Income'' and in 
the materials accompanying the report forms each quarter. Any bank which 
has or has had more than one foreign office, other than a shell branch 
or an International Banking Facility, may take an additional 15 calendar 
days to submit its Call Reports. A bank using any of these additional 15 
calendar days to complete its reports is required to submit its reports 
electronically.
[62 FR 4896, Feb. 3, 1997]



Sec. 304.5  Other forms.

    The forms described in this section have been prepared for the use 
of banks.
    (a) Form 8020/05: Summary of Deposits. Form 8020/05 is a report on 
the amount of deposits for each authorized office of an insured bank 
with branches; unit banks do not report. Reports as of June 30 of each 
year must be submitted no later than the immediately succeeding July 31. 
The report is filed with the appropriate collection agent for the FDIC 
as designated in the materials accompanying the survey forms each year. 
The report forms and the instructions for completing the reports will be 
furnished to all such banks by, or may be obtained upon request from the 
Trust and Survey Group, Division of Supervision, FDIC, 550 17th Street, 
NW, Washington, D.C. 20429.
    (b) Form 6120/06: Notification of Performance of Bank Services. Form 
6120/06 may be used to satisfy the notice requirement for bank service 
arrangements that is contained in section 7 of the Bank Service 
Corporation Act (12 U.S.C. 1867), as amended. In lieu of the form, a 
bank may satisfy the requirement by submitting a letter stating: The 
name of the servicer; the address at which the service is performed; the 
service being performed; and the date the service commenced. Either the 
form or the letter containing the notice information must be submitted 
to

[[Page 52]]

the regional director--Division of Supervision of the region in which 
the bank's main office is located within 30 days of the making of the 
bank service contract or the performance of the bank service, whichever 
occurs first.
    (c) Form FFIEC 001: Annual Report of Trust Assets. This report must 
be filed by all insured state nonmember commercial and savings banks 
operating trust departments or banks granted consent by the Corporation 
to exercise trust powers, and their trust subsidiaries. The report must 
be filed no later than February 15th of each year. When circumstances 
necessitate, additional information may be required about certain 
operations of the trust department. The report must be prepared and 
submitted in accordance with the appropriate instructions. The report is 
filed with the appropriate collection agent for the FDIC as designated 
in the report form and instructions. The report forms and instructions 
for completing the report will be furnished automatically to all such 
banks by, or may be obtained upon request from the Trust and Survey 
Group, Division of Supervision, FDIC, 550 17th Street, NW, Washington, 
D.C. 20429.
    (d) Form FFIEC 002: Report of Assets and Liabilities of U.S. 
Branches and Agencies of Foreign Banks. Form FFIEC 002 is a report in 
the form of a statement of the assets and liabilities of U.S. branches 
and agencies of foreign banks together with supporting schedules that 
request additional detail with respect to selected assets and 
liabilities, off-balance sheet items, and, in the case of insured 
branches, information for assessment purposes. All assets and 
liabilities, including contingent assets and liabilities, must be 
reported in, or otherwise taken into account in the preparation of, this 
report. Insured branches must also submit annually such information on 
small business and small farm lending as the FDIC may need to assess the 
availability of credit to these sectors of the economy. The report must 
be prepared in accordance with the instructions contained in the 
instruction booklet for the report, copies of which are furnished to all 
U.S. branches and agencies of foreign banks by the Federal Reserve 
System. The Board of Governors of the Federal Reserve System collects 
and processes the report on behalf of FDIC-supervised branches. The 
report is submitted quarterly to the appropriate Federal Reserve 
district bank.
    (e) Form FFIEC 004: Report on Indebtedness of Executive Officers and 
Principal Shareholders and their Related Interests to Correspondent 
Banks. Form FFIEC 004 is a recommended form that may be used by the 
executive officers and principal shareholders of an insured state 
nonmember bank to report to the board of directors of their bank on 
their indebtedness (and that of their related interests) to 
correspondent banks, as required by part 349 of this chapter. The 
reports or any form containing identical information must be submitted 
to the bank's board of directors by January 31 of each year and cover 
indebtedness to correspondent banks during the preceding calendar year. 
Form FFIEC 004 is mailed annually by the FDIC to each insured state 
nonmember bank.
[62 FR 4897, Feb. 3, 1997]



Sec. 304.6  [Reserved]



Sec. 304.7  Display of control numbers.

    The following sections of this part of FDIC's regulations containing 
collection of information requirements are listed with the control 
numbers assigned by the Office of Management and Budget:

------------------------------------------------------------------------
                                                             Currently  
               Section of 12 CFR Part 304                  Assigned OMB 
                                                            Control No. 
------------------------------------------------------------------------
304.3...................................................       3064-0057
304.4(a)................................................       3064-0052
304.4(b)................................................       3064-0054
304.5(a)................................................       3064-0061
304.5(b)................................................       3064-0029
304.5(c)................................................       3064-0024
304.5(d)................................................       7100-0032
304.5(e)................................................       3064-0023
------------------------------------------------------------------------

                 Appendix A to Part 304-- List of Forms

    Note:  See footnotes at end of table.

[[Page 53]]



----------------------------------------------------------------------------------------------------------------
                                                                            Section of FDICs                    
                                                                           regulations (12 CFR                  
                 Form                                Title               chapter III) where the       OMB No.   
                                                                           form is referenced                   
----------------------------------------------------------------------------------------------------------------
FDIC 6112/01..........................  Initial Statement of            335.413.................       3064-0030
                                         Beneficial Ownership of                                                
                                         Equity Securities (Form F-7).                                          
FDIC 6112/02..........................  Statement of Changes in         335.414.................       3064-0030
                                         Beneficial Ownership of                                                
                                         Equity Securities (Form F-8).                                          
FDIC 6120/06..........................  Notification of Bank Services.  304.5(b)................       3064-0029
FDIC 6200/05..........................  Application for Federal         303.1...................       3064-0001
                                         Deposit Insurance (Commercial                                          
                                         Banks).                                                                
FDIC 6200/06..........................  Financial Report..............  (\1\)...................       3064-0006
FDIC 6200/07..........................  Application for Federal         303.1...................       3064-0069
                                         Deposit Insurance for                                                  
                                         Operating Noninsured                                                   
                                         Institutions.                                                          
FDIC 6200/09..........................  Application for Consent to      (\2\)...................       3064-0025
                                         Exercise Trust Powers.                                                 
FDIC 6220/01..........................  Application for a Merger or     303.3...................       3064-0016
                                         Other Transaction Pursuant to                                          
                                         Section 19(c) of the Federal                                           
                                         Deposit Insurance Act.                                                 
FDIC 6220/07..........................  Application for a Merger or     303.7(b)(1) and 303.3...       3064-0015
                                         Other Transaction Pursuant to                                          
                                         Section 18(c) of the Federal                                           
                                         Deposit Insurance Act                                                  
                                         (Phantom or Corporate                                                  
                                         Reorganization).                                                       
FDIC 6342/12..........................  Request for Deregistration      341.5...................       3064-0027
                                         Registered Transfer Agent.                                             
FDIC 6420/07..........................  Certified Statement...........  304.3(a)................       3064-0057
FDIC 6440/12..........................  Loan/Application Register.....  338.8(\3\)..............       7100-0247
FDIC 6710/06..........................  Suspicious Activity Report....  353.1...................       3064-0077
FDIC 6710/07..........................  Application Pursuant to         (\4\)...................       3064-0018
                                         Section 19 of the Federal                                              
                                         Deposit Insurance Act.                                                 
FDIC 6810/01..........................  Notification of Addition of a   333.2...................       3064-0097
                                         Director or Employment of a                                            
                                         Senior Executive Officer.                                              
FDIC 6822/01..........................  Notice of Acquisition of        303.4(b)................       3064-0019
                                         Control.                                                               
FDIC 8020/05..........................  Summary of Deposits...........  304.5(a)................       3064-0061
FFIEC 001.............................  Annual Report of Trust Assets.  304.5(c)................       3064-0024
FFIEC 002.............................  Report of Assets and            304.5(d)................       7100-0032
                                         Liabilities of U.S. Branches                                           
                                         and Agencies of Foreign Banks.                                         
FFIEC 004.............................  Report on Indebtedness of       304.5(e)................       3064-0023
                                         Executive Officers and                                                 
                                         Principal Shareholders and                                             
                                         their Related Interests to                                             
                                         Correspondent Banks.                                                   
FFIEC 009.............................  Country Exposure Report.......  351.3(b)................       3064-0017
FFIEC 009a............................  Country Exposure Information    351.3...................       3064-0017
                                         Report.                                                                
FFIEC 019.............................  Country Exposure Report for     (\5\)...................       3064-0017
                                         U.S. Branches and Agencies of                                          
                                         Foreign Banks.                                                         
FFIEC 030.............................  Foreign Branch Report of        347.6(b)................       3064-0011
                                         Condition.                                                             
FFIEC 031.............................  Consolidated Reports of         304.4...................       3064-0052
                                         Condition and Income for a                                             
                                         Bank with Domestic and                                                 
                                         Foreign Offices.                                                       
FFIEC 032.............................  Consolidated Reports of         304.4...................       3064-0052
                                         Condition and Income for a                                             
                                         Bank with Domestic Offices                                             
                                         Only and Total Assets of $300                                          
                                         Million or More.                                                       
FFIEC 033.............................  Consolidated Reports of         304.4...................       3064-0052
                                         Condition and Income for a                                             
                                         Bank with Domestic Offices                                             
                                         Only and Total Assets of $100                                          
                                         Million or More But Less Than                                          
                                         $300 Million.                                                          
FFIEC 034.............................  Consolidated Reports of         304.4...................       3064-0052
                                         Condition and Income for a                                             
                                         Bank with Domestic Offices                                             
                                         Only and Total Assets of Less                                          
                                         than $100 Million.                                                     
FFIEC 035.............................  Monthly Consolidated Foreign    (\6\)...................       1557-0156
                                         Currency Report of Banks in                                            
                                         the United States.                                                     
GFIN..................................  Notice of Government            (\7\)...................       1535-0089
                                         Securities Broker or                                                   
                                         Government Securities Dealer                                           
                                         Activities to be Filed by a                                            
                                         Financial Institution Under                                            
                                         Section 15C(a)(1)(B).                                                  
GFIN-W................................  Notice by Financial             (\7\)...................       7100-0224
                                         Institutions of Termination                                            
                                         of Activities as a Government                                          
                                         Securities Broker or                                                   
                                         Government Securities Dealer.                                          
GFIN-4................................  Disclosure Form for Person      (\7\)...................       1535-0089
                                         Associated With a Financial                                            
                                         Institution Government                                                 
                                         Securities Broker or Dealer.                                           
GFIN-5................................  Uniform Termination Notice for  (\7\)...................       1535-0089
                                         Person Associated With a                                               
                                         Financial Institution                                                  
                                         Government Securities Broker                                           
                                         or Dealer.                                                             
MSD 4.................................  Uniform Application for         343.3...................       3064-0022
                                         Municipal Securities                                                   
                                         Principal or Municipal                                                 
                                         Securities Representative                                              
                                         Associated With a Bank                                                 
                                         Municipal Securities Dealer.                                           
MSD 5.................................  Uniform Termination for         343.3...................       3064-0022
                                         Municipal Securities                                                   
                                         Principal or Municipal                                                 
                                         Securities Representative                                              
                                         Associated With a Bank                                                 
                                         Municipal Securities Dealer.                                           

[[Page 54]]

                                                                                                                
TA-1..................................  Transfer Agent Registration     341.6...................       3064-0026
                                         and Amendment Form.                                                    
----------------------------------------------------------------------------------------------------------------
Notes:                                                                                                          
\1\ Not referenced in 12 CFR chapter III. The report form is submitted by each individual director or officer of
  a proposed or operating bank applying to the FDIC for federal deposit insurance as a state nonmember bank, or 
  by a person proposing to acquire ownership or control of an insured state nonmember bank.                     
\2\ The report form can be obtained from the HMDA Assistance line by telephoning (202) 452-2016.                
\3\ Not referenced in 12 CFR chapter III. The application form is submitted by insured state nonmember banks    
  applying for FDIC consent to exercise trust powers.                                                           
\4\ Not referenced in 12 CFR chapter III. The application form is submitted by FDIC-insured banks applying for  
  FDIC consent to employ persons who have been convicted of crimes involving dishonesty or breach of trust.     
\5\ Not referenced in 12 CFR chapter III. The report form is submitted by state chartered and federally-licensed
  branches and agencies of foreign banks in the U.S. with $30 million or more in total direct claims on foreign 
  residents. The Federal Reserve Board collects and processes the report on behalf of FDIC-supervised branches. 
  The report is submitted quarterly to the appropriate Federal Reserve district bank.                           
\6\ Not referenced in 12 CFR chapter III. The report form is submitted by banks (other than savings banks) and  
  bank holding companies with a dollar equivalent of $100 million or more in assets, liabilities, foreign       
  exchange contracts bought and foreign exchange contracts sold in any six specific foreign currencies as of the
  end of a month. The Office of the Comptroller of the Currency collects and processes this monthly report on   
  behalf of insured state nonmember banks.                                                                      
\7\ Not referenced in 12 CFR chapter III. The report form is submitted by banks or persons associated with banks
  required to file under section 15C of the Securities and Exchange Act of 1934.                                

[62 FR 4897, Feb. 3, 1997]



PARTS 305-306  [RESERVED]--Table of Contents






PART 307--NOTIFICATION OF CHANGES OF INSURED STATUS--Table of Contents




    Authority:  Sec. 2, Pub. L. 797, 64 Stat. 879, 880 as amended by 
secs. 202, 204, Pub. L. 89-694, 80 Stat. 1046, 1054, and sec. 6(c)(14), 
Pub. L. 95-369, 92 Stat. 618 (12 U.S.C. 1818(a), 1818(o)); sec. 304, 
Pub. L. 95-630, 92 Stat. 3676 (12 U.S.C. 1818(q); sec. 9, Pub. L. 797, 
64 Stat. 881 (12 U.S.C. 1819).



Sec. 307.1  Certification of assumption of deposit liabilities.

    Whenever the deposit liabilities of an insured bank or insured 
branch of a foreign bank are assumed by another insured bank (whether by 
merger, consolidation, or other statutory assumption, or by contract), 
the assuming or resulting bank shall certify to the FDIC that it has 
agreed to assume the deposit liabilities of the bank whose deposits were 
assumed. The certification shall be made within 30 days after the 
assumption takes effect and shall state the date the assumption took 
effect. This certification shall be considered satisfactory evidence of 
the assumption.
[48 FR 24031, May 31, 1983]



Sec. 307.2  Notice to be given when deposit liabilities are not assumed.

    Any insured bank or insured branch of a foreign bank whose insured 
status is voluntarily terminated, but whose deposit liabilities are not 
assumed shall give notice to each of its depositors of the date of the 
termination of its insured status under the Federal Deposit Insurance 
Act. The notice to depositors shall be given in a form, in a manner and 
at a time approved by the appropriate FDIC Regional Director. The FDIC 
may require the bank to take other steps that it considers necessary for 
the protection of depositors.
[48 FR 24031, May 31, 1983]



PART 308--RULES OF PRACTICE AND PROCEDURE--Table of Contents




           Subpart A--Uniform Rules of Practice and Procedure

Sec.
308.1  Scope.
308.2  Rules of construction.
308.3  Definitions.
308.4  Authority of Board of Directors.
308.5  Authority of the administrative law judge.
308.6  Appearance and practice in adjudicatory proceedings.
308.7  Good faith certification.
308.8  Conflicts of interest.
308.9  Ex parte communications.
308.10  Filing of papers.
308.11  Service of papers.
308.12  Construction of time limits.
308.13  Change of time limits.
308.14  Witness fees and expenses.
308.15  Opportunity for informal settlement.
308.16  FDIC's right to conduct examination.
308.17  Collateral attacks on adjudicatory proceeding.

[[Page 55]]

308.18  Commencement of proceeding and contents of notice.
308.19  Answer.
308.20  Amended pleadings.
308.21  Failure to appear.
308.22  Consolidation and severance of actions.
308.23  Motions.
308.24  Scope of document discovery.
308.25  Request for document discovery from parties.
308.26  Document subpoenas to nonparties.
308.27  Deposition of witness unavailable for hearing.
308.28  Interlocutory review.
308.29  Summary disposition.
308.30  Partial summary disposition.
308.31  Scheduling and prehearing conferences.
308.32  Prehearing submissions.
308.33  Public hearings.
308.34  Hearing subpoenas.
308.35  Conduct of hearings.
308.36  Evidence.
308.37  Post-hearing filings.
308.38  Recommended decision and filing of record.
308.39  Exceptions to recommended decision.
308.40  Review by Board of Directors.
308.41  Stays pending judicial review.

                  Subpart B--General Rules of Procedure

308.101  Scope of Local Rules.
308.102  Authority of Board of Directors and Executive Secretary.
308.103  Appointment of administrative law judge.
308.104  Filings with the Board of Directors.
308.105  Custodian of the record.
308.106  Written testimony in lieu of oral hearing.
308.107  Document discovery.

  Subpart C--Rules of Practice Before the FDIC and Standards of Conduct

308.108  Sanctions.
308.109  Suspension and disbarment.

 Subpart D--Rules and Procedures Applicable to Proceedings Relating to 
                  Disapproval of Acquisition of Control

308.110  Scope.
308.111  Grounds for disapproval.
308.112  Notice of disapproval.
308.113  Answer to notice of disapproval.
308.114  Burden of proof.

 Subpart E--Rules and Procedures Applicable to Proceedings Relating to 
 Assessment of Civil Penalties for Willful Violations of the Change in 
                            Bank Control Act

308.115  Scope.
308.116  Assessment of penalties.
308.117  Effective date of, and payment under, an order to pay.
308.118  Collection of penalties.

     Subpart F--Rules and Procedures Applicable to Proceedings for 
                Involuntary Termination of Insured Status

308.119  Scope.
308.120  Grounds for termination of insurance.
308.121  Notification to primary regulator.
308.122  Notice of intent to terminate.
308.123  Notice to depositors.
308.124  Involuntary termination of insured status for failure to 
          receive deposits.
308.125  Temporary suspension of deposit insurance.
308.126  Special supervisory associations.

 Subpart G--Rules and Procedures Applicable to Proceedings Relating to 
                         Cease-and-Desist Orders

308.127  Scope.
308.128  Grounds for cease-and-desist orders.
308.129  Notice to state supervisory authority.
308.130  Effective date of order and service on bank.
308.131  Temporary cease-and-desist order.

 Subpart H--Rules and Procedures Applicable to Proceedings Relating to 
  Assessment and Collection of Civil Money Penalties for Violation of 
Cease-and-Desist Orders and of Certain Federal Statutes, Including Call 
                            Report Penalties

308.132  Assessment of penalties.
308.133  Effective date of, and payment under, an order to pay.

    Subpart I--Rules and Procedures for Imposition of Sanctions Upon 
    Municipal Securities Dealers or Persons Associated With Them and 
                  Clearing Agencies or Transfer Agents

308.134  Scope.
308.135  Grounds for imposition of sanctions.
308.136  Notice to and consultation with the Securities and Exchange 
          Commission.
308.137  Effective date of order imposing sanctions.

Subpart J--Rules and Procedures Relating to Exemption Proceedings Under 
          Section 12(h) of the Securities Exchange Act of 1934

308.138  Scope.
308.139  Application for exemption.
308.140  Newspaper notice.

[[Page 56]]

308.141  Notice of hearing.
308.142  Hearing.
308.143  Decision of Board of Directors.

 Subpart K--Procedures Applicable to Investigations Pursuant to Section 
                            10(c) of the FDIA

308.144  Scope.
308.145  Conduct of investigation.
308.146  Powers of person conducting investigation.
308.147  Investigations confidential.
308.148  Rights of witnesses.
308.149  Service of subpoena.
308.150  Transcripts.

Subpart L--Procedures and Standards Applicable to a Notice of Change in 
 Senior Executive Officer or Director Pursuant to Section 32 of the FDIA

308.151  Scope.
308.152  Grounds for disapproval of notice.
308.153  Procedures where notice of disapproval issues pursuant to 
          Sec. 303.14 of this chapter.
308.154  Decision on review.
308.155  Hearing.

    Subpart M--Procedures and Standards Applicable to an Application 
                   Pursuant to Section 19 of the FDIA

308.156  Scope.
308.157  Relevant considerations.
308.158  Filing papers and effective date.
308.159  Denial of applications.
308.160  Hearings.

 Subpart N--Rules and Procedures Applicable to Proceedings Relating to 
     Suspension, Removal, and Prohibition Where a Felony Is Charged

308.161  Scope.
308.162  Relevant considerations.
308.163  Notice of suspension, and orders of removal or prohibition.
308.164  Hearings.

   Subpart O--Liability of Commonly Controlled Depository Institutions

308.165  Scope.
308.166  Grounds for assessment of liability.
308.167  Notice of assessment of liability.
308.168  Effective date of and payment under an order to pay.

  Subpart P--Rules and Procedures Relating to the Recovery of Attorney 
                         Fees and Other Expenses

308.169  Scope.
308.170  Filing, content, and service of documents.
308.171  Responses to application.   
308.172  Eligibility of applicants.
308.173  Prevailing party.
308.174  Standards for awards.
308.175  Measure of awards.
308.176  Application for awards.
308.177  Statement of net worth.
308.178  Statement of fees and expenses.
308.179  Settlement negotiations.
308.180  Further proceedings.
308.181  Recommended decision.
308.182  Board of Directors action.
308.183  Payment of awards.

    Subpart Q--Issuance and Review of Orders Pursuant to the Prompt 
    Corrective Action Provisions of the Federal Deposit Insurance Act

308.200  Scope.
308.201  Directives to take prompt corrective action.
308.202  Procedures for reclassifying a bank based on criteria other 
          than capital.
308.203  Order to dismiss a director or senior executive officer.
308.204  Enforcement of directives.

  Subpart R--Submission and Review of Safety and Soundness Compliance 
      Plans and Issuance of Orders To Correct Safety and Soundness 
                              Deficiencies

308.300  Scope.
308.301  Purpose.
308.302  Determination and notification of failure to meet a safety and 
          soundness standard and request for compliance plan.
308.303  Filing of safety and soundness compliance plan.
308.304  Issuance of orders to correct deficiencies and to take or 
          refrain from taking other actions.
308.305  Enforcement of orders.

Subpart S--Applications for a Stay or Review of Actions of Bank Clearing 
                                Agencies

308.400  Scope.
308.401  Applications for stays of disciplinary sanctions or summary 
          suspensions by a bank clearing agency.
308.402  Applications for review of final disciplinary sanctions, 
          denials of participation, or prohibitions or limitations of 
          access to services imposed by bank clearing agencies.
    Authority:  5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505, 1817, 
1818, 1820, 1828, 1829, 1829b, 1831o, 1832(c), 1884(b), 1972, 3102, 
3108(a), 3349, 3909, 4717; 15 U.S.C. 78 (h) and (i), 78o-4(c), 78o-5, 
78q-1, 78s, 78u, 78u-2, 78u-3, and 78w; 28 U.S.C. 2461 note; 31 U.S.C. 
330, 5321; 42 U.S.C.

[[Page 57]]

4012a; sec. 31001(s), Pub. L. 104-134, 110 Stat. 1321-358.
    Source:  56 FR 37975, Aug. 9, 1991, unless otherwise noted.



           Subpart A--Uniform Rules of Practice and Procedure



Sec. 308.1  Scope.

    This subpart prescribes rules of practice and procedure applicable 
to adjudicatory proceedings as to which hearings on the record are 
provided for by the following statutory provisions:
    (a) Cease-and-desist proceedings under section 8(b) of the Federal 
Deposit Insurance Act (``FDIA'') (12 U.S.C. 1818(b));
    (b) Removal and prohibition proceedings under section 8(e) of the 
FDIA (12 U.S.C. 1818(e));
    (c) Change-in-control proceedings under section 7(j)(4) of the FDIA 
(12 U.S.C. 1817(j)(4)) to determine whether the Federal Deposit 
Insurance Corporation (``FDIC''), should issue an order to approve or 
disapprove a person's proposed acquisition of an institution and/or 
institution holding company;
    (d) Proceedings under section 15C(c)(2) of the Securities Exchange 
Act of 1934 (``Exchange Act'') (15 U.S.C. 78o-5), to impose sanctions 
upon any government securities broker or dealer or upon any person 
associated or seeking to become associated with a government securities 
broker or dealer for which the FDIC is the appropriate regulatory 
agency;
    (e) Assessment of civil money penalties by the FDIC against 
institutions, institution-affiliated parties, and certain other persons 
for which it is the appropriate regulatory agency for any violation of:
    (1) Sections 22(h) and 23 of the Federal Reserve Act (``FRA''), or 
any regulation issued thereunder, and certain unsafe or unsound 
practices or breaches of fiduciary duty, pursuant to 12 U.S.C. 1828(j);
    (2) Section 106(b) of the Bank Holding Company Act Amendments of 
1970 (``BHCA Amendments of 1970''), and certain unsafe or unsound 
practices or breaches of fiduciary duty, pursuant to 12 U.S.C. 
1972(2)(F);
    (3) Any provision of the Change in Bank Control Act of 1978, as 
amended (the ``CBCA''), or any regulation or order issued thereunder, 
and certain unsafe or unsound practices, or breaches of fiduciary duty, 
pursuant to 12 U.S.C. 1817(j)(16);
    (4) Section 7(a)(1) of the FDIA, pursuant to 12 U.S.C. 1817(a)(1);
    (5) Any provision of the International Lending Supervision Act of 
1983 (``ILSA''), or any rule, regulation or order issued thereunder, 
pursuant to 12 U.S.C. 3909;
    (6) Any provision of the International Banking Act of 1978 
(``IBA''), or any rule, regulation or order issued thereunder, pursuant 
to 12 U.S.C. 3108;
    (7) Certain provisions of the Exchange Act, pursuant to section 21B 
of the Exchange Act (15 U.S.C. 78u-2);
    (8) Section 1120 of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (``FIRREA'') (12 U.S.C. 3349), or any order or 
regulation issued thereunder;
    (9) The terms of any final or temporary order issued under section 8 
of the FDIA or of any written agreement executed by the FDIC, the terms 
of any condition imposed in writing by the FDIC in connection with the 
grant of an application or request, certain unsafe or unsound practices 
or breaches of fiduciary duty, or any law or regulation not otherwise 
provided herein pursuant to 12 U.S.C. 1818(i)(2);
    (10) Any provision of law referenced in section 102(f) of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or 
regulation issued thereunder; and
    (11) Any provision of law referenced in 31 U.S.C. 5321 or any order 
or regulation issued thereunder;
    (f) Remedial action under section 102(g) of the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4012a(g)); and
    (g) This subpart also applies to all other adjudications required by 
statute to be determined on the record after opportunity for an agency 
hearing, unless otherwise specifically provided for in the Local Rules.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec. 308.2  Rules of construction.

    For purposes of this subpart:
    (a) Any term in the singular includes the plural, and the plural 
includes the

[[Page 58]]

singular, if such use would be appropriate;
    (b) Any use of a masculine, feminine, or neuter gender encompasses 
all three, if such use would be appropriate;
    (c) The term counsel includes a non-attorney representative; and
    (d) Unless the context requires otherwise, a party's counsel of 
record, if any, may, on behalf of that party, take any action required 
to be taken by the party.



Sec. 308.3  Definitions.

    For purposes of this subpart, unless explicitly stated to the 
contrary:
    (a) Administrative law judge means one who presides at an 
administrative hearing under authority set forth at 5 U.S.C. 556.
    (b) Adjudicatory proceeding means a proceeding conducted pursuant to 
these rules and leading to the formulation of a final order other than a 
regulation.
    (c) Board of Directors or Board means the Board of Directors of the 
Federal Deposit Insurance Corporation or its designee.
    (d) Decisional employee means any member of the Federal Deposit 
Insurance Corporation's or administrative law judge's staff who has not 
engaged in an investigative or prosecutorial role in a proceeding and 
who may assist the Board of Directors or the administrative law judge, 
respectively, in preparing orders, recommended decisions, decisions, and 
other documents under the Uniform Rules.
    (e) Designee of the Board of Directors means officers or officials 
of the Federal Deposit Insurance Corporation acting pursuant to 
authority delegated by the Board of Directors as provided in 12 CFR part 
303 of this chapter or by specific resolution of the Board of Directors.
    (f) Enforcement Counsel means any individual who files a notice of 
appearance as counsel on behalf of the FDIC in an adjudicatory 
proceeding.
    (g) Executive Secretary means the Executive Secretary of the Federal 
Deposit Insurance Corporation or his or her designee.
    (h) FDIC means the Federal Deposit Insurance Corporation.
    (i) Final order means an order issued by the FDIC with or without 
the consent of the affected institution or the institution-affiliated 
party, that has become final, without regard to the pendency of any 
petition for reconsideration or review.
    (j) Institution includes:
    (1) Any bank as that term is defined in section 3(a) of the FDIA (12 
U.S.C. 1813(a));
    (2) Any bank holding company or any subsidiary (other than a bank) 
of a bank holding company as those terms are defined in the BHCA (12 
U.S.C. 1841 et seq.);
    (3) Any savings association as that term is defined in section 3(b) 
of the FDIA (12 U.S.C. 1813(b)), any savings and loan holding company or 
any subsidiary thereof (other than a bank) as those terms are defined in 
section 10(a) of the HOLA (12 U.S.C. 1467(a));
    (4) Any organization operating under section 25 of the FRA (12 
U.S.C. 601 et seq.);
    (5) Any foreign bank or company to which section 8 of the IBA (12 
U.S.C. 3106), applies or any subsidiary (other than a bank) thereof; and
    (6) Any federal agency as that term is defined in section 1(b) of 
the IBA (12 U.S.C. 3101(5)).
    (k) Institution-affiliated party means any institution-affiliated 
party as that term is defined in section 3(u) of the FDIA (12 U.S.C. 
1813(u)).
    (l) Local Rules means those rules promulgated by the FDIC in those 
subparts of this part other than subpart A.
    (m) Office of Financial Institution Adjudication (``OFIA'') means 
the executive body charged with overseeing the administration of 
administrative enforcement proceedings of the Office of the Comptroller 
of the Currency (``OCC''), the Board of Governors of the Federal Reserve 
Board (``FRB''), the FDIC, the Office of Thrift Supervision (``OTS'') 
and the National Credit Union Administration (``NCUA'').
    (n) Party means the FDIC and any person named as a party in any 
notice.
    (o) Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, agency or other entity or organization, including

[[Page 59]]

an institution as defined in paragraph (j) of this section.
    (p) Respondent means any party other than the FDIC.
    (q) Uniform Rules means those rules in subpart A of this part that 
pertain to the types of formal administrative enforcement actions set 
forth at Sec. 308.01 and as specified in subparts B through P of this 
part.
    (r) Violation includes any action (alone or with another or others) 
for or toward causing, bringing about, participating in, counseling, or 
aiding or abetting a violation.



Sec. 308.4  Authority of Board of Directors.

    The Board of Directors may, at any time during the pendency of a 
proceeding, perform, direct the performance of, or waive performance of, 
any act which could be done or ordered by the administrative law judge.



Sec. 308.5  Authority of the administrative law judge.

    (a) General rule. All proceedings governed by this part shall be 
conducted in accordance with the provisions of chapter 5 of title 5 of 
the United States Code. The administrative law judge shall have all 
powers necessary to conduct a proceeding in a fair and impartial manner 
and to avoid unnecessary delay.
    (b) Powers. The administrative law judge shall have all powers 
necessary to conduct the proceeding in accordance with paragraph (a) of 
this section, including the following powers:
    (1) To administer oaths and affirmations;
    (2) To issue subpoenas, subpoenas duces tecum, and protective 
orders, as authorized by this part, and to quash or modify any such 
subpoenas and orders;
    (3) To receive relevant evidence and to rule upon the admission of 
evidence and offers of proof;
    (4) To take or cause depositions to be taken as authorized by this 
subpart;
    (5) To regulate the course of the hearing and the conduct of the 
parties and their counsel;
    (6) To hold scheduling and/or pre-hearing conferences as set forth 
in Sec. 308.31;
    (7) To consider and rule upon all procedural and other motions 
appropriate in an adjudicatory proceeding, provided that only the Board 
of Directors shall have the power to grant any motion to dismiss the 
proceeding or to decide any other motion that results in a final 
determination of the merits of the proceeding;
    (8) To prepare and present to the Board of Directors a recommended 
decision as provided herein;
    (9) To recuse himself or herself by motion made by a party or on his 
or her own motion;
    (10) To establish time, place and manner limitations on the 
attendance of the public and the media for any public hearing; and
    (11) To do all other things necessary and appropriate to discharge 
the duties of a presiding officer.



Sec. 308.6  Appearance and practice in adjudicatory proceedings.

    (a) Appearance before the FDIC or an administrative law judge--(1) 
By attorneys. Any member in good standing of the bar of the highest 
court of any state, commonwealth, possession, territory of the United 
States, or the District of Columbia may represent others before the FDIC 
if such attorney is not currently suspended or debarred from practice 
before the FDIC.
    (2) By non-attorneys. An individual may appear on his or her own 
behalf; a member of a partnership may represent the partnership; a duly 
authorized officer, director, or employee of any government unit, 
agency, institution, corporation or authority may represent that unit, 
agency, institution, corporation or authority if such officer; director, 
or employee is not currently suspended or debarred from practice before 
the FDIC.
    (3) Notice of appearance. Any individual acting as counsel on behalf 
of a party, including the FDIC, shall file a notice of appearance with 
OFIA at or before the time that individual submits papers or otherwise 
appears on behalf of a party in the adjudicatory proceeding. The notice 
of appearance must include a written declaration that the individual is 
currently qualified as provided in paragraph (a)(1) or (a)(2) of

[[Page 60]]

this section and is authorized to represent the particular party. By 
filing a notice of appearance on behalf of a party in an adjudicatory 
proceeding, the counsel agrees and represents that he or she is 
authorized to accept service on behalf of the represented party and 
that, in the event of withdrawal from representation, he or she will, if 
required by the administrative law judge, continue to accept service 
until new counsel has filed a notice of appearance or until the 
represented party indicates that he or she will proceed on a pro se 
basis.
    (b) Sanctions. Dilatory, obstructionist, egregious, contemptuous or 
contumacious conduct at any phase of any adjudicatory proceeding may be 
grounds for exclusion or suspension of counsel from the proceeding.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec. 308.7  Good faith certification.

    (a) General requirement. Every filing or submission of record 
following the issuance of a notice shall be signed by at least one 
counsel of record in his or her individual name and shall state that 
counsel's address and telephone number. A party who acts as his or her 
own counsel shall sign his or her individual name and state his or her 
address and telephone number on every filing or submission of record.
    (b) Effect of signature. (1) The signature of counsel or a party 
shall constitute a certification that: The counsel or party has read the 
filing or submission of record; to the best of his or her knowledge, 
information, and belief formed after reasonable inquiry, the filing or 
submission of record is well-grounded in fact and is warranted by 
existing law or a good faith argument for the extension, modification, 
or reversal of existing law; and the filing or submission of record is 
not made for any improper purpose, such as to harass or to cause 
unnecessary delay or needless increase in the cost of litigation.
    (2) If a filing or submission of record is not signed, the 
administrative law judge shall strike the filing or submission of 
record, unless it is signed promptly after the omission is called to the 
attention of the pleader or movant.
    (c) Effect of making oral motion or argument. The act of making any 
oral motion or oral argument by any counsel or party constitutes a 
certification that to the best of his or her knowledge, information, and 
belief formed after reasonable inquiry, his or her statements are well-
grounded in fact and are warranted by existing law or a good faith 
argument for the extension, modification, or reversal of existing law, 
and are not made for any improper purpose, such as to harass or to cause 
unnecessary delay or needless increase in the cost of litigation.



Sec. 308.8  Conflicts of interest.

    (a) Conflict of interest in representation. No person shall appear 
as counsel for another person in an adjudicatory proceeding if it 
reasonably appears that such representation may be materially limited by 
that counsel's responsibilities to a third person or by the counsel's 
own interests. The administrative law judge may take corrective measures 
at any stage of a proceeding to cure a conflict of interest in 
representation, including the issuance of an order limiting the scope of 
representation or disqualifying an individual from appearing in a 
representative capacity for the duration of the proceeding.
    (b) Certification and waiver. If any person appearing as counsel 
represents two or more parties to an adjudicatory proceeding or also 
represents a non-party on a matter relevant to an issue in the 
proceeding, counsel must certify in writing at the time of filing the 
notice of appearance required by Sec. 308.6(a):
    (1) That the counsel has personally and fully discussed the 
possibility of conflicts of interest with each such party and non-party; 
and
    (2) That each such party and non-party waives any right it might 
otherwise have had to assert any known conflicts of interest or to 
assert any non-material conflicts of interest during the course of the 
proceeding.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]

[[Page 61]]



Sec. 308.9  Ex parte communications.

    (a) Definition--(1) Ex parte communication means any material oral 
or written communication relevant to the merits of an adjudicatory 
proceeding that was neither on the record nor on reasonable prior notice 
to all parties that takes place between:
    (i) An interested person outside the FDIC (including such person's 
counsel); and
    (ii) The administrative law judge handling that proceeding, the 
Board of Directors, or a decisional employee.
    (2) Exception. A request for status of the proceeding does not 
constitute an ex parte communication.
    (b) Prohibition of ex parte communications. From the time the notice 
is issued by the FDIC until the date that the Board of Directors issues 
its final decision pursuant to Sec. 308.40(c):
    (1) No interested person outside the FDIC shall make or knowingly 
cause to be made an ex parte communication to any member of the Board of 
Directors, the administrative law judge, or a decisional employee; and
    (2) No member of the Board of Directors, no administrative law 
judge, or decisional employee shall make or knowingly cause to be made 
to any interested person outside the FDIC any ex parte communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by the administrative law judge, any 
member of the Board of Directors or other person identified in paragraph 
(a) of this section, that person shall cause all such written 
communications (or, if the communication is oral, a memorandum stating 
the substance of the communication) to be placed on the record of the 
proceeding and served on all parties. All other parties to the 
proceeding shall have an opportunity, within ten days of receipt of 
service of the ex parte communication, to file responses thereto and to 
recommend any sanctions that they believe to be appropriate under the 
circumstances. The administrative law judge or the Board of Directors 
shall then determine whether any action should be taken concerning the 
ex parte communication in accordance with paragraph (d) of this section.
    (d) Sanctions. Any party or his or her counsel who makes a 
prohibited ex parte communication, or who encourages or solicits another 
to make any such communication, may be subject to any appropriate 
sanction or sanctions imposed by the Board of Directors or the 
administrative law judge including, but not limited to, exclusion from 
the proceedings and an adverse ruling on the issue which is the subject 
of the prohibited communication.
    (e) Separation of functions. Except to the extent required for the 
disposition of ex parte matters as authorized by law, the administrative 
law judge may not consult a person or party on any matter relevant to 
the merits of the adjudication, unless on notice and opportunity for all 
parties to participate. An employee or agent engaged in the performance 
of investigative or prosecuting functions for the FDIC in a case may 
not, in that or a factually related case, participate or advise in the 
decision, recommended decision, or agency review of the recommended 
decision under Sec. 308.40 except as witness or counsel in public 
proceedings.
[56 FR 37975, Aug. 9, 1991, as amended at 60 FR 24762, May 10, 1995]



Sec. 308.10  Filing of papers.

    (a) Filing. Any papers required to be filed, excluding documents 
produced in response to a discovery request pursuant to Secs. 308.25 and 
308.26, shall be filed with the OFIA, except as otherwise provided.
    (b) Manner of filing. Unless otherwise specified by the Board of 
Directors or the administrative law judge, filing may be accomplished 
by:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery;
    (3) Mailing the papers by first class, registered, or certified 
mail; or
    (4) Transmission by electronic media, only if expressly authorized, 
and upon any conditions specified, by the Board of Directors or the 
administrative law judge. All papers filed by electronic media shall 
also concurrently be filed in accordance with paragraph (c) of this 
section.

[[Page 62]]

    (c) Formal requirements as to papers filed--(1) Form. All papers 
filed must set forth the name, address, and telephone number of the 
counsel or party making the filing and must be accompanied by a 
certification setting forth when and how service has been made on all 
other parties. All papers filed must be double-spaced and printed or 
typewritten on 8\1/2\ x 11 inch paper, and must be clear and legible.
    (2) Signature. All papers must be dated and signed as provided in 
Sec. 308.7.
    (3) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the FDIC and of the filing party, the title 
and docket number of the proceeding, and the subject of the particular 
paper.
    (4) Number of copies. Unless otherwise specified by the Board of 
Directors, or the administrative law judge, an original and one copy of 
all documents and papers shall be filed, except that only one copy of 
transcripts of testimony and exhibits shall be filed.



Sec. 308.11  Service of papers.

    (a) By the parties. Except as otherwise provided, a party filing 
papers shall serve a copy upon the counsel of record for all other 
parties to the proceeding so represented, and upon any party not so 
represented.
    (b) Method of service. Except as provided in paragraphs (c)(2) and 
(d) of this section, a serving party shall use one or more of the 
following methods of service:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery;
    (3) Mailing the papers by first class, registered, or certified 
mail; or
    (4) Transmission by electronic media, only if the parties mutually 
agree. Any papers served by electronic media shall also concurrently be 
served in accordance with the requirements of Sec. 308.10(c).
    (c) By the Board of Directors. (1) All papers required to be served 
by the Board of Directors or the administrative law judge upon a party 
who has appeared in the proceeding in accordance with Sec. 308.6, shall 
be served by any means specified in paragraph (b) of this section.
    (2) If a party has not appeared in the proceeding in accordance with 
Sec. 308.6, the Board of Directors or the administrative law judge shall 
make service by any of the following methods:
    (i) By personal service;
    (ii) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (iii) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (iv) By registered or certified mail addressed to the party's last 
known address; or
    (v) By any other method reasonably calculated to give actual notice.
    (d) Subpoenas. Service of a subpoena may be made:
    (1) By personal service;
    (2) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (3) By delivery to an agent which, in the case of a corporation or 
other association, is delivery to an officer, managing or general agent, 
or to any other agent authorized by appointment or by law to receive 
service and, if the agent is one authorized by statute to receive 
service and the statute so requires, by also mailing a copy to the 
party;
    (4) By registered or certified mail addressed to the person's last 
known address; or
    (5) In such other manner as is reasonably calculated to give actual 
notice.
    (e) Area of service. Service in any state, territory, possession of 
the United States, or the District of Columbia, on any person or company 
doing business in any state, territory, possession of the United States, 
or the District of Columbia, or on any person as otherwise provided by 
law, is effective without regard to the place where the hearing is held, 
provided that if

[[Page 63]]

service is made on a foreign bank in connection with an action or 
proceeding involving one or more of its branches or agencies located in 
any state, territory, possession of the United States, or the District 
of Columbia, service shall be made on at least one branch or agency so 
involved.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec. 308.12  Construction of time limits.

    (a) General rule. In computing any period of time prescribed by this 
subpart, the date of the act or event that commences the designated 
period of time is not included. The last day so computed is included 
unless it is a Saturday, Sunday, or Federal holiday. When the last day 
is a Saturday, Sunday, or Federal holiday, the period runs until the end 
of the next day that is not a Saturday, Sunday, or Federal holiday. 
Intermediate Saturdays, Sundays, and Federal holidays are included in 
the computation of time. However, when the time period within which an 
act is to be performed is ten days or less, not including any additional 
time allowed for in paragraph (c) of this section, intermediate 
Saturdays, Sundays, and Federal holidays are not included.
    (b) When papers are deemed to be filed or served. (1) Filing and 
service are deemed to be effective:
    (i) In the case of personal service or same day commercial courier 
delivery, upon actual service;
    (ii) In the case of overnight commercial delivery service, U.S. 
Express Mail delivery, or first class, registered, or certified mail, 
upon deposit in or delivery to an appropriate point of collection;
    (iii) In the case of transmission by electronic media, as specified 
by the authority receiving the filing, in the case of filing, and as 
agreed among the parties, in the case of service.
    (2) The effective filing and service dates specified in paragraph 
(b) (1) of this section may be modified by the Board of Directors or 
administrative law judge in the case of filing or by agreement of the 
parties in the case of service.
    (c) Calculation of time for service and filing of responsive papers. 
Whenever a time limit is measured by a prescribed period from the 
service of any notice or paper, the applicable time limits are 
calculated as follows:
    (1) If service is made by first class, registered, or certified 
mail, add three calendar days to the prescribed period;
    (2) If service is made by express mail or overnight delivery 
service, add one calendar day to the prescribed period; or
    (3) If service is made by electronic media transmission, add one 
calendar day to the prescribed period, unless otherwise determined by 
the Board of Directors or the administrative law judge in the case of 
filing, or by agreement among the parties in the case of service.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996]



Sec. 308.13  Change of time limits.

    Except as otherwise provided by law, the administrative law judge 
may, for good cause shown, extend the time limits prescribed by the 
Uniform Rules or by any notice or order issued in the proceedings. After 
the referral of the case to the Board of Directors pursuant to 
Sec. 308.38, the Board of Directors may grant extensions of the time 
limits for good cause shown. Extensions may be granted at the motion of 
a party or of the Board of Directors after notice and opportunity to 
respond is afforded all non-moving parties, or on the administrative law 
judge's own motion.



Sec. 308.14  Witness fees and expenses.

    Witnesses subpoenaed for testimony or depositions shall be paid the 
same fees for attendance and mileage as are paid in the United States 
district courts in proceedings in which the United States is a party, 
provided that, in the case of a discovery subpoena addressed to a party, 
no witness fees or mileage need be paid. Fees for witnesses shall be 
tendered in advance by the party requesting the subpoena, except that 
fees and mileage need not be tendered in advance where the FDIC is the 
party requesting the subpoena. The FDIC shall not be required to pay any 
fees to, or expenses of, any witness not subpoenaed by the FDIC.

[[Page 64]]



Sec. 308.15  Opportunity for informal settlement.

    Any respondent may, at any time in the proceeding, unilaterally 
submit to Enforcement Counsel written offers or proposals for settlement 
of a proceeding, without prejudice to the rights of any of the parties. 
No such offer or proposal shall be made to any FDIC representative other 
than Enforcement Counsel. Submission of a written settlement offer does 
not provide a basis for adjourning or otherwise delaying all or any 
portion of a proceeding under this part. No settlement offer or 
proposal, or any subsequent negotiation or resolution, is admissible as 
evidence in any proceeding.



Sec. 308.16  FDIC's right to conduct examination.

    Nothing contained in this subpart limits in any manner the right of 
the FDIC to conduct any examination, inspection, or visitation of any 
institution or institution-affiliated party, or the right of the FDIC to 
conduct or continue any form of investigation authorized by law.



Sec. 308.17  Collateral attacks on adjudicatory proceeding.

    If an interlocutory appeal or collateral attack is brought in any 
court concerning all or any part of an adjudicatory proceeding, the 
challenged adjudicatory proceeding shall continue without regard to the 
pendency of that court proceeding. No default or other failure to act as 
directed in the adjudicatory proceeding within the times prescribed in 
this subpart shall be excused based on the pendency before any court of 
any interlocutory appeal or collateral attack.



Sec. 308.18  Commencement of proceeding and contents of notice.

    (a) Commencement of proceeding. (1)(i) Except for change-in-control 
proceedings under section 7(j)(4) of the FDIA (12 U.S.C. 1817(j)(4)), a 
proceeding governed by this subpart is commenced by issuance of a notice 
by the FDIC.
    (ii) The notice must be served by the Executive Secretary upon the 
respondent and given to any other appropriate financial institution 
supervisory authority where required by law.
    (iii) The notice must be filed with the OFIA.
    (2) Change-in-control proceedings under section 7(j)(4) of the FDIA 
(12 U.S.C. 1817(j)(4)) commence with the issuance of an order by the 
FDIC.
    (b) Contents of notice. The notice must set forth:
    (1) The legal authority for the proceeding and for the FDIC's 
jurisdiction over the proceeding;
    (2) A statement of the matters of fact or law showing that the FDIC 
is entitled to relief;
    (3) A proposed order or prayer for an order granting the requested 
relief;
    (4) The time, place, and nature of the hearing as required by law or 
regulation;
    (5) The time within which to file an answer as required by law or 
regulation;
    (6) The time within which to request a hearing as required by law or 
regulation; and
    (7) That the answer and/or request for a hearing shall be filed with 
OFIA.



Sec. 308.19  Answer.

    (a) When. Within 20 days of service of the notice, respondent shall 
file an answer as designated in the notice. In a civil money penalty 
proceeding, respondent shall also file a request for a hearing within 20 
days of service of the notice.
    (b) Content of answer. An answer must specifically respond to each 
paragraph or allegation of fact contained in the notice and must admit, 
deny, or state that the party lacks sufficient information to admit or 
deny each allegation of fact. A statement of lack of information has the 
effect of a denial. Denials must fairly meet the substance of each 
allegation of fact denied; general denials are not permitted. When a 
respondent denies part of an allegation, that part must be denied and 
the remainder specifically admitted. Any allegation of fact in the 
notice which is not denied in the answer must be deemed admitted for 
purposes of the proceeding. A respondent is not required to respond to 
the portion of a notice that constitutes the prayer for relief or 
proposed order. The answer must set forth affirmative defenses, if any, 
asserted by the respondent.

[[Page 65]]

    (c) Default--(1) Effect of failure to answer. Failure of a 
respondent to file an answer required by this section within the time 
provided constitutes a waiver of his or her right to appear and contest 
the allegations in the notice. If no timely answer is filed, Enforcement 
Counsel may file a motion for entry of an order of default. Upon a 
finding that no good cause has been shown for the failure to file a 
timely answer, the administrative law judge shall file with the Board of 
Directors a recommended decision containing the findings and the relief 
sought in the notice. Any final order issued by the Board of Directors 
based upon a respondent's failure to answer is deemed to be an order 
issued upon consent.
    (2) Effect of failure to request a hearing in civil money penalty 
proceedings. If respondent fails to request a hearing as required by law 
within the time provided, the notice of assessment constitutes a final 
and unappealable order.



Sec. 308.20  Amended pleadings.

    (a) Amendments. The notice or answer may be amended or supplemented 
at any stage of the proceeding. The respondent must answer an amended 
notice within the time remaining for the respondent's answer to the 
original notice, or within ten days after service of the amended notice, 
whichever period is longer, unless the Board of Directors or 
administrative law judge orders otherwise for good cause.
    (b) Amendments to conform to the evidence. When issues not raised in 
the notice or answer are tried at the hearing by express or implied 
consent of the parties, they will be treated in all respects as if they 
had been raised in the notice or answer, and no formal amendments are 
required. If evidence is objected to at the hearing on the ground that 
it is not within the issues raised by the notice or answer, the 
administrative law judge may admit the evidence when admission is likely 
to assist in adjudicating the merits of the action and the objecting 
party fails to satisfy the administrative law judge that the admission 
of such evidence would unfairly prejudice that party's action or defense 
upon the merits. The administrative law judge may grant a continuance to 
enable the objecting party to meet such evidence.
[61 FR 20348, May 6, 1996]



Sec. 308.21  Failure to appear.

    Failure of a respondent to appear in person at the hearing or by a 
duly authorized counsel constitutes a waiver of respondent's right to a 
hearing and is deemed an admission of the facts as alleged and consent 
to the relief sought in the notice. Without further proceedings or 
notice to the respondent, the administrative law judge shall file with 
the Board of Directors a recommended decision containing the findings 
and the relief sought in the notice.



Sec. 308.22  Consolidation and severance of actions.

    (a) Consolidation. (1) On the motion of any party, or on the 
administrative law judge's own motion, the administrative law judge may 
consolidate, for some or all purposes, any two or more proceedings, if 
each such proceeding involves or arises out of the same transaction, 
occurrence or series of transactions or occurrences, or involves at 
least one common respondent or a material common question of law or 
fact, unless such consolidation would cause unreasonable delay or 
injustice.
    (2) In the event of consolidation under paragraph (a)(1) of this 
section, appropriate adjustment to the prehearing schedule must be made 
to avoid unnecessary expense, inconvenience, or delay.
    (b) Severance. The administrative law judge may, upon the motion of 
any party, sever the proceeding for separate resolution of the matter as 
to any respondent only if the administrative law judge finds that:
    (1) Undue prejudice or injustice to the moving party would result 
from not severing the proceeding; and
    (2) Such undue prejudice or injustice would outweigh the interests 
of judicial economy and expedition in the complete and final resolution 
of the proceeding.



Sec. 308.23  Motions.

    (a) In writing. (1) Except as otherwise provided herein, an 
application or request for an order or ruling must be made by written 
motion.

[[Page 66]]

    (2) All written motions must state with particularity the relief 
sought and must be accompanied by a proposed order.
    (3) No oral argument may be held on written motions except as 
otherwise directed by the administrative law judge. Written memoranda, 
briefs, affidavits or other relevant material or documents may be filed 
in support of or in opposition to a motion.
    (b) Oral motions. A motion may be made orally on the record unless 
the administrative law judge directs that such motion be reduced to 
writing.
    (c) Filing of motions. Motions must be filed with the administrative 
law judge, except that following the filing of the recommended decision, 
motions must be filed with the Executive Secretary for disposition by 
the Board of Directors.
    (d) Responses. (1) Except as otherwise provided herein, within ten 
days after service of any written motion, or within such other period of 
time as may be established by the administrative law judge or the 
Executive Secretary, any party may file a written response to a motion. 
The administrative law judge shall not rule on any oral or written 
motion before each party has had an opportunity to file a response.
    (2) The failure of a party to oppose a written motion or an oral 
motion made on the record is deemed a consent by that party to the entry 
of an order substantially in the form of the order accompanying the 
motion.
    (e) Dilatory motions. Frivolous, dilatory or repetitive motions are 
prohibited. The filing of such motions may form the basis for sanctions.
    (f) Dispositive motions. Dispositive motions are governed by 
Secs. 308.29 and 308.30.



Sec. 308.24  Scope of document discovery.

    (a) Limits on discovery. (1) Subject to the limitations set out in 
paragraphs (b), (c), and (d) of this section, a party to a proceeding 
under this subpart may obtain document discovery by serving a written 
request to produce documents. For purposes of a request to produce 
documents, the term ``documents'' may be defined to include drawings, 
graphs, charts, photographs, recordings, data stored in electronic form, 
and other data compilations from which information can be obtained, or 
translated, if necessary, by the parties through detection devices into 
reasonably usable form, as well as written material of all kinds.
    (2) Discovery by use of deposition is governed by subpart I of this 
part.
    (3) Discovery by use of interrogatories is not permitted.
    (b) Relevance. A party may obtain document discovery regarding any 
matter, not privileged, that has material relevance to the merits of the 
pending action. Any request to produce documents that calls for 
irrelevant material, that is unreasonable, oppressive, excessive in 
scope, unduly burdensome, or repetitive of previous requests, or that 
seeks to obtain privileged documents will be denied or modified. A 
request is unreasonable, oppressive, excessive in scope or unduly 
burdensome if, among other things, it fails to include justifiable 
limitations on the time period covered and the geographic locations to 
be searched, the time provided to respond in the request is inadequate, 
or the request calls for copies of documents to be delivered to the 
requesting party and fails to include the requestor's written agreement 
to pay in advance for the copying, in accordance with Sec. 308.25.
    (c) Privileged matter. Privileged documents are not discoverable. 
Privileges include the attorney-client privilege, work-product 
privilege, any government's or government agency's deliberative-process 
privilege, and any other privileges the Constitution, any applicable act 
of Congress, or the principles of common law provide.
    (d) Time limits. All discovery, including all responses to discovery 
requests, shall be completed at least 20 days prior to the date 
scheduled for the commencement of the hearing. No exceptions to this 
time limit shall be permitted, unless the administrative law judge finds 
on the record that good cause exists for waiving the requirements of 
this paragraph.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996]

[[Page 67]]



Sec. 308.25  Request for document discovery from parties.

    (a) General rule. Any party may serve on any other party a request 
to produce for inspection any discoverable documents that are in the 
possession, custody, or control of the party upon whom the request is 
served. The request must identify the documents to be produced either by 
individual item or by category, and must describe each item and category 
with reasonable particularity. Documents must be produced as they are 
kept in the usual course of business or must be organized to correspond 
with the categories in the request.
    (b) Production or copying. The request must specify a reasonable 
time, place, and manner for production and performing any related acts. 
In lieu of inspecting the documents, the requesting party may specify 
that all or some of the responsive documents be copied and the copies 
delivered to the requesting party. If copying of fewer than 250 pages is 
requested, the party to whom the request is addressed shall bear the 
cost of copying and shipping charges. If a party requests 250 pages or 
more of copying, the requesting party shall pay for the copying and 
shipping charges. Copying charges are the current per-page copying rate 
imposed by 12 CFR part 310 implementing the Freedom of Information Act 
(5 U.S.C. 552). The party to whom the request is addressed may require 
payment in advance before producing the documents.
    (c) Obligation to update responses. A party who has responded to a 
discovery request with a response that was complete when made is not 
required to supplement the response to include documents thereafter 
acquired, unless the responding party learns that:
    (1) The response was materially incorrect when made; or
    (2) The response, though correct when made, is no longer true and a 
failure to amend the response is, in substance, a knowing concealment.
    (d) Motions to limit discovery. (1) Any party that objects to a 
discovery request may, within ten days of being served with such 
request, file a motion in accordance with the provisions of Sec. 308.23 
to strike or otherwise limit the request. If an objection is made to 
only a portion of an item or category in a request, the portion objected 
to shall be specified. Any objections not made in accordance with this 
paragraph and Sec. 308.23 are waived.
    (2) The party who served the request that is the subject of a motion 
to strike or limit may file a written response within five days of 
service of the motion. No other party may file a response.
    (e) Privilege. At the time other documents are produced, the 
producing party must reasonably identify all documents withheld on the 
grounds of privilege and must produce a statement of the basis for the 
assertion of privilege. When similar documents that are protected by 
deliberative process, attorney-work-product, or attorney-client 
privilege are voluminous, these documents may be identified by category 
instead of by individual document. The administrative law judge retains 
discretion to determine when the identification by category is 
insufficient.
    (f) Motions to compel production. (1) If a party withholds any 
documents as privileged or fails to comply fully with a discovery 
request, the requesting party may, within ten days of the assertion of 
privilege or of the time the failure to comply becomes known to the 
requesting party, file a motion in accordance with the provisions of 
Sec. 308.23 for the issuance of a subpoena compelling production.
    (2) The party who asserted the privilege or failed to comply with 
the request may file a written response to a motion to compel within 
five days of service of the motion. No other party may file a response.
    (g) Ruling on motions. After the time for filing responses pursuant 
to this section has expired, the administrative law judge shall rule 
promptly on all motions filed pursuant to this section. If the 
administrative law judge determines that a discovery request, or any of 
its terms, calls for irrelevant material, is unreasonable, oppressive, 
excessive in scope, unduly burdensome, or repetitive of previous 
requests, or seeks to obtain privileged documents, he or she may deny or 
modify the request, and may issue appropriate protective orders, upon 
such conditions as

[[Page 68]]

justice may require. The pendency of a motion to strike or limit 
discovery or to compel production is not a basis for staying or 
continuing the proceeding, unless otherwise ordered by the 
administrative law judge. Notwithstanding any other provision in this 
part, the administrative law judge may not release, or order a party to 
produce, documents withheld on grounds of privilege if the party has 
stated to the administrative law judge its intention to file a timely 
motion for interlocutory review of the administrative law judge's order 
to produce the documents, and until the motion for interlocutory review 
has been decided.
    (h) Enforcing discovery subpoenas. If the administrative law judge 
issues a subpoena compelling production of documents by a party, the 
subpoenaing party may, in the event of noncompliance and to the extent 
authorized by applicable law, apply to any appropriate United States 
district court for an order requiring compliance with the subpoena. A 
party's right to seek court enforcement of a subpoena shall not in any 
manner limit the sanctions that may be imposed by the administrative law 
judge against a party who fails to produce subpoenaed documents.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996]



Sec. 308.26  Document subpoenas to nonparties.

    (a) General rules. (1) Any party may apply to the administrative law 
judge for the issuance of a document discovery subpoena addressed to any 
person who is not a party to the proceeding. The application must 
contain a proposed document subpoena and a brief statement showing the 
general relevance and reasonableness of the scope of documents sought. 
The subpoenaing party shall specify a reasonable time, place, and manner 
for making production in response to the document subpoena.
    (2) A party shall only apply for a document subpoena under this 
section within the time period during which such party could serve a 
discovery request under Sec. 308.24(d). The party obtaining the document 
subpoena is responsible for serving it on the subpoenaed person and for 
serving copies on all parties. Document subpoenas may be served in any 
state, territory, or possession of the United States, the District of 
Columbia, or as otherwise provided by law.
    (3) The administrative law judge shall promptly issue any document 
subpoena requested pursuant to this section. If the administrative law 
judge determines that the application does not set forth a valid basis 
for the issuance of the subpoena, or that any of its terms are 
unreasonable, oppressive, excessive in scope, or unduly burdensome, he 
or she may refuse to issue the subpoena or may issue it in a modified 
form upon such conditions as may be consistent with the Uniform Rules.
    (b) Motion to quash or modify. (1) Any person to whom a document 
subpoena is directed may file a motion to quash or modify such subpoena, 
accompanied by a statement of the basis for quashing or modifying the 
subpoena. The movant shall serve the motion on all parties, and any 
party may respond to such motion within ten days of service of the 
motion.
    (2) Any motion to quash or modify a document subpoena must be filed 
on the same basis, including the assertion of privilege, upon which a 
party could object to a discovery request under Sec. 308.25(d), and 
during the same time limits during which such an objection could be 
filed.
    (c) Enforcing document subpoenas. If a subpoenaed person fails to 
comply with any subpoena issued pursuant to this section or any order of 
the administrative law judge which directs compliance with all or any 
portion of a document subpoena, the subpoenaing party or any other 
aggrieved party may, to the extent authorized by applicable law, apply 
to an appropriate United States district court for an order requiring 
compliance with so much of the document subpoena as the administrative 
law judge has not quashed or modified. A party's right to seek court 
enforcement of a document subpoena shall in no way limit the sanctions 
that may be imposed by the administrative law judge on a party who 
induces a failure to comply with subpoenas issued under this section.

[[Page 69]]



Sec. 308.27  Deposition of witness unavailable for hearing.

    (a) General rules. (1) If a witness will not be available for the 
hearing, a party desiring to preserve that witness' testimony for the 
record may apply in accordance with the procedures set forth in 
paragraph (a)(2) of this section, to the administrative law judge for 
the issuance of a subpoena, including a subpoena duces tecum, requiring 
the attendance of the witness at a deposition. The administrative law 
judge may issue a deposition subpoena under this section upon showing 
that:
    (i) The witness will be unable to attend or may be prevented from 
attending the hearing because of age, sickness or infirmity, or will 
otherwise be unavailable;
    (ii) The witness' unavailability was not procured or caused by the 
subpoenaing party;
    (iii) The testimony is reasonably expected to be material; and
    (iv) Taking the deposition will not result in any undue burden to 
any other party and will not cause undue delay of the proceeding.
    (2) The application must contain a proposed deposition subpoena and 
a brief statement of the reasons for the issuance of the subpoena. The 
subpoena must name the witness whose deposition is to be taken and 
specify the time and place for taking the deposition. A deposition 
subpoena may require the witness to be deposed at any place within the 
country in which that witness resides or has a regular place of 
employment or such other convenient place as the administrative law 
judge shall fix.
    (3) Any requested subpoena that sets forth a valid basis for its 
issuance must be promptly issued, unless the administrative law judge on 
his or her own motion, requires a written response or requires 
attendance at a conference concerning whether the requested subpoena 
should be issued.
    (4) The party obtaining a deposition subpoena is responsible for 
serving it on the witness and for serving copies on all parties. Unless 
the administrative law judge orders otherwise, no deposition under this 
section shall be taken on fewer than ten days' notice to the witness and 
all parties. Deposition subpoenas may be served in any state, territory, 
possession of the United States, or the District of Columbia, on any 
person or company doing business in any state, territory, possession of 
the United States, or the District of Columbia, or as otherwise 
permitted by law.
    (b) Objections to deposition subpoenas. (1) The witness and any 
party who has not had an opportunity to oppose a deposition subpoena 
issued under this section may file a motion with the administrative law 
judge to quash or modify the subpoena prior to the time for compliance 
specified in the subpoena, but not more than ten days after service of 
the subpoena.
    (2) A statement of the basis for the motion to quash or modify a 
subpoena issued under this section must accompany the motion. The motion 
must be served on all parties.
    (c) Procedure upon deposition. (1) Each witness testifying pursuant 
to a deposition subpoena must be duly sworn, and each party shall have 
the right to examine the witness. Objections to questions or documents 
must be in short form, stating the grounds for the objection. Failure to 
object to questions or documents is not deemed a waiver except where the 
ground for the objection might have been avoided if the objection had 
been timely presented. All questions, answers, and objections must be 
recorded.
    (2) Any party may move before the administrative law judge for an 
order compelling the witness to answer any questions the witness has 
refused to answer or submit any evidence the witness has refused to 
submit during the deposition.
    (3) The deposition must be subscribed by the witness, unless the 
parties and the witness, by stipulation, have waived the signing, or the 
witness is ill, cannot be found, or has refused to sign. If the 
deposition is not subscribed by the witness, the court reporter taking 
the deposition shall certify that the transcript is a true and complete 
transcript of the deposition.
    (d) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any order of the administrative law judge which directs compliance with 
all or any portion of a deposition subpoena

[[Page 70]]

under paragraph (b) or (c)(3) of this section, the subpoenaing party or 
other aggrieved party may, to the extent authorized by applicable law, 
apply to an appropriate United States district court for an order 
requiring compliance with the portions of the subpoena that the 
administrative law judge has ordered enforced. A party's right to seek 
court enforcement of a deposition subpoena in no way limits the 
sanctions that may be imposed by the administrative law judge on a party 
who fails to comply with, or procures a failure to comply with, a 
subpoena issued under this section.



Sec. 308.28  Interlocutory review.

    (a) General rule. The Board of Directors may review a ruling of the 
administrative law judge prior to the certification of the record to the 
Board of Directors only in accordance with the procedures set forth in 
this section and Sec. 308.23.
    (b) Scope of review. The Board of Directors may exercise 
interlocutory review of a ruling of, the administrative law judge if the 
Board of Directors finds that:
    (1) The ruling involves a controlling question of law or policy as 
to which substantial grounds exist for a difference of opinion;
    (2) Immediate review of the ruling may materially advance the 
ultimate termination of the proceeding;
    (3) Subsequent modification of the ruling at the conclusion of the 
proceeding would be an inadequate remedy; or
    (4) Subsequent modification of the ruling would cause unusual delay 
or expense.
    (c) Procedure. Any request for interlocutory review shall be filed 
by a party with the administrative law judge within ten days of his or 
her ruling and shall otherwise comply with Sec. 308.23. Any party may 
file a response to a request for interlocutory review in accordance with 
Sec. 308.23(d). Upon the expiration of the time for filing all 
responses, the administrative law judge shall refer the matter to the 
Board of Directors for final disposition.
    (d) Suspension of proceeding. Neither a request for interlocutory 
review nor any disposition of such a request by the Board of Directors 
under this section suspends or stays the proceeding unless otherwise 
ordered by the administrative law judge or the Board of Directors.



Sec. 308.29  Summary disposition.

    (a) In general. The administrative law judge shall recommend that 
the Board of Directors issue a final order granting a motion for summary 
disposition if the undisputed pleaded facts, admissions, affidavits, 
stipulations, documentary evidence, matters as to which official notice 
may be taken, and any other evidentiary materials properly submitted in 
connection with a motion for summary disposition show that:
    (1) There is no genuine issue as to any material fact; and
    (2) The moving party is entitled to a decision in its favor as a 
matter of law.
    (b) Filing of motions and responses. (1) Any party who believes that 
there is no genuine issue of material fact to be determined and that he 
or she is entitled to a decision as a matter of law may move at any time 
for summary disposition in its favor of all or any part of the 
proceeding. Any party, within 20 days after service of such a motion, or 
within such time period as allowed by the administrative law judge, may 
file a response to such motion.
    (2) A motion for summary disposition must be accompanied by a 
statement of the material facts as to which the moving party contends 
there is no genuine issue. Such motion must be supported by documentary 
evidence, which may take the form of admissions in pleadings, 
stipulations, depositions, investigatory depositions, transcripts, 
affidavits and any other evidentiary materials that the moving party 
contends support his or her position. The motion must also be 
accompanied by a brief containing the points and authorities in support 
of the contention of the moving party. Any party opposing a motion for 
summary disposition must file a statement setting forth those material 
facts as to which he or she contends a genuine dispute exists. Such 
opposition must be supported by evidence of the same type as that 
submitted with the motion for summary disposition and a brief containing 
the points and authorities in support of the

[[Page 71]]

contention that summary disposition would be inappropriate.
    (c) Hearing on motion. At the request of any party or on his or her 
own motion, the administrative law judge may hear oral argument on the 
motion for summary disposition.
    (d) Decision on motion. Following receipt of a motion for summary 
disposition and all responses thereto, the administrative law judge 
shall determine whether the moving party is entitled to summary 
disposition. If the administrative law judge determines that summary 
disposition is warranted, the administrative law judge shall submit a 
recommended decision to that effect to the Board of Directors. If the 
administrative law judge finds that no party is entitled to summary 
disposition, he or she shall make a ruling denying the motion.



Sec. 308.30  Partial summary disposition.

    If the administrative law judge determines that a party is entitled 
to summary disposition as to certain claims only, he or she shall defer 
submitting a recommended decision as to those claims. A hearing on the 
remaining issues must be ordered. Those claims for which the 
administrative law judge has determined that summary disposition is 
warranted will be addressed in the recommended decision filed at the 
conclusion of the hearing.



Sec. 308.31  Scheduling and prehearing conferences.

    (a) Scheduling conference. Within 30 days of service of the notice 
or order commencing a proceeding or such other time as parties may 
agree, the administrative law judge shall direct counsel for all parties 
to meet with him or her in person at a specified time and place prior to 
the hearing or to confer by telephone for the purpose of scheduling the 
course and conduct of the proceeding. This meeting or telephone 
conference is called a ``scheduling conference.'' The identification of 
potential witnesses, the time for and manner of discovery, and the 
exchange of any prehearing materials including witness lists, statements 
of issues, stipulations, exhibits and any other materials may also be 
determined at the scheduling conference.
    (b) Prehearing conferences. The administrative law judge may, in 
addition to the scheduling conference, on his or her own motion or at 
the request of any party, direct counsel for the parties to meet with 
him or her (in person or by telephone) at a prehearing conference to 
address any or all of the following:
    (1) Simplification and clarification of the issues;
    (2) Stipulations, admissions of fact, and the contents, authenticity 
and admissibility into evidence of documents;
    (3) Matters of which official notice may be taken;
    (4) Limitation of the number of witnesses;
    (5) Summary disposition of any or all issues;
    (6) Resolution of discovery issues or disputes;
    (7) Amendments to pleadings; and
    (8) Such other matters as may aid in the orderly disposition of the 
proceeding.
    (c) Transcript. The administrative law judge, in his or her 
discretion, may require that a scheduling or prehearing conference be 
recorded by a court reporter. A transcript of the conference and any 
materials filed, including orders, becomes part of the record of the 
proceeding. A party may obtain a copy of the transcript at his or her 
expense.
    (d) Scheduling or prehearing orders. At or within a reasonable time 
following the conclusion of the scheduling conference or any prehearing 
conference, the administrative law judge shall serve on each party an 
order setting forth any agreements reached and any procedural 
determinations made.



Sec. 308.32  Prehearing submissions.

    (a) Within the time set by the administrative law judge, but in no 
case later than 14 days before the start of the hearing, each party 
shall serve on every other party, his or her:
    (1) Prehearing statement;
    (2) Final list of witnesses to be called to testify at the hearing, 
including name and address of each witness and a short summary of the 
expected testimony of each witness;
    (3) List of the exhibits to be introduced at the hearing along with 
a copy of each exhibit; and

[[Page 72]]

    (4) Stipulations of fact, if any.
    (b) Effect of failure to comply. No witness may testify and no 
exhibits may be introduced at the hearing if such witness or exhibit is 
not listed in the prehearing submissions pursuant to paragraph (a) of 
this section, except for good cause shown.



Sec. 308.33  Public hearings.

    (a) General rule. All hearings shall be open to the public, unless 
the FDIC, in its discretion, determines that holding an open hearing 
would be contrary to the public interest. Within 20 days of service of 
the notice or, in the case of change-in-control proceedings under 
section 7(j)(4) of the FDIA (12 U.S.C. 1817(j)(4)), within 20 days from 
service of the hearing order, any respondent may file with the Executive 
Secretary a request for a private hearing, and any party may file a 
reply to such a request. A party must serve on the administrative law 
judge a copy of any request or reply the party files with the Executive 
Secretary. The form of, and procedure for, these requests and replies 
are governed by Sec. 308.23. A party's failure to file a request or a 
reply constitutes a waiver of any objections regarding whether the 
hearing will be public or private.
    (b) Filing document under seal. Enforcement Counsel, in his or her 
discretion, may file any document or part of a document under seal if 
disclosure of the document would be contrary to the public interest. The 
administrative law judge shall take all appropriate steps to preserve 
the confidentiality of such documents or parts thereof, including 
closing portions of the hearing to the public.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec. 308.34  Hearing subpoenas.

    (a) Issuance. (1) Upon application of a party showing general 
relevance and reasonableness of scope of the testimony or other evidence 
sought, the administrative law judge may issue a subpoena or a subpoena 
duces tecum requiring the attendance of a witness at the hearing or the 
production of documentary or physical evidence at the hearing. The 
application for a hearing subpoena must also contain a proposed subpoena 
specifying the attendance of a witness or the production of evidence 
from any state, territory, or possession of the United States, the 
District of Columbia, or as otherwise provided by law at any designated 
place where the hearing is being conducted. The party making the 
application shall serve a copy of the application and the proposed 
subpoena on every other party.
    (2) A party may apply for a hearing subpoena at any time before the 
commencement of a hearing. During a hearing, a party may make an 
application for a subpoena orally on the record before the 
administrative law judge.
    (3) The administrative law judge shall promptly issue any hearing 
subpoena requested pursuant to this section. If the administrative law 
judge determines that the application does not set forth a valid basis 
for the issuance of the subpoena, or that any of its terms are 
unreasonable, oppressive, excessive in scope, or unduly burdensome, he 
or she may refuse to issue the subpoena or may issue it in a modified 
form upon any conditions consistent with this subpart. Upon issuance by 
the administrative law judge, the party making the application shall 
serve the subpoena on the person named in the subpoena and on each 
party.
    (b) Motion to quash or modify. (1) Any person to whom a hearing 
subpoena is directed or any party may file a motion to quash or modify 
the subpoena, accompanied by a statement of the basis for quashing or 
modifying the subpoena. The movant must serve the motion on each party 
and on the person named in the subpoena. Any party may respond to the 
motion within ten days of service of the motion.
    (2) Any motion to quash or modify a hearing subpoena must be filed 
prior to the time specified in the subpoena for compliance, but not more 
than ten days after the date of service of the subpoena upon the movant.
    (c) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or any order of the 
administrative law judge which directs compliance with all or any 
portion of a document subpoena, the subpoenaing party or any other 
aggrieved party may seek

[[Page 73]]

enforcement of the subpoena pursuant to Sec. 308.26(c).
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec. 308.35  Conduct of hearings.

    (a) General rules. (1) Hearings shall be conducted so as to provide 
a fair and expeditious presentation of the relevant disputed issues. 
Each party has the right to present its case or defense by oral and 
documentary evidence and to conduct such cross examination as may be 
required for full disclosure of the facts.
    (2) Order of hearing. Enforcement Counsel shall present its case-in-
chief first, unless otherwise ordered by the administrative law judge, 
or unless otherwise expressly specified by law or regulation. 
Enforcement Counsel shall be the first party to present an opening 
statement and a closing statement, and may make a rebuttal statement 
after the respondent's closing statement. If there are multiple 
respondents, respondents may agree among themselves as to their order of 
presentation of their cases, but if they do not agree the administrative 
law judge shall fix the order.
    (3) Examination of witnesses. Only one counsel for each party may 
conduct an examination of a witness, except that in the case of 
extensive direct examination, the administrative law judge may permit 
more than one counsel for the party presenting the witness to conduct 
the examination. A party may have one counsel conduct the direct 
examination and another counsel conduct re-direct examination of a 
witness, or may have one counsel conduct the cross examination of a 
witness and another counsel conduct the re-cross examination of a 
witness.
    (4) Stipulations. Unless the administrative law judge directs 
otherwise, all stipulations of fact and law previously agreed upon by 
the parties, and all documents, the admissibility of which have been 
previously stipulated, will be admitted into evidence upon commencement 
of the hearing.
    (b) Transcript. The hearing must be recorded and transcribed. The 
reporter will make the transcript available to any party upon payment by 
that party to the reporter of the cost of the transcript. The 
administrative law judge may order the record corrected, either upon 
motion to correct, upon stipulation of the parties, or following notice 
to the parties upon the administrative law judge's own motion.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec. 308.36  Evidence.

    (a) Admissibility. (1) Except as is otherwise set forth in this 
section, relevant, material, and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act and other applicable law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted pursuant to this 
subpart.
    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence may not be deemed or ruled to be inadmissible in a proceeding 
conducted pursuant to this subpart if such evidence is relevant, 
material, reliable and not unduly repetitive.
    (b) Official notice. (1) Official notice may be taken of any 
material fact which may be judicially noticed by a United States 
district court and any material information in the official public 
records of any Federal or state government agency.
    (2) All matters officially noticed by the administrative law judge 
or Board of Directors shall appear on the record.
    (3) If official notice is requested or taken of any material fact, 
the parties, upon timely request, shall be afforded an opportunity to 
object.
    (c) Documents. (1) A duplicate copy of a document is admissible to 
the same extent as the original, unless a genuine issue is raised as to 
whether the copy is in some material respect not a true and legible copy 
of the original.
    (2) Subject to the requirements of paragraph (a) of this section, 
any document, including a report of examination, supervisory activity, 
inspection or visitation, prepared by an appropriate Federal financial 
institution regulatory agency or state regulatory agency, is admissible 
either with or without a sponsoring witness.

[[Page 74]]

    (3) Witnesses may use existing or newly created charts, exhibits, 
calendars, calculations, outlines or other graphic material to 
summarize, illustrate, or simplify the presentation of testimony. Such 
materials may, subject to the administrative law judge's discretion, be 
used with or without being admitted into evidence.
    (d) Objections. (1) Objections to the admissibility of evidence must 
be timely made and rulings on all objections must appear on the record.
    (2) When an objection to a question or line of questioning 
propounded to a witness is sustained, the examining counsel may make a 
specific proffer on the record of what he or she expected to prove by 
the expected testimony of the witness, either by representation of 
counsel or by direct interrogation of the witness.
    (3) The administrative law judge shall retain rejected exhibits, 
adequately marked for identification, for the record, and transmit such 
exhibits to the Board of Directors.
    (4) Failure to object to admission of evidence or to any ruling 
constitutes a waiver of the objection.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact or the authentication of any relevant documents. Such 
stipulations must be received in evidence at a hearing, and are binding 
on the parties with respect to the matters therein stipulated.
    (f) Depositions of unavailable witnesses. (1) If a witness is 
unavailable to testify at a hearing, and that witness has testified in a 
deposition to which all parties in a proceeding had notice and an 
opportunity to participate, a party may offer as evidence all or any 
part of the transcript of the deposition, including deposition exhibits, 
if any.
    (2) Such deposition transcript is admissible to the same extent that 
testimony would have been admissible had that person testified at the 
hearing, provided that if a witness refused to answer proper questions 
during the depositions, the administrative law judge may, on that basis, 
limit the admissibility of the deposition in any manner that justice 
requires.
    (3) Only those portions of a deposition received in evidence at the 
hearing constitute a part of the record.



Sec. 308.37  Post-hearing filings.

    (a) Proposed findings and conclusions and supporting briefs. (1) 
Using the same method of service for each party, the administrative law 
judge shall serve notice upon each party, that the certified transcript, 
together with all hearing exhibits and exhibits introduced but not 
admitted into evidence at the hearing, has been filed. Any party may 
file with the administrative law judge proposed findings of fact, 
proposed conclusions of law, and a proposed order within 30 days 
following service of this notice by the administrative law judge or 
within such longer period as may be ordered by the administrative law 
judge.
    (2) Proposed findings and conclusions must be supported by citation 
to any relevant authorities and by page references to any relevant 
portions of the record. A post-hearing brief may be filed in support of 
proposed findings and conclusions, either as part of the same document 
or in a separate document. Any party who fails to file timely with the 
administrative law judge any proposed finding or conclusion is deemed to 
have waived the right to raise in any subsequent filing or submission 
any issue not addressed in such party's proposed finding or conclusion.
    (b) Reply briefs. Reply briefs may be filed within 15 days after the 
date on which the parties' proposed findings, conclusions, and order are 
due. Reply briefs must be strictly limited to responding to new matters, 
issues, or arguments raised in another party's papers. A party who has 
not filed proposed findings of fact and conclusions of law or a post-
hearing brief may not file a reply brief.
    (c) Simultaneous filing required. The administrative law judge shall 
not order the filing by any party of any brief or reply brief in advance 
of the other party's filing of its brief.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec. 308.38  Recommended decision and filing of record.

    (a) Filing of recommended decision and record. Within 45 days after 
expiration of the time allowed for filing reply

[[Page 75]]

briefs under Sec. 308.37(b), the administrative law judge shall file 
with and certify to the Executive Secretary, for decision, the record of 
the proceeding. The record must include the administrative law judge's 
recommended decision, recommended findings of fact, recommended 
conclusions of law, and proposed order; all prehearing and hearing 
transcripts, exhibits, and rulings; and the motions, briefs, memoranda, 
and other supporting papers filed in connection with the hearing. The 
administrative law judge shall serve upon each party the recommended 
decision, findings, conclusions, and proposed order.
    (b) Filing of index. At the same time the administrative law judge 
files with and certifies to the Executive Secretary for final 
determination the record of the proceeding, the administrative law judge 
shall furnish to the Executive Secretary a certified index of the entire 
record of the proceeding. The certified index shall include, at a 
minimum, an entry for each paper, document or motion filed with the 
administrative law judge in the proceeding, the date of the filing, and 
the identity of the filer. The certified index shall also include an 
exhibit index containing, at a minimum, an entry consisting of exhibit 
number and title or description for: Each exhibit introduced and 
admitted into evidence at the hearing; each exhibit introduced but not 
admitted into evidence at the hearing; each exhibit introduced and 
admitted into evidence after the completion of the hearing; and each 
exhibit introduced but not admitted into evidence after the completion 
of the hearing.
[61 FR 20350, May 6, 1996]



Sec. 308.39  Exceptions to recommended decision.

    (a) Filing exceptions. Within 30 days after service of the 
recommended decision, findings, conclusions, and proposed order under 
Sec. 308.38, a party may file with the Executive Secretary written 
exceptions to the administrative law judge's recommended decision, 
findings, conclusions or proposed order, to the admission or exclusion 
of evidence, or to the failure of the administrative law judge to make a 
ruling proposed by a party. A supporting brief may be filed at the time 
the exceptions are filed, either as part of the same document or in a 
separate document.
    (b) Effect of failure to file or raise exceptions. (1) Failure of a 
party to file exceptions to those matters specified in paragraph (a) of 
this section within the time prescribed is deemed a waiver of objection 
thereto.
    (2) No exception need be considered by the Board of Directors if the 
party taking exception had an opportunity to raise the same objection, 
issue, or argument before the administrative law judge and failed to do 
so.
    (c) Contents. (1) All exceptions and briefs in support of such 
exceptions must be confined to the particular matters in, or omissions 
from, the administrative law judge's recommendations to which that party 
takes exception.
    (2) All exceptions and briefs in support of exceptions must set 
forth page or paragraph references to the specific parts of the 
administrative law judge's recommendations to which exception is taken, 
the page or paragraph references to those portions of the record relied 
upon to support each exception, and the legal authority relied upon to 
support each exception.



Sec. 308.40  Review by Board of Directors.

    (a) Notice of submission to Board of Directors. When the Executive 
Secretary determines that the record in the proceeding is complete, the 
Executive Secretary shall serve notice upon the parties that the 
proceeding has been submitted to the Board of Directors for final 
decision.
    (b) Oral argument before the Board of Directors. Upon the initiative 
of the Board of Directors or on the written request of any party filed 
with the Executive Secretary within the time for filing exceptions, the 
Board of Directors may order and hear oral argument on the recommended 
findings, conclusions, decision, and order of the administrative law 
judge. A written request by a party must show good cause for oral 
argument and state reasons why arguments cannot be presented adequately 
in writing. A denial of a request for oral argument may be set forth in 
the Board of Directors' final decision. Oral argument before the

[[Page 76]]

Board of Directors must be on the record.
    (c) Final decision. (1) Decisional employees may advise and assist 
the Board of Directors in the consideration and disposition of the case. 
The final decision of the Board of Directors will be based upon review 
of the entire record of the proceeding, except that the Board of 
Directors may limit the issues to be reviewed to those findings and 
conclusions to which opposing arguments or exceptions have been filed by 
the parties.
    (2) The Board of Directors shall render a final decision within 90 
days after notification of the parties that the case has been submitted 
for final decision, or 90 days after oral argument, whichever is later, 
unless the Board of Directors orders that the action or any aspect 
thereof be remanded to the administrative law judge for further 
proceedings. Copies of the final decision and order of the Board of 
Directors shall be served upon each party to the proceeding, upon other 
persons required by statute, and, if directed by the Board of Directors 
or required by statute, upon any appropriate state or Federal 
supervisory authority.



Sec. 308.41  Stays pending judicial review.

    The commencement of proceedings for judicial review of a final 
decision and order of the FDIC may not, unless specifically ordered by 
the Board of Directors or a reviewing court, operate as a stay of any 
order issued by the FDIC. The Board of Directors may, in its discretion, 
and on such terms as it finds just, stay the effectiveness of all or any 
part of its order pending a final decision on a petition for review of 
that order.



                  Subpart B--General Rules of Procedure



Sec. 308.101  Scope of Local Rules.

    (a) Subparts B and C of the Local Rules prescribe rules of practice 
and procedure to be followed in the administrative enforcement 
proceedings initiated by the FDIC as set forth in Sec. 308.01 of the 
Uniform Rules.
    (b) Except as otherwise specifically provided, the Uniform Rules and 
subpart B of the Local Rules shall not apply to subparts D through P of 
the Local Rules.
    (c) Subpart C of the Local Rules shall apply to any administrative 
proceeding initiated by the FDIC.



Sec. 308.102  Authority of Board of Directors and Executive Secretary.

    (a) The Board of Directors. (1) The Board of Directors may, at any 
time during the pendency of a proceeding, perform, direct the 
performance of, or waive performance of, any act which could be done or 
ordered by the Executive Secretary.
    (2) Nothing contained in this part 308 shall be construed to limit 
the power of the Board of Directors granted by applicable statutes or 
regulations.
    (b) The Executive Secretary. When no administrative law judge has 
jurisdiction over a proceeding, the Executive Secretary may act in place 
of, and with the same authority as, an administrative law judge, except 
that the Executive Secretary may not hear a case on the merits or make a 
recommended decision on the merits to the Board of Directors.



Sec. 308.103  Appointment of administrative law judge.

    (a) Appointment. Unless otherwise directed by the Board of Directors 
or as otherwise provided in the Local Rules, a hearing within the scope 
of this part 308 shall be held before an administrative law judge of the 
Office of Financial Institution Adjudication (``OFIA'').
    (b) Procedures. (1) The Executive Secretary shall promptly after 
issuance of the notice refer the matter to the OFIA which shall secure 
the appointment of an administrative law judge to hear the proceeding.
    (2) OFIA shall advise the parties, in writing, that an 
administrative law judge has been appointed.



Sec. 308.104  Filings with the Board of Directors.

    (a) General rule. All materials required to be filed with or 
referred to the Board of Directors in any proceedings under this part 
308 shall be filed with the Executive Secretary, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.

[[Page 77]]

    (b) Scope. Filings to be made with the Executive Secretary include 
pleadings and motions filed during the proceeding; the record filed by 
the administrative law judge after the issuance of a recommended 
decision; the recommended decision filed by the administrative law judge 
following a motion for summary disposition; referrals by the 
administrative law judge of motions for interlocutory review; motions 
and responses to motions filed by the parties after the record has been 
certified to the Board of Directors; exceptions and requests for oral 
argument; and any other papers required to be filed with the Board of 
Directors under this part 308.



Sec. 308.105  Custodian of the record.

    The Executive Secretary is the official custodian of the record when 
no administrative law judge has jurisdiction over the proceeding. As the 
official custodian, the Executive Secretary shall maintain the official 
record of all papers filed in each proceeding.



Sec. 308.106  Written testimony in lieu of oral hearing.

    (a) General rule. (1) At any time more than fifteen days before the 
hearing is to commence, on the motion of any party or on his or her own 
motion, the administrative law judge may order that the parties present 
part or all of their case-in-chief and, if ordered, their rebuttal, in 
the form of exhibits and written statements sworn to by the witness 
offering such statements as evidence, provided that if any party 
objects, the administrative law judge shall not require such a format if 
that format would violate the objecting party's right under the 
Administrative Procedure Act, or other applicable law, or would 
otherwise unfairly prejudice that party.
    (2) Any such order shall provide that each party shall, upon 
request, have the same right of oral cross-examination (or redirect 
examination) as would exist had the witness testified orally rather than 
through a written statement. Such order shall also provide that any 
party has a right to call any hostile witness or adverse party to 
testify orally.
    (b) Scheduling of submission of written testimony. (1) If written 
direct testimony and exhibits are ordered under paragraph (a) of this 
section, the administrative law judge shall require that it be filed 
within the time period for commencement of the hearing, and the hearing 
shall be deemed to have commenced on the day such testimony is due.
    (2) Absent good cause shown, written rebuttal, if any, shall be 
submitted and the oral portion of the hearing begun within 30 days of 
the date set for filing written direct testimony.
    (3) The administrative law judge shall direct, unless good cause 
requires otherwise, that--
    (i) All parties shall simultaneously file any exhibits and written 
direct testimony required under paragraph (b)(1) of this section; and
    (ii) All parties shall simultaneously file any exhibits and written 
rebuttal required under paragraph (b)(2) of this section.
    (c) Failure to comply with order to file written testimony. (1) The 
failure of any party to comply with an order to file written testimony 
or exhibits at the time and in the manner required under this section 
shall be deemed a waiver of that party's right to present any evidence, 
except testimony of a previously identified adverse party or hostile 
witness. Failure to file written testimony or exhibits is, however, not 
a waiver of that party's right of cross-examination or a waiver of the 
right to present rebuttal evidence that was not required to be submitted 
in written form.
    (2) Late filings of papers under this section may be allowed and 
accepted only upon good cause shown.



Sec. 308.107  Document discovery.

    (a) Parties to proceedings set forth at Sec. 308.01 of the Uniform 
Rules and as provided in the Local Rules may obtain discovery only 
through the production of documents. No other form of discovery shall be 
allowed.
    (b) Any questioning at a deposition of a person producing documents 
pursuant to a document subpoena shall be strictly limited to the 
identification of documents produced by that person and a reasonable 
examination to determine whether the subpoenaed person

[[Page 78]]

made an adequate search for, and has produced, all subpoenaed documents.



  Subpart C--Rules of Practice Before the FDIC and Standards of Conduct



Sec. 308.108  Sanctions.

    (a) General rule. Appropriate sanctions may be imposed when any 
counsel or party has acted, or failed to act, in a manner required by 
applicable statute, regulations, or order, and that act or failure to 
act:
    (1) Constitutes contemptuous conduct;
    (2) Has in a material way injured or prejudiced some other party in 
terms of substantive injury, incurring additional expenses including 
attorney's fees, prejudicial delay, or otherwise;
    (3) Is a clear and unexcused violation of an applicable statute, 
regulation, or order; or
    (4) Has unduly delayed the proceeding.
    (b) Sanctions. Sanctions which may be imposed include any one or 
more of the following:
    (1) Issuing an order against the party;
    (2) Rejecting or striking any testimony or documentary evidence 
offered, or other papers filed, by the party;
    (3) Precluding the party from contesting specific issues or 
findings;
    (4) Precluding the party from offering certain evidence or from 
challenging or contesting certain evidence offered by another party;
    (5) Precluding the party from making a late filing or conditioning a 
late filing on any terms that are just; and
    (6) Assessing reasonable expenses, including attorney's fees, 
incurred by any other party as a result of the improper action or 
failure to act.
    (c) Limits on dismissal as a sanction. No recommendation of 
dismissal shall be made by the administrative law judge or granted by 
the Board of Directors based on the failure to hold a hearing within the 
time period called for in this part 308, or on the failure of an 
administrative law judge to render a recommended decision within the 
time period called for in this part 308, absent a finding:
    (1) That the delay resulted solely or principally from the conduct 
of the FDIC enforcement counsel;
    (2) That the conduct of the FDIC enforcement counsel is unexcused;
    (3) That the moving respondent took all reasonable steps to oppose 
and prevent the subject delay;
    (4) That the moving respondent has been materially prejudiced or 
injured; and
    (5) That no lesser or different sanction is adequate.
    (d) Procedure for imposition of sanctions. (1) The administrative 
law judge, upon the request of any party, or on his or her own motion, 
may impose sanctions in accordance with this section, provided that the 
administrative law judge may only recommend to the Board of Directors 
the sanction of entering a final order determining the case on the 
merits.
    (2) No sanction, other than refusing to accept late papers, 
authorized by this section shall be imposed without prior notice to all 
parties and an opportunity for any counsel or party against whom 
sanctions would be imposed to be heard. Such opportunity to be heard may 
be on such notice, and the response may be in such form, as the 
administrative law judge directs. The opportunity to be heard may be 
limited to an opportunity to respond orally immediately after the act or 
inaction covered by this section is noted by the administrative law 
judge.
    (3) Requests for the imposition of sanctions by any party, and the 
imposition of sanctions, shall be treated for interlocutory review 
purposes in the same manner as any other ruling by the administrative 
law judge.
    (4) Section not exclusive. Nothing in this section shall be read as 
precluding the administrative law judge or the Board of Directors from 
taking any other action, or imposing any restriction or sanction, 
authorized by applicable statute or regulation.



Sec. 308.109  Suspension and disbarment.

    (a) Discretionary suspension and disbarment. (1) The Board of 
Directors may suspend or revoke the privilege of any counsel to appear 
or practice before the FDIC if, after notice of and opportunity for 
hearing in the matter,

[[Page 79]]

that counsel is found by the Board of Directors:
    (i) Not to possess the requisite qualifications to represent others;
    (ii) To be seriously lacking in character or integrity or to have 
engaged in material unethical or improper professional conduct;
    (iii) To have engaged in, or aided and abetted, a material and 
knowing violation of the FDIA; or
    (iv) To have engaged in contemptuous conduct before the FDIC. 
Suspension or revocation on the grounds set forth in paragraphs (a)(1) 
(ii), (iii), and (iv) of this section shall only be ordered upon a 
further finding that the counsel's conduct or character was sufficiently 
egregious as to justify suspension or revocation.
    (2) Unless otherwise ordered by the Board of Directors, an 
application for reinstatement by a person suspended or disbarred under 
paragraph (a)(1) of this section may be made in writing at any time more 
than three years after the effective date of the suspension or 
disbarment and, thereafter, at any time more than one year after the 
person's most recent application for reinstatement. The suspension or 
disbarment shall continue until the applicant has been reinstated by the 
Board of Directors for good cause shown or until, in the case of a 
suspension, the suspension period has expired. An applicant for 
reinstatement under this provision may, in the Board of Directors' sole 
discretion, be afforded a hearing.
    (b) Mandatory suspension and disbarment. (1) Any counsel who has 
been and remains suspended or disbarred by a court of the United States 
or of any state, territory, district, commonwealth, or possession; or 
any person who has been and remains suspended or barred from practice 
before the OCC, Board of Governors, the OTS, the NCUA, the Securities 
and Exchange Commission, or the Commodity Futures Trading Commission; or 
any person who has been convicted of a felony, or of a misdemeanor 
involving moral turpitude, within the last ten years, shall be suspended 
automatically from appearing or practicing before the FDIC. A 
disbarment, suspension, or conviction within the meaning of this 
paragraph (b) shall be deemed to have occurred when the disbarring, 
suspending, or convicting agency or tribunal enters its judgment or 
order, regardless of whether an appeal is pending or could be taken, and 
includes a judgment or an order on a plea of nolo contendere or on 
consent, regardless of whether a violation is admitted in the consent.
    (2) Any person appearing or practicing before the FDIC who is the 
subject of an order, judgment, decree, or finding of the types set forth 
in paragraph (b)(1) of this section shall promptly file with the 
Executive Secretary a copy thereof, together with any related opinion or 
statement of the agency or tribunal involved. Failure to file any such 
paper shall not impair the operation of any other provision of this 
section.
    (3) A suspension or disbarment under paragraph (b)(1) of this 
section from practice before the FDIC shall continue until the applicant 
has been reinstated by the Board of Directors for good cause shown, 
provided that any person suspended or disbarred under paragraph (b)(1) 
of this section shall be automatically reinstated by the Executive 
Secretary, upon appropriate application, if all the grounds for 
suspension or disbarment under paragraph (b)(1) of this section are 
subsequently removed by a reversal of the conviction (or the passage of 
time since the conviction) or termination of the underlying suspension 
or disbarment. An application for reinstatement on any other grounds by 
any person suspended or disbarred under paragraph (b)(1) of this section 
may be filed at any time not less than one year after the applicant's 
most recent application. An applicant for reinstatement under this 
provision may, in the Board of Directors' sole discretion, be afforded a 
hearing.
    (c) Hearings under this section. Hearings conducted under this 
section shall be conducted in substantially the same manner as other 
hearings under the Uniform Rules, provided that in proceedings to 
terminate an existing FDIC suspension or disbarment order, the person 
seeking the termination of the order shall bear the burden of going 
forward with an application and with proof, and that the Board of 
Directors may, in its sole discretion, direct that

[[Page 80]]

any proceeding to terminate an existing suspension or disbarment by the 
FDIC be limited to written submissions.
    (d) Summary suspension for contemptuous conduct. A finding by the 
administrative law judge of contemptuous conduct during the course of 
any proceeding shall be grounds for summary suspension by the 
administrative law judge of a counsel or other representative from any 
further participation in that proceeding for the duration of that 
proceeding.
    (e) Practice defined. Unless the Board of Directors orders 
otherwise, for the purposes of this section, practicing before the FDIC 
includes, but is not limited to, transacting any business with the FDIC 
as counsel or agent for any other person and the preparation of any 
statement, opinion, or other paper by a counsel, which statement, 
opinion, or paper is filed with the FDIC in any registration statement, 
notification, application, report, or other document, with the consent 
of such counsel.



 Subpart D--Rules and Procedures Applicable to Proceedings Relating to 
                  Disapproval of Acquisition of Control



Sec. 308.110  Scope.

    Except as specifically indicated in this subpart, the rules and 
procedures in this subpart, subpart B of the Local Rules, and the 
Uniform Rules shall apply to proceedings in connection with the 
disapproval by the Board of Directors or its designee of a proposed 
acquisition of control of an insured nonmember bank.



Sec. 308.111  Grounds for disapproval.

    The following are grounds for disapproval of a proposed acquisition 
of control of an insured nonmember bank:
    (a) The proposed acquisition of control would result in a monopoly 
or would be in furtherance of any combination or conspiracy to 
monopolize or attempt to monopolize the banking business in any part of 
the United States;
    (b) The effect of the proposed acquisition of control in any section 
of the United States may be to substantially lessen competition or to 
tend to create a monopoly or would in any other manner be in restraint 
of trade, and the anticompetitive effects of the proposed acquisition of 
control are not clearly outweighed in the public interest by the 
probable effect of the transaction in meeting the convenience and needs 
of the community to be served;
    (c) The financial condition of any acquiring person might jeopardize 
the financial stability of the bank or prejudice the interests of the 
depositors of the bank;
    (d) The competence, experience, or integrity of any acquiring person 
or of any of the proposed management personnel indicates that it would 
not be in the interest of the depositors of the bank, or in the interest 
of the public, to permit such person to control the bank;
    (e) Any acquiring person neglects, fails, or refuses to furnish to 
the FDIC all the information required by the FDIC; or
    (f) The FDIC determines that the proposed acquisition would result 
in an adverse effect on the Bank Insurance Fund or the Savings 
Association Insurance Fund.



Sec. 308.112  Notice of disapproval.

    (a) General rule. (1) Within three days of the decision by the Board 
of Directors or its designee to disapprove a proposed acquisition of 
control of an insured nonmember bank, a written notice of disapproval 
shall be mailed by first class mail to, or otherwise served upon, the 
party seeking acquire control.
    (2) The notice of disapproval shall:
    (i) Contain a statement of the basis for the disapproval; and
    (ii) Indicate that a hearing may be requested by filing a written 
request with the Executive Secretary within ten days after service of 
the notice of disapproval; and if a hearing is requested, that an answer 
to the notice of disapproval, as required by Sec. 308.113, must be filed 
within 20 days after service of the notice of disapproval.
    (b) Waiver of hearing. Failure to request a hearing pursuant to this 
section shall constitute a waiver of the

[[Page 81]]

opportunity for a hearing and the notice of disapproval shall constitute 
a final and unappealable order.
    (c) Section 308.18(b) of the Uniform Rules shall not apply to the 
content of the Notice of Disapproval.



Sec. 308.113  Answer to notice of disapproval.

    (a) Contents. (1) An answer to the notice of disapproval of a 
proposed acquisition of control shall be filed within 20 days after 
service of the notice of disapproval and shall specifically deny those 
portions of the notice of disapproval which are disputed. Those portions 
of the notice of disapproval which are not specifically denied are 
deemed admitted by the applicant.
    (2) Any hearing under this subpart shall be limited to those parts 
of the notice of disapproval that are specifically denied.
    (b) Failure to answer. Failure of a respondent to file an answer 
required by this section within the time provided constitutes a waiver 
of his or her right to appear and contest the allegations in the notice 
of disapproval. If no timely answer is filed, Enforcement Counsel may 
file a motion for entry of an order of default. Upon a finding that no 
good cause has been shown for the failure to file a timely answer, the 
administrative law judge shall file a recommended decision containing 
the findings and relief sought in the notice. A final order issued by 
the Board of Directors based upon a respondent's failure to answer is 
deemed to be an order issued upon consent.



Sec. 308.114  Burden of proof.

    The ultimate burden of proof shall be upon the person proposing to 
acquire a depository institution. The burden of going forward with a 
prima facie case shall be upon the FDIC.



 Subpart E--Rules and Procedures Applicable to Proceedings Relating to 
 Assessment of Civil Penalties for Willful Violations of the Change in 
                            Bank Control Act



Sec. 308.115  Scope.

    The rules and procedures of this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings to assess civil 
penalties against any person for willful violation of the Change in Bank 
Control Act of 1978 (12 U.S.C. 1817(j)), or any regulation or order 
issued pursuant thereto, in connection with the affairs of an insured 
nonmember bank.



Sec. 308.116  Assessment of penalties.

    (a) In general. The civil money penalty shall be assessed upon the 
service of a Notice of Assessment which shall become final and 
unappealable unless the respondent requests a hearing pursuant to 
Sec. 308.19(c)(2).
    (b) Amount. (1) Any person who violates any provision of the Change 
in Bank Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto, shall forfeit and pay a civil money penalty of not 
more than $5,000 for each day the violation continues.
    (2) Any person who violates any provision of the Change in Bank 
Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto; or recklessly engages in any unsafe or unsound 
practice in conducting the affairs of a depository institution; or 
breaches any fiduciary duty; which violation, practice or breach is part 
of a pattern of misconduct; or causes or is likely to cause more than a 
minimal loss to such institution; or results in pecuniary gain or other 
benefit to such person, shall forfeit and pay a civil money penalty of 
not more than $25,000 for each day such violation, practice or breach 
continues.
    (3) Any person who knowingly violates any provision of the Change in

[[Page 82]]

Bank Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto; or engages in any unsafe or unsound practice in 
conducting the affairs of a depository institution; or breaches any 
fiduciary duty; and knowingly or recklessly causes a substantial loss to 
such institution or a substantial pecuniary gain or other benefit to 
such institution or a substantial pecuniary gain or other benefit to 
such person by reason of such violation, practice or breach, shall 
forfeit and pay a civil money penalty not to exceed:
    (i) In the case of a person other than a depository institution--
$1,000,000 per day for each day the violation, practice or breach 
continues; or
    (ii) In the case of a depository institution--an amount not to 
exceed the lesser of $1,000,000 or one percent of the total assets of 
such institution for each day the violation, practice or breach 
continues.
    (4) Adjustment of civil money penalties by the rate of inflation 
pursuant to section 31001(s) of the Debt Collection Improvement Act. 
After November 12, 1996:
    (i) Any person who engages in a violation as set forth in paragraph 
(b)(1) of this section shall forfeit and pay a civil money penalty of 
not more than $5,500 for each day the violation continues.
    (ii) Any person who engages in a violation, unsafe or unsound 
practice or breach of fiduciary duty, as set forth in paragraph (b)(2) 
of this section, shall forfeit and pay a civil money penalty of not more 
than $27,500 for each day such violation, practice or breach continues.
    (iii) Any person who knowingly engages in a violation, unsafe or 
unsound practice or breach of fiduciary duty, as set forth in paragraph 
(b)(3) of this section, shall forfeit and pay a civil money penalty not 
to exceed:
    (A) In the case of a person other than a depository institution--
$1,100,000 per day for each day the violation, practice or breach 
continues; or
    (B) In the case of a depository institution--an amount not to exceed 
the lesser of $1,100,000 or one percent of the total assets of such 
institution for each day the violation, practice or breach continues.
    (c) Mitigating factors. In assessing the amount of the penalty, the 
Board of Directors or its designee shall consider the gravity of the 
violation, the history of previous violations, respondent's financial 
resources, good faith, and any other matters as justice may require.
    (d) Failure to answer. Failure of a respondent to file an answer 
required by this section within the time provided constitutes a waiver 
of his or her right to appear and contest the allegations in the notice 
of disapproval. If no timely answer is filed, Enforcement Counsel may 
file a motion for entry of an order of default. Upon a finding that no 
good cause has been shown for the failure to file a timely answer, the 
administrative law judge shall file a recommended decision containing 
the findings and relief sought in the notice. A final order issued by 
the Board of Directors based upon a respondent's failure to answer is 
deemed to be an order issued upon consent.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 57990, Nov. 12, 1996]



Sec. 308.117  Effective date of, and payment under, an order to pay.

    If the respondent both requests a hearing and serves an answer, 
civil penalties assessed pursuant to this subpart are due and payable 60 
days after an order to pay, issued after the hearing or upon default, is 
served upon the respondent, unless the order provides for a different 
period of payment. Civil penalties assessed pursuant to an order to pay 
issued upon consent are due and payable within the time specified 
therein.



Sec. 308.118  Collection of penalties.

    The FDIC may collect any civil penalty assessed pursuant to this 
subpart by agreement with the respondent, or the FDIC may bring an 
action against the respondent to recover the penalty amount in the 
appropriate United States district court. All penalties collected under 
this section shall be paid over to the Treasury of the United States.

[[Page 83]]



     Subpart F--Rules and Procedures Applicable to Proceedings for 
                Involuntary Termination of Insured Status



Sec. 308.119  Scope.

    (a) Involuntary termination of insurance pursuant to section 8(a) of 
the FDIA. The rules and procedures in this subpart, subpart B of the 
Local Rules and the Uniform Rules shall apply to proceedings in 
connection with the involuntary termination of the insured status of an 
insured bank depository institution or an insured branch of a foreign 
bank pursuant to section 8(a) of the FDIA (12 U.S.C. 1818(a)), except 
that the Uniform Rules and subpart B of the Local Rules shall not apply 
to the temporary suspension of insurance pursuant to section 8(a)(8) of 
the FDIA (12 U.S.C. 1818(a)(8)).
    (b) Involuntary termination of insurance pursuant to section 8(p) of 
the Act. The rules and procedures in Sec. 308.124 of this subpart F 
shall apply to proceedings in connection with the involuntary 
termination of the insured status of an insured depository institution 
or an insured branch of a foreign bank pursuant to section 8(p) of the 
FDIA (12 U.S.C. 1818(p)). The Uniform Rules shall not apply to 
proceedings under section 8(p) of the FDIA.



Sec. 308.120  Grounds for termination of insurance.

    (a) General rule. The following are grounds for involuntary 
termination of insurance pursuant to section 8(a) of the FDIA:
    (1) An insured depository institution or its directors or trustees 
have engaged or are engaging in unsafe or unsound practices in 
conducting the business of such depository institution;
    (2) An insured depository institution is in an unsafe or unsound 
condition such that it should not continue operations as an insured 
depository institution; or
    (3) An insured depository institution or its directors or trustees 
have violated an applicable law, rule, regulation, order, condition 
imposed in writing by the FDIC in connection with the granting of any 
application or other request by the insured depository institution or 
have violated any written agreement entered into between the insured 
depository institution and the FDIC.
    (b) Extraterritorial acts of foreign banks. An act or practice 
committed outside the United States by a foreign bank or its directors 
or trustees which would otherwise be a ground for termination of insured 
status under this section shall be a ground for termination if the Board 
of Directors finds:
    (1) The act or practice has been, is, or is likely to be a cause of, 
or carried on in connection with or in furtherance of, an act or 
practice committed within any state, territory, or possession of the 
United States or the District of Columbia that, in and of itself, would 
be an appropriate basis for action by the FDIC; or
    (2) The act or practice committed outside the United States, if 
proven, would adversely affect the insurance risk of the FDIC.
    (c) Failure of foreign bank to secure removal of personnel. The 
failure of a foreign bank to comply with any order of removal or 
prohibition issued by the Board of Directors or the failure of any 
person associated with a foreign bank to appear promptly as a party to a 
proceeding pursuant to section 8(e) of the FDIA (12 U.S.C. 1818(e)), 
shall be a ground for termination of insurance of deposits in any branch 
of the bank.



Sec. 308.121  Notification to primary regulator.

    (a) Service of notification. (1) Upon a determination by the Board 
of Directors or its designee pursuant to Sec. 308.120 of an unsafe or 
unsound practice or condition or of a violation, a notification shall be 
served upon the appropriate Federal banking agency of the insured 
depository institution, or the State banking supervisor if the FDIC is 
the appropriate Federal banking agency.
The notification shall be served not less than 30 days before the Notice 
of Intent to Terminate Insured Status required by section 8(a)(2)(B) of 
the FDIA (12 U.S.C. 1818(a)(2)(B)), and Sec. 308.122, except that this 
period for notification may be reduced or eliminated with the agreement 
of the appropriate Federal banking agency.

[[Page 84]]

    (2) Appropriate Federal banking agency shall have the meaning given 
that term in section 3(q) of the FDIA (12 U.S.C. 1813(q)), and shall be 
the OCC in the case of a national bank, a District bank or an insured 
Federal branch of a foreign bank; the FDIC in the case of an insured 
nonmember bank, including an insured State branch of a foreign bank; the 
Board of Governors in the case of a state member bank; or the OTS in the 
case of an insured Federal or state savings association.
    (3) In the case of a state nonmember bank, insured Federal branch of 
a foreign bank, or state member bank, in addition to service of the 
notification upon the appropriate Federal banking agency, a copy of the 
notification shall be sent to the appropriate State banking supervisor.
    (4) In instances in which a Temporary Order Suspending Insurance is 
issued pursuant to section 8(a)(8) of the FDIA (12 U.S.C. 1818(a)(8)), 
the notification may be served concurrently with such order.
    (b) Contents of notification. The notification shall contain the 
FDIC's determination, and the facts and circumstances upon which such 
determination is based, for the purpose of securing correction of such 
practice, condition, or violation.



Sec. 308.122  Notice of intent to terminate.

    (a) If, after serving the notification under Sec. 308.121, the Board 
of Directors determines that any unsafe or unsound practices, condition, 
or violation, specified in the notification, requires the termination of 
the insured status of the insured depository institution, the Board of 
Directors or its designee, if it determines to proceed further, shall 
cause to be served upon the insured depository institution a notice of 
its intention to terminate insured status not less than 30 days after 
service of the notification, unless a shorter time period has been 
agreed upon by the appropriate Federal banking agency.
    (b) The Board of Directors or its designee shall cause a copy of the 
notice to be sent to the appropriate Federal banking agency and to the 
appropriate state banking supervisor, if any.



Sec. 308.123  Notice to depositors.

    If the Board of Directors enters an order terminating the insured 
status of an insured depository institution or branch, the insured 
depository institution shall, on the day that order becomes final, or on 
such other day as that order prescribes, mail a notification of 
termination of insured status to each depositor at the depositor's last 
address of record on the books of the insured depository institution or 
branch. The insured depository institution shall also publish the 
notification in two issues of a local newspaper of general circulation 
and shall furnish the FDIC with proof of such publications. The 
notification to depositors shall include information provided in 
substantially the following form:

                                 Notice

    (Date)__________.
    1. The status of the __________, as an (insured depository 
institution) (insured branch) under the provisions of the Federal 
Deposit Insurance Act, will terminate as of the close of business on the 
________ day of____________, 19____.
    2. Any deposits made by you after that date, either new deposits or 
additions to existing deposits, will not be insured by the Federal 
Deposit Insurance Corporation.
    3. Insured deposits in the (depository institution) (branch) on the 
________ day of____________, 19____, will continue to be insured, as 
provided by Federal Deposit Insurance Act, for 2 years after the close 
of business on the ________ day of ____________, 19____. Provided, 
however, that any withdrawals after the close of business on the 
________ day of ____________, 19____, will reduce the insurance coverage 
by the amount of such withdrawals.
 _______________________________________________________________________
(Name of (depository institution or branch)
 _______________________________________________________________________
(Address)
The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec. 308.124  Involuntary termination of insured status for failure to receive deposits.

    (a) Notice to show cause. When the Board of Directors or its 
designee has evidence that an insured depository institution is not 
engaged in the business

[[Page 85]]

of receiving deposits, other than trust funds, the Board of Directors or 
its designee shall give written notice of this evidence to the 
depository institution and shall direct the depository institution to 
show cause why its insured status should not be terminated under the 
provisions of section 8(p) of the FDIA (12 U.S.C. 1818(p)). The insured 
depository institution shall have 30 days after receipt of the notice, 
or such longer period as is prescribed in the notice, to submit 
affidavits, other written proof, and any legal arguments that it is 
engaged in the business of receiving deposits other than trust funds.
    (b) Notice of termination date. If, upon consideration of the 
affidavits, other written proof, and legal arguments, the Board of 
Directors determines that the depository institution is not engaged in 
the business of receiving deposits, other than trust funds, the finding 
shall be conclusive and the Board of Directors shall notify the 
depository institution that its insured status will terminate at the 
expiration of the first full semiannual assessment period following 
issuance of that notification.
    (c) Notification to depositors of termination of insured status. 
Within the time specified by the Board of Directors and prior to the 
date of termination of its insured status, the depository institution 
shall mail a notification of termination of insured status to each 
depositor at the depositor's last address of record on the books of the 
depository institution. The depository institution shall also publish 
the notification in two issues of a local newspaper of general 
circulation and shall furnish the FDIC with proof of such publications. 
The notification to depositors shall include information provided in 
substantially the following form:

                                 Notice

    (Date)__________.
    The status of the __________, as an (insured depository institution) 
(insured branch) under the Federal Deposit Insurance Act, will terminate 
on the ________ day of____________, 19____, and its deposits will 
thereupon cease to be insured.
 _______________________________________________________________________
(Name of depository institution or branch)
 _______________________________________________________________________
(Address)

The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec. 308.125  Temporary suspension of deposit insurance.

    (a) If, while an action is pending under section 8(a)(2) of the FDIA 
(12 U.S.C. 1818(a)(2)), the Board of Directors, after consultation with 
the appropriate Federal banking agency, finds that an insured depository 
institution (other than a special supervisory association to which 
Sec. 308.126 of this subpart applies) has no tangible capital under the 
capital guidelines or regulations of the appropriate Federal banking 
agency, the Board of Directors may issue a Temporary Order Suspending 
Deposit Insurance, pending completion of the proceedings under section 
8(a)(2) of the FDIA (12 U.S.C. 1818(a)(2)).
    (b) The temporary order shall be served upon the insured institution 
and a copy sent to the appropriate Federal banking agency and to the 
appropriate State banking supervisor.
    (c) The temporary order shall become effective ten days from the 
date of service upon the insured depository institution. Unless set 
aside, limited, or suspended in proceedings under section 8(a)(8)(D) of 
the FDIA (12 U.S.C. 1818 (a)(8)(D)), the temporary order shall remain 
effective and enforceable until an order terminating the insured status 
of the institution is entered by the Board of Directors and becomes 
final, or the Board of Directors dismisses the proceedings.
    (d) Notification to depositors of suspension of insured status. 
Within the time specified by the Board of Directors and prior to the 
suspension of insured status, the depository institution shall mail a 
notification of suspension of insured status to each depositor at the 
depositor's last address of record on the books of the depository 
institution. The depository institution shall also publish the 
notification in two issues of a local newspaper of general circulation 
and shall furnish the FDIC with

[[Page 86]]

proof of such publications. The notification to depositors shall include 
information provided in substantially the following form:

                                 Notice

    (Date)____________.
    1. The status of the __________, as an (insured depository 
institution) (insured branch) under the provisions of the Federal 
Deposit Insurance Act, will be suspended as of the close of business on 
the ________ day of ____________, 19____, pending the completion of 
administrative proceedings under section 8(a) of the Federal Deposit 
Insurance Act.
    2. Any deposits made by you after that date, either new deposits or 
additions to existing deposits, will not be insured by the Federal 
Deposit Insurance Corporation.
    3. Insured deposits in the (depository institution) (branch) on the 
________ day of ____________, 19____, will continue to be insured for 
____________ after the close of business on the__________ day of 
__________, 19____. Provided, however, that any withdrawals after the 
close of business on the ________ day of____________, 19____, will 
reduce the insurance coverage by the amount of such withdrawals.
 _______________________________________________________________________
(Name of depository institution or branch)
 _______________________________________________________________________
(Address)

The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec. 308.126  Special supervisory associations.

    If the Board of Directors finds that a savings association is a 
special supervisory association under the provisions of section 
8(a)(8)(B) of the FDIA (12 U.S.C. 1818(a)(8)(B)) for purposes of 
temporary suspension of insured status, the Board of Directors shall 
serve upon the association its findings with regard to the determination 
that the capital of the association, as computed using applicable 
accounting standards, has suffered a material decline; that such 
association or its directors or officers, is engaging in an unsafe or 
unsound practice in conducting the business of the association; that 
such association is in an unsafe or unsound condition to continue 
operating as an insured association; or that such association or its 
directors or officers, has violated any law, rule, regulation, order, 
condition imposed in writing by any Federal banking agency, or any 
written agreement, or that the association failed to enter into a 
capital improvement plan acceptable to the Corporation prior to January, 
1990.



 Subpart G--Rules and Procedures Applicable to Proceedings Relating to 
                         Cease-and-Desist Orders



Sec. 308.127  Scope.

    (a) Cease-and-desist proceedings under section 8 of the FDIA. The 
rules and procedures of this subpart, subpart B of the Local Rules and 
the Uniform Rules shall apply to proceedings to order an insured 
nonmember bank or an institution-affiliated party to cease and desist 
from practices and violations described in section 8(b) of the FDIA, 12 
U.S.C. 1818(b); provided that the provisions of the Uniform Rules and 
subpart B of the Local Rules shall not apply to the issuance of 
temporary cease-and-desist orders pursuant to section 8(c) of the FDIA 
(12 U.S.C. 1818(c)).
    (b) Proceedings under the Securities Exchange Act of 1934. (1) The 
rules and procedures of this subpart, subpart B of the Local Rules and 
the Uniform Rules shall apply to proceedings by the Board of Directors 
to order a municipal securities dealer to cease and desist from any 
violation of law or regulation specified in section 15B(c)(5) of the 
Securities Exchange Act, as amended (15 U.S.C. 78o-4(c)(5)) where the 
municipal securities dealer is an insured nonmember bank or a subsidiary 
thereof.
    (2) The rules and procedures of this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings by the Board of 
Directors to order a clearing agency or transfer agent to cease and 
desist from failure to comply with the applicable provisions of section 
17, 17A and 19 of the Securities Exchange Act of 1934, as amended (15 
U.S.C. 78q, 78q-l, 78s), and the applicable rules and regulations 
thereunder, where the clearing agency or transfer agent is an insured 
nonmember bank or a subsidiary thereof.

[[Page 87]]



Sec. 308.128  Grounds for cease-and-desist orders.

    (a) General rule. The Board of Directors or its designee may issue 
and have served upon any insured nonmember bank or an institution-
affiliated party a notice, as set forth in Sec. 308.18 of the Uniform 
Rules for practices and violations as described in Sec. 308.127.
    (b) Extraterritorial acts of foreign banks. An act, violation or 
practice committed outside the United States by a foreign bank or an 
institution-affiliated party that would otherwise be a ground for 
issuing a cease-and-desist order under paragraph (a) of this section or 
a temporary cease-and-desist order under Sec. 308.131 of this subpart, 
shall be a ground for an order if the Board of Directors or its designee 
finds that:
    (1) The act, violation or practice has been, is, or is likely to be 
a cause of, or carried on in connection with or in furtherance of, an 
act, violation or practice committed within any state, territory, or 
possession of the United States or the District of Columbia which act, 
violation or practice, in and of itself, would be an appropriate basis 
for action by the FDIC; or
    (2) The act, violation or practice, if proven, would adversely 
affect the insurance risk of the FDIC.



Sec. 308.129  Notice to state supervisory authority.

    The Board of Directors or its designee shall give the appropriate 
state supervisory authority notification of its intent to institute a 
proceeding pursuant to subpart G of this part, and the grounds thereof. 
Any proceedings shall be conducted according to subpart G of this part, 
unless, within the time period specified in such notification, the state 
supervisory authority has effected satisfactory corrective action. No 
insured institution or other party who is the subject of any notice or 
order issued by the FDIC under this section shall have standing to raise 
the requirements of this subpart as grounds for attacking the validity 
of any such notice or order.



Sec. 308.130  Effective date of order and service on bank.

    (a) Effective date. A cease-and-desist order issued by the Board of 
Directors after a hearing, and a cease-and-desist order issued based 
upon a default, shall become effective at the expiration of 30 days 
after the service of the order upon the bank or its official. A cease-
and-desist order issued upon consent shall become effective at the time 
specified therein. All cease-and-desist orders shall remain effective 
and enforceable, except to the extent they are stayed, modified, 
terminated, or set aside by the Board of Directors or its designee or by 
a reviewing court.
    (b) Service on banks. In cases where the bank is not the respondent, 
the cease-and-desist order shall also be served upon the bank.



Sec. 308.131  Temporary cease-and-desist order.

    (a) Issuance. (1) When the Board of Directors or its designee 
determines that the violation, or the unsafe or unsound practice, as 
specified in the notice, or the continuation thereof, is likely to cause 
insolvency or significant dissipation of assets or earnings of the bank, 
or is likely to weaken the condition of the bank or otherwise prejudice 
the interests of its depositors prior to the completion of the 
proceedings under section 8(b) of the FDIA (12 U.S.C. 1818(b)) and 
Sec. 308.128 of this subpart, the Board of Directors or its designee may 
issue a temporary order requiring the bank or an institution-affiliated 
party to immediately cease and desist from any such violation, practice 
or to take affirmative action to prevent such insolvency, dissipation, 
condition or prejudice pending completion of the proceedings under 
section 8(b) of the FDIA (12 U.S.C. 1818(b)).
    (2) When the Board of Directors or its designee issues a Notice of 
charges pursuant to 12 U.S.C. 1818(b)(1) which specifies on the basis of 
particular facts and circumstances that a bank's books and records are 
so incomplete or inaccurate that the FDIC is unable, through the normal 
supervisory process, to determine the financial condition of the bank or 
the details or purpose of any transaction or transactions that may have 
a material effect on the

[[Page 88]]

financial condition of the bank, then the Board of Directors or its 
designee may issue a temporary order requiring:
    (i) The cessation of any activity or practice which gave rise, 
whether in whole or in part, to the incomplete or inaccurate state of 
the books or records; or
    (ii) Affirmative action to restore such books or records to a 
complete and accurate state, until the completion of the proceedings 
under section 8(b) of the FDIA (12 U.S.C. 1818(b)).
    (3) The temporary order shall be served upon the bank or the 
institution-affiliated party named therein and shall also be served upon 
the bank in the case where the temporary order applies only to an 
institution-affiliated party.
    (b) Effective date. A temporary order shall become effective when 
served upon the bank or the institution-affiliated party. Unless the 
temporary order is set aside, limited, or suspended by a court in 
proceedings authorized under section 8(c)(2) of the FDIA (12 U.S.C. 
1818(c)(2)), the temporary order shall remain effective and enforceable 
pending completion of administrative proceedings pursuant to section 
8(b) of the FDIA (12 U.S.C. 1818(b)) and entry of an order which has 
become final, or with respect to paragraph (a)(2) of this section the 
FDIC determines by examination or otherwise that the bank's books and 
records are accurate and reflect the financial condition of the bank.
    (c) Uniform Rules do not apply. The Uniform Rules and subpart B of 
the Local Rules shall not apply to the issuance of temporary orders 
under this section.



 Subpart H--Rules and Procedures Applicable to Proceedings Relating to 
  Assessment and Collection of Civil Money Penalties for Violation of 

Cease-and-Desist Orders and of Certain Federal Statutes, Including Call 
Report Penalties



Sec. 308.132  Assessment of penalties.

    (a) Scope. The rules and procedures of this subpart, subpart B of 
the Local Rules, and the Uniform Rules shall apply to proceedings to 
assess and collect civil money penalties, including civil money 
penalties for violation of section 7(a) of the FDIA (12 U.S.C. 1817(a)).
    (b) Relevant considerations. In determining the amount of the civil 
penalty to be assessed, the Board of Directors or its designee shall 
consider the financial resources and good faith of the bank or official, 
the gravity of the violation, the history of previous violations, and 
any such other matters as justice may require.
    (c) Amount. (1) The Board of Directors or its designee may assess 
civil money penalties pursuant to section 8(i) of the FDIA (12 U.S.C. 
1818(i)), and Sec. 308.01(e)(1) of the Uniform Rules.
    (2) The Board of Directors or its designee may assess civil money 
penalties pursuant to section 7(a) of the FDIA (12 U.S.C. 1817(a)) as 
follows:
    (i) Late filing--Tier One penalties. In cases in which a bank fails 
to make or publish its Report of Condition and Income (Call Report) 
within the appropriate time periods, a civil money penalty of not more 
than $2,000 per day may be assessed where the bank maintains procedures 
in place reasonably adapted to avoid inadvertent error and the late 
filing occurred unintentionally and as a result of such error; or the 
bank inadvertently transmitted a Call Report which is minimally late.
    (A) First offense. Generally, in such cases, the amount assessed 
shall be $300 per day for each of the first 15 days for which the 
failure continues, and $600 per day for each subsequent day the failure 
continues, beginning on the sixteenth day. For banks with less than 
$25,000,000 in assets, the amount assessed shall be the greater of $100 
per day or \1/1000\th of the bank's total assets (\1/10\th of a basis 
point) for each of the first 15 days for which the failure continues, 
and $200 or \1/500\th of the bank's total assets, \1/5\ of a basis 
point) for each subsequent day the failure continues, beginning on the 
sixteenth day.
    (B) Second offense. Where the bank has been delinquent in making or 
publishing its Call Report within the preceding five quarters, the 
amount assessed for the most current failure shall generally be $500 per 
day for each of the first 15 days for which the failure continues, and 
$1,000 per day for each

[[Page 89]]

subsequent day the failure continues, beginning on the sixteenth day. 
For banks with less than $25,000,000 in assets, those amounts, 
respectively, shall be \1/500\th of the bank's total assets and \1/
250\th of the bank's total assets.
    (C) Mitigating factors. The amounts set forth in paragraph 
(c)(2)(i)(A) of this section may be reduced based upon the factors set 
forth in paragraph (b) of this section.
    (D) Lengthy or repeated violations. The amounts set forth in this 
paragraph (c)(2)(i) will be assessed on a case-by-case basis where the 
amount of time of the bank's delinquency is lengthy or the bank has been 
delinquent repeatedly in making or publishing its Call Reports.
    (E) Waiver. Absent extraordinary circumstances outside the control 
of the bank, penalties assessed for late filing shall not be waived.
    (ii) Late filing--Tier Two penalties. Where a bank fails to make or 
publish its Call Report within the appropriate time period, the Board of 
Directors or its designee may assess a civil money penalty of not more 
than $20,000 per day for each day the failure continues. Pursuant to the 
Debt Collection Improvement Act of 1996, for violations which occur 
after November 12, 1996, the maximum Tier Two penalty amount will 
increase to $22,000 per day for each day the failure continues.
    (iii) False or misleading reports or information--(A) Tier One 
penalties. In cases in which a bank submits or publishes any false or 
misleading Call Report or information, the Board of Directors or its 
designee may assess a civil money penalty of not more than $2,000 per 
day for each day the information is not corrected, where the bank 
maintains procedures in place reasonably adapted to avoid inadvertent 
error and the violation occurred unintentionally and as a result of such 
error; or the bank inadvertently transmits a Call Report or information 
which is false or misleading.
    (B) Tier Two penalties. Where a bank submits or publishes any false 
or misleading Call Report or other information, the Board of Directors 
or its designee may assess a civil money penalty of not more than 
$20,000 per day for each day the information is not corrected. Pursuant 
to the Debt Collection Improvement Act of 1996, for violations which 
occur after November 12, 1996, the maximum Tier Two penalty amount will 
increase to $22,000 per day for each day the information is not 
corrected.
    (C) Tier Three penalties. Where a bank knowingly or with reckless 
disregard for the accuracy of any Call Report or information submits or 
publishes any false or misleading Call Report or other information, the 
Board of Directors or its designee may assess a civil money penalty of 
not more than the lesser of $1,000,000 or 1 percent of the bank's total 
assets per day for each day the information is not corrected. Pursuant 
to the Debt Collection Improvement Act of 1996, for violations which 
occur after November 12, 1996, the maximum Tier Three penalty amount 
will increase to the lesser of $1,100,000 per day or 1 percent of the 
bank's total assets per day for each day the information is not 
corrected.
    (D) Mitigating factors. The amounts set forth in this paragraph 
(c)(2) may be reduced based upon the factors set forth in paragraph (b) 
of this section.
    (3) Adjustment of civil money penalties by the rate of inflation 
pursuant to section 31001(s) of the Debt Collection Act. Pursuant to 
section 31001(s) of the Debt Collection Act, for violations which occur 
after November 12, 1996, the Board of Directors or its designee may 
assess civil money penalties in the maximum amounts as follows:
    (i) Civil money penalties assessed pursuant to section 8(i)(2) of 
the FDIA. Tier One civil money penalties may be assessed pursuant to 
section 8(i)(2)(A) of the FDIA (12 U.S.C. 1818(i)(2)(A)) in an amount 
not to exceed $5,500 for each day during which the violation continues. 
Tier Two civil money penalties may be assessed pursuant to section 
8(i)(2)(B) of the FDIA (12 U.S.C. 1818(i)(2)(B)) in an amount not to 
exceed $27,500 for each day during which the violation, practice or 
breach continues. Tier Three civil money penalties may be assessed 
pursuant to section 8(i)(2)(C)(12 U.S.C. 1818(i)(2)(C)) in an amount not 
to exceed, in the case of any person other than an insured depository 
institution $1,100,000 or, in the

[[Page 90]]

case of any insured depository institution, an amount not to exceed the 
lesser of $1,100,000 or 1 percent of the total assets of such 
institution for each day during which the violation, practice, or breach 
continues.
    (A) Civil money penalties may be assessed pursuant to section 
8(i)(2) of the FDIA in the amounts set forth in this paragraph (c)(3)(i) 
for violations of various consumer laws, including, the Home Mortgage 
Disclosure Act (12 U.S.C. 2804 et seq. and 12 CFR 203.6), the Expedited 
Funds Availability Act (12 U.S.C. 4001 et seq.), the Truth in Savings 
Act (12 U.S.C. 4301 et seq.), the Real Estate Settlement Procedures Act 
(12 U.S.C. 2601 et seq. and 12 CFR part 3500), the Truth in Lending Act 
(15 U.S.C. 1601 et seq.), the Fair Credit Reporting Act (15 U.S.C. 1681 
et seq.), the Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) the 
Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), the 
Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.) and the Fair 
Housing Act (42 U.S.C. 3601 et seq.) in the amounts set forth in 
paragraphs (c)(3)(i) through (c)(3)(iii) of this section.
    (ii) Civil money penalties assessed pursuant to section 7(c) of the 
FDIA for late filing or the submission false or misleading certified 
statements. Tier One civil money penalties may be assessed pursuant to 
section 7(c)(4)(A) of the FDIA (12 U.S.C. 1817(c)(4)(A)) in an amount 
not to exceed $2,000 for each day during which the failure to file 
continues or the false or misleading information is not corrected. Tier 
Two civil money penalties may be assessed pursuant to section 7(c)(4)(B) 
of the FDIA (12 U.S.C. 1817(c)(4)(B)) in an amount not to exceed $22,000 
for each day during which the failure to file continues or the false or 
misleading information is not corrected. Tier Three civil money 
penalties may be assessed pursuant to section 7(c)(4)(C) in an amount 
not to exceed the lesser of $1,100,000 or 1 percent of the total assets 
of the institution for each day during which the failure to file 
continues or the false or misleading information is not corrected.
    (iii) Civil money penalties assessed pursuant to section 10(e)(4) of 
the FDIA for refusal to allow examination or to provide required 
information during an examination. Pursuant to section 10(e)(4) of the 
FDIA (12 U.S.C. 1820(e)(4)), civil money penalties may be assessed 
against any affiliate of an insured depository institution which refuses 
to permit a duly-appointed examiner to conduct an examination or to 
provide information during the course of an examination as set forth in 
section 20(b) of the FDIA (12 U.S.C. 1820(b)), in an amount not to 
exceed $5,500 for each day the refusal continues.
    (iv) Civil money penalties assessed pursuant to section 18(a)(3) of 
the FDIA for incorrect display of insurance logo. Pursuant to section 
18(a)(3) of the FDIA (12 U.S.C. 1828(a)(3)), civil money penalties may 
be assessed against an insured depository institution which fails to 
correctly display its insurance logo pursuant to that section, in an 
amount not to exceed $110 for each day the violation continues.
    (v) Civil money penalties assessed pursuant to section 18(h) of the 
FDIA for failure to file a certified statement or to pay assessment. 
Pursuant to section 18(h) of the FDIA (12 U.S.C. 1828(h)), a civil money 
penalty may be assessed against an insured depository institution which 
wilfully fails or refuses to file a certified statement or pay any 
assessment required under the FDIA in an amount not to exceed $110 for 
each day the violation continues.
    (vi) Civil money penalties assessed pursuant to section 19b(j) of 
the FDIA for recordkeeping violations. Pursuant to section 19b(j) of the 
FDIA (12 U.S.C. 1829b(j)), civil money penalties may be assessed against 
an insured depository institution and any director, officer or employee 
thereof who wilfully or through gross negligence violates or causes a 
violation of the recordkeeping requirements of that section or its 
implementing regulations in an amount not to exceed $11,000 per 
violation.
    (vii) Civil fine pursuant to 12 U.S.C. 1832(c) for violation of 
provisions forbidding interest-bearing demand deposit accounts. Pursuant 
to 12 U.S.C. 1832(c), any depository institution which violates the 
prohibition on deposit or withdrawal from interest-bearing accounts via 
negotiable or transferable instruments payable to third parties shall be 
subject to a fine of $1,100 per violation.

[[Page 91]]

    (viii) Civil penalties for violations of security measure 
requirements under 12 U.S.C. 1884. Pursuant to 12 U.S.C. 1884, an 
institution which violates a rule establishing minimum security 
requirements as set forth in 12 U.S.C. 1882, shall be subject to a civil 
penalty not to exceed $110 for each day of the violation.
    (ix) Civil money penalties assessed pursuant to the Bank Holding 
Company Act of 1970 for prohibited tying arrangements. Pursuant to the 
Bank Holding Company Act of 1970, Tier One civil money penalties may be 
assessed pursuant to 12 U.S.C. 1972(2)(F)(i) in an amount not to exceed 
$5,500 for each day during which the violation continues. Tier Two civil 
money penalties may be assessed pursuant to 12 U.S.C. 1972(2)(F)(ii) in 
an amount not to exceed $27,500 for each day during which the violation, 
practice or breach continues. Tier Three civil money penalties may be 
assessed pursuant to 12 U.S.C. 1972(2)(F)(iii) in an amount not to 
exceed, in the case of any person other than an insured depository 
institution $1,100,000 for each day during which the violation, 
practice, or breach continues or, in the case of any insured depository 
institution, an amount not to exceed the lesser of $1,100,000 or 1 
percent of the total assets of such institution for each day during 
which the violation, practice, or breach continues.
    (x) Civil money penalties assessed pursuant to the International 
Banking Act of 1978. Pursuant to the International Banking Act of 1978 
(IBA) (12 U.S.C. 3108(b)), civil money penalties may be assessed for 
failure to comply with the requirements of the IBA pursuant to section 
8(i)(2) of the FDIA (12 U.S.C. 1818(i)(2)), in the amounts set forth in 
paragraph (c)(3)(i) of this section.
    (xi) Civil money penalties assessed for appraisal violations. 
Pursuant to 12 U.S.C. 3349(b), where a financial institution seeks, 
obtains, or gives any other thing of value in exchange for the 
performance of an appraisal by a person that the institution knows is 
not a state certified or licensed appraiser in connection with a 
federally related transaction, a civil money penalty may be assessed 
pursuant to section 8(i)(2) of the FDIA (12 U.S.C. 1818(i)(2)) in the 
amounts set forth in paragraph (c)(3)(i) of this section.
    (xii) Civil money penalties assessed pursuant to International 
Lending Supervision Act. Pursuant to the International Lending 
Supervision Act (ILSA) (12 U.S.C. 3909(d)), the CMP that may be assessed 
against any banking institution or any officer, director, employee, 
agent or other person participating in the conduct of the affairs of 
such banking institution is amount not to exceed $1,100 for each day a 
violation of the ILSA or any rule, regulation or order issued pursuant 
to ILSA continues.
    (xiii) Civil money penalties assessed for violations of the 
Community Development Banking and Financial Institution Act. Pursuant to 
the Community Development Banking and Financial Institution Act 
(Community Development Banking Act) (12 U.S.C. 4717(b)) a civil money 
penalty may be assessed for violations of the Community Development 
Banking Act pursuant to section 8(i)(2) of the FDIA (12 U.S.C. 
1818(i)(2)), in the amounts set forth in paragraph (c)(3)(i) of this 
section.
    (xiv) Civil money penalties assessed for violations of the 
Securities Exchange Act of 1934. Pursuant to section 21B of the 
Securities Exchange Act of 1934 (Exchange Act) (15 U.S.C. 78u-2), civil 
money penalties may be assessed for violations of certain provisions of 
the Exchange Act, where such penalties are in the public interest. Tier 
One civil money penalties may be assessed pursuant to 15 U.S.C. 78u-
2(b)(1) in an amount not to exceed $5,500 for a natural person or 
$55,000 for any other person for violations set forth in 15 U.S.C. 78u-
2(a). Tier Two civil money penalties may be assessed pursuant to 15 
U.S.C. 78u-2(b)(2) in an amount not to exceed--for each violation set 
forth in 15 U.S.C. 78u-2(a)--$55,000 for a natural person or $275,000 
for any other person if the act or omission involved fraud, deceit, 
manipulation, or deliberate or reckless disregard of a regulatory 
requirement. Tier Three civil money penalties may be assessed pursuant 
to 15 U.S.C. 78u-2(b)(3) for each violation set forth in 15 U.S.C. 78u-
2(a), in an amount not to exceed $110,000 for a natural person or 
$550,000 for any other person, if the act or omission involved

[[Page 92]]

fraud, deceit, manipulation, or deliberate or reckless disregard of a 
regulatory requirement; and such act or omission directly or indirectly 
resulted in substantial losses, or created a significant risk of 
substantial losses to other persons or resulted in substantial pecuniary 
gain to the person who committed the act or omission.
    (xv) Civil money penalties assessed for false claims and statements 
pursuant to the Program Fraud Civil Remedies Act. Pursuant to the 
Program Fraud Civil Remedies Act (31 U.S.C. 3802), civil money penalties 
of not more than $5,500 per day may be assessed for violations involving 
false claims and statements.
    (xvi) Civil money penalties assessed for violations of the Flood 
Disaster Protection Act. Pursuant to the Flood Disaster Protection Act 
(FDPA)(42 U.S.C. 4012a(f)), civil money penalties may be assessed 
against any regulated lending institution that engages in a pattern or 
practice of violations of the FDPA in an amount not to exceed $350 per 
violation, and not to exceed a total of $105,000 annually.
[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 57991, Nov. 12, 1996]



Sec. 308.133  Effective date of, and payment under, an order to pay.

    (a) Effective date. (1) Unless otherwise provided in the Notice, 
except in situations covered by paragraph (a)(2) of this section, civil 
penalties assessed pursuant to this subpart are due and payable 60 days 
after the Notice is served upon the respondent.
    (2) If the respondent both requests a hearing and serves an answer, 
civil penalties assessed pursuant to this subpart are due and payable 60 
days after an order to pay, issued after the hearing or upon default, is 
served upon the respondent, unless the order provides for a different 
period of payment. Civil penalties assessed pursuant to an order to pay 
issued upon consent are due and payable within the time specified 
therein.
    (b) Payment. All penalties collected under this section shall be 
paid over to the Treasury of the United States.



    Subpart I--Rules and Procedures for Imposition of Sanctions Upon 
    Municipal Securities Dealers or Persons Associated With Them and 
                  Clearing Agencies or Transfer Agents



Sec. 308.134  Scope.

    The rules and procedures in this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings by the Board of 
Directors or its designee:
    (a) To censure, limit the activities of, suspend, or revoke the 
registration of, any municipal securities dealer for which the FDIC is 
the appropriate regulatory agency;
    (b) To censure, suspend, or bar from being associated with such a 
municipal securities dealer, any person associated with such a municipal 
securities dealer; and
    (c) To deny registration, to censure limit the activities of, 
suspend, or revoke the registration of, any transfer agent or clearing 
agency for which the FDIC is the appropriate regulatory agency. This 
subpart and the Uniform Rules shall not apply to proceedings to postpone 
or suspend registration of a transfer agent or clearing agency pending 
final determination of denial or revocation of registration.



Sec. 308.135  Grounds for imposition of sanctions.

    (a) Action under section 15(b)(4) of the Exchange Act. The Board of 
Directors or its designee may issue and have served upon any municipal 
securities dealer for which the FDIC is the appropriate regulatory 
agency, or any person associated or seeking to become associated with a 
municipal securities dealer for which the FDIC is the appropriate 
regulatory agency, a written notice of its intention to censure, limit 
the activities or functions or operations of, suspend, or revoke the 
registration of, such municipal securities dealer, or to censure, 
suspend, or bar the person from being associated with the municipal 
securities dealer, when the Board of Directors or its designee 
determines:
    (1) That such municipal securities dealer or such person

[[Page 93]]

    (i) Has committed any prohibited act or omitted any required act 
specified in subparagraph (A), (D), or (E) of section 15(b)(4) of the 
Exchange Act, as amended (15 U.S.C. 78o);
    (ii) Has been convicted of any offense specified in section 
15(b)(4)(B) of the Exchange Act within ten years of commencement of 
proceedings under this subpart; or
    (iii) Is enjoined from any act, conduct, or practice specified in 
section 15(b)(4)(C) of the Exchange Act; and
    (2) That it is in the public interest to impose any of the sanctions 
set forth in paragraph (a) of this section.
    (b) Action under sections 17 and 17A of the Exchange Act. The Board 
of Directors or its designee may issue, and have served upon any 
transfer agent or clearing agency for which the FDIC is the appropriate 
regulatory agency, a written Notice of its intention to deny 
registration to, censure, place limitations on the activities or 
function or operations of, suspend, or revoke the registration of, the 
transfer agent or clearing agency, when the Board of Directors or its 
designee determines:
    (1) That the transfer agent or clearing agency has willfully 
violated, or is unable to comply with, any applicable provision of 
section 17 or 17A of the Exchange Act, as amended, or any applicable 
rule or regulation issued pursuant thereto; and
    (2) That it is in the public interest to impose any of the sanctions 
set forth in paragraph (b) of this section.



Sec. 308.136  Notice to and consultation with the Securities and Exchange Commission.

    Before initiating any proceedings under Sec. 308.135, the FDIC 
shall:
    (a) Notify the Securities and Exchange Commission of the identity of 
the municipal securities dealer or associated person against whom 
proceedings are to be initiated, and the nature of and basis for the 
proposed action; and
    (b) Consult with the Commission concerning the effect of the 
proposed action on the protection of investors and the possibility of 
coordinating the action with any proceeding by the Commission against 
the municipal securities dealer or associated person.



Sec. 308.137  Effective date of order imposing sanctions.

    An order issued by the Board of Directors after a hearing or an 
order issued upon default shall become effective at the expiration of 30 
days after the service of the order, except that an order of censure, 
denial, or revocation of registration is effective when served. An order 
issued upon consent shall become effective at the time specified 
therein. All orders shall remain effective and enforceable except to the 
extent they are stayed, modified, terminated, or set aside by the Board 
of Directors, its designee, or a reviewing court, provided that orders 
of suspension shall continue in effect no longer than 12 months.



Subpart J--Rules and Procedures Relating to Exemption Proceedings Under 
          Section 12(h) of the Securities Exchange Act of 1934



Sec. 308.138  Scope.

    The rules and procedures of this subpart J shall apply to 
proceedings by the Board of Directors or its designee to exempt, in 
whole or in part, an issuer of securities from the provisions of 
sections 12(g), 13, 14(a), 14(c), 14(d), or 14(f) of the Exchange Act, 
as amended (15 U.S.C. 781, 78m, 78n (a), (c) (d) or (f)), or to exempt 
an officer or a director or beneficial owner of securities of such an 
issuer from the provisions of section 16 of the Exchange Act (15 U.S.C. 
78p).



Sec. 308.139  Application for exemption.

    Any interested person may file a written application for an 
exemption under this subpart with the Executive Secretary, Federal 
Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 
20429. The application shall specify the exemption sought and the reason 
therefor, and shall include a statement indicating why the exemption 
would be consistent with the public interest or the protection of 
investors.

[[Page 94]]



Sec. 308.140  Newspaper notice.

    (a) General rule. If the Board of Directors or its designee, in its 
sole discretion, decides to further consider an application for 
exemption, there shall be served upon the applicant instructions to 
publish one notification in a newspaper of general circulation in the 
community where the main office of the issuer is located. The applicant 
shall furnish proof of such publication to the Executive Secretary or 
such other person as may be directed in the instructions.
    (b) Contents. The notification shall contain the name and address of 
the issuer and the name and title of the applicant, the exemption 
sought, a statement that a hearing will be held, and a statement that 
within 30 days of publication of the newspaper notice, interested 
persons may submit to the FDIC written comments on the application for 
exemption and a written request for an opportunity to be heard. The 
address of the FDIC must appear in the notice.



Sec. 308.141  Notice of hearing.

    Within ten days after expiration of the period for receipt of 
comments pursuant to Sec. 308.140, the Executive Secretary shall serve 
upon the applicant and any person who has requested an opportunity to be 
heard written notification indicating the place and time of the hearing. 
The hearing shall be held not later than 30 days after service of the 
notification of hearing. The notification shall contain the name and 
address of the presiding officer designated by the Executive Secretary 
and a statement of the matters to be considered.



Sec. 308.142  Hearing.

    (a) Proceedings are informal. Formal rules of evidence, the 
adjudicative procedures of the APA (5 U.S.C. 554-557), the Uniform Rules 
and Sec. 308.108 of subpart B of the Local Rules shall not apply to 
hearings under this subpart.
    (b) Hearing Procedure. (1) Parties to the hearing may appear 
personally or through counsel and shall have the right to introduce 
relevant and material documents and to make an oral statement.
    (2) There shall be no discovery in proceeding under this subpart J.
    (3) The presiding officer shall have discretion to permit 
presentation of witnesses within specified time limits, provided that a 
list of witnesses is furnished to the presiding officer prior to the 
hearing. Witnesses shall be sworn, unless otherwise directed by the 
presiding officer. The presiding officer may ask questions of any 
witness and each party may cross-examine any witness presented by an 
opposing party.
    (4) The proceedings shall be on the record and the transcript shall 
be promptly submitted to the Board of Directors. The presiding officer 
shall make recommendations to the Board of Directors, unless the Board 
of Directors, in its sole discretion, directs otherwise.



Sec. 308.143  Decision of Board of Directors.

    Following submission of the hearing transcript to the Board of 
Directors, the Board of Directors may grant the exemption where it 
determines, by reason of the number of public investors, the amount of 
trading interest in the securities, the nature and extent of the 
issuer's activities, the issuer's income or assets, or otherwise, that 
the exemption is consistent with the public interest or the protection 
of investors. Any exemption shall be set forth in an order specifying 
the terms of the exemption, the person to whom it is granted, and the 
period for which it is granted. A copy of the order shall be served upon 
each party to the proceeding.



 Subpart K--Procedures Applicable to Investigations Pursuant to Section 
                            10(c) of the FDIA



Sec. 308.144  Scope.

    The procedures of this subpart shall be followed when an 
investigation is instituted and conducted in connection with any open or 
failed insured depository institution, any institutions making 
application to become insured depository institutions, and affiliates 
thereof, or with other types of investigations to determine compliance 
with applicable law and regulations, pursuant to section 10(c) of the 
FDIA (12 U.S.C. 1820(c)). The Uniform Rules

[[Page 95]]

and subpart B of the Local Rules shall not apply to investigations under 
this subpart.



Sec. 308.145  Conduct of investigation.

    An investigation conducted pursuant to section 10(c) of the FDIA 
shall be initiated only upon issuance of an order by the Board of 
Directors; or by the General Counsel, the Director of the Division of 
Supervision, the Director of the Division of Depositor and Asset 
Services, or their respective designees as set forth at Sec. 303.9 of 
this chapter. The order shall indicate the purpose of the investigation 
and designate FDIC's representative(s) to direct the conduct of the 
investigation. Upon application and for good cause shown, the persons 
who issue the order of investigation may limit, quash, modify, or 
withdraw it. Upon the conclusion of the investigation, an order of 
termination of the investigation shall be issued by the persons issuing 
the order of investigation.
[56 FR 37975, Aug. 9, 1991, as amended at 60 FR 31384, June 15, 1995]



Sec. 308.146  Powers of person conducting investigation.

    The person designated to conduct a section 10(c) investigation shall 
have the power, among other things, to administer oaths and 
affirmations, to take and preserve testimony under oath, to issue 
subpoenas and subpoenas duces tecum and to apply for their enforcement 
to the United States District Court for the judicial district or the 
United States court in any territory in which the main office of the 
bank, institution, or affiliate is located or in which the witness 
resides or conducts business. The person conducting the investigation 
may obtain the assistance of counsel or others from both within and 
outside the FDIC. The persons who issue the order of investigation may 
limit, quash, or modify any subpoena or subpoena duces tecum, upon 
application and for good cause shown. The person conducting an 
investigation may report to the Board of Directors any instance where 
any attorney has been guilty of contemptuous conduct. The Board of 
Directors, upon motion of the person conducting the investigation, or on 
its own motion, may make a finding of contempt and may then summarily 
suspend, without a hearing, any attorney representing a witness from 
further participation in the investigation.



Sec. 308.147  Investigations confidential.

    lnvestigations conducted pursuant to section 10(c) shall be 
confidential. Information and documents obtained by the FDIC in the 
course of such investigations shall not be disclosed, except as provided 
in part 309 of this chapter and as otherwise required by law.



Sec. 308.148  Rights of witnesses.

    In an investigation pursuant to section 10(c):
    (a) Any person compelled or requested to furnish testimony, 
documentary evidence, or other information, shall upon request be shown 
and provided with a copy of the order initiating the proceeding;
    (b) Any person compelled or requested to provide testimony as a 
witness or to furnish documentary evidence may be represented by a 
counsel who meets the requirements of Sec. 308.06 of the Uniform Rules. 
That counsel may be present and may:
    (1) Advise the witness before, during, and after such testimony;
    (2) Briefly question the witness at the conclusion of such testimony 
for clarification purposes; and
    (3) Make summary notes during such testimony solely for the use and 
benefit of the witness;
    (c) All persons testifying shall be sequestered. Such persons and 
their counsel shall not be present during the testimony of any other 
person, unless permitted in the discretion of the person conducting the 
investigation;
    (d) In cases of a perceived or actual conflict of interest arising 
out of an attorney's or law firm's representation of multiple witnesses, 
the person conducting the investigation may require the attorney to 
comply with the provisions of Sec. 308.08 of the Uniform Rules; and
    (e) Witness fees shall be paid in accordance with Sec. 308.14 of the 
Uniform Rules.

[[Page 96]]



Sec. 308.149  Service of subpoena.

    Service of a subpoena shall be accomplished in accordance with 
Sec. 308.11 of the Uniform Rules.



Sec. 308.150  Transcripts.

    (a) General rule. Transcripts of testimony, if any, in an 
investigation pursuant to section 10(c) shall be recorded by an official 
reporter, or by any other person or means designated by the person 
conducting the investigation. A witness may, solely for the use and 
benefit of the witness, obtain a copy of the transcript of his or her 
testimony at the conclusion of the investigation or, at the discretion 
of the person conducting the investigation, at an earlier time, provided 
the transcript is available. The witness requesting a copy of his or her 
testimony shall bear the cost thereof.
    (b) Subscription by witness. The transcript of testimony shall be 
subscribed by the witness, unless the person conducting the 
investigation and the witness, by stipulation, have waived the signing, 
or the witness is ill, cannot be found, or has refused to sign. If the 
transcript of the testimony is not subscribed by the witness, the 
official reporter taking the testimony shall certify that the transcript 
is a true and complete transcript of the testimony.



Subpart L--Procedures and Standards Applicable to a Notice of Change in 
 Senior Executive Officer or Director Pursuant to Section 32 of the FDIA



Sec. 308.151  Scope.

    The rules and procedures set forth in this subpart shall apply to 
the notice filed by a state nonmember bank pursuant to section 32 of the 
FDIA (12 U.S.C. 1831i) for the consent of the FDIC to add to or replace 
an individual on the Board of Directors, or to employ any individual as 
a senior executive officer, or change the responsibilities of any 
individual to a position of senior executive officer where the bank:
    (a) Has been chartered and operating as an insured nonmember bank 
for less than two years or the insured state branch has been licensed 
and operating as an insured branch for less than two years;
    (b) Has undergone a change in control within the preceding two 
years; or
    (c) Is not in compliance with the minimum capital requirement 
applicable to it or is otherwise in a troubled condition as determined 
by the FDIC on the basis of such institution's most recent report of 
condition or report of examination or inspection.



Sec. 308.152  Grounds for disapproval of notice.

    The Board of Directors or its designee may issue a notice of 
disapproval with respect to a notice submitted by a state nonmember bank 
pursuant to section 32 of the FDIA (12 U.S.C. 1831i) where:
    (a) The competence, experience, character, or integrity of the 
individual with respect to whom such notice submitted indicates that it 
would not be in the best interests of the depositors of the state 
nonmember bank to permit the individual to be employed by or associated 
with such bank; or
    (b) The competence, experience, character, or integrity of the 
individual with respect to whom such notice is submitted indicated that 
it would not be in the best interests of the public to permit the 
individual to be employed by, or associated with, the state nonmember 
bank.



Sec. 308.153  Procedures where notice of disapproval issues pursuant to Sec. 303.14 of this chapter.

    (a) The Notice of Disapproval shall be served upon the insured state 
nonmember bank and the candidate for director or senior executive 
officer. The Notice of Disapproval shall:
    (1) Summarize or cite the relevant considerations specified in 
Sec. 308.152;
    (2) Inform the individual and the bank that a request for review of 
the disapproval may be filed within fifteen days of receipt of the 
Notice of Disapproval; and
    (3) Specify that additional information, if any, must be contained 
in the request for review.
    (b) The request for review must be filed at the appropriate regional 
office.
    (c) The request for review must be in writing and should:

[[Page 97]]

    (1) Specify the reasons why the FDIC should reconsider its 
disapproval; and
    (2) Set forth relevant, substantive and material documents, if any, 
that for good cause were not previously set forth in the notice required 
to be filed pursuant to section 32 of the FDIA (12 U.S.C. 1831i).



Sec. 308.154  Decision on review.

    (a) Within 30 days of receipt of the request for review, the Board 
of Directors or its designee, shall notify the bank and/or the 
individual filing the reconsideration (hereafter ``petitioner'') of the 
FDIC's decision on review.
    (b) If the decision is to grant the review and approve the notice, 
the bank and the individual involved shall be so notified.
    (c) A denial of the request for review pursuant to section 32 of the 
FDIA shall:
    (1) Inform the petitioner that a written request for a hearing, 
stating the relief desired and the grounds therefore, may be filed with 
the Executive Secretary within 15 days after the receipt of the denial; 
and
    (2) Summarize or cite the relevant considerations specified in 
Sec. 308.152.
    (d) If a decision is not rendered within 30 days, the petitioner may 
file a request for a hearing within fifteen days from the date of 
expiration.



Sec. 308.155  Hearing.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 30 days after receipt of a request for a hearing 
filed pursuant to Sec. 308.154. Upon request of the petitioner or the 
FDIC, the presiding officer or the Executive Secretary may order a later 
hearing date.
    (b) Burden of proof. The ultimate burden of proof shall be upon the 
candidate for director or senior executive officer. The burden of going 
forward with a prima facie case shall be upon the FDIC.
    (c) Hearing procedure. (1) The hearing shall be held in Washington, 
DC or at another designated place, before a presiding officer designated 
by the Executive Secretary.
    (2) The provisions of Secs. 308.06 through 308.12, 308.16, and 
308.21 of the Uniform Rules and Secs. 308.101 through 308.102, and 
308.104 through 308.106 of subpart B of the Local Rules shall apply to 
hearings held pursuant to this subpart.
    (3) The petitioner may appear at the hearing and shall have the 
right to introduce relevant and material documents and make an oral 
presentation. Members of the FDIC enforcement staff may attend the 
hearing and participate as representatives of the FDIC enforcement 
staff.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be furnished, upon request and payment of the 
cost thereof, to the petitioner afforded the hearing.
    (6) In the course of or in connection with any hearing under 
paragraph (c) of this section the presiding officer shall have the power 
to administer oaths and affirmations, to take or cause to be taken 
depositions of unavailable witnesses, and to issue, revoke, quash, or 
modify subpoenas and subpoenas duces tecum. Where the presentation of 
witnesses is permitted, the presiding officer may require the attendance 
of witnesses from any state, territory, or other place subject to the 
jurisdiction of the United States at any location where the proceeding 
is being conducted. Witness fees shall be paid in accordance with 
Sec. 308.14 of the Uniform Rules.
    (7) Upon the request of the applicant afforded the hearing, or the 
members of the FDIC enforcement staff, the record shall remain open for 
five business days following the hearing for the parties to make 
additional submissions to the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors or its designee, where possible, within fifteen days after the 
last day

[[Page 98]]

for the parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors or its designee. 
The Executive Secretary's certification shall close the record.
    (d) Written submissions in lieu of hearing. The petitioner may in 
writing waive a hearing and elect to have the matter determined on the 
basis of written submissions.
    (e) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the order shall be final and unappealable, and shall remain in 
full force and effect.
    (f) Decision by Board of Directors or its designee. Within 45 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the affected individual whether the denial of the 
notice will be continued, terminated, or otherwise modified. The 
notification shall state the basis for any decision of the Board of 
Directors or its designee that is adverse to the petitioner. The Board 
of Directors or its designee shall promptly rescind or modify the denial 
where the decision is favorable to the petitioner.



    Subpart M--Procedures and Standards Applicable to an Application 
                   Pursuant to Section 19 of the FDIA



Sec. 308.156  Scope.

    The rules and procedures set forth in this subpart shall apply to an 
application filed pursuant to section 19 of the FDIA (12 U.S.C. 1829) by 
an insured depository institution and a person, who has been convicted 
of any criminal offense involving dishonesty or a breach of trust or who 
has agreed to enter into a pretrial diversion or similar program in 
connection with the prosecution of such offense, to seek the prior 
written consent of the FDIC to become or continue as an institution-
affiliated party with respect to an insured depository institution; to 
own or control directly or indirectly an insured depository institution; 
or to participate directly or indirectly in any manner in the conduct of 
the affairs of an insured depository institution.



Sec. 308.157  Relevant considerations.

    (a) In proceedings under Sec. 308.156 on an application to become or 
continue as an institution-affiliated party with respect to an insured 
depository institution; to own or control directly or indirectly an 
insured depository institution; or to participate directly or indirectly 
in any manner in the conduct of the affairs of an insured depository 
institution, the following shall be considered:
    (1) Whether the conviction or entry into a pretrial diversion or 
similar program is for a criminal offense involving dishonesty or breach 
of trust;
    (2) Whether participation directly or indirectly by the person in 
any manner in the conduct of the affairs of the insured depository 
institution constitutes a threat to the safety or soundness of the 
insured depository institution or the interests of its depositors, or 
threatens to impair public confidence in the insured depository 
institution;
    (3) Evidence of the applicant's rehabilitation;
    (4) The position to be held by the applicant;
    (5) The amount of influence and control the applicant will be able 
to exercise over the affairs and operations of the insured depository 
institution;
    (6) The ability of the management at the insured depository 
institution to supervise and control the activities of the applicant;
    (7) The level of ownership which the applicant will have at the 
insured depository institution;
    (8) Applicable fidelity bond coverage for the applicant; and
    (9) Additional factors in the specific case that appear relevant.
    (b) The question of whether a person, who was convicted of a crime 
or who agreed to enter a pretrial diversion or similar program, was 
guilty of that

[[Page 99]]

crime shall not be at issue in a proceeding under this subpart.



Sec. 308.158  Filing papers and effective date.

    (a) Filing with the regional office. Applications pursuant to 
section 19 shall be filed in the appropriate regional office.
    (b) Effective date. An application pursuant to section 19 may be 
made in writing at any time more than one year after the issuance of a 
decision denying an application pursuant to section 19. The removal and/
or prohibition pursuant to section 19 shall continue until the applicant 
has been reinstated by the Board of Directors or its designee for good 
cause shown.



Sec. 308.159  Denial of applications.

    A denial of an application pursuant to section 19 shall:
    (a) Inform the applicant that a written request for a hearing, 
stating the relief desired and the grounds therefor and any supporting 
evidence, may be filed with the Executive Secretary within 60 days after 
the denial; and
    (b) Summarize or cite the relevant considerations specified in 
Sec. 308.157 of this subpart.



Sec. 308.160  Hearings.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 60 days after receipt of a request for hearing on an 
application filed pursuant to Sec. 308.159. Upon the request of the 
applicant or FDIC enforcement counsel, the presiding officer or the 
Executive Secretary may order a later hearing date.
    (b) Burden of proof. The ultimate burden of proof shall be upon the 
person proposing to become or continue as an institution-affiliated 
party with respect to an insured depository institution; to own or 
control directly or indirectly an insured depository institution; or to 
participate directly or indirectly in any manner in the conduct of the 
affairs of an insured depository institution. The burden of going 
forward with a prima facie case shall be upon the FDIC.
    (c) Hearing procedure. (1) The hearing shall be held in Washington, 
DC, or at another designated place, before a presiding officer 
designated by the Executive Secretary.
    (2) The provisions of Secs. 308.06 through 308.12, 308.16, and 
308.21 of the Uniform Rules and Secs. 308.101 through 308.102 and 
308.104 through 308.106 of subpart B of the Local Rules shall apply to 
hearings held pursuant to this subpart.
    (3) The applicant may appear at the hearing and shall have the right 
to introduce relevant and material documents and oral argument. Members 
of the FDIC enforcement staff may attend the hearing and participate as 
a party.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be furnished, upon request and payment of the 
cost thereof, to the applicant afforded the hearing.
    (6) In the course of or in connection with any hearing under this 
subsection, the presiding officer shall have the power to administer 
oaths and affirmations, to take or cause to be taken depositions of 
unavailable witnesses, and to issue, revoke, quash, or modify subpoenas 
and subpoenas duces tecum. Where the presentation of witnesses is 
permitted, the presiding officer may require the attendance of witnesses 
from any state, territory, or other place subject to the jurisdiction of 
the United States at any location where the proceeding is being 
conducted. Witness fees shall be paid in accordance with Sec. 308.14 of 
the Uniform Rules.
    (7) Upon the request of the applicant afforded the hearing, or FDIC 
enforcement staff, the record shall remain open for five business days 
following the hearing for the parties to make additional submissions to 
the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors, where possible, within 20 days

[[Page 100]]

after the last day for the parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors or its designee. 
The Executive Secretary's certification shall close the record.
    (d) Written submissions in lieu of hearing. The applicant or the 
bank may in writing waive a hearing and elect to have the matter 
determined on the basis of written submissions.
    (e) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the person shall remain barred under section 19.
    (f) Decision by Board of Directors or its designee. Within 60 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the affected person whether the person shall 
remain barred under section 19. The notification shall state the basis 
for any decision of the Board of Directors or its designee that is 
adverse to the applicant.



 Subpart N--Rules and Procedures Applicable to Proceedings Relating to 
     Suspension, Removal, and Prohibition Where a Felony ls Charged



Sec. 308.161  Scope.

    The rules and procedures set forth in this subpart shall apply to 
the following proceedings:
    (a) To suspend an institution-affiliated party of an insured state 
nonmember bank, or to prohibit such party from further participation in 
the conduct of the affairs of the bank, where the individual is charged 
in any state, Federal, or territorial information or indictment, or 
complaint, with the commission of, or participation in, a crime 
involving dishonesty or breach of trust punishable by imprisonment 
exceeding one year under state or Federal law; or
    (b) To remove from office or to prohibit an institution-affiliated 
party from further participation in the conduct of the affairs of the 
bank, except with the consent of the Board of Directors or its designee, 
if continued service or participation by such party poses a threat to 
the interests of the bank's depositors or threatens to impair public 
confidence in the depository institution, where a judgment of conviction 
or an agreement to enter a pre-trial diversion or other similar program 
is entered against such party, not subject to further appellate review, 
has been entered against the individual for the commission of, or 
participation in, a crime involving dishonesty or breach of trust 
punishable by imprisonment exceeding one year under state or Federal 
law.



Sec. 308.162  Relevant considerations.

    (a)(1) In proceedings under Sec. 308.161 (a) and (b) for a 
suspension, removal or prohibition order, the following shall be 
considered:
    (i) Whether the alleged offense is a crime which is punishable by 
imprisonment for a term exceeding one year under state or Federal law, 
and which involves dishonesty or breach of trust; and
    (ii) Whether continued service or participation by the institution-
affiliated party may pose a threat to the interest of the bank's 
depositors, or threatens to impair public confidence in the bank.
    (2) Additional factors in the specific case that appear relevant to 
its decision to continue in effect, rescind, terminate, or modify a 
suspension, removal or prohibition order may be considered.
    (b) The question of whether an institution-affiliated party charged 
with a crime is guilty of the crime charged shall not be tried or 
considered in a proceeding under this subpart.



Sec. 308.163  Notice of suspension, and orders of removal or prohibition.

    (a) Notice of suspension or prohibition. (1) The Board of Directors 
or its designee may suspend or prohibit from further participation in 
the conduct of

[[Page 101]]

the affairs of the bank an institution-affiliated party by written 
notice of suspension or prohibition upon a determination by the Board of 
Directors or its designee that the grounds for such suspension or 
prohibition exist. The written notice of suspension or prohibition shall 
be served upon the institution-affiliated party and the bank.
    (2) The written notice of suspension shall:
    (i) Inform the institution-affiliated party that a written request 
for a hearing, stating the relief desired and grounds therefore, and any 
supporting evidence, may be filed with the Executive Secretary within 30 
days after receipt of the written notice; and
    (ii) Summarize or cite to the relevant considerations specified in 
Sec. 308.162 of this subpart.
    (3) The suspension or prohibition shall be effective immediately 
upon service on the institution-affiliated party, and shall remain in 
effect until final disposition of the information, indictment, 
complaint, or until it is terminated by the Board of Directors or its 
designee under the provisions of Sec. 308.164 or otherwise.
    (b) Order of removal or prohibition. (1) The Board of Directors or 
its designee may issue an order removing or prohibiting from further 
participation in the conduct of the affairs of the bank an institution-
affiliated party, when:
    (i) A final judgment of conviction not subject to further appellate 
review is entered against the individual for a crime referred to in 
Sec. 308.161(b); and
    (ii) The Board of Directors or its designee determines that 
continued service or participation of the institution-affiliated party 
may threaten the interests of the bank's depositors or may threaten to 
impair public confidence in the bank.
    (2) The order shall be served upon the institution-affiliated party 
and the bank.
    (3) The order shall:
    (i) Inform the institution-affiliated party that a written request 
for a hearing, stating the relief desired and grounds therefor, and any 
supporting evidence, may be filed with the Executive Secretary within 30 
days after receipt of the order; and
    (ii) Summarize or cite the relevant considerations specified in 
Sec. 308.162 of this subpart.
    (4) The order shall be effective immediately upon service on the 
institution-affiliated party, and shall remain in effect until it is 
terminated by the Board of Directors or its designee under the 
provisions of Sec. 308.164 or otherwise.



Sec. 308.164  Hearings.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 30 days after receipt of a request for hearing on an 
application filed pursuant to Sec. 308.163. Upon the request of the 
applicant, the presiding officer or the Executive Secretary may order a 
later hearing date.
    (b) Hearing procedure. (1) The hearing shall be held in Washington, 
DC, or at another designated place, before a presiding officer 
designated by the Executive Secretary.
    (2) The provisions of Secs. 308.06 through 308.12, 308.16, and 
308.21 of the Uniform Rules and Secs. 308.101 through 308.102 and 
308.104 through 308.106 of subpart B of the Local Rules shall apply to 
hearings held pursuant to this subpart.
    (3) The applicant may appear at the hearing and shall have the right 
to introduce relevant and material documents and oral argument. Members 
of the FDIC enforcement staff may attend the hearing and participate as 
representatives of the FDIC enforcement staff.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be furnished, upon request and payment of the 
cost thereof, to the applicant afforded the hearing.
    (6) In the course of or in connection with any hearing under 
paragraph (b) of this section, the presiding officer

[[Page 102]]

shall have the power to administer oaths and affirmations, to take or 
cause to be taken depositions of unavailable witnesses, and to issue, 
revoke, quash, or modify subpoenas and subpoenas duces tecum. Where the 
presentation of witnesses is permitted, the presiding officer may 
require the attendance of witnesses from any state, territory, or other 
place subject to the jurisdiction of the United States at any location 
where the proceeding is being conducted. Witness fees shall be paid in 
accordance with Sec. 308.14 of the Uniform Rules.
    (7) Upon the request of the applicant afforded the hearing, or the 
members of the FDIC enforcement staff, the record shall remain open for 
five business days following the hearing for the parties to make 
additional submissions to the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors, where possible, within ten days after the last day for the 
parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors. The Executive 
Secretary's certification shall close the record.
    (c) Written submissions in lieu of hearing. The applicant or the 
bank may in writing waive a hearing and elect to have the matter 
determined on the basis of written submissions.
    (d) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the order shall be final and unappealable, and shall remain in 
full force and effect pursuant to Sec. 308.163.
    (e) Decision by Board of Directors or its designee. Within 60 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the affected individual whether the order of 
removal or prohibition will be continued, terminated, or otherwise 
modified. The notification shall state the basis for any decision of the 
Board of Directors or its designee that is adverse to the applicant. The 
Board of Directors or its designee shall promptly rescind or modify an 
order of removal or prohibition where the decision is favorable to the 
applicant.



   Subpart O--Liability of Commonly Controlled Depository Institutions



Sec. 308.165  Scope.

    The rules and procedures in this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings in connection 
with the assessment of cross-guaranty liability against commonly 
controlled depository institutions.



Sec. 308.166  Grounds for assessment of liability.

    Any insured depository institution shall be liable for any loss 
incurred or reasonably anticipated to be incurred by the corporation, 
subsequent to August 9, 1989, in connection with the default of a 
commonly controlled insured depository institution, or any loss incurred 
or reasonably anticipated to be incurred in connection with any 
assistance provided by the Corporation to any commonly controlled 
depository institution in danger of default.



Sec. 308.167  Notice of assessment of liability.

    (a) The amount of liability shall be assessed upon service of a 
Notice of Assessment of Liability upon the liable depository 
institution, within two years of the date the Corporation incurred the 
loss.
    (b) Contents of Notice. (1) The Notice of Assessment of Liability 
shall set forth:
    (i) The basis for the FDIC's jurisdiction over the proceeding;
    (ii) A statement of the Corporation's good faith estimate of the 
amount of loss it has incurred or anticipates incurring;
    (iii) A statement of the method by which the estimated loss was 
calculated;
    (iv) A proposed order directing payment by the liable institution of 
the FDIC's estimated amount of loss, and

[[Page 103]]

the schedule under which the payment will be due;
    (v) In cases involving more than one liable institution, the 
estimated amount of each institution's share of the liability.
    (2) The Notice of Assessment of Liability shall advise the liable 
institution(s):
    (i) That an answer must be filed within 20 days after service of the 
Notice;
    (ii) That, if a hearing is requested, a request for a hearing must 
be filed within 20 days after service of the Notice;
    (iii) That if a hearing is requested, such hearing will be held 
within the judicial district in which the liable institution is found, 
or, in cases involving more than one liable institution, within a 
judicial district in which at least one liable institution is found;
    (iv) That, unless the administrative law judge sets a different 
date, the hearing will commence 120 days after service of the Notice of 
Assessment of Liability; and
    (v) That failure to request a hearing shall render the Notice of 
Assessment a final and unappealable order.



Sec. 308.168  Effective date of and payment under an order to pay.

    (a) Unless otherwise provided in the Notice of Assessment of 
Liability, payment of the assessment shall be due on or before the 21st 
day after service of the Assessment of Liability, under the terms of the 
schedule for payment set forth therein.
    (b) All payments collected shall be paid to the Corporation.
    (c) Failure to request a hearing as prescribed herein shall render 
the order to pay final and unappealable.



  Subpart P--Rules and Procedures Relating to the Recovery of Attorney 
                         Fees and Other Expenses



Sec. 308.169  Scope.

    This subpart, and the Equal Access to Justice Act (5 U.S.C. 504), 
which it implements, apply to adversary adjudications before the FDIC. 
The types of adjudication covered by this subpart are those listed in 
Sec. 308.01 of the Uniform Rules. The Uniform Rules and subpart B of the 
Local Rules apply to any proceedings to recover fees and expenses under 
this subpart.



Sec. 308.170  Filing, content, and service of documents.

    (a) Time to file. An application and any other pleading or document 
related to the application may be filed with the Executive Secretary 
whenever the applicant has prevailed in the proceeding or in a discrete 
significant substantive portion of the proceeding within 30 days after 
service of the final order of the Board of Directors in disposition of 
the proceeding.
    (b) Content. The application and related documents shall conform to 
the requirements of Sec. 308.10 of the Uniform Rules.
    (c) Service. The application and related documents shall be served 
on all parties to the adversary adjudication in accordance with 
Sec. 308.11 of the Uniform Rules, except that statements of net worth 
shall be served only on counsel for the FDIC.
    (d) Upon receipt of an application, the Executive Secretary shall 
refer the matter to the administrative law judge who heard the 
underlying adversary proceeding, provided that if the original 
administrative law judge is unavailable, or the Executive Secretary 
determines, in his or her sole discretion, that there is cause to refer 
the matter to a different administrative law judge, the matter shall be 
referred to a different administrative law judge.



Sec. 308.171  Responses to application.

    (a) By FDIC. (1) Within 20 days after service of an application, 
counsel for the FDIC may file with the Executive Secretary and serve on 
all parties an answer to the application. Unless counsel for the FDIC 
requests and is granted an extension of time for filing or files a 
statement of intent to negotiate under Sec. 308.179 of this subpart, 
failure to file an answer within the 20-day period will be treated as a 
consent to the award requested.
    (2) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of the FDIC's 
position. If the answer is based on any alleged facts not

[[Page 104]]

already in the record of the proceeding, the answer shall include either 
supporting affidavits or a request for further proceedings under 
Sec. 308.180.
    (b) Reply to answer. The applicant may file a reply if the FDIC has 
addressed in its answer any of the following issues: that the position 
of the FDIC was substantially justified, that the applicant unduly 
protracted the proceedings, or that special circumstances make an award 
unjust. The reply shall be filed within 15 days after service of the 
answer. If the reply is based on any alleged facts not already in the 
record of the proceeding, the reply shall include either supporting 
affidavits or a request for further proceedings under Sec. 308.180.
    (c) By other parties. Any party to the adversary adjudication, other 
than the applicant and the FDIC, may file comments on an application 
within 20 days after service of the application. If the applicant is 
entitled to file a reply to the FDIC's answer under paragraph (b) of 
this section, another party may file comments on the answer within 15 
days after service of the answer. A commenting party may not participate 
in any further proceedings on the application unless the administrative 
law judge determines that the public interest requires such 
participation in order to permit additional exploration of matters 
raised in the comments.
    (d) Additional response. Additional filings in the nature of 
pleadings may be submitted only by leave of the administrative law 
judge.



Sec. 308.172  Eligibility of applicants.

    (a) Genera1 rule. To be eligible for an award under this subpart, an 
applicant must have been named or admitted as a party to the proceeding. 
In addition, the applicant must show that it meets all other conditions 
of eligibility set out in paragraph (b) of this section.
    (b) Types of eligible applicant. The types of eligible applicant 
are:
    (1) An individual with a net worth of not more than $2,000,000 at 
the time the adversary adjudication was initiated; or
    (2) Any owner of an unincorporated business, or any partnership, 
corporation, associations, unit of local government or organization, the 
net worth of which did not exceed $7,000,000 and which did not have more 
than 500 employees at the time the adversary adjudication was initiated.
    (c) Factors to be considered. In determining the types of eligible 
applicants:
    (1) An applicant who owns an unincorporated business shall be 
considered as an individual rather than a sole owner of an 
unincorporated business if the issues on which he or she prevails are 
related to personal interests rather than to business interests.
    (2) An applicant's net worth includes the value of any assets 
disposed of for the purpose of meeting an eligibility standard and 
excludes the value of any obligations incurred for this purpose. 
Transfers of assets or obligations incurred for less than reasonably 
equivalent value will be presumed to have been made for this purpose.
    (3) The net worth of a bank shall be established by the net worth 
information reported in conformity with applicable instructions and 
guidelines on the bank's Consolidated Report of Condition and Income 
filed for the last reporting date before the initiation of the adversary 
adjudication.
    (4) The employees of an applicant include all those persons who were 
regularly providing services for remuneration for the applicant, under 
its direction and control, on the date the adversary adjudication was 
initiated. Part-time employees are included as though they were full-
time employees.
    (5) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. The 
aggregated net worth shall be adjusted if necessary to avoid counting 
the net worth of any entity twice. As used in this subpart, affiliates 
are individuals, corporations, and entities that directly or indirectly 
or acting through one or more entities control a majority of the voting 
shares of the applicant; and corporations and entities of which the 
applicant directly or indirectly owns or controls a majority of the 
voting shares. The Board of Directors may, however, on the 
recommendation of the administrative law judge, or otherwise, determine 
that such aggregation with regard to one or more of the applicant's 
affiliates would be unjust and contrary to the purposes

[[Page 105]]

of this subpart in light of the actual relationship between the 
affiliated entities. In such a case the net worth and employees of the 
relevant affiliate or affiliates will not be aggregated with those of 
the applicant. In addition, the Board of Directors may determine that 
financial relationships of the applicant other than those described in 
this paragraph constitute special circumstances that would make an award 
unjust.
    (6) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.



Sec. 308.173  Prevailing party.

    (a) General rule. An eligible applicant who, following an adversary 
adjudication has gained victory on the merits in the proceeding is a 
``prevailing party''. An eligible applicant may be a ``prevailing 
party'' if a settlement of the proceeding was effected on terms 
favorable to it or if the proceeding against it has been dismissed. In 
appropriate situations an applicant may also have prevailed if the 
outcome of the proceeding has substantially vindicated the applicant's 
position on the significant substantive matters at issue, even though 
the applicant has not totally avoided adverse final action.
    (b) Segregation of costs. When a proceeding has presented a number 
of discrete substantive issues, an applicant may have prevailed even 
though all the issues were not resolved in its favor. If such an 
applicant is deemed to have prevailed, any award shall be based on the 
fees and expenses incurred in connection with the discrete significant 
substantive issue or issues on which the applicant's position has been 
upheld. If such segregation of costs is not practicable, the award may 
be based on a fair proration of those fees and expenses incurred in the 
entire proceeding which would be recoverable under Sec. 308.175 if 
proration were not performed, whether separate or prorated treatment is 
appropriate, and the appropriate proration percentage, shall be 
determined on the facts of the particular case. Attention shall be given 
to the significance and nature of the respective issues and their 
separability and interrelationship.



Sec. 308.174  Standards for awards.

    A prevailing applicant may receive an award for fees and expenses 
unless the position of the FDIC during the proceeding was substantially 
justified or special circumstances make the award unjust. An award will 
be reduced or denied if the applicant has unduly or unreasonably 
protracted the proceedings. Awards for fees and expenses incurred before 
the date on which the adversary adjudication was initiated are allowable 
if their incurrence was necessary to prepare for the proceeding.



Sec. 308.175  Measure of awards.

    (a) General rule. Awards will be based on rates customarily charged 
by persons engaged in the business of acting as attorneys, agents, and 
expert witnesses, even if the services were made available without 
charge or at a reduced rate, provided that no award under this subpart 
for the fee of an attorney or agent may exceed $75 per hour. No award to 
compensate an expert witness may exceed the highest rate at which the 
FDIC pays expert witnesses. An award may include the reasonable expenses 
of the attorney, agent, or expert witness as a separate item, if the 
attorney, agent, or expert witness ordinarily charges clients separately 
for such expenses.
    (b) Determination of reasonableness of fees. In determining the 
reasonableness of the fee sought for an attorney, agent, or expert 
witness, the administrative law judge shall consider the following:
    (1) If the attorney, agent, or expert witness is in private 
practice, his or her customary fee for like services, or, if he or she 
is an employee of the applicant, the fully allocated cost of the 
services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or expert witness ordinarily performs 
services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and

[[Page 106]]

    (5) Such other factors as may bear on the value of the services 
provided.
    (c) Awards for studies. The reasonable cost of any study, analysis, 
test, project, or similar matter prepared on behalf of an applicant may 
be awarded to the extent that the charge for the service does not exceed 
the prevailing rate payable for similar services, and the study or other 
matter was necessary for preparation of the applicant's case and not 
otherwise required by law or sound business or financial practice.



Sec. 308.176  Application for awards.

    (a) Contents. An application for an award of fees and expenses under 
this subpart shall contain:
    (1) The name of the applicant and an identification of the 
proceeding;
    (2) A showing that the applicant has prevailed, and an 
identification of each issue with regard to which the applicant believes 
that the position of the FDIC in the proceeding was not substantially 
justified;
    (3) A statement of the amount of fees and expenses for which an 
award is sought;
    (4) If the applicant is not an individual, a statement of the number 
of its employees on the date the proceeding was initiated;
    (5) A description of any affiliated individuals or entities, as 
defined in Sec. 308.172(c)(5), or a statement that none exist;
    (6) A declaration that the applicant, together with any affiliates, 
had a net worth not more than the ceiling established for it by 
Sec. 308.172(b) as of the date the proceeding was initiated; and
    (7) Any other matters that the applicant wishes the FDIC to consider 
in determining whether and in what amount an award should be made.
    (b) Verification. The application shall be signed by the applicant 
or an authorized officer or attorney of the applicant. It shall also 
contain or be accompanied by a written verification under oath or under 
penalty of perjury that the information provided in the application and 
supporting documents is true and correct.



Sec. 308.177  Statement of net worth.

    (a) General rule. A statement of net worth must be filed with the 
application for an award of fees. The statement shall reflect the net 
worth of the applicant and all affiliates of the applicant.
    (b) Contents. (1) The statement of net worth may be in any form 
convenient to the applicant which fully discloses all the assets and 
liabilities of the applicant and all the assets and liabilities of its 
affiliates, as of the time of the initiation of the adversary 
adjudication. Unaudited financial statements are acceptable unless the 
administrative law judge or the Board of Directors otherwise requires. 
Financial statements or reports to a Federal or state agency, prepared 
before the initiation of the adversary adjudication for other purposes, 
and accurate as of a date not more than three months prior to the 
initiation of the proceeding, are acceptable in establishing net worth 
as of the time of the initiation of the proceeding, unless the 
administrative law judge or the Board of Directors otherwise requires.
    (2) In the case of applicants or affiliates that are not banks, net 
worth shall be considered for the purposes of this subpart to be the 
excess of total assets over total liabilities, as of the date the 
underlying proceeding was initiated, except as adjusted under 
Sec. 308.172(c)(2). Assets and liabilities of individuals shall include 
those beneficially owned within the meaning of the FDIC's rules and 
regulations.
    (3) If the applicant or any of its affiliates is a bank, the portion 
of the statement of net worth which relates to the bank shall consist of 
a copy of the bank's last Consolidated Report of Condition and Income 
filed before the initiation of the adversary adjudication. In all cases 
the administrative law judge or the Board of Directors may call for 
additional information needed to establish the applicant's net worth as 
of the initiation of the proceeding. Except as adjusted by additional 
information that was called for under the preceding sentence, net worth 
shall be considered for the purposes of this subpart to be the total 
equity capital (or, in the case of mutual savings banks, the total 
surplus accounts) as reported,

[[Page 107]]

in conformity with applicable instructions and guidelines, on the bank's 
Consolidated Report of Condition and Income filed for the last reporting 
date before the initiation of the proceeding.
    (c) Statement confidential. Unless otherwise ordered by the Board of 
Directors or required by law, the statement of net worth shall be for 
the confidential use of counsel for the FDIC, the Board of Directors, 
and the administrative law judge.



Sec. 308.178  Statement of fees and expenses.

    The application shall be accompanied by a statement fully 
documenting the fees and expenses for which an award is sought. A 
separate itemized statement shall be submitted for each professional 
firm or individual whose services are covered by the application, 
showing the hours spent in work in connection with the proceeding by 
each individual, a description of the specific services performed, the 
rate at which each fee has been computed, any expenses for which 
reimbursement is sought, the total amount claimed, and the total amount 
paid or payable by the applicant or by any other person or entity for 
the services performed. The administrative law judge or the Board of 
Directors may require the applicant to provide vouchers, receipts, or 
other substantiation for any expenses claimed.



Sec. 308.179  Settlement negotiations.

    If counsel for the FDIC and the applicant believe that the issues in 
a fee application can be settled, they may jointly file with the 
Executive Secretary a statement of their intent to negotiate a 
settlement. The filing of this statement shall extend the time for 
filing an answer under Sec. 308.171 for an additional 20 days, and 
further extensions may be granted by the administrative law judge upon 
the joint request of counsel for the FDIC and the applicant.



Sec. 308.180  Further proceedings.

    (a) General rule. Ordinarily, the determination of a recommended 
award will be made by the administrative law judge on the basis of the 
written record. However, on request of either the applicant or the FDIC, 
or on his or her own initiative, the administrative law judge may order 
further proceedings such as an informal conference, oral argument, 
additional written submissions, or an evidentiary hearing. Such further 
proceedings will be held only when necessary for full and fair 
resolution of the issues arising from the application and will be 
conducted promptly and expeditiously.
    (b) Request for further proceedings. A request for further 
proceedings under this section shall specifically identify the 
information sought or the issues in dispute and shall explain why 
additional proceedings are necessary.
    (c) Hearing. Ordinarily, the administrative law judge shall hold an 
oral evidentiary hearing only on disputed issues of material fact which 
cannot be adequately resolved through written submissions.



Sec. 308.181  Recommended decision.

    The administrative law judge shall file with the Executive Secretary 
a recommended decision on the fee application not later than 90 days 
after the filing of the application or 30 days after the conclusion of 
the hearing, whichever is later. The recommended decision shall include 
written proposed findings and conclusions on the applicant's eligibility 
and its status as a prevailing party and an explanation of the reasons 
for any difference between the amount requested and the amount of the 
recommended award. The recommended decision shall also include, if at 
issue, proposed findings on whether the FDIC's position was 
substantially justified, whether the applicant unduly protracted the 
proceedings, or whether special circumstances make an award unjust. The 
administrative law judge shall file the record of the proceeding on the 
fee application and, at the same time, serve upon each party a copy of 
the recommended decision, findings, conclusions, and proposed order.



Sec. 308.182  Board of Directors action.

    (a) Exceptions to recommended decision. Within 20 days after service 
of the recommended decision, findings, conclusions, and proposed order, 
the applicant or counsel for the FDIC may file

[[Page 108]]

with the Executive Secretary written exceptions thereto. A supporting 
brief may also be filed.
    (b) Decision of Board of Directors. The Board of Directors shall 
render its decision within 60 days after the matter is submitted to it 
by the Executive Secretary. The Executive Secretary shall furnish copies 
of the decision and order of the Board of Directors to the parties. 
Judicial review of the decision and order may be obtained as provided in 
5 U.S.C. 504(c)(2).



Sec. 308.183  Payment of awards.

    An applicant seeking payment of an award made by the Board of 
Directors shall submit to the Executive Secretary a statement that the 
applicant will not seek judicial review of the decision and order or 
that the time for seeking further review has passed and no further 
review has been sought. The FDIC will pay the amount awarded within 30 
days after receiving the applicant's statement, unless judicial review 
of the award or of the underlying decision of the adversary adjudication 
has been sought by the applicant or any other party to the proceeding.



    Subpart Q--Issuance and Review of Orders Pursuant to the Prompt 
    Corrective Action Provisions of the Federal Deposit Insurance Act

    Source:  57 FR 44897, Sept. 29, 1992, unless otherwise noted.



Sec. 308.200  Scope.

    The rules and procedures set forth in this subpart apply to banks, 
insured branches of foreign banks and senior executive officers and 
directors of banks that are subject to the provisions of section 38 of 
the Federal Deposit Insurance Act (section 38) (12 U.S.C. 1831o) and 
subpart B of part 325 of this chapter.
[57 FR 44897, Sept. 29, 1992; 57 FR 48426, Oct. 23, 1992]



Sec. 308.201  Directives to take prompt corrective action.

    (a) Notice of intent to issue directive--(1) In general. The FDIC 
shall provide an undercapitalized, significantly undercapitalized, or 
critically undercapitalized bank prior written notice of the FDIC's 
intention to issue a directive requiring such bank to take actions or to 
follow proscriptions described in section 38 that are within the FDIC's 
discretion to require or impose under section 38 of the FDI Act, 
including sections 38 (e)(5), (f)(2), (f)(3), or (f)(5). The bank shall 
have such time to respond to a proposed directive as provided by the 
FDIC under paragraph (c) of this section.
    (2) Immediate issuance of final directive. If the FDIC finds it 
necessary in order to carry out the purposes of section 38 of the FDI 
Act, the FDIC may, without providing the notice prescribed in paragraph 
(a)(1) of this section, issue a directive requiring a bank immediately 
to take actions or to follow proscriptions described in section 38 that 
are within the FDIC's discretion to require or impose under section 38 
of the FDI Act, including section 38 (e)(5), (f)(2), (f)(3), or (f)(5). 
A bank that is subject to such an immediately effective directive may 
submit a written appeal of the directive to the FDIC. Such an appeal 
must be received by the FDIC within 14 calendar days of the issuance of 
the directive, unless the FDIC permits a longer period. The FDIC shall 
consider any such appeal, if filed in a timely matter, within 60 days of 
receiving the appeal. During such period of review, the directive shall 
remain in effect unless the FDIC, in its sole discretion, stays the 
effectiveness of the directive.
    (b) Contents of notice. A notice of intention to issue a directive 
shall include:
    (1) A statement of the bank's capital measures and capital levels;
    (2) A description of the restrictions, prohibitions or affirmative 
actions that the FDIC proposes to impose or require;
    (3) The proposed date when such restrictions or prohibitions would 
be effective or the proposed date for completion of such affirmative 
actions; and
    (4) The date by which the bank subject to the directive may file 
with the FDIC a written response to the notice.
    (c) Response to notice--(1) Time for response. A bank may file a 
written response to a notice of intent to issue a

[[Page 109]]

directive within the time period set by the FDIC. The date shall be at 
least 14 calendar days from the date of the notice unless the FDIC 
determines that a shorter period is appropriate in light of the 
financial condition of the bank or other relevant circumstances.
    (2) Content of response. The response should include:
    (i) An explanation why the action proposed by the FDIC is not an 
appropriate exercise of discretion under section 38;
    (ii) Any recommended modification of the proposed directive; and
    (iii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the bank 
regarding the proposed directive.
    (d) FDIC consideration of response. After considering the response, 
the FDIC may:
    (1) Issue the directive as proposed or in modified form;
    (2) Determine not to issue the directive and so notify the bank; or
    (3) Seek additional information or clarification of the response 
from the bank or any other relevant source.
    (e) Failure to file response. Failure by a bank to file with the 
FDIC, within the specified time period, a written response to a proposed 
directive shall constitute a waiver of the opportunity to respond and 
shall constitute consent to the issuance of the directive.
    (f) Request for modification or rescission of directive. Any bank 
that is subject to a directive under this subpart may, upon a change in 
circumstances, request in writing that the FDIC reconsider the terms of 
the directive, and may propose that the directive be rescinded or 
modified. Unless otherwise ordered by the FDIC, the directive shall 
continue in place while such request is pending before the FDIC.



Sec. 308.202  Procedures for reclassifying a bank based on criteria other than capital.

    (a) Reclassification based on unsafe or unsound condition or 
practice--(1) Issuance of notice of proposed reclassification--(i) 
Grounds for reclassification. (A) Pursuant to Sec. 325.103(d) of this 
chapter, the FDIC may reclassify a well capitalized bank as adequately 
capitalized or subject an adequately capitalized or undercapitalized 
institution to the supervisory actions applicable to the next lower 
capital category if:
    (1) The FDIC determines that the bank is in unsafe or unsound 
condition; or
    (2) The FDIC, pursuant to section 8(b)(8) of the FDI Act (12 U.S.C. 
1818(b)(8)), deems the bank to be engaged in an unsafe or unsound 
practice and not to have corrected the deficiency.
    (B) Any action pursuant to this paragraph (a)(1)(i) shall 
hereinafter be referred to as reclassification.
    (ii) Prior notice to institution. Prior to taking action pursuant to 
Sec. 325.103(d) of this chapter, the FDIC shall issue and serve on the 
bank a written notice of the FDIC's intention to reclassify the bank.
    (2) Contents of notice. A notice of intention to reclassify a bank 
based on unsafe or unsound condition shall include:
    (i) A statement of the bank's capital measures and capital levels 
and the category to which the bank would be reclassified;
    (ii) The reasons for reclassification of the bank;
    (iii) The date by which the bank subject to the notice of 
reclassification may file with the FDIC a written appeal of the proposed 
reclassification and a request for a hearing, which shall be at least 14 
calendar days from the date of service of the notice unless the FDIC 
determines that a shorter period is appropriate in light of the 
financial condition of the bank or other relevant circumstances.
    (3) Response to notice of proposed reclassification. A bank may file 
a written response to a notice of proposed reclassification within the 
time period set by the FDIC. The response should include:
    (i) An explanation of why the bank is not in an unsafe or unsound 
condition or otherwise should not be reclassified; and
    (ii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the bank 
regarding the reclassification.
    (4) Failure to file response. Failure by a bank to file, within the 
specified

[[Page 110]]

time period, a written response with the FDIC to a notice of proposed 
reclassification shall constitute a waiver of the opportunity to respond 
and shall constitute consent to the reclassification.
    (5) Request for hearing and presentation of oral testimony or 
witnesses. The response may include a request for an informal hearing 
before the FDIC under this section. If the bank desires to present oral 
testimony or witnesses at the hearing, the bank shall include a request 
to do so with the request for an informal hearing. A request to present 
oral testimony or witnesses shall specify the names of the witnesses and 
the general nature of their expected testimony. Failure to request a 
hearing shall constitute a waiver of any right to a hearing, and failure 
to request the opportunity to present oral testimony or witnesses shall 
constitute a waiver of any right to present oral testimony or witnesses.
    (6) Order for informal hearing. Upon receipt of a timely written 
request that includes a request for a hearing, the FDIC shall issue an 
order directing an informal hearing to commence no later than 30 days 
after receipt of the request, unless the bank requests a later date. The 
hearing shall be held in Washington, DC or at such other place as may be 
designated by the FDIC, before a presiding officer(s) designated by the 
FDIC to conduct the hearing.
    (7) Hearing procedures. (i) The bank shall have the right to 
introduce relevant written materials and to present oral argument at the 
hearing. The bank may introduce oral testimony and present witnesses 
only if expressly authorized by the FDIC or the presiding officer(s). 
Neither the provisions of the Administrative Procedure Act (5 U.S.C. 
554-557) governing adjudications required by statute to be determined on 
the record nor the Uniform Rules of Practice and Procedure in this part 
apply to an informal hearing under this section unless the FDIC orders 
that such procedures shall apply.
    (ii) The informal hearing shall be recorded, and a transcript shall 
be furnished to the bank upon request and payment of the cost thereof. 
Witnesses need not be sworn, unless specifically requested by a party or 
the presiding officer(s). The presiding officer(s) may ask questions of 
any witness.
    (iii) The presiding officer(s) may order that the hearing be 
continued for a reasonable period (normally five business days) 
following completion of oral testimony or argument to allow additional 
written submissions to the hearing record.
    (8) Recommendation of presiding officers. Within 20 calendar days 
following the date the hearing and the record on the proceeding are 
closed, the presiding officer(s) shall make a recommendation to the FDIC 
on the reclassification.
    (9) Time for decision. Not later than 60 calendar days after the 
date the record is closed or the date of the response in a case where no 
hearing was requested, the FDIC will decide whether to reclassify the 
bank and notify the bank of the FDIC's decision.
    (b) Request for rescission of reclassification. Any bank that has 
been reclassified under this section, may, upon a change in 
circumstances, request in writing that the FDIC reconsider the 
reclassification, and may propose that the reclassification be rescinded 
and that any directives issued in connection with the reclassification 
be modified, rescinded, or removed. Unless otherwise ordered by the 
FDIC, the bank shall remain subject to the reclassification and to any 
directives issued in connection with that reclassification while such 
request is pending before the FDIC.



Sec. 308.203  Order to dismiss a director or senior executive officer.

    (a) Service of notice. When the FDIC issues and serves a directive 
on a bank pursuant to Sec. 308.201 of this part requiring the bank to 
dismiss from office any director or senior executive officer under 
Sec. 38(f)(2)(F)(ii) of the FDI Act, the FDIC shall also serve a copy of 
the directive, or the relevant portions of the directive where 
appropriate, upon the person to be dismissed.
    (b) Response to directive--(1) Request for reinstatement. A director 
or senior executive officer who has been served with a directive under 
paragraph (a) of this section (Respondent) may file a written request 
for reinstatement. The request for reinstatement shall be filed

[[Page 111]]

within 10 calendar days of the receipt of the directive by the 
Respondent, unless further time is allowed by the FDIC at the request of 
the Respondent.
    (2) Contents of request; informal hearing. The request for 
reinstatement shall include reasons why the Respondent should be 
reinstated, and may include a request for an informal hearing before the 
FDIC under this section. If the Respondent desires to present oral 
testimony or witnesses at the hearing, the Respondent shall include a 
request to do so with the request for an informal hearing. The request 
to present oral testimony or witnesses shall specify the names of the 
witnesses and the general nature of their expected testimony. Failure to 
request a hearing shall constitute a waiver of any right to a hearing 
and failure to request the opportunity to present oral testimony or 
witnesses shall constitute a waiver of any right or opportunity to 
present oral testimony or witnesses.
    (3) Effective date. Unless otherwise ordered by the FDIC, the 
dismissal shall remain in effect while a request for reinstatement is 
pending.
    (c) Order for informal hearing. Upon receipt of a timely written 
request from a Respondent for an informal hearing on the portion of a 
directive requiring a bank to dismiss from office any director or senior 
executive officer, the FDIC shall issue an order directing an informal 
hearing to commence no later than 30 days after receipt of the request, 
unless the Respondent requests a later date. The hearing shall be held 
in Washington, DC, or at such other place as may be designated by the 
FDIC, before a presiding officer(s) designated by the FDIC to conduct 
the hearing.
    (d) Hearing procedures. (1) A Respondent may appear at the hearing 
personally or through counsel. A Respondent shall have the right to 
introduce relevant written materials and to present oral argument. A 
Respondent may introduce oral testimony and present witnesses only if 
expressly authorized by the FDIC or the presiding officer(s). Neither 
the provisions of the Administrative Procedure Act governing 
adjudications required by statute to be determined on the record nor the 
Uniform Rules of Practice and Procedure in this part apply to an 
informal hearing under this section unless the FDIC orders that such 
procedures shall apply.
    (2) The informal hearing shall be recorded, and a transcript shall 
be furnished to the Respondent upon request and payment of the cost 
thereof. Witnesses need not be sworn, unless specifically requested by a 
party or the presiding officer(s). The presiding officer(s) may ask 
questions of any witness.
    (3) The presiding officer(s) may order that the hearing be continued 
for a reasonable period (normally five business days) following 
completion of oral testimony or argument to allow additional written 
submissions to the hearing record.
    (e) Standard for review. A Respondent shall bear the burden of 
demonstrating that his or her continued employment by or service with 
the bank would materially strengthen the bank's ability:
    (1) To become adequately capitalized, to the extent that the 
directive was issued as a result of the bank's capital level or failure 
to submit or implement a capital restoration plan; and
    (2) To correct the unsafe or unsound condition or unsafe or unsound 
practice, to the extent that the directive was issued as a result of 
classification of the bank based on supervisory criteria other than 
capital, pursuant to section 38(g) of the FDI Act.
    (f) Recommendation of presiding officers. Within 20 calendar days 
following the date the hearing and the record on the proceeding are 
closed, the presiding officer(s) shall make a recommendation to the FDIC 
concerning the Respondent's request for reinstatement with the bank.
    (g) Time for decision. Not later than 60 calendar days after the 
date the record is closed or the date of the response in a case where no 
hearing was requested, the FDIC shall grant or deny the request for 
reinstatement and notify the Respondent of the FDIC's decision. If the 
FDIC denies the request for reinstatement, the FDIC shall set forth in 
the notification the reasons for the FDIC's action.

[[Page 112]]



Sec. 308.204  Enforcement of directives.

    (a) Judicial remedies. Whenever a bank fails to comply with a 
directive issued under section 38, the FDIC may seek enforcement of the 
directive in the appropriate United States district court pursuant to 
section 8(i)(1) of the FDI Act (12 U.S.C. 1818(i)(1)).
    (b) Administrative remedies--(1) Failure to comply with directive. 
Pursuant to section 8(i)(2)(A) of the FDI Act, the FDIC may assess a 
civil money penalty against any bank that violates or otherwise fails to 
comply with any final directive issued under section 38 and against any 
institution-affiliated party who participates in such violation or 
noncompliance.
    (2) Failure to implement capital restoration plan. The failure of a 
bank to implement a capital restoration plan required under section 38, 
or subpart B of part 325 of this chapter, or the failure of a company 
having control of a bank to fulfill a guarantee of a capital restoration 
plan made pursuant to section 38(e)(2) of the FDI Act shall subject the 
bank to the assessment of civil money penalties pursuant to section 
8(i)(2)(A) of the FDI Act.
    (c) Other enforcement action. In addition to the actions described 
in paragraphs (a) and (b) of this section, the FDIC may seek enforcement 
of the provisions of section 38 or subpart B of part 325 of this chapter 
through any other judicial or administrative proceeding authorized by 
law.
[57 FR 44897, Sept. 29, 1992; 57 FR 48426, Oct. 23, 1992]



  Subpart R--Submission and Review of Safety and Soundness Compliance 
      Plans and Issuance of Orders To Correct Safety and Soundness 
                              Deficiencies

    Source:  60 FR 35684, July 10, 1995, unless otherwise noted.



Sec. 308.300  Scope.

    The rules and procedures set forth in this subpart apply to insured 
state nonmember banks and to state-licensed insured branches of foreign 
banks, that are subject to the provisions of section 39 of the Federal 
Deposit Insurance Act (section 39) (12 U.S.C. 1831p-1).



Sec. 308.301  Purpose.

    Section 39 of the FDI Act requires the FDIC to establish safety and 
soundness standards. Pursuant to section 39, a bank may be required to 
submit a compliance plan if it is not in compliance with a safety and 
soundness standard established by guideline under section 39(a) or (b). 
An enforceable order under section 8 of the FDI Act may be issued if, 
after being notified that it is in violation of a safety and soundness 
standard established under section 39, the bank fails to submit an 
acceptable compliance plan or fails in any material respect to implement 
an accepted plan. This subpart establishes procedures for requiring 
submission of a compliance plan and issuing an enforceable order 
pursuant to section 39.



Sec. 308.302  Determination and notification of failure to meet a safety and soundness standard and request for compliance plan.

    (a) Determination. The FDIC may, based upon an examination, 
inspection, or any other information that becomes available to the FDIC, 
determine that a bank has failed to satisfy the safety and soundness 
standards set out in part 364 of this chapter and in the Interagency 
Guidelines Establishing Standards for Safety and Soundness set forth in 
appendix A to part 364 of this chapter.
    (b) Request for compliance plan. If the FDIC determines that a bank 
has failed a safety and soundness standard pursuant to paragraph (a) of 
this section, the FDIC may request, by letter or through a report of 
examination, the submission of a compliance plan and the bank shall be 
deemed to have notice of the request three days after mailing of the 
letter by the FDIC or delivery of the report of examination.



Sec. 308.303  Filing of safety and soundness compliance plan.

    (a) Schedule for filing compliance plan--(1) In general. A bank 
shall file a written safety and soundness compliance plan with the FDIC 
within 30 days of receiving a request for a compliance

[[Page 113]]

plan pursuant to Sec. 308.302(b), unless the FDIC notifies the bank in 
writing that the plan is to be filed within a different period.
    (2) Other plans. If a bank is obligated to file, or is currently 
operating under, a capital restoration plan submitted pursuant to 
section 38 of the FDI Act (12 U.S.C. 1831o), a cease-and-desist order 
entered into pursuant to section 8 of the FDI Act, a formal or informal 
agreement, or a response to a report of examination or report of 
inspection, it may, with the permission of the FDIC, submit a compliance 
plan under this section as part of that plan, order, agreement, or 
response, subject to the deadline provided in paragraph (a)(1) of this 
section.
    (b) Contents of plan. The compliance plan shall include a 
description of the steps the bank will take to correct the deficiency 
and the time within which those steps will be taken.
    (c) Review of safety and soundness compliance plans. Within 30 days 
after receiving a safety and soundness compliance plan under this 
subpart, the FDIC shall provide written notice to the bank of whether 
the plan has been approved or seek additional information from the bank 
regarding the plan. The FDIC may extend the time within which notice 
regarding approval of a plan will be provided.
    (d) Failure to submit or implement a compliance plan--(1) 
Supervisory actions. If a bank fails to submit an acceptable plan within 
the time specified by the FDIC or fails in any material respect to 
implement a compliance plan, then the FDIC shall, by order, require the 
bank to correct the deficiency and may take further actions provided in 
section 39(e)(2)(B). Pursuant to section 39(e)(3), the FDIC may be 
required to take certain actions if the bank commenced operations or 
experienced a change in control within the previous 24-month period, or 
the bank experienced extraordinary growth during the previous 18-month 
period.
    (2) Extraordinary growth. For purposes of paragraph (d)(1) of this 
section, extraordinary growth means an increase in assets of more than 
7.5 percent during any quarter within the 18-month period preceding the 
issuance of a request for submission of a compliance plan, by a bank 
that is not well capitalized for purposes of section 38 of the FDI Act. 
For purposes of calculating an increase in assets, assets acquired 
through merger or acquisition approved pursuant to the Bank Merger Act 
(12 U.S.C. 1828(c)) will be excluded.
    (e) Amendment of compliance plan. A bank that has filed an approved 
compliance plan may, after prior written notice to and approval by the 
FDIC, amend the plan to reflect a change in circumstance. Until such 
time as a proposed amendment has been approved, the bank shall implement 
the compliance plan as previously approved.



Sec. 308.304  Issuance of orders to correct deficiencies and to take or refrain from taking other actions.

    (a) Notice of intent to issue order--(1) In general. The FDIC shall 
provide a bank prior written notice of the FDIC's intention to issue an 
order requiring the bank to correct a safety and soundness deficiency or 
to take or refrain from taking other actions pursuant to section 39 of 
the FDI Act. The bank shall have such time to respond to a proposed 
order as provided by the FDIC under paragraph (c) of this section.
    (2) Immediate issuance of final order. If the FDIC finds it 
necessary in order to carry out the purposes of section 39 of the FDI 
Act, the FDIC may, without providing the notice prescribed in paragraph 
(a)(1) of this section, issue an order requiring a bank immediately to 
take actions to correct a safety and soundness deficiency or take or 
refrain from taking other actions pursuant to section 39. A bank that is 
subject to such an immediately effective order may submit a written 
appeal of the order to the FDIC. Such an appeal must be received by the 
FDIC within 14 calendar days of the issuance of the order, unless the 
FDIC permits a longer period. The FDIC shall consider any such appeal, 
if filed in a timely matter, within 60 days of receiving the appeal. 
During such period of review, the order shall remain in effect unless 
the FDIC, in its sole discretion, stays the effectiveness of the order.
    (b) Contents of notice. A notice of intent to issue an order shall 
include:

[[Page 114]]

    (1) A statement of the safety and soundness deficiency or 
deficiencies that have been identified at the bank;
    (2) A description of any restrictions, prohibitions, or affirmative 
actions that the FDIC proposes to impose or require;
    (3) The proposed date when such restrictions or prohibitions would 
be effective or the proposed date for completion of any required action; 
and
    (4) The date by which the bank subject to the order may file with 
the FDIC a written response to the notice.
    (c) Response to notice--(1) Time for response. A bank may file a 
written response to a notice of intent to issue an order within the time 
period set by the FDIC. Such a response must be received by the FDIC 
within 14 calendar days from the date of the notice unless the FDIC 
determines that a different period is appropriate in light of the safety 
and soundness of the bank or other relevant circumstances.
    (2) Contents of response. The response should include:
    (i) An explanation why the action proposed by the FDIC is not an 
appropriate exercise of discretion under section 39;
    (ii) Any recommended modification of the proposed order; and
    (iii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the bank 
regarding the proposed order.
    (d) Agency consideration of response. After considering the 
response, the FDIC may:
    (1) Issue the order as proposed or in modified form;
    (2) Determine not to issue the order and so notify the bank; or
    (3) Seek additional information or clarification of the response 
from the bank, or any other relevant source.
    (e) Failure to file response. Failure by a bank to file with the 
FDIC, within the specified time period, a written response to a proposed 
order shall constitute a waiver of the opportunity to respond and shall 
constitute consent to the issuance of the order.
    (f) Request for modification or rescission of order. Any bank that 
is subject to an order under this subpart may, upon a change in 
circumstances, request in writing that the FDIC reconsider the terms of 
the order, and may propose that the order be rescinded or modified. 
Unless otherwise ordered by the FDIC, the order shall continue in place 
while such request is pending before the FDIC.



Sec. 308.305  Enforcement of orders.

    (a) Judicial remedies. Whenever a bank fails to comply with an order 
issued under section 39, the FDIC may seek enforcement of the order in 
the appropriate United States district court pursuant to section 8(i)(1) 
of the FDI Act.
    (b) Failure to comply with order. Pursuant to section 8(i)(2)(A) of 
the FDI Act, the FDIC may assess a civil money penalty against any bank 
that violates or otherwise fails to comply with any final order issued 
under section 39 and against any institution-affiliated party who 
participates in such violation or noncompliance.
    (c) Other enforcement action. In addition to the actions described 
in paragraphs (a) and (b) of this section, the FDIC may seek enforcement 
of the provisions of section 39 or this part through any other judicial 
or administrative proceeding authorized by law.



Subpart S--Applications for a Stay or Review of Actions of Bank Clearing 
                                Agencies

    Source:  61 FR 48403, Sept. 11, 1996, unless otherwise noted.



Sec. 308.400  Scope.

    This subpart is issued by the Corporation pursuant to sections 
17A(b)(3)(g), 17A(b)(5)(C), 19 and 23 of the Securities Exchange Act of 
1934 (Exchange Act), as amended (15 U.S.C. 78q-1 (b)(3)(g), (b)(5)(C), 
78s, 78w). It applies to applications by banks insured by the 
Corporation (other than members of the Federal Reserve System) for a 
stay or review of certain actions by clearing agencies registered under 
the Exchange Act, for which the Securities and Exchange Commission 
(Commission) is not the appropriate regulatory agency under section 
3(a)(34)(B) of the Exchange Act (bank clearing agencies).

[[Page 115]]



Sec. 308.401  Applications for stays of disciplinary sanctions or summary suspensions by a bank clearing agency.

    Applications to the Corporation for a stay of disciplinary action 
imposed by registered clearing agencies pursuant to section 17(b)(3)(G) 
of the Exchange Act, or summary suspension or limitation or prohibition 
of access under section 17(b)(5)(C) of the Exchange Act shall be made 
according to the rules adopted by the Commission (17 CFR 240.19d-2). 
References to the ``Commission'' in 17 CFR 240.19d-2 are deemed to refer 
to the ``Corporation.''



Sec. 308.402  Applications for review of final disciplinary sanctions, denials of participation, or prohibitions or limitations of access to services imposed by 
          bank clearing agencies.

    Proceedings on an application to the Corporation under section 
19(d)(2) of the Exchange Act for review of any final disciplinary 
sanctions, denials of participation, or prohibitions or limitations of 
access to services imposed by bank clearing agencies shall be conducted 
according to the procedures set forth in rules adopted by the Commission 
(17 CFR 240.19d-3). References to the ``Commission'' in 17 CFR 240.19d-3 
are deemed to refer to the ``Corporation.''



PART 309--DISCLOSURE OF INFORMATION--Table of Contents




Sec.
309.1  Purpose and scope.
309.2  Definitions.
309.3  Federal Register publication.
309.4  Publicly available records.
309.5  Procedures for requesting records.
309.6  Disclosure of exempt records.
309.7  Service of process.

    Authority:  5 U.S.C. 552; 12 U.S.C. 1819 ``Seventh'' and ``Tenth.''

    Source:  60 FR 61465, Nov. 30, 1995, unless otherwise noted.



Sec. 309.1  Purpose and scope.

    This part sets forth the basic policies of the Federal Deposit 
Insurance Corporation regarding information it maintains and the 
procedures for obtaining access to such information.



Sec. 309.2  Definitions.

    For purposes of this part:
    (a) The term depository institution, as used in Sec. 309.6, includes 
depository institutions that have applied to the Corporation for federal 
deposit insurance, closed depository institutions, presently operating 
federally insured depository institutions, foreign banks, branches of 
foreign banks, and all affiliates of any of the foregoing.
    (b) The terms Corporation or FDIC mean the Federal Deposit Insurance 
Corporation.
    (c) The words disclose or disclosure, as used in Sec. 309.6, mean to 
give access to a record, whether by producing the written record or by 
oral discussion of its contents. Where the Corporation employee 
authorized to release Corporation documents makes a determination that 
furnishing copies of the documents is necessary, the words disclose or 
disclosure include the furnishing of copies of documents or records. In 
addition, disclose or disclosure as used in Sec. 309.6 is synonymous 
with the term transfer as used in the Right to Financial Privacy Act of 
1978 (12 U.S.C. 3401 et seq.).
    (d) The term examination includes, but is not limited to, formal and 
informal investigations of irregularities involving suspected violations 
of federal or state civil or criminal laws, or unsafe and unsound 
practices as well as such other investigations as may be conducted 
pursuant to law.
    (e) The term record includes records, files, documents, reports, 
correspondence, books, and accounts, or any portion thereof.
    (f) The term report of examination includes, but is not limited to, 
examination reports resulting from examinations of depository 
institutions conducted jointly by Corporation examiners and state 
banking authority examiners or other federal financial institution 
examiners, as well as reports resulting from examinations conducted 
solely by Corporation examiners. The term also includes compliance 
examination reports.
    (g) The term customer financial records, as used in Sec. 309.6, 
means an original of, a copy of, or information known to have been 
derived from, any record held by a depository institution

[[Page 116]]

pertaining to a customer's relationship with the depository institution 
but does not include any record that contains information not identified 
with or identifiable as being derived from the financial records of a 
particular customer. The term customer as used in Sec. 309.6 refers to 
individuals or partnerships of five or fewer persons.
    (h) The term Director of the Division having primary authority 
includes Deputies to the Chairman and directors of FDIC Divisions and 
Offices that create, maintain custody, or otherwise have primary 
responsibility for the handling of FDIC records or information.



Sec. 309.3  Federal Register publication.

    The FDIC publishes the following information in the Federal Register 
for the guidance of the public:
    (a) Descriptions of its central and field organization and the 
established places at which, the officers from whom, and the methods 
whereby, the public may secure information, make submittals or requests, 
or obtain decisions;
    (b) Statements of the general course and method by which its 
functions are channeled and determined, including the nature and 
requirements of all formal and informal procedures available;
    (c) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports or examinations;
    (d) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the FDIC;
    (e) Every amendment, revision or repeal of the foregoing; and
    (f) General notices of proposed rule-making.



Sec. 309.4  Publicly available records.

    The following records are available upon request or, as noted, 
available for public inspection during normal business hours, at the 
listed offices. Certain records are also available on the Internet at 
the following address: http://www.fdic.gov. To the extent permitted by 
law, the FDIC may delete identifying details when it makes available or 
publishes a final opinion, final order, statement of policy, 
interpretation or staff manual or instruction. Fees for furnishing 
records under this section are as set forth in Sec. 309.5(c).
    (a) At the Office of Corporate Communications, Federal Deposit 
Insurance Corporation, 550 17th Street, N.W., Washington, DC 20429, 
(202) 898-6996:
    (1) Documents, including press releases, financial institution 
letters and proposed and adopted regulations, published by the FDIC and 
pertaining to its operations and those of insured depository 
institutions that it supervises.
    (2) Reports on the competitive factors involved in merger 
transactions and the bases for approval of merger transactions as 
required by sections 18(c)(4) and 18(c)(9) of the Federal Deposit 
Insurance Act (12 U.S.C. 1828(c) (4) and (9)).
    (3) Community Reinvestment Act (CRA) Public Evaluations.
    (4) Final decisions and orders concerning compliance, enforcement, 
and other related administrative actions.
    (5) At the FDIC's discretion, Summary of Deposits filed by insured 
depository institutions, except that information on the size and number 
of accounts filed before June, 1982 is not available.1
---------------------------------------------------------------------------

    \1\ Summary of Deposits reports are described at 12 CFR 304.5.
---------------------------------------------------------------------------

    (6) Annual Report of Trust Assets for commercial banks and state 
savings banks.2
---------------------------------------------------------------------------

    \2\ Annual Report of Trust Assets, FFIEC Form 001.
---------------------------------------------------------------------------

    (b) At the Office of the Executive Secretary, Federal Deposit 
Insurance Corporation, 550 17th Street, N.W., Washington, DC 20429, 
which information is available for public inspection:
    (1) All final opinions (including concurring and dissenting 
opinions) and all final orders made in the adjudication of 
administrative cases.
    (2) Statements of policy and interpretations which have been adopted 
by the FDIC but have not been published in the Federal Register.
    (3) A current index of matters covered by paragraphs (b)(1) and 
(b)(2) of this section that were issued, adopted or promulgated after 
July 4, 1967. Copies of the index will be provided at the

[[Page 117]]

direct cost of duplication as set forth in Sec. 309.5(b).
    (c) At the Division of Supervision, Federal Deposit Insurance 
Corporation, 550 17th Street, N.W., Washington, DC 20429:
    (1) Filings and reports required under the provisions of 12 CFR Part 
335 and the Securities and Exchange Act of 1934, as amended (15 U.S.C. 
78a), by insured nonmember banks the securities of which are registered 
with the FDIC pursuant to section 12 of that Act (15 U.S.C. 78l). These 
filings and reports are available for public inspection as detailed in 
12 CFR 335.702.
    (2) Manual of Examination Policies.
    (3) Manual of Trust Examination Policies.
    (4) Federal Financial Institutions Examination Council (FFIEC) 
Information Systems Examination Handbook.
    (5) In the FDIC's discretion, the Consolidated Reports of Condition 
and Income filed by insured nonmember banks (and certain nonfederally 
insured depository institutions in the case of reports of condition), 
except that select sensitive financial information may be 
withheld.3
---------------------------------------------------------------------------

    \3\ Reports of income and of condition are described at 12 CFR 
304.4.
---------------------------------------------------------------------------

    (d) At the regional office of the FDIC for the region in which the 
applicant or subject depository institution is located (A list of FDIC's 
regional offices is available from the Office of Corporate 
Communications, Federal Deposit Insurance Corporation, 550 17th Street, 
N.W., Washington, DC 20429, (202) 898-6996):
    (1) In the FDIC's discretion, non-confidential portions of 
application files as provided in 12 CFR 303.6(g), including applications 
for deposit insurance, to establish branches, to relocate offices and to 
merge.
    (2)(i) After acceptance by the FDIC of a notice filed pursuant to 
the Change in Bank Control Act of 1978 (12 U.S.C. 1817(j)) (other than a 
notice filed in contemplation of a public tender offer subject to the 
Securities Exchange Act of 1934 (15 U.S.C. 78m and 78n) and the FDIC's 
tender offer regulations (12 CFR 335.501-335.530), the appropriate FDIC 
regional office will make available, on request, the following 
information: The name of the depository institution whose stock is to be 
acquired; the date the notice was accepted; the identity of the 
acquiring person(s); the number of shares to be acquired; and the number 
of outstanding shares of stock in the depository institution. (The mere 
filing of a notice does not automatically constitute ``acceptance'' by 
the FDIC; a notice is ``accepted'' when the regional office determines 
that the notice contains all the information required by 12 U.S.C. 
1817(j)(6)).
    (ii) In the case of a notice filed in contemplation of a public 
tender offer that is subject to the Securities Exchange Act of 1934 (15 
U.S.C. 78m and 78n) and the FDIC's tender offer regulations (12 CFR 
335.501-335.530), when public disclosure is determined under 
Sec. 303.4(b)(4) of the FDIC's regulations (12 CFR 303.4(b)(4)) to be 
appropriate, the appropriate FDIC regional office will make available, 
on request, the information described in paragraph (d)(2)(i) of this 
section.
    (iii) After a transaction subject to the Change in Bank Control Act 
of 1978 has been consummated, the appropriate FDIC regional office will 
make available, on request, the following information, in addition to 
the information described in paragraph (d)(2)(i) of this section: The 
date the shares were acquired; the names of the sellers (or 
transferors); and the total number of shares owned by the purchasers (or 
acquirors).
    (e) At the Division of Depositor and Asset Services, Federal Deposit 
Insurance Corporation, 550 17th Street, N.W., Washington, DC, 20429:
    (1) Credit Manual;
    (2) Agriculture Manual;
    (3) Claims Manual;
    (4) Operations Manual;
    (5) Closing Manual;
    (6) Environmental Guidelines Manual;
    (7) Deposit Insurance Manual;
    (8) Settlement Manual.
    (f) At the Division of Compliance and Consumer Affairs, Federal 
Deposit Insurance Corporation, 550 17th Street, N.W., Washington, DC 
20429: Compliance Examination Manual.

[[Page 118]]



Sec. 309.5  Procedures for requesting records.

    (a) Definitions. For purposes of this section:
    (1) Commercial use request means a request from or on behalf of a 
requester who seeks records for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made. In determining whether a request falls 
within this category, the FDIC will determine the use to which a 
requester will put the records requested and seek additional information 
as it deems necessary.
    (2) Direct costs means those expenditures the FDIC actually incurs 
in searching for, duplicating, and, in the case of commercial 
requesters, reviewing records in response to a request for records.
    (3) Duplication means the process of making a copy of a record 
necessary to respond to a request for records or for inspection of 
original records that contain exempt material or that cannot otherwise 
be directly inspected. Such copies can take the form of paper copy, 
microfilm, audiovisual records, or machine readable records (e.g., 
magnetic tape or computer disk).
    (4) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of undergraduate or 
graduate higher education, an institution of professional education, and 
an institution of vocational education, which operates a program or 
programs of scholarly research.
    (5) Non-commercial scientific institution means an institution that 
is not operated on a commercial basis as that term is defined in 
paragraph (a)(1) of this section, and which is operated solely for the 
purpose of conducting scientific research, the results of which are not 
intended to promote any particular product or industry.
    (6) Representative of the news media means any person actively 
gathering news for, or a free-lance journalist who reasonably expects to 
have his or her work product published or broadcast by, an entity that 
is organized and operated to publish or broadcast news to the public. 
The term news means information that is about current events or that 
would be of current interest to the general public.
    (7) Review means the process of examining records located in 
response to a request for records to determine whether any portion of 
any record is permitted to be withheld as exempt information. It 
includes processing any record for disclosure, e.g., doing all that is 
necessary to excise them or otherwise prepare them for release.
    (8) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within records. Searches may be done manually 
and/or by computer using existing programming.
    (b) Initial request. (1) Except as provided in paragraphs (d) and 
(h) of this section, the FDIC, upon request for any record in its 
possession, will make the record available to any person who agrees to 
pay the costs of searching, review and duplication as set forth in 
paragraph (c) of this section. The request must be in writing, provide 
information reasonably sufficient to enable the FDIC to identify the 
requested records and specify a dollar limit which the requester is 
willing to pay for the costs of searching, review and duplication, 
unless the costs are believed to be less than the FDIC's cost of 
processing the requester's remittance, which cost will be set forth in 
the ``Notice of Federal Deposit Insurance Corporation Records Fees'' as 
described in paragraph (c)(3) of this section. Requests under this 
paragraph (b) should be addressed to the Office of the Executive 
Secretary, FDIC, 550 17th Street, N.W., Washington, DC 20429.
    (2) The FDIC will transmit notice to the requester within 10 
business days after receipt of the initial request whether it is granted 
or denied. Denials of requests will be based on the exemptions provided 
for in paragraph (d) of this section.
    (3) Notification of a denial of an initial request will be in 
writing and will state:
    (i) If the denial is in part or in whole;
    (ii) The name and title of each person responsible for the denial 
(when other than the person signing the notification);

[[Page 119]]

    (iii) The exemptions relied on for the denial; and
    (iv) The right of the requester to appeal the denial to the FDIC's 
General Counsel within 30 business days following receipt of the 
notification.
    (c) Fees--(1) General rules. (i) Persons requesting records of the 
FDIC shall be charged for the direct costs of search, duplication and 
review as set forth in paragraphs (c)(2) and (c)(3) of this section, 
unless such costs are less than the FDIC's cost of processing the 
requester's remittance.
    (ii) Requesters will be charged for search and review costs even if 
responsive records are not located and, if located, are determined to be 
exempt from disclosure.
    (iii) Multiple requests seeking similar or related records from the 
same requester or group of requesters will be aggregated for the 
purposes of this section.
    (iv) If the FDIC determines that the estimated costs of search, 
duplication or review of requested records will exceed the dollar amount 
specified in the request or if no dollar amount is specified, the FDIC 
will advise the requester of the estimated costs (if greater than the 
FDIC's cost of processing the requester's remittance). The requester 
must agree in writing to pay the costs of search, duplication and review 
prior to the FDIC initiating any records search.
    (v) If the FDIC estimates that its search, duplication and review 
costs will exceed $250.00, the requester must pay an amount equal to 20 
percent of the estimated costs prior to the FDIC initiating any records 
search.
    (vi) The FDIC may require any requester who has previously failed to 
pay the charges under this section within 30 days of mailing of the 
invoice to pay in advance the total estimated costs of search, 
duplication and review. The FDIC may also require a requester who has 
any charges outstanding in excess of 30 days following mailing of the 
invoice to pay the full amount due, or demonstrate that the fee has been 
paid in full, prior to the FDIC initiating any additional records 
search.
    (vii) The FDIC may begin assessing interest charges on unpaid bills 
on the 31st day following the day on which the notice was sent. Interest 
will be at the rate prescribed in section 3717 of title 31 of the United 
States Code and will accrue from the date of the invoice.
    (viii) The time limit for FDIC to respond to a request will not 
begin to run until the FDIC has received the requester's written 
agreement under paragraph (c)(1)(iv) of this section, and advance 
payment under paragraph (c)(1) (v) or (vi) of this section, or 
outstanding charge under paragraph (c)(1)(vi) of this section.
    (ix) As part of the initial request, a requester may ask that the 
FDIC waive or reduce fees if disclosure of the records is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operations or activities of the government and is 
not primarily in the commercial interest of the requester. 
Determinations as to a waiver or reduction of fees will be made by the 
Executive Secretary (or designee) and the requester will be notified in 
writing of his/her determination. A determination not to grant a request 
for a waiver or reduction of fees under this paragraph may be appealed 
to the FDIC's General Counsel (or designee) pursuant to the procedure 
set forth in paragraph (e) of this section.
    (2) Chargeable fees by category of requester. (i) Commercial use 
requesters shall be charged search, duplication and review costs.
    (ii) Educational institutions, non-commercial scientific 
institutions and news media representatives shall be charged duplication 
costs, except for the first 100 pages.
    (iii) Requesters not within the scope of paragraph (c)(2) (i) or 
(ii) of this section shall be charged the full reasonable direct cost of 
search and duplication, except for the first two hours of search time 
and first 100 pages of duplication.
    (3) Fee schedule. The dollar amount of fees which the FDIC may 
charge to records requesters will be established by the Chief Financial 
Officer of the FDIC (or designee), and will be set forth in the ``Notice 
of Federal Deposit Insurance Corporation Records Fees'' issued in 
December of each year or in such ``Interim Notice of Federal Deposit 
Insurance Corporation Records

[[Page 120]]

Fees'' as may be issued. Copies of such notices may be obtained at no 
charge from the FDIC's Office of the Executive Secretary, FOIA Unit, 550 
17th Street NW., Washington, DC 20429. The fees implemented in the 
December or Interim Notice will be effective 30 days after issuance. The 
FDIC may charge fees that recoup the full allowable direct costs it 
incurs. The FDIC may contract with independent contractors to locate, 
reproduce, and/or disseminate records; provided however, that the FDIC 
has determined that the ultimate cost to the requester will be no 
greater than it would be if the FDIC performed these tasks itself. In no 
case will the FDIC contract out responsibilities which the Freedom of 
Information Act (FOIA) (5 U.S.C. 552) provides that the FDIC alone may 
discharge, such as determining the applicability of an exemption or 
whether to waive or reduce fees. Fees are subject to change as costs 
change.
    (i) Manual searches for records. The FDIC will charge for manual 
searches for records at the basic rate of pay of the employee making the 
search plus 16 percent to cover employee benefit costs. Where a single 
class of personnel (e.g., all clerical, all professional, or all 
executive) is used exclusively, the FDIC, at its discretion, may 
establish and charge an average rate for the range of grades typically 
involved.
    (ii) Computer searches for records. The fee for searches of 
computerized records is the actual direct cost of the search, including 
computer time, computer runs, and the operator's time apportionable to 
the search. The fee for a computer printout is the actual cost. The fees 
for computer supplies are the actual costs. The FDIC may, at its 
discretion, establish and charge a fee for computer searches based upon 
a reasonable FDIC-wide average rate for central processing unit 
operating costs and the operator's basic rate of pay plus 16 percent to 
cover employee benefit costs.
    (iii) Duplication of records. (A) The per-page fee for paper copy 
reproduction of documents is the average FDIC-wide cost based upon the 
reasonable direct costs of making such copies.
    (B) For other methods of reproduction or duplication, the FDIC will 
charge the actual direct costs of reproducing or duplicating the 
documents.
    (iv) Review of records. The FDIC will charge commercial use 
requesters for the review of records at the time of processing the 
initial request to determine whether they are exempt from mandatory 
disclosure at the basic rate of pay of the employee making the search 
plus 16 percent to cover employee benefit costs. Where a single class of 
personnel (e.g., all clerical, all professional, or all executive) is 
used exclusively, the FDIC, at its discretion, may establish and charge 
an average rate for the range of grades typically involved. The FDIC 
will not charge at the administrative appeal level for review of an 
exemption already applied. When records or portions of records are 
withheld in full under an exemption which is subsequently determined not 
to apply, the FDIC may charge for a subsequent review to determine the 
applicability of other exemptions not previously considered.
    (v) Other services. Complying with requests for special services is 
at the FDIC's discretion. The FDIC may recover the full costs of 
providing such services to the extent it elects to provide them.
    (d) Exempt information. A request for records may be denied if the 
requested record contains information which falls into one or more of 
the following categories.4 If the requested record contains 
both exempt and nonexempt information, the nonexempt portions which may 
reasonably be segregated from the exempt portions will be released to 
the requester.
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    \4\ Classification of a record as exempt from disclosure under the 
provisions of Sec. 309.5(d) shall not be construed as authority to 
withhold the record if it is otherwise subject to disclosure under the 
Privacy Act of 1974 (5 U.S.C. 552a) or other federal statute, any 
applicable regulation of FDIC or any other federal agency having 
jurisdiction thereof, or any directive or order of any court of 
competent jurisdiction.
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    (1) Records which are specifically authorized under criteria 
established by an Executive Order to be kept secret in the interest of 
national defense or foreign policy and are in fact properly classified 
pursuant to such Executive Order;

[[Page 121]]

    (2) Records related solely to the internal personnel rules and 
practices of the FDIC;
    (3) Records specifically exempted from disclosure by statute, 
provided that such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Trade secrets and commercial or financial information obtained 
from a person that is privileged or confidential;
    (5) Interagency or intra-agency memoranda or letters which would not 
be available by law to a private party in litigation with the FDIC;
    (6) Personnel, medical, and similar files (including financial 
files) the disclosure of which would constitute a clearly unwarranted 
invasion of personal privacy;
    (7) Records compiled for law enforcement purposes, but only to the 
extent that the production of such law enforcement records:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a state, local, or foreign agency or 
authority or any private institution which furnished records on a 
confidential basis;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual;
    (8) Records that are contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the FDIC or any agency responsible for the regulation or 
supervision of financial institutions; or
    (9) geological and geophysical information and data, including maps, 
concerning wells.
    (e) Appeals. (1) A person whose initial request for records under 
paragraph (a) of this section, or whose request for a waiver of fees 
under paragraph (c)(1)(ix) of this section, has been denied, either in 
part or in whole, has the right to appeal the denial to FDIC's General 
Counsel (or designee) within 30 business days after receipt of 
notification of the denial. Appeals of denials of initial requests or 
for a waiver of fees must be in writing and include any additional 
information relevant to consideration of the appeal. Appeals should be 
addressed to the Office of the Executive Secretary, FDIC, 550 17th 
Street, N.W., Washington, DC 20429.
    (2) The FDIC will notify the appellant within 20 business days after 
receipt of the appeal whether it is granted or denied. Denials of 
appeals on initial requests for records will be based on the exemptions 
provided for in paragraph (c) of this section.
    (3) Notifications of a denial of an appeal will be in writing and 
will state:
    (i) Whether the denial is in part or in whole;
    (ii) The name and title of each person responsible for the denial 
(if other than the person signing the notification);
    (iii) The exemptions relied upon for the denial in the case of 
initial requests for records; and
    (iv) The right to judicial review of the denial under the FOIA.
    (f) Extension of time. (1) Under unusual circumstances the FDIC may 
require additional time, up to a maximum of 10 business days, to 
determine whether to grant or deny an initial request or to respond to 
an appeal of an initial denial. These circumstances would arise in cases 
where:
    (i) The records are in facilities, such as field offices or storage 
centers, that are not part of the FDIC's Washington office;
    (ii) The records requested are voluminous and are not in close 
proximity to one another; or

[[Page 122]]

    (iii) There is a need to consult with another agency or among two or 
more components of the FDIC having a substantial interest in the 
determination.
    (2) The FDIC will promptly give written notification to the person 
making the request of the estimated date it will make its determination 
and the reasons why additional time is required.
    (g) FDIC procedures. (1) Initial requests for records will be 
forwarded by the Executive Secretary to the head of the FDIC division or 
office which has primary authority over such records. Where it is 
determined that the requested records may be released, the appropriate 
division or office head will grant access to the records. A request for 
records may be denied only by the Executive Secretary (or designee), 
except that a request for records not responded to within 10 business 
days following its receipt by the Office of Executive Secretary--by 
notice to the requester either granting the request, denying the 
request, or extending the time for making a determination on the 
request--shall, if the requester chooses to treat such delay in response 
as a denial, be deemed to have been denied.
    (2) Appeals from a denial of an initial request will be forwarded by 
the Executive Secretary to the General Counsel (or designee) for a 
determination whether the appeal will be granted or denied. The General 
Counsel (or designee) may on his or her own motion refer an appeal to 
the Board of Directors for a determination or the Board of Directors may 
in its discretion consider such an appeal.
    (h) Records of another agency. If a requested record is the property 
of another federal agency or department, and that agency or department, 
either in writing or by regulation, expressly retains ownership of such 
record, upon receipt of a request for the record the FDIC will promptly 
inform the requester of this ownership and immediately shall forward the 
request to the proprietary agency or department either for processing in 
accordance with the latter's regulations or for guidance with respect to 
disposition.



Sec. 309.6  Disclosure of exempt records.

    (a) Disclosure prohibited. Except as provided in paragraph (b) of 
this section or by 12 CFR part 310 5, no person shall 
disclose or permit the disclosure of any exempt records, or information 
contained therein, to any persons other than those officers, directors, 
employees, or agents of the Corporation who have a need for such records 
in the performance of their official duties. In any instance in which 
any person has possession, custody or control of FDIC exempt records or 
information contained therein, all copies of such records shall remain 
the property of the Corporation and under no circumstances shall any 
person, entity or agency disclose or make public in any manner the 
exempt records or information without written authorization from the 
Director of the Corporation's Division having primary authority over the 
records or information as provided in this section.
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    \5\ The procedures for disclosing records under the Privacy Act are 
separately set forth in 12 CFR part 310.
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    (b) Disclosure authorized. Exempt records or information of the 
Corporation may be disclosed only in accordance with the conditions and 
requirements set forth in this paragraph (b). Requests for discretionary 
disclosure of exempt records or information pursuant to this paragraph 
(b) may be submitted directly to the Division having primary authority 
over the exempt records or information or to the Office of Executive 
Secretary for forwarding to the appropriate Division having primary 
authority over the records sought. Such administrative request must 
clearly state that it seeks discretionary disclosure of exempt records, 
clearly identify the records sought, provide sufficient information for 
the Corporation to evaluate whether there is good cause for disclosure, 
and meet all other conditions set forth in paragraph (b)(1) through (10) 
of this section. Information regarding the appropriate FDIC Division 
having primary authority over a particular record or records may be 
obtained from the Office of Executive Secretary. Authority to disclose 
or authorize disclosure of exempt records of the Corporation is 
delegated as follows:

[[Page 123]]

    (1) Disclosure to depository institutions. The Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may disclose to any director or authorized officer, 
employee or agent of any depository institution, information contained 
in, or copies of, exempt records pertaining to that depository 
institution.
    (2) Disclosure to state banking agencies. The Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may in his or her discretion and for good cause, disclose 
to any authorized officer or employee of any state banking or securities 
department or agency, copies of any exempt records to the extent the 
records pertain to a state-chartered depository institution supervised 
by the agency or authority, or where the exempt records are requested in 
writing for a legitimate depository institution supervisory or 
regulatory purpose.
    (3) Disclosure to federal financial institutions supervisory 
agencies and certain other agencies. The Director of the Corporation's 
Division having primary authority over the exempt records, or designee, 
may in his or her discretion and for good cause, disclose to any 
authorized officer or employee of any federal financial institution 
supervisory agency including the Comptroller of the Currency, the Board 
of Governors of the Federal Reserve System, the Office of Thrift 
Supervision, the Securities and Exchange Commission, the National Credit 
Union Administration, or any other agency included in section 1101(7) of 
the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et. seq.) 
(RFPA), any exempt records for a legitimate depository institution 
supervisory or regulatory purpose. The Director, or designee, may in his 
or her discretion and for good cause, disclose exempt records, including 
customer financial records, to certain other federal agencies as 
referenced in section 1113 of the RFPA for the purposes and to the 
extent permitted therein, or to any foreign bank regulatory or 
supervisory authority as provided, and to the extent permitted, by 
section 206 of the Federal Deposit Insurance Corporation Improvement Act 
of 1991 (12 U.S.C. 3109).
    (4) Disclosure to prosecuting or investigatory agencies or 
authorities. (i) Reports of Apparent Crime pertaining to suspected 
violations of law, which may contain customer financial records, may be 
disclosed to federal or state prosecuting or investigatory authorities 
without giving notice to the customer, as permitted in the relevant 
exceptions of the RFPA.
    (ii) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may disclose to the 
proper federal or state prosecuting or investigatory authorities, or to 
any authorized officer or employee of such authority, copies of exempt 
records pertaining to irregularities discovered in depository 
institutions which are believed to constitute violations of any federal 
or state civil or criminal law, or unsafe or unsound banking practices, 
provided that customer financial records may be disclosed without giving 
notice to the customer, only as permitted by the relevant exceptions of 
the RFPA. Unless such disclosure is initiated by the FDIC, customer 
financial records shall be disclosed only in response to a written 
request which:
    (A) Is signed by an authorized official of the agency making the 
request;
    (B) Identifies the record or records to which access is requested; 
and
    (C) Gives the reasons for the request.
    (iii) When notice to the customer is required to be given under the 
RFPA, the Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may disclose customer 
financial records to any federal or state prosecuting or investigatory 
agency or authority, provided, that:
    (A) The General Counsel, or designee, has determined that disclosure 
is authorized or required by law; or
    (B) Disclosure is pursuant to a written request that indicates the 
information is relevant to a legitimate law enforcement inquiry within 
the jurisdiction of the requesting agency and:
    (1) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee,

[[Page 124]]

certifies pursuant to section 1112(a) 6 of the RFPA that the 
records are believed relevant to a legitimate law enforcement inquiry 
within the jurisdiction of the receiving agency; and
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    \6\ The form of certification generally is as follows. Additional 
information may be added:
    Pursuant to section 1112(a) of the Right to Financial Privacy Act of 
1978 (12 U.S.C. 3412), I, ______ [name and appropriate title] hereby 
certify that the financial records described below were transferred to 
(agency or department) in the belief that they were relevant to a 
legitimate law enforcement inquiry, within the jurisdiction of the 
receiving agency.
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    (2) A copy of such certification and the notice required by section 
1112(b) 7 of the RFPA is sent within fourteen days of the 
disclosure to the customer whose records are disclosed.8
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    \7\ The form of notice generally is as follows. Additional 
information may be added:
    Dear Mr./Ms. ______
    Copies of, or information contained in, your financial records 
lawfully in the possession of the Federal Deposit Insurance Corporation 
have been furnished to (agency or department) pursuant to the Right to 
Financial Privacy Act of 1978 for the following purpose: ______. If you 
believe that this transfer has not been made to further a legitimate law 
enforcement inquiry, you may have legal rights under the Right to 
Financial Privacy Act of 1978 or the Privacy Act of 1974.
    \8\ Whenever the Corporation is subject to a court-ordered delay of 
the customer notice, the notice shall be sent immediately upon the 
expiration of the court-ordered delay.
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    (5) Disclosure to servicers and serviced institutions. The Director 
of the Corporation's Division having primary authority over the exempt 
records, or designee, may disclose copies of any exempt record related 
to a bank data center, a depository institution service corporation or 
any other data center that provides data processing or related services 
to an insured institution (hereinafter referred to as ``data center'') 
to:
    (i) The examined data center;
    (ii) Any insured institution that receives data processing or 
related services from the examined data center;
    (iii) Any state agency or authority which exercises general 
supervision over an institution serviced by the examined data center; 
and
    (iv) Any federal financial institution supervisory agency which 
exercises general supervision over an institution serviced by the 
examined data center. The federal supervisory agency may disclose any 
such examination report received from the Corporation to an insured 
institution over which it exercises general supervision and which is 
serviced by the examined data center.
    (6) Disclosure to third parties. (i) Except as otherwise provided in 
paragraphs (c) (1) through (5) of this section, the Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may in his or her discretion and for good cause, disclose 
copies of any exempt records to any third party where requested to do so 
in writing. Any such written request shall:
    (A) Specify, with reasonable particularity, the record or records to 
which access is requested; and
    (B) Give the reasons for the request.
    (ii) Either prior to or at the time of any disclosure, the Director 
or designee shall require such terms and conditions as he deems 
necessary to protect the confidential nature of the record, the 
financial integrity of any depository institution to which the record 
relates, and the legitimate privacy interests of any individual named in 
such records.
    (7) Authorization for disclosure by depository institutions or other 
third parties. (i) The Director of the Corporation's Division having 
primary authority over the exempt records, or designee, may, in his or 
her discretion and for good cause, authorize any director, officer, 
employee, or agent of a depository institution to disclose copies of any 
exempt record in his custody to anyone who is not a director, officer or 
employee of the depository institution. Such authorization must be in 
response to a written request from the party seeking the record or from 
management of the depository institution to which the report or record 
pertains. Any such request shall specify, with reasonable particularity, 
the record sought, the party's interest therein, and the party's 
relationship to the depository institution to which the record relates.

[[Page 125]]

    (ii) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may, in his or her 
discretion and for good cause, authorize any third party, including a 
federal or state agency, that has received a copy of a Corporation 
exempt record, to disclose such exempt record to another party or 
agency. Such authorization must be in response to a written request from 
the party that has custody of the copy of the exempt record. Any such 
request shall specify the record sought to be disclosed and the reasons 
why disclosure is necessary.
    (iii) Any subsidiary depository institution of a bank holding 
company or a savings and loan holding company may reproduce and furnish 
a copy of any report of examination of the subsidiary depository 
institution to the parent holding company without prior approval of the 
Director of the Division having primary authority over the exempt 
records and any depository institution may reproduce and furnish a copy 
of any report of examination of the disclosing depository institution to 
a majority shareholder if the following conditions are met:
    (A) The parent holding company or shareholder owns in excess of 50% 
of the voting stock of the depository institution or subsidiary 
depository institution;
    (B) The board of directors of the depository institution or 
subsidiary depository institution at least annually by resolution 
authorizes the reproduction and furnishing of reports of examination 
(the resolution shall specifically name the shareholder or parent 
holding company, state the address to which the reports are to be sent, 
and indicate that all reports furnished pursuant to the resolution 
remain the property of the Federal Deposit Insurance Corporation and are 
not to be disclosed or made public in any manner without the prior 
written approval of the Director of the Corporation's Division having 
primary authority over the exempt records as provided in paragraph (b) 
of this section;
    (C) A copy of the resolution authorizing disclosure of the reports 
is sent to the shareholder or parent holding company; and
    (D) The minutes of the board of directors of the depository 
institution or subsidiary depository institution for the meeting 
immediately following disclosure of a report state:
    (1) That disclosure was made;
    (2) The date of the report which was disclosed;
    (3) To whom the report was sent; and
    (4) The date the report was disclosed.
    (iv) With respect to any disclosure that is authorized under this 
paragraph (b)(7), the Director of the Corporation's Division having 
primary authority over the exempt records, or designee, shall only 
permit disclosure of records upon determining that good cause exists. If 
the exempt record contains information derived from depository 
institution customer financial records, disclosure is to be authorized 
only upon the condition that the requesting party and the party 
releasing the records comply with any applicable provision of the RFPA. 
Before authorizing the disclosure, the Director (or designee) may 
require that both the party having custody of a copy of a Corporation 
exempt record and the party seeking access to the record agree to such 
limitations as the Director (or designee) deems necessary to protect the 
confidential nature of the record, the financial integrity of any 
depository institution to which the record relates and the legitimate 
privacy interests of any persons named in such record.
    (8) Disclosure by General Counsel. (i) The Corporation's General 
Counsel, or designee, may disclose or authorize the disclosure of any 
exempt record in response to a valid judicial subpoena, court order, or 
other legal process, and authorize any current or former officer, 
director, employee, agent of the Corporation, or third party, to appear 
and testify regarding an exempt record or any information obtained in 
the performance of such person's official duties, at any administrative 
or judicial hearing or proceeding where such person has been served with 
a valid subpoena, court order, or other legal process requiring him or 
her to testify. The General Counsel shall consider the relevancy of such 
exempt records or testimony to the litigation, and the interests of 
justice, in determining whether

[[Page 126]]

to disclose such records or testimony. Third parties seeking disclosure 
of exempt records or testimony in litigation to which the FDIC is not a 
party shall submit a request for discretionary disclosure directly to 
the General Counsel.9 Such request shall specify the 
information sought with reasonable particularity and shall be 
accompanied by a statement with supporting documentation showing in 
detail the relevance of such exempt information to the litigation, 
justifying good cause for disclosure, and a commitment to be bound by a 
protective order. Failure to exhaust such administrative request prior 
to service of a subpoena or other legal process may, in the General 
Counsel's discretion, serve as a basis for objection to such subpoena or 
legal process. Customer financial records may not be disclosed to any 
federal agency that is not a federal financial supervisory agency 
pursuant to this paragraph unless notice to the customer and 
certification as required by the RFPA have been given except where 
disclosure is subject to the relevant exceptions set forth in the RFPA.
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    \9\ This administrative requirement does not apply to subpoenas, 
court orders or other legal process issued for records of depository 
institutions held by the FDIC as Receiver or Conservator. Subpoenas, 
court orders or other legal process issued for such records will be 
processed in accordance with State and Federal law, regulations, rules 
and privileges applicable to FDIC as Receiver or Conservator.
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    (ii) The General Counsel, or designee, may in his or her discretion 
and for good cause, disclose or authorize disclosure of any exempt 
record or testimony by a current or former officer, director, employee, 
agent of the Corporation, or third party, sought in connection with any 
civil or criminal hearing, proceeding or investigation without the 
service of a judicial subpoena, or other legal process requiring such 
disclosure or testimony, if he or she determines that the records or 
testimony are relevant to the hearing, proceeding or investigation and 
that disclosure is in the best interests of justice and not otherwise 
prohibited by Federal statute. Customer financial records shall not be 
disclosed to any federal agency pursuant to this paragraph that is not a 
federal financial supervisory agency, unless the records are sought 
under the Federal Rules of Civil Procedure (28 U.S.C. appendix) or the 
Federal Rules of Criminal Procedure (18 U.S.C. appendix) or comparable 
rules of other courts and in connection with litigation to which the 
receiving federal agency, employee, officer, director, or agent, and the 
customer are parties, or disclosure is otherwise subject to the relevant 
exceptions in the RFPA. Where the General Counsel or designee authorizes 
a current or former officer, director, employee or agent of the 
Corporation to testify or disclose exempt records pursuant to this 
paragraph (b)(8), he or she may, in his or her discretion, limit the 
authorization to so much of the record or testimony as is relevant to 
the issues at such hearing, proceeding or investigation, and he or she 
shall give authorization only upon fulfillment of such conditions as he 
or she deems necessary and practicable to protect the confidential 
nature of such records or testimony.
    (9) Authorization for disclosure by the Chairman of the 
Corporation's Board of Directors. Except where expressly prohibited by 
law, the Chairman of the Corporation's Board of Directors may in his or 
her discretion, authorize the disclosure of any Corporation records. 
Except where disclosure is required by law, the Chairman may direct any 
current or former officer, director, employee or agent of the 
Corporation to refuse to disclose any record or to give testimony if the 
Chairman determines, in his or her discretion, that refusal to permit 
such disclosure is in the public interest.
    (10) Limitations on disclosure. All steps practicable shall be taken 
to protect the confidentiality of exempt records and information. Any 
disclosure permitted by paragraph (b) of this section is discretionary 
and nothing in paragraph (b) of this section shall be construed as 
requiring the disclosure of information. Further, nothing in paragraph 
(b) of this section shall be construed as restricting, in any manner,

[[Page 127]]

the authority of the Board of Directors, the Chairman of the Board of 
Directors, the Director of the Corporation's Division having primary 
authority over the exempt records, the Corporation's General Counsel, or 
their designees, or any other Corporation Division or Office head, in 
their discretion and in light of the facts and circumstances attendant 
in any given case, to require conditions upon and to limit the form, 
manner, and extent of any disclosure permitted by this section. Wherever 
practicable, disclosure of exempt records shall be made pursuant to a 
protective order and redacted to exclude all irrelevant or non-
responsive exempt information.



Sec. 309.7  Service of process.

    (a) Service. Any subpoena or other legal process to obtain 
information maintained by the FDIC shall be duly issued by a court 
having jurisdiction over the FDIC, and served upon either the Executive 
Secretary (or designee), FDIC, 550 17th Street, N.W., Washington, DC 
20429, or the Regional Director or Regional Manager of the FDIC region 
where the legal action from which the subpoena or process was issued is 
pending. A list of the FDIC's regional offices is available from the 
Office of Corporate Communications, FDIC, 550 17th Street, N.W., 
Washington, DC 20429 (telephone 202-898-6996). Where the FDIC is named 
as a party, service of process shall be made pursuant to the Federal 
Rules of Civil Procedure, and upon the Executive Secretary (or 
designee), FDIC, 550 17th Street N.W., Washington, DC 20429, or upon the 
agent designated to receive service of process in the state, territory, 
or jurisdiction in which any insured depository institution is located. 
Identification of the designated agent in the state, territory, or 
jurisdiction may be obtained from the Office of the Executive Secretary 
or from the Office of the General Counsel, FDIC, 550 17th Street N.W., 
Washington, DC 20429. The Executive Secretary (or designee), Regional 
Director or designated agent shall immediately forward any subpoena, 
court order or legal process to the General Counsel. The Corporation may 
require the payment of fees, in accordance with the fee schedule 
referred to in Sec. 309.5(c)(3), prior to the release of any records 
requested pursuant to any subpoena or other legal process.
    (b) Notification by person served. If any current or former officer, 
director, employee or agent of the Corporation, or any other person who 
has custody of records belonging to the FDIC, is served with a subpoena, 
court order, or other process requiring that person's attendance as a 
witness concerning any matter related to official duties, or the 
production of any exempt record of the Corporation, such person shall 
promptly advise the Office of the Corporation's General Counsel of such 
service, of the testimony and records described in the subpoena, and of 
all relevant facts which may be of assistance to the General Counsel in 
determining whether the individual in question should be authorized to 
testify or the records should be produced. Such person should also 
inform the court or tribunal which issued the process and the attorney 
for the party upon whose application the process was issued, if known, 
of the substance of this section.
    (c) Appearance by person served. Absent the written authorization of 
the Corporation's General Counsel, or designee, to disclose the 
requested information, any current or former officer, director, 
employee, or agent of the Corporation, and any other person having 
custody of records of the Corporation, who is required to respond to a 
subpoena or other legal process, shall attend at the time and place 
therein specified and respectfully decline to produce any such record or 
give any testimony with respect thereto, basing such refusal on this 
section.



PART 310--PRIVACY ACT REGULATIONS--Table of Contents




Sec.
310.1  Purpose and scope.
310.2  Definitions.
310.3  Procedures for requests pertaining to individual records in a 
          system of records.
310.4  Times, places, and requirements for identification of individuals 
          making requests.
310.5  Disclosure of requested information to individuals.
310.6  Special procedures: Medical records.
310.7  Request for amendment of record.

[[Page 128]]

310.8  Agency review of request for amendment of record.
310.9  Appeal of adverse initial agency determination on access or 
          amendment.
310.10  Disclosure of record to person other than the individual to whom 
          it pertains.
310.11  Fees.
310.12  Penalties.
310.13  Exemptions.

    Authority:  5 U.S.C. 552a.

    Source:  40 FR 46274, Oct. 6, 1975, unless otherwise noted.



Sec. 310.1  Purpose and scope.

    The purpose of this part is to establish regulations implementing 
the Privacy Act of 1974, 5 U.S.C. 552a. These regulations delineate the 
procedures that an individual must follow in exercising his or her 
access or amendment rights under the Privacy Act to records maintained 
by the Corporation in systems of records.
[61 FR 43419, Aug. 23, 1996]



Sec. 310.2  Definitions.

    For purposes of this part:
    (a) The term Corporation means the Federal Deposit Insurance 
Corporation;
    (b) The term individual means a natural person who is either a 
citizen of the United States or an alien lawfully admitted for permanent 
residence;
    (c) The term maintain includes maintain, collect, use, disseminate, 
or control;
    (d) The term record means any item, collection or grouping of 
information about an individual that contains his/her name, or the 
identifying number, symbol, or other identifying particular assigned to 
the individual;
    (e) The term system of records means a group of any records under 
the control of the Corporation from which information is retrieved by 
the name of the individual or some identifying number, symbol or other 
identifying particular assigned to the individual;
    (f) The term designated system of records means a system of records 
which has been listed and summarized in the Federal Register pursuant to 
the requirements of 5 U.S.C. 552a(e);
    (g) The term routine use means, with respect to disclosure of a 
record, the use of such record for a purpose which is compatible with 
the purpose for which it was created;
    (h) The terms amend or amendment mean any correction, addition to or 
deletion from a record; and
    (i) The term system manager means the agency official responsible 
for a designated system of records, as denominated in the Federal 
Register publication of ``Systems of Records Maintained by the Federal 
Deposit Insurance Corporation.''
[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977]



Sec. 310.3  Procedures for requests pertaining to individual records in a system of records.

    (a) Any present or former employee of the Corporation seeking access 
to, or amendment of, his/her official personnel records maintained by 
the Corporation shall submit his/her request in such manner as is 
prescribed by the United States Office of Personnel Management in part 
297 of its rules and regulations (5 CFR part 297). For access to, or 
amendment of, other government-wide records systems maintained by the 
Corporation, the procedures prescribed in the respective Federal 
Register Privacy Act system notice shall be followed.
    (b) Requests by individuals for access to records pertaining to them 
and maintained within one of the Corporation's designated systems of 
records should be submitted in writing to the Office of the Executive 
Secretary, FOIA/PA Unit, Federal Deposit Insurance Corporation, 
Washington, DC 20429. Each such request should contain a reasonable 
description of the records sought, the system or systems in which such 
record may be contained, and any additional identifying information, as 
specified in the Corporation's Federal Register ``Notice of Systems of 
Records'' for that particular system, copies of which are available upon 
request from the FOIA/PA Unit, Office of the Executive Secretary.
[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977; 61 
FR 43419, Aug. 23, 1996]



Sec. 310.4  Times, places, and requirements for identification of individuals making requests.

    (a) Individuals may request access to records pertaining to 
themselves by

[[Page 129]]

submitting a written request as provided in Sec. 310.3 of these 
regulations, or by appearing in person on weekdays, other than official 
holidays, at the Office of the Executive Secretary, Records Unit, 
Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, 
DC 20429, between the hours of 8:30 a.m. and 5 p.m.
    (b) Individuals appearing in person at the Corporation seeking 
access to or amendment of their records shall present two forms of 
reasonable identification, such as employment identification cards, 
driver's licenses, or other identification cards or documents typically 
used for identification purposes.
    (c) Except for records that must be publicly disclosed pursuant to 
the Freedom of Information Act, 5 U.S.C. 552, where the Corporation 
determines it to be necessary for the individual's protection, a 
certification of a duly commissioned notary public, of any state or 
territory, attesting to the requesting individual's identity, or an 
unsworn declaration subscribed to as true under the penalty of perjury 
under the laws of the United States of America, at the election of the 
individual, may be required before a written request seeking access to 
or amendment of a record will be honored. The Corporation may also 
require that individuals provide minimal identifying data such as full 
name, date and place of birth, or other personal information necessary 
to ensure proper identity before processing requests for records.
[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977; 61 
FR 43419, Aug. 23, 1996]



Sec. 310.5  Disclosure of requested information to individuals.

    (a) Except to the extent that Corporation records pertaining to an 
individual:
    (1) Are exempt from disclosure under Secs. 310.6 and 310.13 of this 
part, or
    (2) Were compiled in reasonable anticipation of a civil action or 
proceeding, the Corporation will make such records available upon 
request for purposes of inspection and copying by the individual (after 
proper identity verification as provided in Sec. 310.4) and, upon the 
individual's request and written authorization, by another person of the 
individual's own choosing.
    (b) The Executive Secretary will notify, in writing, the individual 
making a request, whenever practicable within ten business days 
following receipt of the request, whether any specified designated 
system of records maintained by the Corporation contains a record 
pertaining to the individual. Where such a record does exist, the 
Executive Secretary also will inform the individual of the system 
manager's decision whether to grant or deny the request for access. In 
the event existing records are determined not to be disclosable, the 
notification will inform the individual of the reasons for which 
disclosure will not be made and will provide a description of the 
individual's right to appeal the denial, as more fully set forth in 
Sec. 310.9. Where access is to be granted, the notification will specify 
the procedures for verifying the individual's identity, as set forth in 
Sec. 310.4.
    (c) Individuals will be granted access to records disclosable under 
this part 310 as soon as is practicable. The Executive Secretary will 
give written notification of a reasonable period within which 
individuals may inspect disclosable records pertaining to themselves at 
the Office of the Executive Secretary during normal business hours. 
Alternatively, individuals granted access to records under this part may 
request that copies of such records be forwarded to them. Fees for 
copying such records will be assessed as provided in Sec. 310.11.
[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977]



Sec. 310.6  Special procedures: Medical records.

    Medical records shall be disclosed on request to the individuals to 
whom they pertain, except, if in the judgment of the Corporation, the 
transmission of the medical information directly to the requesting 
individual could have an adverse effect upon such individual. In the 
event medical information is withheld from a requesting individual due 
to any possible adverse effect such information may have upon the 
individual, the Corporation shall transmit such information to a medical 
doctor

[[Page 130]]

named by the requesting individual for release of the patient.
[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec. 310.7  Request for amendment of record.

    The Corporation will maintain all records it uses in making any 
determination about any individual with such accuracy, relevance, 
timeliness and completeness as is reasonably necessary to assure 
fairness to the individual in the determination. An individual may 
request that the Corporation amend any portion of a record pertaining to 
that individual which the Corporation maintains in a designated system 
of records. Such a request should be submitted in writing to the Office 
of the Executive Secretary, Records Unit, Federal Deposit Insurance 
Corporation, Washington, DC 20429 and should contain the individual's 
reason for requesting the amendment and a description of the record 
(including the name of the appropriate designated system and category 
thereof) sufficient to enable the Corporation to identify the particular 
record or portion thereof with respect to which amendment is sought.



Sec. 310.8  Agency review of request for amendment of record.

    (a) Requests by individuals for the amendment of records will be 
acknowledged by the Executive Secretary of the Corporation, and referred 
to the system manager of the system of records in which the record is 
contained for determination, within ten business days following receipt 
of such requests. Promptly thereafter, the Executive Secretary will 
notify the individual of the system manager's decision to grant or deny 
the request to amend.
    (b) If the system manager denies a request to amend a record, the 
notification of such denial shall contain the reason for the denial and 
a description of the individual's right to appeal the denial as more 
fully set forth in Sec. 310.9.
[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977]



Sec. 310.9  Appeal of adverse initial agency determination on access or amendment.

    (a) A system manager's denial of an individual's request for access 
to or amendment of a record pertaining to him/her may be appealed in 
writing to the Corporation's General Counsel (or designee) within 30 
business days following receipt of notification of the denial. Such an 
appeal should be addressed to the Office of the Executive Secretary, 
FDIC, 550 17th Street NW., Washington, DC 20429, and contain all the 
information specified for requests for access in Sec. 310.3 or for 
initial requests to amend in Sec. 310.7, as well as any other additional 
information the individual deems relevant for the consideration by the 
General Counsel (or designee) of the appeal.
    (b) The General Counsel (or designee) will normally make a final 
determination with respect to an appeal made under this part within 30 
business days following receipt by the Office of the Executive Secretary 
of the appeal. The General Counsel (or designee) may, however, extend 
this 30-day time period for good cause. Where such an extension is 
required, the individual making the appeal will be notified of the 
reason for the extension and the expected date upon which a final 
decision will be given.
    (c) If the General Counsel (or designee) affirms the initial denial 
of a request for access or to amend, he or she will inform the 
individual affected of the decision, the reason therefor, and the right 
of judicial review of the decision. In addition, as pertains to a 
request for amendment, the individual may at that point submit to the 
Corporation a concise statement setting forth his or her reasons for 
disagreeing with the Corporation's refusal to amend.
    (d) Any statement of disagreement with the Corporation's refusal to 
amend, filed with the Corporation by an individual pursuant to 
Sec. 310.9(c), will be included in the disclosure of any records under 
the authority of Sec. 310.10(b). The Corporation may in its discretion 
also include a copy of a concise statement of its reasons for not making 
the requested amendment.

[[Page 131]]

    (e) The General Counsel (or designee) may on his or her own motion 
refer an appeal to the Board of Directors for a determination, and the 
Board of Directors on its own motion may consider an appeal.
[52 FR 34290, Sept. 10, 1987, as amended at 61 FR 43420, Aug. 23, 1996]



Sec. 310.10  Disclosure of record to person other than the individual to whom it pertains.

    (a) Except as provided in paragraph (b) of this section, the 
Corporation will not disclose any record contained in a designated 
system of records to any person or agency except with the prior written 
consent of the individual to whom the record pertains.
    (b) The restrictions on disclosure in paragraph (a) of this section 
do not apply to any of the following disclosures:
    (1) To those officers and employees of the Corporation who have a 
need for the record in the performance of their duties;
    (2) Which is required under the Freedom of Information Act (5 U.S.C. 
552);
    (3) For a routine use listed with respect to a designated system of 
records;
    (4) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
title 13 U.S.C.;
    (5) To a recipient who has provided the Corporation with advance 
adequate written assurance that the record will be used solely as a 
statistical research or reporting record, and the record is to be 
transferred in a form that is not individually identifiable;
    (6) To the National Archives and Records Administration as a record 
which has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Archivist of the United States or his or her designee to determine 
whether the record has such value;
    (7) To another agency or to an instrumentality of any governmental 
jurisdiction within or under the control of the United States for a 
civil or criminal law enforcement activity if the activity is authorized 
by law, and if the head of the agency or instrumentality has made a 
written request to the Corporation specifying the particular portion 
desired and the law enforcement activity for which the record is sought;
    (8) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of an individual if, upon such 
disclosure, notification is transmitted to the last known address of 
such individual;
    (9) To either House of Congress, or, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee;
    (10) To the Comptroller General, or any of his or her authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office;
    (11) Pursuant to the order of a court of competent jurisdiction.
    (12) To a consumer reporting agency in accordance with section 
3711(f) of Title 31.
    (c) The Corporation will adhere to the following procedures in the 
case of disclosure of any record pursuant to the authority of paragraphs 
(b)(3) through (b)(12) of this section.
    (1) The Corporation will keep a record of the date, nature and 
purpose of each such disclosure, as well as the name and address of the 
person or agency to whom such disclosure is made; and
    (2) The Corporation will retain and, with the exception of 
disclosures made pursuant to paragraph (b)(7) of this section, make 
available to the individual named in the record for the greater of five 
years or the life of the record all material compiled under paragraph 
(d)(1) of this section with respect to disclosure of such record.
    (d) Whenever a record which has been disclosed by the Corporation 
under authority of paragraph (b) of this section is, within a reasonable 
amount of time after such disclosure, either amended by the Corporation 
or the subject of a statement of disagreement, the Corporation will 
transmit such additional information to any person or agency to whom the 
record was disclosed, if such

[[Page 132]]

disclosure was subject to the accounting requirements of paragraph 
(c)(1) of this section.
[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec. 310.11  Fees.

    The Corporation, upon a request for records disclosable pursuant to 
the Privacy Act of 1974 (5 U.S.C. 552a), shall charge a fee of $0.10 per 
page for duplicating, except as follows:
    (a) If the Corporation determines that it can grant access to a 
record only by providing a copy of the record, no fee will be charged 
for providing the first copy of the record or any portion thereof;
    (b) Whenever the aggregate fees computed under this section do not 
exceed $10 for any one request, the fee will be deemed waived by the 
Corporation; or
    (c) Whenever the Corporation determines that a reduction or waiver 
is warranted, it may reduce or waive any fees imposed for furnishing 
requested information pursuant to this section.
[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec. 310.12  Penalties.

    Subsection (i)(3) of the Privacy Act of 1974 (5 U.S.C. 552a(i)(3)) 
imposes criminal penalties for obtaining Corporation records on 
individuals under false pretenses. The subsection provides as follows:

    Any person who knowingly and willfully requests or obtains any 
record concerning an individual from an agency under false pretenses 
shall be guilty of a misdemeanor and fined not more than $5,000.



Sec. 310.13  Exemptions.

    The following systems of records are exempt from Secs. 310.3 through 
310.9 and Sec. 310.10(c)(2) of these rules:
    (a) Investigatory material compiled for law enforcement purposes in 
the following systems of records is exempt from Secs. 310.3 through 
310.9 and Sec. 310.10(c)(2) of these rules;

    Provided, however, That if any individual is denied any right, 
privilege, or benefit to which he/she would otherwise be entitled under 
Federal law, or for which he/she would otherwise be eligible, as a 
result of the maintenance of such material, such material shall be 
disclosed to such individual, except to the extent that the disclosure 
of such material would reveal the identity of a source who furnished 
information to the Government under an express promise that the identity 
of the source would be held in confidence, or, prior to September 27, 
1975, under an implied promise that the identity of the source would be 
held in confidence:

    30-64-0002--Financial institutions investigative and enforcement 
records system.
    30-64-0010--Investigative files and records.

    (b) Investigatory material compiled solely for the purpose of 
determining suitability, eligibility, or qualifications for Corporation 
employment to the extent that disclosure of such material would reveal 
the identity of a source who furnished information to the Corporation 
under an express promise that the identity of the source would be held 
in confidence, or, prior to September 27, 1975, under an implied promise 
that the identity of the source would be held in confidence, in the 
following systems of records, is exempt from Secs. 310.3 through 310.9 
and Sec. 310.10(c)(2) of these rules:

    30-64-0001--Attorney-legal intern applicant system.
    30-64-0010--Investigative files and records.

    (c) Testing or examination material used solely to determine or 
assess individual qualifications for appointment or promotion in the 
Corporation's service, the disclosure of which would compromise the 
objectivity or fairness of the testing, evaluation, or examination 
process in the following system of records, is exempt from Secs. 310.3 
through 310.9 and Sec. 310.10(c)(2) of these rules:

30-64-0009--Examiner training and education records.
[42 FR 6797, Feb. 4, 1977, as amended at 42 FR 33720, July 1, 1977; 54 
FR 38507, Sept. 19, 1989; 61 FR 43420, Aug. 23, 1996]



PART 311--RULES GOVERNING PUBLIC OBSERVATION OF MEETINGS OF THE CORPORATION'S BOARD OF DIRECTORS--Table of Contents




Sec.
311.1  Purpose.
311.2  Definitions.

[[Page 133]]

311.3  Meetings.
311.4  Procedures for announcing meetings.
311.5  Regular procedure for closing meetings.
311.6  Expedited procedure for announcing and closing certain meetings.
311.7  General Counsel certification.
311.8  Transcripts and minutes of meetings.

    Authority:  5 U.S.C. 552b and 12 U.S.C. 1819.

    Source:  42 FR 14675, Mar. 16, 1977, unless otherwise noted.



Sec. 311.1  Purpose.

    This part implements the policy of the ``Government in the Sunshine 
Act'', section 552b of title 5 U.S.C., which is to provide the public 
with as much information as possible regarding the decision making 
process of certain Federal agencies, including the Federal Deposit 
Insurance Corporation, while preserving the rights of individuals and 
the ability of the agency to carry out its responsibilities.



Sec. 311.2  Definitions.

    For purposes of this part:
    (a) Board means Board of Directors of the Federal Deposit Insurance 
Corporation and includes any subdivision of the Board authorized to act 
on behalf of the Corporation.
    (b) Meeting means the deliberations (including those conducted by 
conference telephone call, or by any other method) of at least three 
members where such deliberations determine or result in the joint 
conduct or disposition of agency business but does not include:
    (1) Deliberations to determine whether meetings will be open or 
closed or whether information pertaining to closed meetings will be 
withheld;
    (2) Informal background discussions among Board members and staff 
which clarify issues and expose varying views;
    (3) Decision-making by circulating written material to individual 
Board members;
    (4) Sessions with individuals from outside the Corporation where 
Board members listen to a presentation and may elicit additional 
information.
    (c) Member means a member of the Board.
    (d) Open to public observation and open to the public mean that 
individuals may witness the meeting, but not participate in the 
deliberations. The meeting may be recorded, photographed, or otherwise 
reproduced if the reproduction does not disturb the meeting.
    (e) Public announcement and publicly announce mean making reasonable 
effort under the particular circumstances of each case to fully inform 
the public. This may include posting notice on the Corporation's public 
notice bulletin board maintained in the lobby of its offices located at 
550 17th Street, NW., Washington, DC 20429, issuing a press release and 
employing other methods of notification that may be desirable in a 
particular situation.
[42 FR 14675, Mar. 16, 1977, as amended at 42 FR 59494, Nov. 18, 1977; 
54 FR 38965, Sept. 22, 1989; 61 FR 38357, July 24, 1996]



Sec. 311.3  Meetings.

    (a) Open meetings. Except as provided in paragraph (b) of this 
section, every portion of every meeting of the Corporation's Board will 
be open to public observation. Board members will not jointly conduct or 
dispose of Corporation business other than in accordance with this part.
    (b) When meetings may be closed and announcements and disclosures 
withheld. Except where the Board finds that the public interest requires 
otherwise, a meeting or portion thereof may be closed, and announcements 
and disclosure pertaining thereto may be withheld when the Board 
determines that such meeting or portion of the meeting or the disclosure 
of such information is likely to:
    (1) Disclose matters that are: (i) Specifically authorized under 
criteria established by an Executive order to be kept secret in the 
interests of national defense or foreign policy and (ii) in fact 
properly classified pursuant to such Executive order;
    (2) Relate solely to the internal personnel rules and practices of 
the Corporation;
    (3) Disclose matters specifically exempted from disclosure by 
statute (other than the Freedom of Information Act, 5 U.S.C. 552): 
Provided, That such statute: (i) Requires that the matters be withheld 
from the public in such a manner as to leave no discretion on the issue, 
or (ii) establishes particular types of matters to be withheld;

[[Page 134]]

    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would: (i) Interfere with enforcement proceedings, (ii) 
deprive a person of a right to a fair trial or an impartial 
adjudication, (iii) constitute an unwarranted invasion of personal 
privacy, (iv) disclose the identity of a confidential source, (v) 
disclose investigative techniques and procedures, or (vi) endanger the 
life or physical safety of law enforcement personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the Corporation or any other agency responsible for the 
supervision of financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to:
    (i)(A) Lead to significant financial speculation in currencies, 
securities, or commodities, or
    (B) Significantly endanger the stability of any financial 
institution; or
    (ii) Significantly frustrate implementation of a proposed 
Corporation action, except that this paragraph (b)(9)(ii) shall not 
apply in any instance where the Corporation has already disclosed to the 
public the content or nature of its proposed action, or where the 
Corporation is required by law to make such disclosure on its own 
initiative prior to taking final action on such proposal; or
    (10) Specifically concern the Corporation's issuance of a subpoena, 
or the Corporation's participation in a civil action or proceeding, an 
action in a foreign court or international tribunal, or an arbitration, 
or the initiation, conduct, or disposition by the Corporation of a 
particular case of formal agency adjudication pursuant to the procedures 
in 5 U.S.C. 554 or otherwise involving a determination on the record 
after opportunity for a hearing.



Sec. 311.4  Procedures for announcing meetings.

    (a) Scope. Except to the extent that such announcements are exempt 
from disclosure under Sec. 311.3(b), announcements relating to open 
meetings, and meetings closed under the regular closing procedures of 
Sec. 311.5, will be made in the manner set forth in this section.
    (b) Time and content of announcement. The Corporation will make 
public announcement at least seven days before the meeting of the time, 
place, and subject matter of the meeting, whether it is to be open or 
closed to the public, and the name and telephone number of the official 
designated by the Corporation to respond to requests for information 
about the meeting. This announcement will be made unless a majority of 
the Board determines by a recorded vote that Corporation business 
requires that a meeting be called on lesser notice. In such cases, the 
Corporation will make public announcement of the time, place, and 
subject matter of the meeting, and whether it is open or closed to the 
public, at the earliest practicable time, which may be later than the 
commencement of the meeting.
    (c) Changing time or place of meeting. The time or place of a 
meeting may be changed following the public announcement required by 
paragraph (b) of this section only if the Corporation publicly announces 
the change at the earliest practicable time, which may be later than the 
commencement of the meeting.
    (d) Changing subject matter or nature of meeting. The subject matter 
of a meeting, or the determination to open or close a meeting or a 
portion of a meeting, may be changed following the public announcement 
only if:
    (1) A majority of the entire Board determines by recorded vote that 
agency business so requires and that no earlier announcement of the 
change was possible; and,

[[Page 135]]

    (2) The Corporation publicly announces the change and the vote of 
each member upon such change at the earliest practicable time, which may 
be later than the commencement of the meeting.
    (e) Publication of announcements in Federal Register. Immediately 
following each public announcement under this section, such announcement 
will be submitted for publication in the Federal Register by the Office 
of the Executive Secretary.



Sec. 311.5  Regular procedure for closing meetings.

    (a) Scope. Unless Sec. 311.6 is applicable, the procedures for 
closing meetings will be those set forth in this section.
    (b) Procedure. (1) A decision to close a meeting or portion of a 
meeting will be taken only when a majority of the entire Board votes to 
take such action. In deciding whether to close a meeting or portion of a 
meeting, the Board will consider whether the public interest requires an 
open meeting. A separate vote of the Board will be taken with respect to 
each meeting which is proposed to be closed in whole or in part to the 
public. A single vote may be taken with respect to a series of meetings 
which are proposed to be closed in whole or in part to the public, or 
with respect to any information concerning such series of meetings, so 
long as each meeting in the series involves the same particular matters 
and is scheduled to be held no more than thirty days after the initial 
meeting in the series. The vote of each Board member will be recorded 
and no proxies will be allowed.
    (2) Any individual whose interests may be directly affected may 
request that the Corporation close any portion of a meeting for any of 
the reasons referred to in paragraph (b) (5), (6), or (b)(7) of 
Sec. 311.3. Requests should be directed to the Office of the Executive 
Secretary, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429. After receiving notice that an individual desires 
a portion of a meeting to be closed, the Board, upon request of any one 
of its members, will vote by recorded vote whether to close the relevant 
portion of the meeting. This procedure will apply even if the 
individual's request is made subsequent to the announcement of a 
decision to hold an open meeting.
    (3) The Corporation's General Counsel will make the public 
certification required by Sec. 311.7.
    (4) Within 1 day after any vote taken pursuant to paragraphs (b)(1) 
or (2) of this section, the Corporation will make publicly available a 
written copy of the vote, reflecting the vote of each Board member. 
Except to the extent that such information is exempt from disclosure, if 
a meeting or portion of a meeting is to be closed to the public, the 
Corporation will make publicly available within 1 day after the required 
vote a full written explanation of its action, together with a list of 
all persons expected to attend the meeting and their affiliation.
    (5) The Corporation will publicly announce the time, place, and 
subject matter of the meeting, with determinations as to open and closed 
portions, in the manner and within the time limits prescribed in 
Sec. 311.4.
[42 FR 14675, Mar. 16, 1977; 42 FR 16616, Mar. 29, 1977, as amended at 
42 FR 59494, Nov. 18, 1977]



Sec. 311.6  Expedited procedure for announcing and closing certain meetings.

    (a) Scope. Since a majority of its meetings may properly be closed 
pursuant to paragraph (b)(4), (8), (9)(i), or (b)(10) of Sec. 311.3, 
subsection (d)(4) of the Government in the Sunshine Act (5 U.S.C. 552b) 
allows the Corporation to use expedited procedures in closing meetings 
under these four subparagraphs. Absent a compelling public interest to 
the contrary, meetings or portions of meetings that can be expected to 
be closed using these procedures include, but are not limited to: 
Administrative enforcement proceedings under section 8 of the Federal 
Deposit Insurance Act (12 U.S.C. 1818); appointment of the Corporation 
as conservator of a depository institution, or as receiver, liquidator 
or liquidating agent of a closed depository institution or a depository 
institution in danger of closing; and certain management and liquidation 
activities pursuant to such appointments; possible financial assistance 
by the Corporation under section 13 of the Federal Deposit Insurance Act

[[Page 136]]

(12 U.S.C. 1823); certain depository institution applications including 
applications to establish or move branches, applications to merge, and 
applications for insurance; and investigatory activity under section 
10(c) of the Federal Deposit Insurance Act (12 U.S.C. 1820(c)). In 
announcing and closing meetings or portions of meetings under this 
section, the following procedures will be observed.
    (b) Announcement. Except to the extent that such information is 
exempt from disclosure under the provisions of Sec. 311.3(b) the 
Corporation will make public announcement of the time, place and subject 
matter of the meeting and of each portion thereof at the earliest 
practicable time. This announcement will be published in the Federal 
Register if publication can be effected at least 1 day prior to the 
scheduled date of the meeting.
    (c) Procedure for closing. (1) The Corporation's General Counsel 
will make the public certification required by Sec. 311.7.
    (2) At the beginning of a meeting or portion of a meeting to be 
closed under this section, a recorded vote of the Board will be taken. 
The Board will determine by its vote whether to proceed with the 
closing. If a majority of the entire Board votes to close, the meeting 
will be closed to public observation. Even though a meeting or portion 
thereof could properly be closed under this section, a majority of the 
entire Board may find that the public interest requires an open session 
and vote, reflecting the vote of each Board member, will be made 
available to the public.
[42 FR 14675, Mar. 16, 1977; 42 FR 16616, Mar. 29, 1977, as amended at 
54 FR 38965, Sept. 22, 1989]



Sec. 311.7  General Counsel certification.

    For every meeting or portion thereof closed under Sec. 311.5 or 
Sec. 311.6, the Corporation's General Counsel will publicly certify 
that, in the opinion of such General Counsel, the meeting may be closed 
to the public and will state each relevant exemptive provision. In the 
absence of the General Counsel, the next ranking official in the Legal 
Division may perform the certification. If the General Counsel and such 
next ranking official in the Legal Division are both absent, the 
official in the Legal Division who is then next in rank may provide the 
required certification. A copy of this certification, together with a 
statement from the presiding officer of the meeting setting forth the 
time and place of the meeting, and the persons present, will be retained 
in the Board's permanent files.
[42 FR 14675, Mar. 16, 1977, as amended at 61 FR 38357, July 24, 1996]



Sec. 311.8  Transcripts and minutes of meetings.

    (a) When required. The Corporation will maintain a complete 
transcript, identifying each speaker, to record fully the proceedings of 
each meeting or portion of a meeting closed to the public, except that 
in the case of a meeting or portions of a meeting closed to the public 
pursuant to paragraph (b)(8), (9)(i), or (10) of Sec. 311.3, the 
Corporation may, in lieu of a transcript, maintain a set of minutes.
    (b) Content of minutes. If minutes are maintained, they will fully 
and clearly describe all matters discussed and will provide a full and 
accurate summary of any actions taken, and the reasons for taking such 
action. Minutes will also include a description of each of the views 
expressed by each person in attendance on any item and the record of any 
roll call vote, reflecting the vote of each member. All documents 
considered in connection with any action will be identified in the 
minutes.
    (c) Available material. The Corporation will maintain a complete 
verbatim copy of the transcript or minutes of each meeting or portion of 
a meeting closed to the public for a period of at least 2 years after 
the meeting, or until 1 year after the conclusion of any proceeding with 
respect to which the meeting or portion was held, whichever occurs 
later. The Corporation will make promptly available to the public the 
transcript, identifying each speaker, or minutes of items on the agenda 
or testimony of any witness received at the closed meeting except that 
in cases where the Privacy Act of 1974 (5 U.S.C. 552a) does not apply, 
the Corporation may withhold information exempt from disclosure under 
Sec. 311.3(b). For the convenience of members of the public

[[Page 137]]

who may be unable to attend open meetings of the Board, the Corporation 
will maintain for at least 2 years a set of minutes of each meeting of 
the Board or portion thereof open to public observation.
    (d) Procedures for inspecting or copying available material. (1) An 
individual may inspect materials made available under paragraph (c) of 
this section at the Office of the Executive Secretary, Federal Deposit 
Insurance Corporation, 550 17th Street, N.W., Washington, DC 20429, 
during normal business hours. If the individual desires a copy of such 
material, the Corporation will furnish copies at a cost of 10 cents per 
page. Whenever the Corporation determines that in the public interest a 
reduction or waiver is warranted, it may reduce or waive any fees 
imposed under this section.
    (2) An individual may also submit a written request for transcripts 
or minutes, reasonably identifying the records sought, to the Office of 
the Executive Secretary, Federal Deposit Insurance Corporation, 550 17th 
Street, NW., Washington, DC 20429.
    (e) Procedures for obtaining documents identified in minutes. Copies 
of documents identified in minutes or considered by the Board in 
connection with any action identified in the minutes may be made 
available to the public upon request, to the extent permitted by the 
Freedom of Information Act, under the provisions of 12 CFR part 309, 
Disclosure of Information.
[42 FR 14675, Mar. 16, 1977, as amended at 61 FR 38357, July 24, 1996]



PART 312--ASSESSMENT OF FEES UPON ENTRANCE TO OR EXIT FROM THE BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND--Table of Contents




Sec.
312.1  Definitions.
312.2  Bank Insurance Fund reserve ratio.
312.3  Savings Association Insurance Fund reserve ratio.
312.4  Entrance fees assessed in connection with conversion transactions 
          from the Savings Association Insurance Fund to the Bank 
          Insurance Fund.
312.5  Exit fees assessed in connection with conversion transactions 
          from the Savings Association Insurance Fund to the Bank 
          Insurance Fund.
312.6  Entrance fees assessed in connection with conversion transactions 
          from the Bank Insurance Fund to the Savings Association 
          Insurance Fund.
312.7  Exit fees assessed in connection with conversion transactions 
          from the Bank Insurance Fund to the Savings Association 
          Insurance Fund.
312.8  Entrance and exit fees assessed in connection with insured 
          deposit transfers from the Savings Association Insurance Fund 
          to the Bank Insurance Fund.
312.9  Entrance and exit fees assessed in connection with insured 
          deposit transfers from the Bank Insurance Fund to the Savings 
          Association Insurance Fund.
312.10  Payment of entrance and exit fees.

    Authority:  12 U.S.C. 1815(d); 12 U.S.C. 1819.

    Source:  54 FR 40380, Oct. 2, 1989, unless otherwise noted.



Sec. 312.1  Definitions.

    For purposes of this part:
    (a) The term Bank Insurance Fund shall mean the fund established by 
section 11(a)(5) of the Federal Deposit Insurance Act, 12 U.S.C. 
1821(a)(5). The term Savings Association Insurance Fund shall mean the 
fund established by section 11(a)(6) of the Federal Deposit Insurance 
Act, 12 U.S.C. 1821(a)(6).
    (b) The terms Bank Insurance Fund member and Savings Association 
Insurance Fund member shall have the meanings given them in sections 
7(l) (4) and (5) of the Federal Deposit Insurance Act, 12 U.S.C. 1817(l) 
(4), (5), respectively.
    (c) The term Bank Insurance Fund reserve ratio shall mean the ratio 
of the net worth of the Bank Insurance Fund to the value of the 
aggregate total domestic deposits held in all Bank Insurance Fund 
members. The term ``Savings Association Insurance Fund reserve ratio'' 
shall mean the ratio of the value of the net worth of the Savings 
Association Insurance Fund to the value of the aggregate total domestic 
deposits held in all Savings Association Insurance Fund members.
    (d) The term conversion transaction shall have the meaning given it 
in section 5(d)(2)(B) of the Federal Deposit Insurance Act, 12 U.S.C. 
1815(d)(2)(B).
    (e) The terms default and in danger of default shall have the 
meanings given

[[Page 138]]

them in section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 
1813(x).
    (f) The term deposit broker shall have the meaning given it in 
section 29 of the Federal Deposit Insurance Act, 12 U.S.C. 1831f.
    (g) The term entrance fee deposit base generally refers to those 
deposits which the Federal Deposit Insurance Corporation, in its 
discretion, estimates to have a high probability of remaining with the 
acquiring or resulting depository institution for a reasonable period of 
time following the acquisition, in excess of those deposits that would 
have remained in the insurance fund of the depository institution in 
default or in danger of default had such institution been resolved by 
means of an insured deposit transfer. The estimated dollar amount of the 
entrance fee deposit base shall be determined on a case-by-case basis by 
the Federal Deposit Insurance Corporation at the time offers to acquire 
an insured depository institution (or any part thereof) are solicited by 
the Federal Deposit Insurance Corporation or the Resolution Trust 
Corporation.
    (h) The term insured deposit transfer shall mean a transaction 
wherein the insured deposits of an insured depository institution in 
default or in danger of default, are paid by means of a transferred 
deposit pursuant to a written agreement between the Federal Deposit 
Insurance Corporation or the Resolution Trust Corporation and an insured 
depository institution. The term transferred deposit shall have the 
meaning given it in section 3(n) of the Federal Deposit Insurance Act, 
12 U.S.C. 1813 (n).
    (i) The term premium shall mean the amount paid by an insured 
depository institution in consideration for the right to enter into an 
insured deposit transfer agreement. The premium shall not include the 
amount of any transferred deposits, nor shall the premium include any 
amount paid for the purchase of assets or the right to purchase assets 
of a depository institution in default or in danger of default.
    (j) The term retained deposit base shall mean the total deposits 
transferred from a Savings Association Insurance Fund Member to a Bank 
Insurance Fund Member, or from a Bank Insurance Fund member to a Savings 
Association Insurance Fund member, less the following deposits:
    (1) Any deposit acquired, directly or indirectly, by or through any 
deposit broker; and
    (2) Any portion of any deposit account exceeding $80,000.
[54 FR 40380, Oct. 2, 1989; 54 FR 43521, Oct. 25, 1989, as amended at 55 
FR 10412, Mar. 21, 1990]



Sec. 312.2  Bank Insurance Fund reserve ratio.

    The Bank Insurance Fund reserve ratio to be used in computing the 
entrance fee under this part with respect to any particular conversion 
transaction shall be the most recent Bank Insurance Fund reserve ratio 
calculated quarterly by the Federal Deposit Insurance Corporation prior 
to the date on which deposit liabilities are transferred from a Savings 
Association Insurance Fund member to a Bank Insurance Fund member in 
connection with that conversion transaction.
[56 FR 29895, July 1, 1991]



Sec. 312.3  Savings Association Insurance Fund reserve ratio.

    The Savings Association Insurance Fund reserve ratio to be used in 
computing the entrance fee under this part with respect to any 
particular conversion transaction shall be the most recent Savings 
Association Insurance Fund reserve ratio calculated quarterly by the 
Federal Deposit Insurance Corporation prior to the date on which deposit 
liabilities are transferred from a Bank Insurance Fund member to a 
Savings Association Insurance Fund member in connection with that 
conversion transaction.
[56 FR 29895, July 1, 1991]



Sec. 312.4  Entrance fees assessed in connection with conversion transactions from the Savings Association Insurance Fund to the Bank Insurance Fund.

    (a) Each insured depository institution participating in a 
conversion transaction as a result of which insured deposits are 
transferred from a Savings Association Insurance Fund member to a Bank 
Insurance Fund

[[Page 139]]

member shall pay an entrance fee to the Bank Insurance Fund.
    (b) The entrance fee shall be the product derived by multiplying the 
dollar amount of total deposits transferred from the Savings Association 
Insurance Fund member to the Bank Insurance Fund member by the Bank 
Insurance Fund reserve ratio.
    (c) Notwithstanding paragraph (b) of this section, the entrance fee 
to be assessed against an insured depository institution participating 
in a conversion transaction:
    (1) Occurring in connection with the acquisition of a Savings 
Association Insurance Fund member in default or in danger of default, or
    (2) Otherwise arranged by the Federal Deposit Insurance Corporation 
in its capacity as exclusive manager of the Resolution Trust 
Corporation, shall be the product derived by multiplying the dollar 
amount of the entrance fee deposit base transferred from the Savings 
Association Insurance Fund member to the Bank Insurance Fund member by 
the Bank Insurance Fund ratio.
[55 FR 10413, Mar. 21, 1990]



Sec. 312.5  Exit fees assessed in connection with conversion transactions from the Savings Association Insurance Fund to the Bank Insurance Fund.

    (a) Each insured depository institution participating in a 
conversion transaction as a result of which insured deposits are 
transferred from a Savings Association Insurance Fund member to a Bank 
Insurance Fund member shall pay an exit fee.
    (b) The exit fee shall be the product derived by multiplying the 
dollar amount of total deposits transferred from the Savings Association 
Insurance Fund member to the Bank Insurance Fund member by 0.90 percent 
(0.0090).
    (c) Notwithstanding paragraph (b) of this section, the exit fee to 
be assessed against an insured depository institution participating in a 
conversion transaction:
    (1) Occurring in connection with the acquisition of a Savings 
Association Insurance Fund member in default or in danger of default, or
    (2) Otherwise arranged by the Federal Deposit Insurance Corporation 
in its capacity as exclusive manager of the Resolution Trust 
Corporation, shall be the product derived by multiplying the dollar 
amount of the retained deposit base transferred from the Savings 
Association Insurance Fund member to the Bank Insurance Fund member by 
0.90 percent (0.0090).
    (d) The exit fee required to be paid by this section shall be paid 
to the Savings Association Insurance Fund or, if the Secretary of the 
Treasury determines that the Financing Corporation has exhausted all 
other sources of funding for interest payments on the obligations of the 
Financing Corporation and orders that such exit fee be paid to the 
Financing Corporation.
    (e) Exit fees paid to the Savings Association Insurance Fund 
pursuant to paragraph (d) of this section shall be held in a reserve 
account until such time as the Federal Deposit Insurance Corporation and 
the Secretary of the Treasury determine that it is not necessary to 
reserve such funds for the payment of interest on the obligations of the 
Financing Corporation.
    (f) Before January 1, 1997, amendments to this section shall be 
determined jointly by the Federal Deposit Insurance Corporation and the 
Secretary of the Treasury.
[55 FR 10413, Mar. 21, 1990]



Sec. 312.6  Entrance fees assessed in connection with conversion transactions from the Bank Insurance Fund to the Savings Association Insurance Fund.

    (a) Each insured depository institution participating in a 
conversion transaction as a result of which insured deposits are 
transferred from a Bank Insurance Fund member to a Savings Association 
Insurance Fund member shall pay an entrance fee to the Savings 
Association Insurance Fund.
    (b) The entrance fee shall be the product derived by multiplying the 
dollar amount of total deposits transferred from the Bank Insurance Fund 
member to the Savings Association Insurance Fund member by the Savings 
Association Insurance Fund reserve ratio, or by .01 percent (0.0001), 
whichever is greater.

[[Page 140]]

    (c) Notwithstanding paragraph (b) of this section, the entrance fee 
to be assessed against an insured depository institution participating 
in a conversion transaction occurring in connection with the acquisition 
of a Bank Insurance Fund member in default or in danger of default shall 
be the product derived by multiplying the dollar amount of the entrance 
fee deposit base transferred from the Bank Insurance Fund member to the 
Savings Association Insurance Fund member by the Savings Association 
Insurance Fund reserve ratio, or by .01 percent (0.0001), whichever is 
greater.
    (d) Interim entrance fee until initial calculation of Savings 
Association Insurance Fund reserve ratio. Notwithstanding paragraphs (b) 
and (c) of this section, until such time as the Savings Association 
Insurance Fund reserve ratio is initially calculated and made publicly 
available, the entrance fee for all conversions from the Bank Insurance 
Fund to the Savings Association Insurance Fund shall be the product 
derived by multiplying the dollar amount of total deposits transferred 
from the Bank Insurance Fund member to the Savings Association Insurance 
Fund member by .01 percent (0.0001), unless the conversion transaction 
is occurring in connection with the acquisition of a Bank Insurance Fund 
member in default or in danger of default, where it shall be the product 
derived by multiplying the dollar amount of the entrance fee deposit 
base transferred from the Bank Insurance Fund member to the Savings 
Association Insurance Fund member by 0.01 percent (0.0001).
[55 FR 10413, Mar. 21, 1990]



Sec. 312.7  Exit fees assessed in connection with conversion transactions from the Bank Insurance Fund to the Savings Association Insurance Fund.

    (a) Each insured depository institution participating in a 
conversion transaction as a result of which insured deposits are 
transferred from a Bank Insurance Fund member to a Savings Association 
Insurance Fund member shall pay an exit fee to the Bank Insurance Fund.
    (b) The exit fee shall be the product derived by multiplying the 
dollar amount of total deposits transferred from the Bank Insurance Fund 
member to the Savings Association Insurance Fund member by .01 percent 
(0.0001).
    (c) Notwithstanding paragraph (b) of this section, the exit fee to 
be assessed against an insured depository institution participating in a 
conversion transaction occurring in connection with the acquisition of a 
Bank Insurance Fund member in default or in danger of default shall be 
the product derived by multiplying the dollar amount of the retained 
deposit base transferred from the Bank Insurance Fund member to the 
Savings Association Insurance Fund member by 0.01 percent (0.0001).
[55 FR 10413, Mar. 21, 1990]



Sec. 312.8  Entrance and exit fees assessed in connection with insured deposit transfers from the Savings Association Insurance Fund to the Bank Insurance Fund.

    (a) Insured deposit transfers resulting in a transfer of insured 
deposits from a Savings Association Insurance Fund member to a Bank 
Insurance Fund member, shall be subject to an entrance fee and an exit 
fee.
    (b) The entrance fee shall be the product derived by multiplying the 
dollar amount of the retained deposit base of the Savings Association 
Insurance Fund member in default or in danger of default by the Bank 
Insurance Fund ratio.
    (c) The exit fee shall be the product derived by multiplying the 
dollar amount of the retained deposit base of the Savings Association 
Insurance Fund member in default or in danger of default by 0.90 percent 
(0.0090).
    (d) Notwithstanding paragraphs (a), (b), and (c) of this section, 
the sum total of the entrance fee and the exit fee required by this 
section shall in no event exceed the amount of the premium.
    (e) The entrance and exit fees required by this section shall be 
paid by the acquiring institution from the premium as follows. First, 
the premium shall be allocated in payment of the exit fee to one-third 
of the premium received. Second, the remaining premium shall be 
allocated to the entrance fee. Third, if any premium remains, it shall 
be applied to the remaining balance (if

[[Page 141]]

any) owing on the exit fee. Fourth, any amount remaining after 
application pursuant to steps one through three shall be allocated to 
the Resolution Trust Corporation.
    (f) The entrance fee required by this section shall be paid to the 
Bank Insurance Fund. The exit fee required by this section shall be paid 
to the Savings Association Insurance Fund or, if the Secretary of the 
Treasury determines that the Financing Corporaiton has exhausted all 
other sources of funding for interest payments on the obligations of the 
Financing Corporation and orders that such exit fee be paid to the 
Financing Corporation.
    (g) Exit fees paid to the Savings Association Insurance Fund 
pursuant to paragraph (f) of this section shall be held in a reserve 
account until such time as the Federal Deposit Insurance Corporation and 
the Secretary of the Treasury determine that it is not necessary to 
reserve such funds for the payment of interest on the obligations of the 
Financing Corporation.
    (h) Insured deposit transfers occurring before March 21, 1990 shall 
not be subject to the assessment of entrance or exit fees.
    (i) Before January 1, 1997, amendments to this section concerning 
exit fees assessed in connection with insured deposit transfers from the 
Savings Association Insurance Fund to the Bank Insurance Fund shall be 
determined jointly by the Federal Deposit Insurance Corporation and the 
Secretary of the Treasury.
[55 FR 10414, Mar. 21, 1990]



Sec. 312.9  Entrance and exit fees assessed in connection with insured deposit transfers from the Bank Insurance Fund to the Savings Association Insurance Fund.

    (a) Insured deposit transfers resulting in a transfer of insured 
deposits from a Bank Insurance Fund member to a Savings Association 
Insurance Fund member, shall be subject to an entrance fee and in exit 
fee.
    (b) The entrance fee shall be the product derived by multiplying the 
dollar amount of the retained deposit base of the Bank Insurance Fund 
member in default or in danger of default by the Savings Association 
Insurance Fund ratio or by .01 percent (0.0001), whichever is greater.
    (c) The exit fee shall be the product derived by multiplying the 
dollar amount of the retained deposit base of the Bank Insurance Fund 
member by 0.01 percent (0.0001).
    (d) Notwithstanding paragraphs (a), (b), and (c) of this section, 
the sum total of the entrance fee and the exit fee required by this 
section shall in no event exceed the amount of the premium.
    (e) The entrance and exit fees required by this section shall be 
paid by the acquiring institution from the premium as follows. First, 
the premium shall be allocated in payment of the exit fee to one-third 
of the premium received. Second, the remaining premium will be allocated 
to the entrance fee. Third, if any premium remains, it shall be applied 
to the remaining balance (if any) owing on the exit fee. Fourth, any 
amount remaining after application pursuant to steps one through three 
shall be allocated to the Federal Deposit Insurance Corporation.
    (f) The entrance fee required by this section shall be paid to the 
Savings Association Insurance Fund. The exit fee required by this 
section shall be paid to the Bank Insurance Fund.
    (g) Insured deposit transfers occurring before March 21, 1990 shall 
not be subject to the assessment of entrance or exit fees.
[55 FR 10414, Mar. 21, 1990]



Sec. 312.10  Payment of entrance and exit fees.

    (a) A resulting or acquiring depository institution shall be liable 
for the payment of the entrance and exit fees required by this part.
    (b) Notwithstanding paragraph (a) of this section, an acquiring 
depository institution participating in an insured deposit transfer 
pursuant to Sec. 312.8 or Sec. 312.9 of this part shall pay the entrance 
and exit fees from the premium, and in any event, shall not be liable 
for the payment of that portion of the entrance and exit fees that 
exceeds the premium paid by such acquiring depository institution.
    (c) The ``conversion transaction payment date'' shall be either 
March 31st or September 30th, whichever occurs

[[Page 142]]

first following the expiration of 30 days from the date the deposits are 
transferred.
    (d) A resulting or acquiring depository institution shall pay the 
entrance and exit fees required by this part on the conversion 
transaction payment date.
    (e) Notwithstanding paragraph (d) of this section, where the sum of 
the entrance and exit fees required to be paid by an insured depository 
institution pursuant to Secs. 312.4, 312.5, 312.6, or 312.7 of this part 
exceeds $5,000, a resulting or acquiring depository institution may, at 
its option, and upon notification to the Federal Deposit Insurance 
Corporation, pay the entrance and exit fees in equal annual 
installments, interest-free, over a period of not more than five years. 
The first such installment shall be paid on the date described in 
paragraph (c) of this section.
    (f) Entrance and exit fees required to be paid by an insured 
depository institution as the result of an insured deposit transfer 
pursuant to Secs. 312.8 or 312.9 of this part shall be paid on the 
conversion transaction payment date described in paragraph (c) of this 
section.
[55 FR 10414, Mar. 21, 1990]

[[Page 143]]



       SUBCHAPTER B--REGULATIONS AND STATEMENTS OF GENERAL POLICY





PART 323--APPRAISALS--Table of Contents




Sec.
323.1  Authority, purpose, and scope.
323.2  Definitions.
323.3  Appraisals required; transactions requiring a State certified or 
          licensed appraiser.
323.4  Minimum appraisal standards.
323.5  Appraiser independence.
323.6  Professional association membership; competency.
323.7  Enforcement.

    Authority:  12 U.S.C. 1818, 1819 [``Seventh'' and ``Tenth''], and 
3331-3352.

    Source:  55 FR 33888, Aug. 20, 1990, unless otherwise noted.



Sec. 323.1  Authority, purpose, and scope.

    (a) Authority. This part is issued under 12 U.S.C. 1818, 1819 
[``Seventh'' and ``Tenth''] and title XI of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (``FIRREA'') (Pub. L. 101-
73, 103 Stat. 183, 12 U.S.C. 3331 et seq. (1989)).
    (b) Purpose and scope. (1) Title XI provides protection for federal 
financial and public policy interests in real estate related 
transactions by requiring real estate appraisals used in connection with 
federally related transactions to be performed in writing, in accordance 
with uniform standards, by appraisers whose competency has been 
demonstrated and whose professional conduct will be subject to effective 
supervision. This part implements the requirements of title XI and 
applies to all federally related transactions entered into by the FDIC 
or by institutions regulated by the FDIC (regulated institutions).
    (2) This part: (i) Identifies which real estate-related financial 
transactions require the services of an appraiser;
    (ii) Prescribes which categories of federally related transactions 
shall be appraised by a State certified appraiser and which by a State 
licensed appraiser; and
    (iii) Prescribes minimum standards for the performance of real 
estate appraisals in connection with federally related transactions 
under the jurisdiction of the FDIC.



Sec. 323.2  Definitions.

    (a) Appraisal means a written statement independently and 
impartially prepared by a qualified appraiser setting forth an opinion 
as to the market value of an adequately described property as of a 
specific date(s), supported by the presentation and analysis of relevant 
market information.
    (b) Appraisal Foundation means the Appraisal Foundation established 
on November 30, 1987, as a not-for-profit corporation under the laws of 
Illinois.
    (c) Appraisal Subcommittee means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination Council.
    (d) Business loan means a loan or extension of credit to any 
corporation, general or limited partnership, business trust, joint 
venture, pool, syndicate, sole proprietorship, or other business entity.
    (e) Complex 1-to-4 family residential property appraisal means one 
in which the property to be appraised, the form of ownership, or market 
conditions are atypical.
    (f) Federally related transaction means any real estate-related 
financial transactions entered into after the effective date hereof 
that:
    (1) The FDIC or any regulated institution engages in or contracts 
for; and
    (2) Requires the services of an appraiser.
    (g) Market value means the most probable price which a property 
should bring in a competitive and open market under all conditions 
requisite to a fair sale, the buyer and seller each acting prudently and 
knowledgeably, and assuming the price is not affected by undue stimulus. 
Implicit in this definition is the consummation of a sale as of a 
specified date and the passing of title from seller to buyer under 
conditions whereby:
    (1) Buyer and seller are typically motivated;

[[Page 144]]

    (2) Both parties are well informed or well advised, and acting in 
what they consider their own best interests;
    (3) A reasonable time is allowed for exposure in the open market;
    (4) Payment is made in terms of cash in U.S. dollars or in terms of 
financial arrangements comparable thereto; and
    (5) The price represents the normal consideration for the property 
sold unaffected by special or creative financing or sales concessions 
granted by anyone associated with the sale.
    (h) Real estate or real property means an identified parcel or tract 
of land, with improvements, and includes easements, rights of way, 
undivided or future interests and similar rights in a tract of land, but 
does not include mineral rights, timber rights, growing crops, water 
rights and similar interests severable from the land when the 
transaction does not involve the associated parcel or tract of land.
    (i) Real estate-related financial transaction means any transaction 
involving:
    (1) The sale, lease, purchase, investment in or exchange of real 
property, including interests in property, or the financing thereof; or
    (2) The refinancing of real property or interests in real property; 
or
    (3) The use of real property or interests in property as security 
for a loan or investment, including mortgage-backed securities.
    (j) State certified appraiser means any individual who has satisfied 
the requirements for certification in a State or territory whose 
criteria for certification as a real estate appraiser currently meet the 
minimum criteria for certification issued by the Appraiser 
Qualifications Board of the Appraisal Foundation. No individual shall be 
a State certified appraiser unless such individual has achieved a 
passing grade upon a suitable examination administered by a State or 
territory that is consistent with and equivalent to the Uniform State 
Certification Examination issued or endorsed by the Appraiser 
Qualifications Board. In addition, the Appraisal Subcommittee must not 
have issued a finding that the policies, practices, or procedures of a 
State or territory are inconsistent with title XI of FIRREA. The FDIC 
may, from time to time, impose additional qualification criteria for 
certified appraisers performing appraisals in connection with federally 
related transactions within its jurisdiction.
    (k) State licensed appraiser means any individual who has satisfied 
the requirements for licensing in a State or territory where the 
licensing procedures comply with title XI of FIRREA and where the 
Appraisal Subcommittee has not issued a finding that the policies, 
practices, or procedures of the State or territory are inconsistent with 
title XI. The FDIC may, from time to time, impose additional 
qualification criteria for licensed appraisers performing appraisals in 
connection with federally related transactions within its jurisdiction.
    (l) Tract development means a project of five units or more that is 
constructed or is to be constructed as a single development.
    (m) Transaction value means: (1) For loans or other extensions of 
credit, the amount of the loan or extension of credit;
    (2) For sales, leases, purchases, and investments in or exchanges of 
real property, the market value of the real property interest involved; 
and
    (3) For the pooling of loans or interests in real property for 
resale or purchase, the amount of the loan or market value of the real 
property calculated with respect to each such loan or interest in real 
property.
[55 FR 33888, Aug. 20, 1990, as amended at 57 FR 9049, Mar. 16, 1992; 59 
FR 29501, June 7, 1994]



Sec. 323.3  Appraisals required; transactions requiring a State certified or licensed appraiser.

    (a) Appraisals required. An appraisal performed by a State certified 
or licensed appraiser is required for all real estate-related financial 
transactions except those in which:
    (1) The transaction value is $250,000 or less;
    (2) A lien on real estate has been taken as collateral in an 
abundance of caution;
    (3) The transaction is not secured by real estate;

[[Page 145]]

    (4) A lien on real estate has been taken for purposes other than the 
real estate's value;
    (5) The transaction is a business loan that:
    (i) Has a transaction value of $1 million or less; and
    (ii) Is not dependent on the sale of, or rental income derived from, 
real estate as the primary source of repayment;
    (6) A lease of real estate is entered into, unless the lease is the 
economic equivalent of a purchase or sale of the leased real estate;
    (7) The transaction involves an existing extension of credit at the 
lending institution, provided that:
    (i) There has been no obvious and material change in market 
conditions or physical aspects of the property that threatens the 
adequacy of the institution's real estate collateral protection after 
the transaction, even with the advancement of new monies; or
    (ii) There is no advancement of new monies, other than funds 
necessary to cover reasonable closing costs;
    (8) The transaction involves the purchase, sale, investment in, 
exchange of, or extension of credit secured by, a loan or interest in a 
loan, pooled loans, or interests in real property, including mortgaged-
backed securities, and each loan or interest in a loan, pooled loan, or 
real property interest met FDIC regulatory requirements for appraisals 
at the time of origination;
    (9) The transaction is wholly or partially insured or guaranteed by 
a United States government agency or United States government sponsored 
agency;
    (10) The transaction either:
    (i) Qualifies for sale to a United States government agency or 
United States government sponsored agency; or
    (ii) Involves a residential real estate transaction in which the 
appraisal conforms to the Federal National Mortgage Association or 
Federal Home Loan Mortgage Corporation appraisal standards applicable to 
that category of real estate;
    (11) The regulated institution is acting in a fiduciary capacity and 
is not required to obtain an appraisal under other law; or
    (12) The FDIC determines that the services of an appraiser are not 
necessary in order to protect Federal financial and public policy 
interests in real estate-related financial transactions or to protect 
the safety and soundness of the institution.
    (b) Evaluations required. For a transaction that does not require 
the services of a State certified or licensed appraiser under paragraph 
(a)(1), (a)(5) or (a)(7) of this section, the institution shall obtain 
an appropriate evaluation of real property collateral that is consistent 
with safe and sound banking practices.
    (c) Appraisals to address safety and soundness concerns. The FDIC 
reserves the right to require an appraisal under this part whenever the 
agency believes it is necessary to address safety and soundness 
concerns.
    (d) Transactions requiring a State certified appraiser--(1) All 
transactions of $1,000,000 or more. All federally related transactions 
having a transaction value of $1,000,000 or more shall require an 
appraisal prepared by a State certified appraiser.
    (2) Nonresidential transactions of $250,000 or more. All federally 
related transactions having a transaction value of $250,000 or more, 
other than those involving appraisals of 1-to-4 family residential 
properties, shall require an appraisal prepared by a State certified 
appraiser.
    (3) Complex residential transactions of $250,000 or more. All 
complex 1-to-4 family residential property appraisals rendered in 
connection with federally related transactions shall require a State 
certified appraiser if the transaction value is $250,000 or more. A 
regulated institution may presume that appraisals of 1-to-4 family 
residential properties are not complex, unless the institution has 
readily available information that a given appraisal will be complex. 
The regulated institution shall be responsible for making the final 
determination of whether the appraisal is complex. If during the course 
of the appraisal a licensed appraiser identifies factors that would 
result in the property, form of ownership, or market conditions being 
considered atypical, then either:

[[Page 146]]

    (i) The regulated institution may ask the licensed appraiser to 
complete the appraisal and have a certified appraiser approve and co-
sign the appraisal; or
    (ii) The institution may engage a certified appraiser to complete 
the appraisal.
    (e) Transactions requiring either a State certified or licensed 
appraiser. All appraisals for federally related transactions not 
requiring the services of a State certified appraiser shall be prepared 
by either a State certified appraiser or a State licensed appraiser.
    (f) Effective date. Regulated institutions are required to use state 
certified or licensed appraisers as set forth in this section no later 
than December 31, 1992, unless otherwise required by law.
[55 FR 33888, Aug. 20, 1990, as amended at 57 FR 9050, Mar. 16, 1992; 59 
FR 29501, June 7, 1994]



Sec. 323.4  Minimum appraisal standards.

    For federally related transactions, all appraisals shall, at a 
minimum:
    (a) Conform to generally accepted appraisal standards as evidenced 
by the Uniform Standards of Professional Appraisal Practice (USPAP) 
promulgated by the Appraisal Standards Board of the Appraisal 
Foundation, 1029 Vermont Ave., NW., Washington, DC 20005, unless 
principles of safe and sound banking require compliance with stricter 
standards;
    (b) Be written and contain sufficient information and analysis to 
support the institution's decision to engage in the transaction;
    (c) Analyze and report appropriate deductions and discounts for 
proposed construction or renovation, partially leased buildings, non-
market lease terms, and tract developments with unsold units;
    (d) Be based upon the definition of market value as set forth in 
this part; and
    (e) Be performed by State licensed or certified appraisers in 
accordance with requirements set forth in this part.
[59 FR 29502, June 7, 1994]



Sec. 323.5  Appraiser independence.

    (a) Staff appraisers. If an appraisal is prepared by a staff 
appraiser, that appraiser must be independent of the lending, 
investment, and collection functions and not involved, except as an 
appraiser, in the federally related transaction, and have no direct or 
indirect interest, financial or otherwise, in the property. If the only 
qualified persons available to perform an appraisal are involved in the 
lending, investment, or collection functions of the regulated 
institution, the regulated institution shall take appropriate steps to 
ensure that the appraisers exercise independent judgment and that the 
appraisal is adequate. Such steps include, but are not limited to, 
prohibiting an individual from performing appraisals in connection with 
federally related transactions in which the appraiser is otherwise 
involved and prohibiting directors and officers from participating in 
any vote or approval involving assets on which they performed an 
appraisal.
    (b) Fee appraisers. (1) If an appraisal is prepared by a fee 
appraiser, the appraiser shall be engaged directly by the regulated 
institution or its agent, and have no direct or indirect interest, 
financial or otherwise, in the property or the transaction.
    (2) A regulated institution also may accept an appraisal that was 
prepared by an appraiser engaged directly by another financial services 
institution, if:
    (i) The appraiser has no direct or indirect interest, financial or 
otherwise, in the property or the transaction; and
    (ii) The regulated institution determines that the appraisal 
conforms to the requirements of this part and is otherwise acceptable.
[55 FR 33888, Aug. 20, 1990, as amended by 59 FR 29502, June 7, 1994]



Sec. 323.6  Professional association membership; competency.

    (a) Membership in appraisal organizations. A State certified 
appraiser or a State licensed appraiser may not be excluded from 
consideration for an assignment for a federally related transaction 
solely by virtue of membership or lack of membership in any particular 
appraisal organization.
    (b) Competency. All staff and fee appraisers performing appraisals 
in connection with federally related transactions must be State 
certified or licensed, as appropriate. However, a

[[Page 147]]

State certified or licensed appraiser may not be considered competent 
solely by virtue of being certified or licensed. Any determination of 
competency shall be based upon the individual's experience and 
educational background as they relate to the particular appraisal 
assignment for which he or she is being considered.



Sec. 323.7  Enforcement.

    Institutions and institution-affiliated parties, including staff 
appraisers and fee appraisers, may be subject to removal and/or 
prohibition orders, cease and desist orders, and the imposition of civil 
money penalties pursuant to the Federal Deposit Insurance Act, 12 U.S.C. 
1811 et seq., as amended, or other applicable law.



PART 324--AGRICULTURAL LOAN LOSS AMORTIZATION--Table of Contents




Sec.
324.1  Authority.
324.2  Definitions.
324.3  Loss amortization and reappraisal.
324.4  Accounting for amortization.
324.5  Eligibility.
324.6  Conditions on acceptance.
324.7  Submission of proposals.
324.8  Revocation of eligibility.
324.9  Other administrative actions.

    Authority:  12 U.S.C. 1823(j), 1819, and 12 U.S.C. 1811-1831.

    Source:  52 FR 41968, Nov. 2, 1987, unless otherwise noted.

    Effective Date Note:  At 61 FR 33843, July 1, 1996, Part 324 was 
removed, effective Jan. 1, 1999.



Sec. 324.1  Authority.

    This part is issued by the Federal Deposit Insurance Corporation 
(Corporation) pursuant to 12 U.S.C. 1823(j), 1819, and other provisions 
of the Federal Deposit Insurance Act (12 U.S.C. 1811-31d).



Sec. 324.2  Definitions.

    For purposes of this part:
    (a) Agricultural Bank means a state nonmember bank, except a 
district bank,
    (1) The deposits of which are insured by the Corporation;
    (2) Which is located in an area of the country the economy of which 
is dependent on agriculture;
    (3) Which has total assets of $100 million or less as of the most 
recent Report of Condition; and
    (4) Which has--(i) At least 25 percent of its total loans in 
qualified agricultural loans and agriculturally related other property 
as defined below; or
    (ii) Less than 25 percent of its total loans in qualified 
agricultural loans and agriculturally related other property, but which 
bank the appropriate state banking authority has recommended to the 
Corporation and which the Corporation accepts for eligibility under this 
part or which the Corporation on its own motion deems eligible 
hereunder.
    (b) Qualified agricultural loan means--(1) Loans qualifying as loans 
to finance agricultural production and other loans to farmers or as 
loans secured by farmland for purpose of Schedule RC-C of the FFIEC 
Consolidated Reports of Condition and Income or such other comparable 
schedule as may be in effect;
    (2) Loans secured by farm machinery;
    (3) Other loans and leases that a bank proves to be sufficiently 
related to agriculture for classification as an agricultural loan by the 
Corporation;
    (4) The remaining unpaid balance of any loans as described in 
paragraphs (b) (1), (2) and (3) of this section that have been charged-
off since January 1, 1984, and that qualify for deferral under this 
regulation.
    (c) Agriculturally related other property means any property, real 
or personal, that a bank owned on January 1, 1983, and any such 
additional property that it acquires prior to January 1, 1992, in 
connection with a qualified agricultural loan. For purposes of 
Secs. 324.2(a)(4)(i) and 324.6(d) the value of such property shall 
include amounts previously charged-off.
    (d) Accepting Official means the Director, Division of Supervision, 
or his designees.
[53 FR 22133, June 14, 1988; 53 FR 36963, Sept. 23, 1988, as amended at 
60 FR 31384, June 15, 1995]

[[Page 148]]



Sec. 324.3  Loss amortization and reappraisal.

    (a) Provided that there is no evidence that the loss resulted from 
fraud or criminal abuse on the part of the bank, its officers, directors 
or principal shareholders, a bank that has been accepted under this part 
may, in the manner described below, amortize on its Reports of Condition 
and Income:
    (1) Any loss on any qualified agricultural loan that the bank would 
be required to reflect in its annual financial statements for any year 
between and including 1984 to 1991; and
    (2) Any loss that the bank would be required to reflect in its 
financial statements for any period between and including 1983 to 1991 
resulting from a reappraisal or sale of agriculturally related other 
property.
    (b) Amortization under this section shall be computed over a period 
not to exceed seven years on a quarterly straight-line basis commencing 
in the first quarter after the loss was or is charged off so as to be 
fully amortized not later than December 31, 1998.
[52 FR 41968, Nov. 2, 1987, as amended at 53 FR 22134, June 14, 1988]



Sec. 324.4  Accounting for amortization.

    Any bank which is permitted to amortize losses in accordance with 
Sec. 324.3 may restate its capital and other relevant accounts and 
account for future authorized deferrals and amortizations in accordance 
with the instructions to the FFIEC Consolidated Reports of Condition and 
Income. Any resulting increase in the capital account shall be included 
in Tier 2 capital under 12 CFR part 325.
[52 FR 41968, Nov. 2, 1987, as amended at 56 FR 23011, May 20, 1991]



Sec. 324.5  Eligibility.

    A proposal submitted in accord with Sec. 324.7 shall be accepted, 
subject to the conditions described in Sec. 324.6, if the Accepting 
Official finds:
    (a) The proposing bank is an agricultural bank;
    (b) The proposing bank's current capital is in need of restoration, 
but the bank remains an economically viable, fundamentally sound 
institution;
    (c) There is no evidence that fraud or criminal abuse by the bank or 
its officers, directors or principal shareholders led to significant 
losses on qualified agricultural loans and agriculturally related other 
property; and
    (d) The proposing bank has submitted a capital plan approved by the 
Corporation or the Accepting Official that will restore its capital to 
an acceptable level.
[52 FR 41968, Nov. 2, 1987, as amended at 53 FR 22134, June 14, 1988]



Sec. 324.6  Conditions on acceptance.

    All acceptances of proposals shall be subject to the following 
conditions:
    (a) The bank shall fully adhere to the approved capital plan and 
shall obtain the prior approval of the Accepting Official for any 
modifications to the plan;
    (b) With respect to each asset subject to loss deferral under the 
program, the bank shall maintain accounting records adequate to document 
the amount and timing of the deferrals, repayments and amortizations;
    (c) The financial condition of the bank shall not deteriorate to the 
point where it is no longer a viable, fundamentally sound institution;
    (d) The bank shall agree to make a reasonable effort, consistent 
with safe and sound banking practices, to maintain a percentage of 
agricultural loans and agriculturally related other property to total 
loans which is not lower than the percentage of such loans in its loan 
portfolio on January 1, 1986; and
    (e) The bank shall agree to provide the Accepting Official, upon 
request, with such information as the Accepting Official deems necessary 
to monitor the bank's amortization, its compliance with conditions, and 
its continued eligibility.
[52 FR 41968, Nov. 2, 1987, as amended at 53 FR 22134, June 14, 1988]



Sec. 324.7  Submission of proposals.

    (a) A bank wishing to amortize losses on qualified agricultural 
loans or agriculturally related other property shall submit a proposal 
to the Division of Supervision regional director of the region in which 
the bank is located.
    (b) The proposal shall contain the following information:

[[Page 149]]

    (1) Name and address of the bank;
    (2) Information establishing that the bank is located in an area, 
the economy of which is dependent on agriculture such as a description 
of the bank's location, dominant lines of commerce in its service area, 
and any other information the bank believes will support the contention 
that the bank is located in an area dependent on agriculture;
    (3) A copy of the bank's most recent Reports of Condition and 
Income;
    (4) If the Report of Condition fails to show that at least 25 
percent of the bank's total loans are qualified agricultural loans, the 
basis upon which the bank believes that it should be declared eligible 
to amortize losses;
    (5) A capital plan demonstrating that the bank will achieve an 
acceptable capital level not later than the end of the bank's 
amortization period (the plan should provide for a realistic improvement 
in the bank's capital, over the course of the bank's amortization 
period, from earnings retention, capital injections, or other sources 
and include specific information regarding dividend levels, compensation 
to directors, executive officers and individuals who have a controlling 
interest, and payments for services or products furnished by affiliated 
companies or companies which are related interests of insiders);
    (6) A list of the loans and agriculturally related other property 
upon which the bank proposes to defer loss including, for each such loan 
or property, the following information:
    (i) The name of the borrower, the amount of the loan that resulted 
in the loss, and the amount of the loss;
    (ii) The date on which the loss was declared;
    (iii) The basis upon which the loss resulted from a qualified 
agricultural loan;
    (7) A certification by the bank's chief executive officer that there 
is no evidence that the losses resulted from fraud or criminal abuse by 
the bank, its officers, directors, or principal shareholders;
    (8) A copy of a resolution by the bank's Board of Directors 
authorizing submission of the proposal; and
    (9) Such other information as the Accepting Official may require.

(Approved by the Office of Management and Budget under control number 
3064-0091)

[52 FR 41968, Nov. 2, 1987; 52 FR 43190, Nov. 10, 1987, as amended at 53 
FR 22134, June 14, 1988; 60 FR 31384, June 15, 1995]



Sec. 324.8  Revocation of eligibility.

    If the bank fails to continue to meet eligibility requirements or to 
comply with the capital plan or any condition of an acceptance, the 
Accepting Official may notify the bank of the intent to revoke 
authorization for deferral of losses. The bank will have 60 days from 
receipt of the notice in which it may submit written objections and 
reasons why authorization should continue. If no written objections are 
received within 60 days, the revocation shall be final. If the bank 
submits objections, they will be considered and a final decision, or a 
request for additional information, shall be made within the next 30 
days.



Sec. 324.9  Other administrative actions.

    Acceptance of a bank for loss amortization does not foreclose any 
administrative action against the bank that the Corporation may deem 
appropriate.



PART 325--CAPITAL MAINTENANCE--Table of Contents




                 Subpart A--Minimum Capital Requirements

Sec.
325.1  Scope.
325.2  Definitions.
325.3  Minimum leverage capital requirement.
325.4  Inadequate capital as an unsafe or unsound practice or condition.
325.5  Miscellaneous.
325.6  Issuance of directives.

                   Subpart B--Prompt Corrective Action

325.101  Authority, purpose, scope, other supervisory authority, and 
          disclosure of capital categories.
325.102  Notice of capital category.
325.103  Capital measures and capital category definitions.
325.104  Capital restoration plans.
325.105  Mandatory and discretionary supervisory actions under section 
          38.


Appendix A to Part 325--Statement of Policy on Risk-Based Capital

[[Page 150]]

Appendix B to Part 325--Statement of Policy on Capital Adequacy
Appendix C to Part 325--Risk-Based Capital for State Non-Member Banks; 
          Market Risk.

    Authority:  12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 
1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 
1828(o), 1831o, 1835, 3907, 3909, 4808; Pub. L. 102-233, 105 Stat. 1761, 
1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242, 105 Stat. 2236, 
2355, 2386 (12 U.S.C. 1828 note).



                 Subpart A--Minimum Capital Requirements



Sec. 325.1  Scope.

    The provisions of this subpart A apply to those circumstances for 
which the Federal Deposit Insurance Act or this chapter requires an 
evaluation of the adequacy of an insured depository institution's 
capital structure. The FDIC is required to evaluate capital before 
approving various applications by insured depository institutions. The 
FDIC also must evaluate capital, as an essential component, in 
determining the safety and soundness of state nonmember banks it insures 
and supervises and in determining whether depository institutions are in 
an unsafe or unsound condition. This subpart A establishes the criteria 
and standards the FDIC will use in calculating the minimum leverage 
capital requirement and in determining capital adequacy. In addition, 
appendix A to this subpart sets forth the FDIC's risk-based capital 
policy statement and appendix B to this subpart includes a statement of 
policy on capital adequacy that provides interpretational guidance as to 
how this subpart will be administered and enforced. In accordance with 
subpart B of part 325, the FDIC also must evaluate an institution's 
capital for purposes of determining whether the institution is subject 
to the prompt corrective action provisions set forth in section 38 of 
the Federal Deposit Insurance Act (12 U.S.C. 1831o).
[58 FR 8219, Feb. 12, 1993]



Sec. 325.2  Definitions.

    (a) Allowance for loan and lease losses means those general 
valuation allowances that have been established through charges against 
earnings to absorb losses on loans and lease financing receivables. 
Allowances for loan and lease losses exclude allocated transfer risk 
reserves established pursuant to 12 U.S.C. 3904 and specific reserves 
created against identified losses.
    (b) Assets classified loss means:
    (1) When measured as of the date of examination of an insured 
depository institution, those assets that have been determined by an 
evaluation made by a state or federal examiner as of that date to be a 
loss; and
    (2) When measured as of any other date, those assets:
    (i) That have been determined--
    (A) By an evaluation made by a state or federal examiner at the most 
recent examination of an insured depository institution to be a loss; or
    (B) By evaluations made by the insured depository institution since 
its most recent examination to be a loss; and
    (ii) That have not been charged off from the insured depository 
institution's books or collected.
    (c) Bank means an FDIC-insured, state-chartered commercial or 
savings bank that is not a member of the Federal Reserve System and for 
which the FDIC is the appropriate federal banking agency pursuant to 
section 3(q) of the FDI Act (12 U.S.C. 1813(q)).
    (d) Common stockholders' equity means the sum of common stock and 
related surplus, undivided profits, disclosed capital reserves that 
represent a segregation of undivided profits, and foreign currency 
translation adjustments, less net unrealized holding losses on 
available-for-sale equity securities with readily determinable fair 
values.
    (e)(1) Control has the same meaning assigned to it in section 2 of 
the Bank Holding Company Act (12 U.S.C. 1841), and the term controlled 
shall be construed consistently with the term control.
    (2) Exclusion for fiduciary ownership. No insured depository 
institution or company controls another insured depository institution 
or company by virtue of its ownership or control of shares in a 
fiduciary capacity. Shares shall not be deemed to have been acquired in 
a fiduciary capacity if the acquiring insured depository institution

[[Page 151]]

or company has sole discretionary authority to exercise voting rights 
with respect thereto.
    (3) Exclusion for debts previously contracted. No insured depository 
institution or company controls another insured depository institution 
or company by virtue of its ownership or control of shares acquired in 
securing or collecting a debt previously contracted in good faith, until 
two years after the date of acquisition. The two-year period may be 
extended at the discretion of the appropriate federal banking agency for 
up to three one-year periods.
    (f) Controlling person means any person having control of an insured 
depository institution and any company controlled by that person.
    (g)(1) Highly leveraged transaction means an extension of credit to 
or investment in a business by an insured depository institution where 
the financing transaction involves a buyout, acquisition, or 
recapitalization of an existing business and one of the following 
criteria is met:
    (i) The transaction results in a liabilities-to-assets leverage 
ratio higher than 75 percent; or
    (ii) The transaction at least doubles the subject company's 
liabilities and results in a liabilities-to-assets leverage ratio higher 
than 50 percent; or
    (iii) The transaction is designated an HLT by a syndication agent or 
a federal bank regulator.
    (2) Notwithstanding paragraph (g)(1) of this section, loans and 
exposures to any obligor in which the total financing package, including 
all obligations held by all participants is $20 million or more, or such 
lower level as the FDIC may establish by order on a case-by-case basis, 
will be excluded from this definition.
    (h) Identified losses means:
    (1) When measured as of the date of examination of an insured 
depository institution, those items that have been determined by an 
evaluation made by a state or federal examiner as of that date to be 
chargeable against income, capital and/or general valuation allowances 
such as the allowance for loan and lease losses (examples of identified 
losses would be assets classified loss, off-balance sheet items 
classified loss, any provision expenses that are necessary for the 
institution to record in order to replenish its general valuation 
allowances to an adequate level, liabilities not shown on the 
institution's books, estimated losses in contingent liabilities, and 
differences in accounts which represent shortages); and
    (2) When measured as of any other date, those items:
    (i) That have been determined--
    (A) By an evaluation made by a state or federal examiner at the most 
recent examination of an insured depository institution to be chargeable 
against income, capital and/or general valuation allowances; or
    (B) By evaluations made by the insured depository institution since 
its most recent examination to be chargeable against income, capital 
and/or general valuation allowances; and
    (ii) For which the appropriate accounting entries to recognize the 
loss have not yet been made on the insured depository institution's 
books nor has the item been collected or otherwise settled.
    (i) Insured depository institution means any depository institution 
(except for a foreign bank having an insured branch) the deposits of 
which are insured in accordance with the provisions of the Federal 
Deposit Insurance Act (12 U.S.C. 1811 et seq.)
    (j) Intangible assets means those assets that are required to be 
reported as intangible assets in a banking institution's ``Reports of 
Condition and Income'' (Call Report) or in a savings association's 
``Thrift Financial Report.''
    (k) Leverage ratio means the ratio of Tier 1 capital to total 
assets, as calculated under this part.
    (l) Management fee means any payment of money or provision of any 
other thing of value to a company or individual for the provision of 
management services or advice to the bank or related overhead expenses, 
including payments related to supervisory, executive, managerial, or 
policymaking functions, other than compensation to an individual in the 
individual's capacity as an officer or employee of the bank.
    (m) Minority interests in consolidated subsidiaries means minority 
interests in

[[Page 152]]

equity capital accounts of those subsidiaries that have been 
consolidated for the purpose of computing regulatory capital under this 
part, except that minority interests which fail to provide meaningful 
capital support are excluded from this definition.
    (n) Mortgage servicing rights means those intagible assets that 
represent the rights to perform the servicing function for a specific 
group of mortgage loans that are owned by others. Mortgage servicing 
rights must be amortized over a period not to exceed 15 years or their 
estimated useful life, whichever is shorter. For purposes of determining 
regulatory capital under this part, mortgage servicing rights will be 
recognized only to the extent the rights meet the conditions, 
limitations and restrictions described in Sec. 325.5(f).
    (o) Noncumulative perpetual preferred stock means perpetual 
preferred stock (and related surplus) where the issuer has the option to 
waive payment of dividends and where the dividends so waived do not 
accumulate to future periods nor do they represent a contingent claim on 
the issuer. Preferred stock issues where the dividend is reset 
periodically based, in whole or in part, upon the bank's current credit 
standing, including but not limited to, auction rate, money market and 
remarketable preferred stock, are excluded from this definition of 
noncumulative perpetual preferred stock, regardless of whether the 
dividends are cumulative or noncumulative.
    (p) Perpetual preferred stock means a preferred stock that does not 
have a maturity date, that cannot be redeemed at the option of the 
holder, and that has no other provisions that will require future 
redemption of the issue. It includes those issues of preferred stock 
that automatically convert into common stock at a stated date. It 
excludes those issues, the rate on which increases, or can increase, in 
such a manner that would effectively require the issuer to redeem the 
issue.
    (q) Risk-weighted assets means total risk-weighted assets, as 
calculated in accordance with the FDIC's Statement of Policy on Risk-
Based Capital (appendix A to part 325).
    (r) Savings association means any federally-chartered savings 
association, any state-chartered savings association, and any 
corporation (other than a bank) that the Board of Directors of the FDIC 
and the Director of the Office of Thrift Supervision jointly determine 
to be operating in substantially the same manner as a savings 
association.
    (s) Tangible equity means the amount of core capital elements as 
defined in Section I.A.1. of the FDIC's Statement of Policy on Risk-
Based Capital (appendix A to this Part 325), plus the amount of 
outstanding cumulative perpetual preferred stock (including related 
surplus), minus all intangible assets except mortgage servicing rights 
to the extent that the FDIC determines pursuant to Sec. 325.5(f) of this 
part that mortgage servicing rights may be included in calculating the 
bank's Tier 1 capital.
    (t) Tier 1 capital or core capital means the sum of common 
stockholders' equity, noncumulative perpetual preferred stock (including 
any related surplus), and minority interests in consolidated 
subsidiaries, minus all intangible assets (other than mortgage servicing 
rights and purchased credit card relationships eligible for inclusion in 
core capital pursuant to Sec. 325.5(f) and qualifying supervisory 
goodwill eligible for inclusion in core capital pursuant to 12 CFR part 
567), minus deferred tax assets in excess of the limit set forth in 
Sec. 325.5(g), minus identified losses, (to the extent that Tier 1 
capital would have been reduced if the appropriate accounting entries to 
reflect the identified losses had been recorded on the insured 
depository institution's books) and minus investments in securities 
subsidiaries subject to 12 CFR 337.4.
    (u) Tier 1 risk-based capital ratio means the ratio of Tier 1 
capital to risk-weighted assets, as calculated in accordance with the 
FDIC's Statement of Policy on Risk-Based Capital (appendix A to part 
325).
    (v) Total assets means the average of total assets required to be 
included in a banking institution's ``Reports of Condition and Income'' 
(Call Report) or, for savings associations, the consolidated total 
assets required to be included in the ``Thrift Financial Report,'' as 
these reports may from time

[[Page 153]]

to time be revised, as of the most recent report date (and after making 
any necessary subsidiary adjustments for state nonmember banks as 
described in Secs. 325.5(c) and 325.5(d) of this part), minus intangible 
assets (other than mortgage servicing rights and purchased credit card 
relationships eligible for inclusion in core capital pursuant to 
Sec. 325.5(f) and qualifying supervisory goodwill eligible for inclusion 
in core capital pursuant to 12 CFR part 567), minus deferred tax assets 
in excess of the limit set forth in 325.5(g), and minus assets 
classified loss and any other assets that are deducted in determining 
Tier 1 capital. For banking institutions, the average of total assets is 
found in the Call Report schedule of quarterly averages. For savings 
associations, the consolidated total assets figure is found in Schedule 
CSC of the Thrift Financial Report.
    (w) Total risk-based capital ratio means the ratio of qualifying 
total capital to risk-weighted assets, as calculated in accordance with 
the FDIC's Statement of Policy on Risk-Based Capital (appendix A to part 
325).
    (x) Written agreement means an agreement in writing executed by 
authorized representatives entered into with the FDIC by an insured 
depository institution which is enforceable by an action under section 
8(a) and/or section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 
1818 (a), (b)).
[56 FR 10160, Mar. 11, 1991, as amended at 57 FR 44899, Sept. 29, 1992; 
58 FR 6368, 6369, Jan. 28, 1993; 58 FR 8219, Feb. 12, 1993; 58 FR 60103, 
Nov. 15, 1993; 59 FR 66666, Dec. 28, 1994; 60 FR 8187, Feb. 13, 1995; 60 
FR 39232, Aug. 1, 1995]



Sec. 325.3  Minimum leverage capital requirement.

    (a) General. Banks must maintain at least the minimum leverage 
capital requirement set forth in this section. The capital standards in 
this part are the minimum acceptable for banks whose overall financial 
condition is fundamentally sound, which are well-managed and which have 
no material or significant financial weaknesses. Thus, the FDIC is not 
precluded from requiring an institution to maintain a higher capital 
level based on the institution's particular risk profile. Where the FDIC 
determines that the financial history or condition, managerial resources 
and/or the future earnings prospects of a bank are not adequate, or 
where a bank has sizable off-balance sheet or funding risks, significant 
risks from concentrations of credit or nontraditional activities, 
excessive interest rate risk exposure, or a significant volume of assets 
classified substandard, doubtful or loss or otherwise criticized, the 
FDIC will take these other factors into account in analyzing the bank's 
capital adequacy and may determine that the minimum amount of capital 
for that bank is greater than the minimum standards stated in this 
section. These same criteria will apply to any insured depository 
institution making an application to the FDIC that requires the FDIC to 
consider the adequacy of the institution's capital structure.
    (b) Minimum leverage capital requirement. (1) The minimum leverage 
capital requirement for a bank (or an insured depository institution 
making application to the FDIC) shall consist of a ratio of Tier 1 
capital to total assets of not less than 3 percent if the FDIC 
determines that the institution is not anticipating or experiencing 
significant growth and has well-diversified risk, including no undue 
interest rate risk exposure, excellent asset quality, high liquidity, 
good earnings and in general is considered a strong banking 
organization, rated composite 1 under the Uniform Financial Institutions 
Rating System (the CAMEL rating system) established by the Federal 
Financial Institutions Examination Council.
    (2) For all but the most highly-rated institutions meeting the 
conditions set forth in paragraph (b)(1) of this section, the minimum 
leverage capital requirement for a bank (or for an insured depository 
institution making an application to the FDIC) shall be 3 percent plus 
an additional cushion of at least 100 to 200 basis points and therefore 
shall consist of a ratio of Tier 1 capital to total assets of not less 
than 4 percent.
    (c) Insured depository institutions with less than the minimum 
leverage capital requirement. (1) A bank (or an insured depository 
institution making an application to the FDIC) operating with less

[[Page 154]]

than the minimum leverage capital requirement does not have adequate 
capital and therefore has inadequate financial resources.
    (2) Any insured depository institution operating with an inadequate 
capital structure, and therefore inadequate financial resources, will 
not receive approval for an application requiring the FDIC to consider 
the adequacy of its capital structure or its financial resources.
    (3) As required under Sec. 325.104(a)(1) of this part, a bank must 
file a written capital restoration plan with the appropriate FDIC 
regional director within 45 days of the date that the bank receives 
notice or is deemed to have notice that the bank is undercapitalized, 
significantly undercapitalized or critically undercapitalized, unless 
the FDIC notifies the bank in writing that the plan is to be filed 
within a different period.
    (4) In any merger, acquisition or other type of business combination 
where the FDIC must give its approval, where it is required to consider 
the adequacy of the financial resources of the existing and proposed 
institutions, and where the resulting entity is either insured by the 
FDIC or not otherwise federally insured, approval will not be granted 
when the resulting entity does not meet the minimum leverage capital 
requirement.
    (d) Exceptions. Notwithstanding the provisions of paragraphs (a), 
(b) and (c) of this section:
    (1) The FDIC, in its discretion, may approve an application pursuant 
to the Federal Deposit Insurance Act where it is required to consider 
the adequacy of capital if it finds that such approval must be taken to 
prevent the closing of a depository institution or to facilitate the 
acquisition of a closed depository institution, or, when severe 
financial conditions exist which threaten the stability of an insured 
depository institution or of a significant number of depository 
institutions insured by the FDIC or of insured depository institutions 
possessing significant financial resources, such action is taken to 
lessen the risk to the FDIC posed by an insured depository institution 
under such threat of instability.
    (2) The FDIC, in its discretion, may approve an application pursuant 
to the Federal Deposit Insurance Act where it is required to consider 
the adequacy of capital or the financial resources of the insured 
depository institution where it finds that the applicant has committed 
to and is in compliance with a reasonable plan to meet its minimum 
leverage capital requirements within a reasonable period of time.

(Approved by the Office of Management and Budget under control number 
3064-0075 for use through December 31, 1993)

[56 FR 10162, Mar. 11, 1991, as amended at 58 FR 8219, Feb. 12, 1993; 59 
FR 64564, Dec. 15, 1994; 60 FR 45609, Aug. 31, 1995; 62 FR 55493, Oct. 
24, 1997]



Sec. 325.4  Inadequate capital as an unsafe or unsound practice or condition.

    (a) General. As a condition of federal deposit insurance, all 
insured depository institutions must remain in a safe and sound 
condition.
    (b) Unsafe or unsound practice. Any bank which has less than its 
minimum leverage capital requirement is deemed to be engaged in an 
unsafe or unsound practice pursuant to section 8(b)(1) and/or 8(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(1) and/or 1818(c)). 
Except that such a bank which has entered into and is in compliance with 
a written agreement with the FDIC or has submitted to the FDIC and is in 
compliance with a plan approved by the FDIC to increase its Tier 1 
leverage capital ratio to such level as the FDIC deems appropriate and 
to take such other action as may be necessary for the bank to be 
operated so as not to be engaged in such an unsafe or unsound practice 
will not be deemed to be engaged in an unsafe or unsound practice 
pursuant to section 8(b)(1) and/or 8(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1818(b)(1) and/or 1818(c)) on account of its capital 
ratios. The FDIC is not precluded from taking section 8(b)(1), section 
8(c) or any other enforcement action against a bank with capital above 
the minimum requirement if the specific circumstances deem such action 
to be appropriate. Under the conditions set forth in section 8(t) of the 
Federal Deposit Insurance Act (12 U.S.C. 1818(t)), the FDIC also may 
take section 8(b)(1) and/or 8(c)

[[Page 155]]

enforcement action against any savings association that is deemed to be 
engaged in an unsafe or unsound practice on account of its inadequate 
capital structure.
    (c) Unsafe or unsound condition. Any insured depository institution 
with a ratio of Tier 1 capital to total assets that is less than two 
percent is deemed to be operating in an unsafe or unsound condition 
pursuant to section 8(a) of the Federal Deposit Insurance Act (12 U.S.C. 
1818(a)).
    (1) A bank with a ratio of Tier 1 capital to total assets of less 
than two percent which has entered into and is in compliance with a 
written agreement with the FDIC (or any other insured depository 
institution with a ratio of Tier 1 capital to total assets of less than 
two percent which has entered into and is in compliance with a written 
agreement with its primary federal regulator and to which agreement the 
FDIC is a party) to increase its Tier 1 leverage capital ratio to such 
level as the FDIC deems appropriate and to take such other action as may 
be necessary for the insured depository institution to be operated in a 
safe and sound manner, will not be subject to a proceeding by the FDIC 
pursuant to 12 U.S.C. 1818(a) on account of its capital ratios.
    (2) An insured depository institution with a ratio of Tier 1 capital 
to total assets that is equal to or greater than two percent may be 
operating in an unsafe or unsound condition. The FDIC is not precluded 
from bringing an action pursuant to 12 U.S.C. 1818(a) where an insured 
depository institution has a ratio of Tier 1 capital to total assets 
that is equal to or greater than two percent.
[56 FR 10162, Mar. 11, 1991]



Sec. 325.5  Miscellaneous.

    (a) Intangible assets. Any intangible assets that were explicitly 
approved by the FDIC as part of the bank's regulatory capital on a 
specific case basis will be included in capital under the terms and 
conditions that were approved by the FDIC, provided that the intangible 
asset is being amortized over a period not to exceed 15 years or its 
estimated useful life, whichever is shorter. However, pursuant to 
section 18(n) of the Federal Deposit Insurance Act (12 U.S.C. 1828(n)), 
an unidentifiable intangible asset such as goodwill, if acquired after 
April 12, 1989, cannot be included in calculating regulatory capital 
under this part.
    (b) Reservation of authority. Notwithstanding the definition of Tier 
1 capital in Sec. 325.2(t) of this subpart and the risk-based capital 
definitions of Tier 1 and Tier 2 capital in appendix A to this subpart, 
the Director of the Division of Supervision may, if the Director finds a 
newly developed or modified capital instrument or a particular balance 
sheet entry or account to be the functional equivalent of a component of 
Tier 1 or Tier 2 capital, permit one or more insured depository 
institutions to include all or a portion of such instrument, entry, or 
account as Tier 1 or Tier 2 capital, permanently, or on a temporary 
basis, for purposes of this part. Similarly, the Director of the 
Division of Supervision may, if the Director finds that a particular 
Tier 1 or Tier 2 capital component or balance sheet entry or account has 
characteristics or terms that diminish its contribution to an insured 
depository institution's ability to absorb losses, require the deduction 
of all or a portion of such component, entry, or account from Tier 1 or 
Tier 2 capital.
    (c) Securities subsidiary. For purposes of this part, any securities 
subsidiary subject to 12 CFR 337.4 shall not be consolidated with its 
bank parent and any investment therein shall be deducted from the bank 
parent's Tier 1 capital and total assets.
    (d) Depository institution subsidiary. Any domestic depository 
institution subsidiary that is not consolidated in the ``Reports of 
Condition and Income'' (Call Report) of its insured parent bank shall be 
consolidated with the insured parent bank for purposes of this part. The 
financial statements of the subsidiary that are to be used for this 
consolidation must be prepared in the same manner as the ``Reports of 
Condition and Income'' (Call Report). A domestic depository institution 
subsidiary of a savings association shall be consolidated for purposes 
of this part if such consolidation also is required pursuant to the 
capital requirements of

[[Page 156]]

the association's primary federal regulator.
    (e) Restrictions relating to capital components. To qualify as Tier 
1 capital under this part or Tier 1 or Tier 2 capital under appendix A 
to this part, a capital instrument must not contain or be subject to any 
conditions, covenants, terms, restrictions, or provisions that are 
inconsistent with safe and sound banking practices. A condition, 
covenant, term, restriction, or provision is inconsistent with safe and 
sound banking practices if it:
    (1) Unduly interferes with the ability of the issuer to conduct 
normal banking operations;
    (2) Results in significantly higher dividends or interest payments 
in the event of deterioration in the financial condition of the issuer;
    (3) Impairs the ability of the issuer to comply with statutory or 
regulatory requirements regarding the disposition of assets or 
incurrence of additional debt; or
    (4) Limits the ability of the FDIC or a similar regulatory authority 
to take any necessary action to resolve a problem bank or failing bank 
situation.

Other conditions and covenants that are not expressly listed in 
paragraphs (e)(1) through (e)(4) of this section also may be 
inconsistent with safe and sound banking practices.
    (f) Treatment of mortgage servicing rights and purchased credit card 
relationships. For purposes of determining Tier 1 capital under this 
part, mortgage servicing rights and purchased credit card relationships 
will be deducted from assets and from equity capital to the extent that 
the mortgage servicing rights and purchased credit card relationships do 
not meet the conditions, limitations, and restrictions described in this 
section.
    (1) Market valuations. A valuation of the estimated fair market 
value of mortgage servicing rights and purchased credit card 
relationships shall be performed at least quarterly. The quarterly 
market valuation shall include adjustments for any significant changes 
in the original valuation assumptions, including changes in prepayment 
estimates or attrition rates. The valuation shall be based on an 
analysis of the current fair market value of the mortgage servicing 
rights and purchased credit card relationships, determined by applying 
an appropriate market discount rate to the net cash flows expected to be 
generated from the intangible assets. The FDIC in its discretion may 
require independent market valuations on a case-by-case basis where it 
is deemed appropriate for safety and soundness purposes.
    (2) Market value limitation. For purposes of calculating Tier 1 
capital under this part (but not for financial statement purposes), the 
balance sheet assets for mortgage servicing rights and purchased credit 
card relationships will be reduced to an amount equal to the lesser of:
    (i) 90 percent of the fair market value of the intangible assets, 
determined in accordance with paragraph (f)(1) of this section; or
    (ii) 100 percent of the remaining unamortized book value of the 
intangible assets, determined in accordance with the instructions for 
the preparation of Consolidated Reports of Condition and Income (Call 
Reports).
    (3) Tier 1 capital limitation. The maximum allowable amount of 
mortgage servicing rights and purchased credit care relationships, in 
the aggregate, will be limited to the lesser of:
    (i) Fifty percent of the amount of Tier 1 capital that exists before 
the deduction of any disallowed mortgage servicing rights, any 
disallowed purchased credit card relationships, and any disallowed 
deferred tax assets; or
    (ii) The amount of mortgage servicing rights and purchased credit 
card relationships, and any disallowed deferred tax assets determined in 
accordance with paragraph (f)(2) of this section.
    (4) Purchased credit card relationships limitation. In addition to 
the aggregate limitation on mortgage servicing rights and purchased 
credit card relationships set forth in paragraph (f)(3) of this section, 
a sublimit will apply to purchased credit card relationships. The 
maximum allowable amount of purchased credit card relationships will be 
limited to the lesser of:
    (i) Twenty-five percent of the amount of Tier 1 capital that exists 
before the deduction of any disallowed mortgage

[[Page 157]]

servicing rights, any disallowed purchased credit card relationships, 
and any disallowed deferred tax assets; or
    (ii) The amount of purchased credit card relationships determined in 
accordance with paragraph (f)(2) of this section.
    (g) Treatment of deferred tax assets. For purposes of calculating 
Tier 1 capital under this part (but not for financial statement 
purposes), deferred tax assets are subject to the conditions, 
limitations, and restrictions described in this section.
    (1) Deferred tax assets that are dependent upon future taxable 
income. These assets are:
    (i) Deferred tax assets arising from deductible temporary 
differences that exceed the amount of taxes previously paid that could 
be recovered through loss carrybacks if existing temporary differences 
(both deductible and taxable and regardless of where the related 
deferred tax effects are reported on the balance sheet) fully reverse at 
the calendar quarter-end date; and
    (ii) Deferred tax assets arising from operating loss and tax credit 
carryforwards.
    (2) Tier 1 capital limitations. (i) The maximum allowable amount of 
deferred tax assets that are dependent upon future taxable income, net 
of any valuation allowance for deferred tax assets, will be limited to 
the lesser of:
    (A) The amount of deferred tax assets that are dependent upon future 
taxable income that is expected to be realized within one year of the 
calendar quarter-end date, based on projected future taxable income for 
that year; or
    (B) Ten percent of the amount of Tier 1 capital that exists before 
the deduction of any disallowed mortgage servicing rights, any 
disallowed purchased credit card relationships, and any disallowed 
deferred tax assets.
    (ii) For purposes of this limitation, all existing temporary 
differences should be assumed to fully reverse at the calendar quarter-
end date. The recorded amount of deferred tax assets that are dependent 
upon future taxable income, net of any valuation allowance for deferred 
tax assets, in excess of this limitation will be deducted from assets 
and from equity capital for purposes of determining Tier 1 capital under 
this part. The amount of deferred tax assets that can be realized from 
taxes paid in prior carryback years and from the reversal of existing 
taxable temporary differences generally would not be deducted from 
assets and from equity capital. However, notwithstanding the above, the 
amount of carryback potential that may be considered in calculating the 
amount of deferred tax assets that a member of a consolidated group (for 
tax purposes) may include in Tier 1 capital may not exceed the amount 
which the member could reasonably expect to have refunded by its parent.
    (3) Projected future taxable income. Projected future taxable income 
should not include net operating loss carryforwards to be used within 
one year of the most recent calendar quarter-end date or the amount of 
existing temporary differences expected to reverse within that year. 
Projected future taxable income should include the estimated effect of 
tax planning strategies that are expected to be implemented to realize 
tax carryforwards that will otherwise expire during that year. Future 
taxable income projections for the current fiscal year (adjusted for any 
significant changes that have occurred or are expected to occur) may be 
used when applying the capital limit at an interim calendar quarter-end 
date rather then preparing a new projection each quarter.
    (4) Unrealized holding gains and losses on available-for-sale debt 
securities. The deferred tax effects of any unrealized holding gains and 
losses on available-for-sale debt securities may be excluded from the 
determination of the amount of deferred tax assets that are dependent 
upon future taxable income and the calculation of the maximum allowable 
amount of such assets. If these deferred tax effects are excluded, this 
treatment must be followed consistently over time.
    (5) Intangible assets acquired in nontaxable purchase business 
combinations. A deferred tax liability that is specifically related to 
an intangible asset (other than mortgage servicing rights and purchased 
credit card relationships) acquired in a nontaxable purchase business 
combination may be netted against this intangible asset. Only the net 
amount of the intangible

[[Page 158]]

asset must be deducted from Tier 1 capital. When a deferred tax 
liability is netted in this manner, the taxable temporary difference 
that gives rise to this deferred tax liability must be excluded from 
existing taxable temporary differences when determining the amount of 
deferred tax assets that are dependent upon future taxable income and 
calculating the maximum allowable amount of such assets.
[56 FR 10163, Mar. 11, 1991, as amended at 57 FR 7647, Mar. 4, 1992; 58 
FR 6369, Jan. 28, 1993; 58 FR 8219, Feb. 12, 1993; 60 FR 8187, Feb. 13, 
1995; 60 FR 39232, Aug. 1, 1995]



Sec. 325.6  Issuance of directives.

    (a) General. A directive is a final order issued to a bank that 
fails to maintain capital at or above the minimum leverage capital 
requirement as set forth in Secs. 325.3 and 325.4. A directive issued 
pursuant to this section, including a plan submitted under a directive, 
is enforceable in the same manner and to the same extent as a final 
cease-and-desist order issued under 12 U.S.C. 1818(b).
    (b) Issuance of directives. If a bank is operating with less than 
the minimum leverage capital requirement established by this regulation, 
the Board of Directors, or its designee(s), may issue and serve upon any 
insured state nonmember bank a directive requiring the bank to restore 
its capital to the minimum leverage capital requirement within a 
specified time period. The directive may require the bank to submit to 
the appropriate FDIC regional director, or other specified official, for 
review and approval, a plan describing the means and timing by which the 
bank shall achieve the minimum leverage capital requirement. After the 
FDIC has approved the plan, the bank may be required under the terms of 
the directive to adhere to and monitor compliance with the plan. The 
directive may be issued during the course of an examination of the bank, 
or at any other time that the FDIC deems appropriate, if the bank is 
found to be operating with less than the minimum leverage capital 
requirement.
    (c) Notice and opportunity to respond to issuance of a directive. 
(1) If the FDIC makes an initial determination that a directive should 
be issued to a bank pursuant to paragraph (b) of this section, the FDIC, 
through the appropriate designated official(s), shall serve written 
notification upon the bank of its intent to issue a directive. The 
notice shall include the current Tier 1 leverage capital ratio, the 
basis upon which said ratio was calculated, the proposed capital 
injection, the proposed date for achieving the minimum leverage capital 
requirement and any other relevant information concerning the decision 
to issue a directive. When deemed appropriate, specific requirements of 
a proposed plan for meeting the minimum leverage capital requirement may 
be included in the notice.
    (2) Within 14 days of receipt of notification, the bank may file 
with the appropriate designated FDIC official(s) a written response, 
explaining why the directive should not be issued, seeking modification 
of its terms, or other appropriate relief. The bank's response shall 
include any information, mitigating circumstances, documentation or 
other relevant evidence which supports its position, and may include a 
plan for attaining the minimum leverage capital requirement.
    (3) After considering the bank's response, the appropriate 
designated FDIC official(s) shall serve upon the bank a written 
determination addressing the bank's response and setting forth the 
FDIC's findings and conclusions in support of any decision to issue or 
not to issue a directive. The directive may be issued as originally 
proposed or in modified form. The directive may order the bank to:
    (i) Achieve the minimum leverage capital requirement established by 
this regulation by a certain date;
    (ii) Submit for approval and adhere to a plan for achieving the 
minimum leverage capital requirement;
    (iii) Take other action as is necessary to achieve the minimum 
leverage capital requirement; or
    (iv) A combination of the above actions.

If a directive is to be issued, it may be served upon the bank along 
with the final determination.
    (4) Any bank, upon a change in circumstances, may request the FDIC 
to reconsider the terms of a directive and may propose changes in the 
plan under

[[Page 159]]

which it is operating to meet the minimum leverage capital requirement. 
The directive and plan continue in effect while such request is pending 
before the FDIC.
    (5) All papers filed with the FDIC must be postmarked or received by 
the appropriate designated FDIC official(s) within the prescribed time 
limit for filing.
    (6) Failure by the bank to file a written response to notification 
of intent to issue a directive within the specified time period shall 
constitute consent to the issuance of such directive.
    (d) Enforcement of a directive. (1) Whenever a bank fails to follow 
the directive or to submit or adhere to its capital adequacy plan, the 
FDIC may seek enforcement of the directive in the appropriate United 
States district court, pursuant to 12 U.S.C. 3907(b)(2)(B)(ii), in the 
same manner and to the same extent as if the directive were a final 
cease-and-desist order. In addition to enforcement of the directive, the 
FDIC may seek assessment of civil money penalties for violation of the 
directive against any bank, any officer, director, employee, agent, or 
other person participating in the conduct of the affairs of the bank, 
pursuant to 12 U.S.C. 3909(d).
    (2) The directive may be issued separately, in conjunction with, or 
in addition to, any other enforcement mechanisms available to the FDIC, 
including cease-and-desist orders, orders of correction, the approval or 
denial of applications, or any other actions authorized by law. In 
addition to addressing a bank's minimum leverage capital requirement, 
the capital directive may also address minimum risk-based capital 
requirements that are to be maintained and calculated in accordance with 
appendix A to this part.
[56 FR 10164, Mar. 11, 1991]



                   Subpart B--Prompt Corrective Action

    Source:  57 FR 44900, Sept. 29, 1992, unless otherwise noted.



Sec. 325.101  Authority, purpose, scope, other supervisory authority, and disclosure of capital categories.

    (a) Authority. This subpart is issued by the FDIC pursuant to 
section 38 (section 38) of the Federal Deposit Insurance Act (FDI Act), 
as added by section 131 of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 (Pub. L. 102-242, 105 Stat. 2236 (1991)) (12 
U.S.C. 1831o).
    (b) Purpose. Section 38 of the FDI Act establishes a framework of 
supervisory actions for insured depository institutions that are not 
adequately capitalized. The principal purpose of this subpart is to 
define, for FDIC-insured state-chartered nonmember banks, the capital 
measures and capital levels, and for insured branches of foreign banks, 
comparable asset-based measures and levels, that are used for 
determining the supervisory actions authorized under section 38 of the 
FDI Act. This subpart also establishes procedures for submission and 
review of capital restoration plans and for issuance and review of 
directives and orders pursuant to section 38.
    (c) Scope. This subpart implements the provisions of section 38 of 
the FDI Act as they apply to FDIC-insured state-chartered nonmember 
banks and insured branches of foreign banks for which the FDIC is the 
appropriate Federal banking agency. Certain of these provisions also 
apply to officers, directors and employees of those insured 
institutions. In addition, certain provisions of this subpart apply to 
all insured depository institutions that are deemed critically 
undercapitalized.
    (d) Other supervisory authority. Neither section 38 nor this subpart 
in any way limits the authority of the FDIC under any other provision of 
law to take supervisory actions to address unsafe or unsound practices, 
deficient capital levels, violations of law, unsafe or unsound 
conditions, or other practices. Action under section 38 of the FDI Act 
and this subpart may be taken independently of, in conjunction with,

[[Page 160]]

or in addition to any other enforcement action available to the FDIC, 
including issuance of cease and desist orders, capital directives, 
approval or denial of applications or notices, assessment of civil money 
penalties, or any other actions authorized by law.
    (e) Disclosure of capital categories. The assignment of a bank or 
insured branch under this subpart within a particular capital category 
is for purposes of implementing and applying the provisions of section 
38. Unless permitted by the FDIC or otherwise required by law, no bank 
may state in any advertisement or promotional material its capital 
category under this subpart or that the FDIC or any other federal 
banking agency has assigned the bank to a particular capital category.



Sec. 325.102  Notice of capital category.

    (a) Effective date of determination of capital category. A bank 
shall be deemed to be within a given capital category for purposes of 
section 38 of the FDI Act and this subpart as of the date the bank is 
notified of, or is deemed to have notice of, its capital category, 
pursuant to paragraph (b) of this section.
    (b) Notice of capital category. A bank shall be deemed to have been 
notified of its capital levels and its capital category as of the most 
recent date:
    (1) A Consolidated Report of Condition and Income (Call Report) is 
required to be filed with the FDIC;
    (2) A final report of examination is delivered to the bank; or
    (3) Written notice is provided by the FDIC to the bank of its 
capital category for purposes of section 38 of the FDI Act and this 
subpart or that the bank's capital category has changed as provided in 
Sec. 325.103(d).
    (c) Adjustments to reported capital levels and capital category--(1) 
Notice of adjustment by bank. A bank shall provide the appropriate FDIC 
regional director with written notice that an adjustment to the bank's 
capital category may have occurred no later than 15 calendar days 
following the date that any material event has occurred that would cause 
the bank to be placed in a lower capital category from the category 
assigned to the bank for purposes of section 38 and this subpart on the 
basis of the bank's most recent Call Report or report of examination.
    (2) Determination by the FDIC to change capital category. After 
receiving notice pursuant to paragraph (c)(1) of this section, the FDIC 
shall determine whether to change the capital category of the bank and 
shall notify the bank of the FDIC's determination.



Sec. 325.103  Capital measures and capital category definitions.

    (a) Capital measures. For purposes of section 38 and this subpart, 
the relevant capital measures shall be:
    (1) The total risk-based capital ratio;
    (2) The Tier 1 risk-based capital ratio; and
    (3) The leverage ratio.
    (b) Capital categories. For purposes of section 38 and this subpart, 
a bank shall be deemed to be:
    (1) Well capitalized if the bank:
    (i) Has a total risk-based capital ratio of 10.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 6.0 percent or 
greater; and
    (iii) Has a leverage ratio of 5.0 percent or greater; and
    (iv) Is not subject to any written agreement, order, capital 
directive, or prompt corrective action directive issued by the FDIC 
pursuant to section 8 of the FDI Act (12 U.S.C. 1818), the International 
Lending Supervision Act of 1983 (12 U.S.C. 3907), or section 38 of the 
FDI Act (12 U.S.C. 1831o), or any regulation thereunder, to meet and 
maintain a specific capital level for any capital measure.
    (2) Adequately capitalized if the bank:
    (i) Has a total risk-based capital ratio of 8.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 4.0 percent or 
greater; and
    (iii) Has:
    (A) A leverage ratio of 4.0 percent or greater; or
    (B) A leverage ratio of 3.0 percent or greater if the bank is rated 
composite 1 under the CAMEL rating system in the most recent examination 
of the bank and is not experiencing or anticipating significant growth; 
and
    (iv) Does not meet the definition of a well capitalized bank.
    (3) Undercapitalized if the bank:
    (i) Has a total risk-based capital ratio that is less than 8.0 
percent; or

[[Page 161]]

    (ii) Has a Tier 1 risk-based capital ratio that is less than 4.0 
percent; or
    (iii)(A) Except as provided in paragraph (b)(3)(iii)(B) of this 
section, has a leverage ratio that is less than 4.0 percent; or
    (B) Has a leverage ratio that is less than 3.0 percent if the bank 
is rated composite 1 under the CAMEL rating system in the most recent 
examination of the bank and is not experiencing or anticipating 
significant growth.
    (4) Significantly undercapitalized if the bank has:
    (i) A total risk-based capital ratio that is less than 6.0 percent; 
or
    (ii) A Tier 1 risk-based capital ratio that is less than 3.0 
percent; or
    (iii) A leverage ratio that is less than 3.0 percent.
    (5) Critically undercapitalized if the insured depository 
institution has a ratio of tangible equity to total assets that is equal 
to or less than 2.0 percent.
    (c) Capital categories for insured branches of foreign banks. For 
purposes of the provisions of section 38 and this subpart, a insured 
branch of a foreign bank shall be deemed to be:
    (1) Well capitalized if the insured branch:
    (i) Maintains the pledge of assets required under 12 CFR 346.19; and
    (ii) Maintains the eligible assets prescribed under 12 CFR 346.20 at 
108 percent or more of the preceding quarter's average book value of the 
insured branch's third-party liabilities; and
    (iii) Has not received written notification from:
    (A) The OCC to increase its capital equivalency deposit pursuant to 
12 CFR 28.6(a), or to comply with asset maintenance requirements 
pursuant to 12 CFR 28.9; or
    (B) The FDIC to pledge additional assets pursuant to 12 CFR 346.19 
or to maintain a higher ratio of eligible assets pursuant to 12 CFR 
346.20.
    (2) Adequately capitalized if the insured branch:
    (i) Maintains the pledge of assets required under 12 CFR 346.19; and
    (ii) Maintains the eligible assets prescribed under 12 CFR 346.20 at 
106 percent or more of the preceding quarter's average book value of the 
insured branch's third-party liabilities; and
    (iii) Does not meet the definition of a well capitalized insured 
branch.
    (3) Undercapitalized if the insured branch:
    (i) Fails to maintain the pledge of assets required under 12 CFR 
346.19; or
    (ii) Fails to maintain the eligible assets prescribed under 12 CFR 
346.20 at 106 percent or more of the preceding quarter's average book 
value of the insured branch's third-party liabilities.
    (4) Significantly undercapitalized if it fails to maintain the 
eligible assets prescribed under 12 CFR 346.20 at 104 percent or more of 
the preceding quarter's average book value of the insured branch's 
third-party liabilities.
    (5) Critically undercapitalized if the insured depository 
institution fails to maintain the eligible assets prescribed under 12 
CFR 346.20 at 102 percent or more of the preceding quarter's average 
book value of the insured branch's third-party liabilities.
    (d) Reclassifications based on supervisory criteria other than 
capital. The FDIC may reclassify a well capitalized bank as adequately 
capitalized and may require an adequately capitalized bank or an 
undercapitalized bank to comply with certain mandatory or discretionary 
supervisory actions as if the bank were in the next lower capital 
category (except that the FDIC may not reclassify a significantly 
undercapitalized bank as critically undercapitalized) (each of these 
actions are hereinafter referred to generally as ``reclassifications'') 
in the following circumstances:
    (1) Unsafe or unsound condition. The FDIC has determined, after 
notice and opportunity for hearing pursuant to Sec. 308.202(a) of this 
chapter, that the bank is in unsafe or unsound condition; or
    (2) Unsafe or unsound practice. The FDIC has determined, after 
notice and opportunity for hearing pursuant to Sec. 308.202(a) of this 
chapter, that, in the most recent examination of the bank, the bank 
received and has not corrected a less-than-satisfactory rating for any 
of the categories of asset quality, management, earnings, or liquidity.

[[Page 162]]



Sec. 325.104  Capital restoration plans.

    (a) Schedule for filing plan--(1) In general. A bank shall file a 
written capital restoration plan with the appropriate FDIC regional 
director within 45 days of the date that the bank receives notice or is 
deemed to have notice that the bank is undercapitalized, significantly 
undercapitalized, or critically undercapitalized, unless the FDIC 
notifies the bank in writing that the plan is to be filed within a 
different period. An adequately capitalized bank that has been required 
pursuant to Sec. 325.103(d) of this subpart to comply with supervisory 
actions as if the bank were undercapitalized is not required to submit a 
capital restoration plan solely by virtue of the reclassification.
    (2) Additional capital restoration plans. Notwithstanding paragraph 
(a)(1) of this section, a bank that has already submitted and is 
operating under a capital restoration plan approved under section 38 and 
this subpart is not required to submit an additional capital restoration 
plan based on a revised calculation of its capital measures or a 
reclassification of the institution under Sec. 325.103 unless the FDIC 
notifies the bank that it must submit a new or revised capital plan. A 
bank that is notified that it must submit a new or revised capital 
restoration plan shall file the plan in writing with the appropriate 
FDIC regional director within 45 days of receiving such notice, unless 
the FDIC notifies the bank in writing that the plan must be filed within 
a different period.
    (b) Contents of plan. All financial data submitted in connection 
with a capital restoration plan shall be prepared in accordance with the 
instructions provided on the Call Report, unless the FDIC instructs 
otherwise. The capital restoration plan shall include all of the 
information required to be filed under section 38(e)(2) of the FDI Act. 
A bank that is required to submit a capital restoration plan as a result 
of a reclassification of the bank pursuant to Sec. 325.103(d) of this 
subpart shall include a description of the steps the bank will take to 
correct the unsafe or unsound condition or practice. No plan shall be 
accepted unless it includes any performance guarantee described in 
section 38(e)(2)(C) of the FDI Act by each company that controls the 
bank.
    (c) Review of capital restoration plans. Within 60 days after 
receiving a capital restoration plan under this subpart, the FDIC shall 
provide written notice to the bank of whether the plan has been 
approved. The FDIC may extend the time within which notice regarding 
approval of a plan shall be provided.
    (d) Disapproval of capital plan. If a capital restoration plan is 
not approved by the FDIC, the bank shall submit a revised capital 
restoration plan within the time specified by the FDIC. Upon receiving 
notice that its capital restoration plan has not been approved, any 
undercapitalized bank (as defined in Sec. 325.103(b) of this subpart) 
shall be subject to all of the provisions of section 38 and this subpart 
applicable to significantly undercapitalized institutions. These 
provisions shall be applicable until such time as a new or revised 
capital restoration plan submitted by the bank has been approved by the 
FDIC.
    (e) Failure to submit capital restoration plan. A bank that is 
undercapitalized (as defined in Sec. 325.103(b) of this subpart) and 
that fails to submit a written capital restoration plan within the 
period provided in this section shall, upon the expiration of that 
period, be subject to all of the provisions of section 38 and this 
subpart applicable to significantly undercapitalized institutions.
    (f) Failure to implement capital restoration plan. Any 
undercapitalized bank that fails in any material respect to implement a 
capital restoration plan shall be subject to all of the provisions of 
section 38 and this subpart applicable to significantly undercapitalized 
institutions.
    (g) Amendment of capital restoration plan. A bank that has filed an 
approved capital restoration plan may, after prior written notice to and 
approval by the FDIC, amend the plan to reflect a change in 
circumstance. Until such time as a proposed amendment has been approved, 
the bank shall implement the capital restoration plan as approved prior 
to the proposed amendment.
    (h) Performance guarantee by companies that control a bank--(1) 
Limitation

[[Page 163]]

on liability--(i) Amount limitation. The aggregate liability under the 
guarantee provided under section 38 and this subpart for all companies 
that control a specific bank that is required to submit a capital 
restoration plan under this subpart shall be limited to the lesser of:
    (A) An amount equal to 5.0 percent of the bank's total assets at the 
time the bank was notified or deemed to have notice that the bank was 
undercapitalized; or
    (B) The amount necessary to restore the relevant capital measures of 
the bank to the levels required for the bank to be classified as 
adequately capitalized, as those capital measures and levels are defined 
at the time that the bank initially fails to comply with a capital 
restoration plan under this subpart.
    (ii) Limit on duration. The guarantee and limit of liability under 
section 38 and this subpart shall expire after the FDIC notifies the 
bank that it has remained adequately capitalized for each of four 
consecutive calendar quarters. The expiration or fulfillment by a 
company of a guarantee of a capital restoration plan shall not limit the 
liability of the company under any guarantee required or provided in 
connection with any capital restoration plan filed by the same bank 
after expiration of the first guarantee.
    (iii) Collection on guarantee. Each company that controls a given 
bank shall be jointly and severally liable for the guarantee for such 
bank as required under section 38 and this subpart, and the FDIC may 
require and collect payment of the full amount of that guarantee from 
any or all of the companies issuing the guarantee.
    (2) Failure to provide guarantee. In the event that a bank that is 
controlled by any company submits a capital restoration plan that does 
not contain the guarantee required under section 38(e)(2) of the FDI 
Act, the bank shall, upon submission of the plan, be subject to the 
provisions of section 38 and this subpart that are applicable to banks 
that have not submitted an acceptable capital restoration plan.
    (3) Failure to perform guarantee. Failure by any company that 
controls a bank to perform fully its guarantee of any capital plan shall 
constitute a material failure to implement the plan for purposes of 
section 38(f) of the FDI Act. Upon such failure, the bank shall be 
subject to the provisions of section 38 and this subpart that are 
applicable to banks that have failed in a material respect to implement 
a capital restoration plan.



Sec. 325.105  Mandatory and discretionary supervisory actions under section 38.

    (a) Mandatory supervisory actions--(1) Provisions applicable to all 
banks. All banks are subject to the restrictions contained in section 
38(d) of the FDI Act on payment of capital distributions and management 
fees.
    (2) Provisions applicable to undercapitalized, significantly 
undercapitalized, and critically undercapitalized banks. Immediately 
upon receiving notice or being deemed to have notice, as provided in 
Sec. 325.102 of this subpart, that the bank is undercapitalized, 
significantly undercapitalized, or critically undercapitalized, the bank 
shall become subject to the provisions of section 38 of the FDI Act:
    (i) Restricting payment of capital distributions and management fees 
(section 38(d));
    (ii) Requiring that the FDIC monitor the condition of the bank 
(section 38(e)(1));
    (iii) Requiring submission of a capital restoration plan within the 
schedule established in this subpart (section 38(e)(2));
    (iv) Restricting the growth of the bank's assets (section 38(e)(3)); 
and
    (v) Requiring prior approval of certain expansion proposals (section 
38(e)(4)).
    (3) Additional provisions applicable to significantly 
undercapitalized, and critically undercapitalized banks. In addition to 
the provisions of section 38 of the FDI Act described in paragraph 
(a)(2) of this section, immediately upon receiving notice or being 
deemed to have notice, as provided in Sec. 325.102 of this subpart, that 
the bank is significantly undercapitalized, or critically 
undercapitalized, or that the bank is subject to the provisions 
applicable to institutions that are significantly undercapitalized 
because the bank failed to

[[Page 164]]

submit or implement in any material respect an acceptable capital 
restoration plan, the bank shall become subject to the provisions of 
section 38 of the FDI Act that restrict compensation paid to senior 
executive officers of the institution (section 38(f)(4)).
    (4) Additional provisions applicable to critically undercapitalized 
institutions. (i) In addition to the provisions of section 38 of the FDI 
Act described in paragraphs (a)(2) and (a)(3) of this section, 
immediately upon receiving notice or being deemed to have notice, as 
provided in Sec. 325.102 of this subpart, that the insured depository 
institution is critically undercapitalized, the institution is 
prohibited from doing any of the following without the FDIC's prior 
written approval:
    (A) Entering into any material transaction other than in the usual 
course of business, including any investment, expansion, acquisition, 
sale of assets, or other similar action with respect to which the 
depository institution is required to provide notice to the appropriate 
Federal banking agency;
    (B) Extending credit for any highly leveraged transaction;
    (C) Amending the institution's charter or bylaws, except to the 
extent necessary to carry out any other requirement of any law, 
regulation, or order;
    (D) Making any material change in accounting methods;
    (E) Engaging in any covered transaction (as defined in section 
23A(b) of the Federal Reserve Act (12 U.S.C. 371c(b));
    (F) Paying excessive compensation or bonuses;
    (G) Paying interest on new or renewed liabilities at a rate that 
would increase the institution's weighted average cost of funds to a 
level significantly exceeding the prevailing rates of interest on 
insured deposits in the institution's normal market areas; and
    (H) Making any principal or interest payment on subordinated debt 
beginning 60 days after becoming critically undercapitalized except that 
this restriction shall not apply, until July 15, 1996, with respect to 
any subordinated debt outstanding on July 15, 1991, and not extended or 
otherwise renegotiated after July 15, 1991.
    (ii) In addition, the FDIC may further restrict the activities of 
any critically undercapitalized institution to carry out the purposes of 
section 38 of the FDI Act.
    (5) Exception for certain savings associations. The restrictions in 
paragraph (a)(4) of this section shall not apply, before July 1, 1994, 
to any insured savings association if:
    (i) The savings association had submitted a plan meeting the 
requirements of section 5(t)(6)(A)(ii) of the Home Owners' Loan Act (12 
U.S.C. 1464(t)(6)(A)(ii)) prior to December 19, 1991;
    (ii) The Director of OTS had accepted the plan prior to December 19, 
1991; and
    (iii) The savings association remains in compliance with the plan or 
is operating under a written agreement with the appropriate federal 
banking agency.
    (b) Discretionary supervisory actions. In taking any action under 
section 38 that is within the FDIC's discretion to take in connection 
with:
    (1) An insured depository institution that is deemed to be 
undercapitalized, significantly undercapitalized, or critically 
undercapitalized, or has been reclassified as undercapitalized, or 
significantly undercapitalized; or
    (2) An officer or director of such institution, the FDIC shall 
follow the procedures for issuing directives under Secs. 308.201 and 
308.203 of this chapter, unless otherwise provided in section 38 or this 
subpart.

    Appendix A to Part 325--Statement of Policy on Risk-Based Capital

    Capital adequacy is one of the critical factors that the FDIC is 
required to analyze when taking action on various types of applications 
and when conducting supervisory activities related to the safety and 
soundness of individual banks and the banking system. In view of this, 
the FDIC's Board of Directors has adopted part 325 of its regulations, 
which sets forth (1) minimum standards of capital adequacy for insured 
state nonmember banks and (2) standards for determining when an insured 
bank is in an unsafe or unsound condition by reason of the amount of its 
capital.
    This capital maintenance regulation was designed to establish, in 
conjunction with other Federal bank regulatory agencies, uniform capital 
standards for all federally-regulated banking organizations, regardless 
of

[[Page 165]]

size. The uniform capital standards were based on ratios of capital to 
total assets. While those leverage ratios have served as a useful tool 
for assessing capital adequacy, the FDIC believes there is a need for a 
capital measure that is more explicitly and systematically sensitive to 
the risk profiles of individual banks. As a result, the FDIC's Board of 
Directors has adopted this Statement of Policy on Risk-Based Capital to 
supplement the part 325 regulation. This statement of policy does not 
replace or eliminate the existing part 325 capital-to-total assets 
leverage ratios. Once the risk-based capital framework is implemented, 
the FDIC will consider whether the part 325 definitions of capital for 
leverage purposes and the minimum leverage ratios should be amended.
    The framework set forth in this statement of policy consists of (1) 
a definition of capital for risk-based capital purposes, (2) a system 
for calculating risk-weighted assets by assigning assets and off-balance 
sheet items to broad risk categories, and (3) a schedule, which includes 
transitional arrangements during a phase-in period, for achieving a 
minimum supervisory ratio of capital to risk weighted assets. A bank's 
risk-based capital ratio is calculated by dividing its qualifying total 
capital base (the numerator of the ratio) by its risk-weighted assets 
(the denominator).\1\ Table I outlines the definition of capital and 
provides a general explanation of how the risk-based capital ratio is 
calculated, Table II summarizes the risk weights and risk categories, 
and Table III sets forth the credit conversation factors for off-balance 
sheet items. Additional explanations of the capital definitions, the 
risk-weighted asset calculations, and the minimum risk-based capital 
ratio guidelines are provided in Sections I, II and III of this 
statement of policy.
---------------------------------------------------------------------------

    \1\ Period-end amounts, rather than average balances, normally will 
be used when calculating risk-based capital ratios. However, on a case-
by-case basis, ratios based on average balances may also be required if 
supervisory concerns render it appropriate.
---------------------------------------------------------------------------

    In addition, when certain banks that engage in trading activities 
calculate their risk-based capital ratio under this appendix A, they 
must also refer to appendix C of this part, which incorporates capital 
charges for certain market risks into the risk-based capital ratio. When 
calculating their risk-based capital ratio under this appendix A, such 
banks are required to refer to appendix C of this part for supplemental 
rules to determine qualifying and excess capital, calculate risk-
weighted assets, calculate market risk equivalent assets and add them to 
risk-weighted assets, and calculate risk-based capital ratios as 
adjusted for market risk.
    This statement of policy applies to all FDIC-insured state-chartered 
banks (excluding insured branches of foreign banks) that are not members 
of the Federal Reserve System, hereafter referred to as state nonmember 
banks, regardless of size, and to all circumstances in which the FDIC is 
required to evaluate the capital of a banking organization. Therefore, 
the risk-based capital framework set forth in this statement of policy 
will be used in the examination and supervisory process as well as in 
the analysis of applications that the FDIC is required to act upon.
    The risk-based capital ratio focuses principally on broad categories 
of credit risk, however, the ratio does not take account of many other 
factors that can affect a bank's financial condition. These factors 
include overall interest rate risk exposure, liquidity, funding and 
market risks; the quality and level of earnings; investment, loan 
portfolio, and other concentrations of credit risk, certain risks 
arising from nontraditional activities; the quality of loans and 
investments; the effectiveness of loan and investment policies; and 
management's overall ability to monitor and control financial and 
operating risks, including the risk presented by concentrations of 
credit and nontraditional activities. In addition to evaluating capital 
ratios, an overall assessment of capital adequacy must take account of 
each of these other factors, including, in particular, the level and 
severity of problem and adversely classified assets as well as a bank's 
interest rate risk as measured by the bank's exposure to declines in the 
economic value of its capital due to changes in interest rates. For this 
reason, the final supervisory judgment on a bank's capital adequacy may 
differ significantly from the conclusions that might be drawn solely 
from the absolute level of the bank's risk-based capital ratio.
    In light of these other considerations, banks generally are expected 
to operate above the minimum risk-based capital ratio. Banks 
contemplating significant expansion plans, as well as those institutions 
with high or inordinate levels of risk, should hold capital commensurate 
with the level and nature of the risks to which they are exposed.

        I. Definition of Capital for the Risk-Based Capital Ratio

    A bank's qualifying total capital base consists of two types of 
capital elements: core capital elements (Tier 1) and supplementary 
capital elements (Tier 2). To qualify as an element of Tier 1 or Tier 2 
capital, a capital instrument should not contain or be subject to any 
conditions, covenants, terms, restrictions, or provisions that are 
inconsistent with safe and sound banking practices.

[[Page 166]]

          A. The Components of Qualifying Capital (see Table I)

    1. Core capital elements (Tier 1) consists of:
--Common stockholders' equity capital (includes common stock and related 
surplus, undivided profits, disclosed capital reserves that represent a 
segregation of undivided profits, and foreign currency translation 
adjustments, less net unrealized holding losses on available-for-sale 
equity securities with readily determinable fair values);
--Noncumulative perpetual preferred stock,\2\ including any related 
surplus; and
---------------------------------------------------------------------------

    \2\ Preferred stock issues where the dividend is reset periodically 
based, in whole or in part, upon the bank's current credit standing, 
including but not limited to, auction rate, money market or remarketable 
preferred stock, are assigned to Tier 2 capital, regardless of whether 
the dividends are cumulative or noncumulative.
---------------------------------------------------------------------------

--Minority interests in the equity capital accounts of consolidated 
subsidiaries.

    At least 50 percent of the qualifying total capital base should 
consist of Tier 1 capital. Core (Tier 1) capital is defined as the sum 
of core capital elements \3\ minus all intangible assets other than 
mortgage servicing rights and purchased credit card relationships \4\ 
and minus any disallowed deferred tax assets.
---------------------------------------------------------------------------

    \3\ In addition to the core capital elements, Tier 1 may also 
include certain supplementary capital elements during the transition 
period subject to certain limitations set forth in section III of this 
statement of policy.
    \4\ An exception is allowed for intangible assets that are 
explicitly approved by the FDIC as part of the bank's regulatory capital 
on a specific case basis. These intangibles will be included in capital 
for risk-based capital purposes under the terms and conditions that are 
specifically approved by the FDIC.
---------------------------------------------------------------------------

    Although nonvoting common stock noncumulative perpetual preferred 
stock, and minority interests in the equity capital accounts of 
consolidated subsidiaries are normally included in Tier 1 capital, 
voting common stockholders' equity generally will be expected to be the 
dominant form of Tier 1 capital. Thus, banks should avoid undue reliance 
on nonvoting equity, preferred stock and minority interests.
    Although minority interests in consolidated subsidiaries are 
generally included in regulatory capital, exceptions to this general 
rule will be made if the minority interests fail to provide meaningful 
capital support to the consolidated bank. Such a situation could arise 
if the minority interests are entitled to a preferred claim on 
essentially low risk assets of the subsidiary. Similarly, although 
intangible assets in the form of mortgage servicing rights and purchased 
credit card relationships are generally recognized for risk-based 
capital purposes, the deduction of part or all of the mortgage servicing 
rights and purchased credit card relationships may be required if the 
carrying amounts of these rights are excessive in relation to their 
market value or the level of the bank's capital accounts. Mortgage 
servicing rights and purchased credit card relationships that do not 
meet the conditions, limitations and restrictions described in 12 CFR 
325.5(f) will not be recognized for risk-based capital purposes.
    2. Supplementary capital elements (Tier 2) consist of:

    --Allowances for loan and lease losses, up to a maximum of 1.25 
percent of risk-weighted assets;
    --Cumulative perpetual preferred stock, long-term preferred stock 
(original maturity of at least 20 years) and any related surplus;
    --Perpetual preferred stock (and any related surplus) where the 
dividend is reset periodically based, in whole or part, on the bank's 
current credit standing, regardless of whether the dividends are 
cumulative or noncumulative;
    --Hybrid capital instruments, including mandatory convertible debt 
securities; and
    --Term subordinated debt and intermediate-term preferred stock 
(original average maturity of five years or more) and any related 
surplus.

    The definition of supplementary capital does not include revaluation 
reserves or hidden reserves that represent unrealized appreciation on 
assets such as bank premises and equity securities. Although such 
reserves will not be explicitly recognized when calculating a bank's 
risk-based capital ratio, these reserves may be taken into account as 
additional factors when assessing a bank's overall capital adequacy.
    The maximum amount of Tier 2 capital that may be recognized for 
risk-based capital purposes is limited to 100 percent of Tier 1 capital 
(after any deductions for disallowed intangibles). In addition, the 
combined amount of term subordinated debt and intermediate-term 
preferred stock that may be treated as part of Tier 2 capital for risk-
based capital purposes is limited to 50 percent of Tier 1 capital. 
Amounts in excess of these limits may be issued but are not included in 
the calculation of the risk-based capital ratio.
    (a) Allowance for loan and lease losses. Allowances for loan and 
lease losses are reserves that have been established through a charge 
against earnings to absorb future losses on loans or lease financing 
receivables. Allowances for loan and lease losses

[[Page 167]]

exclude allocated transfer risk reserves, \5\ and reserves created 
against identified losses.
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    \5\ Allocated transfer risk reserves are reserves that have been 
established in accordance with section 905(a) of the International 
Lending Supervision Act of 1983 against certain assets whose value has 
been found by the U.S. supervisory authorities to have been 
significantly impaired by protracted transfer risk problems.
---------------------------------------------------------------------------

    This risk-based capital framework provides a phasedown during the 
transition period of the extent to which the allowance for loan and 
lease losses may be included in an institution's capital base. By year-
end 1990, the allowance for loan and lease losses, as an element of 
supplementary capital, may constitute no more than 1.5 percent of risk-
weighted assets and, by year-end 1992, no more than 1.25 percent of 
risk-weighted assets.\6\
---------------------------------------------------------------------------

    \6\ The amount of the allowance for loan and lease losses that may 
be included as a supplementary capital element is based on a percentage 
of gross risk-weighted assets. A bank may deduct reserves for loan and 
lease losses that are in excess of the amount permitted to be included 
in capital, as well as allocated transfer risk reserves, from gross 
risk-weighted assets when computing the denominator of the risk-based 
capital ratio.
---------------------------------------------------------------------------

    (b) Preferred stock. Perpetual preferred stock is defined as 
preferred stock that does not have a maturity date, that cannot be 
redeemed at the option of the holder, and that has no other provisions 
that will require future redemption of the issue. Long-term preferred 
stock includes limited-life preferred stock with an original maturity of 
20 years or more, provided that the stock cannot be redeemed at the 
option of the holder prior to maturity, except with the prior approval 
of the FDIC.
    Cumulative perpetual preferred stock and long-term preferred stock 
qualify for inclusion in supplementary capital provided that the 
instruments can absorb losses while the issuer operates as a going 
concern (a fundamental characteristic of equity capital) and provided 
the issuer has the option to defer payment of dividends on these 
instruments. Given these conditions, and the perpetual or long-term 
nature of the intruments, there is no limit on the amount of these 
preferred stock instruments that may be included with Tier 2 capital.
    Noncumulative perpetual preferred stock where the dividend is reset 
periodically based, in whole or in part, on the bank's current credit 
standing, including auction rate, money market, or remarketable 
preferred stock, are also assigned to Tier 2 capital without limit, 
provided the above conditions are met.
    (c) Hybrid capital instruments. Hybrid capital instruments include 
instruments that have certain characteristics of both debt and equity. 
In order to be included as supplementary capital elements, these 
instruments should meet the following criteria:
    (1) The instrument should be unsecured, subordinated to the claims 
of depositors and general creditors, and fully paid-up.
    (2) The instrument should not be redeemable at the option of the 
holder prior to maturity, except with the prior approval of the FDIC. 
This requirement implies that holders of such instruments may not 
accelerate the payment of principal except in the event of bankruptcy, 
insolvency, or reorganization.
    (3) The instrument should be available to participate in losses 
while the issuer is operating as a going concern. (Term subordinated 
debt would not meet this requirement.) To satisfy this requirement, the 
instrument should convert to common or perpetual preferred stock in the 
event that the sum of the undivided profits and capital surplus accounts 
of the issuer results in a negative balance.
    (4) The instrument should provide the option for the issuer to defer 
principal and interest payments if: (a) The issuer does not report a 
profit in the preceding annual period, defined as combined profits 
(i.e., net income) for the most recent four quarters, and (b) the issuer 
eliminates cash dividends on its common and preferred stock.
    Mandatory convertible debt securities, which are subordinated debt 
instruments that require the issuer to convert such instruments into 
common or perpetual preferred stock by a date at or before the maturity 
of the debt instruments, will qualify as hybrid capital instruments 
provided the maturity of these instruments is 12 years or less and the 
instruments meet the criteria set forth below for ``term subordinated 
debt.'' There is no limit on the amount of hybrid capital instruments 
that may be included within Tier 2 capital.
    (d) Term subordinated debt and intermediate-term preferred stock. 
The aggregate amount of term subordinated debt (excluding mandatory 
convertible debt securities) and intermediate-term preferred stock 
(including any related surplus) that may be treated as Tier 2 capital 
for risk-based capital purposes is limited to 50 percent of Tier 1 
capital. Term subordinated debt and intermediate-term preferred stock 
should have an original average maturity of at least five years to 
qualify as supplementary capital and should not be redeemable at the 
option of the holder prior to maturity, except with the prior approval 
of the FDIC. For state nonmember banks, a term subordinated debt 
instrument is an obligation other than a deposit obligation that:
    (1) Bears on its face, in boldface type, the following: This 
obligation is not a deposit

[[Page 168]]

and is not insured by the Federal Deposit Insurance Corporation;
    (2)(i) Has a maturity of at least five years; or
    (ii) In the case of an obligation or issue that provides for 
scheduled repayments of principal, has an average maturity of at least 
five years; provided that the Director of the Division of Supervision 
may permit the issuance of an obligation or issue with a shorter 
maturity or average maturity if the Director has determined that exigent 
circumstances require the issuance of such obligation or issue; provided 
further that the provisions of this paragraph I.A.2.(d)(2) shall not 
apply to mandatory convertible debt obligations or issues;
    (3) States express that the obligation:
    (i) Is subordinated and junior in right of payment to the issuing 
bank's obligations to its depositors and to the bank's other obligations 
to its general and secured creditors; and
    (ii) Is ineligible as collateral for a loan by the issuing bank;
    (4) Is unsecured;
    (5) States expressly that the issuing bank may not retire any part 
of its obligation without the prior written consent of the FDIC or other 
primary federal regulator; and
    (6) Includes, if the obligation is issued to a depository 
institution, a specific waiver of the right of offset by the lending 
depository institution.

Subordinated debt obligations issued prior to December 2, 1987 that 
satisfied the definition of the term ``subordinated note and debenture'' 
that was in effect prior to that date also will be deemed to be term 
subordinated debt for risk-based capital purposes. An optional 
redemption (``call'') provision in a subordinated debt instrument that 
is exercisable by the issuing bank in less than five years will not be 
deemed to constitute a maturity of less than five years, provided that 
the obligation otherwise has a stated contractual maturity of at least 
five years; the call is exercisable solely at the discretion or option 
of the issuing bank, and not at the discretion or option of the holder 
of the obligation; and the call is exercisable only with the express 
prior written consent of the FDIC under 12 U.S.C. 1828(i)(1) at the time 
early redemption or retirement is sought, and such consent has not been 
given in advance at the time of issuance of the obligation. Optional 
redemption provisions will be accorded similar treatment when 
determining the perpetual nature and/or maturity of preferred stock and 
other capital instruments.
    Discount of limited-life supplementary capital instruments. As a 
limited-life capital instrument approaches maturity, the instrument 
begins to take on charcteristics of a short-term obligation and becomes 
less like a component of capital. Therefore, for risk-based capital 
purposes, the outstanding amount of term subordinated debt and limited-
life preferred stock eligible for inclusion in capital will be adjusted 
downward, or discounted, as the instruments approach maturity. Each 
limited-life capital instrument will be discounted by reducing the 
outstanding amount of the capital instrument eligible for inclusion as 
supplementary capital by a fifth of the original amount (less 
redemptions) each year during the instrument's last five years before 
maturity. Such instruments, therefore, will have no capital value when 
they have a remaining maturity of less than a year.

            B. Deductions from Capital and Other Adjustments

    Certain assets are deducted from a bank's capital base for the 
purpose of calculating the numerator of the risk-based capital ratio.\7\ 
These assets include:
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    \7\ Any assets deducted from capital when computing the numerator of 
the risk-based capital ratio will also be excluded from risk-weighted 
assets when computing the denominator of the ratio.
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    (1) All intangible assets other than mortgage servicing rights and 
purchased credit card relationships.\8\ These disallowed intangibles are 
deducted from the core capital (Tier 1) elements.
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    \8\ In addition to mortgage servicing rights and purchased credit 
card relationships, certain other intangibles may be allowed if 
explicitly approved by the FDIC as part of the bank's regulatory capital 
on a specific case basis. In evaluating whether other types of 
intangibles should be recognized for regulatory capital purposes on a 
specific case basis, the FDIC will accord special attention to the 
general characteristics of the intangibles, including: (1) The 
separability of the intangible asset and the ability to sell it separate 
and apart from the bank or the bulk of the bank's assets, (2) the 
certainty that a readily identifiable stream of cash flows associated 
with the intangible asset can hold its value notwithstanding the future 
prospects of the bank, and (3) the existence of a market of sufficient 
depth to provide liquidity for the intangible asset.
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    (2) Investments in unconsolidated banking and finance 
subsidiaries.\9\ This includes any

[[Page 169]]

equity or debt capital investments in banking or finance subsidaries if 
the subsidiaries are not consolidated for regulatory capital 
requirements.\10\ Generally, these investments include equity and debt 
capital securities and any other instruments or commitments that are 
deemed to be capital of the subsidiary. These investments are deducted 
from the bank's total (Tier 1 plus Tier 2) capital base.
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    \9\ For risk-based capital purposes, these subsidiaries are 
generally defined as any company that is primarily engaged in banking or 
finance and in which the bank, either directly or indirectly, owns more 
than 50 percent of the outstanding voting stock but does not consolidate 
the company for regulatory capital purposes. In addition to investments 
in unconsolidated banking and finance subsidiaries, the FDIC may, on a 
case- by-case basis, deduct investments in associated companies or joint 
ventures, which are generally defined as any companies in which the 
bank, either directly or indirectly, owns 20 to 50 percent of the 
outstanding voting stock. Alternatively, the FDIC may, in certain cases, 
apply an appropriate risk-weighted capital charge against a bank's 
proportionate interest in the assets of associated companies and joint 
ventures. The definitions for subsidiaries, associated companies and 
joint ventures are contained in the instructions for the preparation of 
the Consolidated Reports of Condition and Income.
    \10\ Consolidation requirements for regulatory capital purposes 
generally follow the consolidation requirements set forth in the 
instructions for preparation of the consolidated Reports of Condition 
and Income. However, although investments in subsidiaries representing 
majority ownership in another Federally-insured depository institution 
are not consolidated for purposes of the consolidated Reports of 
Condition and Income that are filed by the parent bank, they are 
generally consolidated for purposes of determining FDIC regulatory 
capital requirements. Therefore, investments in these depository 
institution subsidiaries generally will not be deducted for risk-based 
capital purposes; rather, assets and liabilities of such subsidiaries 
will be consolidated with those of the parent bank when calculating the 
risk-based capital ratio. In addition, although securities subsidiaries 
established pursuant to 12 CFR 337.4 are consolidated for Report of 
Condition and Income purposes, they are not consolidated for regulatory 
capital purposes.
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    (3) Investments in securities subsidiaries established pursuant to 
12 CFR 337.4. The FDIC may also consider deducting investments in other 
subsidiaries, either on a case-by-case basis or, as with securities 
subsidiaries, based on the general characteristics or functional nature 
of the subsidiaries.
    (4) Reciprocal holdings of capital instruments of banks that 
represent intentional cross-holdings by the banks. These holdings are 
deducted from the bank's total capital base.
    (5) Deferred tax assets in excess of the limit set forth in 
Sec. 325.5(g). These disallowed deferred tax assets are deducted from 
the core capital (Tier 1) elements.
    On a case-by-case basis, and in conjunction with supervisory 
examinations, other deductions from capital may also be required, 
including any adjustments deemed appropriate for assets classified as 
loss.

            II. Procedures For Computing Risk-Weighted Assets

                          A. General Procedures

    Under the risk-based capital framework, a bank's balance sheet 
assets and credit equivalent amounts of off-balance sheet items are 
assigned to one of four broad risk categories according to the obligor 
or, if relevent, the guarantor or the nature of the collateral. The 
aggregate dollar amount in each category is then multiplied by the risk 
weight assigned to that category. The resulting weighted values from 
each of the four risk categories are added together and this sum is the 
risk-weighted assets total that, as adjusted.\11\ comprises the 
denominator of the risk-based capital ratio.
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    \11\ Any asset deducted from a bank's capital accounts when 
computing the numerator of the risk-based capital ratio will also be 
excluded from risk-weighted assets when calculating the denominator for 
the ratio.
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    The risk-weighted amounts for all off-balance sheet items are 
determined by a two-step process. First, the notional principal, or face 
value, amount of each off-balance sheet item generally is multiplied by 
a credit conversion factor to arrive at a balance sheet credit 
equivalent amount. Second, the credit equivalent amount generally is 
assigned to the appropriate risk category, like any balance sheet asset, 
according to the obligor or, if relevant, the guarantor or the nature of 
the collateral.

                         B. Other Considerations

    1. Indirect Holdings of Assets. Some of the assets on a bank's 
balance sheet may represent an indirect holding of a pool of assets; for 
example, mutual funds. An investment in shares of a mutual fund whose 
portfolio consists solely of various securities or money market 
instruments that, if held separately, would be assigned to different 
risk categories, generally is assigned to the risk category appropriate 
to the highest risk-weighted asset that the fund is permitted to hold in 
accordance with its stated investment objectives, but in no case to the 
zero percent risk category. If, in order to maintain a necessary degree 
of liquidity, a fund is permitted to hold an insignificant amount of its 
investments in short-term, highly liquid assets that are of superior 
credit quality but that do not qualify for a preferential risk weight, 
such assets may generally be disregarded in determining the risk 
category into which the bank's holding in the overall

[[Page 170]]

fund should be assigned. Regardless of the composition of the fund's 
assets, if the fund is allowed to engage in any activities that appear 
speculative in nature (for example, use of futures, forwards, or option 
contracts for purposes other than to reduce interest rate risk) or if 
the fund has any other characteristics that are inconsistent with the 
preferential risk-weighting assigned to the fund's assets, holdings in 
the fund will be assigned to the 100 percent risk category.
    2. Collateral. In determining risk weights of various assets, the 
only forms of collateral that are formally recognized by the risk-based 
capital framework are cash on deposit in the lending bank; securities 
issued or guaranteed by the central governments of the OECD-based group 
of countries,\1\\2\ U.S. Government agencies, or U.S. Government-
sponsored agencies; and securities issued or guaranteed by multilateral 
lending institutions or regional development banks. Claims fully secured 
by such collateral are assigned to the 20 percent risk category. The 
extent to which these securities are recognized as collateral for risk-
based capital purposes is determined by their current market value. If a 
claim is partially secured, the portion of the claim that is not covered 
by the collateral is assigned to the risk category appropriate to the 
obligor or, if relevant, the guarantor.
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    \12\ The OECD-based group of countries comprises all full members of 
the Organization for Economic Cooperation and Development (OECD) 
regardless of entry date, as well as countries that have concluded 
special lending arrangements with the International Monetary Fund (IMF) 
associated with the IMF's General Arrangements to Borrow, but excludes 
any country that has rescheduled its external sovereign debt within the 
previous five years. As of November 1995, the OECD included the 
following countries: Australia, Austria, Belgium, Canada, Denmark, 
Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, 
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Portugal, 
Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United 
States; and Saudi Arabia had concluded special lending arrangements with 
the IMF associated with the IMF's General Arrangements to Borrow. A 
rescheduling of external sovereign debt generally would include any 
renegotiation of terms arising from a country's inability or 
unwillingness to meet its external debt service obligations, but 
generally would not include renegotiations of debt in the normal course 
of business, such as a renegotiation to allow the borrower to take 
advantage of a decline in interest rates or other change in market 
conditions.
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    3. Guarantees. Guarantees of the OECD and non-OECD central 
governments, U.S. Government agencies, U.S. Government-sponsored 
agencies, state and local governments of the OECD-based group of 
countries, multilateral lending institutions and regional development 
banks, U.S. depository institutions and foreign banks are also 
recognized. If a claim is partially guaranteed, the portion of the claim 
that is not fully covered by the guarantee is assigned to the risk 
category appropriate to the obligor or, if relevant, the collateral.
    4. Maturity. Maturity is generally not a factor in assigning items 
to risk categories with the exceptions of claims on non-OECD banks, 
commitments, and interest rate and foreign exchange rate related 
contracts. Except for commitments, short-term is defined as one year or 
less remaining maturity and long-term is defined as over one year 
remaining maturity. In the case of commitments, short-term is defined as 
one year or less original maturity and long-term is defined as over one 
year original maturity.\1\\3\
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    \1\\3\ Through year-end 1992, remaining rather than original 
maturity may be used for determining term to maturity for commitments.
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    5. Mortgage-Backed Securities. Mortgage-backed securities, including 
pass-throughs and collateralized mortgage obligations (but not stripped 
mortgage-backed securities) that are issued or guaranteed by a U.S. 
Government agency or a U.S. Government-sponsored agency, normally are 
assigned to the risk weight category appropriate to the issuer or 
guarantor. Generally, a privately-issued mortgage-backed security is 
treated as essentially an indirect holding of the underlying assets, and 
assigned to the same risk category as the underlying assets, in 
accordance with the provisions and criteria spelled out in detail in the 
accompanying footnote; \1\\4\ however, such privately-issued

[[Page 171]]

mortgage-backed securities may not be assigned to the zero percent risk 
category. Privately-issued mortgage-backed securities whose structures 
do not comply with the specified provisions set forth in the footnote 
are assigned to the 100 percent risk category. In addition, any class of 
a mortgage-backed security that can absorb more than its pro rata share 
of loss without the whole issue being in default (for example, a 
subordinated class or residual interest) will also be assigned to the 
100 percent risk weight category. All stripped mortgage-backed 
securities, including interest-only strips (IOs), principal-only strips 
(POs), and similar instruments, are assigned to the 100 percent risk 
weight category, regardless of the issuer or guarantor.
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    \1\\4\ A privately-issued mortgage-backed security may be treated as 
an indirect holding of the underlying assets provided that (1) the 
underlying assets are held by an independent trustee and the trustee has 
a first priority, perfected security interest in the underlying assets 
on behalf of the holders of the security, (2) either the holder of the 
security has an undivided pro rata ownership interest in the underlying 
mortgage assets or the trust or single purpose entity (or conduit) that 
issues the security has no liabilities unrelated to the issued 
securities, (3) the security is structured such that the cash flow from 
the underlying assets in all cases fully meets the cash flow 
requirements of the security without undue reliance on any reinvestment 
income, and (4) there is no material reinvestment risk associated with 
any funds awaiting distribution to the holders of the security. In 
addition, if the underlying assets of a mortgage-backed security are 
composed of more than one type of asset, the entire mortgage-backed 
security is generally assigned to the category appropriate to the 
highest risk-weighted asset underlying the issue.
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    6. Small Business Loans and Leases on Personal Property Transferred 
with Recourse--(a) Notwithstanding other provisions of this appendix A, 
a qualifying institution that has transferred small business loans and 
leases on personal property (small business obligations) with recourse 
shall include in risk-weighted assets only the amount of retained 
recourse, provided two conditions are met. First, the transaction must 
be treated as a sale under generally accepted accounting principles 
(GAAP) and, second, the qualifying institution must establish pursuant 
to GAAP a non-capital reserve sufficient to meet the institution's 
reasonably estimated liability under the recourse arrangement. Only 
loans and leases to businesses that meet the criteria for a small 
business concern established by the Small Business Administration under 
section 3(a) of the Small Business Act (15 U.S.C. 632(a)) are eligible 
for this capital treatment.
    (b) For purposes of this appendix A, a qualifying institution is a 
bank that is well capitalized. In addition, by order of the FDIC, a bank 
that is adequately capitalized may be deemed a qualifying institution. 
In determining whether a bank meets the qualifying institution criteria, 
the prompt corrective action well capitalized and adequately capitalized 
definitions set forth in Sec. 325.103 shall be used, except that the 
bank's capital ratios must be calculated without regard to the 
preferential capital treatment for transfers of small business 
obligations with recourse specified in section II.B.6.(a) of this 
appendix A. The total outstanding amount of recourse retained by a 
qualifying institution on transfers of small business obligations 
receiving the preferential capital treatment cannot exceed 15 percent of 
the institution's total risk-based capital. By order, the FDIC may 
approve a higher limit.
    (c) If a bank ceases to be a qualifying institution or exceeds the 
15 percent of capital limit under section II.B.6.(b) of this appendix A, 
the preferential capital treatment will continue to apply to any 
transfers of small business obligations with recourse that were 
consummated during the time the bank was a qualifying institution and 
did not exceed such limit.
    (d) The risk-based capital ratios of a bank shall be calculated 
without regard to the preferential capital treatment for transfers of 
small business obligations with recourse specified in paragraph (a) of 
this section for purposes of:
    (i) Determining whether a bank is adequately capitalized, 
undercapitalized, significantly undercapitalized, or critically 
undercapitalized under the prompt corrective action capital category 
definitions specified in Sec. 325.103; and
    (ii) Applying the prompt corrective action reclassification 
provisions specified in Sec. 325.103(d), regardless of the bank's 
capital level.

         C. Risk Weights for Balance Sheet Assets (see Table II)

    The risk-based capital framework contains four risk weight 
categories--0 percent, 20 percent, 50 percent and 100 percent. In 
general, if a particular item can be placed in more than one risk 
category, it is assigned to the category that has the lowest risk 
weight. An explanation of the components of each category follows:
    Category 1--Zero Percent Risk Weight. This category includes cash 
(domestic and foreign) owned and held in all offices of the bank or in 
transit; balances due from Federal Reserve Banks and central banks in 
other OECD countries; the portions of local currency claims on or 
unconditionally guaranteed by non-OECD central governments to the extent 
that the bank has liabilities booked in that currency; and gold bullion 
held in the bank's own vaults or in another bank's vaults on an 
allocated basis, to the extent it is offset by gold bullion 
liabilities.\1\\5\
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    \1\\5\ All other bullion holdings are to be assigned to the 100 
percent risk weight category.
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    The zero percent risk category also includes direct claims \1\\6\ 
(including securities, loans, and leases) on, and the portions of

[[Page 172]]

claims that are unconditionally guaranteed by, OECD central governments 
\1\\7\ and U.S. Government agencies.\1\\8\ Federal Reserve Bank stock 
also is included in this category.
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    \1\\6\ For purposes of determining the appropriate risk weights for 
this risk-based capital framework, the terms claims and securities refer 
to loans or other debt obligations of the entity on whom the claim is 
held. Investments in the form of stock or equity holdings in commercial 
or financial firms are generally assigned to the 100 percent risk 
category.
    \1\\7\ A central government is defined to include departments and 
ministries, including the central bank, of the central government. The 
U.S. central bank includes the 12 Federal Reserve Banks. The definition 
of central government does not include state, provincial or local 
governments or commercial enterprises owned by the central government. 
In addition, it does not include local government entities or commercial 
enterprises whose obligations are guaranteed by the central government. 
OECD central governments are defined as central governments of the OECD-
based group of countries. Non-OECD central governments are defined as 
central governments of countries that do not belong to the OECD-based 
group of countries.
    \1\\8\ For risk-based capital purposes U.S. Government agency is 
defined as an instrumentality of the U.S. Government whose debt 
obligations are fully and explicitly guaranteed as to the timely payment 
of principal and interest by the full faith and credit of the U.S. 
Government. These agencies include the Government National Mortgage 
Association (GNMA), the Veterans Administration (VA), the Federal 
Housing Administration (FHA), the Farmers Home Administration (FHA), the 
Export-Import Bank (Exim Bank), the Overseas Private Investment 
Corporation (OPIC), the Commodity Credit Corporation (CCC), and the 
Small Business Administration (SBA). U.S. Government agencies generally 
do not directly issue securities to the public; however, a number of 
U.S. Government agencies, such as GNMA, guarantee securities that are 
publicly held.
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    Category 2--20 Percent Risk Weight. This category includes short-
term claims (including demand deposits) on, and portions of short-term 
claims that are guaranteed \19\ by, U.S. depository institutions \20\ 
and foreign banks;\21\ portions of claims collateralized by cash held in 
a segregated deposit account of the lending bank; cash items in process 
of collection, both foreign and domestic; and long-term claims on, and 
portions of long-term claims guaranteed by, U.S. depository institutions 
and OECD banks.\22\
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    \19\ Claims guaranteed by U.S. depository institutions and foreign 
banks include risk participations in both bankers acceptances and 
standby letters of credit, as well as participations in commitments, 
that are conveyed to other U.S. depository institutions or foreign 
banks.
    \20\ U.S. depository institutions are defined to include branches 
(foreign and domestic) of federally-insured banks and depository 
institutions chartered and headquartered in the 50 states of the United 
States, the District of Columbia, Puerto Rico, and U.S. territories and 
possessions. The definition encompasses banks, mutual or stock savings 
banks, savings or building and loan associations, cooperative banks, 
credit unions, international banking facilities of domestic depository 
institutions, and U.S.-chartered depository institutions owned by 
foreigners. However, this definition excludes branches and agencies of 
foreign banks located in the U.S. and bank holding companies.
    \21\ Foreign banks are distinguished as either OECD banks or non-
OECD banks. OECD banks include banks and their branches (foreign and 
domestic) organized under the laws of countries (other than the U.S.) 
that belong to the OECD-based group of countries. Non-OECD banks include 
banks and their branches (foreign and domestic) organized under the laws 
of countries that do not belong to the OECD-based group of countries. 
For risk-based capital purposes, a bank is defined as an institution 
that engages in the business of banking; is recognized as a bank by the 
bank supervisory or monetary authorities of the country of its 
organization or principal banking operations; receives deposits to a 
substantial extent in the regular course of business; and has the power 
to accept demand deposits.
    \22\ Long-term claims on, or guaranteed by, non-OECD banks and all 
claims on bank holding companies are assigned to the 100 percent risk 
weight category, as are holdings of bank-issued securities that qualify 
as capital of the issuing banks for risk-based capital purposes.
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    This category also includes claims on, or portions of claims 
guaranteed by, U.S. Government-sponsored agencies;\23\ and portions of 
claims (including repurchase agreements) collateralized by securities 
issued or guaranteed by OECD central governments, U.S. Government 
agencies, or U.S. Government-sponsored agencies. Also included in the 20 
percent risk category are portions of claims that are conditionally 
guaranteed by OECD

[[Page 173]]

central governments and U.S. Government agencies,\24\ as well as 
portions of local currency claims that are conditionally guaranteed by 
non-OECD central governments to the extent that the bank has liabilities 
booked in that currency.
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    \23\ For risk-based capital purposes, U.S. Government-sponsored 
agencies are defined as agencies originally established or chartered by 
the U.S. Government to serve public purposes specified by the U.S. 
Congress but whose debt obligations are not explicitly guaranteed by the 
full faith and credit of the U.S. Government. These agencies include the 
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National 
Mortgage Association (FNMA), the Farm Credit System, the Federal Home 
Loan Bank System, and the Student Loan Marketing Association (SLMA). For 
risk-based capital purposes, claims on U.S. Government-sponsored 
agencies also include capital stock in a Federal Home Loan Bank that is 
held as a condition of membership in that Bank.
    \24\ For risk-based capital purposes, a conditional guarantee is 
deemed to exist if the validity of the guarantee by the OECD central 
government or the U.S. Government agency is dependent upon some 
affirmative action (e.g., servicing requirements on the part of the 
beneficiary of the guarantee). Portions of claims that are 
unconditionally guaranteed by OECD central governments or U.S. 
Government agencies are assigned to the zero percent risk category.
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    General obligation claims on, or portions of claims guaranteed by, 
the full faith and credit of states or other political subdivisions of 
the United States or other countries of the OECD-based group are also 
assigned to this 20 percent risk category.\25\ In addition, this 
category includes claims on the International Bank for Reconstruction 
and Development (World Bank), International Finance Corporation the 
Inter-American Development Bank, the Asian Development Bank, the African 
Development Bank, the European Investment Bank, the European Bank for 
Reconstruction and Development, the Nordic Investment Bank, and other 
multilateral lending institutions or regional development institutions 
in which the U.S. Government is a shareholder or contributing member, as 
well as portions of claims guaranteed by such organizations or 
collateralized by their securities.
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    \25\ Claims on, or guaranteed by, states or other political 
subdivisions of countries that do not belong to the OECD-based group of 
countries are to be placed in the 100 percent risk weight category.
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    Category 3--50 Percent Risk Weight. This category includes loans 
fully secured by first liens \26\ on one-to-four family residential 
properties, provided that such loans have been approved in accordance 
with prudent underwriting standards, including standards relating to the 
loan amount as a percent of the appraised value of the property,\27\ and 
provided that the loans are not past due 90 days or more or carried in 
nonaccrual status.\28\ The types of loans that qualify as loans secured 
by one-to-four family residential properties are listed in the 
instructions for preparation of the Consolidated Reports of Condition 
and Income. These properties may be either owner-occupied or rented. In 
addition, for risk-based capital purposes, loans secured by one-to-four 
family residential properties include loans to builders with substantial 
project equity for the construction of one-to-four family residences 
that have been presold under firm contracts to purchasers who have 
obtained firm commitments for permanent qualifying mortgage loans and 
have made substantial earnest money deposits. Such loans to builders 
will be considered prudently underwritten only if the bank has obtained 
sufficient documentation that the buyer of the home intends to purchase 
the home (i.e., has a legally binding written sales contract) and has 
the ability to obtain a mortgage loan sufficient to purchase the home 
(i.e., has a firm written commitment for permanent financing of the home 
upon completion), provided the following criteria are met:
    (1) The purchaser is an individual(s) who intends to occupy the 
residence and is not a partnership, joint venture, trust, corporation, 
or any other entity (including an entity acting as a sole 
proprietorship) that is purchasing one or more of the homes for 
speculative purposes;
    (2) The builder must incur at least the first ten percent of the 
direct costs (i.e., actual costs of the land, labor, and material) 
before any drawdown is made under the construction loan and the 
construction loan may not exceed 80 percent of the sales price of the 
presold home;
    (3) The purchaser has made a substantial ``earnest money deposit'' 
of no less than three percent of the sales price of the home and the 
deposit must be subject to forfeiture if the purchaser terminates the 
sales contract; and
    (4) The earnest money deposit must be held in escrow by the bank 
financing the builder or by an independent party in a fiduciary capacity 
and the escrow agreement must provide that, in the event of default 
arising from the cancellation of the sales contract by the buyer, the 
escrow funds must first be used to defray any costs incurred by the 
bank.
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    \26\ If a bank holds the first and junior lien(s) on a residential 
property and no other party holds an intervening lien, the transactions 
will be treated as a single loan secured by a first lien.
    \27\ For risk-based capital purposes, the loan-to-value ratio 
generally is based upon the most current appraised value of the 
property. The appraisal should be performed in a manner consistent with 
the Federal banking agencies' real estate appraisal guidelines and with 
the bank's own appraisal guidelines.
    \28\ Real estate loans that do not meet all of the specified 
criteria or that are made for the purpose of property development are 
placed in the 100 percent risk category.

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[[Page 174]]

    This category also includes loans fully secured by first liens on 
multifamily residential properties,29 provided that:
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    \29\ The types of loans that qualify as loans secured by multifamily 
residential properties are listed in the instructions for preparation of 
the Consolidated Reports of Condition and Income. In addition, as 
provided in those instructions, a multifamily residential property loan 
that is sold subject to a pro rata loss sharing arrangement is treated 
by the selling bank as sold (and excluded from balance sheet assets) to 
the extent that the sales agreement provides for the purchaser of the 
loan to share in any loss incurred on the loan on a pro rata basis with 
the selling bank. In such a transaction, from the standpoint of the 
selling bank, the portion of the loan that is treated as sold is not 
subject to the risk-based capital standards. In connection with sales of 
multifamily residential property loans in which the purchaser of a loan 
shares in any loss incurred on the loan with the selling institution on 
other than a pro rata basis, these other loss sharing arrangements are 
taken into account for purposes of determining the extent to which such 
loans are treated by the selling bank as sold (and excluded from balance 
sheet assets) under the risk-based capital framework in the same manner 
as prescribed for reporting purposes in the instructions for preparation 
of the Consolidated Reports of Condition and Income.
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    (1) The loan amount does not exceed 80 percent of the value 
30 of the property securing the loan as determined by the 
most current appraisal or evaluation, whichever may be appropriate (75 
percent if the interest rate on the loan changes over the term of the 
loan);
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    \30\ At the origination of a loan to purchase an existing property, 
the term ``value'' means the lesser of the actual acquisition cost or 
the estimate of value set forth in an appraisal or evaluation, whichever 
may be appropriate.
---------------------------------------------------------------------------

    (2) For the property's most recent fiscal year, the ratio of annual 
net operating income generated by the property (before payment of any 
debt service on the loan) to annual debt service on the loan is not less 
than 120 percent (115 percent if the interest rate on the loan changes 
over the term of the loan) or, in the case of a property owned by a 
cooperative housing corporation or nonprofit organization, the property 
generates sufficient cash flow to provide comparable protection to the 
bank;
    (3) Amortization of principal and interest on the loan occurs over a 
period of not more than 30 years;
    (4) The minimum original maturity for repayment of principal on the 
loan is not less than seven years;
    (5) All principal and interest payments have been made on a timely 
basis in accordance with the terms of the loan for at least one year 
before the loan is placed in this category; 31
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    \31\ In the case where the existing owner of a multifamily 
residential property refinances a loan on that property, all principal 
and interest payments on the loan being refinanced must have been made 
on a timely basis in accordance with the terms of that loan for at least 
the preceding year. The new loan must meet all of the other eligibility 
criteria in order to qualify for a 50 percent risk weight.
---------------------------------------------------------------------------

    (6) The loan is not 90 days or more past due or carried in 
nonaccrual status; and
    (7) The loan has been made in accordance with prudent underwriting 
standards.
    Also included in this category are privately-issued mortgage-backed 
securities provided that: (1) The structure of the security meets the 
criteria described above for ``Mortgage-Backed Securities;'' (2) if the 
security is backed by a pool of conventional mortgages on one-to-four 
family residential or multifamily residential properties, each 
underlying mortgage meets the criteria described in this section for 
inclusion in the 50 percent risk weight category at the time the pool is 
originated; (3) if the security is backed by privately-issued mortgage-
backed securities, each underlying security qualifies for inclusion in 
the 50 percent risk category; and (4) if the security is backed by a 
pool of multifamily residential mortgages, principal or interest 
payments on the security are not 30 days or more past due.32
---------------------------------------------------------------------------

    \32\  Privately-issued mortgage-backed securities that do not meet 
these criteria or that do not qualify for a lower risk weight generally 
are assigned to the 100 percent risk weight category.
---------------------------------------------------------------------------

    This category also includes revenue (non-general obligation) bonds 
or similar obligations, including loans and leases, that are obligations 
of states or political subdivisions of the United States or other OECD 
countries, but for which the government entity is committed to repay the 
debt with revenues from the specific projects financed, rather than from 
general tax funds (e.g., municipal revenue bonds). In addition, the 
credit equivalent amount of derivative contracts that do not qualify for 
a lower risk weight are assigned to the 50 percent risk category.
    Category 4--100 Percent Risk Weight. All assets not included in the 
above risk categories are assigned to this category, which comprises 
standard risk assets. Long-term claims on, or guaranteed by, non-OECD 
banks, and all claims on non-OECD central governments that entail some 
degree of

[[Page 175]]

transfer risk are assigned to the 100 percent risk category.\3\\3\
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    \3\\3\ Such assets include all non-local currency claims on non-OECD 
central governments and those portions of local currency claims on, or 
guaranteed by, non-OECD central governments that exceed the local 
currency liabilities held by the bank.
---------------------------------------------------------------------------

    This category also includes all claims on foreign and domestic 
private sector obligors that are not assigned to lower risk weight 
categories, including: loans to nondepository financial institutions and 
bank holding companies; claims on commercial firms owned by the public 
sector; customer liabilities to the bank on acceptances outstanding 
involving standard risk claims; \34\ investments in fixed assets, 
premises and other real estated owned; common and preferred stock of 
corporations, including stock acquired for debt previously contracted; 
commercial and consumer loans (except those loans assigned to lower risk 
categories due to recognized guarantees or collateral); real estate 
loans and mortgage-backed securities that do not meet the criteria for 
assignment to a lower risk weight (including any classes of mortgage-
backed securities that can absorb more than their pro rata share of loss 
without the whole issue being in default, such as subordinated classes 
or residual interests); and all stripped mortgage-backed securities, 
including interest-only (IOs) and principal-only (POs) strips.
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    \34\ Customer liabilities on acceptances outstanding involving non-
standard risk claims, such as claims on U.S. depository institutions, 
are assigned to the risk category appropriate to the identity of the 
obligor or, if relevant, the nature of the collateral or guarantees 
backing the claim. Portions of acceptances conveyed as risk 
participations to U.S. depository institutions or foreign banks should 
be assigned to the 20 percent risk category that is appropriate for 
short-term claims guaranteed by U.S. depository institutions and foreign 
banks.
---------------------------------------------------------------------------

    Also included in this category are industrial development bonds and 
similar obligations issued under the auspices of state or political 
subdivisions of the OECD-based group of countries for the benefit of a 
private party or enterprise where that party or enterprise, rather than 
the government entity, is obligated to pay the principal and interest, 
and all obligations of states or political subdivisions of countries 
that do not belong to the OECD-based group of countries.
    Unless already deducted from capital for risk-based capital 
purposes, the following assets also are included in the 100 percent risk 
category: investments in unconsolidated subsidiaries, joint ventures or 
associated companies; instruments that qualify as capital issued by 
other banks; and mortgage servicing rights and other allowed 
intangibles.

    D. Conversion Factors for Off-Balance Sheet Items (see Table III)

    The face amount of an off-balance sheet item is generally multiplied 
by a credit conversion factor and the resulting credit equivalent amount 
is assigned to the appropriate risk category according to the obligor 
or, if relevant, the guarantor or the nature of the collateral.\35\
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    \35\ The sufficiency of collateral and guarantees for off-balance-
sheet items is determined by the market value of the collateral or the 
amount of the guarantee in relation to the face amount of the item, 
except for derivative contracts, for which this determination is 
generally made in relation to the credit equivalent amount. Collateral 
and guarantees are subject to the same provisions noted under section 
II.B. of this appendix A.
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    1. Items With a 100 Percent Conversion Factor. A 100 percent 
conversion factor applies to direct credit substitutes, which include 
guarantees, or equivalent instruments, backing financial claims, such as 
securities, loans or other financial obligations, or backing off-balance 
sheet items that require capital under the risk-based capital framework. 
These direct credit substitutes include financial standby letters of 
credit, or other equivalent irrevocable undertakings or surety 
arrangements, that effectively guarantee repayment of financial 
obligations such as: commercial paper, tax-exempt securities, commercial 
or individual loans or other debt obligations, or standby or commercial 
letters of credit.
    For risk-based capital purposes, financial standby letters of credit 
(100 percent conversion factor) are distinguished from loan commitments 
(normally a 50 percent conversion factor) in that financial standbys are 
irrevocable obligations of the bank to pay a third-party beneficiary 
when a customer (account party) fails to repay an outstanding loan or 
debt instrument. A loan commitment, on the other hand, involves an 
obligation (with or without a material adverse change clause) of the 
bank to provide funds to its customer in the normal course of business 
should the customer seek to draw down the commitment.
    Therefore, the distinguishing characteristics of a financial standby 
letter of credit for risk-based capital purposes is the combination of 
irrevocability with the notion that funding is triggered by some failure 
to repay or perform on a financial obligation. Thus, any commitment (by 
whatever name) that involves an irrevocable obligation to make a payment 
to the customer or to a third party in the event the customer fails to 
repay an outstanding debt obligation will be treated,

[[Page 176]]

for risk-based capital purposes, as a financial standby letter of credit 
and assigned a 100 percent conversion factor. (Performance-related 
standby letters of credit are assigned a conversion factor of 50 
percent.)
    A bank that has conveyed risk participation \36\ in a direct credit 
substitute to a third party should convert the full amount of the direct 
credit substitute at a 100 percent conversion factor without deducting 
the risk participations conveyed. However, portions of direct credit 
substitutes that have been conveyed as risk participations to U.S. 
depository institutions and OECD banks may then be assigned to the 20 
percent risk category that is appropriate for claims guaranteed by U.S. 
depository institutions and OECD banks, rather than to the risk category 
appropriate to the account party obligor.\37\ A bank acquiring a risk 
participation in a direct credit substitute or bankers acceptance should 
convert the participation at 100 percent and then assign the credit 
equivalent amount to the risk category that is appropriate to the 
account party obligor or, if relevant, the guarantor or the nature of 
the collateral.
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    \36\ That is, participations in which the originating bank remains 
liable to the beneficiary for the full amount of the direct credit 
substitute if the party that has acquired the participation fails to pay 
when the instrument is drawn upon.
    \37\ Risk participations with a remaining maturity of one year or 
less that are conveyed to non-OECD banks are also assigned to the 20 
percent risk weight category.
---------------------------------------------------------------------------

    In the case of direct credit substitutes that are structured in the 
form of a syndication as defined in the instructions for the preparation 
of the Consolidated Reports of Condition and Income (that is, where each 
bank is obligated only for its pro rata share of the risk and there is 
no recourse to the originating bank), each bank will only include its 
pro rata share of the direct credit substitute in its risk-based capital 
calculation.
    Sale and repurchase agreements and asset sales with recourse, if not 
already included on the balance sheet, are also converted at 100 
percent. For risk-based capital purposes, the definition of sales of 
assets with recourse, including the sale of one-to-four family 
residential mortgages, is consistent with the definition contained in 
the instructions for the preparation of the Consolidated Reports of 
Condition and Income. Accordingly, except as noted below, the entire 
amount of any assets transferred with recourse that are not already 
included on the balance sheet, including pools of one-to-four family 
residential mortgages, is to be converted at 100 percent and assigned to 
the risk weight category appropriate to the obligor or, if relevant, the 
guarantor or the nature of the collateral. The terms of a transfer of 
assets with recourse may contractually limit the amount of the bank's 
liability to an amount less than the effective risk-based capital 
requirement for the assets being transferred with recourse. If such a 
transaction (including one that, in accordance with the instructions for 
the preparation of the Consolidated Reports of Condition and Income, is 
reported as a financing, i.e., the assets are not removed from the 
balance sheet) meets the criteria for sale treatment under generally 
accepted accounting principles, the amount of total capital required is 
equal to the maximum amount of loss possible under the recourse 
provision. If the transaction is also treated as a sale in accordance 
with the instructions for the preparation of the Consolidated Reports of 
Condition and Income, then the required amount of capital may be reduced 
by the balance of any associated noncapital liability account 
established pursuant to generally accepted accounting principles to 
cover estimated probable losses under the recourse provision. So-called 
``loan strips'' (that is, short-term advances sold under long-term 
commitments without direct recourse) are defined in the instructions for 
the preparation of the Consolidated Reports of Condition and Income and 
for risk-based capital purposes as assets sold with recourse.
    In addition, a 100 percent conversion factor applies to forward 
agreements. Forward agreements are legally binding contractual 
obligations to purchase assets with drawdown which is certain at a 
specified future date. These obligations include forward purchases, 
forward deposits placed, and partly paid shares and securities, but do 
not include forward foreign exchange rate contracts or commitments to 
make residential mortgage loans.
    Securities lent by a bank are treated in one of two ways, depending 
on whether the lender is exposed to risk of loss. If a bank, as agent 
for a customer, lends the customer's securities and is not obligated to 
indemnify the customer against loss, the securities lending transaction 
is excluded from the risk-based capital calculation. On the other hand, 
if a bank lends its own securities, or acting as agent lends the 
customer's securities and agrees to indemnify the customer against loss, 
the transaction is converted at 100 percent and assigned to the risk 
weight category appropriate to the obligor or, if applicable, to the 
collateral delivered to the lending bank or to the independent custodian 
acting on the lending bank's behalf.
    2. Items With a 50 Percent Conversion Factor. Transaction-related 
contingencies are to be converted at 50 percent. Such contingencies 
include bid bonds, performance bonds, warranties, and performance 
standby letters of credit related to particular transactions, as well as 
acquisitions of risk participations in

[[Page 177]]

performance standby letters of credits. Performance standby letters of 
credit (performance bonds) are irrevocable obligations of the bank to 
pay a third-party beneficiary when a customer (account party) fails to 
perform on some contractual nonfinancial obligation. Thus, performance 
standby letters of credit represent obligations backing the performance 
of nonfinancial or commercial contracts or undertakings. To the extent 
permitted by law or regulation, performance standby letters of credit 
include arrangements backing, among other things, subcontractors' and 
suppliers' performance, labor and materials contracts, and construction 
bids.
    The unused portion of commitments with an original maturity 
exceeding one year,\38\ including underwriting commitments and 
commercial and consumer credit commitments, also are to be converted at 
50 percent. Original maturity is defined as the length of time between 
the date the commitment is issued and the earliest date on which: (1) 
The bank can at its option, unconditionally (without cause) cancel the 
commitment,\39\ and (2) the bank is scheduled to (and as a normal 
practice actually does) review the facility to determine whether or not 
it should be extended and, on at least an annual basis, continues to 
regularly review the facility. Facilities that are unconditionally 
cancelable (without cause) at any time by the bank are not deemed to be 
commitments, provided the bank makes a separate credit decision before 
each drawing under the facility.
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    \38\ Remaining maturity may be used for determining the term to 
maturity for loan commitments through year-end 1992; thereafter, 
original maturity shall be used.
    \39\ In the case of home equity or mortgage lines of credit secured 
by liens on one-to-four family residential properties, a bank is deemed 
able to unconditionally cancel the commitment if, at its option, it can 
prohibit additional extensions of credit, reduce the credit line, and 
terminate the commitment to the full extent permitted by relevant 
Federal law.
---------------------------------------------------------------------------

    Commitments, for risk-based capital purposes, are defined as any 
arrangements that obligate a bank to extend credit in the form of loans 
or lease financing receivables; to purchase loans, securities, or other 
assets; or to participate in loans and leases. Commitments also include 
overdraft facilities, revolving credit, home equity and mortgage lines 
of credit, and similar transactions. Normally, commitments involve a 
written contract or agreement and a commitment fee, or some other form 
of consideration. Commitments are included in risk-weighted assets 
regardless of whether they contain material adverse change clauses or 
other provisions that are intended to relieve the issuer of its funding 
obligation under certain conditions.
    In the case of commitments structured as syndications where the bank 
is obligated only for its pro rata share, the risk-based capital 
framework includes only the bank's proportional share of such 
commitments. Thus, after a commitment has been converted at 50 percent, 
portions of commitments that have been conveyed to other U.S. depository 
institutions or OECD banks, but for which the originating bank retains 
the full obligation to the borrower if the participating bank fails to 
pay when the commitment is drawn upon, will be assigned to the 20 risk 
category. The acquisition of such a participation in a commitment would 
be converted at 50 percent and the credit equivalent amount would be 
assigned to the risk category that is appropriate for the account party 
obligor or, if relevant, to the nature of the collateral or guarantees.
    Revolving underwriting facilities (RUFs), note issuance facilities 
(NIFs), and other similar arrangements also are converted at 50 percent. 
These are facilities under which a borrower can issue on a revolving 
basis short-term notes in its own name, but for which the underwriting 
banks have a legally binding commitment either to purchase any notes the 
borrower is unable to sell by the rollover date or to advance funds to 
the borrower.
    3. Items With a 20 Percent Conversion Factor. Short-term, self-
liquidating, trade-related contingencies which arise from the movement 
of goods are converted at 20 percent. Such contingencies include 
commercial letters of credit and other documentary letters of credit 
collateralized by the underlying shipments.
    4. Items With a Zero Percent Conversion Factor. These include unused 
portions of commitments with an original maturity of one year or less, 
or which are unconditionally cancellable at any time (provided a 
separate credit decision is made before each drawing under the 
facility). Unused portions of retail credit card lines and related plans 
are deemed to be short-term commitments if the bank, in accordance with 
applicable law, has the unconditional option to cancel the credit line 
at any time.
    E. Derivative Contracts (Interest Rate, Exchange Rate, Commodity 
(including precious metal) and Equity Derivative Contracts)
    1. Credit equivalent amounts are computed for each of the following 
off-balance-sheet derivative contracts:
    (a) Interest Rate Contracts
    (i) Single currency interest rate swaps.
    (ii) Basis swaps.
    (iii) Forward rate agreements.
    (iv) Interest rate options purchased (including caps, collars, and 
floors purchased).
    (v) Any other instrument linked to interest rates that gives rise to 
similar credit

[[Page 178]]

risks (including when-issued securities and forward deposits accepted).
    (b) Exchange Rate Contracts
    (i) Cross-currency interest rate swaps.
    (ii) Forward foreign exchange contracts.
    (iii) Currency options purchased.
    (iv) Any other instrument linked to exchange rates that gives rise 
to similar credit risks.
    (c) Commodity (including precious metal) or Equity Derivative 
Contracts
    (i) Commodity- or equity-linked swaps.
    (ii) Commodity- or equity-linked options purchased.
    (iii) Forward commodity- or equity-linked contracts.
    (iv) Any other instrument linked to commodities or equities that 
gives rise to similar credit risks.
    2. Exchange rate contracts with an original maturity of 14 calendar 
days or less and derivative contracts traded on exchanges that require 
daily receipt and payment of cash variation margin may be excluded from 
the risk-based ratio calculation. Gold contracts are accorded the same 
treatment as exchange rate contracts except gold contracts with an 
original maturity of 14 calendar days or less are included in the risk-
based calculation. Over-the-counter options purchased are included and 
treated in the same way as other derivative contracts.
    3. Credit Equivalent Amounts for Derivative Contracts. (a) The 
credit equivalent amount of a derivative contract that is not subject to 
a qualifying bilateral netting contract in accordance with section 
II.E.5. of this appendix A is equal to the sum of:
    (i) The current exposure (which is equal to the mark-to-market 
value,40 if positive, and is sometimes referred to as the 
replacement cost) of the contract; and
---------------------------------------------------------------------------

    \40\ Mark-to-market values are measured in dollars, regardless of 
the currency or currencies specified in the contract and should reflect 
changes in both underlying rates, prices and indices, and counterparty 
credit quality.
---------------------------------------------------------------------------

    (ii) An estimate of the potential future credit exposure.
    (b) The current exposure is determined by the mark-to-market value 
of the contract. If the mark-to-market value is positive, then the 
current exposure is equal to that mark-to-market value. If the mark-to-
market value is zero or negative, then the current exposure is zero.
    (c) The potential future credit exposure of a contract, including a 
contract with a negative mark-to-market value, is estimated by 
multiplying the notional principal amount of the contract by a credit 
conversion factor. Banks should, subject to examiner review, use the 
effective rather than the apparent or stated notional amount in this 
calculation. The credit conversion factors are:

                                            Conversion Factor Matrix                                            
----------------------------------------------------------------------------------------------------------------
                                                                Exchange                  Precious              
               Remaining maturity                  Interest     rate and      Equity      metals,       Other   
                                                     rate         gold                  except gold  commodities
----------------------------------------------------------------------------------------------------------------
One year or less...............................         0.0%         1.0%         6.0%         7.0%        10.0%
More than one year to five years...............         0.5%         5.0%         8.0%         7.0%        12.0%
More than five years...........................         1.5%         7.5%        10.0%         8.0%        15.0%
----------------------------------------------------------------------------------------------------------------

    (d) For contracts that are structured to settle outstanding exposure 
on specified dates and where the terms are reset such that the market 
value of the contract is zero on these specified dates, the remaining 
maturity is equal to the time until the next reset date. For interest 
rate contracts with remaining maturities of more than one year and that 
meet these criteria, the conversion factor is subject to a minimum value 
of 0.5 percent.
    (e) For contracts with multiple exchanges of principal, the 
conversion factors are to be multiplied by the number of remaining 
payments in the contract. Derivative contracts not explicitly covered by 
any of the columns of the conversion factor matrix are to be treated as 
``other commodities.''
    (f) No potential future exposure is calculated for single currency 
interest rate swaps in which payments are made based upon two floating 
rate indices (so called floating/floating or basis swaps); the credit 
exposure on these contracts is evaluated solely on the basis of their 
mark-to-market values.
    4. Risk Weights and Avoidance of Double Counting. (a) Once the 
credit equivalent amount for a derivative contract, or a group of 
derivative contracts subject to a qualifying bilateral netting 
agreement, has been determined, that amount is assigned to the risk 
category appropriate to the counterparty, or, if relevant, the guarantor 
or the nature of any collateral. However, the maximum weight that will 
be applied to the credit equivalent amount of such contracts is 50 
percent.
    (b) In certain cases, credit exposures arising from the derivative 
contracts covered by these guidelines may already be reflected, in part, 
on the balance sheet. To avoid double

[[Page 179]]

counting such exposures in the assessment of capital adequacy and, 
perhaps, assigning inappropriate risk weights, counterparty credit 
exposures arising from the types of instruments covered by these 
guidelines may need to be excluded from balance sheet assets in 
calculating a bank's risk-based capital ratio.
    (c) The FDIC notes that the conversion factors set forth in section 
II.E.3. of appendix A, which are based on observed volatilities of the 
particular types of instruments, are subject to review and modification 
in light of changing volatilities or market conditions.
    (d) Examples of the calculation of credit equivalent amounts for 
these types of contracts are contained in Table IV of this appendix A.
    5. Netting. (a) For purposes of this appendix A, netting refers to 
the offsetting of positive and negative mark-to-market values when 
determining a current exposure to be used in the calculation of a credit 
equivalent amount. Any legally enforceable form of bilateral netting 
(that is, netting with a single counterparty) of derivative contracts is 
recognized for purposes of calculating the credit equivalent amount 
provided that:
    (i) The netting is accomplished under a written netting contract 
that creates a single legal obligation, covering all included individual 
contracts, with the effect that the bank would have a claim or 
obligation to receive or pay, respectively, only the net amount of the 
sum of the positive and negative mark-to-market values on included 
individual contracts in the event that a counterparty, or a counterparty 
to whom the contract has been validly assigned, fails to perform due to 
default, bankruptcy, liquidation, or similar circumstances;
    (ii) The bank obtains a written and reasoned legal opinion(s) 
representing that in the event of a legal challenge, including one 
resulting from default, insolvency, bankruptcy or similar circumstances, 
the relevant court and administrative authorities would find the bank's 
exposure to be such a net amount under:
    (1) The law of the jurisdiction in which the counterparty is 
chartered or the equivalent location in the case of noncorporate 
entities and, if a branch of the counterparty is involved, then also 
under the law of the jurisdiction in which the branch is located;
    (2) The law that governs the individual contracts covered by the 
netting contract; and
    (3) The law that governs the netting contract.
    (iii) The bank establishes and maintains procedures to ensure that 
the legal characteristics of netting contracts are kept under review in 
the light of possible changes in relevant law; and
    (iv) The bank maintains in its file documentation adequate to 
support the netting of derivative contracts, including a copy of the 
bilateral netting contract and necessary legal opinions.
    (b) A contract containing a walkaway clause is not eligible for 
netting for purposes of calculating the credit equivalent 
amount.41
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    \41\ For purposes of this section, a walkaway clause means a 
provision in a netting contract that permits a non-defaulting 
counterparty to make lower payments than it would make otherwise under 
the contract, or no payment at all, to a defaulter or to the estate of a 
defaulter, even if a defaulter or the estate of a defaulter is a net 
creditor under the contract.
---------------------------------------------------------------------------

    (c) By netting individual contracts for the purpose of calculating 
its credit equivalent amount, a bank represents that it has met the 
requirements of this appendix A and all the appropriate documents are in 
the bank's files and available for inspection by the FDIC. Upon 
determination by the FDIC that a bank's files are inadequate or that a 
netting contract may not be legally enforceable under any one of the 
bodies of law described in paragraphs (ii)(1) through (3) of section 
II.E.5.(a) of this appendix A, underlying individual contracts may be 
treated as though they were not subject to the netting contract.
    (d) The credit equivalent amount of derivative contracts that are 
subject to a qualifying bilateral netting contract is calculated by 
adding:
    (i) The net current exposure of the netting contract; and
    (ii) The sum of the estimates of potential future exposure for all 
individual contracts subject to the netting contract, adjusted to take 
into account the effects of the netting contract.42
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    \42\ For purposes of calculating potential future credit exposure 
for foreign exchange contracts and other similar contracts in which 
notional principal is equivalent to cash flows, total notional principal 
is defined as the net receipts to each party falling due on each value 
date in each currency.
---------------------------------------------------------------------------

    (e) The net current exposure is the sum of all positive and negative 
mark-to-market values of the individual contracts subject to the netting 
contract. If the net sum of the mark-to-market values is positive, then 
the net current exposure is equal to that sum. If the net sum of the 
mark-to-market values is zero or negative, then the net current exposure 
is zero.
    (f) The effects of the bilateral netting contract on the gross 
potential future exposure are recognized through application of a 
formula, resulting in an adjusted add-on amount (Anet). The 
formula, which employs the ratio of net current exposure to gross 
current exposure (NGR) is expressed as:

Anet=(0.4 x Agross)+0.6(NGR x Agross)


[[Page 180]]


    The effect of this formula is that Anet is the weighted 
average of Agross, and Agross adjusted by the NGR.
    (g) The NGR may be calculated in either one of two ways--referred to 
as the counterparty-by-counterparty approach and the aggregate approach.
    (i) Under the counterparty-by-counterparty approach, the NGR is the 
ratio of the net current exposure of the netting contract to the gross 
current exposure of the netting contract. The gross current exposure is 
the sum of the current exposures of all individual contracts subject to 
the netting contract calculated in accordance with section II.E. of this 
appendix A.
    (ii) Under the aggregate approach, the NGR is the ratio of the sum 
of all of the net current exposures for qualifying bilateral netting 
contracts to the sum of all of the gross current exposures for those 
netting contracts (each gross current exposure is calculated in the same 
manner as in section II.E.5.(g)(i) of this appendix A). Net negative 
mark-to-market values to individual counterparties cannot be used to 
offset net positive current exposures to other counterparties.
    (iii) A bank must use consistently either the counterparty-by-
counterparty approach or the aggregate approach to calculate the NGR. 
Regardless of the approach used, the NGR should be applied individually 
to each qualifying bilateral netting contract to determine the adjusted 
add-on for that netting contract.

                  III. Minimum Risk-Based Capital Ratio

       A. Minimum Risk-Based Capital Ratio After Transition Period

    Banks generally will be expected to meet a minimum ratio of 
qualifying total capital to risk-weighted assets of 8 percent, of which 
at least 4 percentage points should be in the form of core capital (Tier 
1). Any bank that does not meet the minimum risk-based capital ratio, or 
whose capital is otherwise considered inadequate, generally will be 
expected to develop and implement a capital plan for achieving an 
adequate level of capital, consistent with the provisions of this risk-
based capital framework, the specific circumstances affecting the 
individual bank, and the requirements of any related agreements between 
the bank and the FDIC.

                      B. Transitional Arrangements

    The transition period commences with the adoption of this statement 
of policy and ends on December 31, 1992. Initially, this risk-based 
capital framework does not establish a minimum level of capital. 
However, by year-end 1990, banks generally will be expected to meet a 
minimum total capital to risk-weighted assets ratio of 7.25 percent, at 
least one-half of which should be in the form of Tier 1 capital. For 
purposes of calculating this interim minimum ratio, the amount of the 
allowance for loan and lease losses that may be included as a 
supplementary capital element is limited to 1.5 percent of risk-weighted 
assets. In addition, up to 10 percent of a bank's Tier 1 capital (before 
any deduction for disallowed intangibles) may consist of supplementary 
capital elements. Thus, the 7.25 percent interim ratio implies a minimum 
ratio of Tier 1 capital to risk-weighted assets of approximately 3.6 
percent (or one-half of 7.25) and a minimum ratio of core capital 
elements to risk-weighted assets of 3.25 percent (or nine-tenths of the 
Tier 1 capital ratio). By the end of 1992, a state nonmember bank's Tier 
1 capital should consist solely of core capital elements.
    During the transition period, banks should monitor their risk-based 
capital ratios and work toward achieving the interim and final risk-
based capital ratios. Any bank that has risk-based capital ratios of 
less than 4 percent Tier 1 capital and 8 percent total capital should 
develop and implement a capital plan for achieving those minimum 
standards by December 31, 1992, and for achieving the interim minimum 
ratio of 7.25 percent by December 31, 1990. Banks that at present have a 
risk-based capital ratio in excess of 8 percent generally should not 
take any action that would cause the ratio to fall below 8 percent.

                Table I--Definition of Qualifying Capital               
                 [Note: See footnotes at end of table.]                 
------------------------------------------------------------------------
                                              Minimum Requirements and  
                Components                  Limitations After Transition
                                                       Period.          
------------------------------------------------------------------------
Core Capital (Tier 1).....................  Must equal or exceed 4% of  
                                             risk-weighted assets.      
  Common stockholders' equity capital.....  No limit.\1\                
  Noncumulative perpetual preferred stock   No limit.\1\                
   and any related surplus.                                             
  Minority interests in equity capital      No limit.\1\                
   accounts of consolidated subsidiaries.                               
  Less: All intangible assets other than    (\1\)                       
   mortgage servicing rights and purchased                              
   credit card relationships.\2\                                        
  Less: Certain deferred tax assers.\3\                                 
Supplementary Capital (Tier 2)............  Total of Tier 2 is limited  
                                             to 100% of Tier 1.\4\      
  Allowance for loan and lease losses.....  Limited to 1.25% of risk-   
                                             weighted assets.\4\        
  Cumulative perpetual and long-term        No limit within Tier 2; long-
   preferred stock (original maturity of     term preferred is amortized
   20 years or more), and any related        for capital purposes as it 
   surplus.                                  approaches maturity.       
  Auction rate and similar preferred stock  No limit within Tier 2.     
   (both cumulative and non-cumulative).                                
  Hybrid capital instruments (including     No limit within Tier 2.     
   mandatory convertible debt securities).                              

[[Page 181]]

                                                                        
  Term subordinated debt and intermediate-  Term subordinated debt and  
   term preferred stock (original weighted   intermediate-term preferred
   average maturity of 5 years or more).     stock are limited to 50% of
                                             Tier 1 \4\ and amortized   
                                             for capital purposes as    
                                             they approach maturity.    
Deductions (from the sum of Tier 1 plus     ............................
 Tier 2).                                                               
  Investments in banking and finance        ............................
   subsidiaries that are not consolidated                               
   for regulatory capital purposes.                                     
  Intentional, reciprocal cross-holdings    ............................
   of capital securities issued by banks.                               
  Other deductions (such as investments in  On case-by-case basis or as 
   other subsidiaries or in joint            matter of policy after     
   ventures) as determined by supervisory    formal consideration of    
   authority.                                relevant issues.           
Total Capital (Tier 1 + Tier 2 -            Must equal or exceed 8% of  
 Deductions).                                risk-weighted assets.      
------------------------------------------------------------------------
\1\ No express limits are placed on the amounts of nonvoting common,    
  noncumulative perpetual preferred stock and minority interests that   
  may be recognized as part of Tier 1 capital. However, voting common   
  stockholders' equity capital generally will be expected to be the     
  dominant form of Tier 1 capital and banks should avoid undue reliance 
  on other Tier 1 capital elements.                                     
\2\ The amounts of mortgage servicing rights and purchased credit card  
  relationships that can be recognized for purposes of calculating Tier 
  1 capital are subject to the limitations set forth in Sec.  325.5(f)  
  of the FDIC's regulations. All deductions are for capital purposes    
  only; deductions would not affect accounting treatment.               
\3\ Deferred tax assets are subject to the capital limitations set forth
  in Sec.  325.5(g).                                                    
\4\ Amounts in excess of limitations are permitted but do not qualify as
  capital.                                                              

               Calculation of the Risk-Based Capital Ratio

    When calculating the risk-based capital ratio under the framework 
set forth in this statement of policy, qualifying total capital (the 
numerator) is divided by risk-weighted assets (the denominator). The 
process of determining the numerator for the ratio is summarized in 
Table I. The calculation of the denominator is based on the risk weights 
and conversion factors that are summarized in Tables II and III.
    When determining the amount of risk-weighted assets, balance sheet 
assets are assigned an appropriate risk weight (see Table II) and off-
balance sheet items are first converted to a credit equivalent amount 
(see Table III) and then assigned to one of the risk weight categories 
set forth in Table II.
    The balance sheet assets and the credit equivalent amount of off-
balance sheet items are then multiplied by the appropriate risk weight 
percentages and the sum of these risk-weighted amounts is the gross 
risk-weighted asset figure used in determining the denominator of the 
risk-based capital ratio. Any items deducted from capital when computing 
the amount of qualifying capital may also be excluded from risk-weighted 
assets when calculating the denominator for the risk-based capital 
ratio.

         Table II.--Summary of Risk Weights and Risk Categories

                  Category 1--Zero Percent Risk Weight

    (1) Cash (domestic and foreign).
    (2) Balances due from Federal Reserve Banks and central banks in 
other OECD countries.
    (3) Direct claims on, and portions of claims unconditionally 
guaranteed by, the U.S. Treasury, U.S. Government agencies,\1\ or 
central governments in other OECD countries.
---------------------------------------------------------------------------

    \1\ For the purpose of calculating the risk-based capital ratio, a 
U.S. Government agency is defined as an instrumentality of the U.S. 
Government whose obligations are fully and explicitly guaranteed as to 
the timely repayment of principal and interest by the full faith and 
credit of the U.S. Government.
---------------------------------------------------------------------------

    (4) Portions of local currency claims on, or unconditionally 
guaranteed by, non-OECD central governments (including non-OECD central 
banks), to the extent the bank has liabilities booked in that currency.
    (5) Gold bullion held in the bank's own vaults or in another bank's 
vaults on an allocated basis, to the extent that it is offset by gold 
bullion liabilities
    (6) Federal Reserve Bank stock.

                   Category 2--20 Percent Risk Weight

    (1) Cash items in the process of collection.
    (2) All claims (long- and short-term) on, and portions of claims 
(long- and short-term) guaranteed by, U.S. depository institutions and 
OECD banks.
    (3) Short-term (remaining maturity of one year or less) claims on, 
and portions of short-term claims guaranteed by, non-OECD banks.
    (4) Portions of loans and other claims conditionally guaranteed by 
the U.S. Treasury, U.S. Government agencies,\1\ or central governments 
in other OECD countries and portions of local currency claims 
conditionally guaranteed by non-OECD central governments to the extent 
that the bank has liabilities booked in that currency.

[[Page 182]]

    (5) Securities and other claims on, and portions of claims 
guaranteed by, U.S. Government-sponsored agencies.\2\
---------------------------------------------------------------------------

    \2\ For the purpose of calculating the risk-based capital ratio, a 
U.S. Government-sponsored agency is defined as an agency originally 
established or chartered to serve public purposes specified by the U.S. 
Congress but whose obligations are not explicitly guaranteed by the full 
faith and credit of the U.S. Government.
---------------------------------------------------------------------------

    (6) Portions of loans and other claims (including repurchase 
agreements) collateralized \3\ by securities issued or guaranteed by the 
U.S. Treasury, U.S. Government agencies, U.S. Government-sponsored 
agencies or central governments in other OECD countries.
---------------------------------------------------------------------------

    \3\ Degree of collateralization is determined by current market 
value.
---------------------------------------------------------------------------

    (7) Portions of loans and other claims collateralized \3\ by cash on 
deposit in the lending bank.
    (8) General obligation claims on, and portions of claims guaranteed 
by, the full faith and credit of states or other political subdivisions 
of OECD countries, including U.S. state and local governments.
    (9) Claims on, and portions of claims guaranteed by, official 
multilateral lending institutions or regional development institutions 
in which the U.S. Government is a shareholder or a contributing member.
    (10) Portions of claims collateralized \3\ by securities issued by 
official multilateral lending institutions or regional development 
institutions in which the U.S. Government is a shareholder or 
contributing member.
    (11) Privately-issued mortgage-backed securities representing 
indirect ownership of U.S. Government agency or U.S. Government-
sponsored agency securities.
    (12) Investments in shares of mutual funds whose portfolios are 
permitted to hold only assets that qualify for the zero or 20 percent 
risk categories.

                   Category 3--50 Percent Risk Weight

    (1) Loans fully secured by first liens on one-to-four family 
residential properties (including certain presold residential 
construction loans), provided that the loans were approved in accordance 
with prudent underwriting standards and are not past due 90 days or more 
or carried in nonaccrual status.
    (2) Loans fully secured by first liens on multifamily residential 
properties that have been prudently underwritten and meet specified 
requirements with respect to loan-to-value ratio, level of annual net 
operating income to required debt service, maximum amortization period, 
minimum original maturity, and demonstrated timely repayment 
performance.
    (3) Certain privately-issued mortgage-backed securities representing 
indirect ownership of a pool of residential loans that meet the criteria 
for a 50 percent risk weight.
    (4) Revenue bonds or similar obligations, including loans and 
leases, that are obligations of U.S. state or political subdivisions of 
the United States or other OECD countries but for which the government 
entity is committed to repay the debt only out of revenues from the 
specific projects financed.
    (5) Credit equivalent amounts of interest rate and foreign exchange 
rate related contracts, except for those assigned to a lower risk 
category.

                   Category 4--100 Percent Risk Weight

    (1) All other claims on private obligors.
    (2) Claims on, or guaranteed by, non-OECD banks with a remaining 
maturity exceeding one year.
    (3) Claims on non-OECD central governments that are not included in 
item 4 of Category 1 or item 3 of Category 2, and all claims on non-OECD 
state and local governments.
    (4) Obligations issued by U.S. state or local governments or other 
OECD local governments (including industrial development authorities and 
similar entities) that are repayable solely by a private party or 
enterprise.
    (5) Premises, plant, and equipment; other fixed assets; and other 
real estate owned.
    (6) Investments in any unconsolidated subsidiaries, joint ventures, 
or associated companies--if not deducted from capital.
    (7) Instruments issued by other banking organizations that qualify 
as capital.
    (8) Claims on commercial firms owned by the U.S. Government or 
foreign governments.
    (9) All other assets, including any intangible assets that are not 
deducted from capital, and the credit equivalent amounts \4\ of off-
balance sheet items not assigned to a lower risk category.
---------------------------------------------------------------------------

    \4\ For each off-balance sheet item, a conversion factor (see Table 
III) must be applied to determine the credit equivalent amount prior to 
assigning the off-balance sheet item to a risk weight category.
---------------------------------------------------------------------------

    Table III.--Credit Conversion Factors for Off-Balance Sheet Items

                      100 Percent Conversion Factor

    (1) Direct credit substitutes, including general guarantees of 
indebtedness and guarantee-type instruments, such as standby letters of 
credit that serve as financial guarantees for, or support the repayment 
of, loans, securities or commercial letters of credit.

[[Page 183]]

    (2) Acquisitions of risk participations in bankers acceptances and 
in such direct credit substitutes and financial standby letters of 
credit.
    (3) Sale and repurchase agreements and asset sales with recourse, if 
not already included on the balance sheet.
    (4) Forward agreements representing contractual obligations to 
purchase assets, including financing facilities, with drawdown certain 
at a specified future date.
    (5) Securities lent, if the lending bank is exposed to risk of loss.

                      50 Percent Conversion Factor

    (1) Transaction-related contingencies, including bid bonds, 
performance bonds, warranties, and performance standby letters of credit 
backing the nonfinancial performance of other parties.
    (2) Unused portions of commitments with an original maturity \1\ 
exceeding one year, including underwriting commitments and commercial 
credit lines.
---------------------------------------------------------------------------

    \1\ Remaining maturity may be used until year-end 1990.
---------------------------------------------------------------------------

    (3) Revolving underwriting facilities (RUFs), note issuance 
facilities (NIFs) and other similar arrangements.

                      20 Percent Conversion Factor

    (1) Short-term, self-liquidating, trade-related contingencies, 
including commercial letters of credit.

                     Zero Percent Conversion Factor

    (1) Unused portions of commitments with an original maturity \1\ of 
one year or less.
    (2) Unused portions of commitments (regardless of maturity) which 
are unconditionally cancelable at any time, provided a separate credit 
decision is made before each drawing.

 Credit Conversion for Interest Rate and Foreign Exchange Rate Related 
                                Contracts

    The total replacement cost of contracts (obtained by summing the 
positive mark-to-market values of contracts) is added to a measure of 
future potential increases in credit exposure. This future potential 
credit exposure measure is calculated by multiplying the total notional 
value of contracts by one of the following credit conversion factors, as 
appropriate:

                                            Conversion Factor Matrix                                            
----------------------------------------------------------------------------------------------------------------
                                                                Exchange                  Precious              
               Remaining maturity                  Interest     rate and      Equity      metals,       Other   
                                                     rate         gold                  except gold  commodities
----------------------------------------------------------------------------------------------------------------
One year or less...............................         0.0%         1.0%         6.0%         7.0%        10.0%
More than one year to five years...............         0.5%         5.0%         8.0%         7.0%        12.0%
More than five years...........................         1.5%         7.5%        10.0%         8.0%        15.0%
----------------------------------------------------------------------------------------------------------------

    No potential exposure is calculated for single currency interest 
rate contracts on which payments are made based on two floating rate 
indices (floating/floating or basis swaps); the credit exposure on these 
contracts is evaluated solely on the basis of their mark-to-market 
values. In the event a netting contract covers transactions that are 
normally not included in the risk-based ratio calculation--for example, 
exchange rate contracts with an original maturity of fourteen calendar 
days or less or instruments traded on exchanges that require daily 
payment of variation margin--an institution may elect to consistently 
either include or exclude all mark-to-market values of such transactions 
when determining a net current exposure. Multiple contracts with the 
same counterparty may be netted for risk-based capital purposes pursuant 
to section II.E.5. of this appendix.

                  Table IV.--Calculation of Credit Equivalent Amounts for Derivative Contracts                  
----------------------------------------------------------------------------------------------------------------
        Potential exposure               +         Current         =       Credit equivalent amount             
------------------------------------------------   exposure  ---------------------------------------    Credit  
                                      Notional  -------------  Potential     Mark-to      Current     equivalent
    Type of contract (remaining      principal    Conversion    exposure      market      exposure      amount  
             maturity)               (dollars)      factor     (dollars)      value      (dollars)              
----------------------------------------------------------------------------------------------------------------
(1) 120-Day Forward Foreign                                                                                     
 Exchange.........................    5,000,000          .01       50,000      100,000      100,000      150,000
(2) 4-Year Forward Foreign                                                                                      
 Exchange.........................    6,000,000          .05      300,000     -120,000            0      300,000
(3) 3-Year Single-Currency Fixed/                                                                               
 Floating Interest Rate Swap......   10,000,000         .005       50,000      200,000      200,000      250,000
(4) 6-Month Oil Swap..............   10,000,000          .10    1,000,000     -250,000            0    1,000,000
(5) 7-Year Cross-Currency Floating/                                                                             
 Floating Interest Rate Swap......   20,000,000         .075    1,500,000   -1,500,000            0    1,500,000
      Total.......................  ...........  ...........    2,900,000  ...........      300,000    3,200,000

[[Page 184]]

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

    (1) If contracts (1) through (5) above are subject to a qualifying 
bilateral netting contract, then the following applies:

----------------------------------------------------------------------------------------------------------------
                                             Potential                                                          
                                               future                                                   Credit  
                                              exposure                  Net current                   equivalent
                                               (from                     exposure*                      amount  
                                               above)                                                           
----------------------------------------------------------------------------------------------------------------
(1).......................................       50,000                                                         
(2).......................................      300,000                                                         
(3).......................................       50,000                                                         
(4).......................................    1,000,000                                                         
(5).......................................    1,500,000                                                         
      Total...............................    2,900,000  +                        0  =                2,900,000 
----------------------------------------------------------------------------------------------------------------
*The total of the mark-to-market values from above is -1,370,000. Since this is a negative amount, the net      
  current exposure is zero.                                                                                     

    (2) To recognize the effects of netting on potential future 
exposure, the following formula applies:

Anet=(0.4 x Agross)+0.6(NGR x Agross)

    (3) In the above example:

NGR=0=(0/300,000)
Anet=(0.4 x 2,900,000)+0.6(0 x 2,900,000)
Anet=1,160,000

Credit Equivalent Amount: 1,160,000+0=1,160,000

    (4) If the net current exposure was a positive amount, for example, 
$200,000, the credit equivalent amount would be calculated as follows:

NGR=.67=(200,000/300,000)
Anet=(0.4 x 2,900,000)+0.6(.67 x 2,900,000)
Anet=2,325,800

Credit Equivalent Amount: 2,325,800+200,000=2,525,800
[54 FR 11509, Mar. 21, 1989]

    Editorial Note:  For Federal Register citations affecting Appendix A 
of part 325, see the List of CFR Sections Affected in the Finding Aids 
section of this volume.

     Appendix B to Part 325--Statement of Policy on Capital Adequacy

    Part 325 of the Federal Deposit Insurance Corporation rules and 
regulations (12 CFR part 325) sets forth minimum leverage capital 
requirements for fundamentally sound, well-managed banks having no 
material or significant financial weaknesses. It also defines capital 
and sets forth sanctions which will be used against banks which are in 
violation of the part 325 regulation. This statement of policy on 
capital adequacy provides some interpretational and definitional 
guidance as to how this part 325 regulation will be administered and 
enforced by the FDIC. This statement of policy also addresses certain 
aspects of the FDIC's minimum risk-based capital guidelines that are set 
forth in appendix A to part 325. This statement of policy does not 
address the prompt corrective action provisions mandated by the Federal 
Deposit Insurance Corporation Improvement Act of 1991. However, section 
38 of the Federal Deposit Insurance Act and subpart B of part 325 
provide guidance on the prompt corrective action provisions, which 
generally apply to institutions with inadequate levels of capital.

             I. Enforcement of Minimum Capital Requirements

    Section 325.3(b)(1) specifies that FDIC-supervised, state-chartered 
nonmember commercial and savings banks (or other insured depository 
institutions making applications to the FDIC that require the FDIC to 
consider the adequacy of the institutions' capital structure) must 
maintain a minimum leverage ratio of Tier 1 (or core) capital to total 
assets of at least 3 percent; however, this minimum only applies to the 
most highly-rated banks (i.e., those with a composite CAMEL rating of 1 
under the Uniform Financial Institutions Rating System established by 
the Federal Financial Institutions Examination Council) that are not 
anticipating or experiencing any significant growth. All other state 
nonmember banks would need to meet a minimum leverage ratio that is at 
least 100 to 200 basis points above this minimum. That is, in accordance 
with Sec. 325.3(b)(2), an absolute minimum leverage ratio of not less 
than 4 percent must be maintained by those banks that are not highly-
rated or that are anticipating or experiencing significant growth.
    In addition to the minimum leverage capital standards, section III 
of appendix A to part 325 indicates that state nonmember banks generally 
are expected to maintain a minimum risk-based capital ratio of 
qualifying total capital to risk-weighted assets of 8 percent by 
December 31, 1992 (and at least 7.25 percent by December 31, 1990), with 
at least one-half of that total capital amount consisting of Tier 1 
capital.
    State nonmember banks (hereinafter referred to as ``banks'') 
operating with leverage capital ratios below the minimums set

[[Page 185]]

forth in part 325 will be deemed to have inadequate capital and will be 
in violation of the part 325 regulation. Furthermore, banks operating 
with risk-based capital ratios below the minimums set forth in appendix 
A to part 325 generally will be deemed to have inadequate capital. Banks 
failing to meet the minimum leverage and/or risk-based capital ratios 
normally can expect to have any application submitted to the FDIC denied 
(if such application requires the FDIC to evaluate the adequacy of the 
institution's capital structure) and also can expect to be subject to 
the use of capital directives or other formal enforcement action by the 
FDIC to increase capital.
    Capital adequacy in banks which have capital ratios at or above the 
minimums will be assessed and enforced based on the following factors 
(these same criteria will apply to any insured depository institutions 
making applications to the FDIC and to any other circumstances in which 
the FDIC is requested or required to evaluate the adequacy of a 
depository institution's capital structure):

         A. Banks Which Are Fundamentally Sound and Well-Managed

    The minimum leverage capital ratios set forth in Sec. 325.3(b)(2) 
and the minimum risk-based capital ratios set forth in section III of 
appendix A to part 325 generally will be viewed as the minimum 
acceptable capital standards for banks whose overall financial condition 
is fundamentally sound, which are well-managed and which have no 
material or significant financial weaknesses. While the FDIC will make 
this determination in each bank based upon its own condition and 
specific circumstances, this definition will generally apply to those 
banks evidencing a level of risk which is no greater than that normally 
associated with a Composite rating of 1 or 2 under the Uniform Financial 
Institutions Rating System. Banks meeting this definition which are in 
compliance with the minimum leverage and risk-based capital ratio 
standards will not generally be required by the FDIC to raise new 
capital from external sources.
    The FDIC does, however, encourage such banks to maintain capital 
well above the minimums, particularly those institutions that are 
anticipating or experiencing significant growth, and will carefully 
evaluate their earnings and growth trends, dividend policies, capital 
planning procedures and other factors important to the continuous 
maintenance of adequate capital. Adverse trends or deficiencies in these 
areas will be subject to criticism at regular examinations and may be an 
important factor in the FDIC's action on applications submitted by such 
banks. In addition, the FDIC's consideration of capital adequacy in 
banks making applications to the FDIC will also fully examine the 
expected impact of those applications on the bank's ability to maintain 
its capital adequacy. In all cases, banks should maintain capital 
commensurate with the level and nature of risks, including the volume 
and severity of adversely classified assets, to which they are exposed.

                           B. All Other Banks

    Banks not meeting the definition set forth in I.A. of this appendix, 
that is, banks evidencing a level of risk which is at least as great as 
that normally associated with a Composite rating of 3, 4, or 5 under the 
Uniform Financial Institutions Rating System, will be required to 
maintain capital higher than the minimum regulatory requirement and at a 
level deemed appropriate in relation to the degree of risk within the 
institution. These higher capital levels will normally be addressed 
through memorandums of understanding between the FDIC and the bank or, 
in cases of more pronounced risk, through the use of formal enforcement 
actions under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 
1818).

              C. Capital Requirements of Primary Regulator

    Notwithstanding I.A. and B. of this appendix, all banks (or other 
depository institutions making applications to the FDIC that require the 
FDIC to consider the adequacy of the institutions' capital structure) 
will be expected to meet any capital requirements established by their 
primary state or federal regulator which exceed the minimum capital 
requirement set forth in the FDIC's part 325 regulation. In addition, 
the FDIC will, when establishing capital requirements higher than the 
minimum set forth in the regulation, consult with an institution's 
primary state or federal regulator.

                            II. Capital Plans

    Section 325.4(b) specifies that any bank which has less than its 
minimum leverage capital requirement is deemed to be engaging in an 
unsafe or unsound banking practice unless it has submitted, and is in 
compliance with, a plan approved by the FDIC to increase its Tier 1 
leverage capital ratio to such level as the FDIC deems appropriate.
    As required under Sec. 325.104(a)(1) of this part, a bank must file 
a written capital restoration plan with the appropriate FDIC regional 
director within 45 days of the date that the bank receives notice or is 
deemed to have notice that the bank is undercapitalized, significantly 
undercapitalized or critically undercapitalized, unless the FDIC 
notifies the bank in writing that the plan is to be filed within a 
different period. The amount of time allowed to achieve the minimum 
leverage capital requirement will be evaluated by the FDIC on a case-by-
case basis and will depend on a number of factors, including the

[[Page 186]]

viability of the bank and whether it is fundamentally sound and well-
managed.
    Banks evidencing more than normal levels of risk will normally have 
their minimum capital requirements established in a formal or informal 
enforcement proceeding. The time frames for meeting these requirements 
will be set forth in such actions and will generally require some 
immediate action on the bank's part to meet its minimum capital 
requirement. The reasonableness of capital plans submitted by depository 
institutions in connection with applications as provided for in 
Sec. 325.3(d)(2) will be determined in conjunction with the FDIC's 
consideration of the application.

                         III. Written Agreements

    Section 325.4(c) provides that any insured depository institution 
with a Tier 1 capital to total assets (leverage) ratio of less than 2 
percent must enter into and be in compliance with a written agreement 
with the FDIC (or with its primary federal regulator with FDIC as a 
party to the agreement) to increase its Tier 1 leverage capital ratio to 
such level as the FDIC deems appropriate or may be subject to a section 
8(a) termination of insurance action by the FDIC. Except in the very 
rarest of circumstances, the FDIC will require that such agreements 
contemplate immediate efforts by the depository institution to acquire 
the required capital.
    A bank which has issued net worth certificates to the FDIC or 
received approval from the FDIC to defer agricultural loan losses will 
be considered to be in compliance with this written agreement 
requirement for so long as it is in compliance with the FDIC 
requirements set forth in the net worth certificate program and/or 
agricultural loan loss deferral program, provided that both its board 
and the FDIC agree that the net worth certificate or agricultural loan 
loss deferral agreements they enter into or have entered into are 
written agreements as defined in the part 325 regulation. In addition, a 
savings association with qualifying supervisory goodwill that is being 
recognized as Tier 1 capital by the association's primary federal 
regulator will be allowed to recognize this intangible asset for 
purposes of calculating core capital under part 325.
    The guidance in this section III is not intended to preclude the 
FDIC from taking section 8(a) or other enforcement action against any 
institution, regardless of its capital level, if the specific 
circumstances deem such action to be appropriate.

                         IV. Capital Components

    Section 325.2 sets forth the definition of Tier 1 capital for the 
leverage standard as well as the definitions for the various instruments 
and accounts which are included therein. Although nonvoting common 
stock, noncumulative perpetual preferred stock, and minority interests 
in consolidated subsidiaries are normally included in Tier 1 capital, 
voting common stockholders' equity generally will be expected to be the 
dominant form of Tier 1 capital. Thus, banks should avoid undue reliance 
on nonvoting equity, preferred stock and minority interests. The 
following provides some additional guidance with respect to some of the 
items that affect the calculation of Tier 1 capital.

                          A. Intangible Assets

    The FDIC permits state nonmember banks to record intangible assets 
on their books and to report the value of such assets in the 
Consolidated Reports of Condition and Income (``Call Report''). As noted 
in the instructions for preparation of the Consolidated Reports of 
Condition and Income (published by the Federal Financial Institutions 
Examination Council), intangible assets may arise from business 
combinations accounted for under the purchase method in accordance with 
Accounting Principles Board Opinion No. 16, as amended, and acquisitions 
of portions or segments of another institution's business, such as 
branch offices, mortgage servicing portfolios, and credit card 
portfolios.
    Intangible assets created from such transactions may be booked in 
accordance with generally accepted accounting principles with one 
exception. For the purpose of reporting such assets on Call Reports, 
banks reporting to the FDIC shall amortize such assets over their 
estimated useful lives or a period not in excess of 15 years, whichever 
is shorter.
    Notwithstanding the authority to report all intangible assets in the 
Consolidated Reports of Condition and Income, Sec. 325(t) of the 
regulation specifies that mortgage servicing rights and purchased credit 
card relationships are the only intangible assets which will be allowed 
as Tier 1 capital.\1\ The portion of equity capital represented by other 
types of intangible assets will be deducted

[[Page 187]]

from equity capital and assets in the computation of a bank's Tier 1 
capital. Certain of these intangible assets may, however, be recognized 
for regulatory capital purposes if explicitly approved by the Director 
of the Division of Supervision as part of the bank's regulatory capital 
on a specific case basis. These intangibles will be included in 
regulatory capital under the terms and conditions that are specifically 
approved by the FDIC.\2\
---------------------------------------------------------------------------

    \1\ Although intangible assets in the form of mortgage servicing 
rights and purchased credit card relationships are generally recognized 
for regulatory capital purposes, the --deduction of part or all of the 
mortgage servicing rights and purchased credit card relationships may be 
required if the carrying amounts of these rights are excessive in 
relation to their market value or the level of the bank's capital 
accounts. In this regard, mortgage servicing rights and purchased credit 
card relationships will be recognized for regulatory capital purposes 
only to the extent the rights meet the conditions, limitations and 
restrictions described in Sec. 325.5(f).
    \2\ This specific approval must be received in accordance with 
Sec. 325.5(b). In evaluating whether other types of intangibles should 
be recognized for regulatory capital purposes, the FDIC will accord 
special attention to the general characteristics of the intangibles, 
including: (1) The separability of the intangible asset and the ability 
to sell it separate and apart from the bank or the bulk of the bank's 
assets, (2) the certainty that a readily identifiable stream of cash 
flows associated with the intangible asset can hold its value 
notwithstanding the future prospects of the bank, and (3) the existence 
of a market of sufficient depth to provide liquidity for the intangible 
asset. However, pursuant to section 18(n) of the Federal Deposit 
Insurance Act (12 U.S.C. 1828(n)), specific approval cannot be given for 
an unidentifiable intangible asset, such as goodwill, if acquired after 
April 12, 1989.
---------------------------------------------------------------------------

    In certain instances banks may have investments in unconsolidated 
subsidiaries or joint ventures that have large volumes of intangible 
assets. In such instances the bank's consolidated statements will 
reflect an investment in a tangible asset even though such investment 
will, in fact, be represented by a large volume of intangible assets. In 
any such situation where this is material, the bank's investment in the 
unconsolidated subsidiary will be divided into a tangible and an 
intangible portion based on the percentage of intangible assets to total 
assets in the subsidiary. The intangible portion of the investment will 
be treated as if it were an intangible asset on the bank's books in the 
calculation of Tier 1 capital. However, intangible assets in the form of 
mortgage servicing rights and purchased credit card relationships, 
including servicing intangibles held by mortgage banking subsidiaries, 
are subject to the specific criteria set forth in Sec. 325.5(f).

                      B. Perpetual Preferred Stock

    Perpetual preferred stock is defined as preferred stock that does 
not have a maturity date, that cannot be redeemed at the option of the 
holder, and that has no other provisions that will require future 
redemption of the issue. Also, pursuant to section 18(i)(1) of the 
Federal Deposit Insurance Act (12 U.S.C. 1828(i)(1)), a state nonmember 
bank cannot, without the prior consent of the FDIC, reduce the amount or 
retire any part of its perferred stock. (This prior consent is also 
required for the reduction or retirement of any part of a state 
nonmember bank's common stock or capital notes and debentures.)
    Noncumulative perpetual preferred stock is generally included in 
Tier 1 capital. Nonetheless, it is possible for banks to issue preferred 
stock with a dividend rate which escalates to such a high rate that the 
terms become so onerous as to effectively force the bank to call the 
issue (for example, an issue with a low initial rate that is scheduled 
to escalate to much higher rates in subsequent periods). Preferred stock 
issues with such onerous terms have much the same characteristics as 
limited life preferred stock in that the bank would be effectively 
forced to redeem the issue to avoid performance of the onerous terms. 
Such instruments may be disallowed as Tier 1 capital and, for risk-based 
capital purposes, would be included in Tier 2 capital only to the extent 
that the instruments fall within the limitations applicable to 
intermediate-term preferred stock. Banks which are contemplating issues 
bearing terms which may be so characterized are encouraged to submit 
them to the appropriate FDIC regional office for review prior to 
issuance. Nothing herein shall prohibit banks from issuing floating rate 
preferred stock issues where the rate is constant in relation to some 
outside market or index rate. However, noncumulative floating rate 
instruments where the rate paid is based in some part on the current 
credit standing of the bank, and all cumulative preferred stock 
instruments, are excluded from Tier 1 capital. These instruments are 
included in Tier 2 capital for risk-based capital purposes in accordance 
with the limitations set forth in appendix A to part 325.
    The FDIC will also require that issues of perpetual preferred stock 
be consistent with safe and sound banking practices. Issues which would 
unduly enrich insiders or which contain dividend rates or other terms 
which are inconsistent with safe and sound banking practices will likely 
be the subject of appropriate supervisory response from the FDIC. Banks 
contemplating preferred stock issues which may pose safety and soundness 
concerns are encouraged to submit such issues to the appropriate FDIC 
regional office for review prior to sale. Pursuant to Sec. 325.5(e), 
capital instruments that contain or that are subject to any conditions, 
covenants, terms, restrictions or provisions that are inconsistent with 
safe and sound banking practices will not qualify as capital under part 
325.

   C. Other Instruments or Transactions Which Fail to Provide Capital 
                                 Support

    Section 325.5(b) specifies that any capital component or balance 
sheet entry or account

[[Page 188]]

which has characteristics or terms that diminish its contribution to an 
insured depository institution's ability to absorb losses shall be 
deducted from capital. An example involves certain types of minority 
interests in consolidated subsidiaries. Minority interests in 
consolidated subsidiaries have been included in capital based on the 
fact that they provide capital support to the risk in the consolidated 
subsidiaries. Certain transactions have been structured where a bank 
forms a subsidiary by transferring essentially risk-free or low-risk 
assets to the subsidiary in exchange for common stock of the subsidiary. 
The subsidiary then sells preferred stock to third parties.
    The preferred stock becomes a minority interest in a consolidated 
subsidiary but, in effect, represents an essentially risk-free or low-
risk investment for the preferred stockholders. This type of minority 
interest fails to provide any meaningful capital support to the 
consolidated entity inasmuch as it has a preferred claim on the 
essentially risk-free or low-risk assets of the subsidiary. In addition, 
certain minority interests are not substantially equivalent to permanent 
equity in that the interests must be paid off on specified future dates, 
or at the option of the holders of the minority interests, or contain 
other provisions or features that limit the ability of the minority 
interests to effectively absorb losses. Capital instruments or 
transactions of this nature which fail to absorb losses or provide 
meaningful capital support will be deducted from Tier 1 capital.

                      D. Mandatory Convertible Debt

    Mandatory convertible debt securities are subordinated debt 
instruments that require the issuer to convert such instruments into 
common or perpetual preferred stock by a date at or before the maturity 
of the debt instruments. The maturity of these instruments must be 12 
years or less and the instruments must also meet the other criteria set 
forth in appendix A to part 325. Mandatory convertible debt is excluded 
from Tier 1 capital but, for risk-based capital purposes, is included in 
Tier 2 capital as a ``hybrid capital instrument.''
    So-called ``equity commitment notes,'' which merely require a bank 
to sell common or perpetual preferred stock during the life of the 
subordinated debt obligation, are specifically excluded from the 
definition of mandatory convertible debt securities and are only 
included in Tier 2 capital under the risk-based capital framework to the 
extent that they satisfy the requirements and limitations for ``term 
subordinated debt'' set forth in appendix A to part 325.

                  V. Analysis of Consolidated Companies

    In determining a bank's compliance with its minimum capital 
requirements the FDIC will, with two exceptions, generally utilize the 
bank's consolidated statements as defined in the instructions for the 
preparation of Consolidated Reports of Condition and Income.
    The first exception relates to securities subsidiaries of state 
nonmember banks which are subject to Sec. 337.4 of the FDIC's rules and 
regulations (12 CFR 337.4). Any subsidiary subject to this section must 
be a bona fide subsidiary which is adequately capitalized. In addition, 
Sec. 337.4(b)(3) requires that any insured state nonmember bank's 
investment in such a subsidiary shall not be counted towards the bank's 
capital. In those instances where the securities subsidiary is 
consolidated in the bank's Consolidated Report of Condition it will be 
necessary, for the purpose of calculating the bank's Tier 1 capital, to 
adjust the Consolidated Report of Condition in such a manner as to 
reflect the bank's investment in the securities subsidiary on the equity 
method. In this case, and in those cases where the securities subsidiary 
has not been consolidated, the investment in the subsidiary will then be 
deducted from the bank's capital and assets prior to calculation of the 
bank's Tier 1 capital ratio. (Where deemed appropriate, the FDIC may 
also consider deducting investments in other subsidiaries, either on a 
case-by-case basis or, as with securities subsidiaries, based on the 
general characteristics or functional nature of the subsidiaries.)
    The second exception relates to the treatment of subsidiaries of 
insured banks that are domestic depository institutions such as 
commercial banks, savings banks, or savings associations. These 
subsidiaries are not consolidated on a line-by-line basis with the 
insured bank parent in the bank parent's Consolidated Reports of 
Condition and Income. Rather, the instructions for these reports provide 
that bank investments in such depository institution subsidiaries are to 
be reported on an unconsolidated basis in accordance with the equity 
method. Since the FDIC believes that the minimum capital requirements 
should apply to a bank's depository activities in their entirety, 
regardless of the form that the organization's corporate structure 
takes, it will be necessary, for the purpose of calculating the bank's 
Tier 1 leverage and total risk-based capital ratios, to adjust a bank 
parent's Consolidated Report of Condition to consolidate its domestic 
depository institution subsidiaries on a line-by-line basis. The 
financial statements of the subsidiary that are used for this 
consolidation must be prepared in the same manner as the Consolidated 
Report of Condition.
    The FDIC will, in determining the capital adequacy of a bank which 
is a member of a bank holding company or chain banking group, consider 
the degree of leverage and risks undertaken by the parent company or 
other affiliates. Where the level of risk in a

[[Page 189]]

holding company system is no more than normal and the consolidated 
company is adequately capitalized at all appropriate levels, the FDIC 
generally will not require additional capital in subsidiary banks under 
its supervision over and above that which would be required for the 
subsidiary bank on its own merit. In cases where a holding company or 
other affiliated banks (or other companies) evidence more than a normal 
degree of risk (either by virtue of the quality of their assets, the 
nature of the activities conducted, or other factors) or where the 
affiliated organizations are inadequately capitalized, the FDIC will 
consider the potential impact of the additional risk or excess leverage 
upon an individual bank to determine if such factors will likely result 
in excessive requirements for dividends, management fees, or other 
support to the holding company or affiliated organizations which would 
be detrimental to the bank. Where the excessive risk or leverage in such 
organizations is determined to be potentially detrimental to the bank's 
condition or its ability to maintain adequate capital, the FDIC may 
initiate appropriate supervisory action to limit the bank's ability to 
support its weaker affiliates and/or require higher than minimum capital 
ratios in the bank.

          VI. Applicability of Part 325 to Savings Associations

    Section 325.3(c) indicates that, where the FDIC is required to 
evaluate the adequacy of any depository institution's (including any 
savings association's) capital structure in conjunction with an 
application filed by the institution, the FDIC will not approve the 
application if the depository institution does not meet the minimum 
leverage capital requirement set forth in Sec. 325.3(b).
    Also, Sec. 325.4(b) states that, under certain conditions specified 
in section 8(t) of the Federal Deposit Insurance Act, the FDIC may take 
section 8(b)(1) and/or 8(c) enforcement action against a savings 
association that is deemed to be engaged in an unsafe or unsound 
practice on account of its inadequate capital structure. Section 
325.4(c) further specifies that any insured depository institution with 
a Tier 1 leverage ratio (as defined in part 325) of less than 2 percent 
is deemed to be operating in an unsafe or unsound condition pursuant to 
section 8(a) of the Federal Deposit Insurance Act.
    In addition, the Office of Thrift Supervision (OTS), as the primary 
federal regulator of savings associations, has established minimum core 
capital leverage, tangible capital and risk-based capital requirements 
for savings associations (12 CFR part 567). In this regard, certain 
differences exist between the methods used by the OTS to calculate a 
savings association's capital and the methods set forth by the FDIC in 
part 325. These differences include, among others, the core capital 
treatment for investments in subsidiaries and for certain intangible 
assets.
    In determining whether a savings association's application should be 
approved pursuant to Sec. 325.3(c), or whether an unsafe or unsound 
practice or condition exists pursuant to Secs. 325.4(b) and 325.4(c), 
the FDIC will consider the extent of the savings association's capital 
as determined in accordance with part 325. However, the FDIC will also 
consider the extent to which a savings association is in compliance with 
(a) the minimum capital requirements set forth by the OTS, (b) any 
related capital plans for meeting the minimum capital requirements 
approved by the OTS, and/or (c) any other criteria deemed by the FDIC as 
appropriate based on the association's specific circumstances.
[56 FR 10166, Mar. 11, 1991, as amended at 58 FR 6369, Jan. 28, 1993; 58 
FR 8219, Feb. 12, 1993; 58 FR 60103, Nov. 15, 1993; 60 FR 39232, Aug. 1, 
1995]

 Appendix C to Part 325--Risk-Based Capital for State Non-Member Banks; 
                               Market Risk

      Section 1. Purpose, Applicability, Scope, and Effective Date

    (a) Purpose. The purpose of this appendix is to ensure that banks 
with significant exposure to market risk maintain adequate capital to 
support that exposure.1 This appendix supplements and adjusts 
the risk-based capital ratio calculations under appendix A of this part 
with respect to those banks.
---------------------------------------------------------------------------

    \1\ This appendix is based on a framework developed jointly by 
supervisory authorities from the countries represented on the Basle 
Committee on Banking Supervision and endorsed by the Group of Ten 
Central Bank Governors. The framework is described in a Basle Committee 
paper entitled ``Amendment to the Capital Accord to Incorporate Market 
Risks,'' January 1996. Also see modifications issued in September 1997.
---------------------------------------------------------------------------

    (b) Applicability. (1) This appendix applies to any insured state 
nonmember bank whose trading activity 2 (on a worldwide 
consolidated basis) equals:
---------------------------------------------------------------------------

    \2\ Trading activity means the gross sum of trading assets and 
liabilities as reported in the bank's most recent quarterly Consolidated 
Report of Condition and Income (Call Report).
---------------------------------------------------------------------------

    (i) 10 percent or more of total assets; 3 or
---------------------------------------------------------------------------

    \3\ Total assets means quarter-end total assets as reported in the 
bank's most recent Call Report.
---------------------------------------------------------------------------

    (ii) $1 billion or more.
    (2) The FDIC may additionally apply this appendix to any insured 
state nonmember

[[Page 190]]

bank if the FDIC deems it necessary or appropriate for safe and sound 
banking practices.
    (3) The FDIC may exclude an insured state nonmember bank otherwise 
meeting the criteria of paragraph (b)(1) of this section from coverage 
under this appendix if it determines the bank meets such criteria as a 
consequence of accounting, operational, or similar considerations, and 
the FDIC deems it consistent with safe and sound banking practices.
    (c) Scope. The capital requirements of this appendix support market 
risk associated with a bank's covered positions.
    (d) Effective date. This appendix is effective as of January 1, 
1997. Compliance is not mandatory until January 1, 1998. Subject to 
supervisory approval, a bank may opt to comply with this appendix as 
early as January 1, 1997.4
---------------------------------------------------------------------------

    \4\ A bank that voluntarily complies with the final rule prior to 
January 1, 1998, must comply with all of its provisions.
---------------------------------------------------------------------------

                         Section 2. Definitions

    For purposes of this appendix, the following definitions apply:
    (a) Covered positions means all positions in a bank's trading 
account, and all foreign exchange 5 and commodity positions, 
whether or not in the trading account.6 Positions include on-
balance-sheet assets and liabilities and off-balance-sheet items. 
Securities subject to repurchase and lending agreements are included as 
if they are still owned by the lender.
---------------------------------------------------------------------------

    \5\ Subject to FDIC review, a bank may exclude structural positions 
in foreign currencies from its covered positions.
    \6\ The term trading account is defined in the instructions to the 
Call Report.
---------------------------------------------------------------------------

    (b) Market risk means the risk of loss resulting from movements in 
market prices. Market risk consists of general market risk and specific 
risk components.
    (1) General market risk means changes in the market value of covered 
positions resulting from broad market movements, such as changes in the 
general level of interest rates, equity prices, foreign exchange rates, 
or commodity prices.
    (2) Specific risk means changes in the market value of specific 
positions due to factors other than broad market movements. Specific 
risk includes such risk as idiosyncratic variation, as well as event and 
default risk.
    (c) Tier 1 and Tier 2 capital are defined in appendix A of this 
part.
    (d) Tier 3 capital is subordinated debt that is unsecured; is fully 
paid up; has an original maturity of at least two years; is not 
redeemable before maturity without prior approval by the FDIC; includes 
a lock-in clause precluding payment of either interest or principal 
(even at maturity) if the payment would cause the issuing bank's risk-
based capital ratio to fall or remain below the minimum required under 
appendix A of this part; and does not contain and is not covered by any 
covenants, terms, or restrictions that are inconsistent with safe and 
sound banking practices.
    (e) Value-at-risk (VAR) means the estimate of the maximum amount 
that the value of covered positions could decline during a fixed holding 
period within a stated confidence level, measured in accordance with 
section 4 of this appendix.

  Section 3. Adjustments to the Risk-Based Capital Ratio Calculations.

    (a) Risk-based capital ratio denominator. A bank subject to this 
appendix shall calculate its risk-based capital ratio denominator as 
follows:
    (1) Adjusted risk-weighted assets. Calculate adjusted risk-weighted 
assets, which equals risk-weighted assets (as determined in accordance 
with appendix A of this part), excluding the risk-weighted amounts of 
all covered positions (except foreign exchange positions outside the 
trading account and over-the-counter derivative positions).7
---------------------------------------------------------------------------

    \7\ Foreign exchange positions outside the trading account and all 
over-the-counter derivative positions, whether or not in the trading 
account, must be included in adjusted risk weighted assets as determined 
in appendix A of this part.
---------------------------------------------------------------------------

    (2) Measure for market risk. Calculate the measure for market risk, 
which equals the sum of the VAR-based capital charge, the specific risk 
add-on (if any), and the capital charge for de minimis exposures (if 
any).
    (i) VAR-based capital charge. The VAR-based capital charge equals 
the higher of:
    (A) The previous day's VAR measure; or
    (B) The average of the daily VAR measures for each of the preceding 
60 business days multiplied by three, except as provided in section 4(e) 
of this appendix;
    (ii) Specific risk add-on. The specific risk add-on is calculated in 
accordance with section 5 of this appendix; and
    (iii) Capital charge for de minimis exposure. The capital charge for 
de minimis exposure is calculated in accordance with section 4(a) of 
this appendix.
    (3) Market risk equivalent assets. Calculate market risk equivalent 
assets by multiplying the measure for market risk (as calculated in 
paragraph (a)(2) of this section) by 12.5.
    (4) Denominator calculation. Add market risk equivalent assets (as 
calculated in paragraph (a)(3) of this section) to adjusted risk-
weighted assets (as calculated in paragraph (a)(1) of this section). The 
resulting sum is

[[Page 191]]

the bank's risk-based capital ratio denominator.
    (b) Risk-based capital ratio numerator. A bank subject to this 
appendix shall calculate its risk-based capital ratio numerator by 
allocating capital as follows:
    (1) Credit risk allocation. Allocate Tier 1 and Tier 2 capital equal 
to 8.0 percent of adjusted risk-weighted assets (as calculated in 
paragraph (a)(1) of this section).8
---------------------------------------------------------------------------

    \8\ A bank may not allocate Tier 3 capital to support credit risk 
(as calculated under appendix A of this part).
---------------------------------------------------------------------------

    (2) Market risk allocation. Allocate Tier 1, Tier 2, and Tier 3 
capital equal to the measure for market risk as calculated in paragraph 
(a)(2) of this section. The sum of Tier 2 and Tier 3 capital allocated 
for market risk must not exceed 250 percent of Tier 1 capital allocated 
for market risk. (This requirement means that Tier 1 capital allocated 
in this paragraph (b)(2) must equal at least 28.6 percent of the measure 
for market risk.)
    (3) Restrictions. (i) The sum of Tier 2 capital (both allocated and 
excess) and Tier 3 capital (allocated in paragraph (b)(2) of this 
section) may not exceed 100 percent of Tier 1 capital (both allocated 
and excess).9
---------------------------------------------------------------------------

    \9\ Excess Tier 1 capital means Tier 1 capital that has not been 
allocated in paragraphs (b)(1) and (b)(2) of this section. Excess Tier 2 
capital means Tier 2 capital that has not been allocated in paragraph 
(b)(1) and (b)(2) of this section, subject to the restrictions in 
paragraph (b)(3) of this section.
---------------------------------------------------------------------------

    (ii) Term subordinated debt (and intermediate-term preferred stock 
and related surplus) included in Tier 2 capital (both allocated and 
excess) may not exceed 50 percent of Tier 1 capital (both allocated and 
excess).
    (4) Numerator calculation. Add Tier 1 capital (both allocated and 
excess), Tier 2 capital (both allocated and excess), and Tier 3 capital 
(allocated under paragraph (b)(2) of this section). The resulting sum is 
the bank's risk-based capital ratio numerator.

                       Section 4. Internal Models

    (a) General. For risk-based capital purposes, a bank subject to this 
appendix must use its internal model to measure its daily VAR, in 
accordance with the requirements of this section.10 The FDIC 
may permit a bank to use alternative techniques to measure the market 
risk of de minimis exposures so long as the techniques adequately 
measure associated market risk.
---------------------------------------------------------------------------

    \10\ A bank's internal model may use any generally accepted 
measurement techniques, such as variance-covariance models, historical 
simulations, or Monte Carlo simulations. However, the level of 
sophistication and accuracy of a bank's internal model must be 
commensurate with the nature and size of its covered positions. A bank 
that modifies its existing modeling procedures to comply with the 
requirements of this appendix for risk-based capital purposes should, 
nonetheless, continue to use the internal model it considers most 
appropriate in evaluating risks for other purposes.
---------------------------------------------------------------------------

    (b) Qualitative requirements. A bank subject to this appendix must 
have a risk management system that meets the following minimum 
qualitative requirements:
    (1) The bank must have a risk control unit that reports directly to 
senior management and is independent from business trading units.
    (2) The bank's internal risk measurement model must be integrated 
into the daily management process.
    (3) The bank's policies and procedures must identify, and the bank 
must conduct, appropriate stress tests and backtests.11 The 
bank's policies and procedures must identify the procedures to follow in 
response to the results of such tests.
---------------------------------------------------------------------------

    \11\ Stress tests provide information about the impact of adverse 
market events on a bank's covered positions. Backtests provide 
information about the accuracy of an internal model by comparing a 
bank's daily VAR measures to its corresponding daily trading profits and 
losses.
---------------------------------------------------------------------------

    (4) The bank must conduct independent reviews of its risk 
measurement and risk management systems at least annually.
    (c) Market risk factors. The bank's internal model must use risk 
factors sufficient to measure the market risk inherent in all covered 
positions. The risk factors must address interest rate 
risk,12 equity price risk, foreign exchange rate risk, and 
commodity price risk.
---------------------------------------------------------------------------

    \12\ For material exposures in the major currencies and markets, 
modeling techniques must capture spread risk and must incorporate enough 
segments of the yield curve--at least six--to capture differences in 
volatility and less than perfect correlation of rates along the yield 
curve.
---------------------------------------------------------------------------

    (d) Quantitative requirements. For regulatory capital purposes, VAR 
measures must meet the following quantitative requirements:
    (1) The VAR measures must be calculated on a daily basis using a 99 
percent, one-tailed confidence level with a price shock equivalent to a 
ten-business day movement in rates and prices. In order to calculate VAR 
measures based on a ten-day price shock, the bank may either calculate 
ten-day figures directly or convert VAR figures based on holding periods 
other than ten days to the equivalent of a ten-day holding period (for 
instance, by multiplying a one-day VAR measure by the square root of 
ten).
    (2) The VAR measures must be based on an historical observation 
period (or effective observation period for a bank using a

[[Page 192]]

weighting scheme or other similar method) of at least one year. The bank 
must update data sets at least once every three months or more 
frequently as market conditions warrant.
    (3) The VAR measures must include the risks arising from the non-
linear price characteristics of options positions and the sensitivity of 
the market value of the positions to changes in the volatility of the 
underlying rates or prices. A bank with a large or complex options 
portfolio must measure the volatility of options positions by different 
maturities.
    (4) The VAR measures may incorporate empirical correlations within 
and across risk categories, provided that the bank's process for 
measuring correlations is sound. In the event that the VAR measures do 
not incorporate empirical correlations across risk categories, then the 
bank must add the separate VAR measures for the four major risk 
categories to determine its aggregate VAR measure.
    (e) Backtesting. (1) Beginning one year after a bank starts to 
comply with this appendix, a bank must conduct backtesting by comparing 
each of its most recent 250 business days' actual net trading profit or 
loss 13 with the corresponding daily VAR measures generated 
for internal risk measurement purposes and calibrated to a one-day 
holding period and a 99 percent, one-tailed confidence level.
---------------------------------------------------------------------------

    \13\ Actual net trading profits and losses typically include such 
things as realized and unrealized gains and losses on portfolio 
positions as well as fee income and commissions associated with trading 
activities.
---------------------------------------------------------------------------

    (2) Once each quarter, the bank must identify the number of 
exceptions, that is, the number of business days for which the magnitude 
of the actual daily net trading loss, if any, exceeds the corresponding 
daily VAR measure.
    (3) A bank must use the multiplication factor indicated in Table 1 
of this appendix in determining its capital charge for market risk under 
section 3(a)(2)(i)(B) of this appendix until it obtains the next 
quarter's backtesting results, unless the FDIC determines that a 
different adjustment or other action is appropriate.

------------------------------------------------------------------------
                                                          Multiplication
                  Number of exceptions                        factor    
------------------------------------------------------------------------
4 or fewer..............................................          3.00  
5.......................................................          3.40  
6.......................................................          3.50  
7.......................................................          3.65  
8.......................................................          3.75  
9.......................................................          3.85  
10 or more..............................................          4.00  
------------------------------------------------------------------------

                        Section 5. Specific Risk

    (a)Modeled specific risk. A bank may use its internal model to 
measure specific risk. If the bank has demonstrated to the FDIC that its 
internal model measures the specific risk, including event and default 
risk as well as idiosyncratic variation, of covered debt and equity 
positions and includes the specific risk measure in the VAR-based 
capital charge in section 3(a)(2)(i) of this appendix, then the bank has 
no specific risk add-on for purposes of section 3(a)(2)(ii) of this 
appendix. The model should explain the historical price variation in the 
trading portfolio and capture concentration, both magnitude and changes 
in composition. The model should also be robust to an adverse 
environment and have been validated through backtesting which assesses 
whether specific risk is being accurately captured.
    (b) Add-on charge for modeled specific risk. If a bank's model 
measures specific risk, but the bank has not been able to demonstrate to 
the FDIC that the model adequately measures event and default risk for 
covered debt and equity positions, then the bank's specific risk add-on 
for purposes of section 3(a)(2)(ii) of this appendix is as follows:
    (1) If the model is susceptible to valid separation of the VAR-
measure into a specific risk portion and a general market risk portion, 
then the specific risk add-on is equal to the previous day's specific 
risk portion.
    (2) If the model does not separate the VAR measure into a specific 
risk portion and a general market risk portion, then the specific risk 
add-on is the sum of the previous day's VAR measures for subportfolios 
of covered debt and covered equity positions.
    (c) Add-on Charge if specific risk is not modeled. If a bank does 
not model specific risk in accordance with paragraph (a) or (b) of this 
section, the bank's specific risk add-on charge for purposes of section 
3(a)(2)(ii) of this appendix equals the components for covered debt and 
equity positions as appropriate:
    (1) Covered debt positions. (i) For purposes of this section 5, 
covered debt positions means fixed-rate or floating-rate debt 
instruments located in the trading account and instruments located in 
the trading account with values that react primarily to changes in 
interest rates, including certain non-convertible preferred stock, 
convertible bonds, and

[[Page 193]]

instruments subject to repurchase and lending agreements. Also included 
are derivatives (including written and purchased options) for which the 
underlying instrument is a covered debt instrument that is subject to a 
non-zero specific risk capital charge.
    (A) For covered debt positions that are derivatives, a bank must 
risk-weight (as described in paragraph (c)(1)(iii) of this section) the 
market value of the effective notional amount of the underlying debt 
instrument or index portfolio. Swaps must be included as the notional 
position in the underlying debt instrument or index portfolio, with a 
receiving side treated as a long position and a paying side treated as a 
short position; and
    (B) For covered debt positions that are options, whether long or 
short, a bank must risk-weight (as described in paragraph (c)(1)(iii) of 
this section) the market value of the effective notional amount of the 
underlying debt instrument or index multiplied by the option's delta.
    (ii) A bank may net long and short covered debt positions (including 
derivatives) in identical debt issues or indices.
    (iii) A bank must multiply the absolute value of the current market 
value of each net long or short covered debt position by the appropriate 
specific risk weighting factor indicated in Table 2 of this appendix. 
The specific risk capital charge component for covered debt positions is 
the sum of the weighted values.

  Table 2.--Specific Risk Weighting Factors for Covered Debt Positions  
------------------------------------------------------------------------
                                                               Weighting
              Category                  Remaining maturity    factor (in
                                          (contractual)        percent) 
------------------------------------------------------------------------
Government.........................  N/A....................        0.00
Qualifying.........................  6 months or less.......        0.25
                                     Over 6 months to 24            1.00
                                      months.                           
                                     Over 24 months.........        1.60
Other..............................  N/A....................        8.00
------------------------------------------------------------------------

    (A) The government category includes all debt instruments of central 
governments of OECD-based countries 14 including bonds, 
Treasury bills, and other short-term instruments, as well as local 
currency instruments of non-OECD central governments to the extent the 
bank has liabilities booked in that currency.
---------------------------------------------------------------------------

    \14\  Organization for Economic Cooperation and Development (OECD)-
based countries is defined in appendix A of this part.
---------------------------------------------------------------------------

    (B) The qualifying category includes debt instruments of U.S. 
government-sponsored agencies, general obligation debt instruments 
issued by states and other political subdivisions of OECD-based 
countries, multilateral development banks, and debt instruments issued 
by U.S. depository institutions or OECD-banks that do not qualify as 
capital of the issuing institution.15 This category also 
includes other debt instruments, including corporate debt and revenue 
instruments issued by states and other political subdivisions of OECD 
countries, that are:
---------------------------------------------------------------------------

    \15\  U.S. government-sponsored agencies, multilateral development 
banks, and OECD banks are defined in appendix A of this part.
---------------------------------------------------------------------------

    (1) Rated investment-grade by at least two nationally recognized 
credit rating services;
    (2) Rated investment-grade by one nationally recognized credit 
rating agency and not rated less than investment-grade by any other 
credit rating agency; or
    (3) Unrated, but deemed to be of comparable investment quality by 
the reporting bank and the issuer has instruments listed on a recognized 
stock exchange, subject to review by the FDIC.
    (C) The other category includes debt instruments that are not 
included in the government or qualifying categories.
    (2) Covered equity positions. (i) For purposes of this section 5, 
covered equity positions means equity instruments located in the trading 
account and instruments located in the trading account with values that 
react primarily to changes in equity prices, including voting or non-
voting common stock, certain convertible bonds, and commitments to buy 
or sell equity instruments. Also included are derivatives (including 
written and purchased options) for which the underlying is a covered 
equity position.
    (A) For covered equity positions that are derivatives, a bank must 
risk weight (as described in paragraph (c)(2)(iii) of this section) the 
market value of the effective notional amount of the underlying equity 
instrument or equity portfolio. Swaps must be included as the notional 
position in the underlying equity instrument or index portfolio, with a 
receiving side treated as a long position and a paying side treated as a 
short position; and
    (B) For covered equity positions that are options, whether long or 
short, a bank must risk weight (as described in paragraph (c)(2)(iii) of 
this section) the market value of the effective notional amount of the 
underlying equity instrument or index multiplied by the option's delta.
    (ii) A bank may net long and short covered equity positions 
(including derivatives) in identical equity issues or equity indices in 
the same market.16
---------------------------------------------------------------------------

    \16\ A bank may also net positions in depository receipts against an 
opposite position in the underlying equity or identical equity in 
different markets, provided that the bank includes the costs of 
conversion.
---------------------------------------------------------------------------

    (iii)(A) A bank must multiply the absolute value of the current 
market value of each

[[Page 194]]

net long or short covered equity position by a risk weighting factor of 
8.0 percent, or by 4.0 percent if the equity is held in a portfolio that 
is both liquid and well-diversified.17 For covered equity 
positions that are index contracts comprising a well-diversified 
portfolio of equity instruments, the net long or short position is 
multiplied by a risk weighting factor of 2.0 percent.
---------------------------------------------------------------------------

    \17\ A portfolio is liquid and well-diversified if: (1) it is 
characterized by a limited sensitivity to price changes of any single 
equity issue or closely related group of equity issues held in the 
portfolio; (2) the volatility of the portfolio's value is not dominated 
by the volatility of any individual equity issue or by equity issues 
from any single industry or economic sector; (3) it contains a large 
number of individual equity positions, with no single position 
representing a substantial portion of the portfolio's total market 
value; and (4) it consists mainly of issues traded on organized 
exchanges or in well-established over-the-counter markets.
---------------------------------------------------------------------------

    (B) For covered equity positions from the following futures-related 
arbitrage strategies, a bank may apply a 2.0 percent risk weighting 
factor to one side (long or short) of each position with the opposite 
side exempt from charge, subject to review by the FDIC:
    (1) Long and short positions in exactly the same index at different 
dates or in different market centers; or
    (2) Long and short positions in index contracts at the same date in 
different but similar indices.
    (C) For futures contracts on broadly-based indices that are matched 
by offsetting positions in a basket of stocks comprising the index, a 
bank may apply a 2.0 percent risk weighting factor to the futures and 
stock basket positions (long and short), provided that such trades are 
deliberately entered into and separately controlled, and that the basket 
of stocks comprises at least 90 percent of the capitalization of the 
index.
    (iv) The specific risk capital charge component for covered equity 
positions is the sum of the weighted values.
[61 FR 47376, Sept. 6, 1996, as amended at 62 FR 68068, Dec. 30, 1997]



PART 326--MINIMUM SECURITY DEVICES AND PROCEDURES AND BANK SECRECY ACT \1\ COMPLIANCE--Table of Contents



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

    \1\ In its original form, subchapter II of chapter 53 of title 31 
U.S.C., was part of Pub. L. 91-508 which requires recordkeeping for and 
reporting of currency transactions by banks and others and is commonly 
known as the Bank Secrecy Act.
---------------------------------------------------------------------------

                 Subpart A--Minimum Security Procedures

Sec.
326.0  Authority, purpose, and scope.
326.1  Definitions.
326.2  Designation of security officer.
326.3  Security program.
326.4  Reports.

    Subpart B--Procedures for Monitoring Bank Secrecy Act Complianace

326.8  Bank Secrecy Act compliance.

    Authority:  12 U.S.C. 1813, 1815, 1817, 1818, 1819 [Tenth], 1881-
1883; 31 U.S.C. 5311-5324.



                 Subpart A--Minimum Security Procedures

    Source:  56 FR 13581, Apr. 3, 1991, unless otherwise noted.



Sec. 326.0  Authority, purpose, and scope.

    (a) This part is issued by the Federal Deposit Insurance Corporation 
(``FDIC'') pursuant to section 3 of the Bank Protection Act of 1968 (12 
U.S.C. 1882). It applies to insured state banks that are not members of 
the Federal Reserve System. It requires each bank to adopt appropriate 
security procedures to discourage robberies, burglaries, and larcenies 
and to assist in identifying and apprehending persons who commit such 
acts.
    (b) It is the responsibility of the bank's board of directors to 
comply with this part and ensure that a written security program for the 
bank's main office and branches is developed and implemented.

(Approved by the Office of Management and Budget under control number 
3064-0095)



Sec. 326.1  Definitions.

    For the purposes of this part--
    (a) The term insured nonmember bank means any bank, including a 
foreign bank having a branch the deposits of which are insured in 
accordance with the provisions of the Federal Deposit Insurance Act, 
which is not a member of the Federal Reserve System. The term does not 
include any institution chartered or licensed by the Comptroller of the 
Currency, any District bank, or any savings association.

[[Page 195]]

    (b) The term banking office includes any branch of an insured 
nonmember bank, and, in the case of an insured state nonmember bank, it 
includes the main office of that bank.
    (c) The term branch for a bank chartered under the laws of any state 
of the United States includes any branch bank, branch office, branch 
agency, additional office, or any branch place of business located in 
any state or territory of the United States, District of Columbia, 
Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific 
Islands, the Northern Mariana Islands or the Virgin Islands at which 
deposits are received or checks paid or money lent. In the case of a 
foreign bank, as defined in 12 CFR 346.1(a), the term branch has the 
meaning given in 12 CFR 346.1(d).



Sec. 326.2  Designation of security officer.

    Upon the issuance of federal deposit insurance, the board of 
directors of each insured nonmember bank \2\ shall designate a security 
officer who shall have the authority, subject to the approval of the 
board of directors, to develop, within a reasonable time, but no later 
than 180 days, and to administer a written security program for each 
banking office.
---------------------------------------------------------------------------

    \2\ The term board of directors includes the managing official of an 
insured branch of a foreign bank for purposes of 12 CFR 326.0-326.4.
---------------------------------------------------------------------------



Sec. 326.3  Security program.

    (a) Contents of security program. The security program shall:
    (1) Establish procedures for opening and closing for business and 
for the safekeeping of all currency, negotiable securities, and similar 
valuables at all times;
    (2) Establish procedures that will assist in identifying persons 
committing crimes against the bank and that will preserve evidence that 
may aid in their identification and prosecution; such procedures may 
include, but are not limited to:
    (i) Retaining a record of any robbery, burglary, or larceny 
committed against the bank;
    (ii) Maintaining a camera that records activity in the banking 
office; and
    (iii) Using identification devices, such as prerecorded serial-
numbered bills, or chemical and electronic devices;
    (3) Provide for initial and periodic training of officers and 
employees in their responsibilities under the security program and in 
proper employee conduct during and after a robbery, burglary or larceny; 
and
    (4) Provide for selecting, testing, operating and maintaining 
appropriate security devices, as specified in paragraph (b) of this 
section.
    (b) Security devices. Each insured nonmember bank shall have, at a 
minimum, the following security devices:
    (1) A means of protecting cash or other liquid assets, such as a 
vault, safe, or other secure space;
    (2) A lighting system for illuminating, during the hours of 
darkness, the area around the vault, if the vault is visible from 
outside the banking office;
    (3) An alarm system or other appropriate device for promptly 
notifying the nearest responsible law enforcement officers of an 
attempted or perpetrated robbery or burglary;
    (4) Tamper-resistant locks on exterior doors and exterior windows 
that may be opened; and
    (5) Such other devices as the security officer determines to be 
appropriate, taking into consideration:
    (i) The incidence of crimes against financial institutions in the 
area;
    (ii) The amount of currency or other valuables exposed to robbery, 
burglary, and larceny;
    (iii) The distance of the banking office from the nearest 
responsible law enforcement officers;
    (iv) The cost of the security devices;
    (v) Other security measures in effect at the banking office; and
    (vi) The physical characteristics of the structure of the banking 
office and its surroundings.



Sec. 326.4  Reports.

    The security officer for each insured nonmember bank shall report at 
least

[[Page 196]]

annually to the bank's board of directors on the implementation, 
administration, and effectiveness of the security program.



    Subpart B--Procedures for Monitoring Bank Secrecy Act Compliance



Sec. 326.8  Bank Secrecy Act compliance.

    (a) Purpose. This subpart is issued to assure that all insured 
nonmember banks \3\ establish and maintain procedures reasonably 
designed to assure and monitor their compliance with the requirements of 
subchapter II of chapter 53 of title 31 U.S.C., and the implementing 
regulations promulgated thereunder by the Department of Treasury at 31 
CFR part 103.
---------------------------------------------------------------------------

    \3\ In regard to foreign banks, the programs and procedures required 
by Sec. 326.8 need be instituted only at an insured branch as defined in 
12 CFR 346.1(g) which is a State branch as defined in 12 CFR 346.1(f).
---------------------------------------------------------------------------

    (b) Compliance procedures. On or before April 27, 1987, each bank 
shall develop and provide for the continued administration of a program 
reasonably designed to assure and monitor compliance with recordkeeping 
and reporting requirements set forth in subchapter II of chapter 53 of 
title 31 U.S.C., and the implementing regulations promulgated thereunder 
by the Department of Treasury at 31 CFR part 103. The compliance program 
shall be reduced to writing, approved by the board of directors and 
noted in the minutes.
    (c) Contents of compliance program. The compliance program shall, at 
a minimum:
    (1) Provide for a system of internal controls to assure ongoing 
compliance;
    (2) Provide for independent testing for compliance to be conducted 
by bank personnel or by an outside party;
    (3) Designate an individual or individuals responsible for 
coordinating and monitoring day-to-day compliance; and
    (4) Provide training for appropriate personnel.

(Approved by the Office of Management and Budget under control number 
3064-0087)

[52 FR 2860, Jan. 27, 1987, as amended at 53 FR 17917, May 19, 1988]



PART 327--ASSESSMENTS--Table of Contents




                          Subpart A--In General

Sec.
327.1  Purpose and scope.
327.2  Certified statements.
327.3  Payment of semiannual assessments.
327.4  Annual assessment rate.
327.5  Assessment base.
327.6  Terminating transfers; other terminations of insurance.
327.7  Payment of interest on assessment underpayments and overpayments.
327.8  Definitions.
327.9  Assessment schedules.
327.10  Interpretive rule: section 7(b)(2)(A)(v).

  Subpart B--Insured Depository Institutions Participating in Section 
                          5(d)(3) Transactions

327.31  Scope.
327.32  Computation and payment of assessment.
327.33  ``Acquired'' deposits.
327.34  Application of AADAs.
327.35  Grandfathered AADA elements.
327.36  Growth computation.
327.37  Attribution of transferred deposits.

    Authority:  12 U.S.C. 1441, 1441b, 1813, 1815, 1817-1819; Deposit 
Insurance Funds Act of 1996, Pub. L. 104-208, 110 Stat. 3009 et seq.

    Source:  54 FR 51374, Dec. 15, 1989, unless otherwise noted.



                          Subpart A--In General



Sec. 327.1  Purpose and scope.

    (a) Scope. This part 327 applies to any insured depository 
institution, including any insured branch of a foreign bank.
    (b) Purpose. (1) Except as specified in paragraph (b)(2) of this 
section, this part 327 sets forth the rules for:
    (i) The time and manner of filing certified statements by insured 
depository institutions;
    (ii) The time and manner of payment of the semiannual assessments by 
such institutions; and
    (iii) The payment of assessments by depository institutions whose 
insured status has terminated.
    (2) Deductions from the assessment base of an insured branch of a 
foreign bank are stated in part 346 of this chapter.

[[Page 197]]



Sec. 327.2  Certified statements.

    (a) Required. Each insured depository institution shall file a 
certified statement during each semiannual period.
    (b) Time of filing. Certified statements for any semiannual period 
must be filed no later than the second-quarterly payment date specified 
in Sec. 327.3(d)(2). Certified statements postmarked on or before such 
date are deemed to be timely filed.
    (c) Form. The Corporation will provide to each insured depository 
institution a certified statement form showing the amount and 
computation of the institution's semiannual assessment. The president of 
the insured depository institution, or such other officer as the 
institution's board of directors or trustees may designate, shall review 
the information shown on the form.
    (d) Certification--(1) Form accepted. If such officer agrees that to 
the best of his or her knowledge and belief the information shown on the 
certified statement form is true, correct and complete and in accordance 
with the Federal Deposit Insurance Act and the regulations issued 
thereunder, the officer shall so certify.
    (2) Form amended--(i) In general. If such officer determines that to 
the best of his or her knowledge and belief the information shown on the 
certified statement form is not true, correct and complete and in 
accordance with the Federal Deposit Insurance Act and the regulations 
issued thereunder, the officer shall make such amendments to the 
information as he or she believes necessary. The officer shall certify 
that to the best of his or her knowledge and belief the information 
shown on the form, as so amended, is true, correct and complete and in 
accordance with the Federal Deposit Insurance Act and the regulations 
issued thereunder.
    (ii) Request for revision. The certification and filing of an 
amended form under paragraph (d)(2) of this section does not constitute 
a request for revision by the Corporation of the information shown on 
the form. Any such request to the Corporation for revision of the 
information shown on the form shall be submitted separately from the 
certified statement and in accordance with the provisions of 
Sec. 327.3(h).
    (iii) Rate multiplier. The rate multiplier shown on the certified 
statement form shall be amended only if it is inconsistent with the 
assessment risk classification assigned to the institution in writing by 
the Corporation for the current semiannual period pursuant to 
Sec. 327.4(a). Agreement with the rate multiplier shall not be deemed to 
constitute agreement with the assessment risk classification assigned.
[59 FR 67160, Dec. 29, 1994]



Sec. 327.3  Payment of semiannual assessments.

    (a) Required--(1) In general. Except as provided in paragraph (b) of 
this section, each insured depository institution shall pay to the 
Corporation, in two quarterly payments, a semiannual assessment 
determined in accordance with this part 327.
    (2) Notice of designated deposit account. For the purpose of making 
such payments, each insured depository institution shall designate a 
deposit account for direct debit by the Corporation. No later than 30 
days prior to the next payment date specified in paragraphs (c)(2) and 
(d)(2) of this section, each institution shall provide written notice to 
the Corporation of the account designated, including all information and 
authorizations needed by the Corporation for direct debit of the 
account. After the initial notice of the designated account, no further 
notice is required unless the institution designates a different account 
for assessment debit by the Corporation, in which case the requirements 
of the preceding sentence apply.
    (b) Newly insured institutions. A newly insured institution shall 
not be required to pay an assessment for the semiannual period during 
which it becomes an insured institution. For the semiannual period 
following the period during which it becomes an insured institution, it 
shall pay its full semiannual assessment at the time and in the manner 
provided for in paragraph (d) of this section, in an amount that is the 
product of its assessment base for the prior semiannual period, as 
provided for in Sec. 327.5(c), multiplied by one-half of the annual 
assessment rate corresponding to the assessment risk

[[Page 198]]

classification assigned to the institution pursuant to Sec. 327.4(a). 
For the purpose of making such payment, the institution shall provide to 
the Corporation no later than the payment date specified in paragraph 
(d)(2) of this section the notice required by paragraph (a)(2) of this 
section.
    (c) First-quarterly payment--(1) Invoice. Except in the case of 
invoices for the first quarterly payment for the first semiannual period 
of 1997, no later than 30 days prior to the payment date specified in 
paragraph (c)(2) of this section, the Corporation will provide to each 
insured depository institution an invoice showing the amount of the 
assessment payment due from the institution for the first quarter of the 
upcoming semiannual period, and the computation of that amount. Subject 
to paragraph (g) of this section and to subpart B of this part, the 
invoiced amount shall be the product of the following: The assessment 
base of the institution for the preceding September 30 (for the 
semiannual period beginning January 1) or March 31 (for the semiannual 
period beginning July 1) computed in accordance with Sec. 327.5; 
multiplied by one-quarter of the annual assessment rate corresponding to 
the assessment risk classification assigned to the institution pursuant 
to Sec. 327.4(a).
    (2) Payment date and manner. Except as provided in paragraphs (c)(3) 
and (j) of this section, the Corporation will cause the amount stated in 
the applicable invoice to be directly debited on the appropriate regular 
payment date from the deposit account designated by the insured 
depository institution for that purpose, as follows:
    (i) In the case of the first quarterly payment for a semiannual 
period that begins on January 1, the regular payment date is January 2; 
and
    (ii) In the case of the first quarterly payment for a semiannual 
period that begins on July 1, the regular payment date is the preceding 
June 30.
    (3) Alternate payment date--(i) Election. An insured depository 
institution may elect to pay the first quarterly payment for a 
semiannual period that begins on January 1 of a current year on the 
alternate payment date. The alternate payment date is December 30 of the 
prior year.
    (ii) Certification. (A) In order to elect the alternate payment date 
with respect to a current semiannual period, an institution must so 
certify in writing in advance. In order for the election to be effective 
with respect to the current semiannual period, the Corporation must 
receive the certification no later than the prior November 1.
    (B) The certification shall be made on a pre-printed form provided 
by the Corporation. The form shall be signed by the institution's chief 
financial officer or such other officer as the institution's board of 
directors may designate for that purpose. The form shall be sent to the 
attention of the Chief of the Assessment Operations Section of the 
Corporation's Division of Finance. An institution may obtain the form 
from the Corporation's Division of Finance.
    (C) The election of the alternate payment date shall be effective 
with respect to the semiannual period specified in the certification and 
thereafter, until terminated.
    (iii) Termination. (A) An insured depository institution may 
terminate its election of the alternate payment date, and thereby revert 
to the regular payment date, by so certifying in writing to the 
Corporation in advance. In order for the termination to be effective for 
a current semiannual period, the Corporation must receive the 
termination certification no later than the prior November 1.
    (B) The termination certification shall be made on a pre-printed 
form provided by the Corporation. The form shall be signed by the 
institution's chief financial officer or such other officer as the 
institution's board of directors may designate for that purpose. The 
form shall be sent to the attention of the Chief of the Assessment 
Operations Section of the Corporation's Division of Finance. An 
institution may obtain the form from the Corporation's Division of 
Finance.
    (C) The termination shall be permanent, except that an institution 
that has terminated an election may make a new election under paragraph 
(c)(3)(i) of this section.
    (iv) Manner of payment. Except as provided in paragraph (j) of this 
section, if an insured depository institution elects the alternate 
payment date,

[[Page 199]]

the Corporation will cause the amount stated in the applicable invoice 
to be directly debited on the alternate payment date from the deposit 
account designated by the insured depository institution for that 
purpose.
    (d) Second-quarterly payment--(1) Invoice. No later than 30 days 
prior to the payment date specified in paragraph (d)(2) of this section, 
the Corporation will provide to each insured depository institution an 
invoice showing the amount of the assessment payment due from the 
institution for the second quarter of that semiannual period, and the 
computation of that amount. Subject to paragraph (g) of this section and 
to subpart B of this part, the invoiced amount shall be the product of 
the following: The assessment base of the institution for the preceding 
December 31 (for the semiannual period beginning January 1) or June 30 
(for the semiannual period beginning July 1) computed in accordance with 
Sec. 327.5; multiplied by one-quarter of the annual assessment rate 
corresponding to the assessment risk classification assigned to the 
institution pursuant to Sec. 327.4(a).
    (2) Except as provided in paragraph (j) of this section, the 
Corporation will cause the amount stated in the applicable invoice to be 
directly debited on the appropriate regular payment date from the 
deposit account designated by the insured depository institution for 
that purpose, as follows:
    (i) In the case of the second quarterly payment for a semiannual 
period that begins on January 1, the regular payment date is March 30; 
and
    (ii) In the case of the second quarterly payment for a semiannual 
period that begins on July 1, the regular payment date is September 30.
    (e) Necessary action, sufficient funding by institution. Each 
insured depository institution shall take all actions necessary to allow 
the Corporation to debit assessments from the insured depository 
institution's designated deposit account. Each insured depository 
institution shall, prior to each payment date indicated in paragraphs 
(c)(2), (c)(3)(i), and (d)(2) of this section, ensure that funds in an 
amount at least equal to the invoiced amount (or twice the invoiced 
amount if the insured depository institution has elected the doubled-
payment option pursuant to paragraph (j) of this section) are available 
in the designated account for direct debit by the Corporation. Failure 
to take any such action or to provide such funding of the account shall 
be deemed to constitute nonpayment of the assessment.
    (f) Business days. If a payment date specified in paragraph 
(c)(2)(i) falls on a date that is not a business day, the applicable 
date shall be the following business day. If a payment date specified in 
paragraph (c)(1), (c)(2)(ii), (c)(3)(i), or (d)(2) of this section falls 
on a date that is not a business day, the applicable date shall be the 
previous business day.
    (g) Payment adjustments in succeeding quarters. The quarterly 
assessment invoices provided by the Corporation may reflect adjustments, 
initiated by the Corporation or an institution, resulting from such 
factors as amendments to prior quarterly reports of condition, 
retroactive revision of the institution's assessment risk 
classification, and revision of the Corporation's assessment 
computations for prior quarters.
    (h) Request for revision of computation of quarterly assessment 
payment--(1) In general. An institution may submit a request for 
revision of the computation of the institution's quarterly assessment 
payment as shown on the quarterly invoice. Such revision may be 
requested in the following circumstances:
    (i) The institution disagrees with the computation of the assessment 
base as stated on the invoice;
    (ii) The institution determines that the rate multiplier applied by 
the Corporation is inconsistent with the assessment risk classification 
assigned to the institution in writing by the Corporation for the 
semiannual period for which the payment is due; or
    (iii) The institution believes that the invoice does not fully or 
accurately reflect adjustments provided for in paragraph (g) of this 
section.
    (2) Inapplicability. This paragraph (h) is not applicable to 
requests for review of an institution's assessment risk classification, 
which are covered by Sec. 327.4(d).

[[Page 200]]

    (3) Requirements. Any such request for revision must be submitted 
within 60 days of the date of the quarterly assessment invoice for which 
revision is requested, except that requests for revision resulting from 
detection by the institution of an error or omission for which the 
institution files an amendment to its quarterly report of condition must 
be submitted within 60 days of the filing date of the amendment to the 
quarterly report of condition. The request for revision shall be 
submitted to the Chief of the Assessment Operations Section and shall 
provide documentation sufficient to support the revision sought by the 
institution. If additional information is requested by the Corporation, 
such information shall be provided by the institution within 21 days of 
the date of the Corporation's request for additional information. Any 
institution submitting a timely request for revision will receive 
written response from the Corporations's Chief Financial Officer (or his 
or her designee) within 60 days of receipt by the Corporation of the 
request for revision or, if additional information has been requested by 
the Corporation, within 60 days of receipt of the additional 
information. Whenever feasible, the response will notify the institution 
of the determination of the Chief Financial Officer (or designee) as to 
whether the requested revision is warranted. In all instances in which a 
timely request for revision is submitted, the Chief Financial Officer 
(or designee) will make a determination on the request as promptly as 
possible and notify the institution in writing of the determination.
    (i) Assessment notice not received. Any institution that has not 
received an assessment invoice for any quarterly payment by the 
fifteenth day of the month in which the quarterly payment is due shall 
promptly notify the Corporation. Failure to provide prompt notice to the 
Corporation shall not affect the institution's obligation to make full 
and timely assessment payment. Unless otherwise directed by the 
Corporation, the institution shall preliminarily pay the amount shown on 
its assessment invoice for the preceding quarter, subject to subsequent 
correction.
    (j) Doubled-payment option--(1) Election. In the case of a quarterly 
payment to be made on March 30, on June 30, on September 30, or on the 
alternate payment date, an insured depository institution may elect to 
pay twice the amount of such quarterly payment.
    (2) Certification. (i) In order to elect the doubled-payment option 
with respect to a selected payment date, an institution must so certify 
in writing to the Corporation in advance. In order for the election to 
be effective, the Corporation must receive the certification by the 
following dates: in the case of a quarterly payment to be made on March 
30, June 30, or September 30, the Corporation must receive the 
certification no later than the prior February 1, May 1, or August 1, 
respectively; in the case of a quarterly payment to be made on the 
alternate payment date, the Corporation must receive the certification 
by the prior November 1.
    (ii) The certification shall be made on a pre-printed form provided 
by the Corporation. The form shall be signed by the institution's chief 
financial officer or such other officer as the institution's board of 
directors may designate for that purpose. The form shall be sent to the 
attention of the Chief of the Assessment Operations Section of the 
Corporation's Division of Finance. An institution may obtain the form 
from the Corporation's Division of Finance.
    (iii) The election shall be effective with respect to the selected 
quarterly payment for the year specified in the certification and with 
respect to subsequent quarterly payments made on the selected payment 
date in subsequent years, until the election is terminated.
    (3) Termination. (i) An insured depository institution may terminate 
its election of the doubled-payment option for a selected payment date 
by so certifying in writing to the Corporation in advance. In order for 
the termination to be effective, the Corporation must receive the 
termination certification by the following dates: In the case of a 
quarterly payment to be made on March 30, June 30, or September 30, the 
Corporation must receive the termination certification no later than the 
prior February 1, May 1, or August 1, respectively; in the case of a 
quarterly payment to be made on the alternate

[[Page 201]]

payment date, the Corporation must receive the termination certification 
by the prior November 1.
    (ii) The termination certification shall be made on a pre-printed 
form provided by the Corporation. The form shall be signed by the 
institution's chief financial officer or such other officer as the 
institution's board of directors may designate for that purpose. The 
form shall be sent to the attention of the Chief of the Assessment 
Operations Section of the Corporation's Division of Finance. An 
institution may obtain the form from the Corporation's Division of 
Finance.
    (iii) The termination shall be permanent, except that an institution 
that has terminated its election of the doubled-payment option for a 
selected payment date may make a new election.
    (4) Manner of payment. If an insured depository institution elects 
the doubled-payment option for a selected payment date, the Corporation 
will cause an amount equal to twice the amount stated in the applicable 
invoice to be directly debited on the selected payment date from the 
deposit account designated by the insured depository institution for 
that purpose.
[59 FR 67161, Dec. 29, 1994, as amended at 60 FR 50407, Sept. 29, 1995; 
61 FR 67696, Dec. 24, 1996]



Sec. 327.4  Annual assessment rate.

    (a) Assessment risk classification. For the purpose of determining 
the annual assessment rate for insured depository institutions under 
Sec. 327.9, each insured depository institution will be assigned an 
``assessment risk classification''. Notice of the assessment risk 
classification applicable to a particular semiannual period will be 
provided to the institution with the first-quarterly invoice provided 
pursuant to Sec. 327.3(c)(1). Each institution's assessment risk 
classification, which will be composed of a group and a subgroup 
assignment, will be based on the following capital and supervisory 
factors:
    (1) Capital factors. Institutions will be assigned to one of the 
following three capital groups on the basis of data reported in the 
institution's Report of Income and Condition, Report of Assets and 
Liabilities of U.S. Branches and Agencies of Foreign Banks, or Thrift 
Financial Report containing the necessary capital data, for the report 
date that is closest to the last day of the seventh month preceding the 
current semiannual period.
    (i) Well capitalized. For assessment risk classification purposes, 
the short-form designation for this group is ``1''.
    (A) Except as provided in paragraph (a)(1)(i)(B) of this section, 
this group consists of institutions satisfying each of the following 
capital ratio standards: Total risk-based ratio, 10.0 percent or 
greater; Tier 1 risk-based ratio, 6.0 percent or greater; and Tier 1 
leverage ratio, 5.0 or greater. New insured depository institutions 
coming into existence after the report date specified in paragraph 
(a)(1) of this section will be included in this group for the first 
semiannual period for which they are required to pay assessments. For 
the purpose of computing the ratios referred to in this paragraph 
(a)(1)(i)(A) for the second semiannual period of 1997, each such ratio 
shall be computed for an institution as if the institution had retained 
the funds that the institution disbursed in payment of the special 
assessment prescribed by Sec. 329.41(a).
    (B) For purposes of assessment risk classification, an insured 
branch of a foreign bank will be deemed to be ``well capitalized'' if 
the insured branch:
    (1) Maintains the pledge of assets required under 12 CFR 346.19; and
    (2) Maintains the eligible assets prescribed under 12 CFR 346.20 at 
108 percent or more of the average book value of the insured branch's 
third-party liabilities for the quarter ending on the report date 
specified in paragraph (a)(1) of this section.
    (ii) Adequately capitalized. For assessment risk classification 
purposes, the short-form designation for this group is ``2''.
    (A) Except as provided in paragraph (a)(1)(ii)(B) of this section, 
this group consists of institutions that do not satisfy the standards of 
``well capitalized'' under this paragraph but which satisfy each of the 
following capital ratio standards: Total risk-based ratio, 8.0 percent 
or greater; Tier 1 risk-based ratio, 4.0 percent or greater; and Tier 1 
leverage ratio, 4.0 percent or greater.

[[Page 202]]

For the purpose of computing the ratios referred to in this paragraph 
(a)(1)(ii)(A) for the second semiannual period of 1997, each such ratio 
shall be computed for an institution as if the institution had retained 
the funds that the institution disbursed in payment of the special 
assessment prescribed by Sec. 327.41(a).
    (B) For purposes of assessment risk classification, an insured 
branch of a foreign bank will be deemed to be ``adequately capitalized'' 
if the insured branch:
    (1) Maintains the pledge of assets required under 12 CFR 346.19;
    (2) Maintains the eligible assets prescribed under 12 CFR 346.20 at 
106 percent or more of the average book value of the insured branch's 
third-party liabilities for the quarter ending on the report date 
specified in paragraph (a)(1) of this section; and
    (3) Does not meet the definition of a well capitalized insured 
branch of a foreign bank.
    (iii) Undercapitalized. For assessment risk classification purposes, 
the short-form designation for this group is ``3''. This group consists 
of institutions that do not qualify as either ``well capitalized'' or 
``adequately capitalized'' under paragraphs (a)(1) (i) and (ii) of this 
section.
    (2) Supervisory risk factors. Within its capital group, each 
institution will be assigned to one of three subgroups based on the 
Corporation's consideration of supervisory evaluations provided by the 
institution's primary federal regulator. The supervisory evaluations 
include the results of examination findings by the primary federal 
regulator, as well as other information the primary federal regulator 
determines to be relevant. In addition, the Corporation will take into 
consideration such other information (such as state examination 
findings, if appropriate) as it determines to be relevant to the 
institution's financial condition and the risk posed to the BIF or SAIF. 
Authority to set dates applicable to the determination of supervisory 
subgroup assignments is delegated to the Corporation's Director of the 
Division of Supervision (or his or her designee). The three supervisory 
subgroups are:
    (i) Subgroup ``A''. This subgroup consists of financially sound 
institutions with only a few minor weaknesses;
    (ii) Subgroup ``B''. This subgroup consists of institutions that 
demonstrate weaknesses which, if not corrected, could result in 
significant deterioration of the institution and increased risk of loss 
to the BIF or SAIF; and
    (iii) Subgroup ``C''. This subgroup consists of institutions that 
pose a substantial probability of loss to the BIF or SAIF unless 
effective corrective action is taken.
    (b) Payment of assessment at rate assigned. Institutions shall make 
timely payment of assessments based on the assessment risk 
classification assigned in the notice provided to the institution 
pursuant to paragraph (a) of this section. Timely payment is required 
notwithstanding any request for review filed pursuant to paragraph (d) 
of this section. An institution for which the assessment risk 
classification cannot be determined prior to an invoice date specified 
in Sec. 327.3(c)(1) or (d)(1) shall preliminarily pay on that invoice at 
the assessment rate applicable to the classification designated ``2A'' 
in the appropriate rate schedule set forth in Sec. 327.9. If such 
institution is subsequently assigned for that semiannual period an 
assessment risk classification other than that designated as ``2A'', or 
if the classification assigned to an institution in the notice is 
subsequently changed, any excess assessment paid by the institution will 
be credited by the Corporation, with interest, and any additional 
assessment owed shall be paid by the institution, with interest, in the 
next quarterly assessment payment after such subsequent assignment or 
change. Interest payable under this paragraph shall be determined in 
accordance with Sec. 327.7.
    (c) Classification for certain types of institutions. The annual 
assessment rate applicable to institutions that are bridge banks under 
12 U.S.C. 1821(n) and to institutions for which the Corporation has been 
appointed or serves as conservator shall in all cases be the rate 
applicable to the classification designated as ``2A'' in the appropriate 
assessment schedule prescribed pursuant to Sec. 327.9.

[[Page 203]]

    (d) Requests for review. An institution may submit a written request 
for review of its assessment risk classification. Any such request must 
be submitted within 30 days of the date of the assessment risk 
classification notice provided by the Corporation pursuant to paragraph 
(a) of this section. The request shall be submitted to the Corporation's 
Director of the Division of Supervision in Washington, DC, and shall 
include documentation sufficient to support the reclassification sought 
by the institution. If additional information is requested by the 
Corporation, such information shall be provided by the institution 
within 21 days of the date of the request for the additional 
information. Any institution submitting a timely request for review will 
receive written notice from the Corporation regarding the outcome of its 
request. Upon completion of a review, the Director of the Division of 
Supervision (or his or her designee) shall promptly notify the 
institution in writing of the FDIC's determination of whether 
reclassification is warranted. Notice of the procedures applicable to 
reviews will be included with the assessment risk classification notice 
to be provided pursuant to paragraph (a) of this section.
    (e) Disclosure restrictions. The supervisory subgroup to which an 
institution is assigned by the Corporation pursuant to paragraph (a) of 
this section is deemed to be exempt information within the scope of 
Sec. 309.5(c)(8) of this chapter and, accordingly, is governed by the 
disclosure restrictions set out at Sec. 309.6 of this chapter.
    (f) Limited use of assessment risk classification. The assignment of 
a particular assessment risk classification to a depository institution 
under this part 327 is for purposes of implementing and operating a 
risk-based assessment system. Unless permitted by the Corporation or 
otherwise required by law, no institution may state in any advertisement 
or promotional material the assessment risk classification assigned to 
it pursuant to this part.
    (g) Lifeline accounts. Notwithstanding any other provision of this 
part 327, the portion of an institution's assessment base that is 
attributable to deposits in lifeline accounts pursuant to the Bank 
Enterprise Act, 12 U.S.C. 1834, will be assessed at such rate as may be 
established by the Corporation pursuant to 12 U.S.C. 1834 and section 
7(b)(2)(H) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. 
1817(b)(2)(H).
[59 FR 67162, Dec. 29, 1994, as amended at 61 FR 67696, Dec. 24, 1996]



Sec. 327.5  Assessment base.

    (a) Computation of assessment base. Except as provided in paragraph 
(c) of this section, the assessment base of an insured depository 
institution for any date on which the institution is required to file a 
quarterly report of condition shall be computed by:
    (1) Adding--
    (i) All demand deposits--
    (A) That the institution reported as such in the quarterly report of 
condition for that date;
    (B) That belong to subsidiaries of the institution and were 
eliminated in consolidation;
    (C) That are held in any insured branches of the institution that 
are located in the territories and possessions of the United States;
    (D) That represent any uninvested trust funds required to be 
separately stated in the quarterly report for that date;
    (E) That represent any unposted credits to demand deposits, as 
determined in accordance with the provisions of paragraph (b)(1) of this 
section; and
    (ii) All time and savings deposits, together with all interest 
accrued and unpaid thereon--
    (A) That the institution reported as such in the quarterly report of 
condition for that date;
    (B) That belong to subsidiaries of the institution and were 
eliminated in consolidation;
    (C) That are held in any insured branches of the institution that 
are located in the territories and possessions of the United States;
    (D) That represent any unposted credits to time and savings 
deposits, as determined in accordance with the provisions of paragraph 
(b)(1) of this section; then
    (2) Subtracting, in the case of any institution that maintains such 
records as will readily permit verification of

[[Page 204]]

the correctness of its assessment base--
    (i) Any unposted debits;
    (ii) Any pass-through reserve balances;
    (iii) 16\2/3\ percent of the amount computed by subtracting, from 
the amount specified in paragraph (a)(1)(i) of this section, the sum of:
    (A) Unposted debits allocated to demand deposits pursuant to the 
provisions of paragraph (b)(2) of this section; plus
    (B) Pass-through reserve balances representing demand deposits;
    (iv) 1 percent of the amount computed by subtracting, from the 
amount specified in paragraph (a)(1)(ii) of this section, the sum of:
    (A) Unposted debits allocated to time and savings deposits pursuant 
to the provisions of paragraph (b)(2) of this section; plus
    (B) Pass-through reserve balances representing time and savings 
deposits;
    (v) Liabilities arising from a depository institution investment 
contract that are not treated as insured deposits under section 11(a)(8) 
of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(8)).
    (b) Methods of reporting unposted credits and unposted debits--(1) 
Unposted credits. Each insured depository institution shall report 
unposted credits in quarterly reports of condition for addition to the 
assessment base in the following manner:
    (i) If the institution's records show the total actual amount of 
unposted credits segregated into demand deposits and time and savings 
deposits, the institution must report the segregated amounts for 
addition to demand deposits and time and savings deposits, respectively.
    (ii) If the institution's records show the total actual amount of 
unposted credits but do not segregate the amount as stated in paragraph 
(b)(1)(i) of this section, the institution must report the total actual 
amount of the unposted credits for addition to time and savings 
deposits.
    (2) Unposted debits. Unposted debits may be reported in the same 
manner as stated in paragraph (b)(1) of this section for deduction from 
the assessment base, except that unsegregated amounts may be reported 
for deduction only from demand deposits.
    (c) Newly insured institutions. In the case of a newly insured 
institution, the assessment base for the last date for which insured 
depository institutions are required to file quarterly reports of 
condition within the semiannual period in which the newly insured 
institution became an insured institution shall be deemed to be its 
assessment base for that semiannual period. If the institution has not 
filed such a report by the due date for such reports from insured 
depository institutions, it shall promptly provide to the Corporation 
such information as the Corporation may require to prepare the certified 
statement form for the institution for the current semiannual period.
[59 FR 67163, Dec. 29, 1994]



Sec. 327.6  Terminating transfers; other terminations of insurance.

    (a) Terminating transfer--(1) Assessment base computation. If a 
terminating transfer occurs at any time in the second half of a 
semiannual period, each surviving institution's assessment base (as 
computed pursuant to Sec. 327.5) for the first half of that semiannual 
period shall be increased by an amount equal to such institution's pro 
rata share of the terminating institution's assessment base for such 
first half.
    (2) Pro rata share. For purposes of paragraph (a)(1) of this 
section, the phrase pro rata share means a fraction the numerator of 
which is the deposits assumed by the surviving institution from the 
terminating institution during the second half of the semiannual period 
during which the terminating transfer occurs, and the denominator of 
which is the total deposits of the terminating institution as required 
to be reported in the quarterly report of condition for the first half 
of that semiannual period.
    (3) Other assessment-base adjustments. The Corporation may in its 
discretion make such adjustments to the assessment base of an 
institution participating in a terminating transfer, or in a related 
transaction, as may be necessary properly to reflect the likely amount 
of the loss presented by the institution to its insurance fund.

[[Page 205]]

    (4) Limitation on aggregate adjustments. The total amount by which 
the Corporation may increase the assessment bases of surviving or other 
institutions under this paragraph (a) shall not exceed, in the 
aggregate, the terminating institution's assessment base as reported in 
its quarterly report of condition for the first half of the semiannual 
period during which the terminating transfer occurs.
    (b) Other terminations. When the insured status of an institution is 
terminated, and the deposit liabilities of such institution are not 
assumed by another insured depository institution--
    (1) Payment of assessments; certified statements. The terminating 
depository institution shall continue to file certified statements and 
pay assessments for the period its deposits are insured. Such 
terminating institution shall not be required to file further certified 
statements or to pay further assessments after the depository 
institution has paid in full its deposit liabilities and the assessment 
to the Corporation required to be paid for the semiannual period in 
which its deposit liabilities are paid in full, and after it, under 
applicable law, has ceased to have authority to transact a banking 
business and to have existence, except for the purpose of, and to the 
extent permitted by law for, winding up its affairs.
    (2) Payment of deposits; certification to Corporation. When the 
deposit liabilities of the depository institution have been paid in 
full, the depository institution shall certify to the Corporation that 
the deposit liabilities have been paid in full and give the date of the 
final payment. When the depository institution has unclaimed deposits, 
the certification shall further state the amount of the unclaimed 
deposits and the disposition made of the funds to be held to meet the 
claims. For assessment purposes, the following will be considered as 
payment of the unclaimed deposits:
    (i) The transfer of cash funds in an amount sufficient to pay the 
unclaimed and unpaid deposits to the public official authorized by law 
to receive the same; or
    (ii) If no law provides for the transfer of funds to a public 
official, the transfer of cash funds or compensatory assets to an 
insured depository institution in an amount sufficient to pay the 
unclaimed and unpaid deposits in consideration for the assumption of the 
deposit obligations by the insured depository institution.
    (3) Notice to depositors. (i) The terminating depository institution 
shall give sufficient advance notice of the intended transfer to the 
owners of the unclaimed deposits to enable the depositors to obtain 
their deposits prior to the transfer. The notice shall be mailed to each 
depositor and shall be published in a local newspaper of general 
circulation. The notice shall advise the depositors of the liquidation 
of the depository institution, request them to call for and accept 
payment of their deposits, and state the disposition to be made of their 
deposits if they fail to promptly claim the deposits.
    (ii) If the unclaimed and unpaid deposits are disposed of as 
provided in paragraph (b)(2)(i) of this section, a certified copy of the 
public official's receipt issued for the funds shall be furnished to the 
Corporation.
    (iii) If the unclaimed and unpaid deposits are disposed of as 
provided in paragraph (b)(2)(ii) of this section, an affidavit of the 
publication and of the mailing of the notice to the depositors, together 
with a copy of the notice and a certified copy of the contract of 
assumption, shall be furnished to the Corporation.
    (4) Notice to Corporation. The terminating depository institution 
shall advise the Corporation of the date on which the authority or right 
of the depository institution to do a banking business has terminated 
and the method whereby the termination has been effected (i.e., whether 
the termination has been effected by the surrender of the charter, the 
cancellation of its authority or license to do a banking business by the 
supervisory authority, or otherwise).
    (c) Resumption of insured status before insurance of deposits 
ceases. If a depository institution whose insured status has been 
terminated is permitted by the Corporation to continue or resume

[[Page 206]]

its status as an insured depository institution before the insurance of 
its deposits has ceased, the institution will be deemed, for assessment 
purposes, to continue as an insured depository institution and must 
thereafter furnish certified statements and pay assessments as though 
its insured status had not been terminated. The procedure for applying 
for the continuance or resumption of insured status is set forth in 
Sec. 303.5 of this chapter.
[54 FR 51374, Dec. 15, 1989, as amended at 59 FR 67164, Dec. 29, 1994; 
61 FR 64983, Dec. 10, 1996]



Sec. 327.7  Payment of interest on assessment underpayments and overpayments.

    (a) Payment of interest--(1) Payment by institutions. Each insured 
depository institution shall pay interest to the Corporation on any 
underpayment of the institution's assessment.
    (2) Payment by Corporation. (i) The Corporation will pay interest on 
any overpayment by the institution of its assessment.
    (ii) When an institution elects the alternate payment date pursuant 
to Sec. 327.3(c)(3), or otherwise pays an amount due on a regular 
payment date before that date, the payment of the invoiced amount prior 
to the regular payment date shall not be regarded as an overpayment of 
an assessment.
    (iii) When an institution elects the doubled-payment option pursuant 
to Sec. 327.3(j), the payment of any amount in excess of the invoiced 
amount shall not be regarded as an overpayment of an assessment.
    (3) Accrual of interest. (i) Interest on an amount owed to or by the 
Corporation for the underpayment or overpayment of an assessment shall 
accrue interest at the relevant interest rate.
    (ii) Interest on an amount specified in paragraph (a)(3)(i) of this 
section shall begin to accrue on the day following the regular payment 
date, as provided for in Sec. 327.3(c)(2) and (d)(2), for the amount so 
overpaid or underpaid, provided, however, that interest shall not begin 
to accrue on any overpayment until the day following the date such 
overpayment was received by the Corporation. Interest shall continue to 
accrue through the date on which the overpayment or underpayment 
(together with any interest thereon) is discharged.
    (iii) The relevant interest rate shall be redetermined for each 
quarterly assessment interval. A quarterly assessment interval begins on 
the day following a regular payment date, as specified in 
Sec. 327.3(c)(2) and (d)(2), and ends on the immediately following 
regular payment date.
    (b) Rates after the first payment date in 1996. (1) On and after 
January 3, 1996, the relevant interest rate for a quarterly assessment 
interval that includes the month of January, April, July, and October, 
respectively, is the coupon equivalent yield of the average discount 
rate set on the 3-month Treasury bill at the last auction held by the 
United States Treasury Department during the preceding December, March, 
June, and September, respectively.
    (2) The relevant interest rate for a quarterly assessment interval 
will apply to any amounts overpaid or underpaid on the payment date 
(whether regular or alternate) immediately prior to the beginning of the 
quarterly assessment interval. The relevant interest rate will also 
apply to any amounts owed for previous overpayments or underpayments 
(including any interest thereon) that remain outstanding, after any 
adjustments to such overpayments or underpayments have been made 
thereon, at the end of the regular payment date immediately prior to the 
beginning of the quarterly assessment interval.
    (c) Rates prior to the first payment date in 1996. Through January 
3, 1996:
    (1) The interest rate will be the United States Treasury 
Department's current value of funds rate which is issued under the 
Treasury Fiscal Requirements Manual (TFRM rate) and published in the 
Federal Register;
    (2) The interest will be calculated based on the rate issued under 
the TFRM for each applicable period and compounded annually;
    (3) For the initial year, the rate will be applied to the gross 
amount of the underpayment or overpayment; and
    (4) For each additional year or portion thereof, the rate will be 
applied to the net amount of the underpayment or overpayment after that 
amount has

[[Page 207]]

been reduced by the assessment credit, if any, for the year.
[54 FR 51374, Dec. 15, 1989, as amended at 57 FR 45286, Oct. 1, 1992; 58 
FR 3069, Jan. 7, 1993; 59 FR 67164, Dec. 29, 1994; 60 FR 50409, Sept. 
29, 1995]



Sec. 327.8  Definitions.

     For the purposes of this part 327:
    (a) Unposted credits and debits--(1) Unposted credit. The term 
unposted credit means any deposit received in any office of a depository 
institution for deposit in any other office of the depository 
institution located in any State of the United States, the District of 
Columbia, Puerto Rico, Guam, American Samoa, the Northern Marianas 
Islands, or the Virgin Islands, except those which have been:
    (i) Included in the total deposits in the quarterly report of 
condition; or
    (ii) Offset in the quarterly report of condition by an equal amount 
of cash items in the institution's possession drawn on itself (on the 
same type of deposits as those offset) and not charged against deposit 
liabilities at the close of business on the date of the quarterly report 
of condition.
    (2) Unposted debit. The term unposted debit means a cash item in the 
reporting institution's possession that is drawn on the institution and 
immediately chargeable, but not yet charged, against the institution's 
deposit liabilities at the close of business on the date of the 
quarterly report of condition. The following items are excluded:
    (i) Cash items drawn on other depository institutions,
    (ii) Overdrafts and nonsufficient fund (NSF) items,
    (iii) Cash items returned unpaid to the last endorser for any 
reason, and
    (iv) Drafts and warrants that are payable at or payable through the 
reporting institution for which there is no written authorization on 
file at the institution or State statute allowing the institution at its 
discretion to charge the items against the deposit accounts of the 
drawees.
    (3) Exclusion. The above terms unposted credit and unposted debit do 
not include items which have been reflected in deposit accounts on the 
general ledger and in the quarterly report of condition, even though 
they have not been credited or debited to individual deposit accounts.
    (b) Deposits--(1) Deposit. The term deposit has the meaning 
specified in section 3(1) of the Federal Deposit Insurance Act. In 
particular, the term deposit includes any liability--without regard for 
whether the liability is a liability of an insured bank or of an insured 
savings association--that is of a kind which, had the liability been a 
liability of an insured bank immediately prior to the effective date of 
the Financial Institutions Reform, Recovery, and Enforcement Act of 
1989, would have constituted a deposit in such bank within the meaning 
of section 3(1) of the Federal Deposit Insurance Act as such section 
3(1) was then in effect.
    (2) Demand deposits. The term demand deposits refers to deposits 
specified in Sec. 329.1(b) of this chapter, except that any reference to 
bank in such section shall be deemed to refer to depository institution.
    (3) Time and savings deposits. The term time and savings deposits 
refers to any deposits other than demand deposits.
    (4) Exception. (i) Deposits accumulated for the payment of personal 
loans, which represent actual loan payments received by the depository 
institution from borrowers and accumulated by the depository institution 
in hypothecated deposit accounts for payment of the loans at maturity, 
shall not be reported as deposits on the quarterly report of condition. 
The deposit amounts covered by the exception are to be deducted from the 
loan amounts for which these deposits have been accumulated and assigned 
or pledged to effectuate payment.
    (ii) Time and savings deposits that are pledged as collateral to 
secure loans are not deposits accumulated for the payment of personal 
loans and are to be reported in the same manner as if they were not 
securing a loan.
    (c) Quarterly report of condition. The term quarterly report of 
condition means a report required to be filed pursuant to section 
7(a)(3) of the Federal Deposit Insurance Act.

[[Page 208]]

    (d) Semiannual period--(1) In general. The term semiannual period 
means a period beginning on January 1 of any calendar year and ending on 
June 30 of the same year, or a period beginning on July 1 of any 
calendar year and ending on December 31 of the same year.
    (2) Current semiannual period. The term current semiannual period 
means, with respect to a certified statement or an assessment, the 
semiannual period within which such certified statement is required to 
be filed or for which such assessment is required to be paid.
    (3) Prior semiannual period. The term prior semiannual period means, 
with respect to a certified statement or an assessment, the semiannual 
period immediately prior to the current semiannual period.
    (e) Newly insured institution. The term newly insured institution 
means an institution that became an insured depository institution 
during the semiannual period immediately prior to the period for which 
the certified statement is required: Provided, That the term newly 
insured institution does not include any institution that became an 
insured depository institution as a result of the operation of section 
4(a)(2) of the Federal Deposit Insurance Act.
    (f) BIF; BIF member.--(1) BIF. The term BIF means the Bank Insurance 
Fund.
    (2) BIF member. The term BIF member means a depository institution 
that is a member of the BIF.
    (g) SAIF; SAIF member.--(1) SAIF. The term SAIF means the Savings 
Association Insurance Fund.
    (2) SAIF member. The term SAIF member means a depository institution 
that is a member of the SAIF.
    (h) As used in Sec. 327.6(a), the following terms are given the 
following meanings:
    (1) Surviving institution. The term surviving institution means an 
insured depository institution that assumes some or all of the deposits 
of another insured depository institution in a terminating transfer.
    (2) Terminating institution. The term terminating institution means 
an insured depository institution some or all of the deposits of which 
are assumed by another insured depository institution in a terminating 
transfer.
    (3) Terminating transfer. The term terminating transfer means the 
assumption by one insured depository institution of another insured 
depository institution's liability for deposits, whether by way of 
merger, consolidation, or other statutory assumption, or pursuant to 
contract, when the terminating institution goes out of business or 
transfers all or substantially all its assets and liabilities to other 
institutions or otherwise ceases to be obliged to pay subsequent 
assessments by or at the end of the semiannual period during which such 
assumption of liability for deposits occurs. The term terminating 
transfer does not refer to the assumption of liability for deposits from 
the estate of a failed institution, or to a transaction in which the 
FDIC contributes its own resources in order to induce a surviving 
institution to assume liabilities of a terminating institution.
    (i) [Reserved]
    (j) Primary fund. The primary fund of an insured depository 
institution is the insurance fund of which the institution is a member.
    (k) Secondary fund. The secondary fund of an insured depository 
institution is the insurance fund that is not the primary fund of the 
institution.
[54 FR 51374, Dec. 15, 1989, as amended at 59 FR 67164, Dec. 29, 1994; 
60 FR 42741, Aug. 16, 1995; 61 FR 64983, Dec. 10, 1996; 61 FR 67696, 
Dec. 24, 1996; 62 FR 27176, May 19, 1997]



Sec. 327.9  Assessment schedules.

    (a) Base assessment schedules--(1) In general. Subject to 
Sec. 327.4(c) and subpart B of this part, the base annual assessment 
rate for an insured depository institution shall be the rate prescribed 
in the appropriate base assessment schedule set forth in paragraph 
(a)(2) of this section applicable to the assessment risk classification 
assigned by the Corporation under Sec. 327.4(a) to that institution. 
Each base assessment schedule utilizes the group and subgroup 
designations specified in Sec. 327.4(a). An institution shall pay 
assessments at the rate specified in the appropriate base assessment 
schedule except as provided in paragraph (b) of this section.
    (2) Assessment schedules--(i) Base rates for BIF members. The 
following base assessment schedule applies with respect to assessments 
paid to the BIF by BIF

[[Page 209]]

members and by other institutions that are required to make payments to 
the BIF pursuant to subpart B of this part:

                      BIF Base Assessment Schedule                      
------------------------------------------------------------------------
                                                Supervisory subgroup    
               Capital group               -----------------------------
                                                A         B         C   
------------------------------------------------------------------------
1.........................................         4         7        21
2.........................................         7        14        28
3.........................................        14        28        31
------------------------------------------------------------------------

    (ii) Base rates for SAIF members. The following base assessment 
schedule applies with respect to assessments paid to the SAIF by SAIF 
members and by other institutions that are required to make payments to 
the SAIF pursuant to subpart B of this part:

                      SAIF Base Assessment Schedule                     
------------------------------------------------------------------------
                                                Supervisory subgroup    
               Capital group               -----------------------------
                                                A         B         C   
------------------------------------------------------------------------
1.........................................         4         7        21
2.........................................         7        14        28
3.........................................        14        28        31
------------------------------------------------------------------------

    (b) Adjusted assessment schedules--(1) In general. Except as 
provided in paragraph (b)(3)(ii) of this section, institutions shall pay 
semiannual assessments at the rates specified in this paragraph (b) 
whenever such rates have been prescribed by the Board.
    (2) Adjusted rates for BIF members. The Board has adjusted the BIF 
Base Assessment Schedule by reducing each rate therein by 4 basis points 
for the first semiannual period of 1997 and thereafter. Accordingly, the 
following adjusted assessment schedule applies to BIF members:

                    BIF Adjusted Assessment Schedule                    
------------------------------------------------------------------------
                                                Supervisory subgroup    
               Capital group               -----------------------------
                                                A         B         C   
------------------------------------------------------------------------
1.........................................         0         3        17
2.........................................         3        10        24
3.........................................        10        24        27
------------------------------------------------------------------------

    (3) Adjusted rates for SAIF members--(i) In general. The Board has 
adjusted the SAIF Base Assessment Schedule by reducing each rate therein 
by 4 basis points for the first semiannual period of 1997 and 
thereafter. Accordingly, except as provided in paragraph (b)(3)(ii) of 
this section, the following adjusted assessment schedule applies to SAIF 
members:

                    SAIF Adjusted Assessment Schedule                   
------------------------------------------------------------------------
                                                Supervisory subgroup    
               Capital group               -----------------------------
                                                A         B         C   
------------------------------------------------------------------------
1.........................................         0         3        17
2.........................................         3        10        24
3.........................................        10        24        27
------------------------------------------------------------------------

    (ii) Institutions exempt from the special assessment--(A) Rate 
schedule. An institution that, pursuant to former Sec. 327.43 (a) or (b) 
as in effect on November 27, 1996 (See 12 CFR 327.43 as revised January 
1, 1997.), was exempt from the special assessment prescribed by 12 
U.S.C. 1817 Note shall pay regular semiannual assessments to the SAIF 
from the first semiannual period of 1996 through the second semiannual 
period of 1999 according to the schedule of rates specified in former 
Sec. 327.9(d)(1) as in effect for SAIF members on June 30, 1995 (See 12 
CFR 327.9 as revised January 1, 1996.), as follows:

------------------------------------------------------------------------
                                                Supervisory subgroup    
               Capital group               -----------------------------
                                                A         B         C   
------------------------------------------------------------------------
1.........................................        23        26        29
2.........................................        26        29        30
3.........................................        29        30        31
------------------------------------------------------------------------

    (B) Termination of special rate schedule. An institution that makes 
a pro-rata payment of the special assessment shall cease to be subject 
to paragraph (b)(3)(ii)(A) of this section. The pro-rata payment must be 
equal to the following product: 16.7 percent of the amount the 
institution would have owed for the special assessment, multiplied by 
the number of full semiannual periods remaining between the date of the 
payment and December 31, 1999.
    (c) Rate adjustments; procedures--(1) Semiannual adjustments. The 
Board may increase or decrease the BIF Base Assessment Schedule set 
forth in paragraph (a)(2)(i) of this section or the SAIF Base Assessment 
Schedule set forth in paragraph (a)(2)(ii) of this section up to a 
maximum increase of 5 basis points or a fraction thereof or a maximum 
decrease of 5 basis points or a fraction thereof (after aggregating 
increases and decreases), as the Board

[[Page 210]]

deems necessary to maintain the reserve ratio of an insurance fund at 
the designated reserve ratio for that fund. Any such adjustment shall 
apply uniformly to each rate in the base assessment schedule. In no case 
may such adjustments result in an assessment rate that is mathematically 
less than zero or in a rate schedule for an insurance fund that, at any 
time, is more than 5 basis points above or below the base assessment 
schedule for that fund, nor may any one such adjustment constitute an 
increase or decrease of more than 5 basis points. The adjustment for any 
semiannual period for a fund shall be determined by:
    (i) The amount of assessment revenue necessary to maintain the 
reserve ratio at the designated reserve ratio; and
    (ii) The assessment schedule that would generate the amount of 
revenue in paragraph (c)(1)(i) of this section considering the risk 
profile of the institutions required to pay assessments to the fund.
    (2) Amount of revenue. In determining the amount of assessment 
revenue in paragraph (c)(1)(i) of this section, the Board shall take 
into consideration the following:
    (i) Expected operating expenses of the insurance fund;
    (ii) Case resolution expenditures and income of the insurance fund;
    (iii) The effect of assessments on the earnings and capital of the 
institutions paying assessments to the insurance fund; and
    (iv) Any other factors the Board may deem appropriate.
    (3) Adjustment procedure. Any adjustment adopted by the Board 
pursuant to this paragraph (c) will be adopted by rulemaking. 
Nevertheless, because the Corporation is generally required by statute 
to set assessment rates as necessary (and only to the extent necessary) 
to maintain or attain the target designated reserve ratio, and because 
the Corporation must do so in the face of constantly changing 
conditions, and because the purpose of the adjustment procedure is to 
permit the Corporation to act expeditiously and frequently to maintain 
or attain the designated reserve ratio in an environment of constant 
change, but within set parameters not exceeding 5 basis points, without 
the delays associated with full notice-and-comment rulemaking, the 
Corporation has determined that it is ordinarily impracticable, 
unnecessary and not in the public interest to follow the procedure for 
notice and public comment in such a rulemaking, and that accordingly 
notice and public procedure thereon are not required as provided in 5 
U.S.C. 553(b). For the same reasons, the Corporation has determined that 
the requirement of a 30-day delayed effective date is not required under 
5 U.S.C. 553(d). Any adjustment adopted by the Board pursuant to a 
rulemaking specified in this paragraph (c) will be reflected in an 
adjusted assessment schedule set forth in paragraph (b)(2) or (b)(3) of 
this section, as appropriate.
    (4) Announcement. Except with respect to assessments for the first 
semiannual period of 1997, the Board shall announce the semiannual 
assessment schedule and the amount and basis for any adjustment thereto 
not later than 15 days before the invoice date specified in 
Sec. 327.3(c) for the first quarter of the semiannual period for which 
the adjustment shall be effective.
    (d) Refunds or credits of certain assessments. If the amount paid by 
an institution for the regular semiannual assessment for the second 
semiannual period of 1996 exceeds, as a result of the reduction in the 
rate schedule for a portion of that semiannual period, the amount due 
from the institution for that semiannual period, the Corporation will 
refund or credit any such excess payment and will provide interest on 
the excess payment in accordance with the provisions of Sec. 327.7. 
Notwithstanding Sec. 327.7(a)(3)(ii), such interest will accrue 
beginning as of October 1, 1996.
[61 FR 67696, Dec. 24, 1996, as amended at 62 FR 27176, May 19, 1997]



Sec. 327.10  Interpretive rule: section 7(b)(2)(A)(v).

    This interpretive rule explains certain phrases used in section 
7(b)(2)(A)(v) of the Federal Deposit Insurance Act, 12 U.S.C. 
1817(b)(2)(A)(v).
    (a) An institution classified in supervisory subgroup B or C 
pursuant to Sec. 327.4(a)(2) exhibits ``financial, operational, or 
compliance weaknesses

[[Page 211]]

ranging from moderately severe to unsatisfactory'' within the meaning of 
such section 7(b)(2)(A)(v).
    (b) An institution classified in capital group 2 or 3 pursuant to 
Sec. 327.4(a)(1) is ``not well capitalized'' within the meaning of such 
section 7(b)(2)(A)(v).
[61 FR 67698, Dec. 24, 1996]



  Subpart B--Insured Depository Institutions Participating in Section 
                          5(d)(3) Transactions



Sec. 327.31  Scope.

    (a) Affected institutions. This subpart B applies to any insured 
depository institution that:
    (1) Is either a BIF or SAIF member; and
    (2) Is the assuming, surviving, or resulting institution in a 
transaction undertaken pursuant to section 5(d)(3) of the Federal 
Deposit Insurance Act.
    (b) Duration. This subpart B shall cease to apply to an insured 
depository institution if:
    (1) On or after August 9, 1994, the Corporation approves an 
application by an insured depository institution to treat the 
transaction described in paragraph (a) of this section as a conversion 
transaction; and
    (2) The insured depository institution pays the amount of any exit 
and entrance fee assessed by the Corporation with respect to such 
transaction.
[57 FR 45286, Oct. 1, 1992, as amended at 59 FR 67165, Dec. 29, 1994]



Sec. 327.32  Computation and payment of assessment.

    (a) Rate of assessment--(1) BIF and SAIF member rates. (i) Except as 
provided in paragraph (a)(2) of this section, and consistent with the 
provisions of Sec. 327.4, the assessment to be paid by an institution 
that is subject to this subpart B shall be computed at the rate 
applicable to institutions that are members of the primary fund of such 
institution. (ii) Such applicable rate shall be applied to the 
institution's assessment base less that portion of the assessment base 
which is equal to the institution's adjusted attributable deposit 
amount.
    (2) Rate applicable to the adjusted attributable deposit amount. 
Notwithstanding paragraph (a)(1)(i) of this section, that portion of the 
assessment base of any acquiring, assuming, or resulting institution 
which is equal to the adjusted attributable deposit amount of such 
institution shall:
    (i) Be subject to assessment at the assessment rate applicable to 
members of the secondary fund of such institution pursuant to subpart A 
of this part; and
    (ii) Not be taken into account in computing the amount of any 
assessment to be allocated to the primary fund of such institution.
    (3) Adjusted attributable deposit amount. An insured depository 
institution's ``adjusted attributable deposit amount'' for any 
semiannual period is equal to the sum of:
    (i) The amount of any deposits acquired by the institution in 
connection with the transaction (as determined at the time of such 
transaction) described in Sec. 327.31(a), but subject to the adjustment 
specified in paragraph (c) of this section;
    (ii) The total of the amounts determined under paragraph (a)(3)(iii) 
of this section for semiannual periods preceding the semiannual period 
for which the determination is being made under this section; and
    (iii) The amount by which the sum of the amounts described in 
paragraphs (a)(3)(i) and (a)(3)(ii) of this section would have increased 
during the preceding semiannual period (other than any semiannual period 
beginning before the date of such transaction) if such increase occurred 
at a rate equal to the annual rate of growth of deposits of the 
acquiring, assuming, or resulting depository institution minus the 
amount of any deposits acquired through the acquisition, in whole or in 
part, of another insured depository institution.
    (4) Deposits acquired by the institution. As used in paragraph 
(a)(3)(i) of this section, the term ``deposits acquired by the 
institution'' means all deposits that are held in the institution 
acquired by such institution on the date of such transaction; provided, 
that if on or before June 30, 1997, the Corporation has been appointed 
or serves as conservator or receiver for the acquired institution, such 
term:

[[Page 212]]

    (i) Does not include any deposit held in the acquired institution on 
the date of such transaction which the acquired institution has 
obtained, directly or indirectly, by or through any deposit broker;
    (ii) Does not include that part of any remaining deposit held in the 
acquired institution on the date of such transaction that is in excess 
of $80,000; and
    (iii) Is limited to 80 per centum of the remaining portion of the 
aggregate of the deposits specified in paragraph (a)(4)(ii) of this 
section.
    (5) Deposit broker. As used in paragraph (a)(4) of this section, the 
term ``deposit broker'' has the meaning specified in section 29 of the 
Federal Deposit Insurance Act (12 U.S.C. 1831f).
    (b) Procedures for computation and payment. An insured depository 
institution subject to this subpart B shall follow the payment procedure 
that is set forth in subpart A of this part.
    (c) Reduction of deposits acquired by certain institutions. In the 
case of a transaction occurring on or before March 31, 1995, the amount 
determined under paragraph (a)(3)(i) of this section shall be reduced by 
20 percent for the purpose of computing the adjusted attributable 
deposit amount for any semiannual period beginning after December 31, 
1996, of a BIF member bank that, as of June 30, 1995:
    (1) Had an adjusted attributable deposit amount the value of which 
was less than 50 percent of the amount of its total deposits; or
    (2)(i) Had an adjusted attributable deposit amount the value of 
which was less than 75 percent of the value of its total deposits;
    (ii) Had total deposits greater than $5,000,000,000; and
    (iii) Was owned or controlled by a bank holding company that owned 
or controlled insured depository institutions having an aggregate amount 
of deposits insured or treated as insured by the BIF greater than the 
aggregate amount of deposits insured or treated as insured by the SAIF.
[59 FR 67165, Dec. 29, 1994, as amended at 61 FR 53839, Oct. 16, 1996; 
61 FR 64983, Dec. 10, 1996]



Sec. 327.33  ``Acquired'' deposits.

    This section interprets the phrase ``deposits acquired by the 
institution'' as used in Sec. 327.32(a)(3)(i).
    (a) In general--(1) Secondary-fund deposits. The phrase ``deposits 
acquired by the institution'' refers to deposits that are insured by the 
secondary fund of the acquiring institution, and does not include 
deposits that are insured by the acquiring institution's primary fund.
    (2) Nominal dollar amount. Except as provided in paragraph (b) of 
this section, an acquiring institution is deemed to acquire the entire 
nominal dollar amount of any deposits that the transferring institution 
holds on the date of the transaction and transfers to the acquiring 
institution.
    (b) Conduit deposits--(1) Defined. As used in this paragraph (b), 
the term ``conduit deposits'' refers to deposits that an acquiring 
institution has assumed from another institution (original transferor) 
in the course of a transaction described in Sec. 327.31(a), and that are 
treated as insured by the secondary fund of the acquiring institution, 
but which the acquiring institution has been explicitly and specifically 
ordered by the Corporation, or by the appropriate federal banking agency 
for the institution, or by the Department of Justice to commit to re-
transfer to another insured depository institution (re-transferee 
institution) as a condition of approval of the transaction. The 
commitment must be enforceable, and the divestiture must be required to 
occur and must occur within 6 months after the date of the initial 
transaction.
    (2) Treatment with respect to acquiring institution. Conduit 
deposits are not considered to be acquired by the acquiring institution 
within the meaning of Sec. 327.32(a)(3)(i) for the purpose of computing 
the acquiring institution's adjusted attributable deposit amount for a 
current semiannual period that begins after the end of the semiannual 
period following the semiannual period in which the acquiring 
institution re-transfers the deposits.
    (3) Treatment with respect to re-transferee institution. Conduit 
deposits are treated as insured by the same insurance fund after having 
been acquired

[[Page 213]]

by the re-transferee institution as when held by the original 
transferor.
[61 FR 64983, Dec. 10, 1996]



Sec. 327.34  Application of AADAs.

    This section interprets the meaning of the phrase ``an insured 
depository institution's `adjusted attributable deposit amount' for any 
semiannual period'' as used in the introductory text of 
Sec. 327.32(a)(3).
    (a) In general. The phrase ``for any semiannual period'' refers to 
the current semiannual period: that is, the period for which the 
assessment is due, and for which an institution's adjusted attributable 
deposit amount (AADA) is computed.
    (b) Quarterly components of AADAs. An AADA for a current semiannual 
period consists of 2 quarterly AADA components. The first quarterly AADA 
component for the current period is determined with respect to the first 
quarter of the prior semiannual period, and the second quarterly AADA 
component for the current period is determined with respect to the 
second quarter of the prior period.
    (c) Application of AADAs. The value of an AADA that is to be applied 
to a quarterly assessment base in accordance with Sec. 327.32(a)(2) is 
the value of the quarterly AADA component for the corresponding quarter.
    (d) Initial AADAs. If an AADA for a current semiannual period has 
been generated in a transaction that has occurred in the second calendar 
quarter of the prior semiannual period, the first quarterly AADA 
component for the current period is deemed to have a value of zero.
    (e) Transition rule. Paragraphs (b), (c) and (d) of this section 
shall apply to any AADA for any semiannual period beginning on or after 
July 1, 1997.
[61 FR 64984, Dec. 10, 1996]



Sec. 327.35  Grandfathered AADA elements.

    This section explains the meaning of the phrase ``total of the 
amounts determined under paragraph (a)(3)(iii)'' in 
Sec. 327.32(a)(3)(ii). The phrase ``total of the amounts determined 
under paragraph (a)(3)(iii)'' refers to the aggregate of the increments 
of growth determined in accordance with Sec. 327.32(a)(3)(iii). Each 
such increment is deemed to be computed in accordance with the 
contemporaneous provisions and interpretations of such section. 
Accordingly, any increment of growth that is computed with respect to a 
semiannual period has the value appropriate to the proper calculation of 
the institution's assessment for the semiannual period immediately 
following such semiannual period.
[61 FR 64984, Dec. 10, 1996]



Sec. 327.36  Growth computation.

    This section interprets various phrases used in the computation of 
growth as prescribed in Sec. 327.32(a)(3)(iii).
    (a) Annual rate. The annual rate of growth of deposits refers to the 
rate, which may be expressed as an annual percentage rate, of growth of 
an institution's deposits over any relevant interval. A relevant 
interval may be less than a year.
    (b) Growth; increase; increases. Except as provided in paragraph (c) 
of this section, references to ``growth'', ``increase'', and 
``increases'' may generally include negative values as well as positive 
ones.
    (c) Growth of deposits. ``Growth of deposits'' does not include any 
decrease in an institution's deposits representing deposits transferred 
to another insured depository institution, if the transfer occurs on or 
after July 1, 1996.
    (d) Quarterly determination of growth. For the purpose of computing 
assessments for semiannual periods beginning on July 1, 1997, and 
thereafter, the rate of growth of deposits for a semiannual period, and 
the amount by which the sum of the amounts specified in 
Sec. 327.32(a)(3)(i) and (ii) would have grown during a semiannual 
period, is to be determined by computing such rate of growth and such 
sum of amounts for each calendar quarter within the semiannual period.
[61 FR 64984, Dec. 10, 1996]



Sec. 327.37  Attribution of transferred deposits.

    This section explains the attribution of deposits to the BIF and the 
SAIF

[[Page 214]]

when one insured depository institution (acquiring institution) acquires 
deposits from another insured depository institution (transferring 
institution). For the purpose of determining whether the assumption of 
deposits (assumption transaction) constitutes a transaction undertaken 
pursuant to section 5(d)(3) of the Federal Deposit Insurance Act (12 
U.S.C. 1815(d)(3)), and for the purpose of computing the adjusted 
attributable deposit amounts, if any, of the acquiring and the 
transferring institutions after the transaction:
    (a) Transferring institution--(1) Transfer of primary-fund deposits. 
To the extent that the aggregate volume of deposits that is transferred 
by a transferring institution in a transaction, or in a related series 
of transactions, does not exceed the volume of deposits that is insured 
by its primary fund (primary-fund deposits) immediately prior to the 
transaction (or, in the case of a related series of transactions, 
immediately prior to the initial transaction in the series), the 
transferred deposits shall be deemed to be insured by the institution's 
primary fund. The primary institution's volume of primary-fund deposits 
shall be reduced by the aggregate amount so transferred.
    (2) Transfer of secondary-fund deposits. To the extent that the 
aggregate volume of deposits that is transferred by the transferring 
institution in a transaction, or in a related series of transactions, 
exceeds the volume of deposits that is insured by its primary fund 
immediately prior to the transaction (or, in the case of a related 
series of transactions, immediately prior to the initial transaction in 
the series), the following volume of the deposits so transferred shall 
be deemed to be insured by the institution's secondary fund (secondary-
fund deposits): the aggregate amount of the transferred deposits minus 
that portion thereof that is equal to the institution's primary-fund 
deposits. The transferring institution's volume of secondary-fund 
deposits shall be reduced by the volume of the secondary-fund deposits 
so transferred.
    (b) Acquiring institution. The deposits shall be deemed, upon 
assumption by the acquiring institution, to be insured by the same fund 
or funds in the same amount or amounts as the deposits were so insured 
immediately prior to the transaction.
[61 FR 64984, Dec. 10, 1996]



PART 328--ADVERTISEMENT OF MEMBERSHIP--Table of Contents




Sec.
328.0  Scope.
328.1  Official signs.
328.2  Mandatory requirements with regard to the official sign and its 
          display by banks.
328.3  Mandatory requirements with regard to the official advertising 
          statement and manner of use by banks.
328.4  Mandatory requirements with regard to the display of the official 
          savings association sign by insured savings associations.

    Authority:  12 U.S.C. 1819; 12 U.S.C. 1828(a), as amended by sec. 
221, Pub. L. 101-73, 103 Stat. 183.



Sec. 328.0  Scope.

    The regulation contained in this part describes the official signs 
of the FDIC and prescribes their use by insured depository institutions. 
It also prescribes the official advertising statement insured banks must 
include in their advertisements. Insured banks which maintain offices 
that are not insured in foreign countries are not required to include 
the advertising statement in advertisements published in foreign 
countries. For purposes of this part 328, the term insured bank includes 
a foreign bank having an insured branch.
[54 FR 33670, Aug. 16, 1989]



Sec. 328.1  Official signs.

    (a) Official bank sign. The official sign referred to in this 
paragraph (bank sign) shall be 7' by 3' in size and of the following 
design:

[[Page 215]]

[GRAPHIC] [TIFF OMITTED] TC23SE91.000

The symbol of the Corporation shall be that portion of the official bank 
sign represented by the letters and the Corporation seal contained upon 
the official bank sign.
    (b) Official savings association sign. The official sign referred to 
in this paragraph (savings association sign) shall be 5\1/8\' in 
diameter and of the following design:
[GRAPHIC] [TIFF OMITTED] TC23SE91.001

[54 FR 33670, Aug. 16, 1989, as amended at 57 FR 45977, Oct. 6, 1992]



Sec. 328.2  Mandatory requirements with regard to the official sign and its display by banks.

    (a) Insured banks to display official sign. Each insured bank shall 
continuously display an official bank sign or an official savings 
association sign at each station or window where insured deposits are 
usually and normally received in its principal place of business and in 
all its branches, except on automatic service facilities including 
automated teller machines, cash dispensing machines, point-of-sale 
terminals, and other electronic facilities where deposits are received. 
However, no bank becoming an insured bank shall be required to display 
such an official sign until twenty-one (21) days after its first day of 
operation as an insured bank. An official sign may be displayed by an 
insured bank prior to the date display is required. Additional bank 
signs or savings association signs may be displayed in other locations 
within an insured bank in other sizes, colors, or materials. An insured 
bank may display an official sign at a remote service facility, provided 
that if there are any noninsured institutions which share in the remote 
service facility, any insured bank which displays the official bank sign 
must clearly show that the sign refers only to a designated insured bank 
or banks.
    (b) Obtaining official signs. (1) Any insured bank may procure 
official bank signs with black letters on a gold background or official 
savings association signs with black letters, stars, and eagle, on a 
gold background, from the Corporation for official use at no charge. The 
Corporation shall furnish to banks an order blank for use in procuring 
the official signs. Any bank which promptly, after the receipt of the 
order blank, fills it in, executes it, and properly directs and forwards 
it to

[[Page 216]]

the Federal Deposit Insurance Corporation, Washington, DC 20429, shall 
not be deemed to have violated this regulation on account of not 
displaying an official sign, or signs, unless the bank shall omit to 
display such official sign or signs after receipt thereof.
    (2) Official signs or signs reflecting variations in size, colors, 
or materials may be procured by insured banks from commercial suppliers.
    (c) Receipt of deposits at same teller's station or window as 
noninsured bank or institution. An insured bank is forbidden to receive 
deposits at any teller's station or window except a remote service 
facility as defined in Sec. 303.0(b)(18) of this chapter, where any 
noninsured insitution receives deposits or similar liabilities.
    (d) Required changes in official sign. The Corporation may require 
any insured bank, upon at least 30 days' written notice, to change the 
wording of its official signs in a manner deemed necessary for the 
protection of depositors or others.
[54 FR 33670, Aug. 16, 1989, as amended at 57 FR 45977, Oct. 6, 1992]



Sec. 328.3  Mandatory requirements with regard to the official advertising statement and manner of use by banks.

    (a) Insured banks to include official advertising statement in all 
advertisements except as provided in paragraph (c) of this section. Each 
insured bank shall include the official advertising statement, 
prescribed in paragraph (b) of this section, in all of its 
advertisements except as provided in paragraph (c) of this section.
    (1) An insured bank is not required to include the official 
advertising statement in its advertisements until thirty (30) days after 
its first day of operation as an insured bank.
    (2) In cases where the Board of Directors of the Federal Deposit 
Insurance Corporation shall find the application to be meritorious, that 
there has been no neglect or willful violation in the observance of the 
section and that undue hardship will result by reason of its 
requirements, the Board of Directors may grant a temporary exemption 
from its provision to a particular bank upon its written application 
setting forth the facts. For the procedure to be followed in making such 
application see Sec. 303.8 of this chapter.
    (3) In cases where advertising copy not including the official 
advertising statement is on hand on the date the requirements of this 
section become operative, the insured bank may cause the official 
advertising statement to be included by use of a rubber stamp or 
otherwise.
    (4) When a foreign bank has both insured and noninsured U.S. 
branches, the bank must identify which branches are insured and which 
branches are not insured in all of its advertisements requiring the use 
of the official advertising statement.
    (b) Official advertising statement. The official advertising 
statement shall be in substance as follows: ``Member of the Federal 
Deposit Insurance Corporation''. The word ``the'' or the words ``of 
the'' may be omitted. The words ``This bank is a'' or the words ``This 
institution is a'' or the name of the insured bank followed by the words 
``is a'' may be added before the word ``member''. The short title 
``Member of FDIC'' or ``Member FDIC'' or a reproduction of the 
``symbol'' may be used by insured banks at their option as the official 
advertising statement. The official advertising statement shall be of 
such size and print to be clearly legible. Where it is desired to use 
the ``symbol'' of the Corporation as the official advertising statement, 
and the ``symbol'' must be reduced to such proportions that the small 
lines of type and the Corporation seal therein are indistinct and 
illegible, the Corporation seal in the letter C and the two lines of 
small type may be blocked out or dropped.
    (c) Types of advertisements which do not require the official 
advertising statement. The following is an enumeration of the types of 
advertisements which need not include the official advertising 
statement:
    (1) Statements of condition and reports of condition of an insured 
bank which are required to be published by State or Federal law;
    (2) Bank supplies such as stationery (except when used for circular 
letters), envelopes, deposit slips, checks, drafts, signature cards, 
deposit passbooks, certificates of deposit, etc.;

[[Page 217]]

    (3) Signs or plates in the banking office or attached to the 
building or buildings in which the banking offices are located;
    (4) Listings in directories;
    (5) Advertisements not setting forth the name of the insured bank;
    (6) Display advertisements in bank directory, provided the name of 
the bank is listed on any page in the directory with a symbol or other 
descriptive matter indicating it is a member of the Federal Deposit 
Insurance Corporation;
    (7) Joint or group advertisements of banking services where the 
names of insured banks and noninsured banks or institutions are listed 
and form a part of such advertisements;
    (8) Advertisements by radio which do not exceed thirty (30) seconds 
in time;
    (9) Advertisements by television, other than display advertisements, 
which do not exceed thirty (30) seconds in time;
    (10) Advertisements which are of the type or character making it 
impractical to include thereon the official advertising statement 
including, but not limited to, promotional items such as calendars, 
matchbooks, pens, pencils, and key chains;
    (11) Advertisements which contain a statement to the effect that the 
bank is a member of the Federal Deposit Insurance Corporation, or that 
the bank is insured by the Federal Deposit Insurance Corporation, or 
that its deposits or depositors are insured by the Federal Deposit 
Insurance Corporation to the maximum of $100,000 for each depositor;
    (12) Advertisements relating to the making of loans by the bank or 
loan services;
    (13) Advertisements relating to safekeeping box business or 
services;
    (14) Advertisements relating to trust business or trust department 
services;
    (15) Advertisements relating to real estate business or services;
    (16) Advertisements relating to armored car services;
    (17) Advertisements relating to service charges or analysis charges;
    (18) Advertisements relating to securities business or securities 
department services;
    (19) Advertisements relating to travel department business, 
including traveler's checks on which the bank issuing or causing to be 
issued the advertisement is not primarily liable;
    (20) Advertisements relating to savings bank life insurance.
    (d) Outstanding billboard advertisements. Where an insured bank has 
billboard advertisements outstanding which are required to include the 
official advertising statement and has direct control of such 
advertisements either by possession or under the terms of a contract, it 
shall, as soon as it can consistent with its contractual obligations, 
cause the official advertising statement to be included therein.
    (e) Official advertising statement in non-English language. The non-
English equivalent of the official advertising statement may be used in 
any advertisement: Provided, That the translation has had the prior 
written approval of the Corporation.

(Sec. 3(m), 9, 64 Stat. 881; 12 U.S.C. 1813(m), 1819)
[32 FR 10189, July 11, 1967, as amended at 45 FR 23645, Apr. 8, 1980; 46 
FR 37876, July 23, 1981. Redesignated and amended at 54 FR 33670, Aug. 
16, 1989]



Sec. 328.4  Mandatory requirements with regard to the display of the official savings association sign by insured savings associations.

    (a) Insured savings associations to display official savings 
association sign. Each insured savings association shall continuously 
display an official savings association sign at each station or window 
where insured deposits are usually and normally received in its 
principal place of business and at all of its branches, except on 
automatic service facilities including automated teller machines, cash 
dispensing machines, point-of-sale terminals, and other electronic 
facilities where deposits are received. However, no savings association 
becoming an insured savings association as a result of the enactment of 
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 
or otherwise, shall be required to display an official savings 
association sign until twenty-one (21) days after its first day of 
operation as an insured savings association. The official savings 
association sign may be displayed by any insured savings association 
prior to the

[[Page 218]]

date display is required. Additional savings association signs in other 
sizes, colors, or materials, may be displayed in other locations within 
an insured savings association. An insured savings association may 
display the official savings association sign at a remote service 
facility, provided that if there are any noninsured institutions which 
share in the remote service facility, any insured savings association 
which displays the sign must clearly show that the official savings 
association sign refers only to a designated insured savings association 
or associations.
    (b) Obtaining official savings association signs. (1) Any insured 
savings association may procure official savings association signs with 
black letters, stars, and eagle, on a gold background from the 
Corporation for official use at no charge. The Corporation shall furnish 
to savings associations an order blank for use in procuring the official 
savings association sign. Any savings association which promptly, after 
the receipt of the order blank, fills it in, executes it, and properly 
directs and forwards it to the Federal Deposit Insurance Corporation, 
Washington, DC 20429, shall not be deemed to have violated this 
regulation on account of not displaying an official savings association 
sign, or signs, unless the savings association shall omit to display 
such official sign or signs after receipt thereof.
    (2) Official savings association signs or signs reflecting 
variations in size, colors, or materials may be procured by insured 
savings associations from commercial suppliers.
    (c) Receipt of deposits at same teller's station or window as 
noninsured institution. An insured savings association is forbidden to 
receive deposits at any teller's station or window except a remote 
service facility as defined in Sec. 303.0(b)(18) of this chapter, where 
any noninsured institution receives deposits or similar liabilities.
    (d) Required changes in official sign. The Corporation may require 
any insured savings association upon at least 30 days' written notice, 
to change the wording of its official signs in a manner deemed necessary 
for the protection of depositors or others.
    (e) Display of official bank sign by insured savings association 
prohibited. An insured savings association shall not display the bank 
sign at its principal place of business or at any of its branches.
[54 FR 33672, Aug. 16, 1989, as amended at 57 FR 45977, Oct. 6, 1992]



PART 329--INTEREST ON DEPOSITS--Table of Contents




Sec.
329.0  Scope.
329.1  Definitions.
329.2  Payment of interest.
329.101  Transfers not included within the six transfers allowed for 
          nondemand deposits pursuant to Sec. 329.1(b)(3).
329.102  Deposits described in Sec. 329.1(b)(3).
329.103  Premiums.
329.104  Ten-day grace period.

    Authority:  12 U.S.C. 1819, 1828(g) and 1832(a).

    Source:  51 FR 10808, Mar. 31, 1986, unless otherwise noted.



Sec. 329.0  Scope.

    This part applies to any deposit which is payable by a bank within 
the States of the United States or the District of Columbia, or which is 
directly or indirectly accessible by check, draft, or order payable 
within the States of the United States or the District of Columbia, 
which check, draft or order is drawn on an account maintained at a bank 
office located within the States of the United States or the District of 
Columbia. An international banking facility time deposit, as defined by 
the Board of Governors of the Federal Reserve System in Sec. 204.8(a)(2) 
of this title, is not a deposit within the meaning of this part.



Sec. 329.1  Definitions.

    (a) The term bank includes:
    (1) Any State bank, as defined in section 3(a) of the Federal 
Deposit Insurance Act, 12 U.S.C. 1813(a), the deposits in which are 
insured by the Corporation, and which is not a member of the Federal 
Reserve System;
    (2) Any State branch of a foreign bank, the deposit obligations in 
which branch are insured by the Corporation; and
    (3) Any noninsured bank in a State if the total amount of time and 
savings deposits held in all such banks in the

[[Page 219]]

State, plus the total amount of deposits, shares, and withdrawable 
accounts held in all building and loan, savings and loan, and homestead 
associations (including cooperative banks) in the State which are not 
members of a Federal home loan bank, is more than 20 per centum of the 
total amount of such deposits, shares, and withdrawable accounts held in 
all banks and building and loan, savings and loan, and homestead 
associations (including cooperative banks) in the State.
    (b) The term demand deposit includes:
    (1) Any deposit that has a maturity or required-notice period of 
less than seven days;
    (2) Any deposit regarding which the bank does not reserve the right 
to require at least seven days' written notice prior to withdrawal or 
transfer of any funds from the account; or
    (3) Any other deposit from which, under the terms of the deposit 
contract, the depositor is authorized to make, during any month or 
statement cycle of at least four weeks, more than six transfers by means 
of a preauthorized or automatic transfer or telephonic (including data 
transmission) agreement, order or instruction, which transfers are made 
to another account of the depositor at the same bank, to the bank 
itself, or to a third party:
    Provided, That any deposit specified in this paragraph (b)(3) will 
be deemed to be a demand deposit if more than three of the six 
authorized transfers are authorized to be made by check, draft, debit 
card or similar order made by the depositor;
    And provided further, That no deposit specified in this paragraph 
(3) will be deemed to be a demand deposit if the entire beneficial 
interest of the deposit is held by a depositor identified in paragraph 
(2) of section 2(a) of Pub. L. 93-100 (12 U.S.C. 1832(a)(2)).\1\
---------------------------------------------------------------------------

    \1\ Paragraph (1) of 12 U.S.C. 1832(a) authorizes banks to let 
certain depositors make withdrawals from interest-bearing deposits by 
negotiable or transferable instruments for the purpose of making 
transfers to third parties--i.e., to hold deposits commonly called NOW 
accounts.
    Paragraph (2) of 12 U.S.C. 1832(a) provides: ``Paragraph (1) shall 
apply only with respect to deposits or accounts which consist solely of 
funds in which the entire beneficial interest is held by one or more 
individuals or by an organization which is operated primarily for 
religous, philanthropic, charitable, educational, political, or other 
similar purposes and which is not operated for profit, and with respect 
to deposits of public funds by an officer, employee, or agent of the 
United States, any State, county, municipality, or political subdivision 
thereof, the District of Columbia, the Commonwealth of Puerto Rico, 
American Samoa, Guam, any territory or possession of the United States, 
or any political subdivision thereof.
---------------------------------------------------------------------------

    (c) The term interest means any payment to or for the account of any 
depositor as compensation for the use of funds constituting a deposit. A 
bank's absorption of expenses incident to providing a normal banking 
function or its forbearance from charging a fee in connection with such 
a service is not considered a payment of interest.
[51 FR 10808, Mar. 31, 1986, as amended at 53 FR 47523, Nov. 23, 1988]



Sec. 329.2  Payment of interest.

    No bank shall, directly or indirectly, by any device whatsoever, pay 
interest on any demand deposit.



Sec. 329.101  Transfers not included within the six transfers allowed for nondemand deposits pursuant to Sec. 329.1(b)(3).

    This interpretive rule describes certain transfers that are not 
included as any of the six transfers allowed pursuant to 
Sec. 329.1(b)(3).
    (a) Transfers from a deposit described in Sec. 329.1(b)(3) that are 
made to the bank are not deemed to be included within the six transfers 
permitted for a nondemand deposit by that paragraph (3) when the 
transfers are made for the purpose of repaying loans and associated 
expenses at the bank (as originator or servicer). This exemption does 
not apply to transfers to the bank that are made for the purpose of 
repaying loans that are made by the bank to the depositor's demand 
account for the purpose of covering overdrafts.
    (b) Transfers from a deposit described in Sec. 329.1(b)(3) that are 
made to another account of the same depositor at the bank are not deemed 
to be included within the six transfers permitted for a nondemand 
deposit by that paragraph

[[Page 220]]

(3) when the transfers are made by mail, messenger, automated teller 
machine or in person.
    (c) Withdrawals from a deposit described in Sec. 329.1(b)(3) are not 
deemed to be included within the six transfers permitted for a nondemand 
deposit by that paragraph (3) when the withdrawals are made by mail, 
messenger, telephone (via check mailed to the depositor), automated 
teller machine, or in person.



Sec. 329.102  Deposits described in Sec. 329.1(b)(3).

    This interpretive rule explains the second proviso of 
Sec. 329.1(b)(3).
    (a) No deposit described in Sec. 329.1(b)(3) that is held by an 
organization that is not organized for profit and that is described in 
paragraphs 501(c) (3) through (13) and (19) and section 528 of the 
Internal Revenue Code of 1954 (26 U.S.C. 501(c) (3) through (13) and 
(19), and 528) is deemed to be a demand deposit. Actual Internal Revenue 
Service documentation of the organization's tax-exempt status is not 
required; it is merely an aid in making the determination.
    (b) No deposit described in Sec. 329.1(b)(3) that is held by a 
depositor identified in section 2(a)(2) of Pub. L. 93-100 (12 U.S.C. 
1832(a)(2))--whether the deposit is used for business purposes or 
otherwise--is deemed to be a demand deposit.
    (c) No deposit described in Sec. 329.1(b)(3) that represents funds 
held in a fiduciary capacity (whether the fiduciary is a natural person 
or otherwise) is deemed to be a demand deposit if all the beneficiaries 
of the account are natural persons.



Sec. 329.103  Premiums.

    This interpretive rule describes certain payments that are not 
deemed to be interest as defined in Sec. 329.1(c).
    (a) Premiums, whether in the form of merchandise, credit, or cash, 
given by a bank to the holder of a deposit will not be regarded as 
interest as defined in Sec. 329.1(c) if:
    (1) The premium is given to the depositor only at the time of the 
opening of a new account or an addition to an existing account;
    (2) No more than two premiums per deposit are given in any twelve-
month interval; and (3) the value of the premium (in the case of 
merchandise, the total cost to the bank, including shipping, 
warehousing, packaging, and handling costs) does not exceed $10 for a 
deposit of less than $5,000 or $20 for a deposit of $5,000 or more.
    (b) The costs of premiums may not be averaged.
    (c) A bank may not solicit funds for deposit on the basis that the 
bank will divide the funds into several accounts for the purpose of 
enabling the bank to pay the depositor more than two premiums within a 
twelve-month interval on the solicited funds.
    (d) The bank must retain sufficient information for examiners to 
determine that the requirements of this section have been satisfied.
    (e) Notwithstanding paragraph (a) of this section, any premium that 
is not, directly or indirectly, related to or dependent on the balance 
in a demand deposit account and the duration of the account balance 
shall not be considered the payment of interest on a demand deposit 
account and shall not be subject to the limitations in paragraph (a) of 
this section.
[51 FR 10808, Mar. 31, 1986, as amended at 62 FR 40732, July 30, 1997]



Sec. 329.104  Ten-day grace period.

    This interpretive rule provides for 10-day grace periods during 
which interest may be paid on a deposit without violating Sec. 329.2.
    (a) During the ten calendar days following the maturity of a time 
deposit, the bank may continue to pay interest on the matured deposit at 
the contract rate of the deposit, or at any lesser rate, if the deposit 
contract provides for such post-maturity interest. The payment of such 
post-maturity interest will not be regarded as the payment of interest 
on a demand deposit.
    (b) If a time deposit is renewed within ten calendar days after 
maturity, the renewed deposit may be dated back to the maturity date of 
the matured deposit and may draw interest from that date. The payment of 
such additional interest will not be regarded as the payment of interest 
on a demand deposit.
    (c) If a time or savings deposit is renewed within ten days after 
expiration

[[Page 221]]

of the period of notice given with respect to its repayment, the renewed 
deposit may draw interest from the date such notice period expired. The 
payment of such additional interest will not be regarded as the payment 
of interest on a demand deposit.



PART 330--DEPOSIT INSURANCE COVERAGE--Table of Contents




Sec.
330.1  Definitions.
330.2  Authority and purpose.
330.3  General principles.
330.4  Recognition of deposit ownership and recordkeeping requirements.
330.5  Single ownership accounts.
330.6  Accounts held by an agent, nominee, guardian, custodian or 
          conservator.
330.7  Joint ownership accounts.
330.8  Revocable trust accounts.
330.9  Accounts of a corporation, partnership or unincorporated 
          association.
330.10  Accounts held by a depository institution as the trustee of an 
          irrevocable trust.
330.11  Irrevocable trust accounts.
330.12  Retirement and other employee benefit plan accounts.
330.13  Bank investment contracts.
330.14  Public unit accounts.
330.15  Notice to depositors.
330.16  Effective dates.

    Authority:  12 U.S.C. 1813(l), 1813(m), 1817(i), 1818(q), 
1819[Tenth], 1820(f), 1821(a), 1822(c).

    Source:  55 FR 20122, May 15, 1990, unless otherwise noted.



Sec. 330.1  Definitions.

    For the purposes of this part:
    (a) Act means the Federal Deposit Insurance Act (12 U.S.C. 1811 et 
seq.).
    (b) Default has the same meaning as provided under section 3(x) of 
the Act (12 U.S.C. 1813(x)).
    (c) Deposit has the same meaning as provided under section 3(l) of 
the Act (12 U.S.C. 1813(l)).
    (d) Deposit account records means account ledgers, signature cards, 
certificates of deposit, passbooks, corporate resolutions authorizing 
accounts in the possession of the insured depository institution and 
other books and records of the insured depository institution, including 
records maintained by computer, which relate to the insured depository 
institution's deposit taking function, but does not mean account 
statements, deposit slips, items deposited or cancelled checks.
    (e) FDIC means the Federal Deposit Insurance Corporation.
    (f) Insured deposit has the same meaning as that provided under 
subsection 3(m)(1) of the Act (12 U.S.C. 1813(m)(1)).
    (g) Insured depository institution is any depository institution 
whose deposits are insured pursuant to the Act, including a foreign bank 
having an insured branch.
    (h) Insured branch means a branch of a foreign bank any deposits in 
which are insured in accordance with the provisions of the Act.
    (i) Natural person means a human being.
    (j) Trust funds means funds held by an insured depository 
institution as trustee pursuant to any irrevocable trust established 
pursuant to any statute or written trust agreement.
    (k) Trust estate means the determinable and beneficial interest of a 
beneficiary or principal in trust funds but does not include the 
beneficial interest of an heir or devisee in a decedent's estate.
[55 FR 20122, May 15, 1990, as amended at 58 FR 29963, May 25, 1993]



Sec. 330.2  Authority and purpose.

    Section 311 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (FDICIA), Pub. L. 102-242, 105 Stat. 2236, amended sections 
3, 7 and 11 of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 
1813, 1817 and 1821, which govern the amount of deposit insurance 
provided by the FDIC. Section 311 of FDICIA deleted the provision in 
section 3 of the Federal Deposit Insurance Act which authorized the FDIC 
to clarify and define, by regulation, the extent of deposit insurance 
coverage resulting from subsections 3(m)(1), 3(p), 7(i) and 11(a) of the 
FDI Act, 12 U.S.C. 1813(m)(1), 1813(p), 1817(i) and 1821(a) and to 
define the terms used in those sections. However, FDICIA did not change 
the FDIC's authority, in section 9 [Tenth] of the FDI Act, to prescribe 
by its Board of Directors such rules and regulations as it may deem 
necessary to carry out the provisions of the FDI Act or of any other law 
which it has the responsibility of administering or enforcing (except to 
the

[[Page 222]]

extent that authority to issue such rules and regulations has been 
expressly and exclusively granted to any other regulatory agency). 
Moreover, in section 302(d) of FDICIA, Congress added a new subsection 
to section 10 of the FDI Act which provides that except to the extent 
that authority under the FDI Act is conferred on any of the Federal 
banking agencies other than the Corporation, the Corporation may 
prescribe regulations to carry out the FDI Act and by regulation define 
terms as necessary to carry out the FDI Act. The purpose of the 
regulations in this part is to clarify the rules and define the terms 
employed in affording deposit insurance coverage under the Act and 
provide rules for the recognition of deposit ownership in various 
circumstances.
[58 FR 29963, May 25, 1993]



Sec. 330.3  General principles.

    (a) Ownership rights and capacities. The insurance coverage provided 
by the Act and the regulations in this part is based upon the ownership 
rights and capacities in which deposit accounts are maintained at 
insured depository institutions. All deposits in an insured depository 
institution which are maintained in the same right and capacity (by or 
for the benefit of a particular depositor or depositors) shall be added 
together and insured in accordance with the regulations in this part. 
Deposits maintained in different rights and capacities, as recognized 
under this part, shall be insured separately from each other.
    (b) Deposits maintained in separate insured depository institutions 
or in separate branches of the same insured depository institution. Any 
deposit accounts maintained by a depositor at one insured depository 
institution are insured separately from, and without regard to, any 
deposit accounts that the same depositor maintains at any other 
separately chartered and insured depository institution, even if two or 
more separately chartered and insured depository institutions are 
affiliated through common ownership. The deposit accounts of a depositor 
maintained in the same right and capacity at different branches or 
offices of the same insured depository institution are not separately 
insured; rather they shall be added together and insured in accordance 
with the regulations in this part.
    (c) Deposits maintained by foreigners and deposits denominated in 
foreign currency. The availability of deposit insurance is not limited 
to citizens and residents of the United States. Any person or entity 
that maintains deposits in an insured depository institution is entitled 
to the deposit insurance provided by the Act and the provisions of this 
part. In addition, deposits denominated in a foreign currency shall be 
insured in accordance with the provisions of this part. Deposit 
insurance for such deposits shall be determined and paid in the amount 
of United States dollars that is equivalent in value to the amount of 
the deposit denominated in the foreign currency as of close of business 
on the date of default of the insured depository institution. The 
exchange rates to be used for such conversions are the 12 PM rates (the 
noon buying rates for cable transfers) quoted for major currencies by 
the Federal Reserve Bank of New York on the date of default of the 
insured depository institution, unless the deposit agreement specifies 
that some other widely recognized exchange rates are to be used for all 
purposes under that agreement, in which case, the rates so specified 
shall be used for such conversions.
    (d) Deposits in insured branches of foreign banks. Deposits in an 
insured branch of a foreign bank which are payable by contract in the 
United States shall be insured in accordance with the provisions of this 
part, except that any deposits to the credit of the foreign bank, or any 
office, branch, agency or any wholly owned subsidiary of the foreign 
bank, shall not be insured. All deposits held by a depositor in the same 
right and capacity in more than one insured branch of the same foreign 
bank shall be added together for the purpose of determining the amount 
of deposit insurance.
    (e) Deposits payable solely outside of the United States. Any 
obligation of an insured depository institution which is payable solely 
at an office of such institution located outside the States of

[[Page 223]]

the United States, the District of Columbia, Puerto Rico, Guam, the 
Commonwealth of the Northern Mariana Islands, American Samoa, the Trust 
Territory of the Pacific Islands, and the Virgin Islands, is not a 
deposit for the purposes of this part.
    (f) International banking facility deposits. An ``international 
banking facility time deposit,'' as defined by the Board of Governors of 
the Federal Reserve System in Regulation D (12 CFR 204.8(a)(2)), or in 
any successor regulation, is not a deposit for the purposes of this 
part.
    (g) Continuation of separate deposit insurance after merger of 
insured depository institutions. Whenever the liabilities of one or more 
insured depository institutions for deposits shall have been assumed by 
another insured depository institution, whether by merger, 
consolidation, other statutory assumption, or contract:
    (1) The insured status of the institutions whose liabilities have 
been so assumed terminates on the date of receipt by the FDIC of 
satisfactory evidence of such assumption, and
    (2) The separate insurance of deposits so assumed continues for six 
months from the date such assumption takes effect or, in the case of a 
time deposit, the earliest maturity date after the six-month period.

In the case of time deposits which mature within six months of the date 
such deposits are assumed and which are renewed at the same dollar 
amount (either with or without accrued interest having been added to the 
principal amount) and for the same term as the original deposit, the 
separate insurance is applicable to the renewed deposits until the first 
maturity date after the six-month period. Time deposits that mature 
within six months of the deposit assumption and that are renewed on any 
other basis, or that are not renewed and thereby become demand deposits, 
are separately insured only until the end of the six-month period.
    (h) Application of state or local law to deposit insurance 
determinations. In general, deposit insurance is for the benefit of the 
owner or owners of funds on deposit. However, while ownership under 
state law of deposited funds is a necessary condition for deposit 
insurance, ownership under state law is not sufficient for, or decisive 
in, determining deposit insurance coverage. Deposit insurance coverage 
is also a function of the deposit account records of the insured 
depository institution, of recordkeeping requirements, and of other 
provisions of this part, which, in the interest of uniform national 
rules for deposit insurance coverage, are controlling for purposes of 
determining deposit insurance coverage.
    (i) Determination of the amount of a deposit--(1) General rule. The 
amount of a deposit is the balance of principal and interest 
unconditionally credited to the deposit account as of the date of 
default of the insured depository institution, plus the ascertainable 
amount of interest to that date, accrued at the contract rate (or the 
anticipated or announced interest or dividend rate), which the insured 
depository institution in default would have paid if the deposit had 
matured on that date and the insured depository institution had not 
failed. In the absence of any such announced or anticipated interest or 
dividend rate, the rate for this purpose shall be whatever rate was paid 
in the immediately preceding payment period.
    (2) Discounted certificates of deposit. The amount of a certificate 
of deposit sold by an insured depository institution at a discount from 
its face value is its original purchase price plus the amount of accrued 
earnings calculated by compounding interest annually at the rate 
necessary to increase the original purchase price to the maturity value 
over the life of the certificate.
    (3) Waiver of minimum requirements. In the case of a deposit with a 
fixed payment date, fixed or minimum term, or a qualifying or notice 
period that has not expired as of such date, interest thereon to the 
date of closing shall be computed according to the terms of the deposit 
contract as if interest had been credited and as if the deposit could 
have been withdrawn on such date without any penalty or reduction in the 
rate of earnings.

[[Page 224]]



Sec. 330.4  Recognition of deposit ownership and recordkeeping requirements.

    (a) Recognition of deposit ownership--(1) Evidence of deposit 
ownership. In determining the amount of insurance available to each 
depositor, the FDIC shall presume that deposited funds are actually 
owned in the manner indicated on the deposit account records of the 
insured depository institution. If the FDIC, in its sole discretion, 
determines that the deposit account records of the insured depository 
institution are clear and unambiguous, those records shall be considered 
binding on the depositor, and no other records shall be considered, as 
to the manner in which the funds are owned. If the deposit account 
records are ambiguous or unclear as to the manner in which the funds are 
owned, then the FDIC may, in its sole discretion, consider evidence 
other than the deposit account records of the insured depository 
institution for the purpose of establishing the manner in which the 
funds are owned. Notwithstanding the foregoing, if the FDIC has reason 
to believe that the insured depository institution's deposit account 
records misrepresent the actual ownership of deposited funds and such 
misrepresentation would increase deposit insurance coverage, the FDIC 
may consider all available evidence and pay claims for insured deposits 
on the basis of the actual rather than the misrepresented ownership.
    (2) Recognition of deposit ownership in custodial accounts. In the 
case of custodial deposits, the interest of each beneficial owner may be 
determined on a fractional or percentage basis. This may be accomplished 
in any manner which indicates that where the funds of an owner are 
commingled with other funds held in a custodial capacity and a portion 
thereof is placed on deposit in one or more insured depository 
institutions without allocation, the owner's insured interest in such a 
deposit in any one insured depository institution would represent, at 
any given time, the same fractional share as his or her share of the 
total commingled funds.
    (b) Recordkeeping requirements--(1) Disclosure of fiduciary 
relationships. The deposit account records of an insured depository 
institution must expressly disclose, by way of specific references, the 
existence of any fiduciary relationship including, but not limited to, 
relationships involving a trustee, agent, nominee, guardian, executor or 
custodian, pursuant to which funds in an account are deposited and on 
which a claim for insurance coverage is based. No claim for insurance 
coverage based on a fiduciary relationship will be recognized if no 
fiduciary relationship is evident from the deposit account records of 
the insured depository institution.
    (2) Details of fiduciary relationships. If the deposit account 
records of an insured depository institution disclose the existence of a 
relationship which might provide a basis for additional insurance, the 
details of the relationship and the interests of other parties in the 
account must be ascertainable either from the deposit account records of 
the insured depository institution or from records maintained, in good 
faith and in the regular course of business, by the depositor or by some 
person or entity that has undertaken to maintain such records for the 
depositor.
    (3) Multi-tiered fiduciary relationships. In deposit accounts where 
there are multiple levels of fiduciary relationships, there are two 
alternative methods of satisfying paragraphs (b)(1) and (b)(2) of this 
section so as to obtain insurance coverage for the interests of the true 
beneficial owners of a deposit account.
    (i) One method is to: (A) Expressly indicate, on the deposit account 
records of the insured depository institution, the existence of each and 
every level of fiduciary relationships; and
    (B) Disclose, at each level, the name(s) and interest(s) of the 
person(s) on whose behalf the party at that level is acting.
    (ii) An alternative method is to: (A) Expressly indicate, on the 
deposit account records of the insured depository institution, that the 
depositor is acting in a fiduciary capacity on behalf of certain persons 
or entities who may, in turn, be acting in a fiduciary capacity for 
others;
    (B) Disclose the existence of additional levels of fiduciary 
relationships in records, maintained in good faith

[[Page 225]]

and in the regular course of business, by parties at subsequent levels; 
and
    (C) Disclose, at each of the levels, the name(s) and interest(s) of 
the person(s) on whose behalf the party at that level is acting.

No person or entity in the chain of parties will be permitted to claim 
that they are acting in a fiduciary capacity for others unless the 
possible existence of such a relationship is revealed at some previous 
level in the chain.
    (4) Exceptions to recordkeeping requirements--(i) Deposits evidenced 
by negotiable instruments. If any deposit obligation of an insured 
depository institution is evidenced by a negotiable certificate of 
deposit, negotiable draft, negotiable cashier's or officer's check, 
negotiable certified check, negotiable traveler's check, letter of 
credit or other negotiable instrument, the FDIC will recognize the owner 
of such deposit obligation for all purposes of claim for insured 
deposits to the same extent as if his or her name and interest were 
disclosed on the records of the insured depository institution;
    Provided, That the instrument was in fact negotiated to such owner 
prior to the date of default of the insured depository institution. The 
owner must provide affirmative proof of such negotiation, in a form 
satisfactory to the FDIC, to substantiate his or her claim. Receipt of a 
negotiable instrument directly from the insured depository institution 
in default shall, in no event, be considered a negotiation of said 
instrument for purposes of this provision.
    (ii) Deposit obligations for payment of items forwarded for 
collection by depository institution acting as agent. Where an insured 
depository institution in default has become obligated for the payment 
of items forwarded for collection by a depository institution acting 
solely as agent, the FDIC will recognize the holders of such items for 
all purposes of claim for insured deposits to the same extent as if 
their name(s) and interest(s) were disclosed as depositors on the 
deposit account records of the insured depository institution, when such 
claim for insured deposits, if otherwise payable, has been established 
by the execution and delivery of prescribed forms. The FDIC will 
recognize such depository institution forwarding such items for the 
holders thereof as agent for such holders for the purpose of making an 
assignment to the FDIC of their rights against the insured depository 
institution in default and for the purpose of receiving payment on their 
behalf.



Sec. 330.5  Single ownership accounts.

    (a) Individual accounts. Funds owned by a natural person and 
deposited in one or more deposit accounts in his or her own name shall 
be added together and insured up to $100,000 in the aggregate. If more 
than one natural person has the right to withdraw funds from an 
individual account (excluding persons who have the right to withdraw by 
virtue of a Power of Attorney) the account shall be treated as a joint 
ownership account and shall be insured in accordance with the provisions 
of Sec. 330.7 of this part, unless the deposit account records clearly 
indicate, to the satisfaction of the FDIC, that the funds are owned by 
one individual and that other signatories on the account are merely 
authorized to withdraw funds on behalf of the owner.
    (b) Sole proprietorship accounts. (1) Funds owned by a business 
which is a sole proprietorship and deposited in one or more deposit 
accounts in the name of the business, shall be treated as the individual 
account(s) of the person who is the sole proprietor, added to any other 
individual accounts of that person, and insured up to $100,000 in the 
aggregate.
    (2) The term sole proprietorship means a form of business in which 
one person owns all the assets of the business, in contrast to a 
partnership or corporation.
    (c) Single-name accounts containing community property funds. 
Community property funds deposited into one or more deposit accounts in 
the name of one member of a husband-wife community shall be treated as 
the individual account(s) of the named member, added to any other 
individual accounts of that person, and insured up to $100,000 in the 
aggregate.
    (d) Accounts of a decedent and accounts held by executors or 
administrators of a decedent's estate. Funds held in the name of a 
decedent or in the name of the executor, administrator, or other

[[Page 226]]

personal representative of his or her estate and deposited into one or 
more deposit accounts shall be added together and insured up to $100,000 
in the aggregate. Such deposit insurance shall be separate from any 
insurance coverage provided for the individual deposit accounts of the 
executor, administrator, other personal representative or the 
beneficiaries of the estate.



Sec. 330.6  Accounts held by an agent, nominee, guardian, custodian or conservator.

    (a) Agency or nominee accounts. Funds owned by a principal or 
principals and deposited into one or more deposit accounts in the name 
of an agent, custodian or nominee shall be insured to the same extent as 
if deposited in the name of the principal(s). When such funds are 
deposited by an insured depository institution acting as a trustee of an 
irrevocable trust, the insurance coverage shall be governed by the 
provisions of Sec. 330.10 of this part.
    (b) Guardian, custodian or conservator accounts. Funds held by a 
guardian, custodian, or conservator for the benefit of his or her ward, 
or for the benefit of a minor under the Uniform Gifts to Minors Act, and 
deposited into one or more accounts in the name of the guardian, 
custodian or conservator shall, for purposes of this part, be deemed to 
be agency or nominee accounts and shall be insured in accordance with 
paragraph (a) of this section.
    (c) Accounts held by fiduciaries on behalf of two or more persons. 
Funds held by an agent, nominee, guardian, custodian, conservator or 
loan servicer, on behalf of two or more persons jointly, shall be 
treated as a joint ownership account and shall be insured in accordance 
with the provisions of Sec. 330.7 of this part.
    (d) Mortgage servicing accounts. Accounts maintained by a mortgage 
servicer, in a custodial or other fiduciary capacity, which are 
comprised of payments by mortgagors of principal and interest, shall be 
added together and insured in the amount of up to $100,000 for the 
interest of each owner (mortgagee, investor or security holder) in such 
accounts. Accounts maintained by a mortgage servicer, in a custodial or 
other fiduciary capacity, which are comprised of payments by mortgagors 
of taxes and insurance premiums shall be added together and insured in 
the amount of up to $100,000 for the ownership interest of each 
mortgagor in such accounts.
    (e) Custodial accounts for American Indians. Paragraph (a) of this 
section shall not apply to any interest an individual American Indian 
may have in funds deposited by the Bureau of Indian Affairs of the 
United States Department of the Interior (the BIA) on behalf of that 
person pursuant to 25 U.S.C. 162(a), or by any other disbursing agent of 
the United States on behalf of that person pursuant to similar 
authority, in an insured depository institution. The interest of each 
American Indian in all such accounts maintained at the same insured 
depository institution shall be added together and insured, up to 
$100,000, separately from any other accounts maintained by that person 
in the same insured depository institution.
    (f) Annuity Contract Accounts. Funds held by an insurance company or 
other corporation in a deposit account for the sole purpose of funding 
life insurance or annuity contracts and any benefits incidental to such 
contracts, shall be insured in the amount of up to $100,000 per 
annuitant, provided that, pursuant to a state statute:
    (1) The corporation establishes a separate account for such funds; 
and
    (2) The account cannot be charged with the liabilities arising out 
of any other business of the corporation; and
    (3) The account cannot be invaded by other creditors of the 
corporation in the event that the corporation becomes insolvent and its 
assets are liquidated.

Such insurance coverage shall be separate from the insurance provided 
for any other accounts maintained in a different right and capacity by 
the corporation or the annuitants at the same insured depository 
institution.
[55 FR 20122, May 15, 1990, as amended at 60 FR 7709, Feb. 9, 1995]



Sec. 330.7  Joint ownership accounts.

    (a) Separate insurance coverage. Qualifying joint accounts, whether 
owned as joint tenants with right of survivorship, as tenants in common 
or as tenants by the entirety, shall be insured

[[Page 227]]

separately from any individually owned (single ownership) deposit 
accounts maintained by the co-owners. Qualifying joint accounts in the 
names of both husband and wife which are comprised of community property 
funds shall be added together and insured up to $100,000, separately 
from any funds deposited into accounts bearing their individual names.
    (b) Determination of insurance coverage. All qualifying joint 
accounts owned by the same combination of individuals shall first be 
added together and insured up to $100,000 in the aggregate. The 
interests of each co-owner in all qualifying joint accounts, whether 
owned by the same or different combinations of persons, shall then be 
added together and the total shall be insured up to $100,000.
    (c) Qualifying joint accounts. (1) A joint deposit account shall be 
deemed to be a qualifying joint account, for purposes of this section, 
only if:
    (i) All co-owners of the funds in the account are natural persons; 
and
    (ii) Each co-owner has personally signed a deposit account signature 
card; and
    (iii) Each co-owner possesses withdrawal rights on the same basis.
    (2) The requirement of paragraph (c)(1)(ii) of this section shall 
not apply to certificates of deposit, to any deposit obligation 
evidenced by a negotiable instrument, or to any account maintained by an 
agent, nominee, guardian, custodian or conservator on behalf of two or 
more persons.
    (3) All deposit accounts that satisfy the criteria in paragraph 
(c)(1) of this section, and those accounts that come within the 
exception provided for in paragraph (c)(2) of this section, shall be 
deemed to be jointly owned provided that, in accordance with the 
provisions of Sec. 330.4(a) of this part, the FDIC determines that the 
deposit account records of the insured depository institution are clear 
and unambiguous as to the ownership of the accounts. If the deposit 
account records are ambiguous or unclear as to the manner in which the 
deposit accounts are owned, then the FDIC may, in its sole discretion, 
consider evidence other than the deposit account records of the insured 
depository institution for the purpose of establishing the manner in 
which the funds are owned. The signatures of two or more persons on the 
deposit account signature card or the names of two or more persons on a 
certificate of deposit or other deposit instrument shall be conclusive 
evidence that the account is a joint account unless the deposit records 
as a whole are ambiguous and some other evidence indicates, to the 
satisfaction of the FDIC, that there is a contrary ownership capacity.
    (d) Nonqualifying joint accounts. A deposit account held in two or 
more names which is not a qualifying joint account, for purposes of this 
section, shall be treated as being owned by each named owner, as an 
individual, corporation, partnership, or unincorporated association, as 
the case may be, and the actual ownership interest of each individual or 
entity in such account shall be added to any other single ownership 
accounts of such individual or other accounts of such entity, and shall 
be insured in accordance with the provisions of this part governing the 
insurance of such accounts.
    (e) Determination of interests. (1) The interests of the co-owners 
of qualifying joint accounts, held as tenants in common, shall be deemed 
equal, unless otherwise stated in the insured depository institution's 
deposit account records.
    (2) The rule set forth in paragraph (e)(1) of this section shall 
apply regardless of whether the conjunction ``and'' or ``or'' is used in 
the title of a joint deposit account, even when both terms are used, 
such as in the case of a joint deposit account with three or more co-
owners.
[55 FR 20122, May 15, 1990, as amended at 60 FR 7710, Feb. 9, 1995]



Sec. 330.8  Revocable trust accounts.

    (a) General rule. Funds owned by an individual and deposited into 
any account commonly referred to as a tentative or ``Totten'' trust 
account, ``payable-on-death'' account, revocable trust account, or 
similar account evidencing an intention that upon the death of the 
owner, the funds shall belong to such owner's spouse, or to one or more 
children or grandchildren of the owner, shall be insured in the

[[Page 228]]

amount of up to $100,000 in the aggregate as to each such named 
beneficiary, separately from any other accounts of the owner or the 
beneficiaries. Such intention must be manifested in the title of the 
account using commonly accepted terms such as, but not limited to, ``in 
trust for,'' ``as trustee for,'' ``payable-on-death to,'' or any acronym 
therefor, and the beneficiaries of the account must be specifically 
named in the deposit account records of the insured depository 
institution. The settlor of a revocable trust account shall be presumed 
to own the funds deposited into the account.
    (b) Interests of nonqualifying beneficiaries. If a named beneficiary 
of such an account is not a spouse, child, or grandchild of one or more 
owners, the funds corresponding to that beneficiary, who is not within 
the qualifying degree of kinship, shall be treated as individually owned 
(single ownership) accounts of such owner(s), aggregated with any other 
single ownership accounts of such owners, and insured up to $100,000 per 
owner.
    (c) Joint revocable trust accounts. Where an account described in 
paragraph (a) of this section is established by more than one owner and 
held for the benefit of others, some or all of whom are within the 
qualifying degree of kinship, the respective interests of each owner 
(which shall be deemed equal unless otherwise stated in the insured 
depository institution's deposit account records) held for the benefit 
of each qualifying beneficiary shall be separately insured up to 
$100,000. However, where a husband and a wife establish a revocable 
trust account naming themselves as the sole beneficiaries, such account 
shall not be insured according to the provisions of this section but 
shall instead be insured in accordance with the provisions of Sec. 330.7 
of this part.
    (d) Definition of children and grandchildren. For the purpose of 
establishing the qualifying degree of kinship set forth in paragraph (a) 
of this section, the term children includes any natural-born, adopted 
and step-children of the owner and the term grandchildren includes 
natural-born, adopted, or step-children of any of the owner's children.



Sec. 330.9  Accounts of a corporation, partnership or unincorporated association.

    (a) Corporate accounts. (1) The deposit accounts of a corporation 
engaged in any independent activity shall be added together and insured 
up to $100,000 in the aggregate. If a corporation has divisions or units 
which are not separately incorporated, the deposit accounts of those 
divisions or units shall be added to any other deposit accounts of the 
corporation. If a corporation maintains deposit accounts in a 
representative or fiduciary capacity, such accounts shall not be treated 
as the deposit accounts of the corporation but shall be treated as 
fiduciary accounts and insured in accordance with the provisions of 
Sec. 330.6 of this part.
    (2) Notwithstanding any other provision of this part, any trust or 
other business arrangement which has filed or is required to file a 
registration statement with the Securities and Exchange Commission 
pursuant to section 8 of the Investment Company Act of 1940 or that 
would be required so to register but for the fact it is not created 
under the laws of the United States or a state or but for sections 2(b), 
3(c)(1), or 6(a)(1) of that act shall be deemed to be a corporation for 
purposes of determining deposit insurance coverage.
    (b) Partnership accounts. The deposit accounts of a partnership 
engaged in any independent activity shall be added together and insured 
up to $100,000 in the aggregate. Such insurance coverage shall be 
separate from any insurance provided for individually owned (single 
ownership) accounts maintained by the individual partners. A partnership 
shall be deemed to exist, for purposes of this paragraph, any time there 
is an association of two or more persons or entities formed to carry on, 
as co-owners, an unincorporated business for profit.
    (c) Unincorporated association accounts. The deposit accounts of an 
unincorporated association engaged in any independent activity shall be 
added together and insured up to $100,000 in the aggregate, separately 
from the accounts of the person(s) or

[[Page 229]]

entity(ies) comprising the unincorporated association. An unincorporated 
association shall be deemed to exist, for purposes of this paragraph, 
whenever there is an association of two or more persons formed for some 
religious, educational, charitable, social or other noncommercial 
purpose.
    (d) Definition of independent activity. A corporation, partnership 
or unincorporated association shall be deemed to be engaged in an 
independent activity, for purposes of this section, if the entity is 
operated primarily for some purpose other than to increase deposit 
insurance. The deposit accounts of an entity which is not engaged in an 
independent activity shall be deemed to be owned by the person or 
persons owning the corporation or comprising the partnership or 
unincorporated association, and, for deposit insurance purposes, the 
interest of each person in such a deposit account shall be added to any 
other deposit accounts individually owned by that person and insured up 
to $100,000 in the aggregate.



Sec. 330.10  Accounts held by a depository institution as the trustee of an irrevocable trust.

    (a) Separate insurance coverage. Trust funds held by an insured 
depository institution in its capacity as trustee of an irrevocable 
trust, whether held in its trust department, held or deposited in any 
other department of the fiduciary institution, or deposited by the 
fiduciary institution in another insured depository institution, shall 
be insured up to $100,000 of each owner or beneficiary represented. This 
insurance shall be separate from, and in addition to, the insurance 
provided for any other deposits of the owners or the beneficiaries.
    (b) Determination of interests. The insurance for funds held by an 
insured depository institution in its capacity as trustee of an 
irrevocable trust shall be determined in accordance with the following 
rules:
    (1) Allocated funds of a trust estate. If trust funds of a 
particular trust estate are allocated by the fiduciary and deposited, 
the insurance with respect to such trust estate shall be determined by 
ascertaining the amount of its funds allocated, deposited and remaining 
to the credit of the claimant as fiduciary at the insured depository 
institution in default.
    (2) Interest of a trust estate in unallocated trust funds. If funds 
of a particular trust estate are commingled with funds of other trust 
estates and deposited by the fiduciary institution in one or more 
insured depository institutions to the credit of the depository 
institution as fiduciary, without allocation of specific amounts from a 
particular trust estate to an account in such institution(s), the 
percentage interest of that trust estate in the unallocated deposits in 
any institution in default is the same as that trust estate's percentage 
interest in the entire commingled investment pool.
    (c) Limitation on applicability. This section shall not apply to 
deposits of trust funds belonging to a trust which is classified as a 
corporation under Sec. 330.9(b) of this part.
[55 FR 20122, May 15, 1990, as amended at 58 FR 29963, May 25, 1993; 60 
FR 7710, Feb. 9, 1995]



Sec. 330.11  Irrevocable trust accounts.

    (a) General rule. Funds representing the non-contingent trust 
interest(s) of a beneficiary deposited into one or more deposit accounts 
established pursuant to one or more irrevocable trust agreements created 
by the same settlor(s) (grantor(s)) shall be added together and insured 
up to $100,000 in the aggregate. Such insurance coverage shall be 
separate from the coverage provided for other accounts maintained by the 
settlor(s), trustee(s) or beneficiary(ies) of the irrevocable trust(s) 
at the same insured depository institution. Each trust interest in any 
irrevocable trust established by two or more settlors shall be deemed to 
be derived from each settlor pro rata to his or her contribution to the 
trust.
    (b) Treatment of contingent trust interests. In the case of any 
trust in which certain trust interests do not qualify as non-contingent 
trust interests, the funds representing those interests shall be added 
together and insured up to $100,000 in the aggregate. Such insurance 
coverage shall be in addition to the coverage provided for the funds

[[Page 230]]

representing non-contingent trust interests which are insured pursuant 
to paragraph (a) of this section.
    (c) Definitions of trust interest and non-contingent trust interest. 
For the purposes of this section:
    (1) The term trust interest means the interest of a beneficiary in 
an irrevocable express trust (other than an employee benefit plan) 
created either by written trust instrument or by statute, but does not 
include any interest retained by the settlor.
    (2) The term non-contingent trust interest means a trust interest 
capable of determination without evaluation of contingencies except for 
those covered by the present worth tables and rules of calculation for 
their use set forth in Sec. 20.2031-7 of the Federal Estate Tax 
Regulations (26 CFR 20.2031-7) or any similar present worth or life 
expectancy tables which may be adopted by the Internal Revenue Service.
    (d) Commingled accounts of bankruptcy trustees. Whenever a 
bankruptcy trustee appointed under Title 11 of the United States Code 
commingles the funds of various bankruptcy estates in the same account 
at an insured depository institution, the funds of each Title 11 
bankruptcy estate will be added together and insured for up to $100,000, 
separately from the funds of any other such estate.
[55 FR 20122, May 15, 1990, as amended at 60 FR 7710, Feb. 9, 1995]



Sec. 330.12  Retirement and other employee benefit plan accounts.

    (a) ``Pass-through'' insurance. Except as provided in paragraph (b) 
of this section, any deposits of an employee benefit plan or of any 
eligible deferred compensation plan described in section 457 of the 
Internal Revenue Code of 1986 (26 U.S.C. 457) in an insured depository 
institution shall be insured on a ``pass-through'' basis, in the amount 
of up to $100,000 for the non-contingent interest of each plan 
participant, provided that the FDIC's recordkeeping requirements, as 
outlined in Sec. 330.4, are satisfied.
    (b) Exception. ``Pass-through'' insurance shall not be provided 
pursuant to paragraph (a) of this section with respect to any deposit 
accepted by an insured depository institution which, at the time the 
deposit is accepted, may not accept brokered deposits pursuant to 
section 29 of the Act unless, at the time the deposit is accepted:
    (1) The institution meets each applicable capital standard; and
    (2) The depositor receives a written statement from the institution 
indicating that such deposits are eligible for insurance coverage on a 
``pass-through'' basis.
    (c) Aggregation--(1) Multiple plans. Funds representing the non-
contingent interests of a beneficiary in an employee benefit plan, or 
eligible deferred compensation plan described in section 457 of the 
Internal Revenue Code of 1986, which are deposited in one or more 
deposit accounts shall be aggregated with any other deposited funds 
representing such interests of the same beneficiary in other employee 
benefit plans, or eligible deferred compensation plans described in 
section 457 of the Internal Revenue Code of 1986, established by the 
same employer or employee organization.
    (2) Certain retirement accounts. (i) Deposits in an insured 
depository institution made in connection with the following types of 
retirement plans shall be aggregated and insured in the amount of up to 
$100,000 per participant:

    (A) Any individual retirement account described in section 408(a) of 
the Internal Revenue Code of 1986 (26 U.S.C. 408(a));
    (B) Any eligible deferred compensation plan described in section 457 
of the Internal Revenue Code of 1986; and
    (C) Any individual account plan defined in section 3(34) of the 
Employee Retirement Income Security Act (ERISA) (29 U.S.C. 1002) and any 
plan described in section 401(d) of the Internal Revenue Code of 1986 
(26 U.S.C. 401(d)), to the extent that participants and beneficiaries 
under such plans have the right to direct the investment of assets held 
in individual accounts maintained on their behalf by the plans.

    (ii) The provisions of this paragraph (c) shall not apply with 
respect to the deposits of any employee benefit plan, or eligible 
deferred compensation plan described in section 457 of the Internal 
Revenue Code of 1986, which is not entitled to ``pass-through'' 
insurance pursuant to paragraph (b) of this section. Such deposits shall 
be aggregated and

[[Page 231]]

insured in the amount of $100,000 per-plan.
    (d) Determination of interests--(1) Definded contribution plans. The 
value of an employee's non-contingent interest in a defined contribution 
plan shall be deemed to be the employee's account balance as of the date 
of default of the insured depository institution, regardless of whether 
said amount was derived, in whole or in part, from contributions of the 
employee and/or the employer to the account.
    (2) Defined benefit plans. The value of an employee's non-contingent 
interest in a defined benefit plan shall be deemed to be the present 
value of the employee's interest in the plan, evaluated in accordance 
with the method of calculation ordinarily used under such plan, as of 
the date of default of the insured depository institution.
    (3) Amounts taken into account. For the purposes of applying the 
rule under paragraph (c)(2) of this section, only the present vested and 
ascertainable interests of each participant in an employee benefit plan 
or ``457 Plan,'' excluding any remainder interest created by, or as a 
result of, the plan, shall be taken into account in determining the 
amount of deposit insurance accorded to the deposits of the plan.
    (e) Treatment of contingent interests. In the event that employee' 
interests in an employees benefit plan are not capable of evaluation in 
accordance with the rules contained in this section, or an account 
established for any such plan includes amounts for future participants 
in the plan, payment by the FDIC with respect to all such interests 
shall not exceed $100,000 in the aggregate.
    (f) Overfunded pension plan deposits. Any portion(s) of an employee 
benefit plan's deposits which are not attributable to the interests of 
the beneficiaries under the plan shall be deemed attributable to the 
overfunded portion of the plan's assets and shall be aggregated and 
insured up to $100,000, separately from any other deposits.
    (g) Definitions of ``depositor'', ``employee benefit plan'', 
``employee organizations'' and ``non-contingent interest''. Except as 
otherwise indicated in this section, for purposes of this section:
    (1) The term depositor means the person(s) administering or managing 
an employee benefit plan.
    (2) The term employee benefit plan has the same meaning given to 
such term in section 3(3) of the Employee Retirement Income Security Act 
of 1974 (ERISA) (29 U.S.C. 1002) and includes any plan described in 
section 401(d) of the Internal Revenue Code of 1986.
    (3) The term employee organization means any labor union, 
organization, employee representation committee, association, group, or 
plan, in which employees participate and which exists for the purpose, 
in whole or in part, of dealing with employers concerning an employee 
benefit plan, or other matters incidental to employment relationships; 
or any employees' beneficiary association organized for the purpose, in 
whole or in part, of establishing such a plan.
    (4) The term non-contingent interest means an interest capable of 
determination without evaluation of contingencies except for those 
covered by the present worth tables and rules of calculation for their 
use set forth in Sec. 20.2031-7 of the Federal Estate Tax Regulations 
(26 CFR 20.2031-7) or any similar present worth or life expectancy 
tables as may be published by the Internal Revenue Service.
    (h) Disclosure of capital status--(1) Disclosure upon request. An 
insured depository institution shall, upon request, provide a clear and 
conspicuous written notice to any depositor of employee benefit plan 
funds of the institution's leverage ratio, Tier 1 risk-based capital 
ratio, total risk-based capital ratio and prompt corrective action (PCA) 
capital category, as defined in the regulations of the institution's 
primary federal regulator, and whether, in the depository institution's 
judgment, employee benefit plan deposits made with the institution, at 
the time the information is requested, would be eligible for ``pass-
through'' insurance coverage under paragraphs (a) and (b) of this 
section. Such notice shall be provided within five business days after 
receipt of the request for disclosure.
    (2) Disclosure upon opening of an account. (i) An insured depository 
institution shall, upon the opening of any account comprised of employee 
benefit

[[Page 232]]

plan funds, provide a clear and conspicuous written notice to the 
depositor consisting of: an accurate explanation of the requirements for 
pass-through deposit insurance coverage provided in paragraphs (a) and 
(b) of this section; the institution's PCA capital category; and a 
determination of whether or not, in the depository institution's 
judgment, the funds being deposited are eligible for ``pass-through'' 
insurance coverage.
    (ii) An insured depository institution shall provide the notice 
required in paragraph (h)(2)(i) of this section to depositors who have 
employee benefit plan deposits with the insured depository institution 
on July 1, 1995 that, at the time such deposits were placed with the 
insured depository institution, were not eligible for pass-through 
insurance coverage under paragraphs (a) and (b) of this section. The 
notice shall be provided to the applicable depositors within ten 
business days after July 1, 1995.
    (3) Disclosure when ``pass-through'' coverage is no longer 
available. Whenever new, rolled-over or renewed employee benefit plan 
deposits placed with an insured depository institution would no longer 
be eligible for ``pass-through'' insurance coverage, the institution 
shall provide a clear and conspicuous written notice to all existing 
depositors of employee benefit plan funds of its new PCA capital 
category, if applicable, and that new, rolled-over or renewed deposits 
of employee benefit plan funds made after the applicable date shall not 
be eligible for ``pass-through'' insurance coverage under paragraphs (a) 
and (b) of this section. Such written notice shall be provided within 10 
business days after the institution receives notice or is deemed to have 
notice that it is no longer permitted to accept brokered deposits under 
section 29 of the Act and the institution no longer meets the 
requirements in paragraph (b) of this section.
    (4) Definition of ``employee benefit plan''. For purposes of this 
paragraph, the term employee benefit plan has the same meaning as 
provided under paragraph (g)(2) of this section but also includes any 
eligible deferred compensation plans described in section 457 of the 
Internal Revenue Code of 1986 (26 U.S.C. 457).
[58 FR 29964, May 25, 1993; 58 FR 40688, July 29, 1993; 60 FR 7710, Feb. 
9, 1995]



Sec. 330.13  Bank investment contracts.

    (a) General rule. Any liability arising under any insured depository 
institution investment contract between any insured depository 
institution and any employee benefit plan which expressly permits 
benefit-responsive withdrawals or transfers shall not be treated as an 
``insured deposit'' and thus shall not be entitled to deposit insurance.
    (b) Definitions. For purposes of paragraph (a) of this section:
    (1) Benefit-responsive withdrawals or transfers means any withdrawal 
or transfer of funds (consisting of any portion of the principal and any 
interest credited at a rate guaranteed by the insured depository 
institution investment contract) during the period in which any 
guaranteed rate is in effect, without substantial penalty or adjustment, 
to pay benefits provided by the employee benefit plan or to permit a 
plan participant or beneficiary to redirect the investment of his or her 
account balance. This term excludes penalty-free withdrawals from 
employee benefit plan deposits which are based on penalty-free 
withdrawals of funds from an employee benefit plan that are permitted or 
required pursuant to the Employee Retirement Income Security Act of 1974 
or the Internal Revenue Code.
    (2) Employee benefit plan: (i) Has the meaning given to such term in 
section 3(3) of the Employee Retirement Income Security Act of 1974 
(ERISA) (29 U.S.C. 1002); and
    (ii) Includes any plan described in section 401(d) of the Internal 
Revenue Code of 1986 (26 U.S.C. 401(d)); and
    (iii) Excludes any deferred compensation plan described in section 
457 of the Internal Revenue Code of 1986 (26 U.S.C. 457).
    (3) Substantial penalty or adjustment means, in the case of a 
deposit having an original term which exceeds one year, all interest 
earned on the amount withdrawn from the date of deposit or for six 
months, whichever is less; or, in the case of a deposit having an 
original term of one year or less, all interest

[[Page 233]]

earned on the amount withdrawn from the date of deposit or three months, 
whichever is less.
[58 FR 29964, May 25, 1993]



Sec. 330.14  Public unit accounts.

    (a) Extent of insurance coverage--(1) Accounts of the United States. 
Each official custodian of funds of the United States lawfully 
depositing such funds in an insured depository institution shall be 
separately insured in the amount of:
    (i) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (ii) Up to $100,000 in the aggregate for all demand deposits.
    (2) Accounts of a state, county, municipality or political 
subdivision. Each official custodian of funds of any state of the United 
States, or any county, municipality, or political subdivision thereof, 
lawfully depositing such funds in an insured depository institution in 
the state comprising the public unit or wherein the public unit is 
located (including any insured depository institution having a branch in 
said state) shall be separately insured in the amount of:
    (i) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (ii) Up to $100,000 in the aggregate for all demand deposits.

In addition, each such official custodian depositing such funds in an 
insured depository institution outside of the state comprising the 
public unit or wherein the public unit is located, shall be insured in 
the amount of up to $100,000 in the aggregate for all deposits, 
regardless of whether they are time, savings or demand deposits.
    (3) Accounts of the District of Columbia. Each official custodian of 
funds of the District of Columbia lawfully depositing such funds in an 
insured depository institution in the District of Columbia (including an 
insured depository institution having a branch in the District of 
Columbia) shall be separately insured in the amount of:
    (i) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (ii) Up to $100,000 in the aggregate for all demand deposits.

In addition, each such official custodian depositing such funds in an 
insured depository institution outside of the District of Columbia shall 
be insured in the amount of up to $100,000 in the aggregate for all 
deposits, regardless of whether they are time, savings or demand 
deposits.
    (4) Accounts of the Commonwealth of Puerto Rico and other government 
possessions and territories. Each official custodian of funds of the 
Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, the 
Trust Territory of the Pacific Islands, Guam, or The Commonwealth of the 
Northern Mariana Islands, or of any county, municipality, or political 
subdivision thereof lawfully depositing such funds in an insured 
depository institution in Puerto Rico, the Virgin Islands, American 
Samoa, the Trust Territory of the Pacific Islands, Guam, or The 
Commonwealth of the Northern Mariana Islands, respectively, shall be 
separately insured in the amount of:
    (i) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (ii) Up to $100,000 in the aggregate for all demand deposits.

In addition, each such official custodian depositing such funds in an 
insured depository institution outside of the commonwealth, possession 
or territory comprising the public unit or wherein the public unit is 
located, shall be insured in the amount of up to $100,000 in the 
aggregate for all deposits, regardless of whether they are time, savings 
or demand deposits.
    (5) Accounts of an Indian tribe. Each official custodian of funds of 
an Indian tribe (as defined in 25 U.S.C. 1452(c)), including an agency 
thereof having official custody of tribal funds, lawfully depositing the 
same in an insured depository institution shall be separately insured in 
the amount of:
    (i) Up to $100,000 in the aggregate for all time and savings 
deposits; and
    (ii) Up to $100,000 in the aggregate for all demand deposits.
    (b) Rules relating to the official custodian--(1) Qualifications for 
an official custodian. In order to qualify as an official custodian for 
the purposes of paragraph (a) of this section, such custodian must have 
plenary authority, including control, over funds owned by the public 
unit which the custodian is appointed or elected to serve. Control

[[Page 234]]

of public funds includes possession, as well as the authority to 
establish accounts for such funds in insured depository institutions and 
to make deposits, withdrawals, and disbursements of such funds.
    (2) Official custodian of the funds of more than one public unit. 
For the purposes of paragraph (a) of this section, if the same person is 
an official custodian of the funds of more than one public unit, he or 
she shall be separately insured with respect to the funds held by him or 
her for each such public unit, but shall not be separately insured by 
virtue of holding different offices in such public unit or, except as 
provided in paragraph (c) of this section, holding such funds for 
different purposes.
    (3) Split of authority or control over public unit funds. If the 
exercise of authority or control over the funds of a public unit 
requires action by, or the consent of, two or more officers, employees, 
or agents of such public unit, then they will be treated as one official 
custodian for the purposes of this section.
    (c) Public bond issues. Where an officer, agent or employee of a 
public unit has custody of certain funds which by law or under a bond 
indenture are required to be set aside to discharge a debt owed to the 
holders of notes or bonds issued by the public unit, any deposit of such 
funds in an insured depository institution shall be deemed to be a 
deposit by a trustee of trust funds of which the noteholders or 
bondholders are pro rata beneficiaries, and the beneficial interest of 
each noteholder or bondholder in the deposit shall be separately insured 
up to $100,000.
    (d) Definition of political subdivision. The term political 
subdivision includes drainage, irrigation, navigation, improvement, 
levee, sanitary, school or power districts, and bridge or port 
authorities and other special districts created by state statute or 
compacts between the states. It also includes any subdivision of a 
public unit mentioned in paragraphs (a)(2), (a)(3) and (a)(4) of this 
section or any principal department of such public unit:
    (1) The creation of which subdivision or department has been 
expressly authorized by the law of such public unit;
    (2) To which some functions of government have been delegated by 
such law; and
    (3) Which is empowered to exercise exclusive control over funds for 
its exclusive use.



Sec. 330.15  Notice to depositors.

    (a) Each insured depository institution shall send, no later than 
October 10, 1993 (except as provided in paragraph (b) of this section), 
a notice to each of its depositors or, at the option of the institution, 
to all depositors having deposit accounts which could potentially be 
affected by the rules in this part which are effective December 19, 
1993, a notice containing the following language:

    In December 1993, some of the FDIC's deposit insurance rules will 
change. The rule changes will primarily affect the total amount of 
coverage which is provided for IRA, self-directed Keogh plan accounts, 
self-directed defined contribution plan accounts, ``457 Plan'' accounts 
and accounts where an insured institution is acting in a fiduciary 
capacity. If you do not have these types of accounts, those rule changes 
will not affect you. For further information contact [insert ``your 
branch office'' or some other contact point for the institution].

    (b) The language of this notice may not be materially altered in any 
way. The required notice may be included on account statements, included 
as a separate enclosure with account statements or it may be sent to all 
depositors/accountholders in a separate mailing. With respect to any 
depositor/accountholder who maintains a time deposit and would not 
otherwise receive a regular monthly or quarterly account statement prior 
to October 10, 1993, the required notice may be sent to said depositor/
accountholder at any time prior to the later of:
    (1) 60 days prior to the first maturity date of that time deposit; 
or
    (2) October 10, 1993.
[58 FR 29965, May 25, 1993]



Sec. 330.16  Effective dates.

    (a) Delayed effective dates. Sections 330.1(j), 330.10(a), 
330.12(c), 330.12(d)(3) and 330.13 shall become effective on December 
19, 1993.
    (b) Time deposits. Except with respect to the provisions in 
Sec. 330.12 (a) and (b),

[[Page 235]]

any time deposits made before December 19, 1991 that do not mature until 
after December 19, 1993, shall be subject to the rules as they existed 
on the date the deposits were made. Any time deposits made after 
December 19, 1991 but before December 19, 1993, shall be subject to the 
rules as they existed on the date the deposits were made. Any rollover 
or renewal of such time deposits prior to December 19, 1993 shall 
subject those deposits to the rules in effect on the date of such 
rollover or renewal. With respect to time deposits which mature only 
after a prescribed notice period, the provisions of this part shall be 
effective on the earliest possible maturity date after June 24, 1993 
assuming (solely for purposes of this section) that notice had been 
given on that date.
[58 FR 29965, May 25, 1993]



PARTS 331--332  [RESERVED]--Table of Contents






PART 333--EXTENSION OF CORPORATE POWERS--Table of Contents




                               Regulations

Sec.
333.1  Classification of general character of business.
333.2  Change in general character of business.
333.4  Conversions from mutual to stock form.

                             Interpretations

333.101  Prior consent not required.

    Authority:  12 U.S.C. 1816, 1818, 1819 (``Seventh'', ``Eighth'' and 
``Tenth''), 1828, 1828(m), 1831p-1(c).

                               Regulations



Sec. 333.1  Classification of general character of business.

    State nonmember insured banks are divided into five categories for 
the purpose of classifying their general character or type of business, 
2 viz: commercial banks, banks and trust companies, savings 
banks (including mutual and stock), industrial banks, and cash 
depositories.
---------------------------------------------------------------------------

    2  A bank's business may include two or more of the 
general classifications.
---------------------------------------------------------------------------

[15 FR 8644, Dec. 6, 1950]



Sec. 333.2  Change in general character of business.

    No State nonmember insured bank (except a District bank) or branch 
thereof shall hereafter cause or permit any change to be made in the 
general character or type of business exercised by it after the 
effective date of this part without the prior written consent of the 
Corporation.
[15 FR 8644, Dec. 6, 1950]



Sec. 333.4  Conversions from mutual to stock form.

    (a) Scope. This section applies to the conversion of insured mutual 
state savings banks to the stock form of ownership. It supplements the 
procedural and other requirements for such conversions in Sec. 303.15 of 
this chapter. This section also applies, to the extent appropriate, to 
the reorganization of insured mutual state savings banks to the mutual 
holding company form of ownership. As determined by the Board of 
Directors of the FDIC on a case-by-case basis, the requirements of 
paragraphs (d), (e), and (f) of this section do not apply to mutual-to-
stock conversions of insured mutual state savings banks whose capital 
category under Sec. 325.103 of this chapter is ``undercapitalized'', 
``significantly undercapitalized'' or ``critically undercapitalized''. 
The Board of Directors of the FDIC may grant a waiver in writing from 
any requirement of this section for good cause shown.
    (b) Conflicts with state law. In the event that an insured mutual 
state savings bank that proposes to convert to the stock form of 
ownership finds that compliance with any provision of this section would 
be inconsistent or in conflict with applicable state law, the bank may 
file a written request for waiver of compliance with such provision by 
the FDIC. In making such request, the bank shall demonstrate that the 
requested waiver, if granted, would not result in any effects that would 
be detrimental to the safety and soundness of the bank, entail a breach 
of fiduciary duty on part of the bank's

[[Page 236]]

management or otherwise be detrimental or inequitable to the bank, its 
depositors, any other insured depository institution(s), the federal 
deposit insurance funds or to the public interest.
    (c) Definition of Eligible Depositor. For purposes of this section, 
eligible depositors are depositors holding qualifying deposits at the 
bank as of a date designated in the bank's plan of conversion that is 
not less than one year prior to the date of adoption of the plan of 
conversion by the converting bank's board of directors/trustees.
    (d) Requirements. In addition to other requirements that may be 
imposed by the applicable state statutes and regulations and other 
federal statutes and regulations, including Sec. 303.15 of this chapter, 
an insured mutual state savings bank shall not convert to the stock form 
of ownership unless the following requirements are satisfied:
    (1) Eligible depositors shall have higher subscription rights than 
employee stock ownership plans;
    (2) The proposed conversion shall be approved by a vote of at least 
a majority of the bank's depositors and, as reasonably determined by the 
bank's directors or trustees, other stakeholders of the bank who are 
entitled to vote on the conversion, unless the applicable state law 
requires a higher percentage, in which case the higher percentage shall 
be used. Voting may be in person or by proxy;
    (3) Management shall not use proxies executed outside the context of 
the proposed conversion to satisfy the voting requirement imposed in the 
previous paragraph; and
    (4) In addition to the materials to be submitted to the FDIC 
pursuant to Sec. 303.15(c) of this chapter, the bank must submit to the 
FDIC:
    (i) A full appraisal report on the value of the converting bank and 
the pricing of the stock to be sold in the conversion. The report must 
be prepared by an independent appraiser and must include a complete and 
detailed description of the elements that make up an appraisal report, 
justification for the methodology employed and sufficient support for 
the conclusions reached therein, including a full discussion of the 
applicability of each peer group member and documented analytical 
evidence supporting any variance (above or below) the institution 
proposing to convert may have from the peer group statistics and a 
complete analysis of the institution's pro forma earnings which should 
include its full potential once the institution fully deploys its new 
capital pursuant to its business plan; and
    (ii) A business plan which must include, in part, a detailed 
discussion of how the capital acquired in the conversion will be used, 
expected earnings resulting from the plan and a justification for any 
proposed stock repurchases.
    (e) Restriction on repurchase of stock. An insured mutual state 
savings bank that has converted from the mutual to stock form of 
ownership may not repurchase its capital stock within one year following 
the date of its conversion to stock form, except that stock repurchases 
of no greater than 5% of the bank's outstanding capital stock may be 
repurchased during this one-year period where compelling and valid 
business reasons are established, to the satisfaction of the FDIC. Any 
stock repurchases shall be subject to the requirements of section 
18(i)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1828(i)(1)).
    (f) Stock benefit plan limitations. The FDIC will presume that a 
stock option plan or management or employee stock benefit plan that does 
not conform with the applicable percentage limitations of the 
regulations issued by the Office of Thrift Supervision constitutes 
excessive insider benefits and thereby evidences a breach of the board 
of directors' or trustees' fiduciary responsibility. In addition, no 
converted insured mutual state savings bank shall, for one year from the 
date of the conversion, implement a stock option plan or management or 
employee stock benefit plan, other than a tax-qualified employee stock 
ownership plan, unless each of the following requirements is met:
    (1) Each of the plans was fully disclosed in the proxy solicitation 
and conversion stock offering materials;
    (2) All such plans are approved by a majority of the bank's 
stockholders, or in the case of a recently formed holding company, its 
stockholders, prior to

[[Page 237]]

implementation at a duly called meeting of shareholders, either annual 
or special, to be held no sooner than six months after the completion of 
the conversion;
    (3) In the case of a savings bank subsidiary of a mutual holding 
company, all such plans are approved by a majority of stockholders other 
than its parent mutual holding company prior to implementation at a duly 
called meeting of shareholders, either annual or special, to be held no 
sooner than six months following the stock issuance;
    (4) For stock option plans, stock options are granted at no lower 
than the market price at which the stock is trading at the time of 
grant; and
    (5) For management or employee stock benefit plans, no conversion 
stock is used to fund the plans.
[59 FR 61246, Nov. 30, 1994]

                             Interpretations



Sec. 333.101  Prior consent not required.

    (a) The extension by any State nonmember insured bank of its 
business to include personal, character or installment loans, or the 
extension by an industrial bank of its business to include the business 
of a commercial bank, is not a change in the general character or type 
of business requiring the prior written consent of the Corporation.
    (b) An insured State nonmember bank, not exercising trust powers may 
act as trustee or custodian of Individual Retirement Accounts 
established pursuant to the Employee Retirement Income Security Act of 
1974 and Self-Employed Retirement Plans established pursaunt to the 
Self-Employed Individuals Retirement Act of 1962 without the prior 
written consent of the Corporation provided:
    (1) The bank's duties as trustee or custodian are essentially 
custodial or ministerial in nature, (2) the bank is required to invest 
the funds from such plans only (i) in its own time or savings deposits, 
or (ii) in any other assets at the direction of the customer provided 
the bank does not excercise any investment discretion or provided any 
investment advice with respect to such account assets, and (3) the 
bank's acceptance of such accounts without trust powers is not contrary 
to State law.
[41 FR 2375, Jan. 16, 1976, as amended at 50 FR 10754, Mar. 18, 1985]



PART 334  [RESERVED]--Table of Contents






PART 335--SECURITIES OF NONMEMBER INSURED BANKS--Table of Contents




Sec.
335.101  Scope of part, authority and OMB control number.
335.111  Forms and schedules.
335.201  Securities exempted from registration.
335.211  Registration and reporting.
335.221  Forms for registration of securities and similar matters.
335.231  Certification, suspension of trading, and removal from listing 
          by exchanges.
335.241  Unlisted trading.
335.251  Forms for notification of action taken by national securities 
          exchanges.
335.261   Exemptions; terminations; and definitions.
335.301   Reports of issuers of securities registered pursuant to 
          section 12.
335.311   Forms for annual, quarterly, current, and other reports of 
          issuers.
335.321   Maintenance of records and issuer's representations in 
          connection with required reports.
335.331   Acquisition statements and acquisitions of securities by 
          issuers.
335.401   Solicitations of proxies.
335.501   Tender offers.
335.601   Requirements of section 16 of the Securities Exchange Act of 
          1934.
335.611   Initial statements of beneficial ownership of securities (Form 
          F-7).
335.612   Statement of changes in beneficial ownership of securities 
          (Form F-8).
335.613   Annual statement of beneficial ownership of securities (Form 
          F-8A).
335.701   Filing requirements, public reference, and confidentiality.
335.801   Inapplicable SEC regulations; FDIC substituted regulations; 
          additional information.
335.901   Delegation of authority to the Director (DOS) and to the 
          associate directors, regional directors and deputy regional 
          directors to act on matters with respect to disclosure laws 
          and regulations.

    Authority:  15 U.S.C. 78l(i).

    Source:  62 FR 6856, Feb. 14, 1997, unless otherwise noted.



Sec. 335.101  Scope of part, authority and OMB control number.

    (a) This part is issued by the Federal Deposit Insurance Corporation 
(the

[[Page 238]]

FDIC) under section 12(i) of the Securities Exchange Act of 1934, as 
amended (15 U.S.C. 78) (the Exchange Act) and applies to all securities 
of FDIC insured banks (including foreign banks having an insured branch) 
which are neither a member of the Federal Reserve System nor a District 
bank (collectively referred to as nonmember banks) that are subject to 
the registration requirements of section 12(b) or section 12(g) of the 
Exchange Act (registered nonmember banks). The FDIC is vested with the 
powers, functions, and duties vested in the Securities and Exchange 
Commission (the Commission or SEC) to administer and enforce the 
provisions of sections 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of the 
Securities Exchange Act of 1934, as amended (the Exchange Act) (15 
U.S.C. 78l, 78m, 78n(a), 78n(c), 78n(d), 78n(f), and 78(p)), regarding 
nonmember banks with one or more classes of securities subject to the 
registration provisions of sections 12(b) and 12(g).
    (b) This part 335 generally incorporates through cross reference the 
regulations of the SEC issued under sections 12, 13, 14(a), 14(c), 
14(d), 14(f), and 16 of the Exchange Act. References to the Commission 
are deemed to refer to the FDIC unless the context otherwise requires.
    (c) The Office of Management and Budget has reviewed and approved 
the recordkeeping and reporting required by this part (OMB control 
number 3064-0030).



Sec. 335.111  Forms and schedules.

    The Exchange Act regulations of the SEC, which are incorporated by 
cross reference under this part, require the filing of forms and 
schedules as applicable. Reference is made to SEC Exchange Act 
regulation 17 CFR 249.0-1 regarding the availability of all applicable 
SEC Exchange Act forms. Required schedules are codified and are found 
within the context of the SEC's regulations. The filings of all 
applicable SEC forms and schedules shall be made with the FDIC at the 
address in this section. They shall be titled with the name of the FDIC 
in substitution for the name of the SEC. Forms F-7 (Sec. 335.611), F-8 
(Sec. 335.612), F-8A (Sec. 335.613), are FDIC forms which are issued 
under section 16 of the Exchange Act and can be obtained from the 
Registration and Disclosure Section, Division of Supervision, Federal 
Deposit Insurance Corporation, 550 17th Street N.W., Washington, DC 
20429. Reference is also made to Sec. 335.701 for general filing 
requirements, public reference, and confidentiality provisions.



Sec. 335.201  Securities exempted from registration.

    Persons generally subject to registration requirements under 
Exchange Act section 12 and subject to this part shall follow the 
applicable and currently effective SEC regulations relative to 
exemptions from registration issued under sections 3 and 12 of the 
Exchange Act as codified at 17 CFR 240.3a12-1 through 240.3a12-11, 
240.12a-4 through 240.12a-7, 240.12g-1 through 240.12h-4.



Sec. 335.211  Registration and reporting.

    Persons with securities subject to registration under Exchange Act 
sections 12(b) and 12(g), required to report under Exchange Act section 
13, and subject to this part shall follow the applicable and currently 
effective SEC regulations issued under section 12(b) of the Exchange Act 
as codified at 17 CFR 240.12b-1 through 240.12b-36.



Sec. 335.221  Forms for registration of securities and similar matters.

    (a) The applicable forms for registration of securities and similar 
matters are codified in subpart C of 17 CFR part 249. All forms shall be 
filed with the FDIC as appropriate and shall be titled with the name of 
the FDIC instead of the SEC.
    (b) The requirements for Financial Statements can generally be found 
in Regulation S-X (17 CFR part 210). Banks may also refer to the 
instructions for FFIEC Reports of Income and Reports of Condition when 
preparing unaudited interim statements. The requirements for 
Management's Discussion and Analysis of Financial Condition and Results 
of Operations can be found in at 17 CFR 229.300. Industry Guide 3, 
Statistical Disclosure by Bank Holding Companies, is codified at 17 CFR 
229.802.
    (c) A ``small business issuer,'' as defined under 17 CFR 240.12b-2, 
has the

[[Page 239]]

option of filing Small Business (SB) Forms (as codified in 17 CFR part 
249) in lieu of the Exchange Act forms otherwise required to be filed, 
which provide for financial and other item disclosures in conformance 
with Regulation S-B of the Securities and Exchange Commission (17 CFR 
part 228). The definition of ``small business issuer,'' generally 
includes banks with annual revenues of less than $25 million, whose 
voting stock does not have a public float of $25 million or more.



Sec. 335.231  Certification, suspension of trading, and removal from listing by exchanges.

    The provisions of the applicable and currently effective SEC 
regulations under section 12(d) of the Exchange Act shall be followed as 
codified at 17 CFR 240.12d1-1 through 240.12d2-2.



Sec. 335.241  Unlisted trading.

    The provisions of the applicable and currently effective SEC 
regulations under section 12(f) of the Exchange Act shall be followed as 
codified at 17 CFR 240.12f-1 through 240.12f-6.



Sec. 335.251  Forms for notification of action taken by national securities exchanges.

    The applicable forms for notification of action taken by national 
securities exchanges are codified in subpart A of 17 CFR part 249. All 
forms shall be filed with the FDIC as appropriate and shall be titled 
with the name of the FDIC instead of the SEC.



Sec. 335.261  Exemptions; terminations; and definitions.

    The provisions of the applicable and currently effective SEC 
regulations under sections 12(g) and 12(h) of the Exchange Act shall be 
followed as codified at 17 CFR 240.12g-1 through 240.12h-4.



Sec. 335.301  Reports of issuers of securities registered pursuant to section 12.

    The provisions of the applicable and currently effective SEC 
regulations under section 13(a) of the Exchange Act shall be followed as 
codified at 17 CFR 240.13a-1 through 240.13a-17.



Sec. 335.311  Forms for annual, quarterly, current, and other reports of issuers.

    (a) The applicable forms for annual, quarterly, current, and other 
reports are codified in subpart D of 17 CFR part 249. All forms shall be 
filed with the FDIC as appropriate and shall be titled with the name of 
the FDIC instead of the SEC.
    (b) The requirements for Financial Statements can generally be found 
in Regulation S-X (17 CFR part 210). Banks may also refer to the 
instructions for FFIEC Reports of Income and Reports of Condition when 
preparing unaudited interim reports. The requirements for Management's 
Discussion and Analysis of Financial Condition and Results of Operations 
can be found at 17 CFR 229.300. Industry Guide 3, Statistical Disclosure 
by Bank Holding Companies, is codified at 17 CFR 229.802.
    (c) A ``small business issuer,'' as defined under 17 CFR 240.12b-2, 
has the option of filing Small Business (SB) Forms (as codified in 17 
CFR part 249) in lieu of the Exchange Act forms otherwise required to be 
filed, which provide for financial and other item disclosures in 
conformance with Regulation S-B of the Securities and Exchange 
Commission (17 CFR part 228). The definition of ``small business 
issuer,'' generally includes banks with annual revenues of less than $25 
million, whose voting stock does not have a public float of $25 million 
or more.



Sec. 335.321  Maintenance of records and issuer's representations in connection with required reports.

    The provisions of the applicable and currently effective SEC 
regulations under section 13(b) of the Exchange Act shall be followed as 
codified at 17 CFR 240.13b2-1 through 240.13b2-2.



Sec. 335.331  Acquisition statements and acquisitions of securities by issuers.

    The provisions of the applicable and currently effective SEC 
regulations under section 13(d) and 13(e) of the Exchange Act shall be 
followed as codified at 17 CFR 240.13d-1 through 240.13e-102.

[[Page 240]]



Sec. 335.401  Solicitations of proxies.

    The provisions of the applicable and currently effective SEC 
regulations under section 14(a) and 14(c) of the Exchange Act shall be 
followed as codified at 17 CFR 240.14a-1 through 240.14a-103 and 
240.14c-1 through 240.14c-101.



Sec. 335.501  Tender offers.

    The provisions of the applicable and currently effective SEC 
regulations under section 14(d), 14(e), and 14(f) of the Exchange Act 
shall be followed as codified at 17 CFR 240.14d-1 through 240.14f-1.



Sec. 335.601  Requirements of section 16 of the Securities Exchange Act of 1934.

    Persons subject to section 16 of the Act with respect to securities 
registered under this part shall follow the applicable and currently 
effective SEC regulations issued under section 16 of the Act (17 CFR 
240.16a-1 through 240.16e-1(1), except that the forms described in 
Sec. 335.611 (Form F-7), Sec. 335.612 (Form F-8), and Sec. 335.613 (Form 
F-8A) shall be used in lieu of SEC Form 3 (17 CFR 249.103), Form 4 (17 
CFR 249.104), or Form 5 (17 CFR 249.105), respectively. Copies of Forms 
F-7, F-8, F-8A and the instructions thereto can be obtained from the 
Registration, Disclosure, and Securities Operations Unit, Division of 
Supervision, Federal Deposit Insurance Corporation, 550 17th Street 
N.W., Washington, DC 20429.



Sec. 335.611  Initial statement of beneficial ownership of securities (Form F-7).

    This form shall be filed in lieu of SEC Form 3 pursuant to SEC rule 
16a-3 (17 CFR 240.16a-3) for initial statements of beneficial ownership 
of securities. The FDIC is authorized to solicit the information 
required by this form pursuant to sections 16(a) and 23(a) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78p and 78w) and the rules 
and regulations thereunder. SEC regulations referenced in this form are 
codified at 17 CFR 240.16a-1 through 240.16e-1.



Sec. 335.612  Statement of changes in beneficial ownership of securities (Form F-8).

    This form shall be filed pursuant to SEC rule 16a-3 (17 CFR 240.16a-
3) for statements of changes in beneficial ownership of securities. The 
FDIC is authorized to solicit the information required by this form 
pursuant to sections 16(a) and 23(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78p and 78w) and the rules and regulations thereunder. 
SEC regulations referenced in this form are codified at 17 CFR 240.16a-1 
through 240.16e-1.



Sec. 335.613  Annual statement of beneficial ownership of securities (Form F-8A).

    This form shall be filed pursuant to SEC rule 16a-3 (17 CFR 240.16a-
3) for annual statements of beneficial ownership of securities. The FDIC 
is authorized to solicit the information required by this form pursuant 
to sections 16(a) and 23(a) of the Securities Exchange Act of 1934 (15 
U.S.C. 78p and 78w), and the rules and regulations thereunder. SEC 
regulations referenced in this form are codified at 17 CFR 240.16a-1 
through 240.16e-1.



Sec. 335.701  Filing requirements, public reference, and confidentiality.

    (a) Filing requirements. Unless otherwise indicated in this part, 
one original and four conformed copies of all papers required to be 
filed with the FDIC under the Exchange Act or regulations thereunder 
shall be filed at its office in Washington, DC. Official filings made at 
the FDIC's office in Washington, DC should be addressed as follows: 
Attention: Registration, Disclosure, and Securities Operations Unit, 
Division of Supervision, Federal Deposit Insurance Corporation, 550 17th 
Street N.W., Washington, DC 20429. Material may be filed by delivery to 
the FDIC through the mails or otherwise. The date on which papers are 
actually received by the designated FDIC office shall be the date of 
filing thereof if all of the requirements with respect to the filing 
have been complied with.
    (b) Inspection. Except as provided in paragraph (c) of this section, 
all information filed regarding a security registered with the FDIC will 
be available for inspection at the Federal Deposit Insurance 
Corporation, 550 17th Street N.W., Washington, DC.
    (c) Nondisclosure of certain information filed. Any person filing 
any statement,

[[Page 241]]

report, or document under the Act may make a written objection to the 
public disclosure of any information contained therein in accordance 
with the procedure set forth in this paragraph (c).
    (1) The person shall omit from the statement, report, or document, 
when it is filed, the portion thereof that it desires to keep 
undisclosed (hereinafter called the confidential portion). In lieu 
thereof, it shall indicate at the appropriate place in the statement, 
report, or document that the confidential portion has been so omitted 
and filed separately with the FDIC.
    (2) The person shall file with the copies of the statement, report, 
or document filed with the FDIC:
    (i) As many copies of the confidential portion, each clearly marked 
``Confidential Treatment,'' as there are copies of the statement, 
report, or document filed with the FDIC and with each exchange, if any. 
Each copy shall contain the complete text of the item and, 
notwithstanding that the confidential portion does not constitute the 
whole of the answer, the entire answer thereto; except that in the case 
where the confidential portion is part of a financial statement or 
schedule, only the particular financial statement or schedule need be 
included. All copies of the confidential portion shall be in the same 
form as the remainder of the statement, report, or document;
    (ii) An application making objection to the disclosure of the 
confidential portion. Such application shall be on a sheet or sheets 
separate from the confidential portion, and shall contain:
    (A) An identification of the portion of the statement, report, or 
document that has been omitted;
    (B) A statement of the grounds of objection;
    (C) Consent that the FDIC may determine the question of public 
disclosure upon the basis of the application, subject to proper judicial 
reviews;
    (D) The name of each exchange, if any, with which the statement, 
report, or document is filed;
    (iii) The copies of the confidential portion and the application 
filed in accordance with this paragraph shall be enclosed in a separate 
envelope marked ``Confidential Treatment'' and addressed to Executive 
Secretary, Federal Deposit Insurance Corporation, Washington, DC 20429.
    (3) Pending the determination by the FDIC as to the objection filed 
in accordance with paragraph (c)(2)(ii) of this section, the 
confidential portion will not be disclosed by FDIC.
    (4) If the FDIC determines that the objection shall be sustained, a 
notation to that effect will be made at the appropriate place in the 
statement, report, or document.
    (5) If the FDIC shall have determined that disclosure of the 
confidential portion is in the public interest, a finding and 
determination to that effect will be entered and notice of the finding 
and determination will be sent by registered or certified mail to the 
person.
    (6) The confidential portion shall be made available to the public:
    (i) Upon the lapse of 15 days after the dispatch of notice by 
registered or certified mail of the finding and determination of the 
FDIC described in paragraph (c)(5) of this section, if prior to the 
lapse of such 15 days the person shall not have filed a written 
statement that he intends in good faith to seek judicial review of the 
finding and determination;
    (ii) Upon the lapse of 60 days after the dispatch of notice by 
registered or certified mail of the finding and determination of the 
FDIC, if the statement described in paragraph (c)(6)(i) of this section 
shall have been filed and if a petition for judicial review shall not 
have been filed within such 60 days; or
    (iii) If such petition for judicial review shall have been filed 
within such 60 days upon final disposition, adverse to the person, of 
the judicial proceedings.
    (7) If the confidential portion is made available to the public, a 
copy thereof shall be attached to each copy of the statement, report, or 
document filed with the FDIC and with each exchange concerned.



Sec. 335.801  Inapplicable SEC regulations; FDIC substituted regulations; additional information.

    (a) Filing fees. Filing fees will not be charged relative to any 
filings or submissions of materials made with the FDIC pursuant to the 
cross reference

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to regulations of the SEC issued under sections 12, 13, 14(a), 14(c), 
14(d), 14(f), and 16 of the Exchange Act, and this part.
    (b) Electronic filings. The FDIC does not participate in the SEC's 
EDGAR (Electronic Data Gathering Analysis and Retrieval) electronic 
filing program (17 CFR part 232), and does not permit electronically 
transmitted filings or submissions of materials in electronic format to 
the FDIC.
    (c) Legal proceedings. Whenever this part or cross referenced 
provisions of the SEC regulations require disclosure of legal 
proceedings, administrative or judicial proceedings arising under 
section 8 of the Federal Deposit Insurance Act shall be deemed material 
and shall be described.
    (d) Indebtedness of management. Whenever this part or cross 
referenced provisions of the SEC regulations require disclosure of 
indebtedness of management, extensions of credit to specified persons in 
excess of ten (10) percent of the equity capital accounts of the bank or 
$5 million, whichever is less, shall be deemed material and shall be 
disclosed in addition to any other required disclosure. The disclosure 
of this material indebtedness shall include the largest aggregate amount 
of indebtedness (in dollar amounts, and as a percentage of total equity 
capital accounts at the time), including extensions of credit or 
overdrafts, endorsements and guarantees outstanding at any time since 
the beginning of the bank's last fiscal year, and as of the latest 
practicable date.
    (1) If aggregate extensions of credit to all specified persons as a 
group exceeded 20 percent of the equity capital accounts of the bank at 
any time since the beginning of the last fiscal year, the aggregate 
amount of such extensions of credit shall also be disclosed.
    (2) Other loans are deemed material and shall be disclosed where:
    (i) The extension(s) of credit was not made on substantially the 
same terms, including interest rates, collateral and repayment terms as 
those prevailing at the time for comparable transactions with other than 
the specified persons;
    (ii) The extension(s) of credit was not made in the ordinary course 
of business; or
    (iii) The extension(s) of credit has involved or presently involves 
more than a normal risk of collectibility or other unfavorable features 
including the restructuring of an extension of credit, or a delinquency 
as to payment of interest or principal.
    (e) Proxy material required to be filed. (1) Three preliminary 
copies of each information statement, proxy statement, form of proxy, 
and other item of soliciting material to be furnished to security 
holders concurrently therewith, shall be filed with the FDIC by the bank 
or any other person making a solicitation subject to 12 CFR 335.401 at 
least ten calendar days (or 15 calendar days in the case of other than 
routine meetings, as defined in paragraph (e)(2) of this section) prior 
to the date such item is first sent or given to any security holders, or 
such shorter date as may be authorized.
    (2) For the purposes of this paragraph (e), a routine meeting means:
    (i) A meeting with respect to which no one is soliciting proxies 
subject to Sec. 335.401 other than on behalf of the bank, and at which 
the bank intends to present no matters other than:
    (A) The election of directors;
    (B) The election, approval or ratification of accountants;
    (C) A Security holder proposal included pursuant to SEC Rule 14(a)-8 
(17 CFR 240.14a-8); and
    (D) The approval or ratification of a plan as defined in paragraph 
(a)(7)(ii) of Item 402 of SEC Regulation S-K (17 CFR 229.402(a)(7)(ii)) 
or amendments to such a plan; and
    (ii) The bank does not comment upon or refer to a solicitation in 
opposition (as defined in 17 CFR 240.14a-6) in connection with the 
meeting in its proxy material.
    (3) Where preliminary copies of material are filed with the FDIC 
under this section, the printing of definitive copies for distribution 
to security holders should be deferred until the comments of the FDIC's 
staff have been received and considered.
    (f) Additional information; filing of other statements in certain 
cases. (1) In addition to the information expressly required to be 
included in a statement, form, schedule or report, there shall be

[[Page 243]]

added such further material information, if any, as may be necessary to 
make the required statements, in light of the circumstances under which 
they are made, not misleading.
    (2) The FDIC may, upon the written request of the bank, and where 
consistent with the protection of investors, permit the omission of one 
or more of the statements or disclosures herein required, or the filing 
in substitution therefor of appropriate statements or disclosures of 
comparable character.
    (3) The FDIC may also require the filing of other statements or 
disclosures in addition to, or in substitution for those herein required 
in any case where such statements are necessary or appropriate for an 
adequate presentation of the financial condition of any person whose 
financial statements are required, or disclosure about which is 
otherwise necessary for the protection of investors.



Sec. 335.901  Delegation of authority to the Director (DOS) and to the associate directors, regional directors and deputy regional directors to act on matters 
          with respect to disclosure laws and regulations.

    (a) Except as provided in paragraph (b) of this section, authority 
is delegated to the Director, Division of Supervision (DOS), and where 
confirmed in writing by the director, to an associate director, or to 
the appropriate regional director or deputy regional director, to act on 
disclosure matters under and pursuant to sections 12, 13, 14 and 16 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78) or this part.
    (b) Authority to act on disclosure matters is retained by the FDIC 
Board of Directors when such matters involve:
    (1) Exemption from disclosure requirements pursuant to section 12(h) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78l(h)); or
    (2) Exemption from tender offer requirements pursuant to section 
14(d)(8) of the Securities Exchange Act of 1934 (15 U.S.C. 78n(d)(8)).



PART 336--FDIC EMPLOYEES--Table of Contents




            Subpart A--Employee Responsibilities and Conduct

Sec.
336.1  Cross-reference to employee ethical conduct standards and 
          financial disclosure regulations.

Subpart B--Minimum Standards of Fitness for Employment With the Federal 
                      Deposit Insurance Corporation

336.2  Authority, purpose and scope.
336.3  Definitions.
336.4  Minimum standards for appointment to a position with the FDIC.
336.5  Minimum standards for employment with the FDIC.
336.6  Verification of compliance.
336.7  Employee responsibility, counseling and distribution of 
          regulation.
336.8  Sanctions and remedial actions.
336.9  Finality of determination.

    Source:  61 FR 28728, June 6, 1996, unless otherwise noted.



            Subpart A--Employee Responsibilities and Conduct

    Authority:  5 U.S.C. 7301; 12 U.S.C. 1819(a).



Sec. 336.1  Cross-reference to employee ethical conduct standards and financial disclosure regulations.

    Employees of the Federal Deposit Insurance Corporation (Corporation) 
are subject to the Executive Branch-wide Standards of Ethical Conduct at 
5 CFR part 2635, the Corporation regulation at 5 CFR part 3201 which 
supplements the Executive Branch-wide Standards, the Executive Branch-
wide financial disclosure regulations at 5 CFR part 2634, and the 
Corporation regulation at 5 CFR part 3202, which supplements the 
Executive Branch-wide financial disclosure regulations.



Subpart B--Minimum Standards of Fitness for Employment With the Federal 
                      Deposit Insurance Corporation

    Authority:  12 U.S.C. 1819 (Tenth), 1822(f).

[[Page 244]]



Sec. 336.2  Authority, purpose and scope.

    (a) Authority. This part is adopted pursuant to section 12(f) of the 
Federal Deposit Insurance Act, 12 U.S.C. 1822, and the rulemaking 
authority of the Federal Deposit Insurance Corporation (FDIC) found at 
12 U.S.C. 1819. This part is in addition to, and not in lieu of, any 
other statutes or regulations which may apply to standards for ethical 
conduct or fitness for employment with the FDIC and is consistent with 
the goals and purposes of 18 U.S.C. 201, 203, 205, 208, and 209.
    (b) Purpose. The purpose of this part is to state the minimum 
standards of fitness and integrity required of individuals who provide 
service to or on behalf of the FDIC and provide procedures for 
implementing these requirements.
    (c) Scope. (1) This part applies to applicants for employment with 
the FDIC under title 5 of the U.S. Code appointing authority in either 
the excepted or competitive service, including Special Government 
Employees. This part applies to all appointments, regardless of tenure, 
including intermittent, temporary, time-limited and permanent 
appointments.
    (2) In addition, this part applies to all employees of the FDIC who 
serve under an appointing authority under chapter 21 of title 5 of the 
U.S. Code.
    (3) Further, this part applies to any individual who, pursuant to a 
contract or any other arrangement, performs functions or activities of 
the Corporation, under the direct supervision of an officer or employee 
of the Corporation.



Sec. 336.3  Definitions.

    For the purposes of this part:
    (a) Company means any corporation, firm, partnership, society, joint 
venture, business trust, association or similar organization, or any 
other trust unless by its terms it must terminate within twenty-five 
years or not later than twenty-one years and ten months after the death 
of individuals living on the effective date of the trust, or any other 
organization or institution, but shall not include any corporation the 
majority of the shares of which are owned by the United States, any 
state, or the District of Columbia.
    (b) Control means the power to vote, directly or indirectly, 25 
percent or more of any class of the voting stock of a company, the 
ability to direct in any manner the election of a majority of a 
company's directors or trustees, or the ability to exercise a 
controlling influence over the company's management and policies. For 
purposes of this definition, a general partner of a limited partnership 
is presumed to be in control of that partnership. For purposes of this 
part, an entity or individual shall be presumed to have control of a 
company if the entity or individual directly or indirectly, or acting in 
concert with one or more entities or individuals, or through one or more 
subsidiaries, owns or controls 25 percent or more of its equity, or 
otherwise controls or has power to control its management or policies.
    (c) Default on a material obligation means a loan or advance from an 
insured depository institution which is or was delinquent for 90 or more 
days as to payment of principal or interest, or any combination thereof.
    (d) Employee means any officer or employee, including a liquidation 
graded or temporary employee, providing service to or on behalf of the 
FDIC who has been appointed to a position under an authority contained 
in title 5 of the U.S. Code. This definition excludes those individuals 
designated by title 5 of the U.S. Code as officials in the Federal 
Executive Schedule.
    (e) Federal banking agency means the Office of the Comptroller of 
the Currency, the Office of Thrift Supervision, the Board of Governors 
of the Federal Reserve System, or the Federal Deposit Insurance 
Corporation, or their successors.
    (f) Federal deposit insurance fund means the Bank Insurance Fund, 
the Savings Association Insurance Fund, the Federal Savings and Loan 
Insurance Corporation (FSLIC) Resolution Fund, or the funds that were 
formerly maintained by the Resolution Trust Corporation (RTC), or their 
successors, for the benefit of insured depositors.
    (g) FDIC means the Federal Deposit Insurance Corporation, in its 
receivership and corporate capacities.
    (h) Insured depository institution means any bank or savings 
association

[[Page 245]]

the deposits of which are insured by the FDIC.
    (i) Pattern or practice of defalcation regarding obligations means:
    (1) A history of financial irresponsibility with regard to debts 
owed to insured depository institutions which are in default in excess 
of $50,000 in the aggregate. Examples of such financial irresponsibility 
include, without limitation:
    (i) Failure to pay a debt or debts totalling more than $50,000 
secured by an uninsured property which is destroyed; or
    (ii) Abuse of credit cards or incurring excessive debt well beyond 
the individual's ability to repay resulting in default(s) in excess of 
$50,000 in the aggregate.
    (2) Wrongful refusal to fulfill duties and obligations to insured 
depository institutions. Examples of such wrongful refusal to fulfill 
duties and obligations include, without limitation:
    (i) Any use of false financial statements;
    (ii) Misrepresentation as to the individual's ability to repay 
debts;
    (iii) Concealing assets from the insured depository institution;
    (iv) Any instance of fraud, embezzlement or similar misconduct in 
connection with an obligation to the insured depository institution; and
    (v) Any conduct described in any civil or criminal judgment against 
an individual for breach of any obligation, contractual or otherwise, or 
any duty of loyalty or care that the individual owed to an insured 
depository institution.
    (3) Defaults shall not be considered a pattern or practice of 
defalcation where the defaults are caused by catastrophic events beyond 
the control of the employee such as death, disability, illness or loss 
of financial support.
    (j) Substantial loss to federal deposit insurance funds. (1) 
Substantial loss to federal deposit insurance funds means:
    (i) A loan or advance from an insured depository institution, which 
is now owed to the FDIC, RTC, FSLIC or their successors, or any federal 
deposit insurance fund, that is delinquent for ninety (90) or more days 
as to payment of principal, interest, or a combination thereof and on 
which there remains a legal obligation to pay an amount in excess of 
$50,000; or
    (ii) A final judgment in excess of $50,000 in favor of any federal 
deposit insurance fund, the FDIC, RTC, FSLIC, or their successors 
regardless of whether it becomes forgiven in whole or in part in a 
bankruptcy proceeding.
    (2) For purposes of computing the $50,000 ceiling in paragraphs 
(j)(1)(i) and (ii) of this section, all delinquent judgments, loans, or 
advances currently owed to the FDIC, RTC, FSLIC or their successors, or 
any federal deposit insurance fund, shall be aggregated. In no event 
shall delinquent loans or advances from different insured depository 
institutions be separately considered.



Sec. 336.4  Minimum standards for appointment to a position with the FDIC.

    (a) No person shall become employed on or after June 18, 1994, by 
the FDIC or otherwise perform any service for or on behalf of the FDIC 
who has:
    (1) Been convicted of any felony;
    (2) Been removed from, or prohibited from participating in the 
affairs of, any insured depository institution pursuant to any final 
enforcement action by any appropriate federal banking agency;
    (3) Demonstrated a pattern or practice of defalcation regarding 
obligations to insured depository institutions; or
    (4) Caused a substantial loss to federal deposit insurance funds.
    (b) Prior to an offer of employment, any person applying for 
employment with the FDIC shall sign a certification of compliance with 
the minimum standards listed in paragraphs (a) (1) through (4) of this 
section. In addition, any person applying for employment with the FDIC 
shall provide as an attachment to the certification any instance in 
which the applicant, or a company under the applicant's control, 
defaulted on a material obligation to an insured depository institution 
within the preceding five years.
    (c) Incumbent employees who separate from the FDIC and are 
subsequently reappointed after a break in service of more than three 
days are

[[Page 246]]

subject to the minimum standards listed in paragraphs (a) (1) though (4) 
of this section. The former employee is required to submit a new 
certification statement including attachments, as provided in paragraph 
(b) of this section, prior to appointment to the new position.



Sec. 336.5  Minimum standards for employment with the FDIC.

    (a) No person who is employed by the FDIC shall continue in 
employment in any manner whatsoever or perform any service for or on 
behalf of the FDIC who, beginning June 18, 1994 and thereafter:
    (1) Is convicted of any felony;
    (2) Is prohibited from participating in the affairs of any insured 
depository institution pursuant to any final enforcement action by any 
appropriate federal banking agency;
    (3) Demonstrates a pattern or practice of defalcation regarding 
obligations to insured depository institution(s); or
    (4) Causes a substantial loss to federal deposit insurance funds.
    (b) Any noncompliance with the standards listed in paragraphs (a) 
(1) through (4) of this section is a basis for removal from employment 
with the FDIC.



Sec. 336.6  Verfication of compliance.

    The FDIC's Division of Administration shall order appropriate 
investigations as authorized by 12 U.S.C. 1819 and 1822 on newly 
appointed employees, either prior to or following appointment, to verify 
compliance with the minimum standards listed under Sec. 336.4(a) (1) 
through (4).



Sec. 336.7  Employee responsibility, counseling and distribution of regulation.

    (a) Each employee is responsible for being familiar with and 
complying with the provisions of this part.
    (b) The Ethics Counselor shall provide a copy of this part to each 
new employee within 30 days of initial appointment.
    (c) An employee who believes that he or she may not be in compliance 
with the minimum standards provided under Sec. 336.5(a)(1) through (4), 
or who receives a demand letter from the FDIC for any reason, shall make 
a written report of all relevant facts to the Ethics Counselor within 
ten (10) business days after the employee discovers the possible 
noncompliance, or after the receipt of a demand letter from the FDIC.
    (d) The Ethics Counselor shall provide guidance to employees 
regarding the appropriate statutes, regulations and corporate policies 
affecting employee's ethical responsibilities and conduct under this 
part.
    (e) The Ethics Counselor shall provide the Personnel Services Branch 
with notice of an employee's noncompliance.



Sec. 336.8  Sanctions and remedial actions.

    (a) Any employee found not in compliance with the minimum standards 
except as provided in paragraph (b) of this section below shall be 
terminated and prohibited from providing further service for or on 
behalf of the FDIC in any capacity. No other remedial action is 
authorized for sanctions for noncompliance.
    (b) Any employee found not in compliance with the minimum standards 
under Sec. 336.5(a)(3) based on financial irresponsibility as defined in 
Sec. 336.3(i)(1) shall be terminated consistent with applicable 
procedures and prohibited from providing future services for or on 
behalf of the FDIC in any capacity, unless the employee brings him or 
herself into compliance with the minimum standards as provided in 
paragraphs (b) (1) and (2) of this section.
    (1) Upon written notification by the Corporation of financial 
irresponsibility, the employee will be allowed a reasonable period of 
time to establish an agreement that satisfies the creditor and the FDIC 
as to resolution of outstanding indebtedness or otherwise resolves the 
matter to the satisfaction of the FDIC prior to the initiation of a 
termination action.
    (2) As part of the agreement described in paragraph (b)(1) of this 
section, the employee shall provide authority to the creditor to report 
any violation by the employee of the terms of the agreement directly to 
the FDIC Ethics Counselor.

[[Page 247]]



Sec. 336.9  Finality of determination.

    Any determination made by the FDIC pursuant to this part shall be at 
the FDIC's sole discretion and shall not be subject to further review.



PART 337--UNSAFE AND UNSOUND BANKING PRACTICES--Table of Contents




Sec.
337.1  Scope.
337.2  Standby letters of credit.
337.3  Limits on extensions of credit to executive officers, directors, 
          and principal shareholders of insured nonmember banks.
337.4  Securities activities of subsidiaries of insured nonmember banks: 
          bank transactions with affiliated securities companies.
337.5  Exemption.
337.6  Brokered deposits.
337.7--337.9  [Reserved]
337.10  Waiver.
337.11  Effect on other banking practices.
337.12  Frequency of examination.

    Authority:  12 U.S.C. 375a(4), 375b, 1816, 1818(a), 1818(b), 1819, 
1820(d)(10), 1821(f), 1828(j)(2), 1831f, 1831f-1.

    Source:  39 FR 29179, Aug. 14, 1974, unless otherwise noted.



Sec. 337.1  Scope.

    The provisions of this part apply to certain banking practices which 
are likely to have adverse effects on the safety and soundness of 
insured State nonmember banks or which are likely to result in 
violations of law, rule, or regulation.



Sec. 337.2  Standby letters of credit.

    (a) Definition. As used in this section, the term standby letter of 
credit means any letter of credit, or similar arrangement however named 
or described, which represents an obligation to the beneficiary on the 
part of the issuer: (1) To repay money borrowed by or advanced to or for 
the account of the account party, or (2) to make payment on account of 
any indebtedness undertaken by the account party, or (3) to make payment 
on account of any default (including any statement of default) by the 
account party in the performance of an obligation. 1 The term 
similar arrangement includes the creation of an acceptance or similar 
undertaking.
---------------------------------------------------------------------------

    1  As defined in this paragraph (a), the term standby 
letter of credit would not include commercial letters of credit and 
similar instruments where the issuing bank expects the beneficiary to 
draw upon the issuer, which do not ``guaranty'' payment of a money 
obligation of the account party and which do not provide that payment is 
occasioned by default on the part of the account party.
---------------------------------------------------------------------------

    (b) Restriction. A standby letter of credit issued by an insured 
State nonmember bank shall be combined with all other standby letters of 
credit and all loans for purposes of applying any legal limitation on 
loans of the bank (including limitations on loans to any one borrower, 
on loans to affiliates of the bank, or on aggregate loans); Provided, 
however, That if such standby letter of credit is subject to separate 
limitation under applicable State or federal law, then the separate 
limitation shall apply in lieu of the loan limitation. 2 
---------------------------------------------------------------------------

    2  Where the standby letter of credit is subject to a non-
recourse participation agreement with another bank or other banks, this 
section shall apply to the issuer and each participant in the same 
manner as in the case of a participated loan.
---------------------------------------------------------------------------

    (c) Exceptions. All standby letters of credit shall be subject to 
the provisions of paragraph (b) of this section except where:
    (1) Prior to or at the time of issuance, the issuing bank is paid an 
amount equal to the bank's maximum liability under the standby letter of 
credit; or,
    (2) Prior to or at the time of issuance, the issuing bank has set 
aside sufficient funds in a segregated deposit account, clearly 
earmarked for that purpose, to cover the bank's maximum liability under 
the standby letter of credit.
    (d) Disclosure. Each insured State nonmember bank must maintain 
adequate control and subsidiary records of its standby letters of credit 
comparable to the records maintained in connection with the bank's 
direct loans so that at all times the bank's potential liability 
thereunder and the bank's compliance with this section may be readily 
determined. In addition, all such standby letters of credit must be

[[Page 248]]

adequately reflected on the bank's published financial statements.



Sec. 337.3  Limits on extensions of credit to executive officers, directors, and principal shareholders of insured nonmember banks.

    (a) With the exception of 12 CFR 215.5(b), 215.5(c)(3), 215.5(c)(4), 
and 215.11, insured nonmember banks are subject to the restrictions 
contained in subpart A of Federal Reserve Board Regulation O (12 CFR 
Part 215, subpart A) to the same extent and to the same manner as though 
they were member banks.
    (b) For the purposes of compliance with Sec. 215.4(b) of Federal 
Reserve Board Regulation O, no insured nonmember bank may extend credit 
or grant a line of credit to any of its executive officers, directors, 
or principal shareholders or to any related interest of any such person 
in an amount that, when aggregated with the amount of all other 
extensions of credit and lines of credit by the bank to that person and 
to all related interests of that person, exceeds the greater of $25,000 
or five percent of the bank's capital and unimpaired surplus,\3\ or 
$500,000 unless (1) the extension of credit or line of credit has been 
approved in advance by a majority of the entire board of directors of 
that bank and (2) the interested party has abstained from participating 
directly or indirectly in the voting.
---------------------------------------------------------------------------

    \3\ For the purposes of Sec. 337.3, an insured nonmember bank's 
capital and unimpaired surplus shall have the same meaning as found in 
Sec. 215.2(f) of Federal Reserve Board Regulation O (12 CFR 215.2(f)).
---------------------------------------------------------------------------

    (c)(1) No insured nonmember bank may extend credit in an aggregate 
amount greater than the amount permitted in paragraph (c)(2) of this 
section to a partnership in which one or more of the bank's executive 
officers are partners and, either individually or together, hold a 
majority interest. For the purposes of paragraph (c)(2) of this section, 
the total amount of credit extended by an insured nonmember bank to such 
partnership is considered to be extended to each executive officer of 
the insured nonmember bank who is a member of the partnership.
    (2) An insured nonmember bank is authorized to extend credit to any 
executive officer of the bank for any other purpose not specified in 
Sec. 215.5(c)(1) and (2) of Federal Reserve Board Regulation O (12 CFR 
215.5(c)(1) and (2)) if the aggregate amount of such other extensions of 
credit does not exceed at any one time the higher of 2.5 percent of the 
bank's capital and unimpaired surplus or $25,000 but in no event more 
than $100,000, provided, however, that no such extension of credit shall 
be subject to this limit if the extension of credit is secured by:
    (i) A perfected security interest in bonds, notes, certificates of 
indebtedness, or Treasury bills of the United States or in other such 
obligations fully guaranteed as to principal and interest by the United 
States;
    (ii) Unconditional takeout commitments or guarantees of any 
department, agency, bureau, board, commission or establishment of the 
United States or any corporation wholly owned directly or indirectly by 
the United States; or
    (iii) A perfected security interest in a segregated deposit account 
in the lending bank.
    (3) Any extension of credit that was outstanding on May 28, 1992 and 
that would if made on or after that date violate paragraph (c)(1) or 
paragraph (c)(2) of this Sec. 337.3 shall be reduced in amount by May 
28, 1993 so that the extension of credit is in compliance with the 
lending limit set forth in paragraphs (c)(1) and (c)(2) of this section. 
Any renewal or extension of such an extension of credit on or after May 
28, 1992 shall be made only on terms that will bring the extension of 
credit into compliance with the lending limit of paragraphs (c)(1) and 
(c)(2) of this section by May 28, 1993, however, any extension of credit 
made before May 28, 1992 that bears a specific maturity date of May 28, 
1993 or later shall be repaid in accordance with its repayment schedule 
in existence on or before May 28, 1992.
    (4) If an insured nonmember bank is unable to bring all extensions 
of credit outstanding as of May 28, 1992 into compliance as required by 
paragraph (c)(3) of this Sec. 337.3, the bank may at the discretion of 
the appropriate FDIC regional director (Division of Supervision) obtain, 
for good cause shown,

[[Page 249]]

not more than two additional one-year periods to come into compliance.
    (5) For the purposes of paragraph (c) of this section, the 
definitions of the terms used in Federal Reserve Board Regulation O 
shall apply including the exclusion of executive officers of a bank's 
parent bank holding company and executive officers of any other 
subsidiary of that bank holding company from the definition of executive 
officer for the purposes of complying with the loan restrictions 
contained in section 22(g) of the Federal Reserve Act. For the purposes 
of complying with Sec. 215.5(d) of Federal Reserve Board Regulation O, 
the reference to ``the amount specified for a category of credit in 
paragraph (c) of this section'' shall be understood to refer to the 
amount specified in paragraph (c)(2) of this Sec. 337.3.

(Approved by the Office of Management and Budget under control number 
3064-0108)

[47 FR 47003, Oct. 22, 1982, as amended at 48 FR 42971, Sept. 21, 1983; 
57 FR 7649, Mar. 4, 1992; 57 FR 17850, Apr. 28, 1992; 57 FR 28457, June 
25, 1992; 59 FR 66668, Dec. 28, 1994]



Sec. 337.4  Securities activities of subsidiaries of insured nonmember banks: bank transactions with affiliated securities companies.

    (a) Definitions: for the purposes of this section,
    (1) Affiliate shall mean any company that directly or indirectly, 
through one or more intermediaries, controls or is under common control 
with an insured nonmember bank.
    (2) Bona fide subsidiary means a subsidiary of an insured nonmember 
bank that at a minimum: (i) is adequately capitalized; (ii) is 
physically separate and distinct in its operations from the operation of 
the bank;\4\ (iii) maintains separate accounting and other corporate 
records; (iv) observes separate formalities such as separate board of 
directors' meetings; (v) maintains separate employees who are 
compensated by the subsidiary;\5\ (vi) shares no common officers with 
the bank; (vii) a majority of its board of directors is composed of 
persons who are neither directors nor officers of the bank; and (viii) 
conducts business pursuant to independent policies and procedures 
designed to inform customers and prospective customers of the subsidiary 
that the subsidiary is a separate organization from the bank and that 
investments recommended, offered or sold by the subsidiary are not bank 
deposits, are not insured by the FDIC, and are not guaranteed by the 
bank nor are otherwise obligations of the bank.
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    \4\ If the subsidiary conducts business in the same location in 
which the bank conducts business, the subsidiary must utilize physically 
separate offices or office space from that used by the bank. Such 
offices or office space must be clearly and prominently identified so as 
to distinguish the subsidiary from the bank. The physically separate 
office or office space requirement only applies in areas to which the 
public has access.
    \5\ This requirement shall not be construed to prohibit the use by 
the subsidiary of bank employees to perform functions which do not 
directly involve customer contact such as accounting, data processing 
and recordkeeping, so long as the bank and the subsidiary contract for 
such services on terms and conditions comparable to those agreed to by 
independent entities.
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    (3) Company shall mean any corporation (other than a bank), any 
partnership, business trust, association, joint venture, pool syndicate, 
or other similar business organization.
    (4) Control shall mean the power to directly or indirectly vote 25 
per centum or more of the voting stock of a bank or company, the ability 
to control in any manner the election of a majority of a bank's or 
company's directors or trustees, or the ability to exercise a 
controlling influence over the management and policies of a bank or 
company.
    (5) Extension of credit shall mean the making or renewal of any 
loan, a draw upon a line of credit, or an extending of credit in any 
manner whatsoever and includes, but is not limited to:
    (i) A purchase, whether or not under repurchase agreement, of 
securities, other assets, or obligations;
    (ii) An advance by means of an overdraft, cash item, or otherwise;
    (iii) Issuance of a standby letter of credit (or other similar 
arrangement regardless of name or description);
    (iv) An acquisition by discount, purchase, exchange, or otherwise of 
any note, draft, bill of exchange, or other evidence of indebtedness 
upon which a

[[Page 250]]

natural person or company may be liable as maker, drawer, endorser, 
guarantor, or surety;
    (v) A discount of promissory notes, bills of exchange, conditional 
sales contracts, or similar paper, whether with or without recourse;
    (vi) An increase of an existing indebtedness, but not if the 
additional funds are advanced by the bank for its own protection for (A) 
accrued interest or (B) taxes, insurance, or other expenses incidental 
to the existing indebtedness; or
    (vii) Any other transaction as a result of which a natural person or 
company becomes obligated to pay money (or its equivalent) to a bank, 
whether the obligation arises directly or indirectly, or because of an 
endorsement on an obligation or otherwise, or by any means whatsoever.
    (6) Insured nonmember bank shall mean state and federally chartered 
banks insured by FDIC that are not members of the Federal Reserve 
System. The term shall not include foreign banks with insured branches 
in the United States nor insured branches of foreign banks.
    (7) Investment quality debt security shall mean a marketable 
obligation in the form of a bond, note, or debenture that is rated in 
the top four rating categories by a nationally recognized rating service 
or a marketable obligation in the form of a bond, note, or debenture the 
investment characteristics of which are equivalent to the investment 
characteristics of such a top-rated obligation.
    (8) Investment quality equity security shall mean marketable common 
stock that is ranked or graded in the top four categories or equivalent 
categories by a nationally recognized rating service, marketable 
preferred corporate stock that is rated in the top four rating 
categories by a nationally recognized rating service, or marketable 
preferred corporate stock that has investment characteristics that are 
equivalent to the investment characteristics of top rated preferred 
corporate stock.
    (9) Subsidiary shall mean any company controlled by an insured 
nonmember bank.
    (b) Investment in securities subsidiaries. (1) An insured nonmember 
bank may not establish or acquire a subsidiary that engages in the sale, 
distribution, or underwriting of stocks, bonds, debentures, notes or 
other securities; conducts any activities for which the subsidiary is 
required to register with the Securities and Exchange Commission as a 
broker/dealer; acts as an investment adviser to any investment company; 
or engages in any other securities activity unless:
    (i) Except as otherwise provided by Sec. 337.4(b)(2), the 
subsidiary's underwriting activities that would not be authorized to the 
bank under section 16 of the Glass-Steagall Act (12 U.S.C. 24 (Seventh)) 
as made applicable to insured nonmember banks by section 21 of the 
Glass-Steagall Act (12 U.S.C. 378) are limited to, and thereafter 
continue to be limited to, one or more of the following:
    (A) Underwriting of investment quality debt securities;
    (B) Underwriting of investment quality equity securities;
    (C) Underwriting of investment companies not more than 25 percent of 
whose investments consist of investments other than investment quality 
debt securities and/or investment quality equity securities; or
    (D) Underwriting of investment companies not more than 25 percent of 
whose investments consist of investments other than obligations of the 
United States or United States Government agencies, repurchase 
agreements involving such obligations, bank certificates of deposit, 
banker's acceptances and other bank money instruments, short-term 
corporate debt instruments, and other similar investments normally 
associated with a money market fund; and
    (ii) The subsidiary is, and thereafter continues to be, a bona fide 
subsidiary if that subsidiary conducts securities activities not 
authorized to the bank under section 16 of the Glass-Steagall Act as 
made applicable to insured nonmember banks by section 21 of the Glass-
Steagall Act.
    (2) Paragraph (b)(1)(i) of this section notwithstanding, a 
subsidiary of an insured nonmember bank may engage in underwriting 
activities other than as limited thereby provided that the following 
conditions are met:

[[Page 251]]

    (i) The subsidiary is a member in good standing of the National 
Association of Securities Dealers (``NASD'');
    (ii) The subsidiary has been in continuous operation for the five 
year period preceding notice to the FDIC as required by this part;
    (iii) No director, officer, general partner, employee, or 10 percent 
shareholder of any class of voting securities of the subsidiary has been 
convicted within five years of the notice required by this part of any 
felony or misdemeanor in connection with the purchase or sale of any 
security involving the making of a false filing with the Securities and 
Exchange Commission or arising out of the conduct of the business of an 
underwriter, broker, dealer, municipal securities dealer, or investment 
adviser;
    (iv) Neither the subsidiary nor any of its directors, officers, 
general partners, employees, or 10 percent shareholders of any class of 
voting securities of the subsidiary is subject to any state or federal 
administrative order or court order, judgment, or decree entered within 
five years of the notice required by this part temporarily or 
preliminarily enjoining or restraining such person or the subsidiary 
from engaging in, or continuing, any conduct or practice in connection 
with the purchase or sale of any security involving the making of a 
false filing with the Securities and Exchange Commission or arising out 
of the conduct of the business of an underwriter, broker, dealer, 
municipal securities dealer, or investment adviser;
    (v) None of the subsidiary's directors, officers, general partners, 
employees, or 10 percent shareholders of any class of voting securities 
of the subsidiary are subject to an order entered within five years of 
the notice required by this part of the Securities and Exchange 
Commission entered pursuant to section 15(b) or 15B(c) of the Securities 
Exchange Act of 1934 (15 U.S.C. 780, 78o-4) or section 203(c) or (f) of 
the Investment Advisors Act of 1940 (15 U.S.C. 80b-3(c), (f)); and
    (vi) All officers of the subsidiary who have supervisory 
responsibility for underwriting activities have at least five year 
experience in similar activities at NASD member securities firms.
    (3) An insured nonmember bank's direct investment in a securities 
subsidiary described in paragraph (b)(1) or (b)(2) of this section will 
not be counted toward the bank's capital.
    (c) Affiliation with a securities company. An insured nonmember bank 
is prohibited from becoming affiliated with any company that directly 
engages in the sale, distribution, or underwriting of stocks, bonds, 
debentures, notes, or other securities unless:
    (1) The securities business of the affiliate is physically separate 
and distinct from the operation of the bank; \6\
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    \6\ If the affiliate conducts business in the same location in which 
the bank conducts business, the affiliate must utilize physically 
separate offices or office space from that used by the bank. Such 
offices or office space must be clearly and prominently identified so as 
to distinguish the affiliate from the bank. The physically separate 
office or office space requirement only applies in areas to which the 
public has access.
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    (2) The bank and affiliate share no common officers;
    (3) A majority of the board of directors of the bank is composed of 
persons who are neither directors nor officers of the affiliate;
    (4) Any employee of the affiliate who is also an employee of the 
bank does not conduct any securities activities on behalf of the 
affiliate on the premises of the bank that involve customer contact;
    (5) The affiliate conducts business pursuant to independent policies 
and procedures designed to inform customers and prospective customers of 
the affiliate that the affiliate is a separate organization from the 
bank and that investments recommended, offered or sold by the affiliate 
are not bank deposits, are not insured by the FDIC, and are not 
guaranteed by the bank nor are otherwise obligations of the bank. \7\
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    \7\ This requirement shall not be construed to prohibit the 
affiliate from brokering deposits to the extent and in the manner as 
otherwise permitted by statute and regulation.
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    (d) Filing of notice. Every insured nonmember bank that intends to 
acquire or establish a subsidiary that--
    (1) Engages in the sale, distribution, or underwriting of stocks, 
bonds, debentures, notes, or other securities;

[[Page 252]]

    (2) Acts as an investment adviser to any investment company;
    (3) Conducts any activity for which the subsidiary is required to 
register with the Securities and Exchange Commission as a broker/dealer; 
or
    (4) Engages in any other securities activity, shall notify the 
regional director of the FDIC region in which the bank is located of 
such intent.

Notice shall be in writing and must be received in the regional office 
at least 60 days prior to consummation of the acquisition or 
commencement of the operation of the subsidiary, whichever is earlier. 
The bank shall also notify the regional office in writing within 10 days 
after the consummation of the acquisition or commencement of the 
operation of the subsidiary, whichever is earlier. The 60-day notice 
requirement may be waived in FDIC's discretion where such notice is 
impracticable such as in the case of a purchase and assumption 
transaction or an emergency merger. Where the above notices pertain 
solely to the transfer of securities activities previously performed by 
the bank to the subsidiary, an additional written notice must be filed 
with the regional office if the subsidiary commences any securities 
activity covered by Sec. 337.4 (b)(1)(i) or (2) of this part. This 
notice must be received in the regional office within thirty days after 
the subsidiary commences the new activity. If the 60-day advance notice 
and 10-day follow-up notice pertain to the establishment or acquisition 
of a subsidiary that engages in underwriting activities as limited by 
Sec. 337.4(b)(1)(i), an additional written notice must be filed with the 
regional office if the subsidiary commences underwriting activities as 
permitted by Sec. 337.4(b)(2) of this part. This notice must be received 
in the regional office within thirty days after the subsidiary commences 
the new activity.
    (e) Restrictions. An insured nonmember bank which has a subsidiary 
or affiliate that engages in the sale, distribution, or underwriting of 
stocks, bonds, debentures, notes, or other securities, or acts as an 
investment adviser to any investment company shall not:
    (1) Purchase in its discretion as fiduciary, co-fiduciary, or 
managing agent any security currently distributed, currently 
underwritten, or issued by such subsidiary or affiliate or purchase as 
fiduciary, co-fiduciary, or managing agent any security currently issued 
by an investment company advised by such subsidiary or affiliate, unless 
(i) the purchase is expressly authorized by the trust instrument, court 
order, or local law, or specific authority for the purchase is obtained 
from all interested parties after full disclosure, (ii) the purchase, 
although not expressly authorized under paragraph (e)(1)(i) of this 
section, is otherwise consistent with the insured nonmember bank's 
fiduciary obligation, or (iii) the purchase is permissible under 
applicable federal and/or state statute or regulation;
    (2) Transact business through its trust department with such 
subsidiary or affiliate unless the transactions are at least comparable 
to transactions with an unaffiliated securities company or a securities 
company that is not a subsidiary of the bank;
    (3) Extend credit or make any loan directly or indirectly to any 
company the stocks, bonds, debentures, notes or other securities of 
which are currently underwritten or distributed by such subsidiary or 
affiliate of the bank unless the company's stocks, bonds, debentures, 
notes or other securities that are underwritten or distributed (i) 
qualify as investment quality debt securities, or (ii) qualify as 
investment quality equity securities;\8\
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    \8\ This restriction shall not be construed to prohibit the bank 
from honoring a loan commitment or revolving loan agreement or funding a 
line of credit where the loan commitment, revolving loan agreement, or 
line of credit was entered into prior in time to the underwriting or 
distribution. This restriction does not apply to any extension of credit 
to a non-U.S. company whose securities are underwritten or distributed 
outside the United States by a non-U.S. affiliate of an insured 
nonmember bank.
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    (4) Extend credit or make any loan directly or indirectly to any 
investment company whose shares are currently underwritten or 
distributed by such subsidiary or affiliate of the bank;
    (5) Extend credit or make any loan where the purpose of the 
extension of credit or loan is to acquire (i) any stock, bond, 
debenture, note, or other

[[Page 253]]

security currently underwritten or distributed by such subsidiary or 
affiliate; (ii) any security currently issued by an investment company 
advised by such subsidiary or affiliate; or (iii) any stock, bond, 
debenture, note, or other security issued by such subsidiary or 
affiliate, except that a bank may extend credit or make a loan to 
employees of the subsidiary or affiliate for the purpose of acquiring 
securities of such subsidiary or affiliate through an employee stock 
bonus or stock purchase plan adopted by the board of directors or board 
trustees of the subsidiary or affiliate; 9
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    \9\ In complying with Sec. 337.4(e)(5) of this part, the bank shall 
be entitled to rely in good faith on the customer's statement as to the 
purpose of the extension of credit or loan.
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    (6) Make any loan or extension of credit to a subsidiary or 
affiliate of the bank that (i) distributes or underwrites stocks, bonds, 
debentures, notes, or other securities, or (ii) advises any investment 
company, if such loans or extensions of credit would be in excess of the 
limit as to amount, and not in accordance with the restrictions imposed 
on ``covered transactions'' by section 23A of the Federal Reserve Act 
(12 U.S.C. 371c) and that are not within any exemptions established 
thereby;
    (7) Make any loan or extension of credit to any investment company 
for which the bank's subsidiary or affiliate acts as an investment 
adviser if the loan or extension of credit would be in excess of the 
limit as to amount, and not in accordance with the restrictions imposed 
on ``covered transactions'' by section 23A of the Federal Reserved Act 
and that are not within any exemptions established thereby; and
    (8) Directly or indirectly condition any loan or extension of credit 
to any company on the requirement that the company contract with, or 
agree to contract with, the bank's subsidiary or affiliate to underwrite 
or distribute the company's securities or directly or indirectly 
condition any loan or extension of credit to any person on the 
requirement that that person purchase any security currently 
underwritten or distributed by the bank's subsidiary or 
affiliate.10
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    \10\ An insured nonmember bank in complying with the requirements of 
Secs. 337.4 (e)(1), (e)(3), and (e)(4) of this part concerning 
``current'' underwritings and distributions may rely upon the 
affiliate's or subsidiary's statement that the underwriting or 
distribution of any particular security has terminated.
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    (f) Nothing in this section prohibits an insured nonmember bank from 
establishing or acquiring a subsidiary that sells, distributes, or 
underwrites stocks, bonds, debentures, notes, or other securities or 
engages in any other securities activity if those activities would be 
permitted to an insured nonmember bank by sections 16 and 21 of the 
Glass-Steagall Act (12 U.S.C. 24 (Seventh) and 378).
    (g) Nothing in this section authorizes an insured nonmember bank to 
directly engage in any securities activity not authorized to it under 
sections 16 and 21 of the Glass-Steagall Act (12 U.S.C. 24 (Seventh) and 
378).
    (h) Disclosure--(1) Applicability. Any subsidiary of an insured 
nonmember bank required by Sec. 337.4(b)(1)(ii) to be a bona fide 
subsidiary, and any affiliate of an insured nonmember bank whose 
affiliation with such a bank is governed by Sec. 337.4(c), which:
    (i) Shares the same or a similar name or logo with the insured 
nonmember bank,
    (ii) Conducts business in the same location in which the insured 
nonmember bank conducts business,
    (iii) Advertises or promotes particular securities or solicits 
purchasers for particular securities in advertisements, promotions, 
solicitations or other similar communications in which the insured 
nonmember bank also advertises or promotes its services, or
    (iv) Places or causes to be placed in communications from the 
insured nonmember bank to the bank's customers advertisements, 
promotions or solicitations concerning particular securities, must 
comply with the disclosure requirements of paragraphs (h)(2) and (3) of 
this section in order for the subsidiary to meet the definition of a 
bona fide subsidiary and in order for the affiliation to be permissible.

Any insured nonmember bank that established or acquired a securities 
subsidiary or become affiliated with a securities company prior to 
December 28, 1984 and which as of December 14, 1987,

[[Page 254]]

conducted business in the same location as its securities subsidiary or 
affiliate or shared the same or a similar name or logo with its 
securities subsidiary or affiliate has until not later than June 1, 1988 
to comply with paragraphs (h)(2) and (3) of this section.
    (2) Content of Disclosure. Sections 337.4(a)(2)(viii) and 
337.4(c)(5) notwithstanding, any subsidiary and/or affiliate of an 
insured nonmember bank described in paragraph (h)(1) of this section 
must disclose to its customers and prospective customers that securities 
recommended, offered or sold by or through the subsidiary and/or 
affiliate are not FDIC insured deposits (unless otherwise indicated), 
that such securities are not guaranteed by, nor are they obligations of, 
the bank, and that the subsidiary and/or affiliate and the bank are 
separate organizations. The following or a similar statement will 
satisfy the disclosure requirement:

    [name of affiliate/subsidiary] is not a bank and securities offered 
by it are not backed or guaranteed by any bank nor are they insured by 
the FDIC.

    (3) Timing and Placement of Disclosure. In order for any subsidiary 
or affiliate of an insured nonmember bank described in paragraph (h)(1) 
of this section, to comply with paragraph (h)(2) of this section, the 
subsidiary/affiliate must make disclosure to its customers prominently, 
in writing, in opening account documents and periodically (at least 
semiannually) in customer statements. Disclosure may be made in 
confirmations in lieu of customer statements. In the case of joint 
advertisements, promotions, or solicitations and advertisements, 
promotions, or solicitations placed in bank communications, the 
advertisement, promotion, or solicitation must carry the requisite 
disclosure. Disclosure may be in a form and manner consistent with the 
advertising or other media utilized. Television or radio advertisements 
which do not exceed 30 seconds in length need not contain disclosure. 
Disclosure in television advertisements may either be spoken or 
displayed. All disclosures must be prominent and clearly legible. 
Disclosure in opening account documents and periodic disclosure in 
customer statements or confirmations is only required for one year after 
the bank and its subsidiary/affiliate cease to jointly advertise, 
promote or solicit and for one year after advertisements, promotions, or 
solicitations are placed in bank communications with bank customers 
provided, however, that at least two semiannual disclosures must have 
been made during that one year period.
    (4) It is considered an unsafe and unsound banking practice for an 
insured nonmember bank to:
    (i) Share the same or a similar name or logo with a securities 
subsidiary that is required to be a bona fide subsidiary or an affiliate 
that is subject to the provisions contained in Sec. 337.4(c);
    (ii) Conduct business in the same location as any such subsidiary or 
affiliate;
    (iii) Jointly advertise or promote its services in an advertisement, 
promotion, or solicitation concerning particular securities made by such 
a subsidiary or affiliate; or
    (iv) Permit such a subsidiary or affiliate to place advertisements, 
promotions, or solicitions concerning particular securities in 
communications sent by the bank to the bank's customers, unless the 
disclosure requirements of paragraphs (h)(2) and (3) of this section, 
are met.

Failure to comply with paragraphs (h)(2) and (3) of this section, will 
subject the insured nonmember bank to appropriate administrative action 
including, but not necessarily limited to, an order to cease and desist 
use of the same or a similar name or logo as the subsidiary/affiliate, 
the conduct of business in the same location as the subsidiary/
affiliate, the making of joint advertisements, or the placement of the 
subsidiary's/affiliate's promotions, advertisements, or solicitations in 
the bank's communications with its customers.
[49 FR 46723, Nov. 28, 1984, as amended at 51 FR 880, Jan. 9, 1986; 51 
FR 45756, Dec. 22, 1986; 52 FR 47387, Dec. 14, 1987; 53 FR 597, Jan. 8, 
1988; 53 FR 2223, Jan. 29, 1988]



Sec. 337.5  Exemption.

    Check guaranty card programs, customer-sponsored credit card 
programs, and similar arrangements in which a bank undertakes to 
guarantee the obligations of individuals who are its retail

[[Page 255]]

banking deposit customers are exempted from Sec. 337.2: Provided, 
however, That the bank establishes the creditworthiness of the 
individual before undertaking to guarantee his/her obligations and that 
any such arrangement to which a bank's principal shareholders, 
directors, or executive officers are a party be in compliance with 
applicable provisions of Federal Reserve Regulation O (12 CFR part 215).
[50 FR 10495, Mar. 15, 1985]



Sec. 337.6  Brokered deposits.

    (a) Definitions. For the purposes of this Sec. 337.6, the following 
definitions apply:
    (1) Appropriate Federal banking agency has the same meaning as 
provided under section 3(q) of the Federal Deposit Insurance Act (12 
U.S.C. 1813(q)).
    (2) Brokered deposit means any deposit that is obtained, directly or 
indirectly, from or through the mediation or assistance of a deposit 
broker.
    (3) Capital categories. (i) For purposes of section 29 of the 
Federal Deposit Insurance Act and this Sec. 337.6, the terms well 
capitalized, adequately capitalized, and undercapitalized,11 
shall have the same meaning as to each insured depository institution as 
provided under regulations implementing section 38 of the Federal 
Deposit Insurance Act issued by the appropriate federal banking agency 
for that institution.12
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    \11\ The term undercapitalized includes any institution that is 
significantly undercapitalized or critically undercapitalized under 
regulations implementing section 38 of the Federal Deposit Insurance Act 
and issued by the appropriate federal banking agency for that 
institution.
    \12\ For the most part, the capital measure terms are defined in the 
following regulations: FDIC--12 CFR part 325, subpart B; Board of 
Governors of the Federal Reserve System--12 CFR part 208; Office of the 
Comptroller of the Currency--12 CFR part 6; Office of Thrift 
Supervision--12 CFR part 565.
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    (ii) If the appropriate federal banking agency reclassifies a well 
capitalized insured depository institution as adequately capitalized 
pursuant to section 38 of the Federal Deposit Insurance Act, the 
institution so reclassified shall be subject to the provisions 
applicable to such lower capital category under this Sec. 337.6.
    (iii) An insured depository institution shall be deemed to be within 
a given capital category for purposes of this Sec. 337.6 as of the date 
the institution is notified of, or is deemed to have notice of, its 
capital category, under regulations implementing section 38 of the 
Federal Deposit Insurance Act issued by the appropriate federal banking 
agency for that institution.13
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    \13\ The regulations implementing section 38 of the Federal Deposit 
Insurance Act and issued by the federal banking agencies generally 
provide that an insured depository institution is deemed to have been 
notified of its capital levels and its capital category as of the most 
recent date: (1) A Consolidated Report of Condition and Income or Thrift 
Financial Report is required to be filed with the appropriate federal 
banking agency; (2) A final report of examination is delivered to the 
institution; or (3) Written notice is provided by the appropriate 
federal banking agency to the institution of its capital category for 
purposes of section 38 of the Federal Deposit Insurance Act and 
implementing regulations or that the institution's capital category has 
changed. Provisions specifying the effective date of determination of 
capital category are generally published in the following regulations: 
FDIC--12 CFR 325.102. Board of Governors of the Federal Reserve System--
12 CFR 208.32. Office of the Comptroller of the Currency--12 CFR 6.3. 
Office of Thrift Supervision--12 CFR 565.3.
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    (4) Deposit has the same meaning as provided under section 3(l) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(1)).
    (5) Deposit broker. (i) The term deposit broker means:
    (A) Any person engaged in the business of placing deposits, or 
facilitating the placement of deposits, of third parties with insured 
depository institutions, or the business of placing deposits with 
insured depository institutions for the purpose of selling interests in 
those deposits to third parties; and
    (B) An agent or trustee who establishes a deposit account to 
facilitate a business arrangement with an insured depository institution 
to use the proceeds of the account to fund a prearranged loan.
    (ii) The term deposit broker does not include:
    (A) An insured depository institution, with respect to funds placed 
with that depository institution;

[[Page 256]]

    (B) An employee of an insured depository institution, with respect 
to funds placed with the employing depository institution;
    (C) A trust department of an insured depository institution, if the 
trust or other fiduciary relationship in question has not been 
established for the primary purpose of placing funds with insured 
depository institutions;
    (D) The trustee of a pension or other employee benefit plan, with 
respect to funds of the plan;
    (E) A person acting as a plan administrator or an investment adviser 
in connection with a pension plan or other employee benefit plan 
provided that person is performing managerial functions with respect to 
the plan;
    (F) The trustee of a testamentary account;
    (G) The trustee of an irrevocable trust (other than one described in 
paragraph (a)(5)(i)(B) of this section), as long as the trust in 
question has not been established for the primary purpose of placing 
funds with insured depository institutions;
    (H) A trustee or custodian of a pension or profit-sharing plan 
qualified under section 401(d) or 403(a) of the Internal Revenue Code of 
1986 (26 U.S.C. 401(d) or 403(a));
    (I) An agent or nominee whose primary purpose is not the placement 
of funds with depository institutions; or
    (J) An insured depository institution acting as an intermediary or 
agent of a U.S. government department or agency for a government 
sponsored minority or women-owned depository institution deposit 
program.
    (iii) Notwithstanding paragraph (a)(5)(ii) of this section, the term 
deposit broker includes any insured depository institution, and any 
employee of any insured depository institution, which engages, directly 
or indirectly, in the solicitation of deposits by offering rates of 
interest (with respect to such deposits) which are significantly higher 
than the prevailing rates of interest on deposits offered by other 
insured depository institutions having the same type of charter in such 
depository institution's normal market area.
    (6) Employee means any employee: (i) Who is employed exclusively by 
the insured depository institution;
    (ii) Whose compensation is primarily in the form of a salary;
    (iii) Who does not share such employee's compensation with a deposit 
broker; and
    (iv) Whose office space or place of business is used exclusively for 
the benefit of the insured depository institution which employs such 
individual.
    (7) FDIC means the Federal Deposit Insurance Corporation.
    (8) Insured depository institution means any bank, savings 
association, or branch of a foreign bank insured under the provisions of 
the Federal Deposit Insurance Act (12 U.S.C. 1811 et. seq.).
    (b) Solicitation and acceptance of brokered deposits by insured 
depository institutions. (1) A well capitalized insured depository 
institution may solicit and accept, renew or roll over any brokered 
deposit without restriction by this section.
    (2)(i) An adequately capitalized insured depository institution may 
not accept, renew or roll over any brokered deposit unless it has 
applied for and been granted a waiver of this prohibition by the FDIC in 
accordance with the provisions of this section.
    (ii) Any adequately capitalized insured depository institution that 
has been granted a waiver to accept, renew or roll over a brokered 
deposit may not pay an effective yield on any such deposit which, at the 
time that such deposit is accepted, renewed or rolled over, exceeds by 
more than 75 basis points:
    (A) The effective yield paid on deposits of comparable size and 
maturity in such institution's normal market area for deposits accepted 
from within its normal market area; or
    (B) The national rate paid on deposits of comparable size and 
maturity for deposits accepted outside the institution's normal market 
area. For purposes of this paragraph (b)(2)(ii)(B), the national rate 
shall be:
    (1) 120 percent of the current yield on similar maturity U.S. 
Treasury obligations; or
    (2) In the case of any deposit at least half of which is uninsured, 
130 percent of such applicable yield.
    (3)(i) An undercapitalized insured depository institution may not 
accept,

[[Page 257]]

renew or roll over any brokered deposit.
    (ii) An undercapitalized insured depository institution may not 
solicit deposits by offering an effective yield that exceeds by more 
than 75 basis points the prevailing effective yields on insured deposits 
of comparable maturity in such institution's normal market area or in 
the market area in which such deposits are being solicited.
    (4) For purposes of the restriction contained in paragraphs 
(b)(2)(ii)(A) and (b)(3)(ii) of this section, the effective yields in 
the relevant markets are the average of effective yields offered by 
other insured depository institutions in the market area in which 
deposits are being solicited. An effective yield on a deposit with an 
odd maturity violates paragraphs (b)(2)(ii)(A) and (b)(3)(ii) of this 
section if it is more than 75 basis points higher than the yield 
calculated by interpolating between the yields offered by other insured 
depository institutions on deposits of the next longer and shorter 
maturities offered in the market. A market area is any readily defined 
geographical area in which the rates offered by any one insured 
depository institution soliciting deposits in that area may affect the 
rates offered by other insured depository institutions operating in the 
same area.
    (c) Waiver. The FDIC may, on a case-by-case basis and upon 
application by an adequately capitalized insured depository institution, 
waive the prohibition on the acceptance, renewal or rollover of brokered 
deposits upon a finding that such acceptance, renewal or rollover does 
not constitute an unsafe or unsound practice with respect to such 
institution. The FDIC may conclude that it is not unsafe or unsound and 
may grant a waiver when the acceptance, renewal or rollover of brokered 
deposits is determined to pose no undue risk to the institution. Any 
waiver granted may be revoked at any time by written notice to the 
institution.
    (d) Application. An adequately capitalized insured depository 
institution wishing to accept, renew or roll over brokered deposits may 
apply to the appropriate regional director for supervision for the 
region in which the main office of the institution is located. The 
application may be in letter form and shall include the following 
information:
    (1) The time period for which a waiver may be needed;
    (2) A statement of the policy governing the use of brokered deposits 
in the institution's overall funding and liquidity management program;
    (3) The volume, rates and maturities associated with the brokered 
deposits held currently and anticipated during the waiver period sought, 
including any internal limits placed on the terms, solicitation and use 
of brokered deposits;
    (4) A description of how brokered deposits are costed and compared 
to other funding alternatives and how such deposits are used in the 
institution's lending and investment activities, including a detailed 
discussion of any plans for asset growth;
    (5) A description of the procedures and practices used to solicit 
brokered deposits, including an identification of the principal sources 
of such deposits;
    (6) A description of the management systems in overseeing the 
solicitation, acceptance and use of brokered deposits;
    (7) A recent consolidated financial statement with balance sheet and 
income statements; and
    (8) Reasons the institution believes its acceptance, renewal or 
rollover of brokered deposits would pose no undue risk.
    (e) Decision. (1) The Director of the Division of Supervision and, 
when confirmed in writing by the Director, an associate director or the 
appropriate regional director or deputy regional director, shall each 
have the authority to approve any waiver application properly filed. An 
application is properly filed when complete and accurate information 
addressing each of the informational elements stated in paragraph (d) of 
this section has been provided to the appropriate regional director. Any 
properly authorized FDIC official may grant a temporary waiver based 
upon a preliminary review for a short period in order to facilitate the 
orderly processing of an application for a waiver. Any waiver granted 
will be for a fixed period, generally no longer than two

[[Page 258]]

years, but may be extended upon reapplication. The FDIC will provide 
notice to the depository institution's appropriate Federal banking 
agency and any state regulatory agency, as appropriate, that a request 
for a waiver has been filed and will consult with such agency or 
agencies, prior to taking action on the institution's request for a 
waiver. Notwithstanding the foregoing, prior notice and/or consultation 
shall not be required in any particular case if the FDIC determines that 
the circumstances require it to take action without giving such notice 
and opportunity for consultation.
    (2) Any application filed by an institution that is CAMEL- or MACRO-
rated 1 or 2 by its appropriate Federal banking agency shall be deemed 
approved for the period requested (not to exceed 2 years) 21 days after 
filing unless the institution in the interim has been notified in 
writing that further review and consideration are required and that it 
will be specifically notified when its application has been decided.
    (f) 60-Day transition period. An adequately capitalized insured 
depository institution may accept, renew or roll over any brokered 
deposit for a period of 60 days following June 16, 1992, provided it has 
properly filed an application within 30 days after June 16, 1992, and 
the FDIC has not notified the institution that the application has been 
denied.
    (g) Exclusion for institutions in FDIC conservatorship. No insured 
depository institution for which the FDIC has been appointed conservator 
shall be subject to the prohibition on the acceptance, renewal or 
rollover of brokered deposits contained in this Sec. 337.6 or section 29 
of the Federal Deposit Insurance Act for 90 days after the date on which 
the institution was placed in conservatorship. During this 90-day 
period, the institution shall, nevertheless, be subject to the 
restriction on the payment of interest contained in paragraph (b)(2)(ii) 
of the section. After such 90-day period, the institution may not 
accept, renew or roll over any brokered deposit.
    (h) Deposit brokers. (1) A deposit broker shall not solicit or place 
any deposit with an insured depository institution unless it has 
provided the FDIC with written notice that it is acting as a deposit 
broker. The notice may be in letter form and shall describe generally 
the history, nature and volume of its deposit brokerage operations, 
including the sources and placement of such funds. The notice should be 
submitted to the Federal Deposit Insurance Corporation, Office of 
Compliance and Special Activities, Division of Supervision, Washington, 
DC 20429. The notice shall be effective upon receipt.
    (2) A deposit broker shall maintain sufficient records of the volume 
of brokered deposits placed with any insured depository institution over 
the preceding 12 months and the volume outstanding currently, including 
the maturities, rates and costs associated with such deposits.
    (3) The Director of the Division of Supervision or designee may 
request, from time to time, quarterly written reports from any deposit 
broker regarding the volume of brokered deposits placed with a specified 
insured depository institution and the maturities, rates and costs 
associated with such deposits.
    (4) When a deposit broker ceases to act as such, it shall notify the 
FDIC in writing at the address indicated in paragraph (h)(1) of this 
section that it is no longer acting as a deposit broker.
[57 FR 23941, June 5, 1992, as amended at 58 FR 54935, Oct. 25, 1993; 60 
FR 31384, June 15, 1995]



Secs. 337.7--337.9  [Reserved]



Sec. 337.10  Waiver.

    An insured State nonmember bank has the right to petition the Board 
of Directors of the Corporation for a waiver of this part or any subpart 
thereof with respect to any particular transaction or series of similar 
transactions. A waiver may be granted at the discretion of the Board 
upon a showing of good cause. All such petitions should be filed with 
the Office of the Executive Secretary, Federal Deposit Insurance 
Corporation, 550 17th Street, NW., Washington, DC 20429.



Sec. 337.11  Effect on other banking practices.

    Nothing in this part shall be construed as restricting in any manner 
the

[[Page 259]]

Corporation's authority to deal with any banking practice which is 
deemed to be unsafe or unsound or otherwise not in accordance with law, 
rule, or regulation; or which violates any condition imposed in writing 
by the Corporation in connection with the granting of any application or 
other request by an insured State nonmember bank, or any written 
agreement entered into by such bank with the Corporation. Compliance 
with the provisions of this part shall not relieve an insured State 
nonmember bank from its duty to conduct its operations in a safe and 
sound manner nor prevent the Corporation from taking whatever action it 
deems necessary and desirable to deal with specific acts or practices 
which, although they do not violate the provisions of this part, are 
considered detrimental to the safety and sound operation of the bank 
engaged therein.



Sec. 337.12  Frequency of examination.

    (a) General. The Federal Deposit Insurance Corporation examines 
insured state nonmember banks pursuant to authority conferred by section 
10 of the Federal Deposit Insurance Act (12 U.S.C. 1820). The FDIC is 
required to conduct a full-scope, on-site examination of every insured 
state nonmember bank at least once during each 12-month period.
    (b) 18-month rule for certain small institutions. The FDIC may 
conduct a full-scope, on-site examination at least once during each 18-
month period, rather than each 12-month period as provided in paragraph 
(a) of this section, if the following conditions are satisfied:
    (1) The insured state nonmember bank has total assets of $250 
million or less;
    (2) The insured state nonmember bank is well capitalized as defined 
in 12 CFR 325.103(b)(1);
    (3) At its most recent examination, the FDIC found the insured state 
nonmember bank to be well managed;
    (4) At its most recent examination, the FDIC determined that the 
insured state nonmember bank was in outstanding or good condition, that 
is, it received a composite rating of 1 or 2 under the Uniform Financial 
Institutions Rating System (Copies are available at the addresses 
specified in Sec. 309.4 of this chapter);
    (5) The insured state nonmember bank currently is not subject to a 
formal enforcement proceeding or order by the FDIC, OCC, or Federal 
Reserve Board; and
    (6) No person acquired control of the insured state nonmember bank 
during the preceding 12-month period in which a full-scope on-site 
examination would have been required but for this section.
    (c) Authority to conduct more frequent examinations. This section 
does not limit the authority of the FDIC to examine any insured state 
nonmember bank as frequently as the agency deems necessary.
[62 FR 6453, Feb. 12, 1997]



PART 338--FAIR HOUSING--Table of Contents




                         Subpart A--Advertising

Sec.
338.1  Purpose.
338.2  Definitions applicable to subpart A of this part.
338.3  Nondiscriminatory advertising.
338.4  Fair housing poster.

                        Subpart B--Recordkeeping

338.5  Purpose.
338.6  Definitions applicable to this subpart B.
338.7  Recordkeeping requirements.
338.8  Compilation of loan data in register format.
338.9  Mortgage lending of a controlled entity.

    Authority:  12 U.S.C. 1817, 1818, 1819, 1820(b), 2801 et seq.; 15 
U.S.C. 1691 et seq.; 42 U.S.C. 3605, 3608; 12 CFR parts 202, 203; 24 CFR 
part 110.



                         Subpart A--Advertising



Sec. 338.1  Purpose.

    The purpose of this subpart A is to prohibit insured state nonmember 
banks from engaging in discriminatory advertising with regard to 
residential real estate-related transactions. This subpart A also 
requires insured state nonmember banks to publicly display either the 
Equal Housing Lender poster set forth in Sec. 338.4(b) of the FDIC's 
regulations or the Equal Housing Opportunity poster prescribed by part 
110 of the regulations of the United States

[[Page 260]]

Department of Housing and Urban Development (24 CFR part 110). This 
subpart A enforces section 805 of title VIII of the Civil Rights Act of 
1968, 42 U.S.C. 3601-3619 (Fair Housing Act), as amended by the Fair 
Housing Amendments Act of 1988.
[62 FR 36204, July 7, 1997]



Sec. 338.2  Definitions applicable to subpart A of this part.

    For purposes of subpart A of this part:
    (a) Bank means an insured State nonmember bank as defined in section 
3 of the Federal Deposit Insurance Act.
    (b) Dwelling means any building, structure, or portion thereof which 
is occupied as, or designed or intended for occupancy as, a residence by 
one or more families, and any vacant land wihch is offered for sale or 
lease for the construction or location thereon of any such building, 
structure, portion thereof.
    (c) Handicap means, with respect to a person:
    (1) A physical or mental impairment which substantially limits one 
or more of such person's major life activities;
    (2) A record of having such an impairment; or
    (3) Being regarded as having such an impairment, but such term does 
not include current, illegal use of or addition to a controlled 
substance (as defined in section 102 of the Controlled Substances Act 
(21 U.S.C. 802)).
    (d) Familial status means one or more individuals (who have not 
attained the age of 18 years) being domiciled with:
    (1) A parent or another person having legal custody of such 
individual or individuals; or
    (2) The designee of such parent or other person having such custody, 
with the written persmission of such parent or other person.

The protections afforded against discrimination on the basis of familial 
status shall apply to any person who is pregnant or is in the process of 
securing legal custody of any indivdual who has not attained the age of 
18 years.
[56 FR 50039, Oct. 3, 1991]



Sec. 338.3  Nondiscriminatory advertising.

    (a) Any bank which directly or through third parties engages in any 
form of advertising of any loan for the purpose of purchasing, 
constructing, improving, repairing, or maintaining a dwelling or any 
loan secured by a dwelling shall prominently indicate in such 
advertisement, in a manner appropriate to the advertising medium and 
format utilized, that the bank makes such loans without regard to race, 
color, religion, national origin, sex, handicap, or familial status.
    (1) With respect to written and visual advertisements, this 
requirement may be satisfied by including in the advertisement a copy of 
the logotype with the Equal Housing Lender legend contained in the Equal 
Housing Lender poster prescribed in Sec. 338.4(b) of the FDIC's 
regulations or a copy of the logotype with the Equal Housing Opportunity 
legend contained in the Equal Housing Opportunity poster prescribed in 
Sec. 110.25(a) of the United States Department of Housing and Urban 
Development's regulations (24 CFR 110.25(a)).
    (2) With respect to oral advertisements, this requirement may be 
satisfied by a statement, in the spoken text of the advertisement, that 
the bank is an ``Equal Housing Lender'' or an ``Equal Opportunity 
Lender.''
    (3) When an oral advertisement is used in conjunction with a written 
or visual advertisement, the use of either of the methods specified in 
paragraphs (a) (1) and (2) of this section will satisfy the requirements 
of this paragraph (a).
    (b) No advertisement shall contain any words, symbols, models or 
other forms of communication which express, imply, or suggest a 
discriminatory preference or policy of exclusion in violation of the 
provisions of the Fair Housing Act or the Equal Credit Opportunity Act.
[43 FR 11563, Mar. 20, 1978, as amended at 54 FR 52930, Dec. 26, 1989. 
Redesignated and amended at 56 FR 50039, Oct. 3, 1991; 62 FR 36204, July 
7, 1997]



Sec. 338.4  Fair housing poster.

    (a) Each bank engaged in extending loans for the purpose of 
purchasing, constructing, improving, repairing, or maintaining a 
dwelling or any loan secured by a dwelling shall conspicuously

[[Page 261]]

display either the Equal Housing Lender poster set forth in paragraph 
(b) of this section or the Equal Housing Opportunity poster prescribed 
by Sec. 110.25(a) of the United States Department of Housing and Urban 
Development's regulations (24 CFR 110.25(a)), in a central location 
within the bank where deposits are received or where such loans are made 
in a manner clearly visible to the general public entering the area, 
where the poster is displayed.
    (b) The Equal Housing Lender Poster shall be at least 11 by 14 
inches in size and have the following text:

[[Page 262]]

[GRAPHIC] [TIFF OMITTED] TR19OC94.000


[[Page 263]]


    (c) The Equal Housing Lender Poster specified in this section was 
adopted under Sec. 110.25(b) of the United States Department of Housing 
and Urban Development's rules and regulations as an authorized 
substitution for the poster required in Sec. 110.25(a) of those rules 
and regulations.
[54 FR 52930, Dec. 26, 1989. Redesignated at 56 FR 50039, Oct. 3, 1991, 
as amended by 59 FR 52667, Oct. 19, 1994; 62 FR 36204, July 7, 1997]



                        Subpart B--Recordkeeping



Sec. 338.5  Purpose.

    The purpose of this subpart B is two-fold. First, this subpart B 
notifies all insured state nonmember banks of their duty to collect and 
retain certain information about a home loan applicant's personal 
characteristics in accordance with Regulation B of the Board of 
Governors of the Federal Reserve System (12 CFR part 202) in order to 
monitor an institution's compliance with the Equal Credit Opportunity 
Act of 1974 (15 U.S.C. 1691 et seq.). Second, this subpart B notifies 
certain insured state nonmember banks of their duty to maintain, update 
and report a register of home loan applications in accordance with 
Regulation C of the Board of Governors of the Federal Reserve System (12 
CFR part 203), which implements the Home Mortgage Disclosure Act (12 
U.S.C. 2801 et seq.).
[62 FR 36204, July 7, 1997]



Sec. 338.6  Definitions applicable to this subpart B.

    For purposes of this subpart B--
    (a) Bank means an insured state nonmember bank as defined in section 
3 of the Federal Deposit Insurance Act.
    (b) Controlled entity means a corporation, partnership, association, 
or other business entity with respect to which a bank possesses, 
directly or indirectly, the power to direct or cause the direction of 
management and policies, whether through the ownership of voting 
securities, by contract, or otherwise.
[62 FR 36204, July 7, 1997]



Sec. 338.7  Recordkeeping requirements.

    All banks that receive an application for credit primarily for the 
purchase or refinancing of a dwelling occupied or to be occupied by the 
applicant as a principal residence where the extension of credit will be 
secured by the dwelling shall request and retain the monitoring 
information required by Regulation B of the Board of Governors of the 
Federal Reserve System (12 CFR part 202).
[62 FR 36204, July 7, 1997]



Sec. 338.8  Compilation of loan data in register format.

    Banks and other lenders required to file a Home Mortgage Disclosure 
Act loan application register (LAR) with the Federal Deposit Insurance 
Corporation shall maintain, update and report such LAR in accordance 
with Regulation C of the Board of Governors of the Federal Reserve 
System (12 CFR part 203).
[62 FR 36204, July 7, 1997]



Sec. 338.9  Mortgage lending of a controlled entity.

    Any bank which refers any applicants to a controlled entity and 
which purchases any home purchase loans or home improvement loans as 
defined in Regulation C of the Board of Governors of the Federal Reserve 
Board (12 CFR part 203) originated by the controlled entity, as a 
condition to transacting any business with the controlled entity, shall 
require the controlled entity to enter into a written agreement with the 
bank. The written agreement shall provide that the entity shall:
    (a) Comply with the requirements of Secs. 338.3, 338.4 and 338.7, 
and, if otherwise subject to Regulation C of the Board of Governors of 
the Federal Reserve System (12 CFR part 203), Sec. 338.8;
    (b) Open its books and records to examination by the Federal Deposit 
Insurance Corporation; and
    (c) Comply with all instructions and orders issued by the Federal 
Deposit Insurance Corporation with respect to its home loan practices.
[49 FR 35764, Sept. 12, 1984. Redesignated and amended at 56 FR 50039, 
Oct. 3, 1991; 62 FR 36204, July 7, 1997]



PART 339--LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS--Table of Contents




Sec.
339.1  Authority, purpose, and scope.

[[Page 264]]

339.2  Definitions.
339.3  Requirement to purchase flood insurance where available.
339.4  Exemptions.
339.5  Escrow requirement.
339.6  Required use of standard flood hazard determination form.
339.7  Forced placement of flood insurance.
339.8  Determination fees.
339.9  Notice of special flood hazards and availability of Federal 
          disaster relief assistance.
339.10  Notice of servicer's identity.

 Appendix A to Part 339--Sample Form of Notice of Special Flood Hazards 
         and Availability of Federal Disaster Relief Assistance

    Authority:  42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

    Source:  61 FR 45706, Aug. 29, 1996, unless otherwise noted.



Sec. 339.1  Authority, purpose, and scope.

    (a) Authority. This part is issued pursuant to 42 U.S.C. 4012a, 
4104a, 4104b, 4106, and 4128.
    (b) Purpose. The purpose of this part is to implement the 
requirements of the National Flood Insurance Act of 1968 and the Flood 
Disaster Protection Act of 1973, as amended (42 U.S.C. 4001-4129).
    (c) Scope. This part, except for Secs. 339.6 and 339.8, applies to 
loans secured by buildings or mobile homes located or to be located in 
areas determined by the Director of the Federal Emergency Management 
Agency to have special flood hazards. Sections 339.6 and 339.8 apply to 
loans secured by buildings or mobile homes, regardless of location.



Sec. 339.2  Definitions.

    (a) Act means the National Flood Insurance Act of 1968, as amended 
(42 U.S.C. 4001-4129).
    (b) Bank means an insured state nonmember bank and an insured state 
branch of a foreign bank or any subsidiary of an insured state nonmember 
bank.
    (c) Building means a walled and roofed structure, other than a gas 
or liquid storage tank, that is principally above ground and affixed to 
a permanent site, and a walled and roofed structure while in the course 
of construction, alteration, or repair.
    (d) Community means a State or a political subdivision of a State 
that has zoning and building code jurisdiction over a particular area 
having special flood hazards.
    (e) Designated loan means a loan secured by a building or mobile 
home that is located or to be located in a special flood hazard area in 
which flood insurance is available under the Act.
    (f) Director of FEMA means the Director of the Federal Emergency 
Management Agency.
    (g) Mobile home means a structure, transportable in one or more 
sections, that is built on a permanent chassis and designed for use with 
or without a permanent foundation when attached to the required 
utilities. The term mobile home does not include a recreational vehicle. 
For purposes of this part, the term mobile home means a mobile home on a 
permanent foundation. The term mobile home includes a manufactured home 
as that term is used in the NFIP.
    (h) NFIP means the National Flood Insurance Program authorized under 
the Act.
    (i) Residential improved real estate means real estate upon which a 
home or other residential building is located or to be located.
    (j) Servicer means the person responsible for:
    (1) Receiving any scheduled, periodic payments from a borrower under 
the terms of a loan, including amounts for taxes, insurance premiums, 
and other charges with respect to the property securing the loan; and
    (2) Making payments of principal and interest and any other payments 
from the amounts received from the borrower as may be required under the 
terms of the loan.
    (k) Special flood hazard area means the land in the flood plain 
within a community having at least a one percent chance of flooding in 
any given year, as designated by the Director of FEMA.
    (l) Table funding means a settlement at which a loan is funded by a 
contemporaneous advance of loan funds and an assignment of the loan to 
the person advancing the funds.

[[Page 265]]



Sec. 339.3  Requirement to purchase flood insurance where available.

    (a) In general. A bank shall not make, increase, extend, or renew 
any designated loan unless the building or mobile home and any personal 
property securing the loan is covered by flood insurance for the term of 
the loan. The amount of insurance must be at least equal to the lesser 
of the outstanding principal balance of the designated loan or the 
maximum limit of coverage available for the particular type of property 
under the Act. Flood insurance coverage under the Act is limited to the 
overall value of the property securing the designated loan minus the 
value of the land on which the property is located.
    (b) Table funded loans. A bank that acquires a loan from a mortgage 
broker or other entity through table funding shall be considered to be 
making a loan for the purposes of this part.



Sec. 339.4  Exemptions.

    The flood insurance requirement prescribed by Sec. 339.3 does not 
apply with respect to:
    (a) Any State-owned property covered under a policy of self-
insurance satisfactory to the Director of FEMA, who publishes and 
periodically revises the list of States falling within this exemption; 
or
    (b) Property securing any loan with an original principal balance of 
$5,000 or less and a repayment term of one year or less.



Sec. 339.5  Escrow requirement.

    If a bank requires the escrow of taxes, insurance premiums, fees, or 
any other charges for a loan secured by residential improved real estate 
or a mobile home that is made, increased, extended, or renewed on or 
after October 1, 1996, the bank shall also require the escrow of all 
premiums and fees for any flood insurance required under Sec. 339.3. The 
bank, or a servicer acting on behalf of the bank, shall deposit the 
flood insurance premiums on behalf of the borrower in an escrow account. 
This escrow account will be subject to escrow requirements adopted 
pursuant to section 10 of the Real Estate Settlement Procedures Act of 
1974 (12 U.S.C. 2609) (RESPA), which generally limits the amount that 
may be maintained in escrow accounts for certain types of loans and 
requires escrow account statements for those accounts, only if the loan 
is otherwise subject to RESPA. Following receipt of a notice from the 
Director of FEMA or other provider of flood insurance that premiums are 
due, the bank, or a servicer acting on behalf of the bank, shall pay the 
amount owed to the insurance provider from the escrow account by the 
date when such premiums are due.



Sec. 339.6  Required use of standard flood hazard determination form.

    (a) Use of form. A bank shall use the standard flood hazard 
determination form developed by the Director of FEMA (as set forth in 
Appendix A of 44 CFR part 65) when determining whether the building or 
mobile home offered as collateral security for a loan is or will be 
located in a special flood hazard area in which flood insurance is 
available under the Act. The standard flood hazard determination form 
may be used in a printed, computerized, or electronic manner.
    (b) Retention of form. A bank shall retain a copy of the completed 
standard flood hazard determination form, in either hard copy or 
electronic form, for the period of time the bank owns the loan.



Sec. 339.7  Forced placement of flood insurance.

    If a bank, or a servicer acting on behalf of the bank, determines, 
at any time during the term of a designated loan, that the building or 
mobile home and any personal property securing the designated loan is 
not covered by flood insurance or is covered by flood insurance in an 
amount less than the amount required under Sec. 339.3, then the bank or 
its servicer shall notify the borrower that the borrower should obtain 
flood insurance, at the borrower's expense, in an amount at least equal 
to the amount required under Sec. 339.3, for the remaining term of the 
loan. If the borrower fails to obtain flood insurance within 45 days 
after notification, then the bank or its servicer shall purchase 
insurance on the borrower's behalf. The bank or its servicer may charge 
the borrower for the cost of premiums and

[[Page 266]]

fees incurred in purchasing the insurance.



Sec. 339.8  Determination fees.

    (a) General. Notwithstanding any Federal or State law other than the 
Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4001-4129), 
any bank, or a servicer acting on behalf of the bank, may charge a 
reasonable fee for determining whether the building or mobile home 
securing the loan is located or will be located in a special flood 
hazard area. A determination fee may also include, but is not limited 
to, a fee for life-of-loan monitoring.
    (b) Borrower fee. The determination fee authorized by paragraph (a) 
of this section may be charged to the borrower if the determination:
    (1) Is made in connection with a making, increasing, extending, or 
renewing of the loan that is initiated by the borrower;
    (2) Reflects the Director of FEMA's revision or updating of 
floodplain areas or flood-risk zones;
    (3) Reflects the Director of FEMA's publication of a notice or 
compendium that:
    (i) Affects the area in which the building or mobile home securing 
the loan is located; or
    (ii) By determination of the Director of FEMA, may reasonably 
require a determination whether the building or mobile home securing the 
loan is located in a special flood hazard area; or
    (4) Results in the purchase of flood insurance coverage by the 
lender or its servicer on behalf of the borrower under Sec. 339.7.
    (c) Purchaser or transferee fee. The determination fee authorized by 
paragraph (a) of this section may be charged to the purchaser or 
transferee of a loan in the case of the sale or transfer of the loan.



Sec. 339.9  Notice of special flood hazards and availability of Federal disaster relief assistance.

    (a) Notice requirement. When a bank makes, increases, extends, or 
renews a loan secured by a building or a mobile home located or to be 
located in a special flood hazard area, the bank shall mail or deliver a 
written notice to the borrower and to the servicer in all cases whether 
or not flood insurance is available under the Act for the collateral 
securing the loan.
    (b) Contents of notice. The written notice must include the 
following information:
    (1) A warning, in a form approved by the Director of FEMA, that the 
building or the mobile home is or will be located in a special flood 
hazard area;
    (2) A description of the flood insurance purchase requirements set 
forth in section 102(b) of the Flood Disaster Protection Act of 1973, as 
amended (42 U.S.C. 4012a(b));
    (3) A statement, where applicable, that flood insurance coverage is 
available under the NFIP and may also be available from private 
insurers; and
    (4) A statement whether Federal disaster relief assistance may be 
available in the event of damage to the building or mobile home caused 
by flooding in a Federally-declared disaster.
    (c) Timing of notice. The bank shall provide the notice required by 
paragraph (a) of this section to the borrower within a reasonable time 
before the completion of the transaction, and to the servicer as 
promptly as practicable after the bank provides notice to the borrower 
and in any event no later than the time the bank provides other similar 
notices to the servicer concerning hazard insurance and taxes. Notice to 
the servicer may be made electronically or may take the form of a copy 
of the notice to the borrower.
    (d) Record of receipt. The bank shall retain a record of the receipt 
of the notices by the borrower and the servicer for the period of time 
the bank owns the loan.
    (e) Alternate method of notice. Instead of providing the notice to 
the borrower required by paragraph (a) of this section, a bank may 
obtain satisfactory written assurance from a seller or lessor that, 
within a reasonable time before the completion of the sale or lease 
transaction, the seller or lessor has provided such notice to the 
purchaser or lessee. The bank shall retain a record of the written 
assurance from the seller or lessor for the period of time the bank owns 
the loan.
    (f) Use of prescribed form of notice. A bank will be considered to 
be in compliance with the requirement for notice

[[Page 267]]

to the borrower of this section by providing written notice to the 
borrower containing the language presented in appendix A to this part 
within a reasonable time before the completion of the transaction. The 
notice presented in appendix A to this part satisfies the borrower 
notice requirements of the Act.



Sec. 339.10  Notice of servicer's identity.

    (a) Notice requirement. When a bank makes, increases, extends, 
renews, sells, or transfers a loan secured by a building or mobile home 
located or to be located in a special flood hazard area, the bank shall 
notify the Director of FEMA (or the Director of FEMA's designee) in 
writing of the identity of the servicer of the loan. The Director of 
FEMA has designated the insurance provider to receive the bank's notice 
of the servicer's identity. This notice may be provided electronically 
if electronic transmission is satisfactory to the Director of FEMA's 
designee.
    (b) Transfer of servicing rights. The bank shall notify the Director 
of FEMA (or the Director of FEMA's designee) of any change in the 
servicer of a loan described in paragraph (a) of this section within 60 
days after the effective date of the change. This notice may be provided 
electronically if electronic transmission is satisfactory to the 
Director of FEMA's designee. Upon any change in the servicing of a loan 
described in paragraph (a) of this section, the duty to provide notice 
under this paragraph (b) shall transfer to the transferee servicer.

 Appendix A to Part 339--Sample Form of Notice of Special Flood Hazards 
         and Availability of Federal Disaster Relief Assistance

    We are giving you this notice to inform you that:
    The building or mobile home securing the loan for which you have 
applied is or will be located in an area with special flood hazards.
    The area has been identified by the Director of the Federal 
Emergency Management Agency (FEMA) as a special flood hazard area using 
FEMA's Flood Insurance Rate Map or the Flood Hazard Boundary Map for the 
following community: ________________. This area has at least a one 
percent (1%) chance of a flood equal to or exceeding the base flood 
elevation (a 100-year flood) in any given year. During the life of a 30-
year mortgage loan, the risk of a 100-year flood in a special flood 
hazard area is 26 percent (26%).
    Federal law allows a lender and borrower jointly to request the 
Director of FEMA to review the determination of whether the property 
securing the loan is located in a special flood hazard area. If you 
would like to make such a request, please contact us for further 
information.
    ______ The community in which the property securing the loan is 
located participates in the National Flood Insurance Program (NFIP). 
Federal law will not allow us to make you the loan that you have applied 
for if you do not purchase flood insurance. The flood insurance must be 
maintained for the life of the loan. If you fail to purchase or renew 
flood insurance on the property, Federal law authorizes and requires us 
to purchase the flood insurance for you at your expense.
     Flood insurance coverage under the NFIP may be purchased 
through an insurance agent who will obtain the policy either directly 
through the NFIP or through an insurance company that participates in 
the NFIP. Flood insurance also may be available from private insurers 
that do not participate in the NFIP.
     At a minimum, flood insurance purchased must cover the 
lesser of:
    (1) the outstanding principal balance of the loan; or
    (2) the maximum amount of coverage allowed for the type of property 
under the NFIP.
    Flood insurance coverage under the NFIP is limited to the overall 
value of the property securing the loan minus the value of the land on 
which the property is located.
     Federal disaster relief assistance (usually in the form of 
a low-interest loan) may be available for damages incurred in excess of 
your flood insurance if your community's participation in the NFIP is in 
accordance with NFIP requirements.
    ______ Flood insurance coverage under the NFIP is not available for 
the property securing the loan because the community in which the 
property is located does not participate in the NFIP. In addition, if 
the non-participating community has been identified for at least one 
year as containing a special flood hazard area, properties located in 
the community will not be eligible for Federal disaster relief 
assistance in the event of a Federally-declared flood disaster.



PART 340  [RESERVED]--Table of Contents






PART 341--REGISTRATION OF SECURITIES TRANSFER AGENTS--Table of Contents




Sec.
341.1  Scope.

[[Page 268]]

341.2  Definitions.
341.3  Registration as securities transfer agent.
341.4  Amendments to registration.
341.5  Withdrawal from registration.
341.6  Reports.

    Authority:  Secs. 2, 3, 17, 17A and 23(a), Securities Exchange Act 
of 1934, as amended (15 U.S.C. 78b, 78c, 78q, 78q-1 and 78w(a)).

    Source:  47 FR 38106, Aug. 30, 1982, unless otherwise noted.



Sec. 341.1  Scope.

    This part is issued by the Federal Deposit Insurance Corporation 
(the FDIC) under sections 2, 3(a)(34)(B), 17, 17A and 23(a) of the 
Securities Exchange Act of 1934 (the Act), as amended (15 U.S.C. 78b, 
78c(a)(34)(B), 78q, 78q-1 and 78w(a)) and applies to all insured 
nonmember banks, or subsidiaries of such banks, that act as transfer 
agents for securities registered under section 12 of the Act (15 U.S.C. 
78l), or for securities exempt from registration under subsections 
(g)(2)(B) or (g)(2)(G) of section 12 (15 U.S.C. 781(g)(2)(B) and (G)) 
(securities of investment companies, including mutual funds, and 
insurance companies). Such securities are qualifying securities for 
purposes of this part.



Sec. 341.2  Definitions.

    For the purpose of this part, including all forms and instructions 
promulgated for use in connection herewith, unless the context otherwise 
requires:
    (a) The term transfer agent means any person who engages on behalf 
of an issuer of qualifying securities or on behalf of itself as an 
issuer of qualifying securities in: (1) Countersigning such securities 
upon issuance;
    (2) Monitoring the issuance of such securities with a view to 
preventing unauthorized issuance, a function commonly performed by a 
person called a registrar;
    (3) Registering the transfer of such securities;
    (4) Exchanging or converting such securities; or
    (5) Transferring record ownership of securities by bookkeeping entry 
without physical issuance of such securities certificates. The term 
transfer agent includes any person who performs these functions as a co-
transfer agent with respect to equity or debt issues, and any person who 
performs these functions as registrar or co-registrar with respect to 
debt issued by corporations.

    Note: The following examples are illustrative of the kinds of 
activities engaged in by transfer agents under this part.

    1. A transfer agent of stock or shares in a mutual fund maintains 
the records of shareholders and transfers stock from one shareholder to 
another by cancellation of the surrendered certificates and issuance of 
new certificates in the name of the new shareholder. A co-transfer agent 
also performs these functions.
    2. A registrar of stock or shares in a mutual fund monitors the 
issuance of such securities to prevent over-issuance of shares, affixing 
its signature of each stock certificate issued to signify its authorized 
issuance. A co-registrar also performs these functions.
    3. A registrar of corporate debt securities maintains the records of 
ownership of registered bonds; makes changes in such records; issues, 
transfers, and exchanges such certificates; and monitors the securities 
to prevent over-issuance of certificates. A co-registrar also performs 
these functions.
    (b) The term Act means the Securities Exchange Act of 1934.
    (c) The acronym ARA means the appropriate regulatory agency, as 
defined in section 3(a)(34)(B) of the Act.
    (d) The phrase Federal bank regulators means the Office of the 
Comptroller of the Currency, the Board of Governors of the Federal 
Reserve System, and the Federal Deposit Insurance Corporation.
    (e) The term Form TA-1 means the form and any attachments to that 
form, whether filed as a registration or an amendment to a registration.
    (f) The term registrant means the entity on whose behalf Form TA-1 
is filed.
    (g) The acronym SEC means the Securities and Exchange Commission.
    (h) The term insured nonmember bank means a bank whose Deposits are 
insured by the Federal Deposit Insurance Corporation and that is not a 
member of the Federal Reserve System.
    (i) The term qualifying securities means:
    (1) Securities registered on a national securities exchange;

[[Page 269]]

    (2) Securities issued by a company or bank with 500 or more 
shareholders and $1 million or more in total assets, except for 
securities exempted from registration with the SEC by section 12(g)(2) 
(C, D, E, F and H) of the Act.



Sec. 341.3  Registration as securities transfer agent.

    (a) Requirement for registration. Any insured nonmember bank which 
performs any of the functions of a transfer agent as described in 
Sec. 341.2(a) with respect to qualifying securities shall register with 
the FDIC in the manner indicated in this section.
    (b) Application to register as transfer agent. An application for 
registration under section 17A(c) of the Act, of a transfer agent for 
which the FDIC is the appropriate regulatory agency, as defined in 
section 3(a)(34)(B)(iii) of the Act, shall be filed with the FDIC at its 
Washington, DC headquarters on Form TA-1, in accordance with the 
instructions contained therein.
    (c) Effective date of registration. Registration shall become 
effective 30 days after the date an application on Form TA-1 is filed 
unless the FDIC accelerates, denies, or postpones such registration in 
accordance with section 17A(c) of the Act. The effective date of such 
registration may be postponed by order for a period not to exceed 15 
days. Postponement of registration for more than 15 days shall be after 
notice and opportunity for hearing. Form TA-1 is available upon request 
from the Review Unit, Division of Supervision, FDIC, Washington, DC 
20429.
[47 FR 38106, Aug. 30, 1982, as amended at 60 FR 31384, June 15, 1995]



Sec. 341.4  Amendments to registration.

    (a) Within 60 calendar days following the date which any information 
reported on Form TA-1 becomes inaccurate, misleading, or incomplete, the 
registrant shall file an amendment on Form TA-1 correcting the 
inaccurate, misleading, or incomplete information.
    (b) The filing of an amendment to an application for registration as 
a transfer agent under Sec. 341.3, which registration has not become 
effective, shall postpone the effective date of the registration for 30 
days following the date on which the amendment is filed unless the FDIC 
accelerates, denies, or postpones the registration in accordance with 
section 17A(c) of the Act.
[47 FR 38106, Aug. 30, 1982, as amended at 52 FR 1182, Jan. 12, 1987]



Sec. 341.5  Withdrawal from registration.

    (a) Notice of withdrawal from registration. Any transfer agent 
registered under this part that ceases to engage in the functions of a 
transfer agent as defined in Sec. 341.2(a) shall file a written notice 
of withdrawal from registration with the FDIC. A registered transfer 
agent that ceases to engage in one or more of the functions of transfer 
agent as defined in Sec. 341.2(a), but continues to engage in another 
such function, shall not withdraw from registration.
    (b) A notice of withdrawal shall be filed with the FDIC at its 
Washington, DC headquarters. Deregistration shall be effective upon 
receipt of notice of withdrawal by the FDIC. A Request for 
Deregistration form is available from the Review Unit, Division of 
Supervision, FDIC, Washington, DC 20429.
    (c) If the FDIC finds that any registered transfer agent for which 
it is the ARA, is no longer in existence or has ceased to do business as 
a transfer agent, FDIC shall cancel or deny the registration by order of 
the Board of Directors.
    (d) Registration of a transfer agent with another ARA shall cancel 
registration of the transfer agent with FDIC.
[47 FR 38106, Aug. 30, 1982, as amended at 60 FR 31384, June 15, 1995]



Sec. 341.6  Reports.

    Every registration or amendment filed under this section shall 
constitute a report or application within the meaning or sections 17, 
17A(c), and 32(a) of the Act.



PART 342  [RESERVED]--Table of Contents






PART 343--INSURED STATE NONMEMBER BANKS WHICH ARE MUNICIPAL SECURITIES DEALERS--Table of Contents




Sec.
343.1   Scope of part.
343.2   Definitions.

[[Page 270]]

343.3   Filing of Form MSD-4, Amending Statements, and Form MSD-5.

    Authority:  15 U.S.C. 78o-4(c)(5), 78q, and 78w; 12 U.S.C. 1811 et 
seq.



Sec. 343.1  Scope of part.

    (a) This part is issued by the Federal Deposit Insurance Corporation 
(the Corporation) pursuant to those provisions of the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) which provide for the 
regulation of bank municipal securities dealers and their activities.
    (b) This part shall apply to all State banks insured by the Federal 
Deposit Insurance Corporation and not a member of the Federal Reserve 
System, or separately identifiable departments or divisions of such 
banks, which act as municipal securities dealers.
[42 FR 40891, Aug. 12, 1977]



Sec. 343.2  Definitions.

    For purposes of this paragraph, the terms herein have the meanings 
given them in section 3(a) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c (a)) and the rules of the Municipal Securities Rulemaking 
Board. The term Act shall mean the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.).
[42 FR 40891, Aug. 12, 1977]



Sec. 343.3  Filing of Form MSD-4, Amending Statements, and Form MSD-5.

    (a) On and after September 15, 1977, an insured State nonmember 
bank, or a subsidiary or a department or a division thereof, which is a 
municipal securities dealer shall not permit a person to be associated 
with it as a municipal securities principal or municipal securities 
representative unless it has filed with the Corporation an original and 
two copies of Form MSD-4, ``Uniform Application for Municipal Securities 
Principal or Municipal Securities Representative Associated with a Bank 
Municipal Securities Dealer'', completed in accordance with the 
instructions contained therein, for that person. Form MSD-4 is 
prescribed by the Corporation for purposes of paragraph (b) of Municipal 
Securities Rulemaking Board Rule G-7, ``Information Concerning 
Associated Persons''.
    (b) Whenever a bank municipal securities dealer receives a statement 
pursuant to paragraph (c) of Municipal Securities Rulemaking Board Rule 
G-7, ``Information Concerning Associated Persons'' (amending statement), 
from a person for whom it has filed a Form MSD-4 with the Corporation 
pursuant to paragraph (a) of this section, such dealer shall, within ten 
days thereafter, file three copies of the amending statement with the 
Corporation accompanied by an original and two copies of a transmittal 
letter which includes the name of the dealer and a reference to the 
material transmitted, identifying the person involved, and is signed by 
a municipal securities principal associated with the dealer.
    (c) Within thirty days after the termination of the association of a 
municipal securities principal or municipal securities representative 
with a bank municipal securites dealer which has filed a Form MSD-4 with 
the Corporation for that person pursuant to paragraph (a) of this 
section, such dealer shall file an orignial and two copies of a 
notification of termination with the Corporation on Form MSD-5, 
``Uniform Termination Notice for Municipal Securities Principal or 
Municipal Securities Representative Associated with a Bank Municipal 
Securities Dealer'', completed in accordance with the instructions 
contained therein.
    (d) A bank municipal securities dealer which files a Form MSD-4, 
Form MSD-5, or an amending statement with the Corporation under this 
part shall retain for its own records a copy of each such Form MSD-4, 
Form MSD-5, or amending statement for at least three years after 
termination of the associated person with respect to whom the filing was 
made.
    (e) Forms MSD-4, Forms MSD-5 and amending statements are to be filed 
with Director, Division of Supervision, Federal Deposit Insurance 
Corporation, Washington, DC 20429. The date that the Corporation 
receives a Form MSD-4, Form MSD-5, or amending statement shall be the 
date of filing. A Form MSD-4, Form MSD-5, or amending statement which is 
not prepared and executed in accordance with the applicable requirements 
may be returned as unacceptable for filing. Acceptance for filing shall 
not constitute any finding that a Form MSD-4, Form MSD-5 or

[[Page 271]]

amending statement has been completed in accordance with the applicable 
requirements or that any information contained therein is true, current, 
complete or not misleading. Every Form MSD-4, Form MSD-5, or amending 
statement filed with the Corporation under this part shall constitute a 
filing with the Securities and Exchange Commission for purposes of 
section 17(c)(1) of the Act (15 U.S.C. 78q(c)(1)) and a report, 
application, or document within the meaning of section 32(a) of the Act 
(15 U.S.C. 78ff(a)). Forms MSD-4 and MSD-5 can be obtained from the FDIC 
regional office for the area in which the bank is located.
[42 FR 40891, Aug. 12, 1977, as amended at 45 FR 37179, June 2, 1980; 60 
FR 31384, June 15, 1995]



PART 344--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES TRANSACTIONS--Table of Contents




Sec.
344.1  Purpose and scope.
344.2  Exceptions.
344.3  Definitions.
344.4  Recordkeeping.
344.5  Content and time of notification.
344.6  Notification by agreement; alternative forms and times of 
          notification.
344.7  Settlement of securities transactions.
344.8  Securities trading policies and procedures.
344.9  Personal securities trading reporting by bank officers and 
          employees.
344.10  Waivers.,

    Authority:  12 U.S.C. 1817, 1818 and 1819.

    Source:  62 FR 9919, Mar. 5, 1997, unless otherwise noted.



Sec. 344.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to ensure that purchasers 
of securities in transactions effected by a state nonmember insured bank 
(except a District bank) or a foreign bank having an insured branch are 
provided adequate information regarding transactions. This part is also 
designed to ensure that banks subject to this part maintain adequate 
records and controls with respect to the securities transactions they 
effect.
    (b) Scope; general. Any security transaction effected for a customer 
by a bank is subject to this part unless excepted by Sec. 344.2. A bank 
effecting transactions in government securities is subject to the 
notification, recordkeeping, and policies and procedures requirements of 
this part. This part also applies to municipal securities transactions 
by a bank that is not registered as a ``municipal securities dealer'' 
with the Securities and Exchange Commission. See 15 U.S.C. 78c(a)(30) 
and 78o-4.



Sec. 344.2  Exceptions.

    (a) A bank effecting securities transactions for customers is not 
subject to all or part of this part 344 to the extent that they qualify 
for one or more of the following exceptions:
    (1) Small number of transactions. The requirements of Secs. 344.4(a) 
(2) through (4) and 344.8(a) (1) through (3) do not apply to a bank 
effecting an average of fewer than 200 securities transactions per year 
for customers over the prior three calendar year period. The calculation 
of this average does not include transactions in government securities.
    (2) Government securities. The recordkeeping requirements of 
Sec. 344.4 do not apply to banks effecting fewer than 500 government 
securities brokerage transactions per year. This exemption does not 
apply to government securities dealer transactions by banks.
    (3) Municipal securities. This part does not apply to transactions 
in municipal securities effected by a bank registered with the 
Securities and Exchange Commission as a ``municipal securities dealer'' 
as defined in title 15 U.S.C. 78c(a)(30). See 15 U.S.C. 78o-4.
    (4) Foreign branches. Activities of foreign branches of a bank shall 
not be subject to the requirements of this part.
    (5) Transactions effected by registered broker/dealers. (i) This 
part does not apply to securities transactions effected for a bank 
customer by a registered broker/dealer if:
    (A) The broker/dealer is fully disclosed to the bank customer; and
    (B) The bank customer has a direct contractual agreement with the 
broker/dealer.
    (ii) This exemption extends to bank arrangements with broker/dealers 
which involve bank employees when

[[Page 272]]

acting as employees of, and subject to the supervision of, the 
registered broker/dealer when soliciting, recommending, or effecting 
securities transactions.
    (b) Safe and sound operations. Notwithstanding this section, every 
bank effecting securities transactions for customers shall maintain, 
directly or indirectly, effective systems of records and controls 
regarding their customer securities transactions to ensure safe and 
sound operations. The records and systems maintained must clearly and 
accurately reflect the information required under this part and provide 
an adequate basis for an audit.



Sec. 344.3  Definitions.

    (a) Asset-backed security means a security that is serviced 
primarily by the cash flows of a discrete pool of receivables or other 
financial assets, either fixed or revolving, that by their terms convert 
into cash within a finite time period plus any rights or other assets 
designed to assure the servicing or timely distribution of proceeds to 
the security holders.
    (b) Bank means a state nonmember insured bank (except a District 
bank) or a foreign bank having an insured branch.
    (c) Cash management sweep account means a prearranged, automatic 
transfer of funds above a certain dollar level from a deposit account to 
purchase a security or securities, or any prearranged, automatic 
redemption or sale of a security or securities when a deposit account 
drops below a certain level with the proceeds being transferred into a 
deposit account.
    (d) Collective investment fund means funds held by a bank as 
fiduciary and, consistent with local law, invested collectively:
    (1) In a common trust fund maintained by such bank exclusively for 
the collective investment and reinvestment of monies contributed thereto 
by the bank in its capacity as trustee, executor, administrator, 
guardian, or custodian under the Uniform Gifts to Minors Act; or
    (2) In a fund consisting solely of assets of retirement, pension, 
profit sharing, stock bonus or similar trusts which are exempt from 
Federal income taxation under the Internal Revenue Code (26 U.S.C.).
    (e) Completion of the transaction means:
    (1) For purchase transactions, the time when the customer pays the 
bank any part of the purchase price (or the time when the bank makes the 
book-entry for any part of the purchase price, if applicable), however, 
if the customer pays for the security prior to the time payment is 
requested or becomes due, then the transaction shall be completed when 
the bank transfers the security into the account of the customer; and
    (2) For sale transactions, the time when the bank transfers the 
security out of the account of the customer or, if the security is not 
in the bank's custody, then the time when the security is delivered to 
the bank, however, if the customer delivers the security to the bank 
prior to the time delivery is requested or becomes due then the 
transaction shall be completed when the bank makes payment into the 
account of the customer.
    (f) Crossing of buy and sell orders means a security transaction in 
which the same bank acts as agent for both the buyer and the seller.
    (g) Customer means any person or account, including any agency, 
trust, estate, guardianship, or other fiduciary account for which a bank 
effects or participates in effecting the purchase or sale of securities, 
but does not include a broker, dealer, bank acting as a broker or a 
dealer, issuer of the securities that are the subject of the transaction 
or a person or account having a direct, contractual agreement with a 
fully disclosed broker/dealer.
    (h) Debt security means any security, such as a bond, debenture, 
note, or any other similar instrument that evidences a liability of the 
issuer (including any security of this type that is convertible into 
stock or a similar security) and fractional or participation interests 
in one or more of any of the foregoing; provided, however, that 
securities issued by an investment company registered under the 
Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., shall not be 
included in this definition.
    (i) Government security means:

[[Page 273]]

    (1) A security that is a direct obligation of, or obligation 
guaranteed as to principal and interest by, the United States;
    (2) A security that is issued or guaranteed by a corporation in 
which the United States has a direct or indirect interest and which is 
designated by the Secretary of the Treasury for exemption as necessary 
or appropriate in the public interest or for the protection of 
investors;
    (3) A security issued or guaranteed as to principal and interest by 
any corporation whose securities are designated, by statute specifically 
naming the corporation, to constitute exempt securities within the 
meaning of the laws administered by the Securities and Exchange 
Commission; or
    (4) Any put, call, straddle, option, or privilege on a security 
described in paragraph (i) (1), (2), or (3) of this section other than a 
put, call, straddle, option, or privilege that is traded on one or more 
national securities exchanges, or for which quotations are disseminated 
through an automated quotation system operated by a registered 
securities association.
    (j) Investment discretion means that, with respect to an account, a 
bank directly or indirectly:
    (1) Is authorized to determine what securities or other property 
shall be purchased or sold by or for the account; or
    (2) Makes decisions as to what securities or other property shall be 
purchased or sold by or for the account even though some other person 
may have responsibility for these investment decisions.
    (k) Municipal security means a security which is a direct obligation 
of, or an obligation guaranteed as to principal or interest by, a State 
or any political subdivision, or any agency or instrumentality of a 
State or any political subdivision, or any municipal corporate 
instrumentality of one or more States or any security which is an 
industrial development bond (as defined in 26 U.S.C. 103(c)(2)) the 
interest on which is excludable from gross income under 26 U.S.C. 
103(a)(1) if, by reason of the application of paragraph (4) or (6) of 26 
U.S.C. 103(c) (determined as if paragraphs (4)(A), (5) and (7) were not 
included in 26 U.S.C. 103(c), paragraph (1) of 26 U.S.C. 103(c) does not 
apply to such security.
    (l) Periodic plan means any written authorization for a bank to act 
as agent to purchase or sell for a customer a specific security or 
securities, in a specific amount (calculated in security units or 
dollars) or to the extent of dividends and funds available, at specific 
time intervals, and setting forth the commission or charges to be paid 
by the customer or the manner of calculating them. Periodic plans 
include dividend reinvestment plans, automatic investment plans, and 
employee stock purchase plans.
    (m) Security means any note, stock, treasury stock, bond, debenture, 
certificate of interest or participation in any profit-sharing agreement 
or in any oil, gas, or other mineral royalty or lease, any collateral-
trust certificate, preorganization certificate or subscription, 
transferable share, investment contract, voting-trust certificate, and 
any put, call, straddle, option, or privilege on any security or group 
or index of securities (including any interest therein or based on the 
value thereof), or, in general, any instrument commonly known as a 
``security''; or any certificate of interest or participation in, 
temporary or interim certificate for, receipt for, or warrant or right 
to subscribe to or purchase, any of the foregoing. The term security 
does not include:
    (1) A deposit or share account in a federally or state insured 
depository institution;
    (2) A loan participation;
    (3) A letter of credit or other form of bank indebtedness incurred 
in the ordinary course of business;
    (4) Currency;
    (5) Any note, draft, bill of exchange, or bankers acceptance which 
has a maturity at the time of issuance of not exceeding nine months, 
exclusive of days of grace, or any renewal thereof the maturity of which 
is likewise limited;
    (6) Units of a collective investment fund;
    (7) Interests in a variable amount (master) note of a borrower of 
prime credit; or
    (8) U.S. Savings Bonds.

[[Page 274]]



Sec. 344.4  Recordkeeping.

    (a) General rule. A bank effecting securities transactions for 
customers shall maintain the following records for at least three years:
    (1) Chronological records. An itemized daily record of each purchase 
and sale of securities maintained in chronological order, and including:
    (i) Account or customer name for which each transaction was 
effected;
    (ii) Description of the securities;
    (iii) Unit and aggregate purchase or sale price;
    (iv) Trade date; and
    (v) Name or other designation of the broker/dealer or other person 
from whom the securities were purchased or to whom the securities were 
sold;
    (2) Account records. Account records for each customer, reflecting:
    (i) Purchases and sales of securities;
    (ii) Receipts and deliveries of securities;
    (iii) Receipts and disbursements of cash; and
    (iv) Other debits and credits pertaining to transactions in 
securities;
    (3) A separate memorandum (order ticket) of each order to purchase 
or sell securities (whether executed or canceled), which shall include:
    (i) The accounts for which the transaction was effected;
    (ii) Whether the transaction was a market order, limit order, or 
subject to special instructions;
    (iii) The time the order was received by the trader or other bank 
employee responsible for effecting the transaction;
    (iv) The time the order was placed with the broker/dealer, or if 
there was no broker/dealer, time the order was executed or canceled;
    (v) The price at which the order was executed; and
    (vi) The broker/dealer utilized;
    (4) Record of broker/dealers. A record of all broker/dealers 
selected by the bank to effect securities transactions and the amount of 
commissions paid or allocated to each broker during the calendar year; 
and
    (5) Notifications. A copy of the written notification required by 
Secs. 344.5 and 344.6.
    (b) Manner of maintenance. Records may be maintained in whatever 
manner, form or format a bank deems appropriate, provided however, the 
records required by this section must clearly and accurately reflect the 
information required and provide an adequate basis for the audit of the 
information. Records may be maintained in hard copy, automated or 
electronic form provided the records are easily retrievable, readily 
available for inspection, and capable of being reproduced in a hard 
copy. A bank may contract with third party service providers, including 
broker/dealers, to maintain records required under this part.



Sec. 344.5  Content and time of notification.

    Every bank effecting a securities transaction for a customer shall 
give or send, by mail, facsimile or other means of electronic 
transmission, to the customer at or before completion of the transaction 
one of the types of written notification identified below:
    (a) Broker/dealer's confirmations. (1) A copy of the confirmation of 
a broker/dealer relating to the securities transaction. A bank may 
either have the broker/dealer send the confirmation directly to the 
bank's customer or send a copy of the broker/dealer's confirmation to 
the customer upon receipt of the confirmation by the bank. If a bank 
chooses to send a copy of the broker/dealer's confirmation, it must be 
sent within one business day from the bank's receipt of the broker/
dealer's confirmation; and
    (2) If the bank is to receive remuneration from the customer or any 
other source in connection with the transaction, a statement of the 
source and amount of any remuneration to be received if such would be 
required under paragraph (b)(6) of this section; or
    (b) Written notification. A written notification disclosing:
    (1) Name of the bank;
    (2) Name of the customer;
    (3) Whether the bank is acting as agent for such customer, as agent 
for both such customer and some other person, as principal for its own 
account, or in any other capacity;
    (4) The date and time of execution, or the fact that the time of 
execution will be furnished within a reasonable time

[[Page 275]]

upon written request of the customer, and the identity, price, and 
number of shares or units (or principal amount in the case of debt 
securities) of the security purchased or sold by the customer;
    (5) The amount of any remuneration received or to be received, 
directly or indirectly, by any broker/dealer from such customer in 
connection with the transaction;
    (6)(i) The amount of any remuneration received or to be received by 
the bank from the customer, and the source and amount of any other 
remuneration received or to be received by the bank in connection with 
the transaction, unless:
    (A) Remuneration is determined pursuant to a prior written agreement 
between the bank and the customer; or
    (B) In the case of government securities and municipal securities, 
the bank received the remuneration in other than an agency transaction; 
or
    (C) In the case of open end investment company securities, the bank 
has provided the customer with a current prospectus which discloses all 
current fees, loads and expenses at or before completion of the 
transaction;
    (ii) If the bank elects not to disclose the source and amount of 
remuneration it has or will receive from a party other than the customer 
pursuant to paragraph (b)(6)(i) (A), (B), or (C) of this section, the 
written notification must disclose whether the bank has received or will 
receive remuneration from a party other than the customer, and that the 
bank will furnish within a reasonable time the source and amount of this 
remuneration upon written request of the customer. This election is not 
available, however, if, with respect to a purchase, the bank was 
participating in a distribution of that security; or, with respect to a 
sale, the bank was participating in a tender offer for that security;
    (7) Name of the broker/dealer utilized; or where there is no broker/
dealer, the name of the person from whom the security was purchased or 
to whom the security was sold, or a statement that the bank will furnish 
this information within a reasonable time upon written request;
    (8) In the case of a transaction in a debt security subject to 
redemption before maturity, a statement to the effect that the debt 
security may be redeemed in whole or in part before maturity, that the 
redemption could affect the yield represented and that additional 
information is available upon request;
    (9) In the case of a transaction in a debt security effected 
exclusively on the basis of a dollar price:
    (i) The dollar price at which the transaction was effected; and
    (ii) The yield to maturity calculated from the dollar price, 
provided however, that this shall not apply to a transaction in a debt 
security that either has a maturity date that may be extended by the 
issuer thereof, with a variable interest payable thereon, or is an 
asset-backed security that represents an interest in or is secured by a 
pool of receivables or other financial assets that are subject 
continuously to prepayment;
    (10) In the case of a transaction in a debt security effected on the 
basis of yield:
    (i) The yield at which the transaction was effected, including the 
percentage amount and its characterization (e.g., current yield, yield 
to maturity, or yield to call) and if effected at yield to call, the 
type of call, the call date and call price;
    (ii) The dollar price calculated from the yield at which the 
transaction was effected; and
    (iii) If effected on a basis other than yield to maturity and the 
yield to maturity is lower than the represented yield, the yield to 
maturity as well as the represented yield; provided however, that this 
paragraph (b)(10) shall not apply to a transaction in a debt security 
that either has a maturity date that may be extended by the issuer with 
a variable interest rate payable thereon, or is an asset-backed security 
that represents an interest in or is secured by a pool of receivables or 
other financial assets that are subject continuously to prepayment;
    (11) In the case of a transaction in a debt security that is an 
asset-backed security, which represents an interest in or is secured by 
a pool of receivables or other financial assets that are subject 
continuously to prepayment, a statement indicating that the actual

[[Page 276]]

yield of the asset-backed security may vary according to the rate at 
which the underlying receivables or other financial assets are prepaid 
and a statement of the fact that information concerning the factors that 
affect yield (including at a minimum estimated yield, weighted average 
life, and the prepayment assumptions underlying yield) will be furnished 
upon written request of the customer; and
    (12) In the case of a transaction in a debt security, other than a 
government security, that the security is unrated by a nationally 
recognized statistical rating organization, if that is the case.



Sec. 344.6  Notification by agreement; alternative forms and times of notification.

    A bank may elect to use the following alternative notification 
procedures if the transaction is effected for:
    (a) Notification by agreement. Accounts (except periodic plans) 
where the bank does not exercise investment discretion and the bank and 
the customer agree in writing to a different arrangement as to the time 
and content of the written notification; provided however, that such 
agreement makes clear the customer's right to receive the written 
notification pursuant to Sec. 344.5 (a) or (b) at no additional cost to 
the customer.
    (b) Trust accounts. Accounts (except collective investment funds) 
where the bank exercises investment discretion in other than in an 
agency capacity, in which instance the bank shall, upon request of the 
person having the power to terminate the account or, if there is no such 
person, upon the request of any person holding a vested beneficial 
interest in such account, give or send to such person the written 
notification within a reasonable time. The bank may charge such person a 
reasonable fee for providing this information.
    (c) Agency accounts. Accounts where the bank exercises investment 
discretion in an agency capacity, in which instance:
    (1) The bank shall give or send to each customer not less frequently 
than once every three months an itemized statement which shall specify 
the funds and securities in the custody or possession of the bank at the 
end of such period and all debits, credits and transactions in the 
customer's accounts during such period; and
    (2) If requested by the customer, the bank shall give or send to 
each customer within a reasonable time the written notification 
described in Sec. 344.5. The bank may charge a reasonable fee for 
providing the information described in Sec. 344.5.
    (d) Cash management sweep accounts. A bank effecting a securities 
transaction for a cash management sweep account shall give or send its 
customer a written statement, in the same form as required under 
paragraph (f) of this section, for each month in which a purchase or 
sale of a security takes place in the account and not less than once 
every three months if there are no securities transactions in the 
account. Notwithstanding the provisions of this paragraph (d), banks 
that retain custody of government securities that are the subject of a 
hold-in-custody repurchase agreement are subject to the requirements of 
17 CFR 403.5(d).
    (e) Collective investment fund accounts. The bank shall at least 
annually give or send to the customer a copy of a financial report of 
the fund, or provide notice that a copy of such report is available and 
will be furnished upon request to each person to whom a regular periodic 
accounting would ordinarily be rendered with respect to each 
participating account. This report shall be based upon an audit made by 
independent public accountants or internal auditors responsible only to 
the board of directors of the bank.
    (f) Periodic plan accounts. The bank shall give or send to the 
customer not less than once every three months a written statement 
showing:
    (1) The funds and securities in the custody or possession of the 
bank;
    (2) All service charges and commissions paid by the customer in 
connection with the transaction; and
    (3) All other debits and credits of the customer's account involved 
in the transaction; provided that upon written request of the customer, 
the bank shall give or send the information described in Sec. 344.5, 
except that any such information relating to remuneration

[[Page 277]]

paid in connection with the transaction need not be provided to the 
customer when the remuneration is paid by a source other than the 
customer. The bank may charge a reasonable fee for providing information 
described in Sec. 344.5.



Sec. 344.7  Settlement of securities transactions.

    (a) A bank shall not effect or enter into a contract for the 
purchase or sale of a security (other than an exempted security as 
defined in 15 U.S.C. 78c(a)(12), government security, municipal 
security, commercial paper, bankers' acceptances, or commercial bills) 
that provides for payment of funds and delivery of securities later than 
the third business day after the date of the contract unless otherwise 
expressly agreed to by the parties at the time of the transaction.
    (b) Paragraphs (a) and (c) of this section shall not apply to 
contracts:
    (1) For the purchase or sale of limited partnership interests that 
are not listed on an exchange or for which quotations are not 
disseminated through an automated quotation system of a registered 
securities association; or
    (2) For the purchase or sale of securities that the Securities and 
Exchange Commission (SEC) may from time to time, taking into account 
then existing market practices, exempt by order from the requirements of 
paragraph (a) of SEC Rule 15c6-1, 17 CFR 240.15c6-1(a), either 
unconditionally or on specified terms and conditions, if the SEC 
determines that an exemption is consistent with the public interest and 
the protection of investors.
    (c) Paragraph (a) of this section shall not apply to contracts for 
the sale for cash of securities that are priced after 4:30 p.m. Eastern 
time on the date the securities are priced and that are sold by an 
issuer to an underwriter pursuant to a firm commitment underwritten 
offering registered under the Securities Act of 1933, 15 U.S.C. 77a et 
seq., or sold to an initial purchaser by a bank participating in the 
offering. A bank shall not effect or enter into a contract for the 
purchase or sale of the securities that provides for payment of funds 
and delivery of securities later than the fourth business day after the 
date of the contract unless otherwise expressly agreed to by the parties 
at the time of the transaction.
    (d) For purposes of paragraphs (a) and (c) of this section, the 
parties to a contract shall be deemed to have expressly agreed to an 
alternate date for payment of funds and delivery of securities at the 
time of the transaction for a contract for the sale for cash of 
securities pursuant to a firm commitment offering if the managing 
underwriter and the issuer have agreed to the date for all securities 
sold pursuant to the offering and the parties to the contract have not 
expressly agreed to another date for payment of funds and delivery of 
securities at the time of the transaction.



Sec. 344.8  Securities trading policies and procedures.

    (a) Policies and procedures. Every bank effecting securities 
transactions for customers shall establish written policies and 
procedures providing:
    (1) Assignment of responsibility for supervision of all officers or 
employees who:
    (i) Transmit orders to or place orders with broker/dealers; or
    (ii) Execute transactions in securities for customers;
    (2) Assignment of responsibility for supervision and reporting, 
separate from those in paragraph (a)(1) of this section, with respect to 
all officers or employees who process orders for notification or 
settlement purposes, or perform other back office functions with respect 
to securities transactions effected for customers;
    (3) For the fair and equitable allocation of securities and prices 
to accounts when orders for the same security are received at 
approximately the same time and are placed for execution either 
individually or in combination; and
    (4) Where applicable, and where permissible under local law, for the 
crossing of buy and sell orders on a fair and equitable basis to the 
parties to the transaction.

[[Page 278]]



Sec. 344.9  Personal securities trading reporting by bank officers and employees.

    (a) Officers and employees subject to reporting. Bank officers and 
employees who:
    (1) Make investment recommendations or decisions for the accounts of 
customers;
    (2) Participate in the determination of such recommendations or 
decisions; or
    (3) In connection with their duties, obtain information concerning 
which securities are being purchased or sold or recommend such action, 
must report to the bank, within ten business days after the end of the 
calendar quarter, all transactions in securities made by them or on 
their behalf, either at the bank or elsewhere in which they have a 
beneficial interest. The report shall identify the securities purchased 
or sold and indicate the dates of the transactions and whether the 
transactions were purchases or sales.
    (b) Exempt transactions. Excluded from this reporting requirement 
are:
    (1) Transactions for the benefit of the officer or employee over 
which the officer or employee has no direct or indirect influence or 
control;
    (2) Transactions in registered investment company shares;
    (3) Transactions in government securities; and
    (4) All transactions involving in the aggregate $10,000 or less 
during the calendar quarter.
    (c) Alternative report. Where a bank acts as an investment adviser 
to an investment company registered under the Investment Company Act of 
1940, the bank's officers and employees may fulfill their reporting 
requirement under paragraph (a) of this section by filing with the bank 
the ``access persons'' personal securities trading report required by 
(SEC) Rule 17j-1, 17 CFR 270.17j-1.



Sec. 344.10  Waivers.

    The Board of Directors of the FDIC, in its discretion, may waive for 
good cause all or any part of this part 344.



PART 345--COMMUNITY REINVESTMENT--Table of Contents




                           Subpart A--General

Sec.
345.11  Authority, purposes, and scope.
345.12  Definitions.

             Subpart B--Standards for Assessing Performance

345.21  Performance tests, standards, and ratings, in general.
345.22  Lending test.
345.23  Investment test.
345.24  Service test.
345.25  Community development test for wholesale or limited purpose 
          banks.
345.26  Small bank performance standards.
345.27  Strategic plan.
345.28  Assigned ratings.
345.29  Effect of CRA performance on applications.

       Subpart C--Records, Reporting, and Disclosure Requirements

345.41  Assessment area delineation.
345.42  Data collection, reporting, and disclosure.
345.43  Content and availability of public file.
345.44  Public notice by banks.
345.45  Publication of planned examination schedule.

                     Appendix A to Part 345--Ratings

                   Appendix B to Part 345--CRA Notice

    Authority:  12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u and 2901-
2907, 3103-3104, and 3108(a).

    Source:  43 FR 47151, Oct. 12, 1978, unless otherwise noted.



                           Subpart A--General

    Source:  60 FR 22201, May 4, 1995, unless otherwise noted.



Sec. 345.11  Authority, purposes, and scope.

    (a) Authority and OMB control number--(1) Authority. The authority 
for this part is 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u and 2901-
2907, 3103-3104, and 3108(a).
    (2) OMB control number. The information collection requirements 
contained in this part were approved by the Office of Management and 
Budget under the provisions of 44 U.S.C. 3501 et seq. and

[[Page 279]]

have been assigned OMB control number 3064-0092.
    (b) Purposes. In enacting the Community Reinvestment Act (CRA), the 
Congress required each appropriate Federal financial supervisory agency 
to assess an institution's record of helping to meet the credit needs of 
the local communities in which the institution is chartered, consistent 
with the safe and sound operation of the institution, and to take this 
record into account in the agency's evaluation of an application for a 
deposit facility by the institution. This part is intended to carry out 
the purposes of the CRA by:
    (1) Establishing the framework and criteria by which the Federal 
Deposit Insurance Corporation (FDIC) assesses a bank's record of helping 
to meet the credit needs of its entire community, including low- and 
moderate-income neighborhoods, consistent with the safe and sound 
operation of the bank; and
    (2) Providing that the FDIC takes that record into account in 
considering certain applications.
    (c) Scope--(1) General. Except for certain special purpose banks 
described in paragraph (c)(3) of this section, this part applies to all 
insured State nonmember banks, including insured State branches as 
described in paragraph (c)(2) and any uninsured State branch that 
results from an acquisition described in section 5(a)(8) of the 
International Banking Act of 1978 (12 U.S.C. 3103(a)(8)).
    (2) Insured State branches. Insured State branches are branches of a 
foreign bank established and operating under the laws of any State, the 
deposits of which are insured in accordance with the provisions of the 
Federal Deposit Insurance Act. In the case of insured State branches, 
references in this part to main office mean the principal branch within 
the United States and the term branch or branches refers to any insured 
State branch or branches located within the United States. The 
assessment area of an insured State branch is the community or 
communities located within the United States served by the branch as 
described in Sec. 345.41.
    (3) Certain special purpose banks. This part does not apply to 
special purpose banks that do not perform commercial or retail banking 
services by granting credit to the public in the ordinary course of 
business, other than as incident to their specialized operations. These 
banks include banker's banks, as defined in 12 U.S.C. 24 (Seventh), and 
banks that engage only in one or more of the following activities: 
providing cash management controlled disbursement services or serving as 
correspondent banks, trust companies, or clearing agents.



Sec. 345.12  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Affiliate means any company that controls, is controlled by, or 
is under common control with another company. The term control has the 
meaning given to that term in 12 U.S.C. 1841(a)(2), and a company is 
under common control with another company if both companies are directly 
or indirectly controlled by the same company.
    (b) Area median income means:
    (1) The median family income for the MSA, if a person or geography 
is located in an MSA; or
    (2) The statewide nonmetropolitan median family income, if a person 
or geography is located outside an MSA.
    (c) Assessment area means a geographic area delineated in accordance 
with Sec. 345.41.
    (d) Remote Service Facility (RSF) means an automated, unstaffed 
banking facility owned or operated by, or operated exclusively for, the 
bank, such as an automated teller machine, cash dispensing machine, 
point-of-sale terminal, or other remote electronic facility, at which 
deposits are received, cash dispersed, or money lent.
    (e) Bank means a State nonmember bank, as that term is defined in 
section 3(e)(2) of the Federal Deposit Insurance Act, as amended (FDIA) 
(12 U.S.C. 1813(e)(2)), with Federally insured deposits, except as 
provided in Sec. 345.11(c). The term bank also includes an insured State 
branch as defined in Sec. 345.11(c).
    (f) Branch means a staffed banking facility authorized as a branch, 
whether shared or unshared, including, for example, a mini-branch in a 
grocery store or a branch operated in conjunction with any other local 
business or

[[Page 280]]

nonprofit organization. The term ``branch'' only includes a ``domestic 
branch'' as that term is defined in section 3(o) of the FDIA (12 U.S.C. 
1813(o)).
    (g) CMSA means a consolidated metropolitan statistical area as 
defined by the Director of the Office of Management and Budget.
    (h) Community development means:
    (1) Affordable housing (including multifamily rental housing) for 
low- or moderate-income individuals;
    (2) Community services targeted to low- or moderate-income 
individuals;
    (3) Activities that promote economic development by financing 
businesses or farms that meet the size eligibility standards of the 
Small Business Administration's Development Company or Small Business 
Investment Company programs (13 CFR 121.301) or have gross annual 
revenues of $1 million or less; or
    (4) Activities that revitalize or stabilize low- or moderate-income 
geographies.
    (i) Community development loan means a loan that:
    (1) Has as its primary purpose community development; and
    (2) Except in the case of a wholesale or limited purpose bank:
    (i) Has not been reported or collected by the bank or an affiliate 
for consideration in the bank's assessment as a home mortgage, small 
business, small farm, or consumer loan, unless it is a multifamily 
dwelling loan (as described in Appendix A to Part 203 of this title); 
and
    (ii) Benefits the bank's assessment area(s) or a broader statewide 
or regional area that includes the bank's assessment area(s).
    (j) Community development service means a service that:
    (1) Has as its primary purpose community development;
    (2) Is related to the provision of financial services; and
    (3) Has not been considered in the evaluation of the bank's retail 
banking services under Sec. 345.24(d).
    (k) Consumer loan means a loan to one or more individuals for 
household, family, or other personal expenditures. A consumer loan does 
not include a home mortgage, small business, or small farm loan. 
Consumer loans include the following categories of loans:
    (1) Motor vehicle loan, which is a consumer loan extended for the 
purchase of and secured by a motor vehicle;
    (2) Credit card loan, which is a line of credit for household, 
family, or other personal expenditures that is accessed by a borrower's 
use of a ``credit card,'' as this term is defined in Sec. 226.2 of this 
title;
    (3) Home equity loan, which is a consumer loan secured by a 
residence of the borrower;
    (4) Other secured consumer loan, which is a secured consumer loan 
that is not included in one of the other categories of consumer loans; 
and
    (5) Other unsecured consumer loan, which is an unsecured consumer 
loan that is not included in one of the other categories of consumer 
loans.
    (l) Geography means a census tract or a block numbering area 
delineated by the United States Bureau of the Census in the most recent 
decennial census.
    (m) Home mortgage loan means a ``home improvement loan'' or a ``home 
purchase loan'' as defined in Sec. 203.2 of this title.
    (n) Income level includes:
    (1) Low-income, which means an individual income that is less than 
50 percent of the area median income or a median family income that is 
less than 50 percent in the case of a geography.
    (2) Moderate-income, which means an individual income that is at 
least 50 percent and less than 80 percent of the area median income or a 
median family income that is at least 50 and less than 80 percent in the 
case of a geography.
    (3) Middle-income, which means an individual income that is at least 
80 percent and less than 120 percent of the area median income or a 
median family income that is at least 80 and less than 120 percent in 
the case of a geography.
    (4) Upper-income, which means an individual income that is 120 
percent or more of the area median income or a median family income that 
is 120 percent or more in the case of a geography.
    (o) Limited purpose bank means a bank that offers only a narrow 
product

[[Page 281]]

line (such as credit card or motor vehicle loans) to a regional or 
broader market and for which a designation as a limited purpose bank is 
in effect, in accordance with Sec. 345.25(b).
    (p) Loan location. A loan is located as follows:
    (1) A consumer loan is located in the geography where the borrower 
resides;
    (2) A home mortgage loan is located in the geography where the 
property to which the loan relates is located; and
    (3) A small business or small farm loan is located in the geography 
where the main business facility or farm is located or where the loan 
proceeds otherwise will be applied, as indicated by the borrower.
    (q) Loan production office means a staffed facility, other than a 
branch, that is open to the public and that provides lending-related 
services, such as loan information and applications.
    (r) MSA means a metropolitan statistical area or a primary 
metropolitan statistical area as defined by the Director of the Office 
of Management and Budget.
    (s) Qualified investment means a lawful investment, deposit, 
membership share, or grant that has as its primary purpose community 
development.
    (t) Small bank means a bank that, as of December 31 of either of the 
prior two calendar years, had total assets of less than $250 million and 
was independent or an affiliate of a holding company that, as of 
December 31 of either of the prior two calendar years, had total banking 
and thrift assets of less than $1 billion.
    (u) Small business loan means a loan included in ``loans to small 
businesses'' as defined in the instructions for preparation of the 
Consolidated Report of Condition and Income.
    (v) Small farm loan means a loan included in ``loans to small 
farms'' as defined in the instructions for preparation of the 
Consolidated Report of Condition and Income.
    (w) Wholesale bank means a bank that is not in the business of 
extending home mortgage, small business, small farm, or consumer loans 
to retail customers, and for which a designation as a wholesale bank is 
in effect, in accordance with Sec. 345.25(b).
[60 FR 22201, May 4, 1995, as amended at 60 FR 66050, Dec. 20, 1995; 61 
FR 21364, May 10, 1996]



             Subpart B--Standards for Assessing Performance

    Source:  60 FR 22201, May 4, 1995, unless otherwise noted.



Sec. 345.21  Performance tests, standards, and ratings, in general.

    (a) Performance tests and standards. The FDIC assesses the CRA 
performance of a bank in an examination as follows:
    (1) Lending, investment, and service tests. The FDIC applies the 
lending, investment, and service tests, as provided in Secs. 345.22 
through 345.24, in evaluating the performance of a bank, except as 
provided in paragraphs (a)(2), (a)(3), and (a)(4) of this section.
    (2) Community development test for wholesale or limited purpose 
banks. The FDIC applies the community development test for a wholesale 
or limited purpose bank, as provided in Sec. 345.25, except as provided 
in paragraph (a)(4) of this section.
    (3) Small bank performance standards. The FDIC applies the small 
bank performance standards as provided in Sec. 345.26 in evaluating the 
performance of a small bank or a bank that was a small bank during the 
prior calendar year, unless the bank elects to be assessed as provided 
in paragraphs (a)(1), (a)(2), or (a)(4) of this section. The bank may 
elect to be assessed as provided in paragraph (a)(1) of this section 
only if it collects and reports the data required for other banks under 
Sec. 345.42.
    (4) Strategic plan. The FDIC evaluates the performance of a bank 
under a strategic plan if the bank submits, and the FDIC approves, a 
strategic plan as provided in Sec. 345.27.
    (b) Performance context. The FDIC applies the tests and standards in 
paragraph (a) of this section and also considers whether to approve a 
proposed strategic plan in the context of:
    (1) Demographic data on median income levels, distribution of 
household

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income, nature of housing stock, housing costs, and other relevant data 
pertaining to a bank's assessment area(s);
    (2) Any information about lending, investment, and service 
opportunities in the bank's assessment area(s) maintained by the bank or 
obtained from community organizations, state, local, and tribal 
governments, economic development agencies, or other sources;
    (3) The bank's product offerings and business strategy as determined 
from data provided by the bank;
    (4) Institutional capacity and constraints, including the size and 
financial condition of the bank, the economic climate (national, 
regional, and local), safety and soundness limitations, and any other 
factors that significantly affect the bank's ability to provide lending, 
investments, or services in its assessment area(s);
    (5) The bank's past performance and the performance of similarly 
situated lenders;
    (6) The bank's public file, as described in Sec. 345.43, and any 
written comments about the bank's CRA performance submitted to the bank 
or the FDIC; and
    (7) Any other information deemed relevant by the FDIC.
    (c) Assigned ratings. The FDIC assigns to a bank one of the 
following four ratings pursuant to Sec. 345.28 and Appendix A of this 
part: ``outstanding''; ``satisfactory''; ``needs to improve''; or 
``substantial noncompliance'' as provided in 12 U.S.C. 2906(b)(2). The 
rating assigned by the FDIC reflects the bank's record of helping to 
meet the credit needs of its entire community, including low- and 
moderate-income neighborhoods, consistent with the safe and sound 
operation of the bank.
    (d) Safe and sound operations. This part and the CRA do not require 
a bank to make loans or investments or to provide services that are 
inconsistent with safe and sound operations. To the contrary, the FDIC 
anticipates banks can meet the standards of this part with safe and 
sound loans, investments, and services on which the banks expect to make 
a profit. Banks are permitted and encouraged to develop and apply 
flexible underwriting standards for loans that benefit low- or moderate-
income geographies or individuals, only if consistent with safe and 
sound operations.



Sec. 345.22  Lending test.

    (a) Scope of test. (1) The lending test evaluates a bank's record of 
helping to meet the credit needs of its assessment area(s) through its 
lending activities by considering a bank's home mortgage, small 
business, small farm, and community development lending. If consumer 
lending constitutes a substantial majority of a bank's business, the 
FDIC will evaluate the bank's consumer lending in one or more of the 
following categories: motor vehicle, credit card, home equity, other 
secured, and other unsecured loans. In addition, at a bank's option, the 
FDIC will evaluate one or more categories of consumer lending, if the 
bank has collected and maintained, as required in Sec. 345.42(c)(1), the 
data for each category that the bank elects to have the FDIC evaluate.
    (2) The FDIC considers originations and purchases of loans. The FDIC 
will also consider any other loan data the bank may choose to provide, 
including data on loans outstanding, commitments and letters of credit.
    (3) A bank may ask the FDIC to consider loans originated or 
purchased by consortia in which the bank participates or by third 
parties in which the bank has invested only if the loans meet the 
definition of community development loans and only in accordance with 
paragraph (d) of this section. The FDIC will not consider these loans 
under any criterion of the lending test except the community development 
lending criterion.
    (b) Performance criteria. The FDIC evaluates a bank's lending 
performance pursuant to the following criteria:
    (1) Lending activity. The number and amount of the bank's home 
mortgage, small business, small farm, and consumer loans, if applicable, 
in the bank's assessment area(s);
    (2) Geographic distribution. The geographic distribution of the 
bank's home mortgage, small business, small farm, and consumer loans, if 
applicable, based on the loan location, including:
    (i) The proportion of the bank's lending in the bank's assessment 
area(s);

[[Page 283]]

    (ii) The dispersion of lending in the bank's assessment area(s); and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the bank's assessment area(s);
    (3) Borrower characteristics. The distribution, particularly in the 
bank's assessment area(s), of the bank's home mortgage, small business, 
small farm, and consumer loans, if applicable, based on borrower 
characteristics, including the number and amount of:
    (i) Home mortgage loans to low-, moderate-, middle-, and upper-
income individuals;
    (ii) Small business and small farm loans to businesses and farms 
with gross annual revenues of $1 million or less;
    (iii) Small business and small farm loans by loan amount at 
origination; and
    (iv) Consumer loans, if applicable, to low-, moderate-, middle-, and 
upper-income individuals;
    (4) Community development lending. The bank's community development 
lending, including the number and amount of community development loans, 
and their complexity and innovativeness; and
    (5) Innovative or flexible lending practices. The bank's use of 
innovative or flexible lending practices in a safe and sound manner to 
address the credit needs of low- or moderate-income individuals or 
geographies.
    (c) Affiliate lending. (1) At a bank's option, the FDIC will 
consider loans by an affiliate of the bank, if the bank provides data on 
the affiliate's loans pursuant to Sec. 345.42.
    (2) The FDIC considers affiliate lending subject to the following 
constraints:
    (i) No affiliate may claim a loan origination or loan purchase if 
another institution claims the same loan origination or purchase; and
    (ii) If a bank elects to have the FDIC consider loans within a 
particular lending category made by one or more of the bank's affiliates 
in a particular assessment area, the bank shall elect to have the FDIC 
consider, in accordance with paragraph (c)(1) of this section, all the 
loans within that lending category in that particular assessment area 
made by all of the bank's affiliates.
    (3) The FDIC does not consider affiliate lending in assessing a 
bank's performance under paragraph (b)(2)(i) of this section.
    (d) Lending by a consortium or a third party. Community development 
loans originated or purchased by a consortium in which the bank 
participates or by a third party in which the bank has invested:
    (1) Will be considered, at the bank's option, if the bank reports 
the data pertaining to these loans under Sec. 345.42(b)(2); and
    (2) May be allocated among participants or investors, as they 
choose, for purposes of the lending test, except that no participant or 
investor:
    (i) May claim a loan origination or loan purchase if another 
participant or investor claims the same loan origination or purchase; or
    (ii) May claim loans accounting for more than its percentage share 
(based on the level of its participation or investment) of the total 
loans originated by the consortium or third party.
    (e) Lending performance rating. The FDIC rates a bank's lending 
performance as provided in Appendix A of this part.



Sec. 345.23  Investment test.

    (a) Scope of test. The investment test evaluates a bank's record of 
helping to meet the credit needs of its assessment area(s) through 
qualified investments that benefit its assessment area(s) or a broader 
statewide or regional area that includes the bank's assessment area(s).
    (b) Exclusion. Activities considered under the lending or service 
tests may not be considered under the investment test.
    (c) Affiliate investment. At a bank's option, the FDIC will 
consider, in its assessment of a bank's investment performance, a 
qualified investment made by an affiliate of the bank, if the qualified 
investment is not claimed by any other institution.
    (d) Disposition of branch premises. Donating, selling on favorable 
terms, or making available on a rent-free basis a branch of the bank 
that is located in a predominantly minority neighborhood to a minority 
depository institution or

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women's depository institution (as these terms are defined in 12 U.S.C. 
2907(b)) will be considered as a qualified investment.
    (e) Performance criteria. The FDIC evaluates the investment 
performance of a bank pursuant to the following criteria:
    (1) The dollar amount of qualified investments;
    (2) The innovativeness or complexity of qualified investments;
    (3) The responsiveness of qualified investments to credit and 
community development needs; and
    (4) The degree to which the qualified investments are not routinely 
provided by private investors.
    (f) Investment performance rating. The FDIC rates a bank's 
investment performance as provided in Appendix A of this part.



Sec. 345.24  Service test.

    (a) Scope of test. The service test evaluates a bank's record of 
helping to meet the credit needs of its assessment area(s) by analyzing 
both the availability and effectiveness of a bank's systems for 
delivering retail banking services and the extent and innovativeness of 
its community development services.
    (b) Area(s) benefited. Community development services must benefit a 
bank's assessment area(s) or a broader statewide or regional area that 
includes the bank's assessment area(s).
    (c) Affiliate service. At a bank's option, the FDIC will consider, 
in its assessment of a bank's service performance, a community 
development service provided by an affiliate of the bank, if the 
community development service is not claimed by any other institution.
    (d) Performance criteria--retail banking services. The FDIC 
evaluates the availability and effectiveness of a bank's systems for 
delivering retail banking services, pursuant to the following criteria:
    (1) The current distribution of the bank's branches among low-,

moderate-, middle-, and upper-income geographies;
    (2) In the context of its current distribution of the bank's 
branches, the bank's record of opening and closing branches, 
particularly branches located in low- or moderate-income geographies or 
primarily serving low- or moderate-income individuals;
    (3) The availability and effectiveness of alternative systems for 
delivering retail banking services (e.g., RSFs, RSFs not owned or 
operated by or exclusively for the bank, banking by telephone or 
computer, loan production offices, and bank-at-work or bank-by-mail 
programs) in low- and moderate-income geographies and to low- and 
moderate-income individuals; and
    (4) The range of services provided in low-, moderate-, middle-, and 
upper-income geographies and the degree to which the services are 
tailored to meet the needs of those geographies.
    (e) Performance criteria--community development services. The FDIC 
evaluates community development services pursuant to the following 
criteria:
    (1) The extent to which the bank provides community development 
services; and
    (2) The innovativeness and responsiveness of community development 
services.
    (f) Service performance rating. The FDIC rates a bank's service 
performance as provided in Appendix A of this part.



Sec. 345.25  Community development test for wholesale or limited purpose banks.

    (a) Scope of test. The FDIC assesses a wholesale or limited purpose 
bank's record of helping to meet the credit needs of its assessment 
area(s) under the community development test through its community 
development lending, qualified investments, or community development 
services.
    (b) Designation as a wholesale or limited purpose bank. In order to 
receive a designation as a wholesale or limited purpose bank, a bank 
shall file a request, in writing, with the FDIC, at least three months 
prior to the proposed effective date of the designation. If the FDIC 
approves the designation, it remains in effect until the bank requests 
revocation of the designation or until one year after the FDIC notifies 
the bank that the FDIC has revoked the designation on its own 
initiative.

[[Page 285]]

    (c) Performance criteria. The FDIC evaluates the community 
development performance of a wholesale or limited purpose bank pursuant 
to the following criteria:
    (1) The number and amount of community development loans (including 
originations and purchases of loans and other community development loan 
data provided by the bank, such as data on loans outstanding, 
commitments, and letters of credit), qualified investments, or community 
development services;
    (2) The use of innovative or complex qualified investments, 
community development loans, or community development services and the 
extent to which the investments are not routinely provided by private 
investors; and
    (3) The bank's responsiveness to credit and community development 
needs.
    (d) Indirect activities. At a bank's option, the FDIC will consider 
in its community development performance assessment:
    (1) Qualified investments or community development services provided 
by an affiliate of the bank, if the investments or services are not 
claimed by any other institution; and
    (2) Community development lending by affiliates, consortia and third 
parties, subject to the requirements and limitations in Sec. 345.22 (c) 
and (d).
    (e) Benefit to assessment area(s)--(1) Benefit inside assessment 
area(s). The FDIC considers all qualified investments, community 
development loans, and community development services that benefit areas 
within the bank's assessment area(s) or a broader statewide or regional 
area that includes the bank's assessment area(s).
    (2) Benefit outside assessment area(s). The FDIC considers the 
qualified investments, community development loans, and community 
development services that benefit areas outside the bank's assessment 
area(s), if the bank has adequately addressed the needs of its 
assessment area(s).
    (f) Community development performance rating. The FDIC rates a 
bank's community development performance as provided in Appendix A of 
this part.



Sec. 345.26  Small bank performance standards.

    (a) Performance criteria. The FDIC evaluates the record of a small 
bank, or a bank that was a small bank during the prior calendar year, of 
helping to meet the credit needs of its assessment area(s) pursuant to 
the following criteria:
    (1) The bank's loan-to-deposit ratio, adjusted for seasonal 
variation and, as appropriate, other lending-related activities, such as 
loan originations for sale to the secondary markets, community 
development loans, or qualified investments;
    (2) The percentage of loans and, as appropriate, other lending-
related activities located in the bank's assessment area(s);
    (3) The bank's record of lending to and, as appropriate, engaging in 
other lending-related activities for borrowers of different income 
levels and businesses and farms of different sizes;
    (4) The geographic distribution of the bank's loans; and
    (5) The bank's record of taking action, if warranted, in response to 
written complaints about its performance in helping to meet credit needs 
in its assessment area(s).
    (b) Small bank performance rating. The FDIC rates the performance of 
a bank evaluated under this section as provided in Appendix A of this 
part.



Sec. 345.27  Strategic plan.

    (a) Alternative election. The FDIC will assess a bank's record of 
helping to meet the credit needs of its assessment area(s) under a 
strategic plan if:
    (1) The bank has submitted the plan to the FDIC as provided for in 
this section;
    (2) The FDIC has approved the plan;
    (3) The plan is in effect; and
    (4) The bank has been operating under an approved plan for at least 
one year.
    (b) Data reporting. The FDIC's approval of a plan does not affect 
the bank's obligation, if any, to report data as required by 
Sec. 345.42.
    (c) Plans in general--(1) Term. A plan may have a term of no more 
than five years, and any multi-year plan must include annual interim 
measurable

[[Page 286]]

goals under which the FDIC will evaluate the bank's performance.
    (2) Multiple assessment areas. A bank with more than one assessment 
area may prepare a single plan for all of its assessment areas or one or 
more plans for one or more of its assessment areas.
    (3) Treatment of affiliates. Affiliated institutions may prepare a 
joint plan if the plan provides measurable goals for each institution. 
Activities may be allocated among institutions at the institutions' 
option, provided that the same activities are not considered for more 
than one institution.
    (d) Public participation in plan development. Before submitting a 
plan to the FDIC for approval, a bank shall:
    (1) Informally seek suggestions from members of the public in its 
assessment area(s) covered by the plan while developing the plan;
    (2) Once the bank has developed a plan, formally solicit public 
comment on the plan for at least 30 days by publishing notice in at 
least one newspaper of general circulation in each assessment area 
covered by the plan; and
    (3) During the period of formal public comment, make copies of the 
plan available for review by the public at no cost at all offices of the 
bank in any assessment area covered by the plan and provide copies of 
the plan upon request for a reasonable fee to cover copying and mailing, 
if applicable.
    (e) Submission of plan. The bank shall submit its plan to the FDIC 
at least three months prior to the proposed effective date of the plan. 
The bank shall also submit with its plan a description of its informal 
efforts to seek suggestions from members of the public, any written 
public comment received, and, if the plan was revised in light of the 
comment received, the initial plan as released for public comment.
    (f) Plan content--(1) Measurable goals. (i) A bank shall specify in 
its plan measurable goals for helping to meet the credit needs of each 
assessment area covered by the plan, particularly the needs of low- and 
moderate-income geographies and low- and moderate-income individuals, 
through lending, investment, and services, as appropriate.
    (ii) A bank shall address in its plan all three performance 
categories and, unless the bank has been designated as a wholesale or 
limited purpose bank, shall emphasize lending and lending-related 
activities. Nevertheless, a different emphasis, including a focus on one 
or more performance categories, may be appropriate if responsive to the 
characteristics and credit needs of its assessment area(s), considering 
public comment and the bank's capacity and constraints, product 
offerings, and business strategy.
    (2) Confidential information. A bank may submit additional 
information to the FDIC on a confidential basis, but the goals stated in 
the plan must be sufficiently specific to enable the public and the FDIC 
to judge the merits of the plan.
    (3) Satisfactory and outstanding goals. A bank shall specify in its 
plan measurable goals that constitute ``satisfactory'' performance. A 
plan may specify measurable goals that constitute ``outstanding'' 
performance. If a bank submits, and the FDIC approves, both 
``satisfactory'' and ``outstanding'' performance goals, the FDIC will 
consider the bank eligible for an ``outstanding'' performance rating.
    (4) Election if satisfactory goals not substantially met. A bank may 
elect in its plan that, if the bank fails to meet substantially its plan 
goals for a satisfactory rating, the FDIC will evaluate the bank's 
performance under the lending, investment, and service tests, the 
community development test, or the small bank performance standards, as 
appropriate.
    (g) Plan approval--(1) Timing. The FDIC will act upon a plan within 
60 calendar days after the FDIC receives the complete plan and other 
material required under paragraph (d) of this section. If the FDIC fails 
to act within this time period, the plan shall be deemed approved unless 
the FDIC extends the review period for good cause.
    (2) Public participation. In evaluating the plan's goals, the FDIC 
considers the public's involvement in formulating the plan, written 
public comment on the plan, and any response by the bank to public 
comment on the plan.
    (3) Criteria for evaluating plan. The FDIC evaluates a plan's 
measurable goals using the following criteria, as appropriate:

[[Page 287]]

    (i) The extent and breadth of lending or lending-related activities, 
including, as appropriate, the distribution of loans among different 
geographies, businesses and farms of different sizes, and individuals of 
different income levels, the extent of community development lending, 
and the use of innovative or flexible lending practices to address 
credit needs;
    (ii) The amount and innovativeness, complexity, and responsiveness 
of the bank's qualified investments; and
    (iii) The availability and effectiveness of the bank's systems for 
delivering retail banking services and the extent and innovativeness of 
the bank's community development services.
    (h) Plan amendment. During the term of a plan, a bank may request 
the FDIC to approve an amendment to the plan on grounds that there has 
been a material change in circumstances. The bank shall develop an 
amendment to a previously approved plan in accordance with the public 
participation requirements of paragraph (d) of this section.
    (i) Plan assessment. The FDIC approves the goals and assesses 
performance under a plan as provided for in Appendix A of this part.
[60 FR 22201, May 4, 1995, as amended at 60 FR 66050, Dec. 20, 1995]



Sec. 345.28  Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b) and (c) of this 
section, the FDIC assigns to a bank a rating of ``outstanding,'' 
``satisfactory,'' ``needs to improve,'' or ``substantial noncompliance'' 
based on the bank's performance under the lending, investment and 
service tests, the community development test, the small bank 
performance standards, or an approved strategic plan, as applicable.
    (b) Lending, investment, and service tests. The FDIC assigns a 
rating for a bank assessed under the lending, investment, and service 
tests in accordance with the following principles:
    (1) A bank that receives an ``outstanding'' rating on the lending 
test receives an assigned rating of at least ``satisfactory'';
    (2) A bank that receives an ``outstanding'' rating on both the 
service test and the investment test and a rating of at least ``high 
satisfactory'' on the lending test receives an assigned rating of 
``outstanding''; and
    (3) No bank may receive an assigned rating of ``satisfactory'' or 
higher unless it receives a rating of at least ``low satisfactory'' on 
the lending test.
    (c) Effect of evidence of discriminatory or other illegal credit 
practices. Evidence of discriminatory or other illegal credit practices 
adversely affects the FDIC's evaluation of a bank's performance. In 
determining the effect on the bank's assigned rating, the FDIC considers 
the nature and extent of the evidence, the policies and procedures that 
the bank has in place to prevent discriminatory or other illegal credit 
practices, any corrective action that the bank has taken or has 
committed to take, particularly voluntary corrective action resulting 
from self-assessment, and other relevant information.



Sec. 345.29  Effect of CRA performance on applications.

    (a) CRA performance. Among other factors, the FDIC takes into 
account the record of performance under the CRA of each applicant bank 
in considering an application for approval of:
    (1) The establishment of a domestic branch or other facility with 
the ability to accept deposits;
    (2) The relocation of the bank's main office or a branch;
    (3) The merger, consolidation, acquisition of assets, or assumption 
of liabilities; and
    (4) Deposit insurance for a newly chartered financial institution.
    (b) New financial institutions. A newly chartered financial 
institution shall submit with its application for deposit insurance a 
description of how it will meet its CRA objectives. The FDIC takes the 
description into account in considering the application and may deny or 
condition approval on that basis.
    (c) Interested parties. The FDIC takes into account any views 
expressed by interested parties that are submitted in accordance with 
the FDIC's procedures set forth in part 303 of this chapter in 
considering CRA performance in an application listed in paragraphs (a) 
and (b) of this section.

[[Page 288]]

    (d) Denial or conditional approval of application. A bank's record 
of performance may be the basis for denying or conditioning approval of 
an application listed in paragraph (a) of this section.



       Subpart C--Records, Reporting, and Disclosure Requirements

    Source:  60 FR 22201, May 4, 1995, unless otherwise noted.



Sec. 345.41  Assessment area delineation.

    (a) In general. A bank shall delineate one or more assessment areas 
within which the FDIC evaluates the bank's record of helping to meet the 
credit needs of its community. The FDIC does not evaluate the bank's 
delineation of its assessment area(s) as a separate performance 
criterion, but the FDIC reviews the delineation for compliance with the 
requirements of this section.
    (b) Geographic area(s) for wholesale or limited purpose banks. The 
assessment area(s) for a wholesale or limited purpose bank must consist 
generally of one or more MSAs (using the MSA boundaries that were in 
effect as of January 1 of the calendar year in which the delineation is 
made) or one or more contiguous political subdivisions, such as 
counties, cities, or towns, in which the bank has its main office, 
branches, and deposit-taking RSFs.
    (c) Geographic area(s) for other banks. The assessment area(s) for a 
bank other than a wholesale or limited purpose bank must:
    (1) Consist generally of one or more MSAs (using the MSA boundaries 
that were in effect as of January 1 of the calendar year in which the 
delineation is made) or one or more contiguous political subdivisions, 
such as counties, cities, or towns; and
    (2) Include the geographies in which the bank has its main office, 
its branches, and its deposit-taking RSFs, as well as the surrounding 
geographies in which the bank has originated or purchased a substantial 
portion of its loans (including home mortgage loans, small business and 
small farm loans, and any other loans the bank chooses, such as those 
consumer loans on which the bank elects to have its performance 
assessed).
    (d) Adjustments to geographic area(s). A bank may adjust the 
boundaries of its assessment area(s) to include only the portion of a 
political subdivision that it reasonably can be expected to serve. An 
adjustment is particularly appropriate in the case of an assessment area 
that otherwise would be extremely large, of unusual configuration, or 
divided by significant geographic barriers.
    (e) Limitations on the delineation of an assessment area. Each 
bank's assessment area(s):
    (1) Must consist only of whole geographies;
    (2) May not reflect illegal discrimination;
    (3) May not arbitrarily exclude low- or moderate-income geographies, 
taking into account the bank's size and financial condition; and
    (4) May not extend substantially beyond a CMSA boundary or beyond a 
state boundary unless the assessment area is located in a multistate 
MSA. If a bank serves a geographic area that extends substantially 
beyond a state boundary, the bank shall delineate separate assessment 
areas for the areas in each state. If a bank serves a geographic area 
that extends substantially beyond a CMSA boundary, the bank shall 
delineate separate assessment areas for the areas inside and outside the 
CMSA.
    (f) Banks serving military personnel. Notwithstanding the 
requirements of this section, a bank whose business predominantly 
consists of serving the needs of military personnel or their dependents 
who are not located within a defined geographic area may delineate its 
entire deposit customer base as its assessment area.
    (g) Use of assessment area(s). The FDIC uses the assessment area(s) 
delineated by a bank in its evaluation of the bank's CRA performance 
unless the FDIC determines that the assessment area(s) do not comply 
with the requirements of this section.



Sec. 345.42  Data collection, reporting, and disclosure.

    (a) Loan information required to be collected and maintained. A 
bank, except a small bank, shall collect, and maintain

[[Page 289]]

in machine readable form (as prescribed by the FDIC) until the 
completion of its next CRA examination, the following data for each 
small business or small farm loan originated or purchased by the bank:
    (1) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (2) The loan amount at origination;
    (3) The loan location; and
    (4) An indicator whether the loan was to a business or farm with 
gross annual revenues of $1 million or less.
    (b) Loan information required to be reported. A bank, except a small 
bank or a bank that was a small bank during the prior calendar year, 
shall report annually by March 1 to the FDIC in machine readable form 
(as prescribed by the FDIC) the following data for the prior calendar 
year:
    (1) Small business and small farm loan data. For each geography in 
which the bank originated or purchased a small business or small farm 
loan, the aggregate number and amount of loans:
    (i) With an amount at origination of $100,000 or less;
    (ii) With an amount at origination of more than $100,000 but less 
than or equal to $250,000;
    (iii) With an amount at origination of more than $250,000; and
    (iv) To businesses and farms with gross annual revenues of $1 
million or less (using the revenues that the bank considered in making 
its credit decision);
    (2) Community development loan data. The aggregate number and 
aggregate amount of community development loans originated or purchased; 
and
    (3) Home mortgage loans. If the bank is subject to reporting under 
part 203 of this title, the location of each home mortgage loan 
application, origination, or purchase outside the MSAs in which the bank 
has a home or branch office (or outside any MSA) in accordance with the 
requirements of part 203 of this title.
    (c) Optional data collection and maintenance--(1) Consumer loans. A 
bank may collect and maintain in machine readable form (as prescribed by 
the FDIC) data for consumer loans originated or purchased by the bank 
for consideration under the lending test. A bank may maintain data for 
one or more of the following categories of consumer loans: motor 
vehicle, credit card, home equity, other secured, and other unsecured. 
If the bank maintains data for loans in a certain category, it shall 
maintain data for all loans originated or purchased within that 
category. The bank shall maintain data separately for each category, 
including for each loan:
    (i) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (ii) The loan amount at origination or purchase;
    (iii) The loan location; and
    (iv) The gross annual income of the borrower that the bank 
considered in making its credit decision.
    (2) Other loan data. At its option, a bank may provide other 
information concerning its lending performance, including additional 
loan distribution data.
    (d) Data on affiliate lending. A bank that elects to have the FDIC 
consider loans by an affiliate, for purposes of the lending or community 
development test or an approved strategic plan, shall collect, maintain, 
and report for those loans the data that the bank would have collected, 
maintained, and reported pursuant to paragraphs (a), (b), and (c) of 
this section had the loans been originated or purchased by the bank. For 
home mortgage loans, the bank shall also be prepared to identify the 
home mortgage loans reported under part 203 of this title by the 
affiliate.
    (e) Data on lending by a consortium or a third party. A bank that 
elects to have the FDIC consider community development loans by a 
consortium or third party, for purposes of the lending or community 
development tests or an approved strategic plan, shall report for those 
loans the data that the bank would have reported under paragraph (b)(2) 
of this section had the loans been originated or purchased by the bank.
    (f) Small banks electing evaluation under the lending, investment, 
and service tests. A bank that qualifies for evaluation under the small 
bank performance standards but elects evaluation under the lending, 
investment, and service

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tests shall collect, maintain, and report the data required for other 
banks pursuant to paragraphs (a) and (b) of this section.
    (g) Assessment area data. A bank, except a small bank or a bank that 
was a small bank during the prior calendar year, shall collect and 
report to the FDIC by March 1 of each year a list for each assessment 
area showing the geographies within the area.
    (h) CRA Disclosure Statement. The FDIC prepares annually for each 
bank that reports data pursuant to this section a CRA Disclosure 
Statement that contains, on a state-by-state basis:
    (1) For each county (and for each assessment area smaller than a 
county) with a population of 500,000 persons or fewer in which the bank 
reported a small business or small farm loan:
    (i) The number and amount of small business and small farm loans 
reported as originated or purchased located in low-, moderate-, middle-, 
and upper-income geographies;
    (ii) A list grouping each geography according to whether the 
geography is low-, moderate-, middle-, or upper-income;
    (iii) A list showing each geography in which the bank reported a 
small business or small farm loan; and
    (iv) The number and amount of small business and small farm loans to 
businesses and farms with gross annual revenues of $1 million or less;
    (2) For each county (and for each assessment area smaller than a 
county) with a population in excess of 500,000 persons in which the bank 
reported a small business or small farm loan:
    (i) The number and amount of small business and small farm loans 
reported as originated or purchased located in geographies with median 
income relative to the area median income of less than 10 percent, 10 or 
more but less than 20 percent, 20 or more but less than 30 percent, 30 
or more but less than 40 percent, 40 or more but less than 50 percent, 
50 or more but less than 60 percent, 60 or more but less than 70 
percent, 70 or more but less than 80 percent, 80 or more but less than 
90 percent, 90 or more but less than 100 percent, 100 or more but less 
than 110 percent, 110 or more but less than 120 percent, and 120 percent 
or more;
    (ii) A list grouping each geography in the county or assessment area 
according to whether the median income in the geography relative to the 
area median income is less than 10 percent, 10 or more but less than 20 
percent, 20 or more but less than 30 percent, 30 or more but less than 
40 percent, 40 or more but less than 50 percent, 50 or more but less 
than 60 percent, 60 or more but less than 70 percent, 70 or more but 
less than 80 percent, 80 or more but less than 90 percent, 90 or more 
but less than 100 percent, 100 or more but less than 110 percent, 110 or 
more but less than 120 percent, and 120 percent or more;
    (iii) A list showing each geography in which the bank reported a 
small business or small farm loan; and
    (iv) The number and amount of small business and small farm loans to 
businesses and farms with gross annual revenues of $1 million or less;
    (3) The number and amount of small business and small farm loans 
located inside each assessment area reported by the bank and the number 
and amount of small business and small farm loans located outside the 
assessment area(s) reported by the bank; and
    (4) The number and amount of community development loans reported as 
originated or purchased.
    (i) Aggregate disclosure statements. The FDIC, in conjunction with 
the Board of Governors of the Federal Reserve System, the Office of the 
Comptroller of the Currency, and the Office of Thrift Supervision, 
prepares annually, for each MSA (including an MSA that crosses a state 
boundary) and the non-MSA portion of each state, an aggregate disclosure 
statement of small business and small farm lending by all institutions 
subject to reporting under this part or parts 25, 228, or 563e of this 
title. These disclosure statements indicate, for each geography, the 
number and amount of all small business and small farm loans originated 
or purchased by reporting institutions, except that the FDIC may adjust 
the form of the disclosure if necessary, because of special 
circumstances, to protect the privacy of a borrower or the competitive 
position of an institution.

[[Page 291]]

    (j) Central data depositories. The FDIC makes the aggregate 
disclosure statements, described in paragraph (i) of this section, and 
the individual bank CRA Disclosure Statements, described in paragraph 
(h) of this section, available to the public at central data 
depositories. The FDIC publishes a list of the depositories at which the 
statements are available.



Sec. 345.43  Content and availability of public file.

    (a) Information available to the public. A bank shall maintain a 
public file that includes the following information:
    (1) All written comments received from the public for the current 
year and each of the prior two calendar years that specifically relate 
to the bank's performance in helping to meet community credit needs, and 
any response to the comments by the bank, if neither the comments nor 
the responses contain statements that reflect adversely on the good name 
or reputation of any persons other than the bank or publication of which 
would violate specific provisions of law;
    (2) A copy of the public section of the bank's most recent CRA 
Performance Evaluation prepared by the FDIC. The bank shall place this 
copy in the public file within 30 business days after its receipt from 
the FDIC;
    (3) A list of the bank's branches, their street addresses, and 
geographies;
    (4) A list of branches opened or closed by the bank during the 
current year and each of the prior two calendar years, their street 
addresses, and geographies;
    (5) A list of services (including hours of operation, available loan 
and deposit products, and transaction fees) generally offered at the 
bank's branches and descriptions of material differences in the 
availability or cost of services at particular branches, if any. At its 
option, a bank may include information regarding the availability of 
alternative systems for delivering retail banking services (e.g., RSFs, 
RSFs not owned or operated by or exclusively for the bank, banking by 
telephone or computer, loan production offices, and bank-at-work or 
bank-by-mail programs);
    (6) A map of each assessment area showing the boundaries of the area 
and identifying the geographies contained within the area, either on the 
map or in a separate list; and
    (7) Any other information the bank chooses.
    (b) Additional information available to the public--(1) Banks other 
than small banks. A bank, except a small bank or a bank that was a small 
bank during the prior calendar year, shall include in its public file 
the following information pertaining to the bank and its affiliates, if 
applicable, for each of the prior two calendar years:
    (i) If the bank has elected to have one or more categories of its 
consumer loans considered under the lending test, for each of these 
categories, the number and amount of loans:
    (A) To low-, moderate-, middle-, and upper-income individuals;
    (B) Located in low-, moderate-, middle-, and upper-income census 
tracts; and
    (C) Located inside the bank's assessment area(s) and outside the 
bank's assessment area(s); and
    (ii) The bank's CRA Disclosure Statement. The bank shall place the 
statement in the public file within three business days of its receipt 
from the FDIC.
    (2) Banks required to report Home Mortgage Disclosure Act (HMDA) 
data. A bank required to report home mortgage loan data pursuant part 
203 of this title shall include in its public file a copy of the HMDA 
Disclosure Statement provided by the Federal Financial Institutions 
Examination Council pertaining to the bank for each of the prior two 
calendar years. In addition, a bank that elected to have the FDIC 
consider the mortgage lending of an affiliate for any of these years 
shall include in its public file the affiliate's HMDA Disclosure 
Statement for those years. The bank shall place the statement(s) in the 
public file within three business days after receipt.
    (3) Small banks. A small bank or a bank that was a small bank during 
the prior calendar year shall include in its public file:
    (i) The bank's loan-to-deposit ratio for each quarter of the prior 
calendar

[[Page 292]]

year and, at its option, additional data on its loan-to-deposit ratio; 
and
    (ii) The information required for other banks by paragraph (b)(1) of 
this section, if the bank has elected to be evaluated under the lending, 
investment, and service tests.
    (4) Banks with strategic plans. A bank that has been approved to be 
assessed under a strategic plan shall include in its public file a copy 
of that plan. A bank need not include information submitted to the FDIC 
on a confidential basis in conjunction with the plan.
    (5) Banks with less than satisfactory ratings. A bank that received 
a less than satisfactory rating during its most recent examination shall 
include in its public file a description of its current efforts to 
improve its performance in helping to meet the credit needs of its 
entire community. The bank shall update the description quarterly.
    (c) Location of public information. A bank shall make available to 
the public for inspection upon request and at no cost the information 
required in this section as follows:
    (1) At the main office and, if an interstate bank, at one branch 
office in each state, all information in the public file; and
    (2) At each branch:
    (i) A copy of the public section of the bank's most recent CRA 
Performance Evaluation and a list of services provided by the branch; 
and
    (ii) Within five calendar days of the request, all the information 
in the public file relating to the assessment area in which the branch 
is located.
    (d) Copies. Upon request, a bank shall provide copies, either on 
paper or in another form acceptable to the person making the request, of 
the information in its public file. The bank may charge a reasonable fee 
not to exceed the cost of copying and mailing (if applicable).
    (e) Updating. Except as otherwise provided in this section, a bank 
shall ensure that the information required by this section is current as 
of April 1 of each year.



Sec. 345.44  Public notice by banks.

    A bank shall provide in the public lobby of its main office and each 
of its branches the appropriate public notice set forth in Appendix B of 
this part. Only a branch of a bank having more than one assessment area 
shall include the bracketed material in the notice for branch offices. 
Only a bank that is an affiliate of a holding company shall include the 
next to the last sentence of the notices. A bank shall include the last 
sentence of the notices only if it is an affiliate of a holding company 
that is not prevented by statute from acquiring additional banks.



Sec. 345.45  Publication of planned examination schedule.

    The FDIC publishes at least 30 days in advance of the beginning of 
each calendar quarter a list of banks scheduled for CRA examinations in 
that quarter.

                     Appendix A to Part 345--Ratings

    (a) Ratings in general. (1) In assigning a rating, the FDIC 
evaluates a bank's performance under the applicable performance criteria 
in this part, in accordance with Sec. 345.21, and Sec. 345.28, which 
provides for adjustments on the basis of evidence of discriminatory or 
other illegal credit practices.
    (2) A bank's performance need not fit each aspect of a particular 
rating profile in order to receive that rating, and exceptionally strong 
performance with respect to some aspects may compensate for weak 
performance in others. The bank's overall performance, however, must be 
consistent with safe and sound banking practices and generally with the 
appropriate rating profile as follows.
    (b) Banks evaluated under the lending, investment, and service 
tests.--(1) Lending performance rating. The FDIC assigns each bank's 
lending performance one of the five following ratings.
    (i) Outstanding. The FDIC rates a bank's lending performance 
``outstanding'' if, in general, it demonstrates:
    (A) Excellent responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) A substantial majority of its loans are made in its assessment 
area(s);
    (C) An excellent geographic distribution of loans in its assessment 
area(s);
    (D) An excellent distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product lines 
offered by the bank;
    (E) An excellent record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-income 
individuals, or businesses (including

[[Page 293]]

farms) with gross annual revenues of $1 million or less, consistent with 
safe and sound operations;
    (F) Extensive use of innovative or flexible lending practices in a 
safe and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
    (G) It is a leader in making community development loans.
    (ii) High satisfactory. The FDIC rates a bank's lending performance 
``high satisfactory'' if, in general, it demonstrates:
    (A) Good responsiveness to credit needs in its assessment area(s), 
taking into account the number and amount of home mortgage, small 
business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) A high percentage of its loans are made in its assessment 
area(s);
    (C) A good geographic distribution of loans in its assessment 
area(s);
    (D) A good distribution, particularly in its assessment area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different sizes, given the product lines offered by 
the bank;
    (E) A good record of serving the credit needs of highly economically 
disadvantaged areas in its assessment area(s), low-income individuals, 
or businesses (including farms) with gross annual revenues of $1 million 
or less, consistent with safe and sound operations;
    (F) Use of innovative or flexible lending practices in a safe and 
sound manner to address the credit needs of low- or moderate-income 
individuals or geographies; and
    (G) It has made a relatively high level of community development 
loans.
    (iii) Low satisfactory. The FDIC rates a bank's lending performance 
``low satisfactory'' if, in general, it demonstrates:
    (A) Adequate responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) An adequate percentage of its loans are made in its assessment 
area(s);
    (C) An adequate geographic distribution of loans in its assessment 
area(s);
    (D) An adequate distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product lines 
offered by the bank;
    (E) An adequate record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-income 
individuals, or businesses (including farms) with gross annual revenues 
of $1 million or less, consistent with safe and sound operations;
    (F) Limited use of innovative or flexible lending practices in a 
safe and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
    (G) It has made an adequate level of community development loans.
    (iv) Needs to improve. The FDIC rates a bank's lending performance 
``needs to improve'' if, in general, it demonstrates:
    (A) Poor responsiveness to credit needs in its assessment area(s), 
taking into account the number and amount of home mortgage, small 
business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) A small percentage of its loans are made in its assessment 
area(s);
    (C) A poor geographic distribution of loans, particularly to low- or 
moderate-income geographies, in its assessment area(s);
    (D) A poor distribution, particularly in its assessment area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different sizes, given the product lines offered by 
the bank;
    (E) A poor record of serving the credit needs of highly economically 
disadvantaged areas in its assessment area(s), low-income individuals, 
or businesses (including farms) with gross annual revenues of $1 million 
or less, consistent with safe and sound operations;
    (F) Little use of innovative or flexible lending practices in a safe 
and sound manner to address the credit needs of low- or moderate-income 
individuals or geographies; and
    (G) It has made a low level of community development loans.
    (v) Substantial noncompliance. The FDIC rates a bank's lending 
performance as being in ``substantial noncompliance'' if, in general, it 
demonstrates:
    (A) A very poor responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) A very small percentage of its loans are made in its assessment 
area(s);
    (C) A very poor geographic distribution of loans, particularly to 
low- or moderate-income geographies, in its assessment area(s);
    (D) A very poor distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product lines 
offered by the bank;
    (E) A very poor record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-income 
individuals, or businesses (including farms) with gross annual revenues 
of $1 million or less, consistent with safe and sound operations;
    (F) No use of innovative or flexible lending practices in a safe and 
sound manner to address the credit needs of low- or moderate-income 
individuals or geographies; and

[[Page 294]]

    (G) It has made few, if any, community development loans.
    (2) Investment performance rating. The FDIC assigns each bank's 
investment performance one of the five following ratings.
    (i) Outstanding. The FDIC rates a bank's investment performance 
``outstanding'' if, in general, it demonstrates:
    (A) An excellent level of qualified investments, particularly those 
that are not routinely provided by private investors, often in a 
leadership position;
    (B) Extensive use of innovative or complex qualified investments; 
and
    (C) Excellent responsiveness to credit and community development 
needs.
    (ii) High satisfactory. The FDIC rates a bank's investment 
performance ``high satisfactory'' if, in general, it demonstrates:
    (A) A significant level of qualified investments, particularly those 
that are not routinely provided by private investors, occasionally in a 
leadership position;
    (B) Significant use of innovative or complex qualified investments; 
and
    (C) Good responsiveness to credit and community development needs.
    (iii) Low satisfactory. The FDIC rates a bank's investment 
performance ``low satisfactory'' if, in general, it demonstrates:
    (A) An adequate level of qualified investments, particularly those 
that are not routinely provided by private investors, although rarely in 
a leadership position;
    (B) Occasional use of innovative or complex qualified investments; 
and
    (C) Adequate responsiveness to credit and community development 
needs.
    (iv) Needs to improve. The FDIC rates a bank's investment 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) A poor level of qualified investments, particularly those that 
are not routinely provided by private investors;
    (B) Rare use of innovative or complex qualified investments; and
    (C) Poor responsiveness to credit and community development needs.
    (v) Substantial noncompliance. The FDIC rates a bank's investment 
performance as being in ``substantial noncompliance'' if, in general, it 
demonstrates:
    (A) Few, if any, qualified investments, particularly those that are 
not routinely provided by private investors;
    (B) No use of innovative or complex qualified investments; and
    (C) Very poor responsiveness to credit and community development 
needs.
    (3) Service performance rating. The FDIC assigns each bank's service 
performance one of the five following ratings.
    (i) Outstanding. The FDIC rates a bank's service performance 
``outstanding'' if, in general, the bank demonstrates:
    (A) Its service delivery systems are readily accessible to 
geographies and individuals of different income levels in its assessment 
area(s);
    (B) To the extent changes have been made, its record of opening and 
closing branches has improved the accessibility of its delivery systems, 
particularly in low- or moderate-income geographies or to low- or 
moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) are 
tailored to the convenience and needs of its assessment area(s), 
particularly low- or moderate-income geographies or low- or moderate-
income individuals; and
    (D) It is a leader in providing community development services.
    (ii) High satisfactory. The FDIC rates a bank's service performance 
``high satisfactory'' if, in general, the bank demonstrates:
    (A) Its service delivery systems are accessible to geographies and 
individuals of different income levels in its assessment area(s);
    (B) To the extent changes have been made, its record of opening and 
closing branches has not adversely affected the accessibility of its 
delivery systems, particularly in low- and moderate-income geographies 
and to low- and moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) do 
not vary in a way that inconveniences its assessment area(s), 
particularly low- and moderate-income geographies and low- and moderate-
income individuals; and
    (D) It provides a relatively high level of community development 
services.
    (iii) Low satisfactory. The FDIC rates a bank's service performance 
``low satisfactory'' if, in general, the bank demonstrates:
    (A) Its service delivery systems are reasonably accessible to 
geographies and individuals of different income levels in its assessment 
area(s);
    (B) To the extent changes have been made, its record of opening and 
closing branches has generally not adversely affected the accessibility 
of its delivery systems, particularly in low- and moderate-income 
geographies and to low- and moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) do 
not vary in a way that inconveniences its assessment area(s), 
particularly low- and moderate-income geographies and low- and moderate-
income individuals; and
    (D) It provides an adequate level of community development services.
    (iv) Needs to improve. The FDIC rates a bank's service performance 
``needs to improve'' if, in general, the bank demonstrates:
    (A) Its service delivery systems are unreasonably inaccessible to 
portions of its assessment area(s), particularly to low- or moderate-
income geographies or to low- or moderate-income individuals;

[[Page 295]]

    (B) To the extent changes have been made, its record of opening and 
closing branches has adversely affected the accessibility its delivery 
systems, particularly in low- or moderate-income geographies or to low- 
or moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) vary 
in a way that inconveniences its assessment area(s), particularly low- 
or moderate-income geographies or low- or moderate-income individuals; 
and
    (D) It provides a limited level of community development services.
    (v) Substantial noncompliance. The FDIC rates a bank's service 
performance as being in ``substantial noncompliance'' if, in general, 
the bank demonstrates:
    (A) Its service delivery systems are unreasonably inaccessible to 
significant portions of its assessment area(s), particularly to low- or 
moderate-income geographies or to low- or moderate-income individuals;
    (B) To the extent changes have been made, its record of opening and 
closing branches has significantly adversely affected the accessibility 
of its delivery systems, particularly in low- or moderate-income 
geographies or to low- or moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) vary 
in a way that significantly inconveniences its assessment area(s), 
particularly low- or moderate-income geographies or low- or moderate-
income individuals; and
    (D) It provides few, if any, community development services.
    (c) Wholesale or limited purpose banks. The FDIC assigns each 
wholesale or limited purpose bank's community development performance 
one of the four following ratings.
    (1) Outstanding. The FDIC rates a wholesale or limited purpose 
bank's community development performance ``outstanding'' if, in general, 
it demonstrates:
    (i) A high level of community development loans, community 
development services, or qualified investments, particularly investments 
that are not routinely provided by private investors;
    (ii) Extensive use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Excellent responsiveness to credit and community development 
needs in its assessment area(s).
    (2) Satisfactory. The FDIC rates a wholesale or limited purpose 
bank's community development performance ``satisfactory'' if, in 
general, it demonstrates:
    (i) An adequate level of community development loans, community 
development services, or qualified investments, particularly investments 
that are not routinely provided by private investors;
    (ii) Occasional use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Adequate responsiveness to credit and community development 
needs in its assessment area(s).
    (3) Needs to improve. The FDIC rates a wholesale or limited purpose 
bank's community development performance as ``needs to improve'' if, in 
general, it demonstrates:
    (i) A poor level of community development loans, community 
development services, or qualified investments, particularly investments 
that are not routinely provided by private investors;
    (ii) Rare use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Poor responsiveness to credit and community development needs 
in its assessment area(s).
    (4) Substantial noncompliance. The FDIC rates a wholesale or limited 
purpose bank's community development performance in ``substantial 
noncompliance'' if, in general, it demonstrates:
    (i) Few, if any, community development loans, community development 
services, or qualified investments, particularly investments that are 
not routinely provided by private investors;
    (ii) No use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Very poor responsiveness to credit and community development 
needs in its assessment area(s).
    (d) Banks evaluated under the small bank performance standards. The 
FDIC rates the performance of each bank evaluated under the small bank 
performance standards as follows.
    (1) Eligibility for a satisfactory rating. The FDIC rates a bank's 
performance ``satisfactory'' if, in general, the bank demonstrates:
    (i) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the bank's size, financial condition, the credit needs 
of its assessment area(s), and taking into account, as appropriate, 
lending-related activities such as loan originations for sale to the 
secondary markets and community development loans and qualified 
investments;
    (ii) A majority of its loans and, as appropriate, other lending-
related activities are in its assessment area(s);
    (iii) A distribution of loans to and, as appropriate, other lending 
related-activities for individuals of different income levels (including 
low- and moderate-income individuals) and businesses and farms of 
different sizes that is reasonable given the demographics of the bank's 
assessment area(s);

[[Page 296]]

    (iv) A record of taking appropriate action, as warranted, in 
response to written complaints, if any, about the bank's performance in 
helping to meet the credit needs of its assessment area(s); and
    (v) A reasonable geographic distribution of loans given the bank's 
assessment area(s).
    (2) Eligibility for an outstanding rating. A bank that meets each of 
the standards for a ``satisfactory'' rating under this paragraph and 
exceeds some or all of those standards may warrant consideration for an 
overall rating of ``outstanding.'' In assessing whether a bank's 
performance is ``outstanding,'' the FDIC considers the extent to which 
the bank exceeds each of the performance standards for a 
``satisfactory'' rating and its performance in making qualified 
investments and its performance in providing branches and other services 
and delivery systems that enhance credit availability in its assessment 
area(s).
    (3) Needs to improve or substantial noncompliance ratings. A bank 
also may receive a rating of ``needs to improve'' or ``substantial 
noncompliance'' depending on the degree to which its performance has 
failed to meet the standards for a ``satisfactory'' rating.
    (e) Strategic plan assessment and rating. (1) Satisfactory goals. 
The FDIC approves as ``satisfactory'' measurable goals that adequately 
help to meet the credit needs of the bank's assessment area(s).
    (2) Outstanding goals. If the plan identifies a separate group of 
measurable goals that substantially exceed the levels approved as 
``satisfactory,'' the FDIC will approve those goals as ``outstanding.''
    (3) Rating. The FDIC assesses the performance of a bank operating 
under an approved plan to determine if the bank has met its plan goals:
    (i) If the bank substantially achieves its plan goals for a 
satisfactory rating, the FDIC will rate the bank's performance under the 
plan as ``satisfactory.''
    (ii) If the bank exceeds its plan goals for a satisfactory rating 
and substantially achieves its plan goals for an outstanding rating, the 
FDIC will rate the bank's performance under the plan as ``outstanding.''
    (iii) If the bank fails to meet substantially its plan goals for a 
satisfactory rating, the FDIC will rate the bank as either ``needs to 
improve'' or ``substantial noncompliance,'' depending on the extent to 
which it falls short of its plan goals, unless the bank elected in its 
plan to be rated otherwise, as provided in Sec. 345.27(f)(4).

                   Appendix B to Part 345--CRA Notice

    (a) Notice for main offices and, if an interstate bank, one branch 
office in each state.

                    Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Federal 
Deposit Insurance Corporation (FDIC) evaluates our record of helping to 
meet the credit needs of this community consistent with safe and sound 
operations. The FDIC also takes this record into account when deciding 
on certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and our 
performance under the CRA, including, for example, information about our 
branches, such as their location and services provided at them; the 
public section of our most recent CRA Performance Evaluation, prepared 
by the FDIC; and comments received from the public relating to our 
performance in helping to meet community credit needs, as well as our 
responses to those comments. You may review this information today.
    At least 30 days before the beginning of each quarter, the FDIC 
publishes a nationwide list of the banks that are scheduled for CRA 
examination in that quarter. This list is available from the Regional 
Manager, Division of Compliance and Consumer Affairs, FDIC (address). 
You may send written comments about our performance in helping to meet 
community credit needs to (name and address of official at bank) and 
FDIC Regional Manager. Your letter, together with any response by us, 
will be considered by the FDIC in evaluating our CRA performance and may 
be made public.
    You may ask to look at any comments received by the FDIC Regional 
Manager. You may also request from the FDIC Regional Manager an 
announcement of our applications covered by the CRA filed with the FDIC. 
We are an affiliate of (name of holding company), a bank holding 
company. You may request from the (title of responsible official), 
Federal Reserve Bank of ____________________ (address) an announcement 
of applications covered by the CRA filed by bank holding companies.
    (b) Notice for branch offices.

                    Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Federal 
Deposit Insurance Corporation (FDIC) evaluates our record of helping to 
meet the credit needs of this community consistent with safe and sound 
operations. The FDIC also takes this record into account when deciding 
on certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and our 
performance under the CRA. You may review today the public section of 
our most recent CRA evaluation, prepared by the FDIC, and a list of 
services provided at this branch. You may

[[Page 297]]

also have access to the following additional information, which we will 
make available to you at this branch within five calendar days after you 
make a request to us: (1) a map showing the assessment area containing 
this branch, which is the area in which the FDIC evaluates our CRA 
performance in this community; (2) information about our branches in 
this assessment area; (3) a list of services we provide at those 
locations; (4) data on our lending performance in this assessment area; 
and (5) copies of all written comments received by us that specifically 
relate to our CRA performance in this assessment area, and any responses 
we have made to those comments. If we are operating under an approved 
strategic plan, you may also have access to a copy of the plan.

[If you would like to review information about our CRA performance in 
other communities served by us, the public file for our entire bank is 
available at (name of office located in state), located at (address).]

    At least 30 days before the beginning of each quarter, the FDIC 
publishes a nationwide list of the banks that are scheduled for CRA 
examination in that quarter. This list is available from the Regional 
Manager, Division of Compliance and Consumer Affairs, FDIC (address). 
You may send written comments about our performance in helping to meet 
community credit needs to (name and address of official at bank) and the 
FDIC Regional Manager. Your letter, together with any response by us, 
will be considered by the FDIC in evaluating our CRA performance and may 
be made public.
    You may ask to look at any comments received by the FDIC Regional 
Manager. You may also request from the FDIC Regional Manager an 
announcement of our applications covered by the CRA filed with the FDIC. 
We are an affiliate of (name of holding company), a bank holding 
company. You may request from the (title of responsible official), 
Federal Reserve Bank of ____________________ (address) an announcement 
of applications covered by the CRA filed by bank holding companies.



PART 346--FOREIGN BANKS--Table of Contents




                         Subpart A--Definitions

Sec.
346.1  Definitions.

                    Subpart B--Insurance of Deposits

346.2  Scope.
346.3  Restriction on operation of insured and noninsured branches.
346.4  Insurance requirement.
346.5  Branches established under section 5 of the International Banking 
          Act.
346.6  Exemptions from the insurance requirement.
346.7  Notification to depositors.
346.8  Optional insurance.
346.9--346.15  [Reserved]

            Subpart C--Foreign Banks Having Insured Branches

346.16  Scope.
346.17  Agreement to provide information and to be examined.
346.18  Records.
346.19  Pledge of assets.
346.20  Asset maintenance.
346.21  [Reserved]
346.22  Deductions from the assessment base.
346.23--346.100  [Reserved]

 Subpart D--Applications Seeking Approval for Insured State Branches To 
         Conduct Activities Not Permissible for Federal Branches

346.101  Applications.

Appendix A to Part 346  [Reserved]

    Authority:  12 U.S.C. 1813, 1815, 1817, 1819, 1820, 3103, 3104, 
3105, 3108.

    Source:  44 FR 40060, July 9, 1979, unless otherwise noted.



                         Subpart A--Definitions



Sec. 346.1  Definitions.

    For the purposes of this part:
    (a) Foreign bank means any company organized under the laws of a 
foreign country, any Territory of the United States, Puerto Rico, Guam, 
American Samoa, the Northern Mariana Islands or the Virgin Islands which 
engages in the business of banking. The term includes foreign commercial 
banks, foreign merchant banks, and other foreign institutions that 
engage in banking activities usual in connection with the business of 
banking in the countries where such foreign institutions are organized 
and operating. Except as otherwise specifically provided by the Federal 
Deposit Insurance Corporation, banks organized under the laws of a 
foreign country, any Territory of the United States, Puerto Rico, Guam, 
American Samoa, the Northern Mariana Islands, or the Virgin Islands 
which are insured banks other than by reason of having an insured branch 
are not considered to be foreign banks for purposes of Secs. 346.17, 
346.18, 346.19, and 346.20. For purposes of Sec. 346.6, the term

[[Page 298]]

foreign bank does not include any bank organized under the laws of any 
territory of the United States, Puerto Rico, Guam, American Samoa, or 
the Virgin Islands the deposits of which are insured by the Corporation 
pursuant to the Federal Deposit Insurance Act.
    (b) Foreign country means any country other than the United States 
and includes any colony, dependency or possession of any such country.
    (c) State means any State of the United States or the District of 
Columbia.
    (d) Branch means any office or place of business of a foreign bank 
located in any State of the United States at which deposits are 
received. The term does not include any office or place of business 
deemed by the State licensing authority or the Comptroller of the 
Currency to be an agency.
    (e) Federal branch means a branch of a foreign bank established and 
operating under the provisions of section 4 of the International Banking 
Act of 1978 (12 U.S.C. 3102).
    (f) State branch means a branch of a foreign bank established and 
operating under the laws of any State.
    (g) Insured branch means a branch of a foreign bank any deposits of 
which branch are insured in accordance with the provisions of the 
Federal Deposit Insurance Act.
    (h) Noninsured branch means a branch of a foreign bank deposits of 
which branch are not insured in accordance with the provisions of the 
Federal Deposit Insurance Act.
    (i) Insured bank means any bank, including a foreign bank having an 
insured branch, deposits of which are insured in accordance with the 
provisions of the Federal Deposit Insurance Act.
    (j) Home State of a foreign bank means the State so determined by 
the election of the foreign bank, or in default of such election, by the 
Board of Governors of the Federal Reserve System.
    (k) Initial deposit means the first deposit transaction between a 
depositor and the branch. The initial deposit may be placed into 
different deposit accounts or into different kinds of deposit accounts, 
such as demand, savings, or time. Deposit accounts that are held by a 
depositor in the same right and capacity may be added together for the 
purposes of determining the dollar amount of the initial deposit. First 
deposit means any deposit made when there is no current deposit 
relationship between the depositor and the branch.
    (l) Domestic retail deposit activity means the acceptance by a State 
branch of any initial deposit of less than $100,000.
    (m) A majority owned subsidiary means a company the voting stock of 
which is more than 50 percent owned or controlled by another company.
    (n) A wholly owned subsidiary means a company the voting stock of 
which is 100 percent owned or controlled by another company except for a 
nominal number of directors' shares.
    (o) Affiliate means any entity that controls, is controlled by, or 
is under common control with another entity. An entity shall be deemed 
to ``control'' another entity if the entity directly or indirectly owns, 
controls, or has the power to vote 25 percent or more of any class of 
voting securities of the other entity or controls in any manner the 
election of a majority of the directors or trustees of the other entity.
    (p) Depository means any insured state bank, national bank, or 
insured branch. A depository may not be an affiliate of the foreign bank 
whose insured branch is seeking to use the depository.
    (q) Deposit means the same as in section 3(l) of the Federal Deposit 
Insurance Act (12 U.S.C. 1813(l)).
    (r) Significant risk to the deposit insurance fund shall be 
understood to be present whenever there is a high probability that the 
Bank Insurance Fund administered by the FDIC may suffer a loss.
    (s) Foreign business means any entity, including but not limited to 
a corporation, partnership, sole proprietorship, association, foundation 
or trust, which is organized under the laws of a country other than the 
United States or any United States entity which is owned or controlled 
by an entity which is organized under the laws of a country other than 
the United States or a foreign national.
    (t) Large United States business means any entity including but not 
limited to

[[Page 299]]

a corporation, partnership, sole proprietorship, association, foundation 
or trust which is organized under the laws of the United States or any 
state thereof, and:
    (1) Whose securities are registered on a national securities 
exchange or quoted on the National Association of Securities Dealers 
Automated Quotation System; or
    (2) Has annual gross revenues in excess of $1,000,000 for the fiscal 
year immediately preceding the initial deposit.
    (u) Person means an individual, bank, corporation, partnership, 
trust, association, foundation, joint venture, pool, syndicate, sole 
proprietorship, unincorporated organization, or any other form of 
entity.
    (v) Immediate family member of a natural person means the spouse, 
father, mother, brother, sister, son or daughter of that natural person.
[44 FR 40060, July 9, 1979, as amended at 49 FR 49620, Dec. 21, 1984; 54 
FR 14066, Apr. 7, 1989; 59 FR 60706, Nov. 28, 1994; 61 FR 5674, Feb. 14, 
1996]



                    Subpart B--Insurance of Deposits



Sec. 346.2  Scope.

    (a) This subpart B implements the insurance provisions of section 6 
of the International Banking Act of 1978 (12 U.S.C. 3104). It sets out 
the FDIC's rules regarding deposit activities requiring a State branch 
to be an insured branch; deposit activities not requiring a State branch 
to be an insured branch; procedures for a State branch to apply for an 
exemption from the insurance requirement; and, depositor notification 
requirements.1 It sets out the FDIC's policy regarding the 
operation of insured and noninsured branches, whether State or Federal, 
by a foreign bank and it provides that any branch has the option of 
applying for insurance.
---------------------------------------------------------------------------

    1 Sections 346.4, 346.5, 346.6 and 346.7 do not apply to 
a Federal branch; the Comptroller of the Currency's regulations 
establish such rules for Federal branches. Federal branches deemed by 
the Comptroller to require insurance must apply to the FDIC for 
insurance.
---------------------------------------------------------------------------

    (b) Any application for insurance under this subpart should be filed 
in accordance with part 303 of the FDIC's Rules and Regulations.



Sec. 346.3  Restriction on operation of insured and noninsured branches.

    The FDIC will not insure deposits in any branch of a foreign bank 
unless the foreign bank agrees that every branch established or operated 
by the foreign bank in the same State will be an insured branch; 
Provided, That this restriction does not apply to any branch which 
accepts only initial deposits in an amount of $100,000 or greater.



Sec. 346.4  Insurance requirement.

    General rule. Except as provided in Sec. 346.5 or Sec. 346.6, a 
foreign bank shall not establish or operate any State branch which is 
not an insured branch whenever:
    (a) The branch is engaged in a domestic retail deposit activity; and
    (b) The branch is located in a State which requires a bank organized 
and existing under State law to have deposit insurance whenever the bank 
accepts deposits from the general public. A State requirement is one 
imposed by statute or by State banking department regulation or policy.
[44 FR 40060, July 9, 1979, as amended at 54 FR 14067, Apr. 7, 1989]



Sec. 346.5  Branches established under section 5 of the International Banking Act.

    A foreign bank may operate any State branch as a noninsured branch 
whenever the foreign bank has entered into an agreement with the Board 
of Governors of the Federal Reserve System to accept at that branch only 
those deposits as would be permissible for a corporation organized under 
section 25(a) of the Federal Reserve Act (12 U.S.C. 611 et seq.) and 
implementing rules and regulations administered by the Board of 
Governors (12 CFR part 211).



Sec. 346.6  Exemptions from the insurance requirement.

    (a) Deposit activities not requiring insurance. A state branch will 
not be deemed to be engaged in a domestic retail deposit activity which 
requires the branch to be an insured branch under Sec. 346.4 if initial 
deposits in an amount

[[Page 300]]

of less than $100,000 are derived solely from the following:
    (1) Individuals who are not citizens or residents of the United 
States at the time of the initial deposit;
    (2) Individuals who:
    (i) Are not citizens of the United States;
    (ii) Are residents of the United States; and
    (iii) Are employed by a foreign bank, foreign business, foreign 
government, or recognized international organization;
    (3) Persons (including immediate family members of natural persons) 
to whom the branch or foreign bank (including any affiliate thereof) has 
extended credit or provided other nondeposit banking services within the 
past twelve months or has entered into a written agreement to provide 
such services within the next twelve months;
    (4) Foreign businesses, large United States businesses, and persons 
from whom an Edge Corporation may accept deposits under Sec. 211.4(e)(1) 
of Regulation K of the Board of Governors of the Federal Reserve System, 
12 CFR 211.4(e)(1);
    (5) Any governmental unit, including the United States government, 
any state government, any foreign government and any political 
subdivision or agency of any of the foregoing, and recognized 
international organizations;
    (6) Persons who are depositing funds in connection with the issuance 
of a financial instrument by the branch for the transmission of funds or 
the transmission of such funds by any electronic means; and
    (7) Any other depositor but only if the amount of deposits under 
this paragraph (a)(7) does not exceed on an average daily basis one 
percent of the average of the branch's deposits for the last 30 days of 
the most recent calendar quarter, excluding deposits in the branch of 
other offices, branches, agencies or wholly owned subsidiaries of the 
bank and the branch does not solicit deposits from the general public by 
advertising, display of signs, or similar activity designed to attract 
the attention of the general public. A foreign bank which has more than 
one state branch in the same state may aggregate deposits in such 
branches (excluding deposits of other branches, agencies or wholly owned 
subsidiaries of the bank) for the purpose of this paragraph (a)(7). The 
average shall be computed by using the sum of the close of business 
figures for the last 30 calendar days ending with and including the last 
day of the calendar quarter divided by 30. For days on which the branch 
is closed, balances from the last previous business day are to be used.
    (b) Application for an exemption. (1) Whenever a foreign bank 
proposes to accept at a state branch initial deposits of less than 
$100,000 and such deposits are not otherwise excepted under paragraph 
(a) of this section, the foreign bank may apply to the FDIC for consent 
to operate the branch as a noninsured branch. The Board of Directors may 
exempt the branch from the insurance requirement if the branch is not 
engaged in domestic retail deposit activities requiring insurance 
protection. The Board of Directors will consider the size and nature of 
depositors and deposit accounts, the importance of maintaining and 
improving the availability of credit to all sectors of the United States 
economy, including the international trade finance sector of the United 
State economy, whether the exemption would give the foreign bank an 
unfair competitive advantage over United States banking organizations, 
and any other relevant factors in making this determination.
    (2) Any request for an exemption under this paragraph should be in 
writing and authorized by the board of directors of the foreign bank. If 
a resolution is not required pursuant to the applicant's organizational 
documents, the request shall include evidence of approval by the bank's 
senior management. The request should be filed with the Regional 
Director of the Division of Supervision for the region where the state 
branch is located.
    (3) The request should detail the kinds of deposit activities in 
which the branch proposes to engage, the expected source of deposits, 
the manner in which deposits will be solicited, how this activity will 
maintain or improve the availability of credit to all sectors

[[Page 301]]

of the United States economy, including the international trade finance 
sector, that the activity will not give the foreign bank an unfair 
competitive advantage over United States banking organizations and any 
other relevant information.
    (c) Transition period. An uninsured state branch may maintain a 
retail deposit lawfully accepted pursuant to this section prior to April 
1, 1996:
    (1) If the deposit qualifies pursuant to paragraph (a) or (b) of 
this section; or
    (2) If the deposit does not qualify pursuant to paragraph (a) or (b) 
of this section, no later than:
    (i) In the case of a non-time deposit, five years from April 1, 
1996; or
    (ii) In the case of a time deposit, the first maturity date of the 
time deposit after April 1, 1996 or the date that is 90 days after April 
1, 1996, whichever is later.
[61 FR 5674, Feb. 14, 1996]



Sec. 346.7  Notification to depositors.

    Any State branch that is exempt from the insurance requirement 
pursuant to Sec. 346.6 shall--
    (a) Display conspicuously at each window or place where deposits are 
usually accepted a sign stating that deposits are not insured by the 
FDIC; and
    (b) Include in bold face conspicuous type on each signature card, 
passbook, and instrument evidencing a deposit the statement ``This 
deposit is not insured by the FDIC''; or require each depositor to 
execute a statement which acknowledges that the initial deposit and all 
future deposits at the branch are not insured by the FDIC. This 
acknowledgment shall be retained by the branch so long as the depositor 
maintains any deposit with the branch. This provision applies to any 
negotiable certificates of deposit made in a branch on or after July 6, 
1989, as well as to any renewals of such deposits which become effective 
on or after July 6, 1989.
[54 FR 14067, Apr. 7, 1989]



Sec. 346.8  Optional insurance.

    A foreign bank may apply to the FDIC for deposit insurance for any 
State branch that is not otherwise required to be insured under 
Sec. 346.4 or for any Federal branch that is not otherwise required to 
be insured under the rules and regulations of the Comptroller of the 
Currency.



Secs. 346.9--346.15  [Reserved]



            Subpart C--Foreign Banks Having Insured Branches



Sec. 346.16  Scope.

    This subpart C sets out the rules that apply only to a foreign bank 
that operates or proposes to establish an insured State or Federal 
branch. These rules relate to the following matters: an agreement to 
provide information and to be examined and provisions concerning 
recordkeeping, pledge of assets, asset maintenance, and deductions from 
the assessment base.
[44 FR 40060, July 9, 1979, as amended at 54 FR 14067, Apr. 7, 1989]



Sec. 346.17  Agreement to provide information and to be examined.

    (a) A foreign bank that applies for insurance for any branch shall 
agree in writing to the following terms:
    (1) The foreign bank will provide the FDIC with information 
regarding the affairs of the bank and its affiliates which are located 
outside of the United States as the FDIC from time to time may request 
to:
    (i) Determine the relations between the insured branch and the bank 
and its affiliates and
    (ii) Assess the financial condition of the bank as it relates to the 
insured branch.

If the laws of the country of the bank's domicile or the policy of the 
Central Bank or other banking authority prohibit or restrict the foreign 
bank from entering into this agreement, the foreign bank shall agree to 
provide information to the extent permitted by such law or policy. 
Information provided shall be in the form requested by the FDIC and 
shall be made available in the United States. The Board of Directors 
will consider the existence and extent of this prohibition or 
restriction in determining whether to grant insurance and may deny the 
application if the information available is so limited

[[Page 302]]

in extent that an unacceptable risk to the insurance fund is presented.
    (2) The FDIC may examine the affairs of any office, agency, branch 
or affiliate of the foreign bank located in the United States as the 
FDIC deems necessary to: (i) Determine the relations between the insured 
branch and such offices, agencies, branches or affiliates and (ii) 
assess the financial condition of the bank as it relates to the insured 
branch. The foreign bank shall also agree to provide the FDIC with 
information regarding the affairs of such offices, agencies, branches or 
affiliates as the FDIC deems necessary. The Board of Directors will not 
grant insurance to any branch if the foreign bank fails to enter into an 
agreement as required under paragraph (a)(2) of this section.
    (b) The agreement shall be signed by an officer of the bank who has 
been so authorized by the foreign bank's board of directors. The 
agreement and the authorization shall be included with the foreign 
bank's application for insurance. Any agreement not in English shall be 
accompanied by an English translation.
[44 FR 40060, July 9, 1979, as amended at 54 FR 14067, Apr. 7, 1989]



Sec. 346.18  Records.

    (a) Each insured branch shall keep a set of accounts and records in 
the words and figures of the English language which accurately reflect 
the business transactions of the branch on a daily basis.
    (b) The records of each insured branch shall be kept as though it 
were a separate entity, with its assets and liabilities separate from 
the other operations of the head office, other branches or agencies of 
the foreign bank and its subsidiaries or affiliates. A foreign bank 
which has more than one insured branch in a State may treat such 
branches as one entity for record keeping purposes and may designate a 
branch to maintain records for all the branches in the State.



Sec. 346.19  Pledge of assets.

    (a) Purpose. A foreign bank that has an insured branch shall pledge 
assets for the benefit of the FDIC or its designee(s). Whenever the FDIC 
is obligated under section 11(f) of the Federal Deposit Insurance Act 
(12 U.S.C 1821(f)) to pay the insured deposits of an insured branch, the 
assets pledged under this section shall become the property of the FDIC 
to be used to the extent necessary to protect the deposit insurance 
fund.
    (b) Amount of assets to be pledged. (1) A foreign bank shall pledge 
assets equal to five percent of the average of the insured branch's 
liabilities for the last 30 days of the second and fourth calendar 
quarters, respectively. This average shall be computed by using the sum 
of the close of business figures for the 30 calendar days of the second 
and fourth calendar quarters, respectively, ending with and including 
the last date of the respective calendar quarter, divided by 30.\3\ In 
determining its average liabilities, the branch may exclude liabilities 
to other offices, agencies, branches, and wholly owned subsidiaries of 
the foreign bank. The value of the pledged assets shall be computed 
based on the lesser of the principal amount (par value) or market value 
of such assets at the time of the original pledge and thereafter as of 
the last date of the second and fourth calendar quarters, respectively.
---------------------------------------------------------------------------

    \3\ For days on which the branch is closed, balances from the last 
previous business day are to be used.
---------------------------------------------------------------------------

    (2) The initial five-percent deposit for a newly established insured 
branch shall be based on the branch's projection of liabilities at the 
end of the first year of its operation.
    (3) The FDIC may require a foreign bank to pledge additional assets 
or to compute its pledge on a daily basis whenever the FDIC determines 
that the foreign bank's or any branch's condition is such that the 
assets pledged under Sec. 346.19(b) (1) and (2) will not adequately 
protect the deposit insurance fund. In requiring a foreign bank to 
pledge additional assets, the FDIC will consult with the branch's 
primary regulator. Among the factors to be considered in imposing these 
requirements are the concentration of risk to any one borrower or group 
of related borrowers, or the concentration of transfer risk to any one 
country, including the country in which the foreign bank's head office 
is located.

[[Page 303]]

    (4) Each insured branch shall separately comply with the 
requirements of this section. A foreign bank which has more than one 
insured branch in a state may treat all of its insured branches in the 
same state as one entity and shall designate one branch to be 
responsible for compliance with this section.
    (c) Depository. A foreign bank shall place pledged assets for 
safekeeping at any depository which is located in any state. A foreign 
bank must obtain the FDIC's prior written approval of the depository 
selected, and such approval may be revoked and dismissal of the 
depository required whenever the depository does not fulfill any one of 
its obligations under the agreement. A foreign bank shall appoint and 
constitute the depository as its attorney in fact for the sole purpose 
of transferring title to pledged assets to the FDIC as may be required 
to effectuate the provisions of Sec. 346.19(a).
    (d) Assets that may be pledged. Subject to the right of the FDIC to 
require substitution, a foreign bank may pledge any of the kinds of 
assets listed below; such assets must be denominated in United States 
dollars. A foreign bank shall be deemed to have pledged any such assets 
for the benefit of the FDIC or its designees at such time as any such 
asset is placed with the depository.
    (1) Certificates of deposit that are payable in the United States 
and that are issued by any state bank, national bank, or branch of a 
foreign bank which has executed a valid waiver of offset agreement or 
similar debt instruments that are payable in the United States and that 
are issued by any agency of a foreign bank which has executed a valid 
waiver of offset agreement; Provided, That the maturity of any 
certificate or issuance is not greater than one year; and Provided 
further, That the issuing branch or agency of a foreign bank is not an 
affiliate of the pledging bank or from the same country as the pledging 
bank's domicile.
    (2) Interest bearing bonds, notes, debentures, or other direct 
obligations of or obligations fully guaranteed as to principal and 
interest by the United States or any agency or instrumentality thereof;
    (3) Commercial paper that is rated P-1 or P-2, or their equivalent, 
by a nationally recognized rating service: Provided, That any conflict 
in a rating shall be resolved in favor of the lowest rating.
    (4) Banker's acceptances that are payable in the United States and 
that are issued by any state bank, national bank, or branch or agency of 
a foreign bank; Provided, That the maturity of any acceptance is not 
greater than 180 days; and Provided further, That the branch or agency 
issuing the acceptance is not an affiliate of the pledging bank or from 
the same country as the pledging bank's domicile;
    (5) General obligations of any state of the United States, or any 
county or municipality of any state of the United States, or any agency, 
instrumentality, or political subdivision of the foregoing or any 
obligation guaranteed by a state of the United States or any county or 
municipality of any state of the United States; Provided, That such 
obligations have a credit rating within the top two rating bands of a 
national-recognized rating service (with any conflict in a rating 
resolved in favor of the lowest rating).
    (6) Obligations of the African Development Bank, Asian Development 
Bank, Inter-American Development Bank, and the International Bank for 
Reconstruction and Development; or
    (7) Notes issued by bank holding companies or banks organized under 
the laws of the United States or any state thereof or notes issued by 
United States branches or agencies of foreign banks, Provided, That the 
notes have a credit rating within the top two rating bands of a 
nationally-recognized rating service (with any conflict in a rating 
resolved in favor of the lowest rating) and that they are payable in the 
United States, and Provided further, That the issuer is not an affiliate 
of the foreign bank pledging the note.
    (8) Any asset determined by the FDIC to be acceptable.
    (e) Pledge agreement. A foreign bank shall not pledge any assets 
unless a pledge agreement in form and substance satisfactory to the FDIC 
has been executed by the foreign bank and the depository. The agreement, 
in addition to other terms not inconsistent

[[Page 304]]

with this paragraph (e), shall give effect to the following terms:
    (1) Original pledge. The foreign bank shall place with the 
depository assets of the kind described in Sec. 346.19(d), having an 
aggregate value in the amount as required pursuant to Sec. 346.19(b).
    (2) Additional assets required to be pledged. Whenever the foreign 
bank is required to pledge additional assets for the benefit of the FDIC 
or its designees pursuant to Sec. 346.19(b)(1), it shall place (within 
two (2) business days after the last day of the immediately preceding 
second or fourth calendar quarter, respectively, unless otherwise 
ordered) additional assets of the kind described in Sec. 346.19(d), 
having an aggregate value in the amount required by the FDIC.
    (3) Substitution of assets. The foreign bank, at any time, may 
substitute any assets for pledged assets, and, upon such substitution, 
the depository shall promptly release any such assets to the foreign 
bank. Provided, That (i) the foreign bank pledges assets of the kind 
described in Sec. 346.19(d) having an aggregate value not less than the 
value of the pledged assets for which they are substituted and certified 
as such by the foreign bank and (ii) the FDIC has not by written 
notification to the foreign bank, a copy of which shall be provided to 
the depository, suspended or terminated the foreign bank's right of 
substitution.
    (4) Delivery of other documents. Concurrently with the pledge of any 
assets, the foreign bank shall deliver to the depository all documents 
and instruments necessary or advisable to effectuate the transfer of 
title to any such assets and thereafter, from time to time, at the 
request of the FDIC, deliver to the depository any such additional 
documents or instruments.
    (5) Acceptance and safekeeping responsibilities of the depository. 
(i) The depository shall accept and hold any assets pledged by the 
foreign bank pursuant to the pledge agreement for safekeeping free and 
clear of any lien, charge, right of offset, credit, or preference in 
connection with any claim the depository may assert against the foreign 
bank and shall designate any such assets as a special pledge for the 
benefit of the FDIC or its designees. The depository shall not accept 
the pledge of any such assets unless concurrently with such pledge the 
foreign bank delivers to the depository the documents and instruments 
necessary for the transfer of title thereto as provided in this part.
    (ii) The depository shall hold any such assets separate from all 
other assets of the foreign bank or the depository. Such asssets may be 
held in book-entry form but must at all times be segregated on the 
records of the depository and clearly identified as assets subject to 
the pledge agreement.
    (6) Reporting requirements of the branch and the depository--(i) 
Initial reports. Upon the original pledge of assets as provided in 
Sec. 346.19(e)(1),
    (A) The depository shall provide to the foreign bank and to the 
regional director of the FDIC region in which the branch is located a 
written report in the form of a receipt identifying each asset pledged 
and specifying in reasonable detail with respect to each such asset the 
complete title, interest rate, series, serial number (if any), principal 
amount (par value), maturity date and call date; and
    (B) The foreign bank shall provide to the regional director of the 
FDIC region in which the branch is located a written report certified as 
correct by the foreign bank which sets forth the value of each pledged 
asset and the aggregate value of all such assets, and which states that 
the aggregate value of all such assets is the amount required pursuant 
to Sec. 346.19(b) and that all such assets are of the kind described in 
Sec. 346.19(d).
    (ii) Semiannual reports. Within ten (10) calendar days after the end 
of the second and fourth calendar quarters:
    (A) The depository shall provide to the regional director of the 
FDIC region in which the branch is located a written report specifying 
in reasonable detail with respect to each asset currently pledged 
(including any asset pledged to satisfy the requirements of 
Sec. 346.19(b)(3) and identified as such), as of two business days after 
the end of each of the specified calendar quarters, the complete title, 
interest rate, series, serial number (if any), principal amount (par 
value), maturity date, and call date, Provided, That if no substitution 
of any asset has occurred during the reporting period, the report need

[[Page 305]]

only specify that no substitution of assets has occurred; and
    (B) The foreign bank shall provide as of two business days after the 
end of each of the specified calendar quarters to the regional director 
of the FDIC region in which the branch is located a written report 
certified as correct by the foreign bank which sets forth the value of 
each pledged asset and the aggregate value of all such assets, which 
states that the aggregate value of all such assets is the amount 
required pursuant to Sec. 346.19(b) and that all such assets are of the 
kind described in Sec. 346.19(d), and which states the average of the 
liabilities of each branch of the foreign bank computed in the manner 
and for the period prescribed in Sec. 346.19(b).
    (iii) Additional reports. The foreign bank shall, from time to time, 
as may be required, provide to the regional director of the FDIC region 
in which the branch is located a written report in the form specified 
containing the information requested with respect to any asset then 
currently pledged.
    (7) Access to assets. With respect to any asset pledged pursuant to 
the pledge agreement, the depository will provide representatives of the 
FDIC or the foreign bank access (during regular business hours of the 
depository and at the location where any such asset is held, without 
other limitation or qualification) to all original instruments, 
documents, books, and records evidencing or pertaining to any such 
asset.
    (8) Release upon the order of the FDIC. The depository shall release 
to the foreign bank any pledged assets, as specified in a written 
notification of the regional director of the FDIC region in which the 
branch is located, upon the terms and conditions provided in such 
notification, including without limitation the waiver of any requirement 
that any assets be pledged by the foreign bank in substitution of any 
released assets.
    (9) Release to the FDIC. Whenever the FDIC is obligatged under 
section 11(f) of the Federal Deposit Insurance Act (12 U.S.C. 1821(f)) 
to pay insured deposits of an insured branch, the FDIC by written 
certification shall so inform the depository; and the depository, upon 
receipt of such certification, shall thereupon promptly release and 
transfer title to any pledged assets to the FDIC or release such assets 
to the foreign bank, as specified in the certification. Upon release and 
transfer of title to all pledged assets specified in the certification, 
the depository shall be discharged from any further obligation under the 
pledge agreement.
    (10) Interest earned on assets. The foreign bank may regain any 
interest earned with respect to the assets currently pledged unless the 
FDIC by written notice prohibits retention of interest by the foreign 
bank, in which case the notice shall specify the disposition of any such 
interest.
    (11) Expenses of agreement. The FDIC shall not be required to pay 
any fees, costs, or expenses for services provided by the depository to 
the foreign bank pursuant to, or in connection with, the pledge 
agreement.
    (12) Substitution of depository. The depository may resign, or the 
foreign bank may discharge the depository, from its duties and 
obligations under the pledge agreement by giving at least sixty (60) 
days' written notice thereof to the other party and to the regional 
director of the FDIC region in which the branch is located. The FDIC, 
upon thirty (30) days' written notice to the foreign bank and the 
depository, may require the foreign bank to dismiss the depository if 
the FDIC in its discretion determines that the depository is in breach 
of the pledge agreement. The depository shall continue to function as 
such until the appointment of a successor depository becomes effective 
and the depository has released to the successor depository the pledged 
assets and documents and instruments to effectuate transfer of title in 
accordance with the written instructions of the foreign bank as approved 
by the FDIC. The appointment by the foreign bank of a successor 
depository shall not be effective until--
    (i) The FDIC has approved in writing the successor depository and
    (ii) A pledge agreement in form and substance satisfactory to the 
FDIC has been executed.
    (13) Waiver of terms. The FDIC may by written order waive compliance 
by the foreign bank or the depository with

[[Page 306]]

any term or condition of the pledge agreement.

(Reporting and recordkeeping requirements in paragraph (e)(6) approved 
by the Office of Management and Budget under control number 3064-0010)
[49 FR 49620, Dec. 21, 1984, as amended at 52 FR 34210, Sept. 10, 1987; 
54 FR 14067, Apr. 7, 1989]



Sec. 346.20  Asset maintenance.

    (a) An insured branch of a foreign bank shall maintain on a daily 
basis eligible assets in an amount not less than 106% of the preceding 
quarter's average book value of the branch's liabilities or, in the case 
of a newly-established branch, the estimated book value of its 
liabilities at the end of the first full quarter of operation, exclusive 
of liabilities due to the foreign bank's head office, other branches, 
agencies, offices, or wholly owned subsidiaries. The Director of the 
Division of Supervision or his designee may impose a computation of 
total liabilities on a daily basis in those instances where it is found 
necessary for supervisory purposes. The Board of Directors, after 
consulting with the branch's primary regulator, may require that a 
higher ratio of eligible assets be maintained if the financial condition 
of the branch warrants such action. Among the factors which will be 
considered in requiring a higher ratio of eligible assets are the 
concentration of risk to any one borrower or group of related borrowers 
or the concentration of transfer risk to any one country, including the 
country in which the foreign bank's head office is located. Eligible 
assets shall be payable in United States dollars or in a currency freely 
convertible into United States dollars.
    (b) In determining eligible assets for the purposes of compliance 
with paragraph (a) of this section, the branch shall exclude the 
following:
    (1) Any asset due from the foreign bank's head office, other 
branches, agencies, offices or affiliates;
    (2) Any asset classified Value Impaired, to the extend of the 
required Allocated Transfer Risk Reserves or equivalent write down, or 
Loss in the most recent state or federal examination report;
    (3) Any deposit of the branch in a bank unless the bank has executed 
a valid waiver of offset agreement:
    (4) Any asset not supported by sufficient credit information to 
allow a review of the asset's credit quality, as determined at the most 
recent state or federal examination; \4\
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    \4\ Whether an asset has sufficient credit information will be a 
function of the size of the borrower and the location within the foreign 
bank of the responsibility for authorizing and monitoring extensions of 
credit to the borrower. For large, well known companies, when credit 
responsibility is located in an office of the foreign bank outside the 
insured branch, the branch must have adequate documentation to show that 
the asset is of good quality and is being supervised adequately by the 
bank. In such cases, copies of periodic memoranda that include an 
analysis of the borrower's recent financial statements and a report on 
recent developments in the borrower's operations and borrowing 
relationships with the bank generally would constitute sufficient 
information. For other borrowers, periodic memoranda must be 
supplemented by information such as copies of recent financial 
statements, recent correspondence concerning the borrower's financial 
condition and repayment history, credit terms and collateral, data on 
any guarantors, and where necessary, the status of any corrective 
measures being employed.
    Subsequent to the determination that an asset lacks sufficient 
credit information, an insured branch may not include the amount of that 
asset among eligible assets until the FDIC determines that sufficient 
documentation exists. Such a determination may be made either at the 
next federal examination, or upon request of the branch, by the regional 
director of the FDIC region in which the branch is located.
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    (5) Any asset not in the branch's actual possession unless the 
branch holds title to such asset and the branch maintains records 
sufficient to enable independent verification of the branch's ownership 
of the asset, as determined at the most recent state or federal 
examination;
    (6) Any intangible asset.
    (c) A foreign bank which has more than one insured branch in a state 
may treat all of its insured branches in the same state as one entity 
for purposes of compliance with paragraph (a) of this section, and shall 
designate one branch to be responsible for maintaining the records of 
the branches' compliance with this section.

[[Page 307]]

    (d) The average book value of the branch's liabilities for a quarter 
shall be, at the branch's option, either an average of the balances as 
of the close of business for each day of the quarter or an average of 
the balances as of the close of business on each Wednesday during the 
quarter. Quarters end on March 31, June 30, September 30, and December 
31 of any given year. For days on which the branch is closed, balances 
from the previous business day are to be used. Calculations of the 
average book value of the branch's liabilities for a quarter shall be 
retained by the branch until the next Federal examination.
[54 FR 14069, Apr. 7, 1989, as amended at 60 FR 31384, June 15, 1995]



Sec. 346.21  [Reserved]



Sec. 346.22  Deductions from the assessment base.

    An insured branch may deduct from its assessment base deposits in 
the insured branch to the credit of the foreign bank or any office, 
branch or agency of and any wholly owned subsidiary of the foreign bank.



Secs. 346.23--346.100  [Reserved]



 Subpart D--Applications Seeking Approval for Insured State Branches To 
         Conduct Activities Not Permissible for Federal Branches



Sec. 346.101  Applications.

    (a) Scope. A foreign bank operating an insured state branch which 
desires to engage in or continue to engage in any type of activity that 
is not permissible for a federal branch, pursuant to the National Bank 
Act (12 U.S.C. 21 et seq.) or any other federal statute, regulation, 
official bulletin or circular, or order or interpretation issued in 
writing by the Office of the Comptroller of the Currency, or which is 
rendered impermissible due to a subsequent change in statute, 
regulation, official bulletin or circular, written order or 
interpretation, or decision of a court of competent jurisdiction (each 
an impermissible activity), shall file a written application for 
permission to conduct such activity with the FDIC pursuant to this 
section. An applicant may submit to the FDIC a copy of its application 
to the Board of Governors of the Federal Reserve System (Board of 
Governors), provided that such application contains the information 
described in paragraph (d) of this section.
    (b) Exceptions. A foreign bank operating an insured state branch 
which would otherwise be required to submit an application pursuant to 
paragraph (a) of this section will not be required to submit such an 
application if the activity it desires to engage in or continue to 
engage in has been determined by the FDIC not to present a significant 
risk to the affected deposit insurance fund pursuant to 12 CFR Part 362, 
``Activities and Investments of Insured State Banks''.
    (c) Agency activities. A foreign bank operating an insured state 
branch which would otherwise be required to submit an application 
pursuant to paragraph (a) of this section will not be required to submit 
such an application if it desires to engage in or continue to engage in 
an activity conducted as agent which would be a permissible agency 
activity for a state-chartered bank located in the state in which the 
state-licensed insured branch of the foreign bank is located and is also 
permissible for a state-licensed branch of a foreign bank located in 
that state; provided, however, that the agency activity must be 
permissible pursuant to any other applicable federal law or regulation.
    (d) Content of application. An application submitted pursuant to 
paragraph (a) of this section shall be in letter form and shall contain 
the following information:
    (1) A brief description of the activity, including the manner in 
which it will be conducted and an estimate of the expected dollar volume 
associated with the activity;
    (2) An analysis of the impact of the proposed activity on the 
condition of the United States operations of the foreign bank in general 
and of the branch in particular, including a copy, if available, of any 
feasibility study, management plan, financial projections, business 
plan, or similar document concerning the conduct of the activity;

[[Page 308]]

    (3) A resolution by the applicant's board of directors or, if a 
resolution is not required pursuant to the applicant's organizational 
documents, evidence of approval by senior management authorizing the 
conduct of such activity and the filing of this application;
    (4) A statement by the applicant of whether or not it is in 
compliance with Secs. 346.19 and 346.20, Pledge of Assets and Asset 
Maintenance, respectively;
    (5) A statement by the applicant that it has complied with all 
requirements of the Board of Governors concerning applications to 
conduct the activity in question and the status of such application, 
including a copy of the Board of Governors' disposition of such 
application, if applicable;
    (6) A statement of why the activity will pose no significant risk to 
the deposit insurance fund; and
    (7) Any other information which the regional director deems 
appropriate.
    (e) Application procedures. Applications pursuant to this section 
shall be filed with the Regional Director of the Division of Supervision 
for the region in which the insured state branch is located. An 
application shall not be deemed complete until it contains all the 
information requested by the Regional Director and has been accepted. 
Approval of such an application may be conditioned on the applicant's 
agreement to conduct the activity subject to specific limitations, such 
as but not limited to the pledging of assets in excess of the 
requirements of Sec. 346.19 and/or the maintenance of eligible assets in 
excess of the requirements of Sec. 346.20. In the case of an application 
to conduct an activity, as opposed to an application to continue to 
conduct an activity, the insured branch shall not commence the activity 
until it has been approved in writing by the FDIC pursuant to this part 
and the Board of Governors, and any and all conditions imposed in such 
approvals have been satisfied.
    (f) Divestiture or cessation. (1) If an application for permission 
to continue to conduct an activity is not approved by the FDIC or the 
Board of Governors, the applicant shall submit a detailed written plan 
of divestiture or cessation of the activity to the Regional Director of 
the Division of Supervision for the region where the insured branch is 
located within 60 days of the disapproval. The divestiture or cessation 
plan shall describe in detail the manner in which the applicant will 
divest itself of or cease the activity in question and shall include a 
projected timetable describing how long the divestiture or cessation is 
expected to take. Divestitures or cessations shall be completed within 
one year from the date of the disapproval, or within such shorter period 
of time as the Corporation shall direct.
    (2) A foreign bank operating an insured state branch which elects 
not to apply to the FDIC for permission to continue to conduct an 
impermissible activity shall submit a written plan of divestiture or 
cessation, in conformance with paragraph (f)(1) of this section, within 
60 days of January 1, 1995, or of any change in statute, regulation, 
official bulletin or circular, written order or interpretation, or 
decision of a court of competent jurisdiction rendering such activity 
impermissible.
    (g) Delegation of authority. Authority is hereby delegated to the 
Director of the Division of Supervision and, when confirmed in writing 
by the Director, to an associate director, or to the appropriate 
regional director or deputy regional director, to approve plans of 
divestiture and cessation submitted pursuant to paragraph (f) of this 
section.
[59 FR 60706, Nov. 28, 1994, as amended at 60 FR 31384, June 15, 1995]

                   Appendix A to Part 346  [Reserved]



PART 347--FOREIGN ACTIVITIES OF INSURED STATE NONMEMBER BANKS--Table of Contents




Sec.
347.1  Authority and scope.
347.2  Definitions.
347.3  Foreign branches.
347.4  Acquisition and holding of stock in foreign banks or other 
          financial entities.
347.5  Loans or extensions of credit to foreign banks or other financial 
          entities.
347.6  Conditions.

    Authority:  Secs. 3(o), 18(d), and (18)(l), Federal Deposit 
Insurance Act, as amended by sec. 301, Pub. L. 95-630, 92 Stat. 3641 (12 
U.S.C. 1813(o), 1828(d), 1828(l)).

    Source:  44 FR 25195, Apr. 30, 1979, unless otherwise noted.

[[Page 309]]



Sec. 347.1  Authority and scope.

    Under sections 3(o), 18(d) and 18(l) of the Federal Deposit 
Insurance Act, as amended by section 301, Pub. L. No. 95-630, 92 Stat. 
3641 (12 U.S.C. 1813(o), 1828(d), 1828(l)), the Federal Deposit 
Insurance Corporation (the Corporation) prescribes the following 
regulation relating to: (a) Foreign branches of insured State nonmember 
banks, (b) the acquisition and holding of stock in foreign banks and 
other financial entities, and (c) loans or extensions of credit to or 
for the account of such foreign banks or other financial entities.



Sec. 347.2  Definitions.

    For the purposes of this part:
    (a) Foreign branch means any office or place of business of an 
insured State nonmember bank located outside the United States, its 
territories, Puerto Rico, Guam, American Samoa, or the Virgin Islands, 
at which banking operations (excluding representative offices solely 
concerned with new business development or public relations) are 
conducted.
    (b) Foreign country means any foreign nation or colony, dependency, 
or possession thereof.
    (c) Foreign bank means a bank organized under the law of a foreign 
country or any dependency or insular possession of the United States 
which is principally engaged in a commercial banking business and not 
engaged, directly or indirectly, in any activity in the United States 
except as in the judgment of the Federal Deposit Insurance Corporation, 
shall be incidental to the international or foreign business of such 
foreign bank.
    (d) Other financial entity means a foreign institution other than a 
foreign bank which is: (1) Organized under the law of a foreign country 
or any dependency or insular possession of the United States, (2) not 
engaged, directly or indirectly, in any activity in the United States 
except as is incidental to its foreign business, and (3) engaged solely 
in the business of holding the shares of foreign banks, performing 
nominee, fiduciary, or other banking services incidental to the 
activities of a foreign branch or banking affiliate of an insured State 
nonmember bank, or performing other financial activities approved by the 
Corporation as being consistent with this part.



Sec. 347.3  Foreign branches.

    (a) Establishing, moving, or closing foreign branches. A foreign 
branch may not be established, operated, or relocated by an insured 
State nonmember bank without the prior written consent of the 
Corporation. This consent may be obtained through the application 
procedures set forth under part 303. For all foreign branches and 
relocations thereof, the application shall contain information on the 
exact location of the facility and on the involvement of insiders as 
such involvement is specified in Sec. 303.2, as well as the name and 
address of the newspaper in which the notice required by 
Sec. 303.14(b)(1) is published and the date of that publication. At the 
time of the closing of a foreign branch, the insured State nonmember 
bank shall by letter advise the regional director of the name, the 
location, and the date of the closing of the branch.
    (b) Existing foreign branches. The Corporation hereby grants its 
general consent for any insured State nonmember bank with a foreign 
branch that was established prior to March 10, 1979 to continue 
operating such branch without application for specific approval, 
provided the activity does not conflict with the provisions of this part 
and the following information regarding the branch is submitted (unless 
already submitted) within 90 days from April 30, 1979: Name and 
location; statement of condition; earnings statement, with year-to-date 
and last two full years' data; estimated time when branch will be 
profitable if it is not; description of policies and management 
procedures designed to ensure safe and sound operation; and description 
of services offered.
    (c) Powers of foreign branches. In addition to its general banking 
powers and to the extent consistent with its charter, the banking 
practices in the country where it does business, and the provisions of 
this part, a Branch may:
    (1) Guarantee customer's debts or otherwise agree for their benefit 
to make payments on the occurrence of

[[Page 310]]

readily ascertainable events 1 if the guarantee or agreement 
specifies its maximum monetary liability thereunder. The guarantee or 
agreement shall be combined with all standby letters of credit and loans 
for purposes of applying any legal limitation on loans of the bank: 
Provided, That if the guarantee or agreement is subject to separate 
limitation under State or Federal law, the separate limitation shall 
apply in lieu of the loan limitation.
---------------------------------------------------------------------------

    1  Including, but not limited to, events such as 
nonpayment of taxes, rentals, customs duties, or costs of transport and 
loss or nonconformance of shipping documents.
---------------------------------------------------------------------------

    (2) Accept drafts or bills of exchange drawn upon it;
    (3) Acquire and hold securities (including certificates or other 
evidences of ownership or participation) of the central bank, 
clearinghouses, governmental entities, and development banks of the 
country in which it is located, but the total investment in such 
securities (exclusive of securities held as required by the law of that 
country or as authorized for national banks under 12 U.S.C. 24) shall 
not exceed 1 percent of its total deposits on the preceding year-end 
call report date (or on the date of such acquisition in the case of a 
newly approved branch which has never reported);
    (4) Underwrite, distribute, buy, and sell obligations of the 
national government of the country in which it is located;2 
but no bank may hold, or be under commitment with respect to, 
obligations of such a government as a result of underwriting, dealing 
in, or purchasing for its own account, in an aggregate amount exceeding 
10 percent of its capital and surplus;
---------------------------------------------------------------------------

    2  Including obligations issued by an agency or 
instrumentality, and supported by the full faith and credit, of such 
government.
---------------------------------------------------------------------------

    (5) Take liens or other encumbrances on foreign real estate in 
connection with its extensions of credit, whether or not of first 
priority and whether or not such real estate is improved or has been 
appraised;
    (6) Pay to any officer or employee of the branch a greater rate of 
interest on deposits than that paid to other depositors on similar 
deposits with the branch;
    (7) Act as insurance agent or broker. An insured State nonmember 
bank that is of the opinion that other activities are usual in 
connection with the transaction of the business of banking in the places 
where its branches transact business, may apply to the Corporation for 
permission to engage in such activities.
    (d) Limitations. Nothing in paragraph (c) of this section shall 
authorize a foreign branch to engage in the general business of 
producing, distributing, buying, or selling goods, wares, or 
merchandise, or, except as permitted by paragraph (c)(4) of this 
section, to engage or participate, directly, or indirectly, in the 
business of underwriting, selling, or distributing securities.
    (e) Suspending operations during disturbed conditions. The officer 
in charge of a foreign branch may suspend its operations during 
disturbed conditions which make conduct of operations impracticable; but 
every effort shall be made before and during such suspension to serve 
its customers. Full information concerning any suspension shall be 
promptly reported to the branch's main office, which shall immediately 
send a copy thereof to the Regional Director of the region in which the 
main office exists.
[44 FR 25195, Apr. 30, 1979, as amended at 48 FR 28078, June 20, 1983; 
51 FR 47209, Dec. 31, 1986]



Sec. 347.4  Acquisition and holding of stock in foreign banks or other financial entities.

    (a) General. No insured State nonmember bank may acquire or hold, 
directly or indirectly, ownership interest in a foreign bank or other 
entity except as provided in this section. When authorized by State law, 
an insured State nonmember bank may, with the prior written consent of 
the Corporation and subject to the provisions of this part, acquire and 
hold, directly or indirectly, the stock or other evidences of ownership 
in one or more foreign banks or other financial entities without regard 
to the provisions of 12 U.S.C. 1828(j):
    Provided, That the aggregate amount invested directly or indirectly 
(other than through a corporation organized

[[Page 311]]

under section 25(a) of the Federal Reserve Act) in the stock or other 
evidences of ownership of all foreign banks and other financial 
entities, taken together with investments by the bank in the shares of 
corporations organized under section 25(a) of the Federal Reserve Act, 
shall not exceed 25 percent of the bank's capital and surplus.
    (b) Acquisitions to prevent loss. Nothing contained in this part 
shall prevent the acquisition and holding of stock or other evidences of 
ownership in a foreign bank or other financial entity where such 
acquisition is necessary to prevent a loss upon a debt previously 
contracted in good faith; but such stock or other evidences of ownership 
shall be disposed of within 12 months from the date of acquisition 
unless the time is extended by the Corporation.
    (c) Limitations. Stock or other evidences of ownership in a foreign 
bank or other financial entity shall be disposed of as promptly as 
practicable if: (1) Such bank or other financial entity should engage in 
the business of underwriting, selling, or distributing securities in the 
United States or (2) the insured State nonmember bank is advised by the 
Corporation that its holding is inappropriate under this part. The terms 
stock, shares, and evidences of ownership in this section include any 
right to acquire stock, shares, or evidences of ownership, except that 
prior Corporation consent is not required for the acquisition and 
exercise of stock rights in lieu of dividends which are declared on 
shares already held by an insured State nonmember bank and which do not 
result in an increase in percentage ownership of the foreign bank or 
other financial entity.
    (d) Required information. An insured State nonmember bank may apply 
for the consent of the Corporation to acquire and hold, directly or 
indirectly, the stock or other evidences of ownership in a foreign bank 
or other financial entity by filing the information specified in 
Sec. 303.5(c). The Corporation hereby grants its general consent for any 
insured State nonmember bank having stock or other evidence of ownership 
in a foreign bank or other financial entity that was acquired prior to 
March 10, 1979 to continue holding such stock or evidence without 
application for specific approval provided it does not conflict with the 
provisions of this part and the following information is submitted 
(unless already submitted) within 90 days from April 30, 1979: Name and 
location of bank or other financial entity; number, type and par value 
of shares held, percentage of total voting shares outstanding, and, if 
different, percentage of total equity, historical cost, current carrying 
value and any premium paid that has not been amortized; description of 
the company activities, principal locations, subsidiaries and affiliates 
(including company locations, subsidiaries and affiliates in the United 
States), and any activity that is not of a banking or financial nature; 
recent balance sheets and income statements; and amount of any credit 
extended to the subsidiary or affiliate and description of any contracts 
with company (including management or service contracts).
    (e) Reports. An insured State nonmember bank shall immediately 
inform the Corporation, through the Regional Director of the region in 
which the bank is located, of any acquisition or disposition of stock in 
a foreign bank or other financial entity, including the cost and number 
of shares acquired pursuant to this section.
[44 FR 25195, Apr. 30, 1979, as amended at 50 FR 22985, May 30, 1985]



Sec. 347.5  Loans or extensions of credit to foreign banks or other financial entities.

    An insured State nonmember bank which holds directly or indirectly 
3 stock or other evidences of ownership in a foreign bank or 
other financial entity may make loans or extensions of credit to or for 
the account of such foreign bank or other financial entity without 
regard to the provisions of 12 U.S.C. 1828(j).
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    3 Whether through a corporation organized under section 
25(a) of the Federal Reserve Act, or otherwise.
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Sec. 347.6  Conditions.

    (a) Records, controls and reports. An insured State nonmember bank 
exercising any powers under this part shall maintain a system of 
records, controls

[[Page 312]]

and reports that, at minimum, provide for the following:
    (1) Risk assets. To permit assessment of exposure to loss, 
information furnished or available to the main office should be 
sufficient to permit periodic and systematic appraisals of the quality 
of loans and other extensions of credit. Coverage should extend to a 
substantial proportion of the risk assets in the branch or subsidiary, 
and include the status of all large credit lines and of credits to 
customers also borrowing from other offices of the bank. Information on 
credit extensions should include:
    (i) A recent financial statement of the borrower and current 
information on the borrower's financial condition;
    (ii) Credit terms, conditions, and collateral;
    (iii) Data on any guarantors;
    (iv) Payment history; and
    (v) Status of corrective measures employed.
    (2) Liquidity. To enable assessment of local management's ability to 
meet its obligations from available resources, reports should identify 
the general sources and character of the deposits, borrowing, etc., 
employed in the branch or subsidiary with special reference to their 
terms and volatility. Information should be available on sources of 
liquidity--cash, balances with banks, marketable securities, and 
repayment flows--such as will reveal their accessibility in time and any 
risk elements involved.
    (3) Contingencies. Data on the volume and nature of contingent items 
such as loan commitments and guaranties or their equivalents that permit 
analysis of potential risk exposure and liquidity requirements.
    (4) Controls. Reports on the internal and external audits of the 
branch or subsidiary in sufficient detail to permit determination of 
conformance to auditing guidelines. Such reports should cover:
    (i) Verification and identification of entries on financial 
statements;
    (ii) Income and expense accounts, including descriptions of 
significant chargeoffs and recoveries;
    (iii) Operations and dual-control procedures and other internal 
controls;
    (iv) Conformance to head office guidelines on loans, deposits, 
foreign exchange activities, proper accounting procedures, and 
discretionary authority of local management;
    (v) Compliance with local laws and regulations; and
    (vi) Compliance with applicable U.S. laws and regulations.
    (b) The bank shall submit an annual report of condition for each 
foreign branch pursuant to instructions provided by the Corporation.
    (c) The Corporation may from time to time require an insured State 
nonmember bank to make and submit such reports and information as may be 
necessary to implement and enforce the provisions of this part.



PART 348--MANAGEMENT OFFICIAL INTERLOCKS--Table of Contents




Sec.
348.1  Authority, purpose, and scope.
348.2  Definitions.
348.3  Prohibitions.
348.4  Interlocking relationships permitted by statute.
348.5  Regulatory Standards exemption.
348.6  Management Consignment exemption.
348.7  Change in circumstances.
348.8  Enforcement.

    Authority:  12 U.S.C. 3207, 12 U.S.C. 1823(k).

    Source:  61 FR 40305, Aug. 2, 1996, unless otherwise noted.



Sec. 348.1  Authority, purpose, and scope.

    (a) Authority. This part is issued under the provisions of the 
Depository Institution Management Interlocks Act (Interlocks Act) (12 
U.S.C. 3201 et seq.), as amended.
    (b) Purpose. The purpose of the Interlocks Act and this part is to 
foster competition by generally prohibiting a management official from 
serving two nonaffiliated depository organizations in situations where 
the management interlock likely would have an anticompetitive effect.
    (c) Scope. This part applies to management officials of insured 
nonmember banks and their affiliates.



Sec. 348.2  Definitions.

    For purposes of this part, the following definitions apply:

[[Page 313]]

    (a) Affiliate. (1) The term affiliate has the meaning given in 
section 202 of the Interlocks Act (12 U.S.C. 3201). For purposes of 
section 202, shares held by an individual include shares held by members 
of his or her immediate family. ``Immediate family'' means spouse, 
mother, father, child, grandchild, sister, brother or any of their 
spouses, whether or not any of their shares are held in trust.
    (2) For purposes of section 202(3)(B) of the Interlocks Act (12 
U.S.C. 3201(3)(B)), an affiliate relationship involving an insured 
nonmember bank based on common ownership does not exist if the FDIC 
determines, after giving the affected persons the opportunity to 
respond, that the asserted affiliation was established in order to avoid 
the prohibitions of the Interlocks Act and does not represent a true 
commonality of interest between the depository organizations. In making 
this determination, the FDIC considers, among other things, whether a 
person, including members of his or her immediate family whose shares 
are necessary to constitute the group, owns a nominal percentage of the 
shares of one of the organizations and the percentage is substantially 
disproportionate to that person's ownership of shares in the other 
organization.
    (b) Anticompetitive effect means a monopoly or substantial lessening 
of competition.
    (c) Area median income means:
    (1) The median family income for the metropolitan statistical area 
(MSA), if a depository organization is located in an MSA; or
    (2) The statewide nonmetropolitan median family income, if a 
depository organization is located outside an MSA.
    (d) Community means a city, town, or village, and contiguous or 
adjacent cities, towns, or villages.
    (e) Contiguous or adjacent cities, towns, or villages means cities, 
towns, or villages whose borders touch each other or whose borders are 
within 10 road miles of each other at their closest points. The property 
line of an office located in an unincorporated city, town, or village is 
the boundary line of that city, town, or village for the purpose of this 
definition.
    (f) Critical means important to restoring or maintaining a 
depository organization's safe and sound operations.
    (g) Depository holding company means a bank holding company or a 
savings and loan holding company (as more fully defined in section 202 
of the Interlocks Act (12 U.S.C. 3201)) having its principal office 
located in the United States.
    (h) Depository institution means a commercial bank (including a 
private bank), a savings bank, a trust company, a savings and loan 
association, a building and loan association, a homestead association, a 
cooperative bank, an industrial bank, or a credit union, chartered under 
the laws of the United States and having a principal office located in 
the United States. Additionally, a United States office, including a 
branch or agency, of a foreign commercial bank is a depository 
institution.
    (i) Depository institution affiliate means a depository institution 
that is an affiliate of a depository organization.
    (j) Depository organization means a depository institution or a 
depository holding company.
    (k) Low- and moderate-income areas means census tracts (or, if an 
area is not in a census tract, block numbering areas delineated by the 
United States Bureau of the Census) where the median family income is 
less than 100 percent of the area median income.
    (l) Management official. (1) The term management official means:
    (i) A director;
    (ii) An advisory or honorary director of a depository institution 
with total assets of $100 million or more;
    (iii) A senior executive officer as that term is defined in 12 CFR 
303.14(a)(3);
    (iv) A branch manager;
    (v) A trustee of a depository organization under the control of 
trustees; and
    (vi) Any person who has a representative or nominee serving in any 
of the capacities in this paragraph (l)(1).
    (2) The term management official does not include:
    (i) A person whose management functions relate exclusively to the 
business of retail merchandising or manufacturing;

[[Page 314]]

    (ii) A person whose management functions relate principally to the 
business outside the United States of a foreign commercial bank; or
    (iii) A person described in the provisos of section 202(4) of the 
Interlocks Act (12 U.S.C. 3201(4)) (referring to an officer of a State-
chartered savings bank, cooperative bank, or trust company that neither 
makes real estate mortgage loans nor accepts savings).
    (m) Office means a principal or branch office of a depository 
institution located in the United States. Office does not include a 
representative office of a foreign commercial bank, an electronic 
terminal, or a loan production office.
    (n) Person means a natural person, corporation, or other business 
entity.
    (o) Relevant metropolitan statistical area (RMSA) means an MSA, a 
primary MSA, or a consolidated MSA that is not comprised of designated 
Primary MSAs to the extent that these terms are defined and applied by 
the Office of Management and Budget.
    (p) Representative or nominee means a natural person who serves as a 
management official and has an obligation to act on behalf of another 
person with respect to management responsibilities. The FDIC will find 
that a person has an obligation to act on behalf of another person only 
if the first person has an agreement, express or implied, to act on 
behalf of the second person with respect to management responsibilities. 
The FDIC will determine, after giving the affected persons an 
opportunity to respond, whether a person is a representative or nominee.
    (q) Total assets. (1) The term total assets includes assets measured 
on a consolidated basis and reported in the most recent fiscal year-end 
Consolidated Report of Condition and Income.
    (2) The term total assets does not include:
    (i) Assets of a diversified savings and loan holding company as 
defined by section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C. 
1467a(a)(1)(F)) other than the assets of its depository institution 
affiliate;
    (ii) Assets of a bank holding company that are exempt from the 
prohibitions of section 4 of the Bank Holding Company Act of 1956 
pursuant to an order issued under section 4(d) of that Act (12 U.S.C. 
1843(d)) other than the assets of its depository institution affiliate; 
or
    (iii) Assets of offices of a foreign commercial bank other than the 
assets of its United States branch or agency.
    (r) United States means the United States of America, any State or 
territory of the United States of America, the District of Columbia, 
Puerto Rico, Guam, American Samoa, and the Virgin Islands.



Sec. 348.3  Prohibitions.

    (a) Community. A management official of a depository organization 
may not serve at the same time as a management official of an 
unaffiliated depository organization if the depository organizations in 
question (or a depository institution affiliate thereof) have offices in 
the same community.
    (b) RMSA. A management official of a depository organization may not 
serve at the same time as a management official of an unaffiliated 
depository organization if the depository organizations in question (or 
a depository institution affiliate thereof) have offices in the same 
RMSA and each depository organization has total assets of $20 million or 
more.
    (c) Major assets. A management official of a depository organization 
with total assets exceeding $1 billion (or any affiliate thereof) may 
not serve at the same time as a management official of an unaffiliated 
depository organization with total assets exceeding $500 million (or any 
affiliate thereof), regardless of the location of the two depository 
organizations.



Sec. 348.4  Interlocking relationships permitted by statute.

    The prohibitions of Sec. 348.3 do not apply in the case of any one 
or more of the following organizations or to a subsidiary thereof:
    (a) A depository organization that has been placed formally in 
liquidation, or which is in the hands of a receiver, conservator, or 
other official exercising a similar function;
    (b) A corporation operating under section 25 or section 25A of the 
Federal Reserve Act (12 U.S.C. 601 et seq. and 12 U.S.C. 611 et seq., 
respectively) (Edge

[[Page 315]]

Corporations and Agreement Corporations);
    (c) A credit union being served by a management official of another 
credit union;
    (d) A depository organization that does not do business within the 
United States except as an incident to its activities outside the United 
States;
    (e) A State-chartered savings and loan guaranty corporation;
    (f) A Federal Home Loan bank or any other bank organized solely to 
serve depository institutions (a bankers' bank) or solely for the 
purpose of providing securities clearing services and services related 
thereto for depository institutions and securities companies;
    (g) A depository organization that is closed or is in danger of 
closing as determined by the appropriate Federal depository institutions 
regulatory agency and is acquired by another depository organization. 
This exemption lasts for five years, beginning on the date the 
depository organization is acquired;
    (h) A savings association whose acquisition has been authorized on 
an emergency basis in accordance with section 13(k) of the Federal 
Deposit Insurance Act (12 U.S.C. 1823(k)) with resulting dual service by 
a management official that would otherwise be prohibited under the 
Interlocks Act which may continue for up to 10 years from the date of 
the acquisition provided that the FDIC has given its approval for the 
continuation of such service; and
    (i)(1) A diversified savings and loan holding company (as defined in 
section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C. 
1467a(a)(1)(F)) with respect to the service of a director of such 
company who is also a director of an unaffiliated depository 
organization if:
    (i) Both the diversified savings and loan holding company and the 
unaffiliated depository organization notify their appropriate Federal 
depository institutions regulatory agency at least 60 days before the 
dual service is proposed to begin; and
    (ii) The appropriate regulatory agency does not disapprove the dual 
service before the end of the 60-day period.
    (2) The FDIC may disapprove a notice of proposed service if it finds 
that:
    (i) The service cannot be structured or limited so as to preclude an 
anticompetitive effect in financial services in any part of the United 
States;
    (ii) The service would lead to substantial conflicts of interest or 
unsafe or unsound practices; or
    (iii) The notificant failed to furnish all the information required 
by the FDIC.
    (3) The FDIC may require that any interlock permitted under this 
paragraph (h) be terminated if a change in circumstances occurs with 
respect to one of the interlocked depository organizations that would 
have provided a basis for disapproval of the interlock during the notice 
period.



Sec. 348.5  Regulatory Standards exemption.

    (a) Criteria. The FDIC may permit an interlock that otherwise would 
be prohibited by the Interlocks Act and Sec. 348.3 if:
    (1) The board of directors of the depository organization (or the 
organizers of a depository organization being formed) that seeks the 
exemption provides a resolution to the FDIC certifying that the 
organization, after the exercise of reasonable efforts, is unable to 
locate any other candidate from the community or RMSA, as appropriate, 
who:
    (i) Possesses the level of expertise required by the depository 
organization and who is not prohibited from service by the Interlocks 
Act; and
    (ii) Is willing to serve as a management official; and
    (2) The FDIC, after reviewing an application submitted by the 
depository organization seeking the exemption, determines that:
    (i) The management official is critical to the safe and sound 
operations of the affected depository organization; and
    (ii) Service by the management official will not produce an 
anticompetitive effect with respect to the depository organization.
    (b) Presumptions. The FDIC applies the following presumptions when 
reviewing any application for a Regulatory Standards exemption:

[[Page 316]]

    (1) An interlock will not have an anticompetitive effect if it 
involves depository organizations that, if merged, would not cause the 
post-merger Herfindahl-Hirschman Index (HHI) to exceed 1800 and would 
not cause the HHI to increase by more than 200 points. This presumption 
shall not apply to depository organizations subject to the Major Assets 
prohibition of Sec. 348.3(c).
    (2) A proposed management official is critical to the safe and sound 
operations of a depository institution if:
    (i) That official is approved by the FDIC to serve as a director or 
a senior executive officer of that institution pursuant to 12 CFR 
303.14; and
    (ii) The institution had operated for less than two years, was not 
in compliance with minimum capital requirements, or otherwise was in a 
``troubled condition'' as defined by 12 CFR 303.14(a)(4) at the time the 
service under that section was approved.
    (c) Duration of interlock. An interlock permitted under this section 
may continue until the FDIC notifies the affected depository 
organizations otherwise. The FDIC may require termination of any 
interlock permitted under this section if the FDIC concludes, after 
giving the affected persons the opportunity to respond, that the 
determinations under paragraph (a)(2) of this section no longer may be 
made. A management official may continue serving the depository 
organization involved in the interlock for a period of 15 months 
following the date of the order to terminate the interlock. The FDIC may 
shorten this period under appropriate circumstances.



Sec. 348.6  Management Consignment exemption.

    (a) Criteria. The FDIC may permit an interlock that otherwise would 
be prohibited by the Interlocks Act and Sec. 348.3 if the FDIC, after 
reviewing an application submitted by the depository organization 
seeking an exemption, determines that the interlock would:
    (1) Improve the provision of credit to low- and moderate-income 
areas;
    (2) Increase the competitive position of a minority- or women-owned 
depository organization;
    (3) Strengthen the management of a depository institution that has 
been chartered for less than two years at the time an application is 
filed under this part; or
    (4) Strengthen the management of a depository institution that is in 
an unsafe or unsound condition as determined by the FDIC on a case-by-
case basis.
    (b) Presumptions. The FDIC applies the following presumptions when 
reviewing any application for a Management Consignment exemption:
    (1) A proposed management official is capable of strengthening the 
management of a depository institution described in paragraph (a)(3) of 
this section if that official is approved by the FDIC to serve as a 
director or a senior executive officer of that institution pursuant to 
12 CFR 303.14 and the institution had operated for less than two years 
at the time the service under 12 CFR 303.14 was approved; and
    (2) A proposed management official is capable of strengthening the 
management of a depository institution described in paragraph (a)(4) of 
this section if that official is approved by the FDIC to serve as a 
director or a senior executive officer of that institution pursuant to 
12 CFR 303.14 and the institution was not in compliance with minimum 
capital requirements or otherwise was in a ``troubled condition'' as 
defined under 12 CFR 303.14 at the time service under that section was 
approved.
    (c) Duration of interlock. An interlock granted under this section 
may continue for a period of two years from the date of approval. The 
FDIC may extend this period for one additional two-year period if the 
depository organization applies for an extension at least 30 days before 
the current exemption expires and satisfies one of the criteria 
specified in paragraph (a) of this section. The provisions set forth in 
paragraph (b) of this section also apply to applications for extensions.



Sec. 348.7  Change in circumstances.

    (a) Termination. A management official shall terminate his or her 
service or apply for an exemption to the Interlocks Act if a change in 
circumstances

[[Page 317]]

causes the service to become prohibited under that Act. A change in 
circumstances may include, but is not limited to, an increase in asset 
size of an organization, a change in the delineation of the RMSA or 
community, the establishment of an office, an acquisition, a merger, a 
consolidation, or any reorganization of the ownership structure of a 
depository organization that causes a previously permissible interlock 
to become prohibited.
    (b) Transition period. A management official described in paragraph 
(a) of this section may continue to serve the insured nonmember bank 
involved in the interlock for 15 months following the date of the change 
in circumstances. The FDIC may shorten this period under appropriate 
circumstances.



Sec. 348.8  Enforcement.

    Except as provided in this section, the FDIC administers and 
enforces the Interlocks Act with respect to insured nonmember banks and 
their affiliates and may refer any case of a prohibited interlocking 
relationship involving these entities to the Attorney General of the 
United States to enforce compliance with the Interlocks Act and this 
part. If an affiliate of an insured nonmember bank is subject to the 
primary regulation of another federal depository organization 
supervisory agency, then the FDIC does not administer and enforce the 
Interlocks Act with respect to that affiliate.



PART 349--REPORTS AND PUBLIC DISCLOSURE OF INDEBTEDNESS OF EXECUTIVE OFFICERS AND PRINCIPAL SHAREHOLDERS TO A STATE NONMEMBER BANK AND ITS CORRESPONDENT BANKS--Table of Contents




Sec.
349.1  Purpose and scope.
349.2  Definitions.
349.3  Reports by executive officers and principal shareholders.
349.4  Disclosure of indebtedness of executive officers and principal 
          shareholders.

    Authority:  Sec. 2 (9 ``Seventh'' and ``Tenth''), Pub. L. 797, 64 
State. 881, as amended by sec. 309, Pub. L. 95-630, 92 Stat. 3677 (12 
U.S.C. 1819 ``Seventh'' and ``Tenth''); secs. 428(b) and 429, Pub. L. 
97-320, 96 Stat. 1526, 1527.

    Source:  48 FR 57114, Dec. 28, 1983, unless otherwise noted.



Sec. 349.1  Purpose and scope.

    Section 106(b)(2) of the Bank Holding Company Act Amendments of 1970 
(12 U.S.C. 1972(2)) (BHCA Amendments) prohibits--(1) preferential 
lending by a bank to executive officers, directors, and principal 
shareholders of another bank when there is a correspondent account 
relationship between the banks, or (2) the opening of a correspondent 
account relationship between banks when there is a preferential 
extension of credit by one of the banks to an executive officer, 
director, or principal shareholder of the other bank. Section 106(b)(2) 
also imposes requirements on executive officers and principal 
shareholders to submit reports on their indebtedness to correspondent 
banks to the board of directors of their bank. Section 7(k) of the 
Federal Deposit Insurance Act (12 U.S.C. 1817(k)) and section 
106(b)(2)(G)(ii) of the BHCA Amendments (12 U.S.C. 1972(2)(G)(ii)) 
authorize the Federal banking agencies to issue rules and regulations, 
including definitions of terms, to require the reporting and public 
disclosure of information by a bank or an executive officer or principal 
shareholder thereof concerning extensions of credit by the bank or its 
correspondent banks to any of the reporting bank's executive officers or 
principal shareholders, or the related interests of such persons. This 
part 349 implements the authorization of the latter sections to require 
such reporting and disclosure by insured State nonmember banks and their 
executive officers and principal shareholders.



Sec. 349.2  Definitions.

    For the purposes of the reporting and disclosure requirements of 
this part 349, the following definitions apply:
    (a) Bank has the meanings provided in (1) 12 U.S.C. 1841(c), and 
includes a branch or agency of a foreign bank, or a commercial lending 
company controlled by a foreign bank or by a company that controls a 
foreign bank, where the branch or agency is maintained in a State of the 
United States

[[Page 318]]

or in the District of Columbia or the commercial lending company is 
organized under State law, and (2) 12 U.S.C. 1972(2)(H)(i). 
Notwithstanding the foregoing, with respect to disclosures made pursuant 
to paragraph (a)(1) of Sec. 349.4 and with respect to copies of requests 
maintained pursuant to paragraph (c) of Sec. 349.4, bank shall mean 
State nonmember bank as defined in 12 U.S.C. 1813(b), including a mutual 
savings bank as defined in 12 U.S.C. 1813(f).
    (b) Capital stock and unimpaired surplus shall have the meaning 
provided in Sec. 215.2(f) of Federal Reserve Board Regulation O, subpart 
A (12 CFR 215.2(f)). Notwithstanding the foregoing, with respect to 
mutual savings banks, the term total equity capital found in 12 CFR 
215.2(f) shall mean total surplus accounts.
    (c) Company, control of a company or bank, executive officer,\1\ 
extension of credit, immediate family, and person have the meanings 
provided in Secs. 215.2 and 215.3 of subpart A of Federal Reserve Board 
Regulation O (12 CFR 215.2 and 215.3). All references to the term member 
bank in Secs. 215.2 and 215.3 shall be deemed to refer to an insured 
State nonmember bank for the purposes of this part 349.
---------------------------------------------------------------------------

    \1\ For the purposes of this part 349, executive officers of an 
insured State nonmember bank do not include an executive officer of a 
bank holding company of which such bank is a subsidiary or of any other 
subsidiary of the bank holding company, unless the executive officer is 
also an executive officer of the insured State nonmember bank.
---------------------------------------------------------------------------

    (d) Correspondent account is an account that is maintained by an 
insured State nonmember bank with another bank for the deposit or 
placement of funds. A correspondent account does not include:
    (1) Time deposits at prevailing market rates; or
    (2) An account maintained in the ordinary course of business solely 
for the purpose of effecting Federal funds transactions at prevailing 
market rates or making Eurodollar placements at prevailing market rates.
    (e) Correspondent bank means a bank that maintains one or more 
correspondent accounts for an insured State nonmember bank during a 
calendar year that in the aggregate exceed an average daily balance 
during that year of $100,000 or one-half of one percent of the insured 
State nonmember bank's total deposits (as reported in its first 
Consolidated Report of Condition during that calendar year), whichever 
amount is smaller.
    (f) Indebtedness means an extension of credit, but does not include:
    (1) Commercial paper, bonds, debentures and other types of 
marketable securities issued in the ordinary course of business; or
    (2) Consumer credit (as defined in 12 CFR 226.2(p)), in an aggregate 
amount of $5,000 or less from each of the insured State nonmember bank's 
correspondent banks, provided the indebtedness is incurred under terms 
that are not more favorable than those offered to the general public.
    (g) Maximum amount of indebtedness means, at the option of the 
reporting person, either (1) the highest outstanding indebtedness during 
the calendar year for which the report is made, or (2) the highest end 
of the month indebtedness outstanding during the calendar year for which 
the report is made.
    (h) For the purpose of this part 349, principal shareholder and 
related interest have the meanings provided in Sec. 215.10(a) of Federal 
Reserve Board Regulation O, subpart A (12 CFR 215.10(a)), except that 
the term principal shareholder is synonymous with the term stockholder 
of record as that term is used in the reporting provisions of 12 U.S.C. 
1972(2)(G)(i). All references to the term member bank in Sec. 215.10(a) 
shall be deemed to refer to an insured State nonmember bank for the 
purposes of this part 349.



Sec. 349.3  Reports by executive officers and principal shareholders.

    (a) Annual report. If during any calendar year an executive officer 
or principal shareholder of an insured State nonmember bank or a related 
interest of such a person has outstanding an extension of credit from a 
correspondent bank, the executive officer or principal

[[Page 319]]

shareholder must make a written report to the board of directors of the 
insured State nonmember bank on or before January 31 of the following 
year.2
---------------------------------------------------------------------------

    \2\ Persons reporting under this section are not required to include 
information on extensions of credit that are fully described in a report 
by a person they control or a person that controls them, provided they 
identify their relationship with such other person.
---------------------------------------------------------------------------

    (b) Contents of report. The report required by this section shall 
include the following information:
    (1) The maximum amount of indebtedness of the executive officer or 
principal shareholder and of each of that person's related interests to 
each of the insured State nonmember bank's correspondent banks during 
the calendar year; and
    (2) The amount of indebtedness of the executive officer or principal 
shareholder and of each of that person's related interests outstanding 
to each of the insured State nonmember bank's correspondent banks not 
more than ten business days before the report required by this section 
is filed; 3  and
---------------------------------------------------------------------------

    \3\  If the amount of indebtedness outstanding to a correspondent 
bank ten days before the filing of the report is not available or cannot 
be readily ascertained, an estimate of the amount of indebtedness may be 
filed with the report, provided that the report is supplemented within 
the next 30 days with the actual amount of indebtedness.
---------------------------------------------------------------------------

    (3) A description of the terms and conditions (including the range 
of interest rates, the original amount and date, maturity date, payment 
terms, security, if any, and any other unusual terms or conditions) of 
each extension of credit included in the indebtedness reported under 
paragraph (b)(1) of this section.
    (c) Retention of reports. The reports required by this section must 
ordinarily be retained at the insured State nonmember bank for a period 
of three years, but the Federal Deposit Insurance Corporation may 
require that they be retained by the bank for an additional period of 
time. The reports filed under this section are not required by this 
regulation to be made available to the public and shall not be filed 
with the Federal Deposit Insurance Corporation unless specifically 
requested.
    (d) Bank's responsibility. Each insured State nonmember bank shall 
advise each of its executive officers and each of its principal 
shareholders (to the extent known by the bank) of the reports required 
by this section and make available to each of these persons a list with 
the name and address of each of the insured State nonmember bank's 
correspondent banks.



Sec. 349.4  Disclosure of indebtedness of executive officers and principal shareholders.

    (a) Upon receipt of a written request, an insured State nonmember 
bank shall disclose to the requester the name of each executive officer 
or principal shareholder of the bank whose aggregate indebtedness, 
including the indebtedness of related interests of such person.
    (1) At the bank itself as of the end of the latest calendar quarter; 
or
    (2) At the correspondent banks of the disclosing bank at any time 
during the previous calendar year

equals or exceeds the lesser of five percent (5%) of the disclosing 
bank's capital stock and unimpaired surplus or $500,000, but in no event 
shall an insured State nonmember bank be required to make such 
disclosure where the aggregate indebtedness of an executive officer or 
principal shareholder is less than $25,000.
    (b) Contents of disclosure. (1) An insured State nonmember bank is 
not required to disclose any additional information concerning the 
indebtedness referred to in paragraph (a) of this section, except that 
it must observe the requirement of paragraph (b)(2) of this section.
    (2) Disclosures made pursuant to paragraph (a) of this section shall 
specify whether the individual or individuals named in the disclosure, 
who are indebted in the amount specified in paragraph (a) of this 
section, are indebted solely to the bank itself or to one or more 
correspondent banks of the reporting bank or to both.
    (c) An insured State nonmember bank shall maintain a copy of any 
request for information made under paragraph (a) of this section and a 
record of the bank's disposition of such request for a period of two 
years.

[[Page 320]]

    (d) OMB review. The Office of Management and Budget has reviewed and 
approved the collection of information requirements contained in this 
part 349 under OMB Control Number 3064-0023.
[48 FR 57114, Dec. 28, 1983, as amended at 49 FR 1176, Jan. 10, 1984]



PART 350--DISCLOSURE OF FINANCIAL AND OTHER INFORMATION BY FDIC-INSURED STATE NONMEMBER BANKS--Table of Contents




Sec.
350.1  Scope.
350.2  Definitions.
350.3  Requirement for annual disclosure statement.
350.4  Contents of annual disclosure statement.
350.5  Alternative annual disclosure statements.
350.6  Signature and attestation.
350.7  Notice and availability.
350.8  Delivery.
350.9  Disclosure of examination reports.
350.10  Prohibited conduct and penalties.
350.11  Safe harbor provision.
350.12  Disclosure required by applicable banking or securities law or 
          regulations.

    Authority:  12 U.S.C. 1817(a)(1), 1819 ``Seventh'' and ``Tenth''.

    Source:  52 FR 49379, Dec. 31, 1987, unless otherwise noted.



Sec. 350.1  Scope.

    This part applies to FDIC-insured state-chartered banks that are not 
members of the Federal Reserve System, and to FDIC-Insured state-
licensed branches of foreign banks.



Sec. 350.2  Definitions.

    (a) Bank. For purposes of this part, the term bank means an FDIC-
insured state-chartered organization that is not a member of the Federal 
Reserve System, and an FDIC-insured state-licensed branch of a foreign 
bank.
    (b) Call Report. For purposes of this part, the term Call Report 
means the report filed by a bank pursuant to 12 U.S.C. 1817(a)(1).



Sec. 350.3  Requirement for annual disclosure statement.

    (a) Contents. Each bank shall prepare as of December 31 and make 
available on request an annual disclosure statement. The statement shall 
contain information required by Sec. 350.4(a) and (b) and may include 
other information that bank management believes appropriate, as provided 
in Sec. 350.4(c).
    (b) Availability. A bank shall make its annual disclosure statement 
available to the public beginning not later than the following March 31 
or, if the bank mails an annual report to its shareholders, beginning 
not later than five days after the mailing of such reports, whichever 
occurs first. A bank shall make a disclosure statement available 
continuously until the disclosure statement for the succeeding year 
becomes available.
[62 FR 10200, Mar. 6, 1997]



Sec. 350.4  Contents of annual disclosure statement.

    (a) Financial reports. The annual disclosure statement for any year 
shall reflect a fair presentation of the bank's financial condition at 
the end of that year and the preceding year and, except for state-
licensed branches of foreign banks, the results of operations for each 
such year. The annual disclosure statement may, at the option of bank 
management, consist of the bank's entire Call Report, or applicable 
portions thereof, for the relevant dates and periods. At a minimum, the 
statement must contain information comparable to that provided in the 
following Call Report schedules:
    (1) For insured state-chartered organizations that are not members 
of the Federal Reserve System:
    (i) Schedule RC (Balance Sheet);
    (ii) Schedule RC-N (Past Due and Nonaccrual, Loans, Leases, and 
Other Assets--column A covering financial instruments past due 30 
through 89 days and still accruing and Memorandum item 1 need not be 
included);
    (iii) Schedule RI (Income Statement);
    (iv) Schedule RI-A (Changes in Equity Capital); and
    (v) Schedule RI-B, Part II (Changes in Allowance for Loan and Lease 
Losses).
    (2) For insured state-licensed branches of foreign banks:
    (i) Schedule RAL (Assets and Liabilities);
    (ii) Schedule E (Deposit Liabilities and Credit Balances); and

[[Page 321]]

    (iii) Schedule P (Other Borrowed Money).
    (b) Other required information. The annual disclosure statement 
shall include such other information as the FDIC may require of a 
particular bank. This could include disclosure of enforcement actions 
where the FDIC deems it in the public interest to do so.
    (c) Optional information. A bank may, at its option, provide 
additional information that bank management considers important to an 
evaluation of the overall condition of the bank. This information could 
include, but is not limited to, a discussion of the financial data; 
information relating to mergers and acquisitions; the existence of and 
facts relating to regulatory enforcement actions; business plans; and 
material changes in balance sheet and income statement items.
    (d) Disclaimer. The following legend shall be included in every 
annual disclosure statement to advise the public that the FDIC has not 
reviewed the information contained therein: ``This statement has not 
been reviewed, or confirmed for accuracy or relevance, by the Federal 
Deposit Insurance Corporation.''
[62 FR 10200, Mar. 6, 1997]



Sec. 350.5  Alternative annual disclosure statements.

    The requirements of Sec. 350.4(a) may be satisfied:
    (a) In the case of a bank having a class of securities registered 
pursuant to section 12 of the Securities Exchange Act of 1934, by the 
bank's annual report to security holders for meetings at which directors 
are to be elected or the bank's annual report (see 12 CFR part 335);
    (b) In the case of a bank with independently audited financial 
statements, by copies of the audited financial statements and the 
certificate or report of the independent accountant to the extent that 
such statements contain information comparable to that specified in 
Sec. 350.4(a); and
    (c) In the case of a bank subsidiary of a one-bank holding company, 
by an annual report of the one-bank holding company prepared in 
conformity with the regulations of the Securities and Exchange 
Commission or by sections in the holding company's consolidated 
financial statements on Form FR Y-9C pursuant to Regulation Y of the 
Federal Reserve Board (12 CFR part 225) that are comparable to the Call 
Report schedules enumerated in Sec. 350.4(a)(1), provided that in either 
case not less than 95 percent of the holding company's consolidated 
total assets and total liabilities are assets and liabilities of the 
bank and the bank's consolidated subsidiaries.
    (d) In the case of a bank covered by 12 CFR part 363, by an annual 
report prepared pursuant to 12 CFR 363.4. However, if the annual report 
is for a bank subsidiary of a holding company which provides only the 
consolidated financial statements of the holding company, this annual 
report may be used to satisfy the requirements of this part only if it 
is the report of a one-bank holding company and provided that not less 
than 95 percent of the holding company's consolidated total assets and 
total liabilities are assets and liabilities of the bank and the bank's 
consolidated subsidiaries.
[62 FR 10200, Mar. 6, 1997]



Sec. 350.6  Signature and attestation.

    An authorized officer of the bank shall sign the annual disclosure 
statement. The officer shall also attest to the correctness of the 
information contained in the statement if the financial reports are not 
accompanied by a certificate or report of an independent accountant.
[62 FR 10200, Mar. 6, 1997]



Sec. 350.7  Notice and availability.

    (a) Shareholders. If the bank provides written notice of the annual 
meeting of shareholders, the bank shall include with, or as part of, 
that notice an announcement that the bank's annual disclosure statement 
will be sent to the shareholder either automatically or upon request. 
For disclosure statements available on request, the announcement shall 
indicate at a minimum an address and telephone number to which requests 
may be directed. The first copy of the annual disclosure statement shall 
be provided to a shareholder without charge.
    (b) Customers and the general public. In the lobby of its main 
office and each

[[Page 322]]

branch, the bank shall at all times display a notice that the annual 
disclosure statement may be obtained from the bank. The notice shall 
include at a minimum an address and telephone number of which requests 
should be directed. The first copy of the annual disclosure statement 
shall be provided to a requester free of charge.



Sec. 350.8  Delivery.

    Each bank shall, after receiving a request for an annual disclosure 
statement, promptly mail or otherwise furnish a statement to the 
requester.



Sec. 350.9  Disclosure of examination reports.

    Except as permitted under specific provisions of the FDIC's 
regulations (12 CFR part 309), a bank may not disclose any report of 
examination or report of supervisory activity or any portion thereof 
prepared by the FDIC. The bank also shall not make any representation 
concerning such report or the findings therein.



Sec. 350.10  Prohibited conduct and penalties.

    (a) Misrepresentations. No officer, director, employee, agent, or 
other person participating in the affairs of a bank, shall, directly or 
indirectly:
    (1) Disclose or cause to be disclosed false or misleading 
information in the annual disclosure statement, or omit or cause the 
omission of pertinent or required information in the annual disclosure 
statement; or
    (2) Represent that the FDIC, or any employee thereof, has reviewed, 
or confirmed the accuracy or relevance of the disclosure statement.
    (b) Participating persons. For purposes of this part, a person 
participating in the affairs of a bank shall include (but not be limited 
to) any person who provides information contained in, or directly or 
indirectly assists in the preparation of, the annual disclosure 
statement.
    (c) Enforcement actions. Conduct that violates paragraph (a) of this 
section may constitute an unsafe or unsound banking practice or 
otherwise serve as a basis for an enforcement action by the FDIC.



Sec. 350.11  Safe harbor provision.

    The provisions of Sec. 350.10 shall not apply unless it is shown 
that the information disclosed was included without a reasonable basis 
or other than in good faith.



Sec. 350.12  Disclosure required by applicable banking or securities law or regulations.

    The requirements of this part are not intended to replace or waive 
any disclosure required to be made under applicable banking or 
securities law or regulations.
[62 FR 10201, Mar. 6, 1997]



PART 351--INTERNATIONAL OPERATIONS--Table of Contents




Sec.
351.1  Allocated transfer risk reserve.
351.2  Accounting for fees on international loans.
351.3  Reporting and disclosure of international assets.

    Authority:  Title IX, Pub. L. 98-181, 97 Stat. 1153.



Sec. 351.1  Allocated transfer risk reserve.

    (a) Definitions. For the purposes of this subpart:
    (1) Banking institution means an insured state nonmember bank.
    (2) Federal banking agencies means the Board of Governors of the 
Federal Reserve System, the Comptroller of the Currency, and the Federal 
Deposit Insurance Corporation.
    (3) International assets means those assets required to be included 
in banking institutions' ``Country Exposure Report'' forms (FFIEC No. 
009).
    (4) Transfer risk means the possibility that an asset cannot be 
serviced in the currency of payment because of a lack of, or restraints 
on the availability of, needed foreign exchange in the country of the 
obligor.
    (b) Allocated Transfer Risk Reserve--(1) Establishment of Allocated 
Transfer Risk Reserve. A banking institution shall establish an 
allocated transfer risk reserve (ATRR) for specified international 
assets when required by the FDIC in accordance with this section.
    (2) Procedures and Standards--(i) Joint agency determination. At 
least annually,

[[Page 323]]

the Federal banking agencies shall determine jointly, based on the 
standards set forth in paragraph (b)(2)(ii) of this section, the 
following:
    (A) Which international assets subject to transfer risk warrant 
establishment of an ATRR;
    (B) The amount of the ATRR for the specified assets; and
    (C) Whether an ATRR established for specified assets may be reduced.
    (ii) Standards for requiring ATRR--(A) Evaluation of assets. The 
Federal banking agencies shall apply the following criteria in 
determining whether an ATRR is required for particular international 
assets:
    (1) Whether the quality of a banking institution's assets has been 
impaired by a protracted inability of public or private obligors in a 
foreign country to make payments on their external indebtedness as 
indicated by such factors, among others, as whether:
    (i) Such obligors have failed to make full interest payments on 
external indebtedness;
    (ii) Such obligors have failed to comply with the terms of any 
restructured indebtedness; or
    (iii) A foreign country has failed to comply with any International 
Monetary Fund or other suitable adjustment program; or
    (2) Whether no definite prospects exist for the orderly restoration 
of debt service.
    (B) Determination of amount of ATRR. (1) In determining the amount 
of the ATRR, the Federal banking agencies shall consider:
    (i) The length of time the quality of the asset has been impaired;
    (ii) Recent actions taken to restore debt service capability;
    (iii) Prospects for restored asset quality; and
    (iv) Such other factors as the Federal banking agencies may consider 
relevant to the quality of the asset.
    (2) The initial year's provision for the ATRR shall be ten percent 
of the principal amount of each specified international asset, or such 
greater or lesser percentage determined by the Federal banking agencies. 
Additional provision, if any, for the ATRR in subsequent years shall be 
fifteen percent of the principal amount of each specified international 
asset, or such greater or lesser percentage determinined by the Federal 
banking agencies.
    (iii) FDIC notification. Based on the joint agency determinations 
under paragraph (b)(2)(i) of this section, the FDIC shall notify each 
banking institution holding assets subject to an ATRR:
    (A) Of the amount of the ATRR to be established by the institution 
for specified international assets; and
    (B) That an ATRR established for specified assets may be reduced.
    (3) Accounting treatment of ATRR--(i) Charge to current income. A 
banking institution shall establish an ATRR by a charge to current 
income and the amounts so charged shall not be included in the banking 
institution's capital or surplus.
    (ii) Separate accounting. A banking institution shall account for an 
ATRR separately from the Allowance for Possible Loan Losses, and shall 
deduct the ATRR from gross loans and leases to arrive at net loans and 
leases. The ATRR must be established for each asset subject to the ATRR 
in the pertcentage amount specified.
    (iii) Consolidation. A banking institution shall establish an ATRR, 
as required, on a consolidated basis. For banks, consolidation should be 
in accordance with the procedures and tests of significance set forth in 
the instructions for preparation of Consolidated Reports of Condition 
and Income (FFIEC Nos. 031, 032, 033 and 034).
    (iv) Alternative accounting treatment. A banking institution need 
not establish an ATRR if it writes down in the period in which the ATRR 
is required, or has written down in prior periods, the value of the 
specified international assets in the requisite amount for each such 
asset. For purposes of this paragraph, international assets may be 
written down by a charge to the allowance for Possible Loan Losses or a 
reduction in the principal amount of the asset by application of 
interest payments or other collections on the asset. However, the 
Allowance for Possible Loan Losses must be replenished in such amount 
necessary to restore it to a level which adequately provides for the 
estimated losses inherent in the banking institution's loan portfolio.

[[Page 324]]

    (v) Reduction of ATRR. A banking institution may reduce an ATRR when 
notified by the FDIC or, at any time, by writing down such amount of the 
international asset for which the ATRR was established.
[49 FR 5593, Feb. 13, 1984]



Sec. 351.2  Accounting for fees on international loans.

    (a) Definitions. For the purpose of this subpart:
    (1) International loan means a loan as defined in the instructions 
to the ``Report of Condition and Income'' for the respective banking 
institution (FFIEC Nos. 031, 032, 033 and 034) and made to a foreign 
government, or to an individual, a corporation, or other entity not a 
citizen of, resident in, or organized or incorporated in the United 
States.
    (2) International syndicated loan means a loan characterized by the 
formation of a group of managing banking institutions and, in the usual 
case, assumption by them of underwriting commitments and participation 
in the loan by other banking institutions.
    (3) Loan agreement means the documents signed by all of the parties 
to a loan, containing the amount, terms and conditions of the loan, and 
the interest and fees to be paid by the borrower.
    (4) Restructured international loan means a loan that meets the 
following criteria: (i) The borrower is unable to service the existing 
loan according to its terms and is a resident of a foreign country in 
which there is a generalized inability of public and private sector 
obligors to meet their external debt obligations on a timely basis 
because of a lack of, or restraints on the availability of, needed 
foreign exchange in the country; and either (ii) the terms of the 
existing loan are amended to reduce stated interest or extend the 
schedule of payments; or (iii) a new loan is made to, or for the benefit 
of, the borrower, enabling the borrower to service or refinance the 
existing debt.
    (b) Restrictions on fees for restructured international loans. No 
banking institution shall charge any fee in connection with a 
restructured loan unless all fees exceeding the banking institution's 
administrative costs, as described in paragraph (d)(2) of this section, 
are deferred and recognized over the term of the loan as an interest 
yield adjustment.
    (c) Amortizing fees. Except as otherwise provided by this section, 
fees received on international loans shall be deferred and amortized 
over the term of the loan. The interest method should be used during the 
loan period to recognize the deferred fee revenue in relation to the 
outstanding loan balance. If it is not practicable to apply the interest 
method during the loan period, the straight-line method shall be used.
    (d) Accounting treatment of international loan or syndication 
administrative costs and corresponding fees. (1) Administrative costs of 
originating, restructuring, or syndicating an international loan shall 
be expensed as incurred. A portion of the fee income equal to the 
banking institution's administrative costs may be recognized as income 
in the same period such costs are expensed.
    (2) The administrative costs of originating, restructuring, or 
syndicating an international loan include those costs which are 
specifically identified with negotiating, processing and consummating 
the loan. These costs include, but are not necessarily limited to: legal 
fees; costs of preparing and processing loan documents; and an allocable 
portion of salaries and related benefits of employees engaged in the 
international lending function and, where applicable, the syndication 
function. No portion of supervisory and administrative expenses or other 
indirect expenses such as occupancy and other similar overhead costs 
shall be included.
    (e) Fees received by managing banking institutions. Fees received on 
international syndicated loans representing an adjustment of the yield 
on the loan shall be recognized over the loan period using the interest 
method. If the interest yield portion of a fee received on an 
international syndicated loan by a managing banking institution is 
unstated or differs materially from the pro rata portion of fees paid 
other participants in the syndication, an amount necessary for an 
interest yield adjustment shall be recognized. This amount shall at 
least be equivalent (on

[[Page 325]]

a pro rata basis) to the largest fee received by a loan participant in 
the syndication that is not a managing banking institution. The 
remaining portion of the syndication fee may be recognized as income at 
the loan closing date to the extent that it is identified and documented 
as compensation for services in arranging the loan. Such documentations 
shall include the loan agreement. Otherwise, the fee shall be deemed an 
adjustment of yield.
    (f) Loan commitment fees. (1) Fees which are based upon the unfunded 
portion of a credit for the period until it is drawn and represent 
compensation for a binding commitment to provide funds or for rendering 
a service in issuing the commitment shall be recognized as income over 
the term of the commitment period using the straight-line method of 
amortization. Such fees for revolving credit arrangements, where the 
fees are received periodically in arrears and are based on the amount of 
the unused loan commitment, may be recognized as income when received 
provided the income result would not be materially different.
    (2) If it is not practicable to separate the commitment portion from 
other components of the fee, the entire fee shall be amortized over the 
term of the combined commitment and expected loan period. The straight-
line method of amortization should be used during the commitment period 
to recognize the fee revenue. The interest method should be used during 
the loan period to recognize the remaining fee revenue in relation to 
the outstanding loan balance. If the loan is funded before the end of 
the commitment period, any unamortized commitment fees shall be 
recognized as revenue at that time.
    (g) Agency fees. Fees paid to an agent banking institution for 
administrative services in an international syndicated loan shall be 
recognized at the time of the loan closing or as the service is 
performed, if later.
[49 FR 12198, Mar. 29, 1984]



Sec. 351.3  Reporting and disclosure of international assets.

    (a) Requirements. (1) Pursuant to section 907(a) of the 
International Lending Supervision Act of 1983 (Title IX, Pub. L. 98-181, 
97 Stat. 1153) (ILSA), a banking institution shall submit to the FDIC, 
at least quarterly, information regarding the amounts and composition of 
its holdings of international assets.
    (2) Pursuant to section 907(b) of ILSA, a banking institution shall 
submit to the FDIC information regarding concentrations in its holdings 
of international assets that are material in relation to total assets 
and to capital of the institution, such information to be made publicly 
available by the FDIC on request.
    (b) Procedures. The format, content and reporting and filing dates 
of the reports required under paragraph (a) of this section shall be 
determined jointly by the Federal banking agencies. The requirements to 
be prescribed by the Federal banking agencies may include changes to 
existing forms (such as revisions to the Country Exposure Report, Form 
FFIEC No. 009) or such other requirements as the Federal banking 
agencies deem appropriate. The Federal banking agencies also may 
determine to exempt from the requirements of paragraph (a) of this 
section banking institutions that, in the Federal banking agencies' 
judgment, have de minimis holdings of international assets.
    (c) Reservation of authority. Nothing contained in this rule shall 
preclude the FDIC from requiring from a banking institution such 
additional or more frequent information on the institution's holdings of 
international assets as the agency may consider necessary.
[49 FR 5587, Feb. 13, 1984]



PART 352--NONDISCRIMINATION ON THE BASIS OF HANDICAP--Table of Contents




Sec.
352.1  Purpose.
352.2  Application.
352.3  Definitions.
352.4  Self-evaluation.
352.5  General requirements.
352.6  Employment.
352.7  Program accessibility: Existing facilities.
352.8  Program accessibility: New construction and alterations.
352.9  Communications.
352.10  Compliance procedures.
352.11  Notice.

    Authority:  12 U.S.C. 1819.

[[Page 326]]


    Source:  51 FR 9643, Mar. 20, 1986, unless otherwise noted.



Sec. 352.1  Purpose.

    The purpose of this part is to implement the spirit of section 119 
of the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978, which amended section 504 of the 
Rehabilitation Act of 1973 to prohibit discrimination on the basis of 
handicap in programs or activities conducted by various Executive 
agencies. Although the FDIC does not believe that Congress contemplated 
coverage of non-appropriated, independent regulatory agencies such as 
the FDIC, it has chosen to promulgate this final regulation to ensure 
that, to the extent practicable, handicapped persons are provided with 
equal access to FDIC programs and activities.



Sec. 352.2  Application.

    (a) This part applies to all programs and activities conducted by 
the FDIC. The following programs and activities involve the direct 
provision of benefits and services to, or participation by, members of 
the public:
    (1) Attending Board of Directors meetings open to the public and all 
other public meetings;
    (2) Making inquiries or filing complaints at the FDIC Office of 
Congressional Relations and Corporate Communications;
    (3) Using the FDIC library in Washington, DC;
    (4) Visiting an insured bank at which they conducted business (or an 
alternative liquidation site selected by the FDIC) and which has become 
insolvent, or been purchased by another bank under FDIC supervision, for 
the purpose of:
    (i) Collecting FDIC checks for the insured amount of their deposits 
previously held in such bank; and/or
    (ii) Discussing with FDIC representatives matters related to the 
repayment of debts which they previously owed to such bank, prior to its 
failure or purchase by another bank under FDIC supervision;
    (5) Seeking employment with the FDIC;
    (6) Conducting regular banking business at a Deposit Insurance 
National Bank formed by the FDIC pursuant to the authority in 12 U.S.C. 
1821(h).
    (b) This regulation governs the conduct of FDIC personnel in their 
interaction with employees of insured banks and employees of other state 
or federal agencies while discharging the FDIC's statutory obligations 
as insurer and/or receiver of financial institutions. It does not apply 
to financial institutions insured by the FDIC.
    (c) Although application for employment and employment with the FDIC 
are programs and activities of the FDIC for purposes of this regulation, 
they shall be governed only by the standards set forth in Sec. 352.6 of 
this part.



Sec. 352.3  Definitions.

    For purposes of this part, the term--
    (a) Auxiliary aids means services or devices that enable persons 
with impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, the FDIC 
programs or activities set forth in Sec. 352.2.
    (b) Complete complaint means, with respect to any FDIC program or 
activity other than employment, a written statement that contains the 
complainant's name and address and describes the FDIC's action in 
sufficient detail to inform the FDIC of the nature and date of the 
alleged violation of these regulations. It shall be signed by the 
complainant or by someone authorized to do so on his or her behalf. 
Complaints filed on behalf of classes or third parties shall describe or 
identify (by name if possible) the alleged victims of discrimination.
    (c) Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots and other real or personal 
property. As used in this definition, personal property means only 
furniture, carpeting and similar features not considered to be real 
property.
    (d) Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment. As used in this definition, the phrase:

[[Page 327]]

    (1) Physical or mental impairment includes--
    (i) A physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) A mental or psychological disorder, such as mental retardation, 
organic brain syndrome, emotional or mental illness, and specific 
learning disabilities.
    (2) Major life activities including functions such as caring for 
oneself, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the FDIC as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (d)(1) of 
this definition but is treated by the FDIC as having such an impairment.
    (e) Qualified handicapped person means--
    (1) With respect to any FDIC program or activity under which a 
person is required to perform services or to achieve a level of 
accomplishment, a handicapped person who meets the essential eligibility 
requirements and can achieve the purpose of the program or activity 
without modifications in the program or activity that the FDIC can 
determine on the basis of a written record would result in a fundamental 
alteration in its nature;
    (2) With respect to any other program or activity, a handicapped 
person who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity;
    (3) With respect to employment, a handicapped person as defined in 
29 CFR 1613.702(f), which is made applicable to this part by Sec. 352.6.
    (f) Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617), 
and the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As used 
in this regulation, section 504 shall be applied only to the programs 
and activities conducted by the FDIC as set forth in Sec. 352.2 of this 
regulation.



Sec. 352.4  Self-evaluation.

    (a) Within one year of the effective date of this regulation, the 
FDIC shall conduct a self-evaluation of its program implementing the 
spirit of section 504.
    (b) The agency shall provide an opportunity to interested persons, 
including handicapped persons or organizations representating 
handicapped persons, to participate in the self-evaluation process by 
submitting written comments. Comments on the program made by such 
persons or organizations, while not binding on the FDIC for adoption, 
will be received and considered as part of the FDIC's self-evaluation 
process.
    (c) The FDIC shall, for a period of three years from the date of 
completion of the self-evaluation, maintain on file and make available 
for public inspection:
    (1) A description of areas examined and any problems identified in 
the program implementing the spirit of section 504; and
    (2) A description of any modifications made in the program.



Sec. 352.5  General requirements.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination under the programs and 
activities conducted by the

[[Page 328]]

FDIC and set forth in Sec. 352.2 of this regulation.
    (b) The FDIC, in providing any services under the programs and 
activities set forth in Sec. 352.2 of this part, shall ensure that 
qualified handicapped persons are provided with an equal opportunity to 
benefit from or to reach the same level of achievement from such 
services as that provided to non-handicapped persons.
    (c) The FDIC, in providing any services under the programs and 
activities set forth in Sec. 352.2 of this part, shall give priority to 
those methods of administration which will not segregate participation 
by qualified handicapped persons in FDIC-conducted programs and 
activities from participation by non-handicapped individuals.



Sec. 352.6  Employment.

    No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
conducted by the FDIC. The definitions, requirements, and procedures 
(including those pertaining to employment discrimination complaints) of 
section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as 
established in 29 CFR part 1613, shall apply to employment in the FDIC.



Sec. 352.7  Program accessibility: Existing facilities.

    (a) General. The FDIC shall operate each of the programs or 
activities set forth in Sec. 352.2 of this part so that the program or 
activity, when viewed in its entirety, is readily accessible to and 
usable by handicapped persons. This paragraph does not--
    (1) Necessarily require the FDIC to make each of its existing 
facilities accessible to and usable by handicapped persons; or
    (2) Require the FDIC to take any action that the FDIC can determine 
on the basis of a written record would result in a fundamental 
alteration in the nature of a program or activity or in undue financial 
and administrative burdens. If it is determined that an action would 
result in such an alteration or such burdens, the FDIC shall take other 
reasonable actions that would not result in such an alteration or such 
burdens but would nevertheless ensure that handicapped persons receive 
the benefits and services of the program or activity.
    (b) Methods. The FDIC may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
delivery of services at alternate accessible sites, alteration of 
existing facilities and construction of new facilities or any other 
methods that result in making its programs or activities readily 
accessible to and usable by handicapped persons. The FDIC is not 
required to make structural changes in existing facilities where other 
methods are effective in achieving compliance with this section.
    (c) Time period for compliance. The FDIC shall comply with the 
obligations established under this section within ninety days of the 
effective date of this part except that where structural changes in 
facilities are undertaken, such changes shall be made within three years 
of the effective date of this part, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
existing facilities will be undertaken to achieve program accessibility, 
the FDIC shall develop, within six months of the effective date of this 
part, a transition plan setting forth the steps necessary to complete 
such changes. The plan shall be developed after consultation with 
representatives of the General Services Administration and the 
Architectural and Transportation Barriers Compliance Board. The plan 
shall--
    (1) Identify physical obstacles in the FDIC's facilities that limit 
the accessibility of its programs or activities to handicapped persons;
    (2) Describe the methods that will be used to make the facilities 
accessible;
    (3) Specify the proposed schedule for taking the steps necessary to 
achieve compliance with this section and, if the time period of the 
transition plan is longer than one year, identify proposed steps that 
will be taken during each year of the transition period;
    (4) Indicate the official responsible for implementation of the 
plan; and

[[Page 329]]

    (5) Identify the persons or groups with whose assistance the plan 
was prepared.



Sec. 352.8  Program accessibility: New construction and alterations.

    Each building or part of a building in which the programs or 
activities set forth in Sec. 352.2 will be carried on, and which is 
newly constructed, or substantially altered by, on behalf of, or for the 
use of the FDIC, shall be designed, constructed or altered so as to be 
readily accessible to, and usable by, handicapped persons.



Sec. 352.9  Communications.

    (a) The FDIC shall take appropriate steps to ensure effective 
communication with participants in the FDIC programs and activities set 
forth in Sec. 352.2.
    (1) The FDIC shall furnish appropriate auxiliary aids where 
necessary to afford a handicapped person an equal opportunity to 
participate in, and enjoy the benefits of, the FDIC programs or 
activities set forth in Sec. 352.2 of this part.
    (i) In determining what type of auxiliary aid is necessary, the FDIC 
shall give primary consideration to any reasonable requests of the 
handicapped person.
    (ii) The FDIC need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the FDIC communicates by telephone, it shall use 
telecommunications devices for deaf persons (TDD's) or equally effective 
telecommunication systems with hearing impaired participants and 
beneficiaries.
    (b) The FDIC shall ensure that interested persons, including persons 
with impaired vision or hearing, can obtain information as to the 
existence and location of accessible services, activities, and 
facilities. Interested persons may obtain such information by calling, 
writing or visiting the FDIC Office of Equal Employment Opportunity, 
located at 550 17th Street, NW., Washington, DC 20429. The Office of 
Equal Employment Opportunity telephone number is (202) 898-6745 
(District of Columbia area) and (800) 424-5488 (all others) (TDD).
    (c) The FDIC shall provide information at a primary entrance to each 
of its accessible and inaccessible facilities where programs or 
activities as set forth in Sec. 352.2 are conducted, directing users to 
a location at which they can obtain information about accessible 
facilities. The international symbol for accessibility shall be used at 
each primary entrance of an accessible facility.
    (d) This section does not require the FDIC to take any action that 
the FDIC can determine on the basis of a written record would result in 
a fundamental alteration in the nature of a program or activity or in 
undue financial and administrative burdens. If an action that is 
required to comply with this section would result in such an alteration 
or such burdens, the FDIC shall take other reasonable actions that would 
not result in such an alteration or such burdens but would nevertheless 
ensure that, to the maximum extent possible, handicapped persons receive 
the benefits and services of the program or activity.



Sec. 352.10  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in the FDIC programs or activities set forth in Sec. 352.2 of 
this part.
    (b) The FDIC shall process complaints alleging employment 
discrimination on the basis of handicap according to the procedures 
established in 29 CFR part 1613 pursuant to section 501 of the 
Rehabilitation Act of 1973 (29 U.S.C. 791).
    (c) The FDIC's Office of Equal Employment Opportunity shall be 
responsible for coordinating implementation of this section. All 
complaints should be sent to the FDIC's Office of Equal Employment 
Opportunity, 550 17th Street, NW., Washington, DC 20429.
    (d) The FDIC shall accept and investigate all complete complaints 
over which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The FDIC may 
extend this time period for good cause.

[[Page 330]]

    (e) If the FDIC receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complainant to the appropriate 
government entity.
    (f) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the FDIC shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Finding regarding the alleged violations;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (g) Appeals of the findings or remedies must be filed by the 
complainant within 90 days of receipt from the FDIC of the letter 
required by Sec. 352.10(f). The FDIC may extend this time for good 
cause.
    (h) Timely appeals shall be accepted and processed by the Chairman 
of the FDIC or designee.
    (i) The Chairman of the FDIC or designee shall notify the 
complainant of the results of the appeal within 90 days of the receipt 
of the request. If the Chairman of the FDIC or designee determines that 
additional information is needed from the complainant, he or she shall 
have 60 days from the date of receipt of the additional information to 
make a determination on the appeal.
    (j) The time limits set forth in paragraphs (f) and (i) of this 
section, may be extended for an individual case when the Chairman of the 
FDIC or designee determines that there is good cause, based on the 
particular circumstances of that case, for the extension.
    (k) The FDIC may delegate its authority for conducting complaint 
investigations to other federal agencies, except that the authority for 
making the final determination may not be delegated.



Sec. 352.11  Notice.

    The FDIC shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the program or activities conducted by the agency, and make such 
information available to them in such manner as the Chairman or his 
designee finds necessary to apprise such persons of the protections 
against discrimination assured them by section 504 and this regulation.



PART 353--SUSPICIOUS ACTIVITY REPORTS--Table of Contents




Sec.
353.1  Purpose and scope.
353.2  Definitions.
353.3  Reports and records.

    Authority:  12 U.S.C. 1818, 1819; 31 U.S.C. 5318.

    Source:  61 FR 6099, Feb. 16, 1996, unless otherwise noted.



Sec. 353.1  Purpose and scope.

    The purpose of this part is to ensure that an insured state 
nonmember bank files a Suspicious Activity Report when it detects a 
known or suspected criminal violation of federal law or a suspicious 
transaction related to a money laundering activity or a violation of the 
Bank Secrecy Act. This part applies to all insured state nonmember banks 
as well as any insured, state-licensed branches of foreign banks.



Sec. 353.2  Definitions.

    For the purposes of this part:
    (a) FinCEN means the Financial Crimes Enforcement Network of the 
Department of the Treasury.
    (b) Institution-affiliated party means any institution-affiliated 
party as that term is defined in sections 3(u) and 8(b)(5) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(u) and 1818(b)(5)).



Sec. 353.3  Reports and records.

    (a) Suspicious activity reports required. A bank shall file a 
suspicious activity report with the appropriate federal law enforcement 
agencies and the Department of the Treasury, in accordance with the 
form's instructions, by sending a completed suspicious activity report 
to FinCEN in the following circumstances:
    (1) Insider abuse involving any amount. Whenever the bank detects 
any known or suspected federal criminal violation, or pattern of 
criminal violations, committed or attempted against the bank or 
involving a transaction or transactions conducted through the bank,

[[Page 331]]

where the bank believes it was either an actual or potential victim of a 
criminal violation, or series of criminal violations, or that the bank 
was used to facilitate a criminal transaction, and the bank has a 
substantial basis for identifying one of the bank's directors, officers, 
employees, agents, or other institution-affiliated parties as having 
committed or aided in the commission of the criminal violation, 
regardless of the amount involved in the violation;
    (2) Transactions aggregating $5,000 or more where a suspect can be 
identified. Whenever the bank detects any known or suspected federal 
criminal violation, or pattern of criminal violations, committed or 
attempted against the bank or involving a transaction or transactions 
conducted through the bank, and involving or aggregating $5,000 or more 
in funds or other assets, where the bank believes it was either an 
actual or potential victim of a criminal violation, or series of 
criminal violations, or that the bank was used to facilitate a criminal 
transaction, and the bank has a substantial basis for identifying a 
possible suspect or group of suspects. If it is determined prior to 
filing this report that the identified suspect or group of suspects has 
used an ``alias'', then information regarding the true identity of the 
suspect or group of suspects, as well as alias identifiers, such as 
driver's license or social security numbers, addresses and telephone 
numbers, must be reported;
    (3) Transactions aggregating $25,000 or more regardless of potential 
suspects. Whenever the bank detects any known or suspected federal 
criminal violation, or pattern of criminal violations, committed or 
attempted against the bank or involving a transaction or transactions 
conducted through the bank, involving or aggregating $25,000 or more in 
funds or other assets, where the bank believes it was either an actual 
or potential victim of a criminal violation, or series of criminal 
violations, or that the bank was used to facilitate a criminal 
transaction, even though the bank has no substantial basis for 
identifying a possible suspect or group of suspects; or
    (4) Transactions aggregating $5,000 or more that involve potential 
money laundering or violations of the Bank Secrecy Act. Any transaction 
(which for purposes of this paragraph (a)(4) means a deposit, 
withdrawal, transfer between accounts, exchange of currency, loan, 
extension of credit, purchase or sale of any stock, bond, certificate of 
deposit, or other monetary instrument or investment security, or any 
other payment, transfer, or delivery by, through, or to a financial 
institution, by whatever means effected) conducted or attempted by, at 
or through the bank and involving or aggregating $5,000 or more in funds 
or other assets, if the bank knows, suspects, or has reason to suspect 
that:
    (i) The transaction involves funds derived from illegal activities 
or is intended or conducted in order to hide or disguise funds or assets 
derived from illegal activities (including, without limitation, the 
ownership, nature, source, location, or control of such funds or assets) 
as part of a plan to violate or evade any federal law or regulation or 
to avoid any transaction reporting requirement under federal law;
    (ii) The transaction is designed to evade any regulations 
promulgated under the Bank Secrecy Act; or
    (iii) The transaction has no business or apparent lawful purpose or 
is not the sort of transaction in which the particular customer would 
normally be expected to engage, and the bank knows of no reasonable 
explanation for the transaction after examining the available facts, 
including the background and possible purpose of the transaction.
    (b) Time for reporting. (1) A bank shall file the suspicious 
activity report no later than 30 calendar days after the date of initial 
detection of facts that may constitute a basis for filing a suspicious 
activity report. If no suspect was identified on the date of detection 
of the incident requiring the filing, a bank may delay filing a 
suspicious activity report for an additional 30 calendar days to 
identify a suspect. In no case shall reporting be delayed more than 60 
calendar days after the date of initial detection of a reportable 
transaction.
    (2) In situations involving violations requiring immediate 
attention, such as when a reportable violation is ongoing,

[[Page 332]]

the bank shall immediately notify, by telephone, an appropriate law 
enforcement authority and the appropriate FDIC regional office (Division 
of Supervision) in addition to filing a timely report.
    (c) Reports to state and local authorities. A bank is encouraged to 
file a copy of the suspicious activity report with state and local law 
enforcement agencies where appropriate.
    (d) Exemptions. (1) A bank need not file a suspicious activity 
report for a robbery or burglary committed or attempted, that is 
reported to appropriate law enforcement authorities.
    (2) A bank need not file a suspicious activity report for lost, 
missing, counterfeit, or stolen securities if it files a report pursuant 
to the reporting requirements of 17 CFR 240.17f-1.
    (e) Retention of records. A bank shall maintain a copy of any 
suspicious activity report filed and the original or business record 
equivalent of any supporting documentation for a period of five years 
from the date of filing the suspicious activity report. Supporting 
documentation shall be identified and maintained by the bank as such, 
and shall be deemed to have been filed with the suspicious activity 
report. A bank must make all supporting documentation available to 
appropriate law enforcement authorities upon request.
    (f) Notification to board of directors. The management of a bank 
shall promptly notify its board of directors, or a committee thereof, of 
any report filed pursuant to this section. The term ``board of 
directors'' includes the managing official of an insured state-licensed 
branch of a foreign bank for purposes of this part.
    (g) Confidentiality of suspicious activity reports. Suspicious 
activity reports are confidential. Any bank subpoenaed or otherwise 
requested to disclose a suspicious activity report or the information 
contained in a suspicious activity report shall decline to produce the 
suspicious activity report or to provide any information that would 
disclose that a suspicious activity report has been prepared or filed 
citing this part, applicable law (e.g., 31 U.S.C. 5318(g)), or both, and 
notify the appropriate FDIC regional office (Division of Supervision).
    (h) Safe harbor. The safe harbor provisions of 31 U.S.C. 5318(g), 
which exempts any bank that makes a disclosure of any possible violation 
of law or regulation from liability under any law or regulation of the 
United States, or any constitution, law or regulation of any state or 
political subdivision, cover all reports of suspected or known criminal 
violations and suspicious activities to law enforcement and financial 
institution supervisory authorities, including supporting documentation, 
regardless of whether such reports are filed pursuant to this part or 
are filed on a voluntary basis.



PART 357--DETERMINATION OF ECONOMICALLY DEPRESSED REGIONS--Table of Contents




    Authority:  12 U.S.C. 1823(k)(5); 12 U.S.C. 1819.



Sec. 357.1  Economically depressed regions.

    (a) Purpose. Section 13(k)(5) of the Federal Deposit Insurance Act 
(12 U.S.C. 1823(k)(5)) provides that the FDIC shall consider proposals 
for financial assistance for eligible Savings Association Insurance Fund 
members before grounds exist for appointment of a conservator or 
receiver for such member. One of the criteria for eligibility is that an 
institution's offices are located in an economically depressed region as 
determined by the FDIC.
    (b) Economically depressed regions. The FDIC has determined that the 
following geographical regions are economically depressed regions for 
purposes of section 13(k)(5) of the Federal Deposit Insurance Act (12 
U.S.C. 1823(k)(5)): Alaska, Arizona, Arkansas, Colorado, Louisiana, New 
Mexico, Oklahoma and Texas.
[55 FR 11161, Mar. 27, 1990]



PART 359--GOLDEN PARACHUTE AND INDEMNIFICATION PAYMENTS--Table of Contents




Sec.
359.0  Scope.
359.1  Definitions.
359.2  Golden parachute payments prohibited.
359.3  Prohibited indemnification payments.

[[Page 333]]

359.4  Permissible golden parachute payments.
359.5  Permissible indemnification payments.
359.6  Filing instructions.
359.7  Applicability in the event of receivership.

    Authority:  12 U.S.C. 1828(k).

    Source:  61 FR 5930, Feb. 15, 1996, unless otherwise noted.



Sec. 359.0  Scope.

    (a) This part limits and/or prohibits, in certain circumstances, the 
ability of insured depository institutions, their subsidiaries and 
affiliated depository institution holding companies to enter into 
contracts to pay and to make golden parachute and indemnification 
payments to institution-affiliated parties (IAPs).
    (b) The limitations on golden parachute payments apply to troubled 
insured depository institutions which seek to enter into contracts to 
pay or to make golden parachute payments to their IAPs. The limitations 
also apply to depository institution holding companies which are 
troubled and seek to enter into contracts to pay or to make golden 
parachute payments to their IAPs as well as healthy holding companies 
which seek to enter into contracts to pay or to make golden parachute 
payments to IAPs of a troubled insured depository institution 
subsidiary. A ``golden parachute payment'' is generally considered to be 
any payment to an IAP which is contingent on the termination of that 
person's employment and is received when the insured depository 
institution making the payment is troubled or, if the payment is being 
made by an affiliated holding company, either the holding company itself 
or the insured depository institution employing the IAP, is troubled. 
The definition of golden parachute payment does not include payments 
pursuant to qualified retirement plans, nonqualified bona fide deferred 
compensation plans, nondiscriminatory severance pay plans, other types 
of common benefit plans, state statutes and death benefits. Certain 
limited exceptions to the golden parachute payment prohibition are 
provided for in cases involving the hiring of a white knight and 
unassisted changes in control. A procedure is also set forth whereby an 
institution or IAP can request permission to make what would otherwise 
be a prohibited golden parachute payment.
    (c) The limitations on indemnification payments apply to all insured 
depository institutions, their subsidiaries and affiliated depository 
institution holding companies regardless of their financial health. 
Generally, this part prohibits insured depository institutions, their 
subsidiaries and affiliated holding companies from indemnifying an IAP 
for that portion of the costs sustained with regard to an administrative 
or civil enforcement action commenced by any federal banking agency 
which results in a final order or settlement pursuant to which the IAP 
is assessed a civil money penalty, removed from office, prohibited from 
participating in the affairs of an insured depository institution or 
required to cease and desist from or take an affirmative action 
described in section 8(b) (12 U.S.C. 1818(b)) of the Federal Deposit 
Insurance Act (FDI Act). However, there are exceptions to this general 
prohibition. First, an institution or holding company may purchase 
commercial insurance to cover such expenses, except judgments and 
penalties. Second, the institution or holding company may advance legal 
and other professional expenses to an IAP directly (except for judgments 
and penalties) if its board of directors makes certain specific findings 
and the IAP agrees in writing to reimburse the institution if it is 
ultimately determined that the IAP violated a law, regulation or other 
fiduciary duty.



Sec. 359.1  Definitions.

    (a) Act means the Federal Deposit Insurance Act, as amended (12 
U.S.C. 1811, et seq.).
    (b) Appropriate federal banking agency, bank holding company, 
depository institution holding company and savings and loan holding 
company have the meanings given to such terms in section 3 of the Act.
    (c) Benefit plan means any plan, contract, agreement or other 
arrangement which is an ``employee welfare benefit plan'' as that term 
is defined in section 3(1) of the Employee Retirement Income Security 
Act of 1974, as amended

[[Page 334]]

(29 U.S.C. 1002(1)), or other usual and customary plans such as 
dependent care, tuition reimbursement, group legal services or cafeteria 
plans; provided however, that such term shall not include any plan 
intended to be subject to paragraphs (f)(2) (iii) and (v) of this 
section.
    (d) Bona fide deferred compensation plan or arrangement means any 
plan, contract, agreement or other arrangement whereby:
    (1) An IAP voluntarily elects to defer all or a portion of the 
reasonable compensation, wages or fees paid for services rendered which 
otherwise would have been paid to such party at the time the services 
were rendered (including a plan that provides for the crediting of a 
reasonable investment return on such elective deferrals) and the insured 
depository institution or depository institution holding company either:
    (i) Recognizes compensation expense and accrues a liability for the 
benefit payments according to generally accepted accounting principles 
(GAAP); or
    (ii) Segregates or otherwise sets aside assets in a trust which may 
only be used to pay plan and other benefits, except that the assets of 
such trust may be available to satisfy claims of the institution's or 
holding company's creditors in the case of insolvency; or
    (2) An insured depository institution or depository institution 
holding company establishes a nonqualified deferred compensation or 
supplemental retirement plan, other than an elective deferral plan 
described in paragraph (e)(1) of this section:
    (i) Primarily for the purpose of providing benefits for certain IAPs 
in excess of the limitations on contributions and benefits imposed by 
sections 415, 401(a)(17), 402(g) or any other applicable provision of 
the Internal Revenue Code of 1986 (26 U.S.C. 415, 401(a)(17), 402(g)); 
or
    (ii) Primarily for the purpose of providing supplemental retirement 
benefits or other deferred compensation for a select group of directors, 
management or highly compensated employees (excluding severance payments 
described in paragraph (f)(2)(v) of this section and permissible golden 
parachute payments described in Sec. 359.4); and
    (3) In the case of any nonqualified deferred compensation or 
supplemental retirement plans as described in paragraphs (d) (1) and (2) 
of this section, the following requirements shall apply:
    (i) The plan was in effect at least one year prior to any of the 
events described in paragraph (f)(1)(ii) of this section;
    (ii) Any payment made pursuant to such plan is made in accordance 
with the terms of the plan as in effect no later than one year prior to 
any of the events described in paragraph (f)(1)(ii) of this section and 
in accordance with any amendments to such plan during such one year 
period that do not increase the benefits payable thereunder;
    (iii) The IAP has a vested right, as defined under the applicable 
plan document, at the time of termination of employment to payments 
under such plan;
    (iv) Benefits under such plan are accrued each period only for 
current or prior service rendered to the employer (except that an 
allowance may be made for service with a predecessor employer);
    (v) Any payment made pursuant to such plan is not based on any 
discretionary acceleration of vesting or accrual of benefits which 
occurs at any time later than one year prior to any of the events 
described in paragraph (f)(1)(ii) of this section;
    (vi) The insured depository institution or depository institution 
holding company has previously recognized compensation expense and 
accrued a liability for the benefit payments according to GAAP or 
segregated or otherwise set aside assets in a trust which may only be 
used to pay plan benefits, except that the assets of such trust may be 
available to satisfy claims of the institution's or holding company's 
creditors in the case of insolvency; and
    (vii) Payments pursuant to such plans shall not be in excess of the 
accrued liability computed in accordance with GAAP.
    (e) Corporation means the Federal Deposit Insurance Corporation, in 
its corporate capacity.
    (f) Golden parachute payment. (1) The term golden parachute payment 
means

[[Page 335]]

any payment (or any agreement to make any payment) in the nature of 
compensation by any insured depository institution or an affiliated 
depository institution holding company for the benefit of any current or 
former IAP pursuant to an obligation of such institution or holding 
company that:
    (i) Is contingent on, or by its terms is payable on or after, the 
termination of such party's primary employment or affiliation with the 
institution or holding company; and
    (ii) Is received on or after, or is made in contemplation of, any of 
the following events:
    (A) The insolvency (or similar event) of the insured depository 
institution which is making the payment or bankruptcy or insolvency (or 
similar event) of the depository institution holding company which is 
making the payment; or
    (B) The appointment of any conservator or receiver for such insured 
depository institution; or
    (C) A determination by the insured depository institution's or 
depository institution holding company's appropriate federal banking 
agency, respectively, that the insured depository institution or 
depository institution holding company is in a troubled condition, as 
defined in the applicable regulations of the appropriate federal banking 
agency (Sec. 303.14(a)(4) of this chapter); or
    (D) The insured depository institution is assigned a composite 
rating of 4 or 5 by the appropriate federal banking agency or informed 
in writing by the Corporation that it is rated a 4 or 5 under the 
Uniform Financial Institutions Rating System of the Federal Financial 
Institutions Examination Council, or the depository institution holding 
company is assigned a composite rating of 4 or 5 or unsatisfactory by 
its appropriate federal banking agency; or
    (E) The insured depository institution is subject to a proceeding to 
terminate or suspend deposit insurance for such institution; and
    (iii)(A) Is payable to an IAP whose employment by or affiliation 
with an insured depository institution is terminated at a time when the 
insured depository institution by which the IAP is employed or with 
which the IAP is affiliated satisfies any of the conditions enumerated 
in paragraphs (f)(1)(ii) (A) through (E) of this section, or in 
contemplation of any of these conditions; or
    (B) Is payable to an IAP whose employment by or affiliation with an 
insured depository institution holding company is terminated at a time 
when the insured depository institution holding company by which the IAP 
is employed or with which the IAP is affiliated satisfies any of the 
conditions enumerated in paragraphs (f)(1)(ii)(A), (C) or (D) of this 
section, or in contemplation of any of these conditions.
    (2) Exceptions. The term golden parachute payment shall not include:
    (i) Any payment made pursuant to a pension or retirement plan which 
is qualified (or is intended within a reasonable period of time to be 
qualified) under section 401 of the Internal Revenue Code of 1986 (26 
U.S.C. 401) or pursuant to a pension or other retirement plan which is 
governed by the laws of any foreign country; or
    (ii) Any payment made pursuant to a benefit plan as that term is 
defined in paragraph (c) of this section; or
    (iii) Any payment made pursuant to a bona fide deferred compensation 
plan or arrangement as defined in paragraph (d) of this section; or
    (iv) Any payment made by reason of death or by reason of termination 
caused by the disability of an institution-affiliated party; or
    (v) Any payment made pursuant to a nondiscriminatory severance pay 
plan or arrangement which provides for payment of severance benefits to 
all eligible employees upon involuntary termination other than for 
cause, voluntary resignation, or early retirement; provided, however, 
that no employee shall receive any such payment which exceeds the base 
compensation paid to such employee during the twelve months (or such 
longer period or greater benefit as the Corporation shall consent to) 
immediately preceding termination of employment, resignation or early 
retirement, and such severance pay plan or arrangement shall not have 
been adopted or modified to increase

[[Page 336]]

the amount or scope of severance benefits at a time when the insured 
depository institution or depository institution holding company was in 
a condition specified in paragraph (f)(1)(ii) of this section or in 
contemplation of such a condition without the prior written consent of 
the appropriate federal banking agency; or
    (vi) Any severance or similar payment which is required to be made 
pursuant to a state statute or foreign law which is applicable to all 
employers within the appropriate jurisdiction (with the exception of 
employers that may be exempt due to their small number of employees or 
other similar criteria); or
    (vii) Any other payment which the Corporation determines to be 
permissible in accordance with Sec. 359.4.
    (g) Insured depository institution means any bank or savings 
association the deposits of which are insured by the Corporation 
pursuant to the Act, or any subsidiary thereof.
    (h) Institution-affiliated party (IAP) means:
    (1) Any director, officer, employee, or controlling stockholder 
(other than a depository institution holding company) of, or agent for, 
an insured depository institution or depository institution holding 
company;
    (2) Any other person who has filed or is required to file a change-
in-control notice with the appropriate federal banking agency under 
section 7(j) of the Act (12 U.S.C. 1817(j));
    (3) Any shareholder (other than a depository institution holding 
company), consultant, joint venture partner, and any other person as 
determined by the appropriate federal banking agency (by regulation or 
case-by-case) who participates in the conduct of the affairs of an 
insured depository institution or depository institution holding 
company; and
    (4) Any independent contractor (including any attorney, appraiser, 
or accountant) who knowingly or recklessly participates in: Any 
violation of any law or regulation, any breach of fiduciary duty, or any 
unsafe or unsound practice, which caused or is likely to cause more than 
a minimal financial loss to, or a significant adverse effect on, the 
insured depository institution or depository institution holding 
company.
    (i) Liability or legal expense means:
    (1) Any legal or other professional fees and expenses incurred in 
connection with any claim, proceeding, or action;
    (2) The amount of, and any cost incurred in connection with, any 
settlement of any claim, proceeding, or action; and
    (3) The amount of, and any cost incurred in connection with, any 
judgment or penalty imposed with respect to any claim, proceeding, or 
action.
    (j) Nondiscriminatory means that the plan, contract or arrangement 
in question applies to all employees of an insured depository 
institution or depository institution holding company who meet 
reasonable and customary eligibility requirements applicable to all 
employees, such as minimum length of service requirements. A 
nondiscriminatory plan, contract or arrangement may provide different 
benefits based only on objective criteria such as salary, total 
compensation, length of service, job grade or classification, which are 
applied on a proportionate basis (with a variance in severance benefits 
relating to any criterion of plus or minus ten percent) to groups of 
employees consisting of not less than the lesser of 33 percent of 
employees or 1,000 employees.
    (k) Payment means:
    (1) Any direct or indirect transfer of any funds or any asset;
    (2) Any forgiveness of any debt or other obligation;
    (3) The conferring of any benefit, including but not limited to 
stock options and stock appreciation rights; and
    (4) Any segregation of any funds or assets, the establishment or 
funding of any trust or the purchase of or arrangement for any letter of 
credit or other instrument, for the purpose of making, or pursuant to 
any agreement to make, any payment on or after the date on which such 
funds or assets are segregated, or at the time of or after such trust is 
established or letter of credit or other instrument is made available, 
without regard to whether the obligation to make such payment is 
contingent on:

[[Page 337]]

    (i) The determination, after such date, of the liability for the 
payment of such amount; or
    (ii) The liquidation, after such date, of the amount of such 
payment.
    (l) Prohibited indemnification payment. (1) The term prohibited 
indemnification payment means any payment (or any agreement or 
arrangement to make any payment) by any insured depository institution 
or an affiliated depository institution holding company for the benefit 
of any person who is or was an IAP of such insured depository 
institution or holding company, to pay or reimburse such person for any 
civil money penalty or judgment resulting from any administrative or 
civil action instituted by any federal banking agency, or any other 
liability or legal expense with regard to any administrative proceeding 
or civil action instituted by any federal banking agency which results 
in a final order or settlement pursuant to which such person:
    (i) Is assessed a civil money penalty;
    (ii) Is removed from office or prohibited from participating in the 
conduct of the affairs of the insured depository institution; or
    (iii) Is required to cease and desist from or take any affirmative 
action described in section 8(b) of the Act with respect to such 
institution.
    (2) Exceptions. (i) The term prohibited indemnification payment 
shall not include any reasonable payment by an insured depository 
institution or depository institution holding company which is used to 
purchase any commercial insurance policy or fidelity bond, provided that 
such insurance policy or bond shall not be used to pay or reimburse an 
IAP for the cost of any judgment or civil money penalty assessed against 
such person in an administrative proceeding or civil action commenced by 
any federal banking agency, but may pay any legal or professional 
expenses incurred in connection with such proceeding or action or the 
amount of any restitution to the insured depository institution, 
depository institution holding company or receiver.
    (ii) The term prohibited indemnification payment shall not include 
any reasonable payment by an insured depository institution or 
depository institution holding company that represents partial 
indemnification for legal or professional expenses specifically 
attributable to particular charges for which there has been a formal and 
final adjudication or finding in connection with a settlement that the 
IAP has not violated certain banking laws or regulations or has not 
engaged in certain unsafe or unsound banking practices or breaches of 
fiduciary duty, unless the administrative action or civil proceeding has 
resulted in a final prohibition order against the IAP.



Sec. 359.2  Golden parachute payments prohibited.

    No insured depository institution or depository institution holding 
company shall make or agree to make any golden parachute payment, except 
as provided in this part.



Sec. 359.3  Prohibited indemnification payments.

    No insured depository institution or depository institution holding 
company shall make or agree to make any prohibited indemnification 
payment, except as provided in this part.



Sec. 359.4  Permissible golden parachute payments.

    (a) An insured depository institution or depository institution 
holding company may agree to make or may make a golden parachute payment 
if and to the extent that:
    (1) The appropriate federal banking agency, with the written 
concurrence of the Corporation, determines that such a payment or 
agreement is permissible; or
    (2) Such an agreement is made in order to hire a person to become an 
IAP either at a time when the insured depository institution or 
depository institution holding company satisfies or in an effort to 
prevent it from imminently satisfying any of the criteria set forth in 
Sec. 359.1(f)(1)(ii), and the institution's appropriate federal banking 
agency and the Corporation consent in writing to the amount and terms of 
the golden parachute payment. Such consent by the FDIC and the 
institution's appropriate federal banking agency shall not improve the 
IAP's position in

[[Page 338]]

the event of the insolvency of the institution since such consent can 
neither bind a receiver nor affect the provability of receivership 
claims. In the event that the institution is placed into receivership or 
conservatorship, the FDIC and/or the institution's appropriate federal 
banking agency shall not be obligated to pay the promised golden 
parachute and the IAP shall not be accorded preferential treatment on 
the basis of such prior approval; or
    (3) Such a payment is made pursuant to an agreement which provides 
for a reasonable severance payment, not to exceed twelve months salary, 
to an IAP in the event of a change in control of the insured depository 
institution; provided, however, that an insured depository institution 
or depository institution holding company shall obtain the consent of 
the appropriate federal banking agency prior to making such a payment 
and this paragraph (a)(3) shall not apply to any change in control of an 
insured depository institution which results from an assisted 
transaction as described in section 13 of the Act (12 U.S.C. 1823) or 
the insured depository institution being placed into conservatorship or 
receivership; and
    (4) An insured depository institution, depository institution 
holding company or IAP making a request pursuant to paragraphs (a)(1) 
through (3) of this section shall demonstrate that it does not possess 
and is not aware of any information, evidence, documents or other 
materials which would indicate that there is a reasonable basis to 
believe, at the time such payment is proposed to be made, that:
    (i) The IAP has committed any fraudulent act or omission, breach of 
trust or fiduciary duty, or insider abuse with regard to the depository 
institution or depository institution holding company that has had or is 
likely to have a material adverse effect on the institution or holding 
company;
    (ii) The IAP is substantially responsible for the insolvency of, the 
appointment of a conservator or receiver for, or the troubled condition, 
as defined by applicable regulations of the appropriate federal banking 
agency, of the insured depository institution, depository institution 
holding company or any insured depository institution subsidiary of such 
holding company;
    (iii) The IAP has materially violated any applicable federal or 
state banking law or regulation that has had or is likely to have a 
material effect on the insured depository institution or depository 
institution holding company; and
    (iv) The IAP has violated or conspired to violate section 215, 656, 
657, 1005, 1006, 1007, 1014, 1032, or 1344 of title 18 of the United 
States Code, or section 1341 or 1343 of such title affecting a federally 
insured financial institution as defined in title 18 of the United 
States Code.
    (b) In making a determination under paragraphs (a) (1) through (3) 
of this section, the appropriate federal banking agency and the 
Corporation may consider:
    (1) Whether, and to what degree, the IAP was in a position of 
managerial or fiduciary responsibility;
    (2) The length of time the IAP was affiliated with the insured 
depository institution or depository institution holding company, and 
the degree to which the proposed payment represents a reasonable payment 
for services rendered over the period of employment; and
    (3) Any other factors or circumstances which would indicate that the 
proposed payment would be contrary to the intent of section 18(k) of the 
Act or this part.



Sec. 359.5  Permissible indemnification payments.

    (a) An insured depository institution or depository institution 
holding company may make or agree to make reasonable indemnification 
payments to an IAP with respect to an administrative proceeding or civil 
action initiated by any federal banking agency if:
    (1) The insured depository institution's or depository institution 
holding company's board of directors, in good faith, determines in 
writing after due investigation and consideration that the institution-
affiliated party acted in good faith and in a manner he/she believed to 
be in the best interests of the institution;
    (2) The insured depository institution's or depository institution 
holding

[[Page 339]]

company's board of directors, respectively, in good faith, determines in 
writing after due investigation and consideration that the payment of 
such expenses will not materially adversely affect the institution's or 
holding company's safety and soundness;
    (3) The indemnification payments do not constitute prohibited 
indemnification payments as that term is defined in Sec. 359.1(l); and
    (4) The IAP agrees in writing to reimburse the insured depository 
institution or depository institution holding company, to the extent not 
covered by payments from insurance or bonds purchased pursuant to 
Sec. 359.1(l)(2), for that portion of the advanced indemnification 
payments which subsequently become prohibited indemnification payments, 
as defined in Sec. 359.1(l)
    (b) An IAP requesting indemnification payments shall not participate 
in any way in the board's discussion and approval of such payments; 
provided, however, that such IAP may present his/her request to the 
board and respond to any inquiries from the board concerning his/her 
involvement in the circumstances giving rise to the administrative 
proceeding or civil action.
    (c) In the event that a majority of the members of the board of 
directors are named as respondents in an administrative proceeding or 
civil action and request indemnification, the remaining members of the 
board may authorize independent legal counsel to review the 
indemnification request and provide the remaining members of the board 
with a written opinion of counsel as to whether the conditions 
delineated in paragraph (a) of this section have been met. If 
independent legal counsel opines that said conditions have been met, the 
remaining members of the board of directors may rely on such opinion in 
authorizing the requested indemnification.
    (d) In the event that all of the members of the board of directors 
are named as respondents in an administrative proceeding or civil action 
and request indemnification, the board shall authorize independent legal 
counsel to review the indemnification request and provide the board with 
a written opinion of counsel as to whether the conditions delineated in 
paragraph (a) of this section have been met. If independent legal 
counsel opines that said conditions have been met, the board of 
directors may rely on such opinion in authorizing the requested 
indemnification.



Sec. 359.6  Filing instructions.

    Requests to make excess nondiscriminatory severance plan payments 
pursuant to Sec. 359.1(f)(2)(v) and golden parachute payments permitted 
by Sec. 359.4 shall be submitted in writing to the FDIC regional 
director (Supervision) for the region in which the institution is 
located. The request shall be in letter form and shall contain all 
relevant factual information as well as the reasons why such approval 
should be granted. In the event that the consent of the institution's 
primary federal regulator is required in addition to that of the FDIC, 
the requesting party shall submit a copy of its letter to the FDIC to 
the institution's primary federal regulator. In the case of national 
banks, such written requests shall be submitted to the OCC. In the case 
of state member banks and bank holding companies, such written requests 
shall be submitted to the Federal Reserve district bank where the 
institution or holding company, respectively, is located. In the case of 
savings associations and savings association holding companies, such 
written requests shall be submitted to the OTS regional office where the 
institution or holding company, respectively, is located. In cases where 
the prior consent of only the institution's primary federal regulator is 
required and that agency is not the FDIC, a written request satisfying 
the requirements of this section shall be submitted to the primary 
federal regulator as described in this section.



Sec. 359.7  Applicability in the event of receivership.

    The provisions of this part, or any consent or approval granted 
under the provisions of this part by the FDIC (in its corporate 
capacity), shall not in any way bind any receiver of a failed insured 
depository institution. Any consent or approval granted under the 
provisions of this part by the FDIC or any other federal banking agency 
shall not in any way obligate such agency or

[[Page 340]]

receiver to pay any claim or obligation pursuant to any golden 
parachute, severance, indemnification or other agreement. Claims for 
employee welfare benefits or other benefits which are contingent, even 
if otherwise vested, when the FDIC is appointed as receiver for any 
depository institution, including any contingency for termination of 
employment, are not provable claims or actual, direct compensatory 
damage claims against such receiver. Nothing in this part may be 
construed to permit the payment of salary or any liability or legal 
expense of any IAP contrary to 12 U.S.C. 1828(k)(3).



PART 360--RESOLUTION AND RECEIVERSHIP RULES--Table of Contents




Sec.
360.1  Least-cost resolution.
360.2  Federal Home Loan banks as secured creditors.
360.3  Priorities.
360.4  Administrative expenses.
360.5  Definition of qualified financial contracts.

    Authority:  12 U.S.C. 1821(d)(11), 1821(e)(8)(D)(i), 1823(c)(4); 
Sec. 401(h), Pub. L. 101-73, 103 Stat. 357.



Sec. 360.1  Least-cost resolution.

    (a) General rule. Except as provided in section 13(c)(4)(G) of the 
FDI Act (12 U.S.C. 1823 (c)(4)(G)), the FDIC shall not take any action, 
directly or indirectly, under sections 13(c), 13(d), 13(f), 13(h) or 
13(k) of the FDI Act (12 U.S.C. 1823 (c), (d), (f), (h) or (k)) with 
respect to any insured depository institution that would have the effect 
of increasing losses to any insurance fund by protecting:
    (1) Depositors for more than the insured portion of their deposits 
(determined without regard to whether such institution is liquidated); 
or
    (2) Creditors other than depositors.
    (b) Purchase and assumption transactions. Subject to the requirement 
of section 13(c)(4)(A) of the FDI Act (12 U.S.C. 13(c)(4)(A)), paragraph 
(a) of this section shall not be construed as prohibiting the FDIC from 
allowing any person who acquires any assets or assumes any liabilities 
of any insured depository institution, for which the FDIC has been 
appointed conservator or receiver, to acquire uninsured deposit 
liabilities of such institution as long as the applicable insurance fund 
does not incur any loss with respect to such uninsured deposit 
liabilities in an amount greater than the loss which would have been 
incurred with respect to such liabilities if the institution had been 
liquidated.
[58 FR 67664, Dec. 22, 1993]



Sec. 360.2  Federal Home Loan banks as secured creditors.

    (a) Notwithstanding any other provisions of federal or state law or 
any other provisions of these regulations, the receiver of a borrower 
from a Federal Home Loan Bank shall recognize the priority of any 
security interest granted to a Federal Home Loan Bank by any member of 
any Federal Home Loan Bank or any affiliate of any such member, whether 
such security interest is in specifically designated assets or a blanket 
interest in all assets or categories of assets, over the claims and 
rights of any other party (including any receiver, conservator, trustee 
or similar party having rights of a lien creditor) other than claims and 
rights that
    (1) Would be entitled to priority under otherwise applicable law; 
and
    (2) Are held by actual bona fide purchasers for value or by actual 
secured parties that are secured by actual perfected security interests.
    (b) If the receiver rather than the Bank shall have possession of 
any collateral consisting of notes, securities, other instruments, 
chattel paper or cash securing advances of the Bank, the receiver shall, 
upon request by the Bank, promptly deliver possession of such collateral 
to the Bank or its designee.
    (c) In the event that a receiver is appointed for any member of a 
Federal Home Loan Bank, the following procedures shall apply:
    (1) The receiver and the Bank shall immediately seek and develop a 
mutually agreeable plan for the payment of any advances made by the Bank 
to such borrower or for the servicing, foreclosure upon and liquidation 
of the collateral securing any such advances, taking into account the 
nature and amount of such collateral, the markets

[[Page 341]]

in which such collateral is normally traded or sold and other relevant 
factors.
    (2) In the event that the receiver and the Bank shall not, in good 
faith, be able to develop such a mutually agreeable plan, or, in the 
interim, the Bank in good faith reasonably concludes that the value of 
such collateral is decreasing, because of interest rate or other market 
changes, at such a rate that to delay liquidation or other exercise of 
the Bank's rights as a secured party for the development of a mutually 
agreeable plan could reasonably cause the value of such collateral to 
decrease to an amount that is insufficient to satisfy the Bank's claim 
in full, the Bank may, at any time thereafter if permitted to do so by 
the terms of the advances or other security agreement with such borrower 
or otherwise by applicable law, proceed to foreclose upon, sell, lease 
or otherwise dispose of such collateral (or any portion thereof), or 
otherwise exercise its rights as a secured party, provided that the Bank 
acts in good faith and in a commercially reasonable manner and otherwise 
in accordance with applicable law.
    (3) The foregoing provisions of this paragraph (c) shall not apply 
in the event that a purchase and assumption transaction is entered into 
regarding any such member.
    (d) The Bank's rights pursuant to the second sentence of section 
10(d) of the Federal Home Loan Bank Act shall not be affected or 
diminished by any provisions of state law that may be applicable to a 
security interest in property of the member.
    (e) The receiver for a borrower from a Federal Home Loan Bank shall 
allow a claim for a prepayment fee by the Bank if, and only if:
    (1) Made pursuant to a written contract that provides for a 
prepayment fee, provided, however, that such prepayment fee allowed by 
the receiver shall not exceed the present value of the loss attributable 
to the difference between the contract rate of the secured borrowing and 
the reinvestment rate then available to the Bank; and
    (2) The indebtedness owed to the Bank by such borrower is secured by 
sufficient collateral in which a perfected security interest in favor of 
the Bank exists or as to which the Bank's security interest is entitled 
to priority under the Competitive Equality Banking Act of 1987, Pub. L. 
100-86, section 306(d), 101 Stat. 552, 601-02, or otherwise so that the 
aggregate of the outstanding principal on the advances secured by such 
collateral, the accrued by unpaid interest thereon and the prepayment 
fee applicable to such advances can be paid in full from the amounts 
realized from such collateral. For purposes of this paragraph (e)(2), 
the adequacy of such collateral shall be determined as of the date such 
prepayment fees shall be due and payable under the terms of the written 
contract providing therefor.
[54 FR 19156, May 4, 1989. Redesignated at 54 FR 42801, Oct. 18, 1989, 
and further redesignated at 55 FR 46496, Nov. 5, 1990. Redesignated at 
58 FR 67664, Dec. 22, 1993]



Sec. 360.3  Priorities.

    (a) Unsecured claims against an association or the receiver that are 
proved to the satisfaction of the receiver shall have priority in the 
following order:
    (1) Administrative expenses of the receiver, including the costs, 
expenses, and debts of the receiver;
    (2) Administrative expenses of the association, provided that such 
expenses were incurred within thirty (30) days prior to the receiver's 
taking possession, and that such expenses shall be limited to reasonable 
expenses incurred for services actually provided by accountants, 
attorneys, appraisers, examiners, or management companies, or reasonable 
expenses incurred by employees which were authorized and reimbursable 
under a pre-existing expense reimbursement policy, that, in the opinion 
of the receiver, are of benefit to the receivership, and shall not 
include wages or salaries of employees of the association;
    (3) Claims for wages and salaries, including vacation and sick leave 
pay and contributions to employee benefit plans, earned prior to the 
appointment of the receiver by an employee of the association whom the 
receiver determines it is in the best interests of the receivership to 
engage or retain for a reasonable period of time;

[[Page 342]]

    (4) If authorized by the receiver, claims for wages and salaries, 
including vacation and sick leave pay and contributions to employee 
benefits plans, earned prior to the appointment of the receiver, up to a 
maximum of three thousand dollars ($3,000) per person, by an employee of 
the association not engaged or retained pursuant to a determination by 
the receiver pursuant to the third category above;
    (5) Claims of governmental units for unpaid taxes, other than 
Federal income taxes, except to the extent subordinated pursuant to 
applicable law; but no other claim of a governmental unit shall have a 
priority higher than that of a general creditor under paragraph (a)(6) 
of this section;
    (6) Claims for withdrawable accounts, including those of the 
Corporation as subrogee or transferee, and all other claims which have 
accrued and become unconditionally fixed on or before the date of 
default, whether liquidated or unliquidated, except as provided in 
paragraphs (a)(1) through (a)(5) of this section, provided, however, 
that if the association is chartered and was operated under the laws of 
a state that provided a priority for holders of withdrawable accounts 
over such other claims or general creditors, such priority within this 
paragraph (a)(6) shall be observed by the receiver; and provided 
further, that if deposits of a Federal association are booked or 
registered at an office of such association that is located in a State 
that provides such priority with respect to State-chartered 
associations, such deposits in a Federal association shall have priority 
over such other claims or general creditors, which shall be observed by 
the receiver;
    (7) Claims other than those that have accrued and become 
unconditionally fixed on or before the date of default, including claims 
for interest after the date of default on claims under paragraph (a)(6) 
of this section, Provided that any claim based on an agreement for 
accelerated, stipulated, or liquidated damages, which claim did not 
accrue prior to the date of default, shall be considered as not having 
accrued and become unconditionally fixed on or before the date of 
default;
    (8) Claims of the United States for unpaid Federal income taxes;
    (9) Claims that have been subordinated in whole or in part to 
general creditor claims, which shall be given the priority specified in 
the written instruments that evidence such claims; and
    (10) Claims by holders of nonwithdrawable accounts, including stock, 
which shall have priority within this paragraph (a)(10) in accordance 
with the terms of the written instruments that evidence such claims.
    (b) Interest after the date of default on claims under paragraph 
(a)(6) of this section shall be at a rate or rates adjusted monthly to 
reflect the average rate for U.S. Treasury bills with maturities of not 
more than ninety-one (91) days during the preceding three (3) months.
    (c) [Reserved]
    (d) All unsecured claims of any category or class or priority 
described in paragraphs (a)(1) through (a)(10) of this section shall be 
paid in full, or provision made for such payment, before any claims of 
lesser priority are paid. If there are insufficient funds to pay all 
claims of a category or class in full, distribution to claimants in such 
category or class shall be made pro rata. Notwithstanding anything to 
the contrary herein, the receiver may, at any time, and from time to 
time, prior to the payment in full of all claims of a category or class 
with higher priority, make such distributions to claimants in priority 
classes outlined in paragraphs (a)(1) through (a)(6) of this section as 
the receiver believes are reasonably necessary to conduct the 
receivership,
    Provided that the receiver determines that adequate funds exist or 
will be recovered during the receivership to pay in full all claims of 
any higher priority.
    (e) If the association is in mutual form, and a surplus remains 
after making distribution in full of allowed claims as set forth in 
paragraphs (a) and (b) of this section, such surplus shall be 
distributed to the depositors in proportion to their accounts as of the 
date of default.
    (f) Under the provisions of section 11(d)(11) of the Act (12 U.S.C. 
1821(d)(11)), the provisions of this Sec. 360.3

[[Page 343]]

do not apply to any receivership established and liquidation or other 
resolution occurring after August 10, 1993.
[53 FR 25132, July 5, 1988, as amended at 53 FR 30667, Aug. 15, 1988. 
Redesignated and amended at 54 FR 42801, Oct. 18, 1989, and further 
redesignated and amended at 55 FR 46496, Nov. 5, 1990; 58 FR 43070, Aug. 
13, 1993. Redesignated at 58 FR 67664, Dec. 22, 1993; 60 FR 35488, July 
10, 1995]



Sec. 360.4  Administrative expenses.

    The priority for administrative expenses of the receiver, as that 
term is used in section 11(d)(11) of the Act (12 U.S.C. 1821(d)(11), 
shall include those necessary expenses incurred by the receiver in 
liquidating or otherwise resolving the affairs of a failed insured 
depository institution. Such expenses shall include pre-failure and 
post-failure obligations that the receiver determines are necessary and 
appropriate to facilitate the smooth and orderly liquidation or other 
resolution of the institution.
[60 FR 35488, July 10, 1995]



Sec. 360.5  Definition of qualified financial contracts.

    (a) Authority and purpose. Sections 11(e) (8) through (10) of the 
Federal Deposit Insurance Act, 12 U.S.C. 1821(e) (8) through (10), 
provide special rules for the treatment of qualified financial contracts 
of an insured depository institution for which the FDIC is appointed 
conservator or receiver, including rules describing the manner in which 
qualified financial contracts may be transferred or closed out. Section 
11(e)(8)(D)(i) of the Federal Deposit Insurance Act, 12 U.S.C. 
1821(e)(8)(D)(i), grants the Corporation authority to determine by 
regulation whether any agreement, other than those identified within 
section 11(e)(8)(D), should be recognized as qualified financial 
contracts under the statute. The purpose of this section is to identify 
additional agreements which the Corporation has determined to be 
qualified financial contracts.
    (b) Repurchase agreements. The following agreements shall be deemed 
``repurchase agreements'' under section 11(e)(8)(D)(v) of the Federal 
Deposit Insurance Act, as amended (12 U.S.C. 1821(e)(8)(D)(v)): A 
repurchase agreement on qualified foreign government securities is an 
agreement or combination of agreements (including master agreements) 
which provides for the transfer of securities that are direct 
obligations of, or that are fully guaranteed by, the central governments 
(as set forth at 12 CFR part 325, appendix A, section II.C, n. 17, as 
may be amended from time to time) of the OECD-based group of countries 
(as set forth at 12 CFR part 325, appendix A, section II.B.2., note 12 
as may be amended from time to time) against the transfer of funds by 
the transferee of such securities with a simultaneous agreement by such 
transferee to transfer to the transferor thereof securities as described 
above, at a date certain not later than one year after such transfers or 
on demand, against the transfer of funds.
    (c) Swap agreements. The following agreements shall be deemed ``swap 
agreements'' under section 11(e)(8)(D)(vi) of the Federal Deposit 
Insurance Act, as amended (12 U.S.C. 1821(e)(8)(D)(vi)): A spot foreign 
exchange agreement is any agreement providing for or effecting the 
purchase or sale of one currency in exchange for another currency (or a 
unit of account established by an intergovernmental organization such as 
the European Currency Unit) with a maturity date of two days or less 
after the agreement has been entered into, and includes short-dated 
transactions such as tomorrow/next day and same day/tomorrow 
transactions.
    (d) Nothing in this section shall be construed as limiting or 
changing a party's obligation to comply with all reasonable trading 
practices and requirements, non-insolvency law requirements and any 
other requirements imposed by other provisions of the FDI Act. This 
section in no way limits the authority of the Corporation to take 
supervisory or enforcement actions, or to otherwise manage the affairs 
of a financial institution for which the Corporation has been appointed 
conservator or receiver.
[60 FR 66865, Dec. 27, 1995]

[[Page 344]]



PART 361--MINORITY AND WOMEN OUTREACH PROGRAM--CONTRACTING--Table of Contents




Sec.
361.1  Purpose.
361.2  Policy.
361.3  Definitions.
361.4  Scope.
361.5  Oversight and monitoring.
361.6  Outreach.
361.7  Certification.
361.8  Solicitation of non-legal services.
361.9  MWOB joint ventures.
361.10  Subcontracting.
361.11  Solicitation and awards for legal services.

    Authority:  12 U.S.C. 1833e.

    Source:  57 FR 15004, Apr. 24, 1992, unless otherwise noted.



Sec. 361.1  Purpose.

    (a) The purpose of the FDIC Minority and Women Outreach program, 
(``MWOP'' or ``Program'') is to ensure that firms owned by minorities 
and women are given the opportunity to participate fully in all 
contracts entered into by the FDIC.
    (b) This part is issued by the Office of Equal Opportunity 
(``OEO''). Authority is derived from the Financial Institutions Reform, 
Recovery, and Enforcement Act (``FIRREA'') of 1989, title XII, section 
1216(c), which requires the FDIC to prescribe regulations establishing 
and overseeing a minority outreach program ensuring inclusion, to the 
maximum extent possible, of minorities and women, and entities owned by 
minorities and women, including financial institutions, investment 
banking firms, underwriters, accountants, and providers of legal 
services, in all contracts entered into by the FDIC with public or 
private sector contractors.



Sec. 361.2  Policy.

    It is the policy of the FDIC that minorities and women and entities 
owned by minorities and women shall have the maximum practicable 
opportunity to participate in contracts awarded by the FDIC.



Sec. 361.3  Definitions.

    For the purposes of this part:
    (a) Minority and/or women-owned business (``MWOB'') means firms at 
least fifty-one (51) percent owned and controlled by one or more 
minorities and/or women. In the case of publicly owned companies, at 
least fifty-one (51) percent of its voting stock must be owned and 
controlled by minorities and/or women. Additionally, the management and 
daily business operations must be controlled by one or more such 
individuals.
    (b) Joint venture (non-legal services) means an arrangement in which 
twenty-five (25) percent or more of the duties are performed by the MWOB 
and the MWOB is compensated proportionally to its duties. Additionally, 
twenty-five (25) percent or more of the management and daily business 
operations must be controlled by such individuals.
    (c) Co-counseling (legal services) means an association between two 
or more attorneys or law firms for the joint provision of legal 
services.
    (d) Legal services means all services provided by attorneys or law 
firms (including services of support staff).
    (e) Minority means any Black American, Native American Indian, 
Hispanic American, or Asian American.



Sec. 361.4  Scope.

    The MWOP applies to all contracts entered into by the FDIC, whether 
public or private. The MWOP is incorporated into FDIC policies and 
guidelines governing contracting and the retention of outside services.



Sec. 361.5  Oversight and monitoring.

    (a) The FDIC Office of Equal Opportunity has overall responsibility 
for nationwide MWOP oversight, which includes, but is not limited to, 
the monitoring, review and interpretation of MWOP regulation. In 
addition, the OEO is responsible for providing the FDIC with technical 
assistance and guidance to facilitate the identification, registration, 
and solicitation of minority and women-owned businesses.
    (b) Each FDIC office and division that performs contracting or 
outreach activities shall submit information to the OEO on a quarterly 
basis, or upon

[[Page 345]]

request. Quarterly submissions will include, at a minimum, statistical 
information on contract awards and solicitations by designated 
demographic categories and related outreach activities. Additionally, 
for contracts requiring a subcontracting plan, the prime contractor is 
required to maintain statistical and outreach data and information 
regarding the implementation of the subcontracting plan.



Sec. 361.6  Outreach.

    (a) Each regional office and consolidated site including the Legal 
Division, involved in contracting with the private sector will designate 
one or more MWOP coordinators. The coordinators will perform outreach 
activities for the Program and act as liaison between the FDIC and the 
public on MWOP issues. On a quarterly basis, or as requested by the OEO, 
the coordinators will report to the OEO on their implementation of the 
Program.
    (b) Outreach includes the identification and registration of MWOBs 
who can provide goods and services utilized by the FDIC. This includes 
distributing information concerning the MWOP and providing appropriate 
registration materials for use by vendors and/or contractors. The 
identification of MWOBs will primarily be accomplished by:
    (1) Obtaining various lists and directories of minority and women-
owned firms maintained by other federal, state and local governmental 
agencies;
    (2) Participating in conventions, seminars and professional meetings 
comprised of, or attended predominately by, MWOBs;
    (3) Conducting seminars, meetings, workshops and other various 
functions to promote the identification and registration of MWOBs;
    (4) Placing MWOP promotional advertisements indicating opportunities 
with FDIC in minority and women-owned media and,
    (5) Monitoring to assure that FDIC staff interfacing with the 
contracting community are knowledgeable of, and actively promoting, the 
MWOP.



Sec. 361.7  Certification.

    (a) In order to qualify as MWOB, each vendor or contractor must 
either:
    (1) Self-certify ownership status by completing the appropriate 
section of the applicable registration form; or
    (2) Submit a valid MWOB certification received from a federal 
agency, designated state or authorized local agency.
    (b) Questions regarding minority and/or women ownership status will 
be resolved by the Division of Administration or, with respect to 
outside counsel, the FDIC Office of Inspector General, both located at 
550 17th Street, NW., Washington, DC 20429.
[57 FR 15004, Apr. 24, 1992, as amended at 60 FR 31384, June 15, 1995]



Sec. 361.8  Solicitation of non-legal services.

    (a) As part of the solicitation process, vendors and contractors, 
for non-legal services who submit a completed FDIC ``Vendor 
Application,'' Form 3700/13, will be registered in the National 
Contractor System (NCS), an automated database. The NCS will be 
available to all FDIC offices involved in contracting activities. The 
NCS will be utilized to identify qualified MWOBs for inclusion on bid 
lists.
    (b) To ensure that minority and women-owned firms are being included 
in each solicitation, the solicitation process will include:
    (1) Disseminating procedures and information governing FDIC's 
solicitation rules and policies to MWOBs;
    (2) Providing MWOBs technical guidance in the preparation of 
proposals;
    (3) Allowing qualified MWOBs a 3% price advantage and additional 
technical consideration for competitively bid services; and
    (4) Providing post-award technical guidance to unsuccessful MWOBs.



Sec. 361.9  MWOB joint ventures.

    The FDIC encourages the formation of bona fide joint ventures to 
assist MWOBs in gaining access to FDIC contracting opportunities.



Sec. 361.10  Subcontracting.

    Consistent with Sec. 361.2 of this part, the contractor is required 
to carry out the FDIC minority and women-owned business contracting 
policy in the awarding of subcontracts to the fullest

[[Page 346]]

extent, consistent with the efficient performance of the awarded 
contract.



Sec. 361.11  Solicitation and awards for legal services.

    (a) The Legal Division engages outside counsel primarily to provide 
legal services for liquidation, conservatorship and receivership 
activities. Outside counsel is selected on a competitive basis, as 
defined in the FDIC ``Guide for Outside Counsel'', P-2100-002-91 
(``Guide''), as amended from time to time.
    (b) To be retained as outside counsel, law firms must be free of 
conflicting interests, unless the Legal Division waives those conflicts 
in writing. Outside counsel must also enter into a Legal Services 
Agreement with the FDIC and agree to comply with the provisions of the 
``Guide''.
    (c) The Legal Division actively seeks to engage firms owned by 
minorities and women, both directly and in association with other firms. 
The Legal Division's Minority and Outreach Office provides assistance to 
minority and women-owned firms, and to minority and women attorneys 
within other firms, with respect to registration or other matters 
relating to the retention of outside counsel.



PART 362--ACTIVITIES AND INVESTMENTS OF INSURED STATE BANKS--Table of Contents




Sec.
362.1  Purpose and scope.
362.2  Definitions.
362.3  Equity investments.
362.4  Activities of insured state banks and their subsidiaries.
362.5  Notification of exempt insurance activities.
362.6  Delegation of authority.

    Authority:  12 U.S.C. 1816, 1818, 1819(tenth), 1831a.

    Source:  57 FR 53234, Nov. 9, 1992, unless otherwise noted.



Sec. 362.1  Purpose and scope.

    The purpose of this part is to implement the provisions of section 
24 of the Federal Deposit Insurance Act (12 U.S.C. 1831a) which sets 
forth certain restrictions and prohibitions on the activities and 
investments of insured state banks and their subsidiaries. In addition, 
consistent with the overall purpose of section 24, it is the intent of 
this part to ensure that activities and investments undertaken by 
insured state banks or their subsidiaries do not present a risk to 
either of the deposit insurance funds, are safe and sound, are 
consistent with the purposes of federal deposit insurance, and are 
otherwise consistent with law.
[57 FR 53234, Nov. 9, 1992, as amended at 58 FR 64483, Dec. 8, 1993]



Sec. 362.2  Definitions.

    For the purposes of this part, the following definitions apply:
    (a) Activity refers to the authorized conduct of business by an 
insured state bank. Activity as used in connection with the direct 
conduct of business by an insured state bank includes acquiring or 
retaining any investment other than an equity investment. Activity as 
used in connection with the conduct of business by a subsidiary of an 
insured state bank includes acquiring or retaining any investment.
    (b) The phrase activity permissible for a national bank shall be 
understood to refer to any activity authorized for national banks under 
the National Bank Act (12 U.S.C. 21 et seq.) or any other statute. 
Activities expressly authorized by statute or recognized as permissible 
in regulations, official circulars or bulletins issued by the Office of 
the Comptroller of the Currency or in any order or interpretation issued 
in writing by the Office of the Comptroller of the Currency will be 
accepted as permissible for state banks.
    (c) An activity is considered to be conducted as principal if it is 
conducted other than as agent for a customer, is conducted other than in 
a brokerage, custodial, advisory or administrative capacity, or is 
conducted other than as trustee.
    (d) Bona fide subsidiary means a subsidiary of an insured state bank 
that at a minimum:
    (1) Is adequately capitalized;
    (2) Is physically separate and distinct in its operations from the 
operations of the bank, however, this requirement shall not be construed 
to prohibit the bank and its subsidiary from sharing the same facility 
provided that the area in which the subsidiary conducts

[[Page 347]]

business with the public is clearly distinct from the area in which 
customers of the bank conduct business with the bank;
    (3) Maintains separate accounting and other corporate records;
    (4) Observes separate formalities such as separate board of 
directors' meetings;
    (5) Maintains separate employees who are compensated by the 
subsidiary, however, this requirement shall not be construed to prohibit 
the use by the subsidiary of bank employees to perform functions which 
do not directly involve customer contact such as accounting, data 
processing and recordkeeping, so long as the bank and the subsidiary 
contract for such services on terms and conditions comparable to those 
agreed to by independent entities;
    (6) Has no less than a majority of its executive officers who are 
neither executive officers nor directors of the bank;
    (7) Has as a majority of its board of directors persons who are 
neither directors nor executive officers of the bank; and
    (8) Conducts business pursuant to independent policies and 
procedures designed to inform customers and prospective customers of the 
subsidiary that the subsidiary is a separate organization from the bank.
    (e) Company shall mean any corporation, partnership, business trust, 
association, joint venture, pool, syndicate or other similar business 
organization.
    (f) Control shall mean the power to vote, directly or indirectly, 25 
per centum or more of any class of the voting stock of a company, the 
ability to control in any manner the election of a majority of a 
company's directors or trustees, or the ability to exercise a 
controlling influence over the management and policies of a company.
    (g) An insured state bank will be considered to convert its charter 
if the bank undergoes any transaction which causes the bank to operate 
under a different form of charter than that under which it operated as 
of December 19, 1991, however, a change from mutual to stock form shall 
not be considered to constitute a charter conversion.
    (h) Department means a division of an insured state bank that:
    (1) Is physically distinct from the remainder of the bank;
    (2) Maintains separate accounting and other records;
    (3) Has assets, liabilities, obligations and expenses that are 
separate and distinct from those of the remainder of the bank; and
    (4) As a matter of state statute, the obligations, liabilities and 
expenses of which can only be satisfied with the assets of the division.
    (i) Depository institution means any bank or savings association.
    (j) Equity interest in real estate means any form of direct or 
indirect ownership of any interest in real property, whether in the form 
of an equity interest, partnership, joint venture or other form, which 
is accounted for as an investment in real estate or real estate joint 
venture under generally accepted accounting principles or is otherwise 
determined to be an investment in a real estate venture under Federal 
Financial Institutions Examination Council Call Report Instructions. The 
phrase equity interest in real estate does not include the following:
    (1) An interest in real property that is used or intended to be used 
by the insured state bank or its subsidiaries as offices or related 
facilities for the conduct of its business or future expansion of its 
business;
    (2) An interest in real property that is acquired in satisfaction of 
debts previously contracted for in good faith or acquired in sales under 
judgments, decrees or mortgages held by the insured state bank or 
acquired under deed in lieu of foreclosure provided that the property is 
not intended to be held for real estate investment purposes and is not 
held longer than the shorter of any time limit on holding such property 
set by applicable state law or regulation or the time limit on holding 
such property that is applicable by statute or regulation for a national 
bank; and
    (3) Interests in real property that are primarily in the nature of 
charitable contributions to community development corporations provided 
that the contribution to any one community development corporation does 
not exceed 2 percent of the bank's tier one capital and the bank's total 
contribution to all such corporations does not exceed 5

[[Page 348]]

percent of the bank's tier one capital, provided however, that the 
bank's aggregate investment in such interest may be as great as 10 
percent of the bank's tier one capital if its appropriate Federal 
banking agency has determined that making such investments does not pose 
a significant risk to the deposit insurance fund. In the case of an 
insured state nonmember bank, making an aggregate investment in 
interests in real property that are primarily in the nature of 
charitable contributions up to a maximum of 10 percent of tier one 
capital shall not be considered to present a significant risk to the 
deposit insurance fund.
    (k) Equity investment means any equity security as defined in 
Sec. 362.2(g); any partnership interest; any equity interest in real 
estate as defined in Sec. 362.2(e); and any transaction which in 
substance falls into any of these categories even though it may be 
structured as some other form of business transaction, however, the term 
equity investment shall not include any of the foregoing if it is 
acquired through foreclosure or settlement in lieu of foreclosure.
    (l) Equity security means any stock (other than adjustable rate 
preferred stock and money market (auction rate) preferred stock), 
certificate of interest or participation in any profit-sharing 
agreement, collateral-trust certificate, preorganization certificate or 
subscription, transferable share, investment contract, or voting-trust 
certificate; any security immediately convertible at the option of the 
holder without payment of substantial additional consideration into such 
a security; any security carrying any warrant or right to subscribe to 
or purchase any such security; and any certificate of interest or 
participation in, temporary or interim certificate for, or receipt for 
any of the foregoing. The term equity security does not include any of 
the foregoing if it is acquired through foreclosure or settlement in 
lieu of foreclosure.
    (m) The phrase equity investment permissible for a national bank 
shall be understood to refer to any equity investment authorized for 
national banks under the National Bank Act (12 U.S.C. 21 et seq.) or any 
other statute. Investments expressly authorized by statute or recognized 
as permissible in regulations, official bulletins or circulars issued by 
the Office of the Comptroller of the Currency or in any order or 
interpretation issued in writing by the Office of the Comptroller of the 
Currency will be accepted as permissible for state banks.
    (n) Executive officer, director, principal shareholder, related 
interest, and extension of credit shall have the same meaning as is 
relevant for the purpose of section 22(h) of the Federal Reserve Act (12 
U.S.C. 375) and Sec. 337.3 of this chapter.
    (o) Insured state bank shall mean any state bank insured by the 
Federal Deposit Insurance Corporation (FDIC) whether or not a member of 
the Federal Reserve System.
    (p) Investment in a department by an insured state bank means any 
transfer of funds by an insured state bank to one of its departments 
which is represented on the department's accounts and records as an 
accounts payable, a liability, or equity of the department except that 
transfers of funds to the department in payment of services rendered by 
that department shall not be considered an investment in the department.
    (q) Investment in a subsidiary by an insured state bank shall mean 
the total of any equity investment in a subsidiary by an insured state 
bank, any debt issued by the subsidiary that is held by the insured 
state bank, and any extensions of credit from the insured state bank to 
the subsidiary.
    (r) Lower income means income that is less than or equal to the 
median income for the area in which the qualified housing project is 
located as determined by state or federal statistics. The ``area'' in 
which a housing project is located shall be understood to refer to the 
relevant Metropolitan Statistical Area (MSA) in which the project is 
located if the project is located within an MSA. If the project is not 
located in a MSA, the median income of the ``area'' in which the project 
is located shall be understood to refer to the median income of the 
state or territory in which the project is located exclusive of the 
designated MSA's if no state statistics for the local area are 
available.

[[Page 349]]

    (s) National securities exchange means a securities exchange that is 
registered as a national securities exchange by the Securities and 
Exchange Commission pursuant to section 6 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78f) and the National Market System, i.e., the top 
tier of the National Association of Securities Dealers Automated 
Quotation System (NASDAQ).
    (t) Residents of the state shall be understood to include companies 
or partnerships incorporated in, organized under the laws of, licensed 
to do business in, or having an office in the state.
    (u) Significant risk to the deposit insurance fund shall be 
understood to be present whenever there is a high probability that any 
insurance fund administered by the FDIC may suffer a loss.
    (v) Subsidiary means any company directly or indirectly controlled 
by an insured state bank.
    (w) Tier one capital shall have the same meaning as set forth in 
Part 325 of this chapter in the case of an insured state nonmember bank 
and, in the case of an insured state member bank, shall have the same 
meaning as set forth in regulations defining the term tier one capital 
as adopted by the bank's appropriate federal banking agency.
    (x) Well-capitalized shall have the same meaning as is found in 
Sec. 325.103(b)(1) of this chapter, however, for the purposes of 
applying this definition, the terms risk-weighted assets, total capital, 
and total book assets shall have the respective meaning prescribed in 
regulations issued by the appropriate federal banking agency. In order 
to be considered well-capitalized for the purposes of Sec. 362.3(b)(7) 
and 362.4(c)(2)(i), an insured state bank must meet the above 
requirements before excluding the bank's investment in its insurance 
underwriting department and/or its insurance underwriting subsidiary and 
the bank must be adequately capitalized after such investment is 
excluded from the bank's capital. The term adequately capitalized shall 
have the same meaning as is found in Sec. 325.103(b)(2) of this chapter.
[57 FR 53234, Nov. 9, 1992, as amended at 58 FR 64483, Dec. 8, 1993]



Sec. 362.3  Equity investments.

    (a) Prohibited investments. No insured state bank may directly or 
indirectly acquire or retain any equity investment of a type, or in an 
amount, that is not permissible for a national bank.
    (b) Exceptions--(1) Majority owned subsidiaries. An insured state 
bank is not prohibited from acquiring or retaining a majority interest 
in a subsidiary. If the FDIC denied an application by a Savings 
Association Insurance Fund (SAIF) member state bank for permission to 
acquire or retain the majority interest in a subsidiary pursuant to 
Sec. 333.3 of this chapter, this exception does not apply. If the denial 
concerned an application for permission to retain the investment, the 
SAIF member state bank must divest its interest in the subsidiary in 
accordance with whatever conditions and restrictions are set forth in 
the FDIC's order denying the application.
    (2) Qualified housing projects. (i) Subject to the limitation 
contained in paragraph (b)(2)(ii) of this section, an insured state bank 
is not prohibited from investing as a limited partner in a partnership 
the sole purpose of which is direct or indirect investment in the 
acquisition, rehabilitation, or new construction of a qualified housing 
project. A qualified housing project shall be understood to mean 
residential real estate intended to primarily benefit lower income 
persons throughout the period of the bank's investment including but not 
necessarily limited to any project eligible for the low income housing 
tax credit under section 42 of the Internal Revenue Code (26 U.S.C. 42). 
A residential real estate project that does not qualify for the tax 
credit under section 42 of the Internal Revenue Code may be considered 
primarily for the benefit of lower income persons if 50 percent or more 
of the housing units are to be occupied by lower income persons. A real 
estate project that does not qualify for the tax credit under section 42 
of the Internal Revenue Code will be considered residential despite the 
fact that some portion of the total square footage of the project is 
utilized for commercial purposes provided that such commercial use is 
not the primary purpose of the project.

[[Page 350]]

    (ii) Investments described in paragraph (b)(2)(i) of this section 
may only be made if the bank's investment in the partnership, when 
aggregated with any existing investment in such a partnership or 
partnerships, does not exceed 2 percent of the bank's total assets as 
reported on the bank's most recent consolidated report of condition. For 
the purposes of this section, legally binding commitments are included 
as part of the bank's investment.
    (3) Savings bank life insurance. Unless it is otherwise found to 
pose a significant risk to the insurance fund of which the bank is a 
member, an insured state bank located in Massachusetts, New York, or 
Connecticut is not prohibited from owning stock in a savings bank life 
insurance company provided that the savings bank life insurance company 
discloses to purchasers of life insurance policies, annuities, and other 
insurance products that the policies offered to the public are not 
insured by the FDIC, are not obligations of, and are not guaranteed by, 
any insured state bank. The following or similar statement will satisfy 
this requirement: ``This [policy, annuity, insurance product] is not a 
federally insured deposit and is not an obligation of, nor is it 
guaranteed by, any federally insured bank.'' The disclosure must be made 
prior to the time of purchase, must be prominent, and must be in a 
separate document clearly labeled ``consumer disclosure'' if the 
disclosure does not appear on the face of the policy, annuity or other 
insurance product. If state law or regulation provides for substantially 
similar disclosure requirements, compliance with the state imposed 
disclosure requirements will satisfy the requirements of this paragraph 
(b)(3).
    (4) Common or preferred stock; shares of investment companies. (i) 
To the extent permitted by the FDIC, and subject to the requirements of 
paragraph (d) of this section, an insured state bank that is located in 
a state which as of September 30, 1991 authorized investment in:
    (A)(1) Common or preferred stock listed on a national securities 
exchange (listed stock); or
    (2) Shares of an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1 et seq.) (registered shares); and
    (B) Which during any time in the period beginning on September 30, 
1990 and ending on November 26, 1991 made or maintained an investment in 
such listed stock or registered shares, may retain whatever listed stock 
or registered shares that were lawfully acquired or held prior to 
December 19, 1991, and continue to acquire listed stock and/or 
registered shares.
    (ii) The exception provided for by paragraph (b)(4)(i) of this 
section shall cease to apply to any insured state bank if the bank 
converts its charter, the bank undergoes any transaction for which 
notice is required to be filed under section 7(j) of the Federal Deposit 
Insurance Act (12 U.S.C. 1817(j)) except a transaction that is presumed 
to be an acquisition of control under Sec. 303.4(a) of this chapter, the 
bank undergoes any transaction subject to section 3 of the Bank Holding 
Company Act (12 U.S.C. 1842) other than a one bank holding company 
formation in which all or substantially all of the shares of the holding 
company will be owned by persons who were shareholders of the bank, the 
bank is acquired by or merged into a depository institution other than a 
depository institution described in paragraph (b)(4)(i) of this section, 
or control of the bank's parent company changes. In such event the 
insured state bank may not make any additional investments pursuant to 
the exception provided for by paragraph (b)(4)(i) of this section. The 
bank is not prohibited under this section from retaining its existing 
investments provided that the FDIC does not order a divestiture under 
paragraph (d)(3) of this section, section 8 of the Federal Deposit 
Insurance Act (FDI Act, 12 U.S.C. 1818) or some other provision of the 
FDI Act or FDIC's regulations, or some other provision of law.
    (5) Stock of company that provides director and officer liability 
insurance. An insured state bank is not prohibited from acquiring up to 
10 percent of the voting stock of a company that solely provides or 
reinsures directors', trustees', and officers' liability insurance 
coverage or bankers' blanket bond

[[Page 351]]

group insurance coverage for insured depository institutions.
    (6) Shares of depository institutions. An insured state bank is not 
prohibited from acquiring or retaining the voting shares of a depository 
institution if the institution engages only in activities permissible 
for national banks; the institution is subject to examination and 
regulation by a state bank supervisor; 20 or more depository 
institutions own voting shares of the institution but no one institution 
owns more than 15 percent of the shares; and the institution's voting 
shares (other than directors' qualifying shares or shares held under or 
acquired through a plan established for the benefit of the officers and 
employees) are owned only by depository institutions.
    (7) Interests in insurance subsidiaries. (i) A well-capitalized 
insured state bank is not prohibited from retaining after December 19, 
1992 its equity investment in a majority owned subsidiary that was 
lawfully providing insurance as principal in a state on November 21, 
1991 of a sort that could not be so provided by a national bank provided 
that the activities of the subsidiary continue to be limited to 
underwriting insurance of the same type provided by the subsidiary as of 
November 21, 1991 to residents of the state, individuals employed in the 
state, and any other person to whom the subsidiary provided insurance as 
principal without interruption since such person resided in or was 
employed in the state. In the case of resident companies or 
partnerships, the subsidiary's activities must be limited to providing 
insurance to the company's or partnership's employees residing in the 
state and/or to providing insurance to cover the company's or 
partnership's property located in the state.
    (ii) A bank that does not meet the requirements necessary to be 
considered well-capitalized for the purposes of paragraph (b)(7)(i) of 
this section may file an application with the regional director for the 
Division of Supervision for the region in which the bank's principal 
office is located requesting permission to retain its insurance 
underwriting department and/or subsidiary. Such application will be 
granted solely in the FDIC's discretion but in no event will it be 
granted unless the FDIC determines that the bank is expected to satisfy 
the definition of well-capitalized for the purposes of paragraph (b)(7) 
no later than three years from December 9, 1992, and it is determined 
that retention of the department and/or subsidiary until the bank meets 
the definition of well-capitalized will not pose a significant risk to 
the insurance fund. The application may be in letter form and should 
contain the bank's plan for meeting the well-capitalized definition 
before three years from December 9, 1992, taking into consideration the 
gradual deduction of the bank's investment over that period.
    (iii) An insured state bank is not prohibited from retaining after 
December 19, 1992 its equity investment in a majority owned title 
insurance underwriting subsidiary provided that the bank was required 
before June 1, 1991 to provide title insurance as a condition of the 
bank's initial chartering under state law and none of the transactions 
described in paragraph (b)(4)(ii) of this section (other than a charter 
conversion) has occurred since June 1, 1991.
    (c) Divestiture of prohibited equity investments--(1) Requirement to 
divest. Any equity investment acquired prior to December 19, 1991 that 
is not of a type, or in an amount, that is permissible for a national 
bank, and which does not fall within one of the exceptions in paragraph 
(b) of this section, must be divested as quickly as prudently possible 
but in no event later than December 19, 1996. If a SAIF member state 
bank holds an equity investment that was subject to divestiture pursuant 
to Sec. 333.3 of this chapter, and the equity investment is subject to 
divestiture under this paragraph (c)(1) the equity investment must be 
divested as quickly as prudently possible but in no event later than 
July 1, 1994 or any earlier date established by a divestiture plan that 
was filed by the bank under, and approved by the FDIC pursuant to, 
Sec. 333.3 of this chapter.
    (2) Requirement to file divestiture plan. Any insured state bank 
that is required by paragraph (c)(1) of this section to divest an equity 
investment must submit a divestiture plan with the regional director for 
the Division of Supervision

[[Page 352]]

for the region in which the bank's principal office is located not later 
than 60 days from December 9, 1992. An insured state bank that has 
submitted a plan pursuant to this section may proceed to act in 
accordance with that plan unless and until it is informed in writing by 
the FDIC that the plan is unacceptable.
    (3) Content of divestiture plan. The divestiture plan shall:
    (i) Describe the obligor, type, amount, book and market values 
(estimated or known) of the equity investments subject to divestiture as 
of the bank's most recent consolidated report of condition prior to the 
filing;
    (ii) Set forth the bank's plan to comply with paragraph (c)(1) of 
this section;
    (iii) Describe the anticipated gain or loss (anticipated or 
realized) if any from the divestiture of the investment and the impact 
thereof on the bank's capital (including capital ratios before and after 
the sale);
    (iv) Include a copy of a resolution by the bank's board of directors 
or board of trustees authorizing the filing of the divestiture plan; and
    (v) Provide such other information as requested by the regional 
director.
    (4) Retention of equity investments during divestiture period. Upon 
review of the divestiture plan and such additional information as 
requested by the regional director, and at any time during the 
divestiture period, the FDIC may impose such conditions and restrictions 
on the retention of the equity investments as the FDIC deems appropriate 
including requiring divestiture in advance of December 19, 1996.
    (d) Notice and approval of intent to invest in common or preferred 
stock or shares of an investment company; divestiture of excess 
investments--(1) Notice and required FDIC determination. No insured 
state bank may acquire or retain any listed stock or registered shares 
pursuant to paragraph (b)(4) of this section unless the bank files a 
one-time notice with the FDIC setting forth the bank's intention to 
acquire and retain the listed stock or registered shares and the FDIC 
has determined that acquiring or retaining listed stock or registered 
shares will not pose a significant risk to the deposit insurance fund of 
which the bank is a member. The notice must be filed with the regional 
director for the Division of Supervision for the region in which the 
bank's principal office is located.
    (2) Content of notice. The notice shall contain:
    (i) A statement indicating whether the bank made or maintained 
investments in listed stock and/or registered shares during the period 
between September 30, 1990 and November 26, 1991;
    (ii) The aggregate dollar book value amount of the bank's investment 
in listed stock and registered shares held as of December 19, 1991 
expressed as a percentage of the bank's tier one capital as measured on 
December 19, 1991 (tier one capital as reported on the bank's December 
31, 1991 consolidated report of condition may be used in lieu of 
calculating tier one capital as of December 19, 1991);
    (iii) The aggregate highest dollar book value amount of the bank's 
investments in listed stock and registered shares between September 30, 
1990 and November 26, 1991 expressed as a percentage of tier one capital 
as reported in the consolidated report of condition for the quarter in 
which the aggregate high dollar amount of investment occurred;
    (iv) A description of the bank's funds management policies and how 
the bank's investments (planned or existing) in listed stock and/or 
registered shares relate to the objectives set out in the bank's funds 
management policies;
    (v) A description of the bank's investment policies and a discussion 
of to what extent those policies:
    (A) Limit concentrations in listed stock and/or registered shares 
both by issue and by industry;
    (B) Set an aggregate limit on investment in listed stock and/or 
registered shares; and
    (C) Deal with the sale of listed stock and/or registered shares in 
light of market conditions;
    (vi) A discussion of the parameters used to determine the quality of 
the bank's outstanding and proposed investments in listed stock and/or 
registered shares as well as future investments;

[[Page 353]]

    (vii) A copy of a resolution by the board of directors or board of 
trustees authorizing the filing of the notice; and
    (viii) Such additional information as deemed appropriate by the 
regional director.
    (3) FDIC determination. Approval of a notice filed under paragraph 
(d)(1) of this section will not be granted unless the FDIC determines 
that acquiring and retaining the listed stock and/or registered shares 
does not pose a significant risk to the insurance fund of which the bank 
is a member. Approval may be made subject to whatever conditions or 
restrictions the FDIC determines is necessary or appropriate. The FDIC 
may require divestiture of some or all of the investments in listed 
stock or registered shares made during the period from September 30, 
1990 to December 19, 1991, as well as any investments in listed stock or 
registered shares made subsequent to that period if it is determined 
that retention of the investments in question will have an adverse 
effect on the safety and soundness of the bank.
    (4) Maximum permissible investment. (i) The maximum permissible 
investment in listed stock and registered shares an insured state bank 
may make pursuant to paragraph (b)(4) of this section may in no event 
exceed one hundred percent of the bank's tier one capital as measured in 
its most recent consolidated report of condition. Book value of the 
investment shall be used for the purposes of compliance with this limit. 
Generally, it will be presumed that it does not pose a significant risk 
to the fund for a well-capitalized bank to acquire and retain listed 
stock and/or registered shares pursuant to paragraph (b)(4) of this 
section up to a maximum of one hundred percent of the bank's tier one 
capital, and absent some mitigating factors, it will also be presumed 
that it does not present a significant risk to the fund for an 
adequately capitalized bank to acquire and retain such stock and/or 
shares up to a maximum of one hundred percent of the bank's tier one 
capital. It will also be presumed, absent some mitigating factors, that 
it does present a significant risk to the fund for a bank that is under 
capitalized to acquire or retain listed stock and/or registered shares 
in excess of the highest aggregate level of investment made by the bank 
in such listed stock and/or registered shares during the period from 
September 30, 1990 to November 26, 1991 expressed as a percentage of the 
bank's tier one capital as reported by the bank in its consolidated 
report of condition for the quarter in which the high aggregate 
investment occurred. ``Adequately capitalized'' and ``under 
capitalized'' shall have the same meaning as is found in Sec. 325.103 of 
this chapter.
    (ii) The FDIC, in response to a notice filed under paragraph (d)(1) 
of this section, may set a percentage as the maximum permissible 
investment for any insured state bank that is lower than that which 
would otherwise be applicable under paragraph (d)(4)(i) of this section.
    (iii) Any acquisition of listed stock or registered shares by an 
insured state bank made after December 19, 1991 pursuant to approval of 
a notice filed under paragraph (d)(1) of this section may not, when 
made, exceed the maximum permissible investment percentage (as set out 
in the FDIC's approval of such notice) of the bank's tier one capital as 
reported on the bank's consolidated report of condition for the period 
immediately preceding the acquisition.
    (5) Divestiture of excess stock and/or shares. (i) An insured state 
bank that held as of December 19, 1991 investments in listed stock and/
or registered shares in an aggregate amount in excess of 100 percent of 
the bank's tier one capital as measured on December 19, 1991 is 
prohibited from retaining the excess listed stock and/or registered 
shares. (Tier one capital as reported on the bank's December 31, 1991 
consolidated report of condition may be used in lieu of calculating tier 
one capital as of December 19, 1991.) Such bank's outstanding investment 
in listed stock or registered shares must comply by no later than 
December 19, 1994 with the maximum permissible investment set for the 
bank by the FDIC in connection with the notice filed pursuant to 
Sec. 362.3(d)(1) if the bank's maximum permissible investment is 100 
percent of tier one capital. In such event, the bank shall divest the 
excess investment by not less than \1/3\ in each of the

[[Page 354]]

three years beginning on December 19, 1991, provided however, that the 
bank shall be relieved of the obligation to divest at least \1/3\ of its 
excess investment each year if divesting a lesser amount will reduce the 
bank's outstanding investment to 100 percent of its current tier one 
capital. If the bank's maximum permissible investment set by the FDIC is 
lower than 100 percent of tier one capital, paragraph (d)(5)(ii) of this 
section shall apply.
    (ii) If an insured state bank does not receive approval in 
connection with a notice filed pursuant to paragraph (d)(1) of this 
section to retain its outstanding investment in listed stock and/or 
registered shares, the bank must, as quickly as prudently possible but 
in no event later than December 19, 1996, divest the listed stock and/or 
registered shares for which approval to retain was denied. The bank must 
file a divestiture plan with the regional director for the Division of 
Supervision for the region in which the bank's principal office is 
located no later than 60 days after the bank receives notice that 
approval to retain the investment(s) was denied. The divestiture plan 
shall contain the information specified in paragraph (c)(3) of this 
section.
[57 FR 53234, Nov. 9, 1992; 58 FR 59787, Nov. 10, 1993]



Sec. 362.4  Activities of insured state banks and their subsidiaries.

    (a) General prohibitions. (1) Except as otherwise provided in this 
part, after December 19, 1992, an insured state bank may not directly 
engage as principal in any activity that is not permissible for a 
national bank, and a majority-owned subsidiary of an insured state bank 
may not engage as principal in any activity that is not permissible for 
a subsidiary of a national bank, unless the bank meets and continues to 
meet the applicable minimum capital standards prescribed by the 
appropriate federal banking agency and the FDIC determines that the 
conduct of the activity by the bank and/or its majority-owned subsidiary 
will not pose a significant risk to the affected deposit insurance fund. 
Applications for consent to directly, or indirectly through a majority-
owned subsidiary, engage as principal in activities that are not 
permissible for a national bank or a subsidiary of a national bank 
should be filed in accordance with Sec. 362.4(d). An insured state bank 
must file an application for each subsidiary regardless of whether the 
bank previously obtained consent for a subsidiary to engage as principal 
in the same activity. An insured state bank that obtained the FDIC's 
consent pursuant to Sec. 333.3 of this chapter prior to that section's 
repeal to directly or indirectly through a subsidiary engage as 
principal in an activity that was otherwise impermissible under 
Sec. 333.3 of this chapter and which is impermissible under this part 
without the FDIC's consent, does not need to obtain the FDIC's consent 
pursuant to this part in order to continue the activity.
    (2) Except as otherwise provided in this part, no insured state bank 
may directly or indirectly through a subsidiary, engage in insurance 
underwriting except to the extent such activities are permissible for a 
national bank.
    (b) Phase-out for banks that do not meet capital standard. (1) Any 
insured state bank which does not meet the applicable minimum capital 
requirements set out in paragraph (a)(1) of this section and which as of 
December 19, 1992, directly, or indirectly through a subsidiary, engaged 
as principal in any activity that is not permissible for a national bank 
or a subsidiary of a national bank, must cease the impermissible 
activity as soon as practicable but in no event later than June 8, 1994, 
unless an extension is granted by the FDIC for good cause.
    (2) In no event shall any extension granted pursuant to this 
paragraph exceed one year from December 8, 1993. If the insured state 
bank is expected to meet the requisite capital level prior to June 8, 
1994, the bank may apply for permission to continue the activity. An 
insured state bank that does not meet the requisite capital 
requirements, and which has a majority-owned subsidiary that has equity 
investments in real estate which are not permissible for a subsidiary of 
a national bank, must divest the subsidiary or the equity investments in 
the real estate as soon as practicable but in no event later than 
December 19, 1996.

[[Page 355]]

    (c) Exceptions--(1) Savings bank life insurance. Any insured state 
bank that is located in Massachusetts, New York or Connecticut that is 
otherwise authorized to do so is not prohibited from engaging in the 
underwriting of savings bank life insurance provided that:
    (i) The FDIC does not alter its determination made pursuant to 
section 24(e)(2) of the FDI Act (12 U.S.C. 1831a(e)) that such 
activities do not pose a significant risk to the insurance fund of which 
the bank is a member;
    (ii) The insurance underwriting is conducted through a division of 
the bank that meets the definition of ``department'' contained in 
Sec. 362.2(h); and
    (iii) The bank discloses to purchasers of life insurance policies, 
other insurance products and annuities which are offered to the public 
that the policies, other insurance products and annuities are not 
insured by the FDIC and that only the assets of the insurance department 
may be used to satisfy the obligations of the insurance department. The 
disclosure must be made prior to the time of purchase of the insurance 
policy, other insurance product, or annuity; must be prominent; and must 
be in a separate document clearly labeled ``consumer disclosure'' if the 
disclosure does not appear on the face of the policy, other insurance 
product, or annuity. The following or a similar statement will satisfy 
the disclosure obligation: ``This [insurance policy, other insurance 
product, annuity] is not a federally insured deposit and only the assets 
of the bank's insurance department may legally be used to satisfy any 
obligation of that department.'' If state law or regulation provides for 
substantially similar disclosure requirements, compliance with the state 
imposed disclosure requirements will satisfy the requirements of this 
paragraph.
    (2) Insurance underwriting. (i) A well-capitalized insured state 
bank that was lawfully providing insurance as principal on November 21, 
1991 may continue to provide insurance as principal in the state or 
states in which the bank did so on November 21, 1991 so long as the 
insurance that is provided is of the same type which the bank provided 
as of November 21, 1991 and the insurance is only offered to residents 
of that state, individuals employed in that state, and any other person 
to whom the bank provided insurance as principal without interruption 
since such person resided in, or was employed in, that state. In the 
case of resident companies or partnerships, the bank's as principal 
activities must be limited to providing insurance to the company's or 
partnership's employees residing in the state and/or to providing 
insurance to cover the company's or partnership's property located in 
the state.
    (ii) Any insured state bank or any subsidiary thereof that engaged 
in the underwriting of insurance on or before September 30, 1991 which 
was reinsured in whole or in part by the Federal Crop Insurance 
Corporation may continue to do so.
    (iii) Any title insurance subsidiary of an insured state bank 
described in Sec. 362.3(b)(7)(iii) may continue to provide title 
insurance provided that none of the transactions described in 
Sec. 362.3(b)(4)(ii) (other than a charter conversion) has occurred to 
the parent insured state bank since June 1, 1991.
    (3) Activities that do not present a significant risk. The FDIC has 
determined that the following as principal activities do not represent a 
significant risk to the deposit insurance funds and that the listed 
activities may therefore be conducted by an insured state bank or its 
majority-owned subsidiary (as the case may be) without first obtaining 
the FDIC's prior consent provided that the bank is otherwise authorized 
to engage in the activity under state law, the conduct of the activity 
by the bank and/or its subsidiary is otherwise permitted under federal 
law and regulation, and the bank meets and continues to meet the 
applicable minimum capital standards as prescribed by the appropriate 
federal banking agency. The fact that prior consent is not required by 
this part does not preclude the FDIC from taking any appropriate action 
within its authority with respect to the activities if the facts and 
circumstances warrant such action.
    (i) Guarantee activities. An insured state bank may:
    (A) Directly guarantee the obligations of others as provided for in 
Sec. 347.3(c)(1) of this chapter; and

[[Page 356]]

    (B) Directly offer customer-sponsored credit card programs, and 
similar arrangements, in which the insured state bank undertakes to 
guarantee the obligations of individuals who are its retail banking 
deposit customers, provided, however, that the bank must establish the 
creditworthiness of the individual before undertaking to guarantee his/
her obligations.
    (ii) Activities that are closely related to banking. An insured 
state bank may:
    (A) Engage as principal in any activity that is not permissible for 
a national bank provided that the Federal Reserve Board by regulation or 
order has found the activity to be closely related to banking for the 
purposes of section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. 
1843(c)(8)), provided, further however, That this exception shall not be 
construed to permit the bank to directly hold equity securities that a 
national bank may not hold and which are not otherwise permissible 
investments for insured state banks pursuant to Sec. 362.3(b); and
    (B) Establish or acquire a majority-owned subsidiary which solely 
engages as principal in any activity that the Federal Reserve Board by 
regulation or order has found to be closely related to banking for the 
purposes of section 4(c)(8) of the Bank Holding Company Act.
    (iii) Securities activities conducted through a subsidiary of an 
insured nonmember bank. An insured nonmember bank may conduct securities 
activities through a subsidiary of the bank in accordance with the 
requirements and restrictions of Sec. 337.4 of this chapter in lieu of 
any requirement or restriction contained in this part.
    (iv) Equity securities held by a majority-owned subsidiary of an 
insured state bank--(A) Grandfathered investments in common or preferred 
stock and shares of investment companies. Any insured state bank that 
has received approval to invest in common or preferred stock or shares 
of an investment company pursuant to Sec. 362.3(d) may conduct the 
approved investment activities through a majority-owned subsidiary of 
the bank without any additional approval from the FDIC provided that any 
conditions or restrictions imposed with regard to the approval granted 
under Sec. 362.3(d) are met.
    (B) Bank stock. An insured state bank may indirectly through a 
majority-owned subsidiary organized for such purpose invest in up to ten 
percent of the outstanding stock of another insured bank.
    (C) Stock of a corporation that engages in activities permissible 
for a bank service corporation. An insured state bank may indirectly 
through a majority-owned subsidiary organized for such purpose invest in 
50% or less of the stock of a corporation which engages solely in any 
activity that is permissible for a bank service corporation. (The term 
``bank service corporation'' shall have the same meaning as is relevant 
for the purposes of the Bank Service Corporation Act (12 U.S.C. 1861 et 
seq.).) This exception shall not be construed to override any other 
limitation imposed by this part as to the amount of stock which may be 
held in a subsidiary without obtaining the FDIC's consent.
    (D) Stock of a corporation which engages in activities which are not 
``as principal''. An insured state bank may indirectly through a 
majority-owned subsidiary invest in 50% or less of the stock of a 
corporation which engages solely in activities which are not considered 
to be ``as principal'' as that term is defined in Sec. 362.2(c).
    (v) Investments in adjustable rate and money market preferred stock. 
An insured state bank may invest up to 15 percent of the bank's total 
capital (as that term is defined by the appropriate federal banking 
agency) in adjustable rate preferred stock and money market (auction 
rate) preferred stock.
    (d) Application for consent to directly, or indirectly through a 
majority-owned subsidiary, engage as principal in an activity that is 
not permissible for a national bank--(1) Timing and place of filing 
application. All applications for consent pursuant to paragraph (d) of 
this section should be filed with the regional director for the Division 
of Supervision for the FDIC regional office in which the insured state 
bank's principal office is located. Applications for consent to continue 
an activity in which an insured state bank and/or its majority-owned 
subsidiary was engaged as of December 19, 1992, must be filed with the

[[Page 357]]

appropriate regional office no later than February 7, 1994.
    (2) Continuation of activity while application is pending. Any 
insured state bank which has filed an application in accordance with 
paragraph (d)(1) of this section requesting consent to directly or 
indirectly continue any ongoing activity may continue to engage in the 
activity while the application is pending provided, however, in no event 
may such an insured state bank or its subsidiary continue the activity 
for more than six months from the receipt of the application by the 
appropriate FDIC regional office unless the FDIC grants an extension or 
approval of the application has been granted.
    (3) Copy of application filed with another agency. Unless the FDIC 
requests additional information, in a case in which an insured state 
bank has sought the approval of another federal or state regulatory 
authority to directly or indirectly engage in an activity for which 
consent is required under this part, the application filing requirements 
of paragraph (d) of this section may be satisfied by submitting to the 
FDIC a copy of the request as filed with such other regulatory authority 
provided that the request as filed with such authority substantially 
satisfies all of the information requirements of paragraph (d) of this 
section.
    (4) Form and content of application--(i) Form. Applications filed 
pursuant to Sec. 362.4(d) may be in letter form.
    (ii) Applications for consent to directly engage as principal in 
activities that are not permissible for a national bank. Applications 
for consent to begin for the first time to directly engage as principal 
in any activity that is not permissible for a national bank, as well as 
applications for consent to continue to conduct as principal an activity 
in which a bank was engaged as of December 19, 1992 which is not 
permissible for a national bank, shall contain the following:
    (A) A brief description of the activity, the manner in which it is 
or will be conducted, and the present and expected volume or level of 
the activity;
    (B) A copy, if any, of the bank's feasibility study, financial 
projections and/or business plan regarding the conduct of the activity;
    (C) A citation to the state statutory or regulatory authority for 
the conduct of the activity;
    (D) A copy of the order or other document from the appropriate 
regulatory authority granting approval for the bank to conduct the 
activity if such approval is necessary and has already been granted;
    (E) A copy of a resolution by the bank's board of directors or 
trustees authorizing the filing of the application;
    (F) A brief description of the bank's policy and practice with 
regard to any present or anticipated involvement in the activity by a 
director, executive officer or principal shareholder of the bank or any 
related interest of such a person;
    (G) A description of the bank's expertise in the activity; and
    (H) Such other information as requested by the FDIC.
    (iii) Applications for consent to engage as principal through a 
majority-owned subsidiary in activities that are not permissible for a 
subsidiary of a national bank. Applications for consent to begin for the 
first time to conduct, as principal, through a majority-owned subsidiary 
activities that are not permissible for a subsidiary of a national bank, 
as well as applications for consent for the bank's majority-owned 
subsidiary to continue to conduct, as principal, activities in which the 
bank's subsidiary was engaged as of December 19, 1992 that are not 
permissible for a subsidiary of a national bank, shall contain the 
following information:
    (A) The information described in paragraph (d)(4)(ii) of this 
section;
    (B) The amount of the bank's existing and proposed investment in the 
subsidiary; and
    (C) The bank's investment in other subsidiaries conducting the same 
type of activity.
    (iv) If an insured state bank previously obtained consent for a 
majority-owned subsidiary to engage as principal in a particular 
activity, any subsequent request for consent for another subsidiary of 
the bank to engage as principal in the same activity may omit the 
information described in paragraph (d)(4)(ii) of this section.

[[Page 358]]

    (5) Phase-out of activities for which consent to continue has been 
denied--(i) Direct activity. If a request filed pursuant to paragraph 
(d) of this section for consent to continue the direct conduct of an 
activity is denied, the bank must cease the activity as soon as 
practicable but in no event later than one year from the denial unless 
the FDIC specifically sets a different time which may in the FDIC's sole 
discretion be longer than one year. The FDIC may condition or restrict 
the conduct of the activity during the phase-out period as is deemed 
necessary in order to protect the affected deposit insurance fund.
    (ii) Activity in a majority-owned subsidiary. If a request filed 
pursuant to paragraph (d) of this section for consent to continue the 
conduct of an activity through a majority-owned subsidiary of the bank 
is denied, the bank must divest its equity investment in the subsidiary 
as quickly as prudently possible but in no event later than December 19, 
1996. The bank shall file a divestiture plan in accordance with 
Sec. 362.3(c)(3) no later than 60 days after the bank receives notice 
that consent was denied. In the alternative, the bank may choose to 
discontinue the activity rather than divest its equity investment in the 
subsidiary in which case the activity must be discontinued as soon as 
practicable but in no event later than one year from the denial unless 
the FDIC specifically sets a different time period which may, in the 
FDIC's sole discretion, be longer than one year. If the bank elects to 
discontinue the activity rather than to divest the subsidiary, the bank 
must notify the FDIC of that decision no later than 60 days after the 
bank receives notice that consent was denied. The notice must be in 
writing and should be filed with the appropriate FDIC regional office. 
If an insured state bank is denied consent to continue impermissible 
equity investments in real estate through a majority-owned subsidiary 
and the bank elects to discontinue those investments rather than divest 
the subsidiary, the period of time which the subsidiary shall have to 
divest the equity investments in real estate shall not extend beyond 
December 19, 1996. The FDIC may condition or restrict the conduct of any 
activity during the phase-out period as it deems necessary in order to 
protect the affected deposit insurance fund.
    (e) Disclosures. Except as otherwise provided herein, any approval 
of an application filed pursuant to Sec. 362.4(d) shall be subject to 
the condition that the bank and/or subsidiary shall provide any persons 
doing or about to do business with the bank and/or subsidiary written 
disclosure that the products, goods or services offered by the bank and/
or subsidiary are not insured by the FDIC. If the products, goods or 
services are offered by a subsidiary of the bank, the disclosure must 
also indicate that the products, goods or services are not guaranteed by 
the bank and that only the assets of the subsidiary are available to 
satisfy the obligations of, or any contractual claims arising in 
connection with, the operation of the subsidiary. If the products, goods 
or services are offered by a department of the bank, the disclosure must 
indicate that only the assets of the department are available to satisfy 
the obligations of the department. Disclosures must occur prior to the 
time any contractual obligation to purchase any product, good or service 
arises; must be prominent; and must be clearly labeled ``customer 
disclosure''. If any communications from the bank to its depositors 
contain advertisements, promotions, or solicitations pertaining to the 
activities of the bank or its subsidiary which were approved pursuant to 
Sec. 362.4(d) those communications must contain a disclosure that the 
products, goods or services are not insured by the FDIC. Disclosures 
will not be imposed under this part if state law or regulation 
establishes disclosure requirements which are substantially similar to 
those contained in this paragraph. Disclosure that the product, good or 
service is not an insured deposit will not be required if it is 
determined by the FDIC that the likelihood of confusing the product, 
good, or service with an insured deposit is minimal.
    (f) Conditions. Approvals granted pursuant to Sec. 362.4(d) may be 
made subject to any conditions or restrictions found by the FDIC to be 
necessary to protect the bank and/or the deposit insurance funds from 
risk, to prevent unsafe or unsound banking practices, and/or to

[[Page 359]]

ensure that the activity is consistent with the purposes of federal 
deposit insurance.
    (g) Conditions and restrictions applicable to insured state banks 
and/or their subsidiaries that engage in insurance underwriting 
activities excepted under Sec. 362.3(b)(7) or Sec. 362.4(c)(2)(i). (1) 
No insured state bank may directly or indirectly through a subsidiary 
underwrite insurance pursuant to the exception contained in 
Sec. 362.3(b)(7) or Sec. 362.4(c)(2)(i) unless the following conditions 
and restrictions are met:
    (i) Any insurance underwriting directly conducted by the bank must 
be done through a division of the bank that meets the definition of 
``department'' contained in Sec. 362.2(h);
    (ii) Any subsidiary that underwrites insurance must meet the 
definition of a ``bona fide subsidiary'' contained in Sec. 362.2(d); and
    (iii) The disclosure requirements of Sec. 362.3(b)(3) and/or 
Sec. 362.4(c)(1)(iii) are met to the same extent as they would be 
applicable if the bank and/or its subsidiary were conducting savings 
bank life insurance activities.
    (2) Any insured state bank or a subsidiary of an insured state bank 
that would be eligible for the exception in Sec. 362.3(b)(7) or 
Sec. 362.4(c)(2) but for the requirements of paragraphs (g)(1)(i) or 
(g)(1)(ii) of this section may continue to conduct the insurance 
underwriting activities provided that the requirements of paragraph 
(g)(1)(iii) of this section are met and provided that the requirements 
of paragraphs (g)(1)(i) and (g)(1)(ii) of this section are met no later 
than one year from December 8, 1993.
[58 FR 64484, Dec. 8, 1993]



Sec. 362.5  Notification of exempt insurance activities.

    Any insured state bank that was lawfully underwriting insurance in a 
state on November 21, 1991, and any insured state bank that has a 
subsidiary that was lawfully underwriting insurance in a state on 
November 21, 1991, shall submit a notice to the regional director for 
the Division of Supervision for the region in which the bank's principal 
office is located not later than 60 days from December 9, 1992, if those 
insurance underwriting activities would not be permissible for a 
national bank or a subsidiary of a national bank. The notice requirement 
does not apply in the case of an insured state bank described in 
Sec. 362.3(b)(7)(ii). The notice shall contain the following 
information:
    (a) The name of the bank and/or subsidiary:
    (b) The state or states in which the bank and/or its subsidiary was 
underwriting insurance on November 21, 1991:
    (c) A recitation of the authority for the bank or subsidiary to 
conduct insurance underwriting activities;
    (d) A list of the types of insurance that the bank and/or subsidiary 
provided to the public as of November 21, 1991 in the state(s) 
identified in paragraph (b) of this section. For purposes of this list, 
various lines of insurance are considered to be distinct types of 
insurance.
[57 FR 53234, Nov. 9, 1992. Redesignated at 58 FR 64483, Dec. 8, 1993]



Sec. 362.6  Delegation of authority.

    The authority to review and act upon divestiture plans submitted 
pursuant to Sec. 362.3(c)(2); the authority to approve or deny notices 
filed pursuant to Sec. 362.3(d); the authority to approve or deny 
applications pursuant to Sec. 362.3(b)(7)(ii); and the authority to 
approve or deny requests for consent pursuant to Sec. 362.4(d) as well 
as to take any other action authorized by Sec. 362.4(d) is delegated to 
the Director of the Division of Supervision or the Director's designee.
[60 FR 31384, June 15, 1995]



PART 363--ANNUAL INDEPENDENT AUDITS AND REPORTING REQUIREMENTS--Table of Contents




Sec.
363.0  OMB control number.
363.1  Scope.
363.2  Annual reporting requirements.
363.3  Independent public accountant.
363.4  Filing and notice requirements.
363.5  Audit committees.

Appendix A to Part 363--Guidelines and Interpretations

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

    Source:  58 FR 31335, June 2, 1993, unless otherwise noted.

[[Page 360]]



Sec. 363.0  OMB control number.

    The collecting of information requirements in this part have been 
approved by the Office of Management and Budget under OMB control number 
3064-0113.



Sec. 363.1  Scope.

    (a) Applicability. This part applies with respect to fiscal years of 
insured depository institutions which begin after December 31, 1992. 
This part does not apply with respect to any fiscal year of any insured 
depository institution, the total assets of which, at the beginning of 
such fiscal year, are less than $500 million.
    (b) Compliance by subsidiaries of holding companies. (1) The audited 
financial statements requirement of Sec. 363.2(a) may be satisfied for 
an insured depository institution that is a subsidiary of a holding 
company by audited financial statements of the consolidated holding 
company.
    (2) The other requirements of this part for an insured depository 
institution that is a subsidiary of a holding company may be satisfied 
by the holding company if:
    (i) The services and functions comparable to those required of the 
insured depository institution by this part are provided at the holding 
company level; and
    (ii) The insured depository institution has as of the beginning of 
its fiscal year:
    (A) Total assets of less than $5 billion; or
    (B) Total assets of $5 billion or more and a composite CAMEL rating 
of 1 or 2.
    (3) The appropriate federal banking agency may revoke the exception 
in paragraph (b)(2) of this section for any institution with total 
assets in excess of $9 billion for any period of time during which the 
appropriate federal banking agency determines that the institution's 
exemption would create a significant risk to the affected deposit 
insurance fund.
[58 FR 31335, June 2, 1993, as amended at 61 FR 6493, Feb. 21, 1996]



Sec. 363.2  Annual reporting requirements.

    (a) Audited financial statements. Each insured depository 
institution shall prepare annual financial statements in accordance with 
generally accepted accounting principles which shall be audited by an 
independent public accountant.
    (b) Management report. Each insured depository institution annually 
shall prepare, as of the end of the institution's most recent fiscal 
year, a management report signed by its chief executive officer and 
chief accounting or chief financial officer which contains:
    (1) A statement of management's responsibilities for preparing the 
institution's annual financial statements, for establishing and 
maintaining an adequate internal control structure and procedures for 
financial reporting, and for complying with laws and regulations 
relating to safety and soundness which are designated by the FDIC and 
the appropriate federal banking agency; and
    (2) Assessments by management of the effectiveness of such internal 
control structure and procedures as of the end of such fiscal year and 
the institution's compliance with such laws and regulations during such 
fiscal year.



Sec. 363.3  Independent public accountant.

    (a) Annual audit of financial statements. Each insured depository 
institution shall engage an independent public accountant to audit and 
report on its annual financial statements in accordance with generally 
accepted auditing standards and section 37 of the Federal Deposit 
Insurance Act (12 U.S.C. 1831n). The scope of the audit engagement shall 
be sufficient to permit such accountant to determine and report whether 
the financial statements are presented fairly and in accordance with 
generally accepted accounting principles.
    (b) Additional report. Such independent public accountant shall 
examine, attest to, and report separately on, the assertion of 
management concerning the institution's internal control structure and 
procedures for financial reporting. The attestation shall be made in 
accordance with generally accepted standards for attestation 
engagements.

[[Page 361]]

    (c) Notice by accountant of termination of services. An independent 
public accountant performing an audit under this part who ceases to be 
the accountant for an insured depository institution shall notify the 
FDIC and the appropriate federal banking agency in writing of such 
termination within 15 days after the occurrence of such event, and set 
forth in reasonable detail the reasons for such termination.
[58 FR 31335, June 2, 1993, as amended at 62 FR 63257, Nov. 28, 1997]



Sec. 363.4  Filing and notice requirements.

    (a) Annual reporting. Within 90 days after the end of its fiscal 
year, each insured depository institution shall file with each of the 
FDIC, the appropriate federal banking agency, and any appropriate state 
bank supervisor, two copies of an annual report containing audited 
annual financial statements, the independent public accountant's report 
thereon, management's statements and assessments, and the independent 
public accountant's attestation report concerning the institution's 
internal control structure and procedures for financial reporting as 
required by Secs. 363.2(a), 363.3(a), 363.2(b), and 363.3(b), 
respectively.
    (b) Public availability. The annual report in paragraph (a) of this 
section shall be available for public inspection.
    (c) Independent accountant's reports. Each insured depository 
institution shall file with the FDIC, the appropriate federal banking 
agency, and any appropriate state bank supervisor, a copy of any 
management letter, qualification, or other report issued by its 
independent public accountant with respect to such institution and the 
services provided by such accountant pursuant to this part within 15 
days after receipt.
    (d) Notice of engagement or change of accountants. Each insured 
depository institution shall provide, within 15 days after the 
occurrence of any such event, written notice to the FDIC, the 
appropriate federal banking agency, and any appropriate state bank 
supervisor of the engagement of an independent public accountant, or the 
resignation or dismissal of the independent public accountant previously 
engaged. The notice shall include a statement of the reasons for any 
such event in reasonable detail.
[58 FR 31335, June 2, 1993, as amended at 61 FR 6493, Feb. 21, 1996; 62 
FR 63257, Nov. 28, 1997]



Sec. 363.5  Audit committees.

    (a) Composition and duties. Each insured depository institution 
shall establish an independent audit committee of its board of 
directors, the members of which shall be outside directors who are 
independent of management of the institution, and the duties of which 
shall include reviewing with management and the independent public 
accountant the basis for the reports issued under this part.
    (b) Committees of large institutions. The audit committee of any 
insured depository institution that has total assets of more than $3 
billion, measured as of the beginning of each fiscal year, shall include 
members with banking or related financial management expertise, have 
access to its own outside counsel, and not include any large customers 
of the institution. If a large institution is a subsidiary of a holding 
company and relies on the audit committee of the holding company to 
comply with this rule, the holding company audit committee shall not 
include any members who are large customers of the subsidiary 
institution.
[58 FR 31335, June 2, 1993, as amended at 61 FR 6493, Feb. 21, 1996]

         Appendix A to Part 363--Guidelines and Interpretations

                            Table of Contents

                              Introduction

                       Scope of Rule (Sec. 363.1)

1. Measuring Total Asset
2. Insured Branches of Foreign Banks
3. Compliance by Holding Company Subsidiaries
4. Comparable Services and Functions

               Annual Reporting Requirements (Sec. 363.2)

5. Annual Financial Statements
6. Holding Company Statements
7. Insured Branches of Foreign Banks
8. Management Report
9. Safeguarding of Assets
10. Standards for Internal Controls
11. Service Organizations
12. Compliance with Laws and Regulations

[[Page 362]]

           Role of Independent Public Accountant (Sec. 363.3)

13. General Qualifications
14. Independence
15. Peer Reviews
16. Filing Peer Review Reports
17. Information to Independent Public Accountant
18. Attestation Report
19. Reviews with Audit Committee and Management
20. Notice of Termination
21. Reliance on Internal Auditors

               Filing and Notice Requirements (Sec. 363.4)

22. Place for Filing
23. Relief From Filing Deadlines
24. Public Availability
25. Independent Public Accountant's Reports
26. Notices Concerning Accountants

                      Audit Committees (Sec. 363.5)

27. Composition
28. ``Independent of Management'' Considerations
29. Lack of Independence
30. Holding Company Audit Committees
31. Duties
32. Banking or Related Financial Management Expertise
33. Large Customers
34. Access to Counsel
35. Forming and Restructuring Audit Committees

                                  Other

36. Modifications of Guidelines

    Schedule A to Appendix A--Agreed Upon Procedures for Determining 
                     Compliance With Designated Laws

                              Introduction

    Congress added section 36, ``Early Identification of Needed 
Improvements in Financial Management'' (section 36), to the Federal 
Deposit Insurance Act (FDI Act) in 1991.
    The FDIC Board of Directors adopted 12 CFR part 363 of its rules and 
regulations (the Rule) to implement those provisions of section 36 that 
require rulemaking. The FDIC also approved these ``Guidelines and 
Interpretations'' (the Guidelines) and directed that they be published 
with the Rule to facilitate a better understanding of, and full 
compliance with, the provisions of section 36.
    Although not contained in the Rule itself, some of the guidance 
offered restates or refers to statutory requirements of section 36 and 
is therefore mandatory. If that is the case, the statutory provision is 
cited.
    Furthermore, upon adopting the Rule, the FDIC reiterated its belief 
that every insured depository institution, regardless of its size or 
charter, should have an annual audit of its financial statements 
performed by an independent public accountant, and should establish an 
audit committee comprised entirely of outside directors.
    The following Guidelines reflect the views of the FDIC concerning 
the interpretation of section 36. The Guidelines are intended to assist 
insured depository institutions (institutions), their boards of 
directors, and their advisors, including their independent public 
accountants and legal counsel, and to clarify section 36 and the Rule. 
It is recognized that reliance on the Guidelines may result in 
compliance with section 36 and the Rule which may vary from institution 
to institution. Terms which are not explained in the Guidelines have the 
meanings given them in the Rule, the FDI Act, or professional accounting 
and auditing literature.

                       Scope of Rule (Sec. 363.1)

    1. Measuring Total Assets. To determine whether this part applies, 
an institution should use total assets as reported on its most recent 
Report of Condition (Call Report) or Thrift Financial Report (TFR), the 
date of which coincides with the end of its preceding fiscal year. If 
its fiscal year ends on a date other than the end of a calendar quarter, 
it should use its Call Report or TFR for the quarter end immediately 
preceding the end of its fiscal year.
    2. Insured Branches of Foreign Banks. Unlike other institutions, 
insured branches of foreign banks are not separately incorporated or 
capitalized. To determine whether this part applies, an insured branch 
should measure claims on non-related parties reported on its Report of 
Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks 
(form FFIEC 002).
    3. Compliance by Holding Company Subsidiaries. Audited consolidated 
financial statements and other reports or notices required by this part 
which are submitted by a holding company for any subsidiary institution, 
should be accompanied by a cover letter identifying all subsidiary 
institutions to which they pertain. An institution filing holding 
company consolidated financial statements as permitted by Sec. 363.1(b) 
also may report on changes in its independent public accountant on a 
holding company basis. An institution that does not meet the criteria in 
section 36(i) must satisfy the remaining provisions of the statute and 
this part on an individual institution basis, and maintain its own audit 
committee. Multi-tiered holding companies may satisfy all requirements 
of this part at any level.
    4. Comparable Services and Functions. Services and functions will be 
considered ``comparable'' to those required by this part if the holding 
company:
    (a) Prepares reports used by the subsidiary institution to meet the 
requirements of this part;

[[Page 363]]

    (b) Has an audit committee that meets the requirements of this part 
appropriate to its largest subsidiary institution; and
    (c) Prepares and submits the management assessments of the 
effectiveness of the internal control structure and procedures for 
financial reporting (internal controls), and compliance with the 
Designated Laws defined in guideline 12 based on information concerning 
the relevant activities and operations of those subsidiary institutions 
within the scope of the rule.

               Annual Reporting Requirements (Sec. 363.2)

    5. Annual Financial Statements. Each institution should prepare 
comparative annual consolidated financial statements (balance sheets, 
statements of income, changes in equity capital, and cash flows, with 
accompanying footnote disclosures) in accordance with generally accepted 
accounting principles (GAAP) for each of its two most recent fiscal 
years. Statements for the earlier year may be presented on an unaudited 
basis if the institution was not subject to this part for that year and 
audited statements were not prepared.
    6. Holding Company Statements. Subsidiary institutions may file 
copies of their holding company's audited financial statements filed 
with the Securities and Exchange Commission (SEC) or prepared for their 
FR Y-6 Annual Report under the Bank Holding Company Act of 1956.
    7. Insured Branches of Foreign Banks. An insured branch of a foreign 
bank should satisfy the financial statements requirement by filing one 
of the following for the two preceding fiscal years:
    (a) Audited balance sheets, disclosing information about financial 
instruments with off-balance-sheet risk;
    (b) Schedules RAL and L of form FFIEC 002, prepared and audited on 
the basis of the instructions for its preparation; or
    (c) With written approval of the appropriate federal banking agency, 
consolidated financial statements of the parent bank.
    8. Management Report. Management should perform its own 
investigation and review of the effectiveness of internal controls and 
compliance with the Designated Laws defined in Guideline 12. Management 
also should maintain records of its determinations and assessments until 
the next federal safety and soundness examination, or such later date as 
specified by the FDIC or appropriate federal banking agency. Management 
should provide in its assessment of the effectiveness of internal 
controls, or supplementally, sufficient information to enable the 
accountant to report on its assertion. The management report of an 
insured branch of a foreign bank should be signed by the branch's 
managing official if the branch does not have a chief executive or 
financial officer.
    9. Safeguarding of Assets. ``Safeguarding of assets'', as the term 
relates to internal control policies and procedures regarding financial 
reporting, and which has precedent in accounting literature, should be 
encompassed in the management report and the independent public 
accountant's attestation discussed in guideline 18. Testing the 
existence of and compliance with internal controls on the management of 
assets, including loan underwriting and documentation, represents a 
reasonable implementation of section 36. The FDIC expects such internal 
controls to be encompassed by the assertion in the management report, 
but the term ``safeguarding of assets'' need not be specifically stated. 
The FDIC does not require the accountant to attest to the adequacy of 
safeguards, but does require the accountant to determine whether 
safeguarding policies exist.\1\
---------------------------------------------------------------------------

    \1\ It is management's responsibility to establish policies 
concerning underwriting and asset management and to make credit 
decisions. The auditor's role is to test compliance with management's 
policies relating to financial reporting.
---------------------------------------------------------------------------

    10. Standards for Internal Controls. Each institution should 
determine its own standards for establishing, maintaining, and assessing 
the effectiveness of its internal controls.2
---------------------------------------------------------------------------

    \2\ In considering what information is needed on safeguarding of 
assets and standards for internal controls, management may review 
guidelines provided by its primary federal regulator; the FDIC's 
Division of Supervision Manual of Examination Policies; the Federal 
Reserve Board's Commercial Bank Examination Manual and other relevant 
regulations; the Office of Thrift Supervision's Thrift Activities 
Handbook; the Comptroller of the Currency's Handbook for National Bank 
Examiners; and standards published by professional accounting 
organizations, such as the American Institute of Certified Public 
Accountants' (AICPA) Statement on Auditing Standards No. 55, 
``Consideration of the Internal Control Structure in a Financial 
Statement Audit,'' as amended by Statement of Auditing Standards No. 78; 
the Committee of Sponsoring Organizations (COSO) of the Treadway 
Commission's Internal Control--Integrated Framework, including its 
addendum on safeguarding of assets; and other internal control standards 
published by the AICPA, other accounting or auditing professional 
associations, and financial institution trade associations.
---------------------------------------------------------------------------

    11. Service Organizations. Although service organizations should be 
considered in determining if internal controls are adequate, an 
institution's independent public accountant, its management, and its 
audit committee should exercise independent judgment concerning that 
determination. On-site reviews

[[Page 364]]

of service organizations may not be necessary to prepare the reports 
required by the Rule, and the FDIC does not intend that the Rule 
establish any such requirement.
    12. Compliance with Laws and Regulations. The designated laws and 
regulations are the federal laws and regulations concerning loans to 
insiders and the federal and state laws and regulations concerning 
dividend restrictions (the Designated Laws). Table 1 to this Appendix A 
lists the designated federal laws and regulations pertaining to insider 
loans and dividend restrictions that are applicable to each type of 
institution.

           Role of Independent Public Accountant (Sec. 363.3)

    13. General Qualifications. To provide audit and attest services to 
insured depository institutions, an independent public accountant should 
be registered or licensed to practice as a public accountant, and be in 
good standing, under the laws of the state or other political 
subdivision of the United States in which the home office of the 
institution (or the insured branch of a foreign bank) is located. As 
required by section 36(g)(3)(A)(i), the accountant must agree to provide 
copies of any workpapers, policies, and procedures relating to services 
performed under this part.
    14. Independence. The independent public accountant also should be 
in compliance with the AICPA's Code of Professional Conduct and meet the 
independence requirements and interpretations of the SEC and its staff.
    15. Peer Reviews. As required by section 36(g)(3)(A)(ii), the 
independent public accountant must have received, or be enrolled in, a 
peer review that meets acceptable guidelines. The following peer review 
guidelines are acceptable:
    (a) The external peer review should be conducted by an organization 
independent of the accountant or firm being reviewed, as frequently as 
is consistent with professional accounting practices;
    (b) The peer review should be generally consistent with AICPA 
standards 3 and
---------------------------------------------------------------------------

    \3\ These would include Standards for Performing and Reporting on 
Peer Reviews, codified in the SEC Practice Section Reference Manual, and 
Standards for Performing and Reporting on Peer Reviews, contained in 
Volume 2 of the AICPA's Professional Standards.
---------------------------------------------------------------------------

    (c) The review should include, if available, at least one audit of 
an insured depository institution or consolidated financial holding 
company. Peer review working papers are to be retained for 120 days 
after the peer review report is filed with the FDIC, and be made 
available to the FDIC upon request, in a form consistent with the SEC's 
agreement with the accounting profession.
    16. Filing Peer Review Reports. Within 15 days of receiving 
notification that the peer review has been accepted, or before 
commencing any audit under the Rule, whichever is earlier, two copies of 
the most recent peer review report, accompanied by any letter of 
comments and letter of response, should be filed by the independent 
public accountant (if not already on file) with the FDIC, Registration 
and Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429, 
where they will be available for public inspection. All corrective 
action required under any qualified peer review report should have been 
taken before commencing services under this Rule.
    17. Information to Independent Public Accountant. Attention is 
directed to section 36(h) which requires institutions to provide 
specified information to their accountants. An institution also should 
provide its accountant with copies of any notice that the institution's 
capital category is being changed or reclassified under section 38 of 
the FDI Act, and any correspondence from the appropriate federal banking 
agency concerning compliance with this part.
    18. Attestation Report. The independent public accountant should 
provide the institution with an internal controls attestation report and 
any management letter at the conclusion of the audit as required by 
section 36(c)(1). If a holding company subsidiary relies on its holding 
company management report, the accountant may attest to and report on 
management's assertions in one report, without reporting separately on 
each subsidiary covered by the Rule. The FDIC has determined that 
management letters are exempt from public disclosure.
    19. Reviews with Audit Committee and Management. The independent 
public accountant should meet with the institution's audit committee to 
review the accountant's reports required by this part before they are 
filed. It also may be appropriate for the accountant to review its 
findings with the institution's board of directors and management.
    20. Notice of Termination. The notice required by Sec. 363.3(c) 
should state whether the independent public accountant agrees with the 
assertions contained in any notice filed by the institution under 
Sec. 363.4(d), and whether the institution's notice discloses all 
relevant reasons.
    21. Reliance on Internal Auditors. Nothing in this part or this 
appendix is intended to preclude the ability of the independent public 
accountant to rely on the work of an institution's internal auditor.

[[Page 365]]

               Filing and Notice Requirements (Sec. 363.4)

    22. Place for Filing. Except for peer review reports filed pursuant 
to Guideline 16, all reports and notices required by, and other 
communications or requests made pursuant to, the Rule should be filed as 
follows:
    (a) FDIC: Appropriate FDIC Regional Office (Supervision), i.e., the 
FDIC regional office in the FDIC region in which the institution is 
headquartered or, in the case of a subsidiary institution of a holding 
company, the FDIC regional office that is responsible for monitoring the 
consolidated company. A filing made on behalf of several covered 
institutions owned by the same parent holding company should be 
accompanied by a transmittal letter identifying all of the institutions 
covered.
    (b) Office of the Comptroller of the Currency (OCC): Appropriate OCC 
Supervisory Office.
    (c) Federal Reserve: Appropriate Federal Reserve Bank.
    (d) Office of Thrift Supervision (OTS): Appropriate OTS District 
Office.
    (e) State bank supervisor: The filing office of the appropriate 
State bank supervisor.
    23. Relief from Filing Deadlines. Although the reasonable deadlines 
for filings and other notices established by this part are specified, 
some institutions may occasionally be confronted with extraordinary 
circumstances beyond their reasonable control that may justify 
extensions of a deadline. In that event, upon written application from 
an insured depository institution, setting forth the reasons for a 
requested extension, the FDIC or appropriate federal banking agency may, 
for good cause, extend a deadline in this part for a period not to 
exceed 30 days.
    24. Public Availability. Each institution's annual report should be 
available for public inspection at its main and branch offices no later 
than 15 days after it is filed with the FDIC. Alternatively, an 
institution may elect to mail one copy of its annual report to any 
person who requests it. The annual report should remain available to the 
public until the annual report for the next year is available. An 
institution may use its annual report under this part to meet the annual 
disclosure statement required by 12 CFR 350.3, if the institution 
satisfies all other requirements of 12 CFR part 350.
    25. Independent Public Accountant's Reports. Section 36(h)(2)(A) 
requires that, within 15 days of receipt by an institution of any 
management letter or other report, such letter or other report shall be 
filed with the FDIC, any appropriate federal banking agency, and any 
appropriate state bank supervisor. Institutions and their accountants 
are encouraged to coordinate preparation and delivery of audit and 
attestation reports and filing the annual report, to avoid duplicate 
filings.
    26. Notices Concerning Accountants. Institutions should review and 
satisfy themselves as to compliance with the required qualifications set 
forth in guidelines 13-15 before engaging an independent public 
accountant. With respect to any selection, change or termination of an 
accountant, institutions should be familiar with the notice requirements 
in guideline 21, and should send a copy of any notice under 
Sec. 363.4(d) to the accountant when it is filed with the FDIC. An 
institution which files reports with its appropriate federal banking 
agency under, or is a subsidiary of a holding company which files 
reports with the SEC pursuant to, the Securities Exchange Act of 1934 
may use its current report (e.g. SEC Form 8-K) concerning a change in 
accountant to satisfy the similar notice requirements of this part.

                      Audit Committees (Sec. 363.5)

    27. Composition. The board of directors of each institution should 
determine if outside directors meet the requirements of section 36 and 
this part. At least annually, it should determine whether all existing 
and potential audit committee members are ``independent of management of 
the institution.'' If the institution has total assets in excess of $3 
billion, the board also should determine whether members of the 
committee satisfy the additional requirements of this part. Because an 
insured branch of a foreign bank does not have a separate board of 
directors, the FDIC will not apply the audit committee requirements to 
such branch. However, any such branch is encouraged to make a reasonable 
good faith effort to see that similar duties are performed by persons 
whose experience is generally consistent with the Rule's requirements 
for an institution the size of the insured branch.
    28. ``Independent of Management'' Considerations. In determining 
whether an outside director is independent of management, the board 
should consider all relevant information. This would include considering 
whether the director:
    (a) Is or has been an officer or employee of the institution or its 
affiliates;
    (b) Serves or served as a consultant, advisor, promoter, 
underwriter, legal counsel, or trustee of or to the institution or its 
affiliates;
    (c) Is a relative of an officer or other employee of the institution 
or its affiliates;
    (d) Holds or controls, or has held or controlled, a direct or 
indirect financial interest in the institution or its affiliates; and
    (e) Has outstanding extensions of credit from the institution or its 
affiliates.
    29. Lack of Independence. An outside director should not be 
considered independent of management if such director is, or has been 
within the preceding year, an officer or employee of the institution or 
any affiliate, or owns or controls, or has owned or controlled

[[Page 366]]

within the preceding year, assets representing 10 percent or more of any 
outstanding class of voting securities of the institution.
    30. Holding Company Audit Committees. When an insured depository 
institution subsidiary fails to meet the requirements for the holding 
company exception in Sec. 363.1(b)(2) or maintains its own separate 
audit committee to satisfy the requirements of this part, members of the 
independent audit committee of the holding company may serve as the 
audit committee of the subsidiary institution if they are otherwise 
independent of management of the subsidiary, and, if applicable, meet 
any other requirements for a large subsidiary institution covered by 
this part. However, this does not permit officers or employees of a 
holding company to serve on the audit committee of its subsidiary 
institutions. When the subsidiary institution satisfies the requirements 
for the holding company exception in Sec. 363.1(b)(2), members of the 
audit committee of the holding company should meet all the membership 
requirements applicable to the largest subsidiary depository institution 
and may perform all the duties of the audit committee of a subsidiary 
institution, even though such holding company directors are not 
directors of the institution.
    31. Duties. The audit committee should perform all duties determined 
by the institution's board of directors. The duties should be 
appropriate to the size of the institution and the complexity of its 
operations, and include reviewing with management and the independent 
public accountant the basis for their respective reports issued under 
Secs. 363.2(a) and (b) and 363.3(a) and (b). Appropriate additional 
duties could include:

    (a) Reviewing with management and the independent public accountant 
the scope of services required by the audit, significant accounting 
policies, and audit conclusions regarding significant accounting 
estimates;
    (b) Reviewing with management and the accountant their assessments 
of the adequacy of internal controls, and the resolution of identified 
material weaknesses and reportable conditions in internal controls, 
including the prevention or detection of management override or 
compromise of the internal control system;
    (c) Reviewing with management and the accountant the institution's 
compliance with laws and regulations;
    (d) Discussing with management the selection and termination of the 
accountant and any significant disagreements between the accountant and 
management; and
    (e) Overseeing the internal audit function.

    It is recommended that audit committees maintain minutes and other 
relevant records of their meetings and decisions.
    32. Banking or Related Financial Management Expertise. At least two 
members of the audit committee of a large institution shall have 
``banking or related financial management expertise'' as required by 
section 36(g)(1)(C)(i). This determination is to be made by the board of 
directors of the insured depository institution. A person will be 
considered to have such required expertise if the person has significant 
executive, professional, educational, or regulatory experience in 
financial, auditing, accounting, or banking matters as determined by the 
board of directors. Significant experience as an officer or member of 
the board of directors or audit committee of a financial services 
company would satisfy these criteria.
    33. Large Customers. Any individual or entity (including a 
controlling person of any such entity) which, in the determination of 
the board of directors, has such significant direct or indirect credit 
or other relationships with the institution, the termination of which 
likely would materially and adversely affect the institution's financial 
condition or results of operations, should be considered a ``large 
customer'' for purposes of Sec. 363.5(b).
    34. Access to Counsel. The audit committee should be able to retain 
counsel at its discretion without prior permission of the institution's 
board of directors or its management. Section 36 does not preclude 
advice from the institution's internal counsel or regular outside 
counsel. It also does not require retaining or consulting counsel, but 
if the committee elects to do either, it also may elect to consider 
issues affecting the counsel's independence. Such issues would include 
whether to retain or consult only counsel not concurrently representing 
the institution or any affiliate, and whether to place limitations on 
any counsel representing the institution concerning matters in which 
such counsel previously participated personally and substantially as 
outside counsel to the committee.
    35. Forming and Restructuring Audit Committees. Audit committees 
should be formed within four months of the effective date of this part. 
Some institutions may have to restructure existing audit committees to 
comply with this part. No regulatory action will be taken if 
institutions restructure their audit committees by the earlier of their 
next annual meeting of stockholders, or one year from the effective date 
of this part.

                                  Other

    36. Modifications of Guidelines. The FDIC Board of Directors has 
delegated to the Director of the FDIC's Division of Supervision 
authority to make and publish in the Federal Register minor technical 
amendments to the Guidelines in this appendix (including the attached 
Agreed Upon Procedures in Schedule A to this appendix), in consultation 
with the other appropriate federal banking agencies, to reflect the 
practical experience gained from implementation of this part. It

[[Page 367]]

is not anticipated any such modification would be effective until 
affected institutions have been given reasonable advance notice of the 
modification. Any material modification or amendment will be subject to 
review and approval of the FDIC Board of Directors.

                                              Table 1 to Appendix A                                             
----------------------------------------------------------------------------------------------------------------
                              Designated Federal Laws and Regulations Applicable to                             
-----------------------------------------------------------------------------------------------------------------
                                                                                          State                 
                                                            National    State member    nonmember      Savings  
                                                              banks         banks         banks     associations
----------------------------------------------------------------------------------------------------------------
                   Insider Loans--Parts and/or Sections of Title 12 of the United States Code                   
----------------------------------------------------------------------------------------------------------------
375a.......................  Loans to Executive Officers                      (\1\)         (\1\) 
                              of Banks.                                                                         
375b.......................  Prohibitions Respecting                          (\1\)         (\1\) 
                              Loans and Extensions of                                                           
                              Credit to Executive                                                               
                              Officers and Directors of                                                         
                              Banks, Political Campaign,                                                        
                              Committees, etc.                                                                  
1468(b)....................  Extensions of Credit to      ............  ............  ............       
                              Executive Officers,                                                               
                              Directors, and Principal                                                          
                              Shareholders.                                                                     
1828(j)(2).................  Provisions Relating to       ............  ............         ............
                              Loans, Extensions of                                                              
                              Credit, and Other Dealings                                                        
                              Between Member Banks and                                                          
                              Their Affiliates,                                                                 
                              Executive Officers,                                                               
                              Directors, etc.                                                                   
1828(j)(3)(B)..............  Extensions of Credit               (\2\)   ............        (\3\)               
                              Applicability of                                                                  
                              Provisions Relating to                                                            
                              Loans, Extensions of                                                              
                              Credit, and Other Dealings                                                        
                              Between Insured Branches                                                          
                              of Foreign Banks and Their                                                        
                              Insiders.                                                                         
----------------------------------------------------------------------------------------------------------------
                      Parts and/or Sections of Title 12 of the Code of Federal Regulations                      
----------------------------------------------------------------------------------------------------------------
23.5.......................  Application of Legal                ............  ............  ............
                              Lending Limits;                                                                   
                              Restrictions on                                                                   
                              Transactions With                                                                 
                              Affiliates.                                                                       
31.........................  Extensions of Credit to             ............  ............  ............
                              National Bank Insiders.                                                           
215........................  Subpart A--Loans by Member                       (\4\)         (\5\) 
                              Banks to Their Executive                                                          
                              Officers, Directors, and                                                          
                              Principal Shareholders.                                                           
                             Subpart B--Reports of                            (\4\)         (\5\) 
                              Indebtedness of Executive                                                         
                              Officers and Principal                                                            
                              Shareholders of Insured                                                           
                              Nonmember Banks.                                                                  
337.3......................  Limits on Extensions of      ............  ............         ............
                              Credit to Executive                                                               
                              Officers, Directors, and                                                          
                              Principal Shareholders of                                                         
                              Insured Nonmember Banks.                                                          
349.3......................  Reports by Executive         ............  ............         ............
                              Officers and Principal                                                            
                              Shareholders.                                                                     
563.43.....................  Loans by Savings             ............  ............  ............       
                              Associations to Their                                                             
                              Executive Officers,                                                               
                              Directors, and Principal                                                          
                              Shareholders.                                                                     
----------------------------------------------------------------------------------------------------------------
               Dividend Restrictions--Parts and/or Sections of Title 12 of the United States Code               
----------------------------------------------------------------------------------------------------------------
56.........................  Prohibition on Withdrawal                  ............  ............
                              of Capital and Unearned                                                           
                              Dividends.                                                                        
60.........................  Dividends and Surplus Funds                ............  ............
1467a(f)...................  Declaration of Dividends...  ............  ............  ............       
1831o......................  Prompt Corrective Action--                             
                              Dividend Restrictions.                                                            
----------------------------------------------------------------------------------------------------------------
                      Parts and/or Sections of Title 12 of the Code of Federal Regulations                      
----------------------------------------------------------------------------------------------------------------
5.61.......................  Payment of dividends;               ............  ............  ............
                              capital limitation.                                                               
5.62.......................  Payment of dividends;               ............  ............  ............
                              earnings limitation.                                                              
6.6........................  Prompt Corrective Action--          ............  ............  ............
                              Dividend Restrictions.                                                            
7.6120.....................  Dividends Payable in                ............  ............  ............
                              Property Other Than Cash.                                                         
208.19.....................  Payments of Dividends......  ............         ............  ............
208.35.....................  Prompt Corrective Action...  ............         ............  ............
325.105....................  Prompt Corrective Action...  ............  ............         ............
563.134....................  Capital Distributions......  ............  ............  ............       
565........................  Prompt Corrective Action...  ............  ............  ............       
----------------------------------------------------------------------------------------------------------------
\1\ Subsections (g) and (h) only.                                                                               
\2\ Applies only to insured federal branches of foreign banks.                                                  

[[Page 368]]

                                                                                                                
\3\ Applies only to insured state branches of foreign banks.                                                    
\4\ See 12 CFR parts 337.3 and 349.3.                                                                           
\5\ See 12 CFR part 563.43.                                                                                     

[58 FR 31335, June 2, 1993, as amended at 61 FR 6494, Feb. 21, 1996; 62 
FR 63258, Nov. 28, 1997]



PART 364--STANDARDS FOR SAFETY AND SOUNDNESS--Table of Contents




Sec.
364.100  Purpose.
364.101  Standards for safety and soundness.

Appendix A to Part 364--Interagency Guidelines Establishing Standards 
          for Safety and Soundness

    Authority:  12 U.S.C. 1819 (Tenth), 1831p-1.

    Source:  60 FR 35685, July 10, 1995, unless outherwise noted.



Sec. 364.100  Purpose.

    Section 39 of the Federal Deposit Insurance Act requires the Federal 
Deposit Insurance Corporation to establish safety and soundness 
standards. Pursuant to section 39, this part establishes safety and 
soundness standards by guideline.



Sec. 364.101  Standards for safety and soundness.

    The Interagency Guidelines Establishing Standards for Safety and 
Soundness prescribed pursuant to section 39 of the Federal Deposit 
Insurance Act (12 U.S.C. 1831p-1), as set forth as appendix A to this 
part apply to all insured state nonmember banks and to state-licensed 
insured branches of foreign banks, that are subject to the provisions of 
section 39 of the Federal Deposit Insurance Act.

 Appendix A to Part 364--Interagency Guidelines Establishing Standards 
                        for Safety and Soundness

                            Table of Contents

                             I. Introduction

    A. Preservation of existing authority.
    B. Definitions.

                II. Operational and Managerial Standards

    A. Internal controls and information systems.
    B. Internal audit system.
    C. Loan documentation.
    D. Credit underwriting.
    E. Interest rate exposure.
    F. Asset growth.
    G. Asset quality.
    H. Earnings.
    I. Compensation, fees and benefits.

III. Prohibition on Compensation That Constitutes an Unsafe and Unsound 
                                Practice

    A. Excessive compensation.
    B. Compensation leading to material financial loss.

                             I. Introduction

    i. Section 39 of the Federal Deposit Insurance Act 1 (FDI 
Act) requires each Federal banking agency (collectively, the agencies) 
to establish certain safety and soundness standards by regulation or by 
guideline for all insured depository institutions. Under section 39, the 
agencies must establish three types of standards: (1) Operational and 
managerial standards; (2) compensation standards; and (3) such standards 
relating to asset quality, earnings, and stock valuation as they 
determine to be appropriate.
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    \1\ Section 39 of the Federal Deposit Insurance Act (12 U.S.C. 
1831p-1) was added by section 132 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (FDICIA), Pub. L. 102-242, 105 Stat. 
2236 (1991), and amended by section 956 of the Housing and Community 
Development Act of 1992, Pub. L. 102-550, 106 Stat. 3895 (1992) and 
section 318 of the Riegle Community Development and Regulatory 
Improvement Act of 1994, Pub. L. 103-325, 108 Stat. 2160 (1994).
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    ii. Section 39(a) requires the agencies to establish operational and 
managerial standards relating to: (1) Internal controls, information 
systems and internal audit systems, in accordance with section 36 of the 
FDI Act (12 U.S.C. 1831m); (2) loan documentation; (3) credit 
underwriting; (4) interest rate exposure; (5) asset growth; and (6) 
compensation, fees, and benefits, in accordance with subsection (c) of 
section 39. Section 39(b) requires the agencies to establish standards 
relating to asset quality, earnings, and stock valuation that the 
agencies determine to be appropriate.
    iii. Section 39(c) requires the agencies to establish standards 
prohibiting as an unsafe and unsound practice any compensatory 
arrangement that would provide any executive officer, employee, 
director, or principal shareholder of the institution with excessive 
compensation, fees or benefits and any compensatory arrangement that 
could lead to material financial loss to an institution. Section 39(c) 
also requires that the agencies

[[Page 369]]

establish standards that specify when compensation is excessive.
    iv. If an agency determines that an institution fails to meet any 
standard established by guideline under subsection (a) or (b) of section 
39, the agency may require the institution to submit to the agency an 
acceptable plan to achieve compliance with the standard. In the event 
that an institution fails to submit an acceptable plan within the time 
allowed by the agency or fails in any material respect to implement an 
accepted plan, the agency must, by order, require the institution to 
correct the deficiency. The agency may, and in some cases must, take 
other supervisory actions until the deficiency has been corrected.
    v. The agencies have adopted amendments to their rules and 
regulations to establish deadlines for submission and review of 
compliance plans.2
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    \2\ For the Office of the Comptroller of the Currency, these 
regulations appear at 12 CFR Part 30; for the Board of Governors of the 
Federal Reserve System, these regulations appear at 12 CFR Part 263; for 
the Federal Deposit Insurance Corporation, these regulations appear at 
12 CFR Part 308, subpart R, and for the Office of Thrift Supervision, 
these regulations appear at 12 CFR Part 570.
---------------------------------------------------------------------------

    vi. The following Guidelines set out the safety and soundness 
standards that the agencies use to identify and address problems at 
insured depository institutions before capital becomes impaired. The 
agencies believe that the standards adopted in these Guidelines serve 
this end without dictating how institutions must be managed and 
operated. These standards are designed to identify potential safety and 
soundness concerns and ensure that action is taken to address those 
concerns before they pose a risk to the deposit insurance funds.

                  A. Preservation of Existing Authority

    Neither section 39 nor these Guidelines in any way limits the 
authority of the agencies to address unsafe or unsound practices, 
violations of law, unsafe or unsound conditions, or other practices. 
Action under section 39 and these Guidelines may be taken independently 
of, in conjunction with, or in addition to any other enforcement action 
available to the agencies. Nothing in these Guidelines limits the 
authority of the FDIC pursuant to section 38(i)(2)(F) of the FDI Act (12 
U.S.C. 1831(o)) and Part 325 of Title 12 of the Code of Federal 
Regulations.

                             B. Definitions

    1. In general. For purposes of these Guidelines, except as modified 
in the Guidelines or unless the context otherwise requires, the terms 
used have the same meanings as set forth in sections 3 and 39 of the FDI 
Act (12 U.S.C. 1813 and 1831p-1).
    2. Board of directors, in the case of a state-licensed insured 
branch of a foreign bank and in the case of a federal branch of a 
foreign bank, means the managing official in charge of the insured 
foreign branch.
    3. Compensation means all direct and indirect payments or benefits, 
both cash and non-cash, granted to or for the benefit of any executive 
officer, employee, director, or principal shareholder, including but not 
limited to payments or benefits derived from an employment contract, 
compensation or benefit agreement, fee arrangement, perquisite, stock 
option plan, postemployment benefit, or other compensatory arrangement.
    4. Director shall have the meaning described in 12 CFR 
215.2(c).3
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    \3\ In applying these definitions for savings associations, pursuant 
to 12 U.S.C. 1464, savings associations shall use the terms ``savings 
association'' and ``insured savings association'' in place of the terms 
``member bank'' and ``insured bank''.
---------------------------------------------------------------------------

    5. Executive officer shall have the meaning described in 12 CFR 
215.2(d).4
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    \4\ See footnote 3 in section I.B.4. of this appendix.
---------------------------------------------------------------------------

    6. Principal shareholder shall have the meaning described in 12 CFR 
215.2(l).5
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    \5\ See footnote 3 in section I.B.4. of this appendix.
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                II. Operational and Managerial Standards

    A. Internal controls and information systems. An institution should 
have internal controls and information systems that are appropriate to 
the size of the institution and the nature, scope and risk of its 
activities and that provide for:
    1. An organizational structure that establishes clear lines of 
authority and responsibility for monitoring adherence to established 
policies;
    2. Effective risk assessment;
    3. Timely and accurate financial, operational and regulatory 
reports;
    4. Adequate procedures to safeguard and manage assets; and
    5. Compliance with applicable laws and regulations.
    B. Internal audit system. An institution should have an internal 
audit system that is appropriate to the size of the institution and the 
nature and scope of its activities and that provides for:
    1. Adequate monitoring of the system of internal controls through an 
internal audit function. For an institution whose size, complexity or 
scope of operations does not warrant a full scale internal audit 
function, a system of independent reviews of key internal controls may 
be used;
    2. Independence and objectivity;

[[Page 370]]

    3. Qualified persons;
    4. Adequate testing and review of information systems;
    5. Adequate documentation of tests and findings and any corrective 
actions;
    6. Verification and review of management actions to address material 
weaknesses; and
    7. Review by the institution's audit committee or board of directors 
of the effectiveness of the internal audit systems.
    C. Loan documentation. An institution should establish and maintain 
loan documentation practices that:
    1. Enable the institution to make an informed lending decision and 
to assess risk, as necessary, on an ongoing basis;
    2. Identify the purpose of a loan and the source of repayment, and 
assess the ability of the borrower to repay the indebtedness in a timely 
manner;
    3. Ensure that any claim against a borrower is legally enforceable;
    4. Demonstrate appropriate administration and monitoring of a loan; 
and
    5. Take account of the size and complexity of a loan.
    D. Credit underwriting. An institution should establish and maintain 
prudent credit underwriting practices that:
    1. Are commensurate with the types of loans the institution will 
make and consider the terms and conditions under which they will be 
made;
    2. Consider the nature of the markets in which loans will be made;
    3. Provide for consideration, prior to credit commitment, of the 
borrower's overall financial condition and resources, the financial 
responsibility of any guarantor, the nature and value of any underlying 
collateral, and the borrower's character and willingness to repay as 
agreed;
    4. Establish a system of independent, ongoing credit review and 
appropriate communication to management and to the board of directors;
    5. Take adequate account of concentration of credit risk; and
    6. Are appropriate to the size of the institution and the nature and 
scope of its activities.
    E. Interest rate exposure. An institution should:
    1. Manage interest rate risk in a manner that is appropriate to the 
size of the institution and the complexity of its assets and 
liabilities; and
    2. Provide for periodic reporting to management and the board of 
directors regarding interest rate risk with adequate information for 
management and the board of directors to assess the level of risk.
    F. Asset growth. An institution's asset growth should be prudent and 
consider:
    1. The source, volatility and use of the funds that support asset 
growth;
    2. Any increase in credit risk or interest rate risk as a result of 
growth; and
    3. The effect of growth on the institution's capital.
    G. Asset quality. An insured depository institution should establish 
and maintain a system that is commensurate with the institution's size 
and the nature and scope of its operations to identify problem assets 
and prevent deterioration in those assets. The institution should:
    1. Conduct periodic asset quality reviews to identify problem 
assets;
    2. Estimate the inherent losses in those assets and establish 
reserves that are sufficient to absorb estimated losses;
    3. Compare problem asset totals to capital;
    4. Take appropriate corrective action to resolve problem assets;
    5. Consider the size and potential risks of material asset 
concentrations; and
    6. Provide periodic asset reports with adequate information for 
management and the board of directors to assess the level of asset risk.
    H. Earnings. An insured depository institution should establish and 
maintain a system that is commensurate with the institution's size and 
the nature and scope of its operations to evaluate and monitor earnings 
and ensure that earnings are sufficient to maintain adequate capital and 
reserves. The institution should:
    1. Compare recent earnings trends relative to equity, assets, or 
other commonly used benchmarks to the institution's historical results 
and those of its peers;
    2. Evaluate the adequacy of earnings given the size, complexity, and 
risk profile of the institution's assets and operations;
    3. Assess the source, volatility, and sustainability of earnings, 
including the effect of nonrecurring or extraordinary income or expense;
    4. Take steps to ensure that earnings are sufficient to maintain 
adequate capital and reserves after considering the institution's asset 
quality and growth rate; and
    5. Provide periodic earnings reports with adequate information for 
management and the board of directors to assess earnings performance.
    I. Compensation, fees and benefits. An institution should maintain 
safeguards to prevent the payment of compensation, fees, and benefits 
that are excessive or that could lead to material financial loss to the 
institution.

III. Prohibition on Compensation That Constitutes an Unsafe and Unsound 
                                Practice

                        A. Excessive Compensation

    Excessive compensation is prohibited as an unsafe and unsound 
practice. Compensation shall be considered excessive when amounts paid 
are unreasonable or disproportionate to

[[Page 371]]

the services performed by an executive officer, employee, director, or 
principal shareholder, considering the following:
    1. The combined value of all cash and non-cash benefits provided to 
the individual;
    2. The compensation history of the individual and other individuals 
with comparable expertise at the institution;
    3. The financial condition of the institution;
    4. Comparable compensation practices at comparable institutions, 
based upon such factors as asset size, geographic location, and the 
complexity of the loan portfolio or other assets;
    5. For postemployment benefits, the projected total cost and benefit 
to the institution;
    6. Any connection between the individual and any fraudulent act or 
omission, breach of trust or fiduciary duty, or insider abuse with 
regard to the institution; and
    7. Any other factors the agencies determines to be relevant.

           B. Compensation Leading to Material Financial Loss

    Compensation that could lead to material financial loss to an 
institution is prohibited as an unsafe and unsound practice.
[60 FR 35678, 35685, July 10, 1995; 61 FR 43951, Aug. 27, 1996]



PART 365--REAL ESTATE LENDING STANDARDS--Table of Contents




Sec.
365.1  Purpose and scope.
365.2  Real estate lending standards.

Appendix A to Part 365--Interagency Guidelines for Real Estate Lending 
          Policies

    Authority:  12 U.S.C. 1828(o).

    Source:  57 FR 62896, 62900, Dec. 31, 1992, unless otherwise noted.



Sec. 365.1  Purpose and scope.

    This part, issued pursuant to section 304 of the Federal Deposit 
Insurance Corporation Improvement Act of 1991, 12 U.S.C. 1828(o), 
prescribes standards for real estate lending to be used by insured state 
nonmember banks (including state-licensed insured branches of foreign 
banks) in adopting internal real estate lending policies.



Sec. 365.2  Real estate lending standards.

    (a) Each insured state nonmember bank shall adopt and maintain 
written policies that establish appropriate limits and standards for 
extensions of credit that are secured by liens on or interests in real 
estate, or that are made for the purpose of financing permanent 
improvements to real estate.
    (b)(1) Real estate lending policies adopted pursuant to this section 
must:
    (i) Be consistent with safe and sound banking practices;
    (ii) Be appropriate to the size of the institution and the nature 
and scope of its operations; and
    (iii) Be reviewed and approved by the bank's board of directors at 
least annually.
    (2) The lending policies must establish:
    (i) Loan portfolio diversification standards;
    (ii) Prudent underwriting standards, including loan-to-value limits, 
that are clear and measurable;
    (iii) Loan administration procedures for the bank's real estate 
portfolio; and
    (iv) Documentation, approval, and reporting requirements to monitor 
compliance with the bank's real estate lending policies.
    (c) Each insured state nonmember bank must monitor conditions in the 
real estate market in its lending area to ensure that its real estate 
lending policies continue to be appropriate for current market 
conditions.
    (d) The real estate lending policies adopted pursuant to this 
section should reflect consideration of the Interagency Guidelines for 
Real Estate Lending Policies established by the Federal bank and thrift 
supervisory agencies.

 Appendix A to Part 365--Interagency Guidelines for Real Estate Lending 
                                Policies

    The agencies' regulations require that each insured depository 
institution adopt and maintain a written policy that establishes 
appropriate limits and standards for all extensions of credit that are 
secured by liens on or interests in real estate or made for the purpose 
of financing the construction of a building or other improvements.\5\ 
These guidelines are intended to assist institutions

[[Page 372]]

in the formulation and maintenance of a real estate lending policy that 
is appropriate to the size of the institution and the nature and scope 
of its individual operations, as well as satisfies the requirements of 
the regulation.
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    \5\ The agencies have adopted a uniform rule on real estate lending. 
See 12 CFR part 365 (FDIC); 12 CFR part 208, subpart C (FRB); 12 CFR 
part 34, subpart D (OCC); and 12 CFR 563.100-101 (OTS).
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    Each institution's policies must be comprehensive, and consistent 
with safe and sound lending practices, and must ensure that the 
institution operates within limits and according to standards that are 
reviewed and approved at least annually by the board of directors. Real 
estate lending is an integral part of many institutions' business plans 
and, when undertaken in a prudent manner, will not be subject to 
examiner criticism.

                Loan Portfolio Management Considerations

    The lending policy should contain a general outline of the scope and 
distribution of the institution's credit facilities and the manner in 
which real estate loans are made, serviced, and collected. In 
particular, the institution's policies on real estate lending should:
     Identify the geographic areas in which the institution will 
consider lending.
     Establish a loan portfolio diversification policy and set 
limits for real estate loans by type and geographic market (e.g., limits 
on higher risk loans).
     Identify appropriate terms and conditions by type of real 
estate loan.
     Establish loan origination and approval procedures, both 
generally and by size and type of loan.
     Establish prudent underwriting standards that are clear and 
measurable, including loan-to-value limits, that are consistent with 
these supervisory guidelines.
     Establish review and approval procedures for exception 
loans, including loans with loan-to-value percentages in excess of 
supervisory limits.
     Establish loan administration procedures, including 
documentation, disbursement, collateral inspection, collection, and loan 
review.
     Establish real estate appraisal and evaluation programs.
     Require that management monitor the loan portfolio and 
provide timely and adequate reports to the board of directors.

    The institution should consider both internal and external factors 
in the formulation of its loan policies and strategic plan. Factors that 
should be considered include:
     The size and financial condition of the institution.
     The expertise and size of the lending staff.
     The need to avoid undue concentrations of risk.
     Compliance with all real estate related laws and 
regulations, including the Community Reinvestment Act, anti-
discrimination laws, and for savings associations, the Qualified Thrift 
Lender test.
     Market conditions.

    The institution should monitor conditions in the real estate markets 
in its lending area so that it can react quickly to changes in market 
conditions that are relevant to its lending decisions. Market supply and 
demand factors that should be considered include:
     Demographic indicators, including population and employment 
trends.
     Zoning requirements.
     Current and projected vacancy, construction, and absorption 
rates.
     Current and projected lease terms, rental rates, and sales 
prices, including concessions.
     Current and projected operating expenses for different 
types of projects.
     Economic indicators, including trends and diversification 
of the lending area.
     Valuation trends, including discount and direct 
capitalization rates.

                         Underwriting Standards

    Prudently underwritten real estate loans should reflect all relevant 
credit factors, including:
     The capacity of the borrower, or income from the underlying 
property, to adequately service the debt.
     The value of the mortgaged property.
     The overall creditworthiness of the borrower.
     The level of equity invested in the property.
     Any secondary sources of repayment.
     Any additional collateral or credit enhancements (such as 
guarantees, mortgage insurance or takeout commitments).

    The lending policies should reflect the level of risk that is 
acceptable to the board of directors and provide clear and measurable 
underwriting standards that enable the institution's lending staff to 
evaluate these credit factors. The underwriting standards should 
address:
     The maximum loan amount by type of property.
     Maximum loan maturities by type of property.
     Amortization schedules.
     Pricing structure for different types of real estate loans.
     Loan-to-value limits by type of property.

    For development and construction projects, and completed commercial 
properties, the policy should also establish, commensurate with the size 
and type of the project or property:

[[Page 373]]

     Requirements for feasibility studies and sensitivity and 
risk analyses (e.g., sensitivity of income projections to changes in 
economic variables such as interest rates, vacancy rates, or operating 
expenses).
     Minimum requirements for initial investment and maintenance 
of hard equity by the borrower (e.g., cash or unencumbered investment in 
the underlying property).
     Minimum standards for net worth, cash flow, and debt 
service coverage of the borrower or underlying property.
     Standards for the acceptability of and limits on non-
amortizing loans.
     Standards for the acceptability of and limits on the use of 
interest reserves.
     Pre-leasing and pre-sale requirements for income-producing 
property.
     Pre-sale and minimum unit release requirements for non-
income-producing property loans.
     Limits on partial recourse or nonrecourse loans and 
requirements for guarantor support.
     Requirements for takeout commitments.
     Minimum covenants for loan agreements.

                           Loan Administration

    The institution should also establish loan administration procedures 
for its real estate portfolio that address:
     Documentation, including:

      Type and frequency of financial statements, including requirements 
for verification of information provided by the borrower;
      Type and frequency of collateral evaluations (appraisals and other 
estimates of value).

     Loan closing and disbursement.
     Payment processing.
     Escrow administration.
     Collateral administration.
     Loan payoffs.
     Collections and foreclosure, including:


      Delinquency follow-up procedures;
      Foreclosure timing;
      Extensions and other forms of forbearance;
      Acceptance of deeds in lieu of foreclosure.

     Claims processing (e.g., seeking recovery on a defaulted 
loan covered by a government guaranty or insurance program).
     Servicing and participation agreements.

                    Supervisory Loan-to-Value Limits

    Institutions should establish their own internal loan-to-value 
limits for real estate loans. These internal limits should not exceed 
the following supervisory limits:

------------------------------------------------------------------------
                                                               Loan-to- 
                                                                 value  
                        Loan category                            limit  
                                                               (percent)
------------------------------------------------------------------------
Raw land....................................................          65
Land development............................................          75
Construction:                                                           
    Commercial, multifamily,\1\ and other nonresidential....          80
    1- to 4-family residential..............................          85
Improved property...........................................          85
Owner-occupied 1- to 4-family and home equity...............       (\2\)
------------------------------------------------------------------------
\1\ Multifamily construction includes condominiums and cooperatives.    
\2\ A loan-to-value limit has not been established for permanent        
  mortgage or home equity loans on owner-occupied, 1- to 4-family       
  residential property. However, for any such loan with a loan-to-value 
  ratio that equals or exceeds 90 percent at origination, an institution
  should require appropriate credit enhancement in the form of either   
  mortgage insurance or readily marketable collateral.                  
                                                                        

    The supervisory loan-to-value limits should be applied to the 
underlying property that collateralizes the loan. For loans that fund 
multiple phases of the same real estate project (e.g., a loan for both 
land development and construction of an office building), the 
appropriate loan-to-value limit is the limit applicable to the final 
phase of the project funded by the loan; however, loan disbursements 
should not exceed actual development or construction outlays. In 
situations where a loan is fully cross-collateralized by two or more 
properties or is secured by a collateral pool of two or more properties, 
the appropriate maximum loan amount under supervisory loan-to-value 
limits is the sum of the value of each property, less senior liens, 
multiplied by the appropriate loan-to-value limit for each property. To 
ensure that collateral margins remain within the supervisory limits, 
lenders should redetermine conformity whenever collateral substitutions 
are made to the collateral pool.
    In establishing internal loan-to-value limits, each lender is 
expected to carefully consider the institution-specific and market 
factors listed under ``Loan Portfolio Management Considerations,'' as 
well as any other relevant factors, such as the particular subcategory 
or type of loan. For any subcategory of loans that exhibits greater 
credit risk than the overall category, a lender should consider the 
establishment of an internal loan-to-value limit for that subcategory 
that is lower than the limit for the overall category.
    The loan-to-value ratio is only one of several pertinent credit 
factors to be considered when underwriting a real estate loan. Other 
credit factors to be taken into account are highlighted in the 
``Underwriting Standards'' section above. Because of these other 
factors, the establishment of these supervisory limits should not be 
interpreted to mean that loans at these levels will automatically be 
considered sound.

[[Page 374]]

         Loans in Excess of the Supervisory Loan-to-Value Limits

    The agencies recognize that appropriate loan-to-value limits vary 
not only among categories of real estate loans but also among individual 
loans. Therefore, it may be appropriate in individual cases to originate 
or purchase loans with loan-to-value ratios in excess of the supervisory 
loan-to-value limits, based on the support provided by other credit 
factors. Such loans should be identified in the institution's records, 
and their aggregate amount reported at least quarterly to the 
institution's board of directors. (See additional reporting requirements 
described under ``Exceptions to the General Policy.'')
    The aggregate amount of all loans in excess of the supervisory loan-
to-value limits should not exceed 100 percent of total capital.\2\ 
Moreover, within the aggregate limit, total loans for all commercial, 
agricultural, multifamily or other non-1-to-4 family residential 
properties should not exceed 30 percent of total capital. An institution 
will come under increased supervisory scrutiny as the total of such 
loans approaches these levels.
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    \2\ For the state member banks, the term ``total capital'' means 
``total risk-based capital'' as defined in appendix A to 12 CFR part 
208. For insured state non-member banks, ``total capital'' refers to 
that term described in table I of appendix A to 12 CFR part 325. For 
national banks, the term ``total capital'' is defined at 12 CFR 3.2(e). 
For savings associations, the term ``total capital'' is defined at 12 
CFR 567.5(c).
    In determining the aggregate amount of such loans, institutions 
should: (a) Include all loans secured by the same property if any one of 
those loans exceeds the supervisory loan-to-value limits; and (b) 
include the recourse obligation of any such loan sold with recourse. 
Conversely, a loan should no longer be reported to the directors as part 
of aggregate totals when reduction in principal or senior liens, or 
additional contribution of collateral or equity (e.g., improvements to 
the real property securing the loan), bring the loan-to-value ratio into 
compliance with supervisory limits.
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                          Excluded Transactions

    The agencies also recognize that there are a number of lending 
situations in which other factors significantly outweigh the need to 
apply the supervisory loan-to-value limits. These include:
     Loans guaranteed or insured by the U.S. government or its 
agencies, provided that the amount of the guaranty or insurance is at 
least equal to the portion of the loan that exceeds the supervisory 
loan-to-value limit.
     Loans backed by the full faith and credit of a state 
government, provided that the amount of the assurance is at least equal 
to the portion of the loan that exceeds the supervisory loan-to-value 
limit.
     Loans guaranteed or insured by a state, municipal or local 
government, or an agency thereof, provided that the amount of the 
guaranty or insurance is at least equal to the portion of the loan that 
exceeds the supervisory loan-to-value limit, and provided that the 
lender has determined that the guarantor or insurer has the financial 
capacity and willingness to perform under the terms of the guaranty or 
insurance agreement.
     Loans that are to be sold promptly after origination, 
without recourse, to a financially responsible third party.
     Loans that are renewed, refinanced, or restructured without 
the advancement of new funds or an increase in the line of credit 
(except for reasonable closing costs), or loans that are renewed, 
refinanced, or restructured in connection with a workout situation, 
either with or without the advancement of new funds, where consistent 
with safe and sound banking practices and part of a clearly defined and 
well-documented program to achieve orderly liquidation of the debt, 
reduce risk of loss, or maximize recovery on the loan.
     Loans that facilitate the sale of real estate acquired by 
the lender in the ordinary course of collecting a debt previously 
contracted in good faith.
     Loans for which a lien on or interest in real property is 
taken as additional collateral through an abundance of caution by the 
lender (e.g., the institution takes a blanket lien on all or 
substantially all of the assets of the borrower, and the value of the 
real property is low relative to the aggregate value of all other 
collateral).
     Loans, such as working capital loans, where the lender does 
not rely principally on real estate as security and the extension of 
credit is not used to acquire, develop, or construct permanent 
improvements on real property.
     Loans for the purpose of financing permanent improvements 
to real property, but not secured by the property, if such security 
interest is not required by prudent underwriting practice.

                Exceptions to the General Lending Policy

    Some provision should be made for the consideration of loan requests 
from creditworthy borrowers whose credit needs do not fit within the 
institution's general lending policy. An institution may provide for 
prudently underwritten exceptions to its lending policies, including 
loan-to-value limits,

[[Page 375]]

on a loan-by-loan basis. However, any exceptions from the supervisory 
loan-to-value limits should conform to the aggregate limits on such 
loans discussed above.
    The board of directors is responsible for establishing standards for 
the review and approval of exception loans. Each institution should 
establish an appropriate internal process for the review and approval of 
loans that do not conform to its own internal policy standards. The 
approval of any such loan should be supported by a written justification 
that clearly sets forth all of the relevant credit factors that support 
the underwriting decision. The justification and approval documents for 
such loans should be maintained as a part of the permanent loan file. 
Each institution should monitor compliance with its real estate lending 
policy and individually report exception loans of a significant size to 
its board of directors.

    Supervisory Review of Real Estate Lending Policies and Practices

    The real estate lending policies of institutions will be evaluated 
by examiners during the course of their examinations to determine if the 
policies are consistent with safe and sound lending practices, these 
guidelines, and the requirements of the regulation. In evaluating the 
adequacy of the institution's real estate lending policies and 
practices, examiners will take into consideration the following factors:
     The nature and scope of the institution's real estate 
lending activities.
     The size and financial condition of the institution.
     The quality of the institution's management and internal 
controls.
     The expertise and size of the lending and loan 
administration staff.
     Market conditions.
    Lending policy exception reports will also be reviewed by examiners 
during the course of their examinations to determine whether the 
institutions' exceptions are adequately documented and appropriate in 
light of all of the relevant credit considerations. An excessive volume 
of exceptions to an institution's real estate lending policy may signal 
a weakening of its underwriting practices, or may suggest a need to 
revise the loan policy.

                               Definitions

    For the purposes of these Guidelines:
    Construction loan means an extension of credit for the purpose of 
erecting or rehabilitating buildings or other structures, including any 
infrastructure necessary for development.
    Extension of credit or loan means:
    (1) The total amount of any loan, line of credit, or other legally 
binding lending commitment with respect to real property; and
    (2) The total amount, based on the amount of consideration paid, of 
any loan, line of credit, or other legally binding lending commitment 
acquired by a lender by purchase, assignment, or otherwise.
    Improved property loan means an extension of credit secured by one 
of the following types of real property:
    (1) Farmland, ranchland or timberland committed to ongoing 
management and agricultural production;
    (2) 1- to 4-family residential property that is not owner-occupied;
    (3) Residential property containing five or more individual dwelling 
units;
    (4) Completed commercial property; or
    (5) Other income-producing property that has been completed and is 
available for occupancy and use, except income-producing owner-occupied 
1- to 4-family residential property.
    Land development loan means an extension of credit for the purpose 
of improving unimproved real property prior to the erection of 
structures. The improvement of unimproved real property may include the 
laying or placement of sewers, water pipes, utility cables, streets, and 
other infrastructure necessary for future development.
    Loan origination means the time of inception of the obligation to 
extend credit (i.e., when the last event or prerequisite, controllable 
by the lender, occurs causing the lender to become legally bound to fund 
an extension of credit).
    Loan-to-value or loan-to-value ratio means the percentage or ratio 
that is derived at the time of loan origination by dividing an extension 
of credit by the total value of the property(ies) securing or being 
improved by the extension of credit plus the amount of any readily 
marketable collateral and other acceptable collateral that secures the 
extension of credit. The total amount of all senior liens on or 
interests in such property(ies) should be included in determining the 
loan-to-value ratio. When mortgage insurance or collateral is used in 
the calculation of the loan-to-value ratio, and such credit enhancement 
is later released or replaced, the loan-to-value ratio should be 
recalculated.
    Other acceptable collateral means any collateral in which the lender 
has a perfected security interest, that has a quantifiable value, and is 
accepted by the lender in accordance with safe and sound lending 
practices. Other acceptable collateral should be appropriately 
discounted by the lender consistent with the lender's usual practices 
for making loans secured by such collateral. Other acceptable collateral 
includes, among other items, unconditional irrevocable standby letters 
of credit for the benefit of the lender.
    Owner-occupied, when used in conjunction with the term 1- to 4-
family residential property means that the owner of the underlying

[[Page 376]]

real property occupies at least one unit of the real property as a 
principal residence of the owner.
    Readily marketable collateral means insured deposits, financial 
instruments, and bullion in which the lender has a perfected interest. 
Financial instruments and bullion must be salable under ordinary 
circumstances with reasonable promptness at a fair market value 
determined by quotations based on actual transactions, on an auction or 
similarly available daily bid and ask price market. Readily marketable 
collateral should be appropriately discounted by the lender consistent 
with the lender's usual practices for making loans secured by such 
collateral.
    Value means an opinion or estimate, set forth in an appraisal or 
evaluation, whichever may be appropriate, of the market value of real 
property, prepared in accordance with the agency's appraisal regulations 
and guidance. For loans to purchase an existing property, the term 
``value'' means the lesser of the actual acquisition cost or the 
estimate of value.
    1- to 4-family residential property means property containing fewer 
than five individual dwelling units, including manufactured homes 
permanently affixed to the underlying property (when deemed to be real 
property under state law).
[57 FR 62896, 62900, Dec. 31, 1992; 58 FR 4460, Jan. 14, 1993]



PART 366--CONTRACTOR CONFLICTS OF INTEREST--Table of Contents




Sec.
366.1  Authority, purpose, and scope.
366.2  Definitions.
366.3  Appropriate officials.
366.4  Disqualification of contractors.
366.5  Contractor conflicts of interest.
366.6  Information required to be submitted.
366.7  Minimum ethical standards for independent contractors.
366.8  Confidentiality of information.
366.9  Liability for rescission or termination.
366.10  Finality of determination.

    Authority:  12 U.S.C. 1819, 1822(f)(3) and (4).

    Source:  61 FR 9596, Mar. 11, 1996, unless otherwise noted.



Sec. 366.1  Authority, purpose, and scope.

    (a) Authority. This part is adopted pursuant to section 12(f)(3) and 
(4) of the Federal Deposit Insurance Act, 12 U.S.C. 1822(f)(3) and (4), 
and the rule-making authority of the Federal Deposit Insurance 
Corporation (FDIC) found at 12 U.S.C. 1819. Pursuant to those sections 
and consistent with the goals and purposes of titles 18 and 41 of the 
U.S. Code, the FDIC is promulgating regulations in this part applicable 
to independent contractors governing conflicts of interest, ethical 
responsibilities, and the use of confidential information. The 
regulations in this part also establish procedures for ensuring that 
independent contractors meet minimum standards of competence, 
experience, integrity, and fitness. The FDIC will apply this part to 
contractual activities it undertakes, including situations in which it 
is acting as manager of the Federal Savings and Loan Insurance 
Corporation (FSLIC) Resolution Fund (FRF). This part is in addition to, 
and not in lieu of, any other statute or regulation which may apply to 
such contractual activities. This part does not apply to the FDIC when 
acting as a conservator of a failed financial institution or when 
operating a bridge bank.
    (b) Purpose. Consistent with the goals and purposes of titles 18 and 
41 of the U.S. Code, this part seeks to establish:
    (1) Minimum standards which govern conflicts of interest, ethical 
responsibilities, and the use of confidential information by 
contractors;
    (2) Procedures to ensure that independent contractors meet minimum 
standards of competence, experience, integrity, and fitness; and
    (3) Official written guidance to contracting personnel who award 
contracts for services and to contractors who bid on such contracts.
    (c) Scope. (1) (i) This part applies to:
    (A) Contractors, including law firms and other independent 
contractors, that are not deemed, under 12 U.S.C. 1822(f)(1)(B), to be 
employees of the FDIC, which submit offers to provide services to the 
FDIC or which enter into contracts for services with the FDIC; and
    (B) Subcontractors which enter into contracts to perform services 
under a proposed or existing contract with the FDIC.
    (ii) Contractors that are deemed under 12 U.S.C. 1822(f)(1)(B) to be 
employees of the Corporation are subject, in addition to this part, to 
Title 18 of the United States Code; the Standards of Ethical Conduct for 
Employees of the Executive Branch (5 CFR part 2635); the Supplemental 
Standards of Ethical

[[Page 377]]

Conduct for Employees of the Federal Deposit Insurance Corporation (5 
CFR part 3201); the Executive Branch Financial Disclosure, Qualified 
Trusts, and Certificates of Divestiture regulations (5 CFR part 2634); 
and the Supplemental Financial Disclosure Requirements for Employees of 
the Federal Deposit Insurance Corporation (5 CFR part 3202).
    (2) For all contractors subject to this part, the FDIC will apply 
this part to contracts which are entered into between the contractors 
and the FDIC on or after April 10, 1996. In addition, this part applies 
to contracts between contractors subject to this part and the FDIC which 
exist on April 10, 1996 for which a contractual action, such as a 
modification, extension, or exercise of an option, takes place on or 
after April 10, 1996.
    (d) Resolution Trust Corporation transition. This part shall apply 
to all RTC contractors that provide services to the FDIC after the RTC's 
termination which occurred, by statute, December 31, 1995.



Sec. 366.2  Definitions.

    As used in this part:
    (a) Affiliated business entity means a company that is under the 
control of the contractor, is in control of the contractor or is under 
common control with the contractor.
    (b) Company means any corporation, firm, partnership, society, joint 
venture, business trust, association or similar organization, or any 
other trust unless by its terms it must terminate within twenty-five 
years or not later than twenty-one years and ten months after the death 
of individuals living on the effective date of the trust, or any other 
organization or institution, but shall not include any corporation the 
majority of the shares of which are owned by the United States, any 
state, or the District of Columbia.
    (c) Conflict of interest means a situation in which:
    (1) A contractor; any management officials or affiliated business 
entities of a contractor; or any employees, agents, or subcontractors of 
a contractor who will perform services under a proposed or existing 
contract with the FDIC, has one or more personal, business, or financial 
interests or relationships which would cause a reasonable individual 
with knowledge of the relevant facts to question the integrity or 
impartiality of those who are or will be acting under a proposed or 
existing FDIC contract; or
    (2) A contractor; any management officials or affiliated business 
entities of a contractor; or any employees, agents, or subcontractors of 
a contractor who will perform services under a proposed or existing 
contract with the FDIC, is an adverse party to the FDIC, RTC, FSLIC, or 
their successors in a lawsuit; or
    (3) A contractor; any management officials or affiliated business 
entities of a contractor; or any employees, agents, or subcontractors of 
a contractor who will perform services under a proposed or existing 
contract with the FDIC, has ever been suspended, excluded, or debarred 
from contracting with a Federal entity or has ever had a contract with 
the FDIC, RTC, FSLIC or their successors rescinded or terminated prior 
to the contract's completion and which rescission or termination 
involved issues of conflicts of interest or ethical responsibilities; or
    (4) Any other facts exist which the FDIC, in its sole discretion, 
determines may, through performance of a proposed or existing FDIC 
contract, provide a contractor with an unfair competitive advantage 
which favors the interests of the contractor or any person with whom the 
contractor has or is likely to have a personal or business relationship.
    (d) Contractor means a person which has submitted an offer to 
perform services for the FDIC or has a contractual arrangement with the 
FDIC to perform services.
    (e) Control means the power to vote, directly or indirectly, 25 
percent or more of any class of the voting stock of a company; the 
ability to direct in any manner the election of a majority of a 
company's directors or trustees; or the ability to exercise a 
controlling influence over the company's management and policies. For 
purposes of this definition, a general partner of a limited partnership 
is presumed to be in control of that partnership.

[[Page 378]]

    (f) Default on a material obligation means a loan or advance from an 
insured depository institution which has ever been delinquent for 90 or 
more days as to payment of principal or interest, or a combination 
thereof, with a remaining balance of principal and accrued interest on 
the ninetieth day, or any time thereafter, in an amount in excess of 
$50,000.
    (g) FDIC means the Federal Deposit Insurance Corporation in its 
receivership and corporate capacities. It does not mean the FDIC in its 
conservatorship capacity or when it is operating a bridge bank as 
defined, respectively, in 12 U.S.C. 1821(c) and (n).
    (h) Insured depository institution means any bank or savings 
association the deposits of which are insured by the FDIC.
    (i) Management official means any shareholder, employee or partner 
who controls a company and any individual who directs the day-to-day 
operations of a company. With respect to a partnership whose management 
committee or executive committee has responsibility for the day-to-day 
operations of the partnership, management official means only a member 
of such committee but, if no such committee exists, management official 
means each of the general partners.
    (j) Offer means a proposal to provide services to the FDIC. For law 
firms or sole practitioner lawyers, ``offer'' also means the application 
submitted by the law firm to the FDIC.
    (k) Pattern or practice of defalcation regarding obligations means 
two or more instances in which:
    (1) A loan or advance from an insured depository institution is in 
default for ninety (90) or more days as to payment of principal, 
interest, or a combination thereof and there remains a legal obligation 
to pay an amount in excess of $50,000; or
    (2) A loan or advance from an insured depository institution where 
there has been a failure to comply with the terms to such an extent that 
the collateral securing the loan or advance was foreclosed upon, 
resulting in a loss in excess of $50,000 to the insured depository 
institution.
    (l) Person means an individual or company.
    (m) RTC means the former Resolution Trust Corporation in any of its 
capacities.
    (n) Subcontractor means a person that enters into a contract with an 
FDIC contractor to perform services under a proposed or existing 
contract with the FDIC.
    (o) Substantial loss to Federal deposit insurance funds means:
    (1) A loan or advance from an insured depository institution, which 
is currently owed to the FDIC, RTC, FSLIC or their successors, or the 
Bank Insurance Fund (BIF), the Savings Association Insurance Fund 
(SAIF), the FRF, or funds maintained by the RTC for the benefit of 
insured depositors, that is or has ever been delinquent for ninety (90) 
or more days as to payment of principal, interest, or a combination 
thereof and on which there remains a legal obligation to pay an amount 
in excess of $50,000;
    (2) An obligation to pay an outstanding, unsatisfied, final judgment 
in excess of $50,000 in favor of the FDIC, RTC, FSLIC, or their 
successors, or the BIF, the SAIF, the FRF or the funds maintained by the 
RTC for the benefit of insured depositors; or
    (3) A loan or advance from an insured depository institution which 
is currently owed to the FDIC, RTC, FSLIC or their successors, or the 
BIF, the SAIF, the FRF or the funds maintained by the RTC for the 
benefit of insured depositors, where there has been a failure to comply 
with the terms to such an extent that the collateral securing the loan 
or advance was foreclosed upon, resulting in a loss in excess of 
$50,000.



Sec. 366.3  Appropriate officials.

    (a) The General Counsel of the FDIC, or the designee of the General 
Counsel, shall administer the provisions of this part with respect to 
contracts involving the provision of services by law firms or sole 
practitioner lawyers.
    (b) The FDIC Executive Secretary, or the designee of the Executive 
Secretary, shall administer the provisions of this part with respect to 
all other contracts.

[[Page 379]]



Sec. 366.4  Disqualification of contractors.

    (a) Disqualifying conditions. No person shall perform services under 
an FDIC contract and no contractor shall enter into any contract with 
the FDIC if that person or contractor:
    (1) Has been convicted of any felony;
    (2) Has been removed from, or prohibited from participating in the 
affairs of, any insured depository institution pursuant to any final 
enforcement action by the Office of the Comptroller of the Currency, the 
Office of Thrift Supervision, the Board of Governors of the Federal 
Reserve System, or the Federal Deposit Insurance Corporation or their 
successors;
    (3) Has demonstrated a pattern or practice of defalcation regarding 
obligations; or
    (4) Has caused a substantial loss to Federal deposit insurance 
funds.
    (b) Contractors with disqualifying conditions arising prior to 
contract award. (1) A contractor which has any of the disqualifying 
conditions identified in paragraph (a) of this section prior to the 
award of an FDIC contract is disqualified and is prohibited from 
entering into contracts with the FDIC.
    (2) If after submitting an offer but prior to award, a contractor 
discovers that it has any of the disqualifying conditions identified in 
paragraph (a) of this section, it shall notify the FDIC in writing 
within 10 days or prior to award, whichever is earlier.
    (c) Disqualifying conditions that arise or are discovered after 
contract award. A contractor must notify the FDIC in writing within 10 
days after discovering that it or any person performing services under 
an FDIC contract has any of the disqualifying conditions identified in 
paragraph (a) of this section. Such notification shall contain a 
detailed description of the disqualifying condition and may include a 
statement of how the contractor intends to resolve such condition. The 
FDIC, after receipt of such notification or other discovery of the 
contractor's disqualifying condition, shall take such action as it 
determines is in the FDIC's best interests, including that:
    (1) The FDIC may notify the contractor in writing of the corrective 
actions, if any, which the contractor must take to eliminate the 
disqualifying condition. Corrective actions must be completed by the 
contractor not later than 30 days after notification is mailed by the 
FDIC unless the FDIC, at its sole discretion, determines that it will be 
in the best interests of the FDIC to grant the contractor an extension 
of time in which to complete such corrective action;
    (2) The FDIC may immediately declare any contracts with such 
contractor in default, terminate the contracts, and order an immediate 
transfer of duties and responsibilities under the contracts; or
    (3) The FDIC may declare any contracts with such contractor in 
default and temporarily waive such default in order to allow an orderly 
transfer of duties and responsibilities under the contracts.
    (d) Reconsideration of decisions. Decisions issued by the FDIC may 
be reconsidered upon application by an affected party to the Chairman or 
the Chairman's designee. Such requests shall be in writing and contain 
the bases for the request. The FDIC, at its discretion and after 
determining that it is in its best interests, may stay any corrective or 
other actions ordered by it pending reconsideration of a decision.



Sec. 366.5  Contractor conflicts of interest.

    (a) General. The FDIC will not award contracts to contractors that 
have conflicts of interest associated with a particular contract or 
permit contractors to continue performance under existing contracts when 
such contractors have conflicts of interest, unless such conflicts are 
eliminated by the contractor or are waived by the appropriate FDIC 
official.
    (b) Waivers. Waivers of conflicts of interest will only be granted 
when, in light of all relevant circumstances, the interests of the FDIC 
in the contractor's participation outweigh the concern that a reasonable 
person may question the integrity of the FDIC's operations.
    (c) Conflicts of interest arising prior to contract award (1) 
Requests for review of conflicts of interest. (i) A contractor, with its 
offer, may request a determination as to the existence of a conflict of 
interest, may request that the conflict of interest, if any, be waived 
in

[[Page 380]]

accordance with paragraph (b) of this section, or may propose how the 
contractor could eliminate the conflict.
    (ii) If after submitting an offer, but prior to award, a contractor 
discovers that it has a conflict, it shall notify the FDIC in writing 
within 10 days or prior to award, whichever is earlier. The contractor, 
with its notice, may make such requests or proposals regarding the 
conflict or potential conflict as are described in paragraph (c)(1)(i) 
of this section.
    (2) Review by the FDIC. (i) Subject to the restrictions set forth in 
paragraphs (c)(2)(ii) and (c)(3) of this section, the appropriate FDIC 
official, at his or her sole discretion, may determine whether a 
conflict of interest exists, may waive the conflict of interest in 
accordance with paragraph (b) of this section, or may approve in writing 
a contractor's proposal to eliminate a conflict of interest.
    (ii) For contractors other than law firms and sole practitioner 
lawyers, the FDIC may consider a contractor's conflict or potential 
conflict of interest only if the FDIC first determines that the 
contractor's offer is the most advantageous of all received.
    (3) Pre-bid requests and pre-bid review for contractors other than 
law firms and sole practitioner lawyers. A request for pre-bid review 
must be in writing and describe in detail the conflict or potential 
conflict of interest. The request may provide a proposal for elimination 
of the conflict or request a waiver of the conflict. The FDIC may 
perform a pre-bid review of conflicts of interest only if it first 
determines, at its sole discretion, that the participation of the 
contractor in the bidding process is necessary to provide adequate 
competition.
    (d) Conflicts of interest that arise or are discovered after 
contract award. A contractor shall notify the FDIC in writing within 10 
days after discovering that it has a conflict of interest. Such 
notification shall contain a detailed description of the conflict of 
interest and state how the contractor intends to eliminate the conflict. 
The FDIC, after receipt of such notification or other discovery of the 
contractor's conflict or potential conflict of interest, shall take such 
action as it determines is in the FDIC's best interests, including that:
    (1) The FDIC may notify the contractor in writing of its finding as 
to whether a conflict of interest exists and the basis for such 
determination; whether or not a waiver will be granted; or whether 
corrective actions may be taken in order to eliminate the conflict of 
interest. Corrective actions must be completed by the contractor not 
later than 30 days after notification is mailed by the FDIC unless the 
FDIC, at its sole discretion, determines that it is in the best 
interests of the FDIC to grant the contractor an extension in which to 
complete such corrective action;
    (2) The FDIC may immediately declare any affected contracts with 
such contractor in default, terminate the contracts, and order an 
immediate transfer of duties and responsibilities under such contracts; 
or
    (3) The FDIC may declare any affected contract with such contractor 
in default and temporarily waive such default in order to allow an 
orderly transfer of duties and responsibilities under such contract.
    (e) Reconsideration of decisions. Decisions issued pursuant to this 
part may be reconsidered by the Chairman or the Chairman's designee upon 
application by the contractor. Such requests shall be in writing and 
shall contain the bases for the request. The FDIC, at its discretion and 
after determining that it is in its best interests, may stay any 
corrective or other actions ordered by the FDIC pending reconsideration 
of a decision.



Sec. 366.6  Information required to be submitted.

    (a) Initial submission. Every offer submitted to the FDIC by any 
contractor shall include a completed Representations and Certifications 
Form and such other information as the FDIC may deem appropriate to 
permit it to make a determination with respect to disqualifying 
conditions or conflicts of interest. The Representations and 
Certifications Form shall require that the contractor provide the 
following:
    (1) Certifications that, to the best of the contractor's knowledge, 
the contractor is not disqualified from service

[[Page 381]]

on behalf of the FDIC because of the existence of any of the conditions 
identified in Sec. 366.4(a), or conflicts of interest as defined in 
Sec. 366.2(c)(1) through (3), subject to the contractor's request for 
waiver of a conflict of interest or proposal for elimination of a 
conflict of interest as described in Sec. 366.5;
    (2) A list and description of any instance during the ten (10) years 
preceding the submission of the offer in which the contractor or any 
company under the contractor's control defaulted on a material 
obligation to any insured depository institution;
    (3) The contractor's agreement that it will not allow any employee, 
agent, or subcontractor to perform services under the proposed contract 
with the FDIC unless the contractor first verifies with each such 
employee, agent, or subcontractor that, to the best of such person's 
knowledge, such person:
    (i) Is not disqualified from performing services under the FDIC 
contract because of the existence of any of the conditions identified in 
Sec. 366.4(a);
    (ii) Has no conflicts of interest as defined in Sec. 366.2(c)(1) 
through (3), subject to a request by the contractor for a conflict of 
interest waiver or proposal for the elimination of a conflict of 
interest as set forth in Sec. 366.5; and
    (iii) Has not, during the ten (10) years preceding the submission of 
the offer, defaulted on a material obligation to any insured depository 
institution; and
    (4) Any other information which the FDIC may deem appropriate, the 
scope of which will be dependent on the particular contract under 
consideration.
    (b) Subsequent submissions. During the term of the contract, the 
contractor shall:
    (1) Verify the information described in paragraph (a)(3) of this 
section for any employee, agent, or subcontractor who will perform 
services under the contract for whom such information has not been 
previously verified, prior to such employee, agent, or subcontractor 
performing services under the contract; and
    (2) Immediately notify the FDIC if any of the information submitted 
pursuant to paragraph (a) of this section was incorrect at time of 
submission or has subsequently become incorrect.
    (c) Failure to provide information. A contractor that fails to 
provide any required information or misstates a material fact may be 
determined by the FDIC to be ineligible for the award of the FDIC 
contract for which such information is required or to be in default with 
respect to any existing contract for which such information is required.
    (d) Retention of information. A contractor shall retain the 
information upon which it relied in preparing its certification(s) 
during the term of the contract and for a period of three (3) years 
following the termination or expiration of the contract and shall make 
such information available for review by the FDIC upon request.
    (e) Delayed compliance in emergencies. In emergencies, when 
unforeseeable circumstances make it necessary to contract immediately in 
order to protect FDIC personnel or property, the FDIC may authorize 
delayed compliance with this part.
    (f) Additional contractual requirements. In addition to the 
provisions of this part, the FDIC may include in its contract 
provisions, conditions and limitations, including additional standards 
for contractor fitness and integrity.



Sec. 366.7  Minimum ethical standards for independent contractors.

    (a) In connection with the performance of any contract and during 
the term of such contract, a contractor, shall not:
    (1) Accept or solicit for itself or others favors, gifts, or other 
items of monetary value from any person the contractor knows is seeking 
official action from the FDIC in connection with the contract or has 
interests which may be substantially affected by the contractor's 
performance or nonperformance of duties to the FDIC;
    (2) Use improperly or allow the improper use of FDIC property, or 
property over which the contractor has supervision or charge by reason 
of the contract;
    (3) Use its status as an FDIC contractor for its personal, financial 
or business benefit or for the benefit of a third party, except as 
contemplated by the contract;

[[Page 382]]

    (4) Make any promise or commitment on behalf of the FDIC not 
authorized by the FDIC.
    (b) Pursuant to 18 U.S.C. 201, whoever acts for or on behalf of the 
FDIC is deemed to be a public official and public officials are 
prohibited from soliciting or accepting anything of value in return for 
being influenced in the performance of official actions. Violators are 
subject to criminal sanctions under Title 18 of the United States Code.
    (c) Pursuant to 18 U.S.C. 1001, whoever knowingly and willingly 
falsifies a material fact, makes a false statement, or utilizes a false 
writing in connection with an FDIC contract is subject to criminal 
sanctions under Title 18 of the United States Code.
    (d) A contractor that violates the provisions of this section may be 
determined by the FDIC to be ineligible for the award of an FDIC 
contract and the FDIC may determine that such contractor is in default 
under any existing FDIC contract.



Sec. 366.8  Confidentiality of information.

    (a) A contractor has a duty to protect confidential information and 
shall not use or allow the use of confidential information to further a 
private interest other than as contemplated by the contract.
    (b) If a contractor fails to comply with the provisions of this 
section, the FDIC may:
    (1) Declare the contractor ineligible for the award of any FDIC 
contract not yet awarded; or
    (2) Declare the contractor in default under any existing contract 
with the FDIC.
    (c) As used in this section, ``confidential information'' means 
information that a contractor obtains from the FDIC or a third party in 
connection with an FDIC contract but does not include information 
generally available to the public unless the information becomes 
available to the public as a result of unauthorized disclosure by the 
contractor.



Sec. 366.9  Liability for rescission or termination.

    The FDIC may seek its actual, direct, and consequential damages from 
a contractor whose disqualifying conditions, conflicts of interest, 
failure to comply with information submission or confidentiality 
requirements, or failure to comply with the minimum ethical standards 
for independent contractors were the basis for rescission or termination 
of a contract between the FDIC and the contractor. This right to 
terminate or rescind and these remedies are cumulative and in addition 
to any other remedies or rights the FDIC may have under the terms of the 
contract, at law, or otherwise.



Sec. 366.10  Finality of determination.

    Any determination made by the FDIC pursuant to this part is at the 
FDIC's sole discretion and shall not be subject to further review.



PART 367--SUSPENSION AND EXCLUSION OF CONTRACTOR AND TERMINATION OF CONTRACTS--Table of Contents




Sec.
367.1  Authority, purpose, scope and application.
367.2  Definitions.
367.3  Appropriate officials.
367.4  [Reserved]
367.5  Exclusions.
367.6  Causes for exclusion.
367.7  Suspensions.
367.8  Causes for suspension.
367.9  Imputation of causes.
367.10-67.11  [Reserved]
367.12  Procedures.
367.13  Notices.
367.14  Responses.
367.15  Additional proceedings as to disputed material facts.
367.16  Ethics Counselor decisions.
367.17  Duration of suspensions and exclusions.
367.18  Abrogation of contracts.
367.19  Exceptions to suspensions and exclusions.
367.20  Review and reconsideration of Ethics Counselor decisions.

    Authority:  12 U.S.C. 1822(f) (4) and (5).

    Source:  61 FR 68560, Dec. 30, 1996, unless otherwise noted.



Sec. 367.1  Authority, purpose, scope and application.

    (a) Authority. This part is adopted pursuant to section 12(f) (4) 
and (5) of the Federal Deposit Insurance Act, 12 U.S.C. 1822(f) (4) and 
(5), and the rule-making authority of the Federal Deposit Insurance 
Corporation (FDIC)

[[Page 383]]

found at 12 U.S.C. 1819. Other regulations implementing these statutory 
directives appear at 12 CFR part 366.
    (b) Purpose. This part is designed to inform contractors and 
subcontractors (including their affiliated business entities, key 
employees and management officials) regarding their rights to notice and 
an opportunity to be heard on FDIC actions involving suspension and 
exclusion from contracting and rescission of existing contracts. This 
part is in addition to, and not in lieu of, any other statute or 
regulation that may apply to such contractual activities.
    (c) Scope. This part applies to:
    (1) Contractors, other than attorneys or law firms providing legal 
services, submitting offers to provide services or entering into 
contracts to provide services to the FDIC acting in any capacity; and
    (2) Subcontractors entering into contracts to perform services under 
a proposed or existing contract with the FDIC.
    (d) Application. (1) This part will apply to entities that become 
contractors, as defined in Sec. 367.2(f), on or after December 30, 1996. 
In addition, this part will apply to contractors as defined in 
Sec. 367.2(f) that are performing contracts on December 30, 1996.
    (2) This part will also apply to actions initiated on or after 
December 30, 1996 regardless of the date of the cause giving rise to the 
actions.
    (3) Contracts entered into by the former Resolution Trust 
Corporation (RTC) that were transferred to the FDIC will be treated in 
the same manner as FDIC contracts under this part.
    (4) RTC actions taken under the RTC regulations on or before 
December 31, 1995, will be honored as if taken by the FDIC. A contractor 
subject to an RTC exclusion or suspension will be precluded thereby from 
participation in the FDIC's contracting program unless that exclusion or 
suspension is modified or terminated under the provisions of this part.



Sec. 367.2  Definitions.

    (a) Adequate evidence means information sufficient to support the 
reasonable belief that a particular act or omission has occurred.
    (b) Affiliated business entity means a company that is under the 
control of the contractor, is in control of the contractor, or is under 
common control with the contractor.
    (c) Civil judgment means a judgment of a civil offense or liability 
by any court of competent jurisdiction in the United States.
    (d) Company means any corporation, firm, partnership, society, joint 
venture, business trust, association, consortium or similar 
organization.
    (e) Conflict of interest means a situation in which:
    (1) A contractor; any management officials or affiliated business 
entities of a contractor; or any employees, agents, or subcontractors of 
a contractor who will perform services under a proposed or existing 
contract with the FDIC:
    (i) Has one or more personal, business, or financial interests or 
relationships which would cause a reasonable individual with knowledge 
of the relevant facts to question the integrity or impartiality of those 
who are or will be acting under a proposed or existing FDIC contract;
    (ii) Is an adverse party to the FDIC, RTC, the former Federal 
Savings and Loan Insurance Corporation (FSLIC), or their successors in a 
lawsuit; or
    (iii) Has ever been suspended, excluded, or debarred from 
contracting with a federal entity or has ever had a contract with the 
FDIC, RTC, FSLIC or their successors rescinded or terminated prior to 
the contract's completion and which rescission or termination involved 
issues of conflicts of interest or ethical responsibilities; or
    (2) Any other facts exist which the FDIC, in its sole discretion, 
determines may, through performance of a proposed or existing FDIC 
contract, provide a contractor with an unfair competitive advantage 
which favors the interests of the contractor or any person with whom the 
contractor has or is likely to have a personal or business relationship.
    (f) Contractor means a person or company which has submitted an 
offer to perform services for the FDIC or has a contractual arrangement 
with the FDIC to perform services. For purposes of this part, contractor 
also includes:

[[Page 384]]

    (1) A contractor's affiliated business entities, key employees, and 
management officials of the contractor;
    (2) Any subcontractor performing services for the FDIC and the 
management officials and key employees of such subcontractors; and
    (3) Any entity or organization seeking to perform services for the 
FDIC as a minority or woman-owned business (MWOB).
    (g) Contract(s) means agreement(s) between FDIC and a contractor, 
including, but not limited to, agreements identified as ``Task Orders'', 
for a contractor to provide services to FDIC. Contracts also mean 
contracts between a contractor and its subcontractor.
    (h) Control means the power to vote, directly or indirectly, 25 
percent or more of any class of the voting stock of a company; the 
ability to direct in any manner the election of a majority of a 
company's directors or trustees; or the ability to exercise a 
controlling influence over the company's management and policies. For 
purposes of this definition, a general partner of a limited partnership 
is presumed to be in control of that partnership.
    (i) Conviction means a judgment or conviction of a criminal offense 
by any court of competent jurisdiction, whether entered upon a verdict 
or plea, and includes pleas of nolo contendere.
    (j) FDIC means the Federal Deposit Insurance Corporation acting in 
its receivership and corporate capacities, and FDIC officials or 
committees acting under delegated authority.
    (k) Indictment shall include an information or other filing by a 
competent authority charging a criminal offense.
    (l) Key employee means an individual who participates personally and 
substantially in the negotiation of, performance of, and/or monitoring 
for compliance under a contract with the FDIC. Such participation is 
made through, but is not limited to, decision, approval, disapproval, 
recommendation, or the rendering of advice under the contract.
    (m) Management official means any shareholder, employee or partner 
who controls a company and any individual who directs the day-to-day 
operations of a company. With respect to a partnership, all partners are 
deemed to be management officials unless the partnership is governed by 
a management or executive committee with responsibility for the day-to-
day operations. In partnerships with such committees, management 
official means only those partners who are a member of such a committee.
    (n) Material fact means one that is necessary to determine the 
outcome of an issue or case and without which the case could not be 
supported.
    (o) Offer means a proposal or other written or oral offer to provide 
services to FDIC.
    (p) Pattern or practice of defalcation regarding obligations means 
two or more instances in which a loan or advance from an insured 
depository institution:
    (1) Is in default for ninety (90) or more days as to payment of 
principal, interest, or a combination thereof, and there remains a legal 
obligation to pay an amount in excess of $50,000; or
    (2) Where there has been a failure to comply with the terms of a 
loan or advance to such an extent that the collateral securing the loan 
or advance was foreclosed upon, resulting in a loss in excess of $50,000 
to the insured depository institution.
    (q) Preponderance of the evidence means proof by information that, 
compared with that opposing it, leads to the conclusion that the fact at 
issue is more probably true than not.
    (r) Subcontractor means an entity or organization that enters into a 
contract with an FDIC contractor or another subcontractor to perform 
services under a proposed or existing contract with the FDIC.
    (s) Substantial loss to federal deposit insurance funds means:
    (1) A loan or advance from an insured depository institution, which 
is currently owed to the FDIC, RTC, FSLIC or their successors, or the 
Bank Insurance Fund (BIF), the Savings Association Insurance Fund 
(SAIF), the FSLIC Reserve Fund (FRF), or funds that were maintained by 
the RTC for the benefit of insured depositors, that is or has ever been 
delinquent for ninety (90) or more days as to payment of principal, 
interest, or a combination thereof and on which there remains a legal 
obligation to pay an amount in excess of $50,000;

[[Page 385]]

    (2) An obligation to pay an outstanding, unsatisfied, final judgment 
in excess of $50,000 in favor of the FDIC, RTC, FSLIC, or their 
successors, or the BIF, the SAIF, the FRF or the funds that were 
maintained by the RTC for the benefit of insured depositors; or
    (3) A loan or advance from an insured depository institution which 
is currently owed to the FDIC, RTC, FSLIC or their successors, or the 
BIF, the SAIF, the FRF or the funds that were maintained by the RTC for 
the benefit of insured depositors, where there has been a failure to 
comply with the terms to such an extent that the collateral securing the 
loan or advance was foreclosed upon, resulting in a loss in excess of 
$50,000.



Sec. 367.3  Appropriate officials.

    (a) The Ethics Counselor is the Executive Secretary of the FDIC. The 
Ethics Counselor shall act as the official responsible for rendering 
suspension and exclusion decisions under this part. In addition to 
taking suspension and/or exclusion action under this part, the Ethics 
Counselor has authority to terminate exclusion and suspension 
proceedings. As used in this part, ``Ethics Counselor'' includes any 
official designated by the Ethics Counselor to act on the Ethics 
Counselor's behalf.
    (b) The Corporation Ethics Committee is the Committee appointed by 
the Chairman of the FDIC, or Chairman's designee, which provides review 
of any suspension or exclusion decision rendered by the Ethics Counselor 
that is appealed by a contractor who has been suspended and/or excluded 
from FDIC contracting.
    (c) Information concerning the possible existence of any cause for 
suspension or exclusion shall be reported to the Office of the Executive 
Secretary (Ethics Section). This part does not modify the responsibility 
to report allegations of fraud, waste and abuse, including but not 
limited to criminal violations, to the Office of Inspector General.



Sec. 367.4  [Reserved]



Sec. 367.5  Exclusions.

    (a) The Ethics Counselor may exclude a contractor from the FDIC 
contracting program for any of the causes set forth in Sec. 367.6, using 
procedures established in this part.
    (b) Exclusion is a serious action to be imposed when there exists a 
preponderance of the evidence that a contractor has violated one or more 
of the causes set forth in Sec. 367.6. Contractors excluded from FDIC 
contracting programs are prohibited from entering into any new contracts 
with FDIC for the duration of the period of exclusion as determined 
pursuant to this part. The FDIC shall not solicit offers from, award 
contracts to, extend or modify existing contracts, award task orders 
under existing contracts, or consent to subcontracts with such 
contractors. Excluded contractors are also prohibited from conducting 
business with FDIC as agents or representatives of other contractors. 
Provided however, that these limitations do not become effective upon 
the notification of the contractor that there is a possible cause to 
exclude under Sec. 367.13. Rather, they become effective only upon the 
Ethics Counselor's decision to exclude the contractor pursuant to 
Sec. 367.16. Provided further, that the causes for exclusion set forth 
in Sec. 367.6(a)(1) through (4) reflect statutorily established 
mandatory bars to contracting with the FDIC.
    (c) Except when one or more of the statutorily established mandatory 
bars to contracting are shown to exist, the existence of a cause for 
exclusion does not necessarily require that the contractor be excluded; 
the seriousness of the contractor's acts or omissions and any mitigating 
or aggravating circumstances shall be considered in making any exclusion 
decision.



Sec. 367.6  Causes for exclusion.

    The FDIC may exclude a contractor, in accordance with the procedures 
set forth in this part, upon a finding that:
    (a) The contractor has been convicted of any felony;
    (b) The contractor has been removed from, or prohibited from 
participating in the affairs of, any insured depository institution 
pursuant to any final enforcement action by the Office of the 
Comptroller of the Currency, the Office of Thrift Supervision, the Board 
of

[[Page 386]]

Governors of the Federal Reserve System, or the FDIC or their 
successors;
    (c) The contractor has demonstrated a pattern or practice of 
defalcation;
    (d) The contractor has caused a substantial loss to Federal deposit 
insurance funds;
    (e) The contractor has failed to disclose, pursuant to 12 CFR 366.6, 
a material fact to the FDIC;
    (f) The contractor has failed to disclosed any material adverse 
change in the representations and certifications provided to FDIC under 
12 CFR 366.6;
    (g) The contractor has miscertified its status as a minority and/or 
woman owned business (MWOB);
    (h) The contractor has a conflict of interest that was not waived by 
the Ethics Counselor or designee;
    (i) The contractor has been subject to a final enforcement action by 
any federal financial institution regulatory agency, or has stipulated 
to such action;
    (j) The contractor is debarred from participating in other federal 
programs;
    (k) The contractor has been convicted of, or subject to a civil 
judgment for:
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction, or conspiracy to do the same;
    (2) Violation of federal or state antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging, or conspiracy to do the 
same;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, 
receiving stolen property, making false claims, obstructing of justice, 
or conspiracy to do the same;
    (4) Commission of any other offense indicating a breach of trust, 
dishonesty or lack of integrity, or conspiracy to do the same;
    (l) The contractor's performance under previous contract(s) with 
FDIC or RTC has resulted in:
    (1) The FDIC or RTC declaring such contract(s) to be in default; or
    (2) The termination of such contract(s) for poor performance; or
    (3) A violation of the terms of a contract that would have resulted 
in a default or termination of the contract for poor performance if that 
violation had been discovered during the course of the contract; or
    (m) The contractor has engaged in any conduct:
    (1) Indicating a breach of trust, dishonesty, or lack of integrity 
that seriously and directly affects its ability to meet standards of 
present responsibility required of an FDIC contractor; or
    (2) So serious or compelling in nature that it adversely affects the 
ability of a contractor to meet the minimum ethical standards required 
by 12 CFR part 366.



Sec. 367.7  Suspensions.

    (a) The Ethics Counselor may suspend a contractor for any of the 
causes in Sec. 367.8 using the procedures established in this section.
    (b) Suspension is an action to be imposed when there exists adequate 
evidence of one or more of the causes set out in Sec. 367.8. This 
includes, but is not limited to, situations where immediate action is 
necessary to protect the integrity of the FDIC contracting program and/
or the security of FDIC assets during the pendency of legal or 
investigative proceedings initiated by FDIC, any federal agency or any 
law enforcement authority.
    (c) The duration of any suspension action shall be for a temporary 
period pending the completion of an investigation and such other legal 
proceedings as may ensue.
    (d) A suspension shall become effective immediately upon issuance of 
the notice specified in Sec. 367.13(b).
    (e) Contractors suspended from FDIC contracting programs are 
prohibited from entering into any new contracts with the FDIC for the 
duration of the period of suspension. The FDIC shall not solicit offers 
from, award contracts to, extend or modify existing contracts, award 
task orders under existing contracts, or consent to subcontracts with 
such contractors. Suspended contractors are also prohibited from 
conducting business with FDIC as agents or representatives of other 
contractors.

[[Page 387]]



Sec. 367.8  Causes for suspension.

    (a) Suspension may be imposed under the procedures set forth in this 
section upon adequate evidence:
    (1) Of suspension by another federal agency;
    (2) That a cause for exclusion under Sec. 367.6 may exist;
    (3) Of the commission of any other offense indicating a breach of 
trust, dishonesty, or lack of integrity that seriously and directly 
affects the minimum ethical standards required of an FDIC contractor; or
    (4) Of any other cause so serious or compelling in nature that it 
adversely affects the ability of a contractor to meet the minimal 
ethical standards required by 12 CFR part 366.
    (b) Indictment for any offense described in Sec. 367.6 is adequate 
evidence to suspend a contractor.
    (c) In assessing the adequacy of the evidence, FDIC will consider 
how much information is available, how credible it is given the 
circumstances, whether or not important allegations are corroborated and 
what inferences can reasonably be drawn as a result.



Sec. 367.9  Imputation of causes.

    (a) Where there is cause to suspend and/or exclude any affiliated 
business entity of the contractor, that conduct may be imputed to the 
contractor if the conduct occurred in connection with the affiliated 
business entity's performance of duties for or on behalf of the 
contractor, or with the contractor's knowledge, approval, or 
acquiescence. The contractor's acceptance of the benefits derived from 
the conduct shall be evidence of such knowledge, approval, or 
acquiescence.
    (b) Where there is cause to suspend and/or exclude any contractor, 
that conduct may be imputed to any affiliated business entity, key 
employee, or management official of a contractor who participated in, 
knew of or had reason to know of the contractor's conduct.
    (c) Where there is cause to suspend and/or exclude a key employee or 
management official of a contractor, that cause may be imputed to the 
contractor if the conduct occurred in connection with the key employee 
or management official's performance of duties for or on behalf of the 
contractor, or with the contractor's knowledge, approval, or 
acquiescence. The contractor's acceptance of the benefits derived from 
the conduct shall be evidence of such knowledge, approval, or 
acquiescence.
    (d) Where there is cause to suspend and/or exclude one contractor 
participating in a joint venture or similar arrangement, that cause may 
be imputed to other participating contractors if the conduct occurred 
for or on behalf of the joint venture or similar arrangement, or with 
the knowledge, approval, or acquiescence of these contractors. 
Acceptance of the benefits derived from the conduct shall be evidence of 
such knowledge, approval, or acquiescence.
    (e) Where there is cause to suspend and/or exclude a subcontractor, 
that cause may be imputed to the contractor for which the subcontractor 
performed services, if the conduct occurred for or on behalf of the 
contractor and with the contractor's knowledge, approval, or 
acquiescence. Acceptance of the benefits derived from the conduct shall 
be evidence of such knowledge, approval, or acquiescence.



Secs. 367.10-367.11  [Reserved]



Sec. 367.12  Procedures.

    (a) FDIC shall process suspension and exclusion actions as 
informally as practicable, consistent with its policy of providing 
contractors with adequate information on the grounds that give rise to 
the proposed action and affording contractors with a reasonable 
opportunity to respond.
    (b) For purposes of determining filing dates for the pleadings 
required by this part, including responses, notices of appeal, appeals 
and requests for reconsideration, the provisions relating to the 
construction of time limits in 12 CFR 308.12 will control.



Sec. 367.13  Notices.

    (a) Exclusions. Before excluding a contractor, the FDIC shall send 
it a written notice of possible cause to exclude. Such notice shall 
include:

[[Page 388]]

    (1) Notification that exclusion for a specified period of time is 
being considered based on the specified cause(s) in Sec. 367.6 to be 
relied upon;
    (2) Identification of the event(s), circumstance(s), or condition(s) 
that indicates that there is cause to believe a cause for exclusion 
exists, described in sufficient detail to put the contractor on notice 
of the conduct or transaction(s) upon which an exclusion proceeding is 
based;
    (3) Notification that the contractor is not prohibited from 
contracting with the FDIC unless and until it is either suspended from 
FDIC contracting or the FDIC Ethics Counselor issues a decision 
excluding the contractor, provided however, in any case where the 
possible cause for exclusion would also be an impediment to the 
contractor's eligibility pursuant to 12 CFR part 366, the contractor's 
eligibility for any contract will be determined under that part; and
    (4) Notification of the regulatory provisions governing the 
exclusion proceeding and the potential effect of a final exclusion 
decision.
    (b) Suspensions. Before suspending a contractor, the FDIC shall send 
it notice, including:
    (1) Notice that a suspension is being imposed based on specified 
causes in Sec. 367.8;
    (2) Identification of the event(s), circumstance(s), or condition(s) 
that indicate that there is adequate evidence to believe a cause for 
suspension exists, described in sufficient detail to put the contractor 
on notice of the basis for the suspension, recognizing that the conduct 
of ongoing investigations and legal proceedings, including criminal 
proceedings, place limitations on the evidence that can be released;
    (3) Notification that the suspension prohibits the contractor from 
contracting with the FDIC for a temporary period, pending the completion 
of an investigation or other legal proceedings; and
    (4) Notification of the regulatory provisions governing the 
suspension proceeding.
    (c) Service of notices. Notices will be sent to the contractor by 
first class mail, postage prepaid. For purposes of compliance with this 
section, notice shall be considered to have been received by the 
contractor if the notice is properly mailed to the last known address of 
such contractor. Whenever practical, a copy of the notice will also be 
transmitted to the contractor by facsimile. In the event the notice is 
not sent by facsimile, a copy will be sent by an overnight delivery 
service such as Express Mail or a commercial equivalent.



Sec. 367.14  Responses.

    (a) The contractor will have 15 days from the date of the notice 
within which to respond.
    (b) The response shall be in writing and may include: information 
and argument in opposition to the proposed exclusion and/or suspension, 
including any additional specific information pertaining to the possible 
causes for exclusion; and information and argument in mitigation of the 
proposed period of exclusion.
    (c) The response may request a meeting with an FDIC official 
identified in the notice to permit the contractor to discuss issues of 
fact or law relating to the suspension and/or proposed exclusion or to 
otherwise resolve the pending matters.
    (1) Any such meetings between a contractor and FDIC shall take such 
form as the FDIC deems appropriate.
    (2) In cases of suspensions, no meeting will be held where a 
representative of the Department of Justice has advised in writing that 
the substantial interests of the Government would be prejudiced by such 
a meeting and the Ethics Counselor determines that a suspension is based 
on the same facts as pending or contemplated legal proceedings 
referenced by the representative of the Department of Justice.
    (d) Failure to respond to the notice shall be deemed an admission of 
the existence of the cause(s) for suspension and/or exclusion set forth 
in the notice and an acceptance of the period of exclusion proposed 
therein. In such circumstances, the FDIC may proceed to a final decision 
without further proceedings.
    (e) Where a contractor has received more than one notice, the FDIC 
may consolidate the pending proceedings,

[[Page 389]]

including the scheduling of any meetings, in accordance with this 
section.



Sec. 367.15  Additional proceedings as to disputed material facts.

    (a) In actions not based upon a conviction or civil judgment, if the 
Ethics Counselor finds that the contractor's submission raises a genuine 
dispute over facts material to the proposed suspension and/or exclusion, 
the contractor shall be afforded an opportunity to appear (with counsel, 
if desired), submit documentary evidence, present witnesses, and 
confront any witnesses the FDIC presents.
    (b) The Ethics Counselor may refer disputed material facts to 
another official for analysis and recommendation.
    (c) If requested, a transcribed record of any additional proceedings 
shall be made available at cost to the contractor.



Sec. 367.16  Ethics Counselor decisions.

    (a) Standard of proof:
    (1) An exclusion must be based on a finding that the cause(s) for 
exclusion is established by a preponderance of the evidence in the 
administrative record of the case; and
    (2) A suspension must be based on a finding that the cause(s) for 
suspension is established by adequate evidence in the administrative 
record of the case.
    (b) The administrative record consists of the portion of any 
information, reports, documents or other evidence identified and relied 
upon in the Notice of Possible Cause to Exclude, the Notice of 
Suspension and/or supplemental notices, if any, together with any 
material portions of the contractor's response. When additional 
proceedings are necessary to determine disputed material facts, the 
Ethics Counselor shall base the decision on the facts as found, together 
with any information and argument submitted by the contractor and any 
other information in the administrative record.
    (c) In actions based upon a conviction, judgment, a final 
enforcement action by a federal financial institution regulatory agency, 
or in which all facts and circumstances material to the exclusion action 
have been finally adjudicated in another forum, the Ethics Counselor may 
exclude a contractor without regard to the procedures set out in 
Secs. 367.13 and 367.14. Any such decisions will be subject to the 
review and reconsideration provisions of Sec. 367.20.
    (d) Notice of decisions. Contractors shall be given prompt notice of 
the Ethics Counselor's decision in the manner described in 
Sec. 367.13(c). If the Ethics Counselor suspends a contractor or imposes 
a period of exclusion, the decision shall:
    (1) Set forth the cause(s) for suspension and/or exclusion included 
in the notice that were found by a preponderance of the evidence with 
reference to the administrative record support for that finding;
    (2) Set forth the effect of the exclusion action and the effective 
dates of that action;
    (3) Refer the contractor to its procedural rights of review and 
reconsideration under Sec. 367.20; and
    (4) Inform the contractor that a copy of the exclusion decision 
shall be placed in the FDIC Public Reading Room.
    (e) If the FDIC Ethics Counselor decides that a period of exclusion 
is not warranted, the Notice of Possible Cause to Exclude may be 
withdrawn or the proceeding may be otherwise terminated. A decision to 
terminate an exclusion proceeding may include the imposition of 
appropriate conditions on the contractor in their future dealings with 
the FDIC.



Sec. 367.17  Duration of suspensions and exclusions.

    (a) Suspensions. (1) Suspensions shall be for a temporary period 
pending the completion of an investigation or other legal or exclusion 
proceedings.
    (2) If legal or administrative proceedings are not initiated within 
12 months after the date of the suspension notice, the suspension shall 
be terminated unless a representative of the Department of Justice 
requests its extension in writing. In such cases, the suspension may be 
extended for an additional six months. In no event may a suspension be 
imposed for more than 18 months, unless such proceedings have been 
initiated within that period.
    (3) FDIC shall notify the Department of Justice of an impending 
termination

[[Page 390]]

of a suspension at least 30 days before the 12-month period expires to 
give the Department of Justice an opportunity to request an extension.
    (4) The time limitations for suspension in this section may be 
waived by the affected contractor.
    (b) Exclusions. (1) Exclusions shall be for a period commensurate 
with the seriousness of the cause(s) after due consideration of 
mitigating evidence presented by the contractor.
    (2) If a suspension precedes an exclusion, the suspension period 
shall be considered in determining the exclusion period.
    (3) Exclusion for causes other than the mandatory bars in 12 CFR 
366.4(a) generally should not exceed three years, but where 
circumstances warrant, a longer period of exclusion may be imposed.
    (4) The Ethics Counselor may extend an existing exclusion for an 
additional period if the Ethics Counselor determines that an extension 
is necessary to protect the integrity of the FDIC contracting program 
and the public interest. However, an exclusion may not be extended 
solely on the basis of the facts and circumstances upon which the 
initial exclusion action was based. The standards and procedures in this 
part shall be applied in any proceeding to extend an exclusion.



Sec. 367.18  Abrogation of contracts.

    (a) The FDIC may, in its discretion, rescind or terminate any 
contract in existence at the time a contractor is suspended or excluded.
    (b) Any contract not rescinded or terminated shall continue in force 
in accordance with the terms thereof.
    (c) The right to rescind or terminate a contract in existence is 
cumulative and in addition to any other remedies or rights the FDIC may 
have under the terms of the contract, at law, or otherwise.



Sec. 367.19  Exceptions to suspensions and exclusions.

    (a) Exceptions to the effects of suspensions and exclusions may be 
available in unique circumstances, where there are compelling reasons to 
utilize a particular contractor for a specific task. Requests for such 
exceptions may be submitted only by the FDIC program office requesting 
the contract services.
    (b) In the case of the modification or extension of an existing 
contract, the Ethics Counselor may except such a contracting action from 
the effects of suspension and/or exclusion upon a determination, in 
writing, that a compelling reason exists for utilization of the 
contractor in the particular instance. The Ethics Counselor's authority 
under this section shall not be delegated to any lower official.
    (c) In the case of new contracts, the Corporation Ethics Committee 
may except a particular new contract from the effects of suspension and/
or exclusion upon a determination in writing that a compelling reason 
exists for utilization of the contractor in the particular instance.



Sec. 367.20  Review and reconsideration of Ethics Counselor decisions.

    (a) Review. (1) A suspended and/or excluded contractor may appeal 
the exclusion decision to the Corporation Ethics Committee.
    (2) In order to avail itself of the right to appeal, a suspended 
and/or excluded contractor must file a written notice of intent to 
appeal within 5 days of the Ethics Counselor's decision.
    (3) The appeal shall be filed in writing within 30 days of the 
decision.
    (4) The Corporation Ethics Committee, at its discretion and after 
determining that it is in the best interests of the FDIC, may stay the 
effect of the suspension and/or exclusion pending conclusion of its 
review of the matter.
    (b) Reconsideration. (1) A suspended and/or excluded contractor may 
submit a request to the Ethics Counselor to reconsider the suspension 
and/or exclusion decision, reduce the period of exclusion or terminate 
the suspension and/or exclusion.
    (2) Such requests shall be in writing and supported by documentation 
that the requested action is justified by:
    (i) Reversal of the conviction or civil judgment upon which the 
suspension and/or exclusion was based;
    (ii) Newly discovered material evidence;
    (iii) Bona fide change in ownership or management;

[[Page 391]]

    (iv) Elimination of other causes for which the suspension and/or 
exclusion was imposed; or
    (v) Other reasons the FDIC Ethics Counselor deems appropriate.
    (3) A request for reconsideration based on the reversal of the 
conviction or civil judgment may be filed at any time.
    (4) Requests for reconsideration based on other grounds may only be 
filed during the period commencing 60 days after the Ethics Counselor's 
decision imposing the suspension and/or exclusion. Only one such request 
may be filed in any twelve month period.
    (5) The Ethics Counselor's decision on a request for reconsideration 
is subject to the review procedure set forth in paragraph (a) of this 
section.



PART 368--GOVERNMENT SECURITIES SALES PRACTICES--Table of Contents




Sec.
368.1  Scope.
368.2  Definitions.
368.3  Business conduct.
368.4  Recommendations to customers.
368.5  Customer information.
368.100  Obligations concerning institutional customers.

    Authority:  15 U.S.C. 78o-5.

    Source:  62 FR 13287, Mar. 19, 1997, unless otherwise noted.



Sec. 368.1  Scope.

    This part is applicable to state nonmember banks and insured state 
branches of foreign banks that have filed notice as, or are required to 
file notice as, government securities brokers or dealers pursuant to 
section 15C of the Securities Exchange Act (15 U.S.C. 78o-5) and 
Department of the Treasury rules under section 15C (17 CFR 400.1(d) and 
part 401).



Sec. 368.2  Definitions.

    (a) Bank that is a government securities broker or dealer means a 
state nonmember bank or an insured state branch of a foreign bank that 
has filed notice, or is required to file notice, as a government 
securities broker or dealer pursuant to section 15C of the Securities 
Exchange Act (15 U.S.C. 78o-5) and Department of the Treasury rules 
under section 15C (17 CFR 400.1(d) and part 401).
    (b) Customer does not include a broker or dealer or a government 
securities broker or dealer.
    (c) Government security has the same meaning as this term has in 
section 3(a)(42) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(42)).
    (d) Non-institutional customer means any customer other than:
    (1) A bank, savings association, insurance company, or registered 
investment company;
    (2) An investment adviser registered under section 203 of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-3); or
    (3) Any entity (whether a natural person, corporation, partnership, 
trust, or otherwise) with total assets of at least $50 million.



Sec. 368.3  Business conduct.

    A bank that is a government securities broker or dealer shall 
observe high standards of commercial honor and just and equitable 
principles of trade in the conduct of its business as a government 
securities broker or dealer.



Sec. 368.4  Recommendations to customers.

    In recommending to a customer the purchase, sale or exchange of a 
government security, a bank that is a government securities broker or 
dealer shall have reasonable grounds for believing that the 
recommendation is suitable for the customer upon the basis of the facts, 
if any, disclosed by the customer as to the customer's other security 
holdings and as to the customer's financial situation and needs.



Sec. 368.5  Customer information.

    Prior to the execution of a transaction recommended to a non-
institutional customer, a bank that is a government securities broker or 
dealer shall make reasonable efforts to obtain information concerning:
    (a) The customer's financial status;
    (b) The customer's tax status;
    (c) The customer's investment objectives; and
    (d) Such other information used or considered to be reasonable by 
such bank in making recommendations to the customer.

[[Page 392]]



Sec. 368.100  Obligations concerning institutional customers.

    (a) As a result of broadened authority provided by the Government 
Securities Act Amendments of 1993 (15 U.S.C. 78o-3 and 78o-5), the FDIC 
is adopting sales practice rules for the government securities market, a 
market with a particularly broad institutional component. Accordingly, 
the FDIC believes it is appropriate to provide further guidance to banks 
on their suitability obligations when making recommendations to 
institutional customers.
    (b) The FDIC's suitability rule (Sec. 368.4) is fundamental to fair 
dealing and is intended to promote ethical sales practices and high 
standards of professional conduct. Banks' responsibilities include 
having a reasonable basis for recommending a particular security or 
strategy, as well as having reasonable grounds for believing the 
recommendation is suitable for the customer to whom it is made. Banks 
are expected to meet the same high standards of competence, 
professionalism, and good faith regardless of the financial 
circumstances of the customer.
    (c) In recommending to a customer the purchase, sale, or exchange of 
any government security, the bank shall have reasonable grounds for 
believing that the recommendation is suitable for the customer upon the 
basis of the facts, if any, disclosed by the customer as to the 
customer's other security holdings and financial situation and needs.
    (d) The interpretation in this section concerns only the manner in 
which a bank determines that a recommendation is suitable for a 
particular institutional customer. The manner in which a bank fulfills 
this suitability obligation will vary, depending on the nature of the 
customer and the specific transaction. Accordingly, the interpretation 
in this section deals only with guidance regarding how a bank may 
fulfill customer-specific suitability obligations under Sec. 368.4. 
1
---------------------------------------------------------------------------

    \1\  The interpretation in this section does not address the 
obligation related to suitability that requires that a bank have `` * * 
* a `reasonable basis' to believe that the recommendation could be 
suitable for at least some customers.'' In the Matter of the Application 
of F.J. Kaufman and Company of Virginia and Frederick J. Kaufman, Jr., 
50 SEC 164 (1989).
---------------------------------------------------------------------------

    (e) While it is difficult to define in advance the scope of a bank's 
suitability obligation with respect to a specific institutional customer 
transaction recommended by a bank, the FDIC has identified certain 
factors that may be relevant when considering compliance with 
Sec. 368.4. These factors are not intended to be requirements or the 
only factors to be considered but are offered merely as guidance in 
determining the scope of a bank's suitability obligations.
    (f) The two most important considerations in determining the scope 
of a bank's suitability obligations in making recommendations to an 
institutional customer are the customer's capability to evaluate 
investment risk independently and the extent to which the customer is 
exercising independent judgement in evaluating a bank's recommendation. 
A bank must determine, based on the information available to it, the 
customer's capability to evaluate investment risk. In some cases, the 
bank may conclude that the customer is not capable of making independent 
investment decisions in general. In other cases, the institutional 
customer may have general capability, but may not be able to understand 
a particular type of instrument or its risk. This is more likely to 
arise with relatively new types of instruments, or those with 
significantly different risk or volatility characteristics than other 
investments generally made by the institution. If a customer is either 
generally not capable of evaluating investment risk or lacks sufficient 
capability to evaluate the particular product, the scope of a bank's 
customer-specific obligations under Sec. 368.4 would not be diminished 
by the fact that the bank was dealing with an institutional customer. On 
the other hand, the fact that a customer initially needed help 
understanding a potential investment need not necessarily imply that the 
customer did not ultimately develop an understanding and make an 
independent investment decision.

[[Page 393]]

    (g) A bank may conclude that a customer is exercising independent 
judgement if the customer's investment decision will be based on its own 
independent assessment of the opportunities and risks presented by a 
potential investment, market factors and other investment 
considerations. Where the bank has reasonable grounds for concluding 
that the institutional customer is making independent investment 
decisions and is capable of independently evaluating investment risk, 
then a bank's obligations under Sec. 368.4 for a particular customer are 
fulfilled. 2 Where a customer has delegated decision-making 
authority to an agent, such as an investment advisor or a bank trust 
department, the interpretation in this section shall be applied to the 
agent.
---------------------------------------------------------------------------

    \2\  See footnote 1 in paragraph (d) of this section.
---------------------------------------------------------------------------

    (h) A determination of capability to evaluate investment risk 
independently will depend on an examination of the customer's capability 
to make its own investment decisions, including the resources available 
to the customer to make informed decisions. Relevant considerations 
could include:
    (1) The use of one or more consultants, investment advisers, or bank 
trust departments;
    (2) The general level of experience of the institutional customer in 
financial markets and specific experience with the type of instruments 
under consideration;
    (3) The customer's ability to understand the economic features of 
the security involved;
    (4) The customer's ability to independently evaluate how market 
developments would affect the security; and
    (5) The complexity of the security or securities involved.
    (i) A determination that a customer is making independent investment 
decisions will depend on the nature of the relationship that exists 
between the bank and the customer. Relevant considerations could 
include:
    (1) Any written or oral understanding that exists between the bank 
and the customer regarding the nature of the relationship between the 
bank and the customer and the services to be rendered by the bank;
    (2) The presence or absence of a pattern of acceptance of the bank's 
recommendations;
    (3) The use by the customer of ideas, suggestions, market views and 
information obtained from other government securities brokers or dealers 
or market professionals, particularly those relating to the same type of 
securities; and
    (4) The extent to which the bank has received from the customer 
current comprehensive portfolio information in connection with 
discussing recommended transactions or has not been provided important 
information regarding its portfolio or investment objectives.
    (j) Banks are reminded that these factors are merely guidelines that 
will be utilized to determine whether a bank has fulfilled its 
suitability obligation with respect to a specific institutional customer 
transaction and that the inclusion or absence of any of these factors is 
not dispositive of the determination of suitability. Such a 
determination can only be made on a case-by-case basis taking into 
consideration all the facts and circumstances of a particular bank/
customer relationship, assessed in the context of a particular 
transaction.
    (k) For purposes of the interpretation in this section, an 
institutional customer shall be any entity other than a natural person. 
In determining the applicability of the interpretation in this section 
to an institutional customer, the FDIC will consider the dollar value of 
the securities that the institutional customer has in its portfolio and/
or under management. While the interpretation in this section is 
potentially applicable to any institutional customer, the guidance 
contained in this section is more appropriately applied to an 
institutional customer with at least $10 million invested in securities 
in the aggregate in its portfolio and/or under management.

[[Page 394]]



PART 369--PROHIBITION AGAINST USE OF INTERSTATE BRANCHES PRIMARILY FOR DEPOSIT PRODUCTION--Table of Contents




Sec.
369.1  Purpose and scope.
369.2  Definitions.
369.3  Loan-to-deposit ratio screen.
369.4  Credit needs determination.
369.5  Sanctions.

    Authority:  12 U.S.C. 1819 (Tenth) and 1835a.

    Source:  62 FR 47737, Sept. 10, 1997, unless otherwise noted.



Sec. 369.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to implement section 109 
(12 U.S.C. 1835a) of the Riegle-Neal Interstate Banking and Branching 
Efficiency Act of 1994 (Interstate Act).
    (b) Scope. (1) This part applies to any State nonmember bank that 
has operated a covered interstate branch for a period of at least one 
year.
    (2) This part describes the requirements imposed under 12 U.S.C. 
1835a, which requires the appropriate Federal banking agencies (the 
FDIC, the Office of the Comptroller of the Currency, and the Board of 
Governors of the Federal Reserve System) to prescribe uniform rules that 
prohibit a bank from using any authority to engage in interstate 
branching pursuant to the Interstate Act, or any amendment made by the 
Interstate Act to any other provision of law, primarily for the purpose 
of deposit production.



Sec. 369.2  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Bank means, unless the context indicates otherwise:
    (1) A State nonmember bank; and
    (2) A foreign bank as that term is defined in 12 U.S.C. 3101(7) and 
12 CFR 346.1(a).
    (b) Covered interstate branch means any branch of a State nonmember 
bank, and any insured branch of a foreign bank licensed by a State, 
that:
    (1) Is established or acquired outside the bank's home state 
pursuant to the interstate branching authority granted by the Interstate 
Act or by any amendment made by the Interstate Act to any other 
provision of law; or
    (2) Could not have been established or acquired outside of the 
bank's home state but for the establishment or acquisition of a branch 
described in paragraph (b)(1) of this section.
    (c) Home state means:
    (1) With respect to a state bank, the state that chartered the bank;
    (2) With respect to a national bank, the state in which the main 
office of the bank is located; and
    (3) With respect to a foreign bank, the home state of the foreign 
bank as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 
346.1(j).
    (d) Host state means a state in which a bank establishes or acquires 
a covered interstate branch.
    (e) Host state loan-to-deposit ratio generally means, with respect 
to a particular host state, the ratio of total loans in the host state 
relative to total deposits from the host state for all banks (including 
institutions covered under the definition of ``bank'' in 12 U.S.C. 
1813(a)(1)) that have that state as their home state, as determined and 
updated periodically by the appropriate Federal banking agencies and 
made available to the public.
    (f) State means state as that term is defined in 12 U.S.C. 
1813(a)(3).
    (g) Statewide loan-to-deposit ratio means, with respect to a bank, 
the ratio of the bank's loans to its deposits in a state in which the 
bank has one or more covered interstate branches, as determined by the 
FDIC.



Sec. 369.3  Loan-to-deposit ratio screen.

    (a) Application of screen. Beginning no earlier than one year after 
a bank establishes or acquires a covered interstate branch, the FDIC 
will consider whether the bank's statewide loan-to-deposit ratio is less 
than 50 percent of the relevant host state loan-to-deposit ratio.
    (b) Results of screen. (1) If the FDIC determines that the bank's 
statewide loan-to-deposit ratio is 50 percent or more of the host state 
loan-to-deposit ratio, no further consideration under this part is 
required.
    (2) If the FDIC determines that the bank's statewide loan-to-deposit 
ratio is less than 50 percent of the host state

[[Page 395]]

loan-to-deposit ratio, or if reasonably available data are insufficient 
to calculate the bank's statewide loan-to-deposit ratio, the FDIC will 
make a credit needs determination for the bank as provided in 
Sec. 369.4.



Sec. 369.4  Credit needs determination.

    (a) In general. The FDIC will review the loan portfolio of the bank 
and determine whether the bank is reasonably helping to meet the credit 
needs of the communities in the host state that are served by the bank.
    (b) Guidelines. The FDIC will use the following considerations as 
guidelines when making the determination pursuant to paragraph (a) of 
this section:
    (1) Whether covered interstate branches were formerly part of a 
failed or failing depository institution;
    (2) Whether covered interstate branches were acquired under 
circumstances where there was a low loan-to-deposit ratio because of the 
nature of the acquired institution's business or loan portfolio;
    (3) Whether covered interstate branches have a high concentration of 
commercial or credit card lending, trust services, or other specialized 
activities, including the extent to which the covered interstate 
branches accept deposits in the host state;
    (4) The Community Reinvestment Act (CRA) ratings received by the 
bank, if any, under 12 U.S.C. 2901 et seq.;
    (5) Economic conditions, including the level of loan demand, within 
the communities served by the covered interstate branches;
    (6) The safe and sound operation and condition of the bank; and
    (7) The FDIC's Community Reinvestment regulations (12 CFR Part 345) 
and interpretations of those regulations.



Sec. 369.5  Sanctions.

    (a) In general. If the FDIC determines that a bank is not reasonably 
helping to meet the credit needs of the communities served by the bank 
in the host state, and that the bank's statewide loan-to-deposit ratio 
is less than 50 percent of the host state loan-to-deposit ratio, the 
FDIC:
    (1) May order that a bank's covered interstate branch or branches be 
closed unless the bank provides reasonable assurances to the 
satisfaction of the FDIC, after an opportunity for public comment, that 
the bank has an acceptable plan under which the bank will reasonably 
help to meet the credit needs of the communities served by the bank in 
the host state; and
    (2) Will not permit the bank to open a new branch in the host state 
that would be considered to be a covered interstate branch unless the 
bank provides reasonable assurances to the satisfaction of the FDIC, 
after an opportunity for public comment, that the bank will reasonably 
help to meet the credit needs of the community that the new branch will 
serve.
    (b) Notice prior to closure of a covered interstate branch. Before 
exercising the FDIC's authority to order the bank to close a covered 
interstate branch, the FDIC will issue to the bank a notice of the 
FDIC's intent to order the closure and will schedule a hearing within 60 
days of issuing the notice.
    (c) Hearing. The FDIC will conduct a hearing scheduled under 
paragraph (b) of this section in accordance with the provisions of 12 
U.S.C. 1818(h) and 12 CFR part 308.

[[Page 397]]



           CHAPTER IV--EXPORT-IMPORT BANK OF THE UNITED STATES




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

Part                                                                Page
400             Employee financial disclosure and ethical 
                    conduct standards regulations...........         398
403             Classification, declassification, and 
                    safeguarding of national security 
                    information.............................         398
404             Disclosure of information...................         409
405             Privacy Act rules...........................         417
407             Regulations governing public observation of 
                    Eximbank meetings.......................         420
408             Procedures for compliance with the National 
                    Environmental Policy Act................         424
410             Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by Export-Import 
                    Bank of the United States...............         427
411             New restrictions on lobbying................         432
412             Acceptance of payment from a non-federal 
                    source for travel expenses..............         444
413-499

[Reserved]

[[Page 398]]



PART 400--EMPLOYEE FINANCIAL DISCLOSURE AND ETHICAL CONDUCT STANDARDS REGULATIONS--Table of Contents




    Authority:  5 U.S.C. 7301.



Sec. 400.101  Cross-reference to employee financial disclosure and ethical conduct standards regulations.

    Employees of the Export-Import Bank of the United States (Bank) 
should refer to:
    (a) The executive branch-wide financial disclosure regulations at 5 
CFR part 2634;
    (b) The executive branch-wide Standards of Ethical Conduct at 5 CFR 
part 2635; and
    (c) The Bank regulations at 5 CFR part 6201 which supplement the 
executive branch-wide standards.
[60 FR 17628, Apr. 7, 1995]



PART 403--CLASSIFICATION, DECLASSIFICATION, AND SAFEGUARDING OF NATIONAL SECURITY INFORMATION--Table of Contents




Sec.
403.1  General policies and definitions.
403.2  Responsibilities.
403.3  Classification principles and authority.
403.4  Derivative classification.
403.5  Declassification and downgrading.
403.6  Systematic review for declassification.
403.7  Mandatory review for declassification.
403.8  Appeals.
403.9  Fees.
403.10  Safeguarding.
403.11  Enforcement and investigation procedures.

    Authority: E.O. 12356, National Security Information, April 2, 1982 
(3 CFR, 1982 Comp. p. 166) (hereafter referred to as the Order), 
Information Security Oversight Directive No. 1, June 25, 1982 (32 CFR 
part 2001) (hereafter referred to as the Directive), and National 
Security Decision Directive 84, ``Safeguarding National 
SecurityInformation,'' signed by the President on March 11, 1983 
(hereafter referred to as NSDD 84).

    Source: 50 FR 27215, July 2, 1985, unless otherwise noted.



Sec. 403.1  General policies and definitions.

    (a) This regulation of the Export-Import Bank (the Bank) implements 
executive orders which govern the classification, declassification, and 
safeguarding of national security information and material of the United 
States. This regulation is based on Executive Order 12356, National 
Security Information, April 2, 1982 (3 CFR, 1982 Comp. p. 166) 
(hereafter referred to as the Order), Information Security Oversight 
Directive No. 1, June 25, 1982 (32 CFR part 2001) (hereafter referred to 
as the Directive), and National Security Decision Directive 84, 
``Safeguarding National Security Information,'' signed by the President 
on March 11, 1983 (hereafter referred to as NSDD 84). Violation of the 
provisions of part 403 may result in the imposition of administrative 
penalties, and civil and criminal penalties under applicable law. 
Executive Order 12356 prescribes a uniform system for classifying, 
declassifying, and safeguarding national security information. It 
recognizes that it is essential that the public be informed concerning 
the activities of the Government, but that the interests of the United 
States and its citizens require that certain information concerning the 
national defense and foreign relations be protected against unauthorized 
disclosure. Information may not be classified under the Order unless its 
disclosure reasonably could be expected to cause damage to the national 
security.
    (b) For the purposes of the Order, the Directive and these 
guidelines, the following terms shall have the meanings specified below:
    (1) Information means any information or material, regardless of its 
physical form or characteristics, that is owned by, produced by or for, 
or is under the control of the United States Government.
    (2) National security information means information that has been 
determined pursuant to this Order or any predecessor order to require 
protection against unauthorized disclosure and that is so designated.
    (3) Foreign government information means: (i) Information provided 
by a foreign government or governments, an international organization of 
governments, or any element thereof with the expectation, expressed or 
implied, that the information, the source of the information, or both, 
are to be held in confidence; or

[[Page 399]]

    (ii) Information produced by the United States pursuant to or as a 
result of a joint arrangement with a foreign government or governments 
or an international organization of governments, or any element thereof, 
requiring that the information, the arrangement, or both, are to be held 
in confidence.
    (4) National security means the national defense or foreign 
relations of the United States.
    (5) Confidential source means any individual or organization that 
has provided, or that may reasonably be expected to provide, information 
to the United States on matters pertaining to the national security with 
the expectation, expressed or implied, that the information or 
relationship, or both, be held in confidence.
    (6) Original classification means an initial determination that 
information requires, in the interest of national security, protection 
against unauthorized disclosure, together with a classification 
designation signifying the level of protection required.



Sec. 403.2  Responsibilities.

    In the carrying out of security procedures, responsibility falls on 
all personnel generally and on certain personnel in a more particular 
manner.
    (a) Individual. Each employee of the Bank having access to 
classified material has an individual responsibility to protect such 
information. Classified information should be secured in approved 
equipment or facilities whenever it is not under the direct control of 
the employee.
    (b) Office and Division Heads. These officials have the additional 
responsibility of a continuing review for ascertaining that security 
procedures are properly observed by the personnel comprising their 
respective offices.
    (c) Security Officer. (1) The Security Officer has the 
responsibility for developing, inspecting, and advising on procedures 
and controls for safeguarding classified material originating in, 
received by, in transit through, or in custody of the Bank; the training 
and orientation of employees; the carrying out of inspections; and the 
destruction of obsolete and non-record material.
    (2) The Security Officer shall be responsible for disseminating 
written material and conducting oral briefings to inform Bank personnel 
of the Order, Directive, and regulations. An explanation of the 
practical application of these procedures and the underlying policy 
objectives thereof shall be emphasized.
    (d) Security Committee. (1) This Committee consists of the General 
Counsel, as Chairperson, the Security Officer, and other Bank employees, 
as designated by the President and Chairman (hereinafter referred to as 
the Chairman) and is responsible for the implementation and enforcement 
of the Order and the Directive. This Committee will act on all matters 
with respect to the Bank's administration of these regulations.
    (2) All suggestions and complaints regarding the Bank's Information 
Security Program, including those regarding over-classification, failure 
to declassify, or delay in declassifying, not otherwise provided for 
herein, shall be referred to the Security Committee for review.
    (3) The Security Committee shall have responsibility for 
recommending to the Chairman appropriate administrative action to 
correct abuse or violation of these regulations or of any provision of 
the Order or Directive thereunder, including but not limited to 
notification by warning letter, formal suspension without pay, and 
removal. Upon receipt of such a recommendation, the Chairman shall make 
a decision and advise the Security Committee of this action.



Sec. 403.3  Classification principles and authority.

    (a) Classification Principles. (1) Except as provided in the Atomic 
Energy Act of 1954, as amended, the Order provides the only basis for 
classifying national security information. Information held by the Bank 
will be made available to the public to the extent possible consistent 
with the need to protect the national defense or foreign relations, as 
required by the interests of the United States and its citizens. 
Accordingly, security classification shall be applied only to protect 
the national security.

[[Page 400]]

    (2) Before a classification determination is made, each item of 
information that may require protection shall be identified exactly. 
This requires identification of that specific information, disclosure of 
which could affect the national security. When there is reasonable doubt 
about the need to classify, the information should be safeguarded as if 
it were confidential until a final determination is made by an 
authorized classifier as to its classification. The final determination 
must be made within thirty (30) days.
    (b) Classification Designations. Information which requires 
protection against unauthorized disclosure in the interest of national 
security (classified information) shall be classified at one of the 
following three levels:
    (1) TOP SECRET shall be applied only to information, the 
unauthorized disclosure of which reasonably could be expected to cause 
exceptionally grave damage to the national security.
    (2) SECRET shall be applied only to information, the unauthorized 
disclosure of which reasonably could be expected to cause serious damage 
to the national security.
    (3) CONFIDENTIAL shall be applied to information, the unauthorized 
disclosure of which reasonably could be expected to cause damage to the 
national security.

Except as provided by statute, no other terms, such as SENSITIVE, 
OFFICIAL BUSINESS ONLY, AGENCY, BUSINESS, ADMINISTRATIVELY, etc., shall 
be used within the Bank in conjunction with any of the three 
classification levels defined above.
    (c) Original Classification Authority and Criteria. (1) The Bank's 
authority to assign original classification to any document is limited 
as follows and is nondelegable:

------------------------------------------------------------------------
              Classification                         Classifier         
------------------------------------------------------------------------
CONFIDENTIAL..............................                              
                                            President and Chairman.     
                                            First Vice President and    
                                             Vice Chairman.             
                                            General Counsel.            
                                            Senior Vice Presidents.     
                                            Security Officer.           
------------------------------------------------------------------------

    (2) A determination to classify information shall be made by an 
original classification authority when the information concerns one or 
more of categories (i) through (x) of this paragraph, and when the 
unauthorized disclosure of the information, either by itself or in the 
context of other information, reasonably could be expected to cause 
damage to the national security. Information shall be considered for 
classification if it concerns:
    (i) Military plans, weapons, or operations;
    (ii) The vulnerabilities or capabilities of systems, installations, 
projects, or plans relating to the national security;
    (iii) Foreign government information;
    (iv) Intelligence activities (including special activities), or 
intelligence sources or methods;
    (v) Foreign relations or foreign activities of the United States;
    (vi) Scientific, technological, or economic matters relating to the 
national security;
    (vii) United States Government programs for safeguarding nuclear 
materials or facilities;
    (viii) Cryptology;
    (ix) A confidential source; or
    (x) Other categories of information that are related to the national 
security and that require protection against unauthorized disclosure as 
determined by the President of the United States, by the Chairman or by 
other officials who have been delegated original classification 
authority by the President. Recommendations concerning the need to 
designate additional categories of information that may be considered 
for classification shall be forwarded through the Security Officer to 
the Chairman for determination. Such a determination shall be reported 
to the Director of the Information Security Oversight Office.
    (3) Information that is determined to concern one or more of the 
above categories shall be classified when an original classification 
authority also determines that its unauthorized disclosure, either by 
itself or in the context of other information, reasonably could be 
expected to cause damage to the national security. Accordingly, certain 
information which would otherwise be unclassified may require 
classification when associated with other unclassified or classified 
information.

[[Page 401]]

Classification on this basis shall be supported by a written explanation 
that, at a minimum, shall be maintained with the file or reference on 
the recent copy of the information.
    (4) Unauthorized disclosure of foreign government information, the 
identity of a confidential foreign source, or disclosure of intelligence 
sources or methods is presumed to cause damage to the national security.
    (5) Information classified in accordance with the above 
classification categories shall not be declassified automatically as a 
result of any unofficial publication or inadvertent or unauthorized 
disclosure in the United States or abroad of identical or similar 
information.
    (d) Duration of Original Classification. (1) Information shall be 
classified as long as required by national security considerations. When 
it can be determined, a specific date or event for declassification 
shall be set by the original classification authority at the time the 
information is originally classified. If the date or event for 
declassification cannot be determined at the time of classification, the 
standard notation ``Originating Agency's Determination Required'', or 
its abbreviation ``OADR'', should be entered on the ``Declassify on'' 
line.
    (2) Automatic declassification determinations under predecessor 
orders shall remain valid unless the classification is extended by an 
authorized declassification authority. These extensions may be by 
individual documents or categories of information, provided, however, 
that any extension of classification on other than an individual 
document basis shall be reported to the Director of the Information 
Security Oversight Office. The declassification authority shall be 
responsible for notifying holders of the information of such extensions.
    (3) Information classified under predecessor orders and marked for 
declassification review shall remain classified until reviewed for 
declassification under the provisions of the Order.
    (e) Marking and Identification. (1) Classified information must be 
marked, or otherwise identified, to inform and warn the holder of the 
information of its sensitivity. The classifier is responsible for 
ensuring that proper classification markings are applied. At the time of 
classification, the following information shall be shown on the face of 
all classified documents, or clearly associated with other forms of 
classified information in a manner appropriate to the medium involved, 
unless this information itself would reveal a confidential source or 
relationship not otherwise evident in the document or information:
    (i) One of the three classification levels defined in Sec. 403.3(b); 
``(TS)'' for Top Secret, ``(S)'' for Secret, ``(C)'' for Confidential, 
and ``(U)'' for Unclassified; with each page marked at top and bottom 
according to the highest level of classified information on each page.
    (ii) The identity of the original classification authority if other 
than the person whose name appears as the approving or signing official;
    (iii) The agency and office of origin; and
    (iv) The date or event for declassification, or the notation 
``Originating Agency's Determination Required.''
    (2) Each classified document shall, by marking or other means, 
indicate which portions are classified, with the applicable 
classification level, and which portions are not classified. The 
Chairman may, for good cause, grant and revoke waivers of this 
requirement for specified classes of documents or information. The 
Director of the Information Security Oversight Office shall be notified 
of any waivers.
    (3) Marking designations implementing the provisions of the Order, 
including abbreviations, shall conform to the standards prescribed in 
implementing directives issued by the Information Security Oversight 
Office. All authorized classifiers shall be issued a uniform stamp that 
has a ``Classified by'' line and a ``Declassify on'' line.
    (4) Documents that contain foreign government information shall 
include either the marking, ``FOREIGN GOVERNMENT INFORMATION'', or a 
marking that otherwise indicates that the information is foreign 
government information. If that fact must be concealed, the document 
will be marked as

[[Page 402]]

if it were of U.S. origin. Foreign government information shall either 
retain its original classification or be assigned a United States 
classification that shall ensure a degree of protection at least 
equivalent to that required by the entity that furnished the 
information.
    (5) Documents that contain information relating to intelligence 
sources or methods shall include the following marking unless proscribed 
by the Director of the Central Intelligence; WARNING NOTICE--
INTELLIGENCE SOURCES OR METHODS INVOLVED.
    (6) Information assigned a level of classification under predecessor 
orders shall be considered as classified at that level of classification 
despite the omission of other required markings. Omitted markings may be 
inserted on a document by the General Counsel or the Security Officer.
    (f) Limitations on Classification. (1) In no case shall information 
be classified in order to conceal violations of law, inefficiency, or 
administrative error; to prevent embarrassment to a person, 
organization, or agency; to restrain competition; or to prevent or delay 
the release of information that does not require protection in the 
interest of national security.
    (2) Basic scientific research information not clearly related to the 
national security may not be classified.
    (3) The Chairman or other authorized original classifiers may 
reclassify information previously declassified and disclosed if it is 
determined in writing that--
    (i) The information requires protection in the interest of national 
security, and
    (ii) The information may reasonably be recovered.

In making such determination, the Chairman or any other authorized 
original classifier shall consider the following factors: The lapse of 
time following disclosure; the nature and extent of disclosure; the 
ability to bring the fact of reclassification to the attention of 
persons to whom the information was disclosed; the ability to prevent 
further disclosure; and the ability to retrieve the information 
voluntarily from persons not authorized access to its reclassified 
state. These reclassification actions shall be reported promptly to the 
Director of the Information Security Oversight Office.
    (4) Information may be classified or reclassified after an agency 
has received a request for it under the Freedom of Information Act (5 
U.S.C. 552) or the Privacy Act of 1974 (5 U.S.C. 552a), or the mandatory 
review provisions of the Order and these regulations, if such 
classification meets the requirements of the Order and is accomplished 
personally and on a document-by-document basis by the Chairman, the Vice 
Chairman, or the Security Officer.



Sec. 403.4  Derivative classification.

    (a) Use of derivative classification. (1) Unlike original 
classification which is an initial determination, derivative 
classification is an incorporation, paraphrasing, restatement, or 
generation in new form of information that is already classified. 
Derivative classification is the responsibility of those who only 
reproduce, extract, or summarize classified information, or who only 
apply classification markings derived from source material or as 
directed by a classification guide. Original classification authority is 
not required for derivative classification.
    (2) Persons who apply such derivative classification markings shall:
    (i) Respect original classification decisions;
    (ii) Verify the information's current level of classification so far 
as practicable before applying the markings; and
    (iii) Carry forward to any newly created documents the assigned 
dates or events for declassification or review. The latest date for 
declassification should be entered in the case of multiple source 
documents.
    (b) New Material. (1) New material that derives its classification 
from information classified on or after the effective date of the Order, 
April 2, 1982, shall be marked with the declassification date or event, 
or the date for review, as assigned to the source information.
    (2) New material that derives its classification under prior orders 
shall be treated as follows:

[[Page 403]]

    (i) If the source material bears a classification date or event 20 
years or less from the date or origin, that date or event shall be 
carried forward on the new material.
    (ii) If the source material bears no declassification date or event 
or is marked for declassification beyond 20 years, the new material 
shall be marked with a date for review for declassification at 20 years 
from the date of original classification of the source material.
    (iii) If the source material is foreign government information 
bearing no date or event for declassification or is marked for 
declassification beyond 30 years, the new material shall be marked for 
review for declassification at 30 years from the date of original 
classification of the source materials.
    (iv) A copy of the source document or documents should be maintained 
with the file copy of the new document or documents which have been 
derivatively classified.



Sec. 403.5  Declassification and downgrading.

    (a) Authority and policy for declassification and downgrading. 
Information that continues to meet the classification requirements 
prescribed in Sec. 403.3(c) despite the passage of time will continue to 
be safeguarded. However, information which is properly classified at the 
time it is developed may not necessarily require protection 
indefinitely. National security information over which the Bank 
exercises final classification jurisdiction shall be declassified or 
downgraded as soon as national security considerations permit. 
Information shall be declassified or downgraded by:
    (1) The official who authorized the original classification, if that 
official is still serving in the same position, by a successor, or by a 
supervisory official of either; or
    (2) Officials specifically delegated this authority in writing by 
the Chairman or by the Security Officer. A list of those who may be so 
delegated shall be maintained by the Security Officer.
    (3) If the Director of the Information Security Oversight Office 
determines that information is unlawfully classified, the Director may 
require the Export-Import Bank to declassify it. Any such decision by 
the Director may be appealed to the National Security Council. The 
information shall remain classified until the appeal is decided.
    (b) Declassification Procedure. Information marked with a specific 
declassification date or event shall be declassified on that date or 
upon occurrence of that event. The overall classification markings shall 
be lined through a statement placed on the cover or first page to 
indicate the declassification authority, by name and title, and the date 
of declassification. If practicable, the classification markings on each 
page shall be cancelled; otherwise, the statement on the cover or first 
page shall indicate that the declassification applies to the entire 
document.
    (c) Notification to Holders. When classified information has been 
properly marked with specific dates or events for declassification it is 
not necessary to issue notices of declassification to any holders. 
However, when declassification action is taken earlier than originally 
scheduled, or the duration of classification is extended, the authority 
making such changes shall promptly notify all holders to whom the 
information was originally transmitted. This notification shall include 
the marking action to be taken, the authority for the change (name and 
title), and the effective date of the change. Upon receipt of 
notification, recipients shall make the proper changes and shall notify 
holders to whom they have transmitted the classified information.
    (d) Downgrading. Information designated a particular level of 
classification may be assigned a lower classification level by the 
original classifier or by an official authorized to declassify the same 
information. Prompt notice of such downgrading shall be provided to 
known holders of the information. Classified information marked for 
automatic downgrading under previous Executive Orders shall be reviewed 
to determine that it no longer continues to meet classification 
requirements despite the passage of time.
    (e) Transferred Information. Classified information transferred from 
one agency to another in conjunction with a transfer of functions, and 
not merely

[[Page 404]]

for storage purposes, shall be considered under the control of the 
receiving agency for purposes of downgrading and declassification, 
subject to consultation with any other agency that has an interest in 
the subject matter of the information. Prior to forwarding classified 
information to an approved storage facility of the Bank, to a Federal 
records center, or to the National Archives for permanent preservation, 
the information shall be reviewed for downgrading or declassification.



Sec. 403.6  Systematic review for declassification.

    Classified information determined by the Archivist of the United 
States to be of sufficient value to warrant permanent retention will be 
subject to systematic declassification review by the Archivist in 
accordance with guidelines provided by the Bank, as originator of the 
information. These guidelines shall be developed by the Security Officer 
who is designated by the Bank to assist the Archivist in the review 
process. The guidelines shall be reviewed every five years or as 
requested by the Archivist of the United States.



Sec. 403.7  Mandatory review for declassification.

    (a) Classified information under the jurisdiction of the Bank shall 
be reviewed for declassification upon receipt of a request by a United 
States citizen or permanent resident alien, a Federal agency, or a State 
or local government. A request for mandatory review of classified 
information shall be submitted in writing and describe the information 
with sufficient particularity to locate it with a reasonable amount of 
effort. Requests may be addressed to the:

    General Counsel, Export-Import Bank of the U.S., 811 Vermont Avenue, 
NW., Washington, DC 20571

    (b) The Bank's response to mandatory review requests will be 
governed by the amount of search and review time required to process the 
request. The Bank will acknowledge receipt of all requests, and will 
inform the requester if additional time is needed to process the 
request. Except in unusual circumstances, the Bank will make a final 
determination within one year from the date of receipt of the request.
    (c) When information cannot be declassified in its entirety, the 
Bank will make a reasonable effort to release, consistent with other 
applicable laws, those declassified portions that constitute a coherent 
segment.
    (d) The bank shall determine whether information under the 
classification jurisdiction of the Bank or any reasonably segregable 
portion of it no longer requires protection. If so, the General Counsel 
shall promptly make such information available to the requester, and 
shall inform the requester of any fees due before releasing the 
document. If the information may not be released, in whole or in part, 
the General Counsel shall give the requester a brief statement of the 
reasons, and a notice, mailed with return receipt requested, of the 
right to appeal the determination within 60 days of the denial letter's 
receipt.
    (e) The agency that initially received or classified records 
containing foreign government information shall be responsible for 
making a declassification determination on review requests for 
classified records which contain such foreign government information. 
Such requests shall be referred to the appropriate agency for action.
    (f) When the Bank receives a mandatory declassification review 
request for records in its possession that were originated by another 
agency, it shall forward the request to that agency. The Bank may 
request notification of the declassification determination.
    (g) Information originated by a President, the White House staff, by 
committees, commissions, or boards appointed by the President, or other 
specifically providing advice and counsel to a President or acting on 
behalf of a President is exempted from the provisions of mandatory 
review for declassification, except as consistent with applicable laws 
that pertain to presidential papers or records.
    (h) The bank shall process requests for declassification that are 
submitted under the provisions of the Freedom of Information Act, as 
amended, or the Privacy Act of 1974, in accordance with the provisions 
of those acts. (See, 12

[[Page 405]]

CFR part 404 and 12 CFR part 405, respectively.) In any case, however, 
exemptions under the Freedom of Information Act or other exemptions 
under applicable law may be invoked by the Bank to deny material on 
grounds other than classification.
    (i) The Bank shall refuse to confirm or deny the existence or non-
existence of requested information whenever the fact of its existence or 
non-existence is itself classifiable under the Order.



Sec. 403.8  Appeals.

    (a) The Vice Chairman is designated to receive appeals on requests 
for declassification which have been denied by the Bank. Such appeals 
shall be addressed to:

    First Vice President & Vice Chairman, Export-Import Bank of the 
United States, 811 Vermont Avenue NW., Washington, DC 20571


The appeal must be received within 60 days after receipt by appellant of 
the denial letter. Appeals shall be decided within 30 days of their 
receipt by the Vice Chairman.
    (1) If the decision is to declassify the materials in their 
entirety, the Vice Chairman shall promptly make such information 
available to the requester, and inform the requester of any fees due 
before releasing the documents.
    (2) If the decision is to deny declassification of a portion of the 
material, the Vice Chairman shall promptly make the part which was 
declassified available to the requester, and shall advise the requester, 
in writing, of the reasons for the partial denial of declassification.
    (3) If the decision is to deny declassification of all the material, 
the Vice Chairman shall promptly advise the requester, in writing, of 
the reasons for such denial.



Sec. 403.9  Fees.

    The following specific fees shall be applicable with respect to 
services rendered to members of the public under these regulations, by 
the Bank, except that the search fee will normally be waived when the 
search involves less than one-half hour of clerical time.

    (a) Search for records, per hour or fraction thereof:

  (i) Professional............................................... $11.00
     (ii) Clerical...................................................   
                                                                    6.00
  (b) Computer service charges per second for actual use of computer 
 central processing unit............................................    
                                                                     .25
  (c) Copies made by photostat or otherwise (per page); maximum of 5 
 copies will be provided............................................    
                                                                     .10
     (d) Certification of each record as a true copy................L   
                                                                    1.00
  (e) Certification of each record as a true copy under official seal 
                                                                    1.50
  (f) Duplication of architectural photographs and drawings......   2.00

Fees must be paid in full prior to issuance of requested copies. 
    Remittances shall be in the form either of a personal check or bank 
    draft drawn on a bank in the United States, or postal money order. 
    Remittances shall be made payable to the order of the Export-Import 
    Bank of the United States, and mailed to:

    General Counsel, Export-Import Bank of the United States, 811 
Vermont Avenue NW., Washington, DC 20571



Sec. 403.10  Safeguarding.

    (a) General Access Requirements. Except as provided in 
Sec. 403.10(c), access to classified information shall be granted in 
accordance with the following:
    (1) Determination of Trustworthiness. No person shall be given 
access to classified information or material unless a favorable 
determination has been made as to his trustworthiness. The determination 
of eligibility, refered to as a security clearance, shall be based on 
such investigations as the Bank may require in accordance with the 
standards and criteria of applicable law and Executive orders.
    (2) Determination of Need to Know. In addition to a security 
clearance, a person must have a need for access to the particular 
classified information or material sought in connection with the 
performance of official duties or contractual obligations. The 
determination of that need shall be made by officials having 
responsibility for the classified information or material.
    (b) Classified Information Nondisclosure Agreement. All persons with 
authorized access to classified information shall be required to sign a 
nondisclosure agreement, Standard Form 189, as a condition of access. 
This form shall be

[[Page 406]]

retained in the security file of the individual for 50 years.
    (c) Access by Historical Researchers and Former Presidential 
Appointees. The Bank shall obtain written agreements from requesters to 
safeguard the information to which they are given access as permitted by 
the Order and written consent to the Bank's review of their notes and 
manuscripts for the purpose of determining that no classified 
information is contained therein. A determination of trustworthiness is 
a pre-condition to a requester's access. If the access requested by 
historical researchers and former Presidential Appointees requires the 
rendering of services for which fair and equitable fees may be charged 
pursuant to Title 5 of the Independent Offices Appropriations Act, 65 
Stat. 290, 31 U.S.C. 483a (1976), the requester shall be so notified and 
the fees may be imposed.
    (d) Media Contacts. All contacts by members of the media which 
concern classified information shall be directed to the attention of the 
Security Officer, Room 1031, Export-Import Bank of the United States, 
811 Vermont Avenue NW., Washington, DC 20571.
    (e) Dissemination. Except as otherwise provided by directives issued 
by the President through the National Security Council, classified 
information originating in another agency and in the possession of the 
Bank may not be disseminated outside the Bank without the consent of the 
originating agency.
    (f) Accountability Procedures. Dissemination of various levels of 
classified information or material shall be within the control and 
responsibility of designated control officers. Particularly stringent 
controls shall be placed on information and material classified as TOP 
SECRET.
    (1) TOP SECRET. Designated as TOP SECRET control officers are the 
Chairman, Vice Chairman and the Security Officer who alone have 
authority to receive TOP SECRET information for the Bank. Other 
personnel authorized in writing by the Chairman or Security Officer also 
may receive TOP SECRET information for the Bank. It shall be the 
responsibility of these individuals with respect to all TOP SECRET 
information:
    (i) To receive the material for the Bank;
    (ii) To maintain registers which will reflect the routing of the 
material and the return thereof in a reasonable length of time for 
security storage;
    (iii) To dispatch and make record of material disseminated to 
authorize persons outside the Bank;
    (iv) To make a physical inventory of all material at least annually; 
and
    (v) To maintain current access records.
    (2) SECRET. Designated as SECRET control officers are the Security 
Officer and the Analysis, Records & Communications Manager, who have the 
responsibility with respect to all information classified in this 
category:
    (i) To receive the material for the Bank;
    (ii) To maintain registers which will reflect the routing of the 
material and the return thereof in a reasonable length of time for 
security storage;
    (iii) To dispatch and make record of material disseminated to 
authorized persons outside the Bank;
    (iv) To maintain current access records.
    (3) CONFIDENTIAL. Designated as CONFIDENTIAL control officers are 
the Security Officer and the Analysis, Records & Communications Manager 
who have responsibility with respect to all information classified in 
this category:
    (i) To review material for the Bank;
    (ii) To route the material to proper Bank offices;
    (iii) To dispatch and make record of material disseminated to 
authorized persons outside the Bank;
    (iv) To maintain current access records.
    (g) Storage. Classified information shall be stored only in 
facilities or under conditions adequate to prevent unauthorized persons 
from gaining access to it and in accordance with the Directive as well 
as General Services Administration standards and specifications. 
Reference may be made to 32 CFR 2001.41, 2001.43 for preliminary 
guidance regarding these standards and specifications.
    (h) Coversheets. Department of State (DOS) classified incoming 
cables are to

[[Page 407]]

be logged in and routed to the appropriate offices in double envelopes. 
When these cables are being used in various offices, classified 
coversheets must be used to protect the documents. This practice 
eliminates the possibility of inadvertently mixing classified with non-
classified material, and promotes security awareness. Coversheets are 
obtainable from the Office of the Security Director.
    (i) Transmittal. (1) To be transmitted outside the Bank, all 
classified documents must be sent through the Security Office and have 
attached EIB Form 71-2, approved by one of the following: the President 
and Chairman, First Vice President and Vice Chairman, a Senior Vice 
President, General Counsel, Vice President or Security Officer.
    (2) Preparation and Receipting. Classified information shall be 
enclosed in opaque inner and outer covers before transmitting. The inner 
cover shall be a sealed wrapper or envelope plainly marked with the 
assigned classification and addresses of both sender and addressee. 
Transmittal documents shall indicate on their face the highest level of 
any information transmitted, and must clearly state whether or not the 
transmittal document itself is classified after removal of enclosures 
and attachments. The outer cover shall be sealed and addressed with no 
identification of the classification of its contents. A receipt shall be 
attached to or enclosed in the inner cover, except that CONFIDENTIAL 
information shall require a receipt only if the sender deems it 
necessary. The receipt shall identify the sender, addressee, and the 
document but shall contain no classified information. It shall be 
immediately signed by the recipient and returned to the sender. Any of 
these wrapping and receipting requirements may be waived by agency heads 
under conditions that will provide adequate protection and prevent 
access by unauthorized persons.
    (3) Transmittal of CONFIDENTIAL Information. CONFIDENTIAL 
information shall be transmitted within and between the fifty States, 
the District of Columbia, the Commonwealth of Puerto Rico, and U.S. 
territories or possessions by one of the means established for higher 
classifications, or by United States Postal Service, certified first 
class, or express mail service, when prescribed by an agency head. 
Outside these areas, CONFIDENTIAL information shall be transmitted only 
as is authorized for higher classification levels.
    (4) Transmittal of TOP SECRET and SECRET information shall be in 
accordance with the Directive. Reference may be made to 32 CFR 2001.44 
for preliminary guidance.
    (j) Destruction. Classified information no longer needed in working 
files or for record or reference purposes shall be processed for 
appropriate disposition in accordance with Chapters 21 and 33 of title 
44 U.S.C., when govern disposition of Federal Records. All classified 
information approved for destruction must be torn and placed in 
containers designated as burnbags which are available through the Office 
Services Section of the Bank. Destruction of such information will be 
carried out by the Security Officer or a designee by use of a 
disintegrator or by burning. The method of destruction selected must 
preclude recognition or reconstruction of the classified information or 
material. Records of destruction will be maintained by the Security 
Office for TOP SECRET information and material with serialized markings 
or material for which there is a special need to record its destruction.
    (k) Reproduction Controls. (1) Reproduction of classified documents 
is prohibited, except by personnel authorized in writing by the Chairman 
or Security Officer.
    (2) TOP SECRET documents may not be reproduced without the consent 
of the originating agency unless otherwise marked by the originating 
office.
    (3) Reproduction of SECRET and CONFIDENTIAL documents may be 
restricted by the originating agency.
    (4) Reproduced copies of classified documents are subject to the 
same accountability and controls as the original documents.
    (5) Records shall be maintained by the Security Officer to show the 
number and distribution or reproduced copies of all TOP SECRET 
documents, of all documents covered by special access programs 
distributed outside the

[[Page 408]]

originating agency, and all SECRET and all CONFIDENTIAL documents which 
are marked with special dissemination and reproduction limitations.



Sec. 403.11  Enforcement and investigation procedures.

    (a) Loss or Possible Compromise. Any person who has knowledge of the 
loss or possible compromise of classified information shall immediately 
report the circumstances to the Security Officer of the Bank. In turn, 
the originating agency shall be notified about the loss or compromise in 
order that a damage assessment may be conducted and appropriate measures 
taken to negate or minimize any adverse effect, and prevent further such 
loss or compromise. An immediate inquiry shall be initiated by the Bank 
for the purposes: (1) Of determining cause and responsibility and (2) 
taking corrective measures and appropriate administrative, disciplinary, 
or legal action.
    (b) Reporting and Investigating Unauthorized Disclosures. (1) 
Employees who have reason to believe that an unauthorized disclosure of 
classified information has occurred shall report the disclosure to their 
supervisor, who shall inform the Security Officer.
    (2) The Bank shall promptly notify the Information Security 
Oversight Office at the General Services Administration, Washington, DC 
20405, of all unauthorized disclosures of classified information.
    (3) If the Bank believes that it is the source of an unauthorized 
disclosure of classified information that it originated, it shall 
evaluate the disclosure under paragraph (b)(7) of this section. If the 
disclosure is serious, the Bank shall report the disclosure and the 
results of the evaluation to the Department of Justice together with 
notification that it is conducting an internal investigation.
    (4) If the Bank believes that it is the source of an unauthorized 
disclosure of classified information that it handled but did not 
originate, it shall report the disclosure to the Department of Justice 
and to the originating agency(ies) or department(s) for evaluation under 
paragraph (b)(7) of this section. If the Bank cannot determine the 
identity of the originating agency(ies) or department(s), it shall 
report the disclosure to the Department of Justice together with any 
information or reasonable inferences as to the identity of the 
originating agency(ies) or department(s).
    (5) If the Bank receives a request for an evaluation of information 
it originated, it shall, if the evaluation shows the disclosure was 
serious, inform the agency(ies) or department(s) from which the 
disclosure occurred of this conclusion and request that the agency(ies) 
or department(s) conduct an internal investigation.
    (6) If the Bank determines that an unauthorized disclosure of 
classified information has occurred but that it neither originated, 
handled nor disclosed the information, it shall report the disclosure to 
the likely originating agency(ies) or department(s).
    (7) In determining whether a disclosure is sufficiently serious to 
warrant reporting to the Department of Justice, the Bank, if it is the 
originating agency, shall ascertain the nature of the disclosed 
information, determine the extent to which it disseminated the 
information and evaluate the disclosure to determine whether it 
seriously damages its mission and responsibilities. In evaluating the 
damage caused by the disclosure, the Bank shall consider such matters as 
whether the disclosure jeopardizes an ongoing project, operation or 
source of information and to what extent the policy goals underlying the 
project or operation must be altered.
    (8) In any instance where the Bank is determined to be the source of 
an unauthorized disclosure and an evaluation by the Bank or the 
originating agency(ies) or department(s) determines the disclosure to be 
of a serious nature, an internal investigation will be initiated and an 
investigation report, containing such information as may be required by 
the Department of Justice, will be submitted to the Department of 
Justice within 15 days after notification from the originating agency or 
Department of Justice, but in any case no later than 30 days. If the 
investigation report is not completed within 15 days, the Bank shall 
submit as much of the required information as is available at that time 
and furnish

[[Page 409]]

additional information as it is developed.
    (9) Whenever the Bank determines during the course of an 
investigation that it is necessary to compel or induce the cooperation 
of an employee, the Bank shall first consult with the Department of 
Justice. The Department of Justice will coordinate with the Bank to 
determine the procedures the Bank may use to compel an employee's 
participation without foreclosing possible criminal proceedings.
    (10) The Bank shall maintain records of all disclosures that have 
been reported or investigated.
    (11) All employees shall cooperate fully with officials of the Bank 
or other agencies who are conducting investigations of unauthorized 
disclosures of classified information.
    (12) Employees determined by the Bank to have knowingly participated 
in an unauthorized disclosure of classified information or who have 
refused to cooperate with an investigation of such a disclosure shall be 
denied further access to classified information and shall be subject to 
other appropriate administrative sanctions. Prior to taking action 
against an employee in connection with the unauthorized disclosure or 
classified information, the Bank shall consult with the Department of 
Justice, Criminal Division.



PART 404--DISCLOSURE OF INFORMATION--Table of Contents




Sec.
404.1  Purpose and policy.
404.2  Scope.
404.3  Information and records available to the public and exempt from 
          disclosure.
404.4  Public access to information and records.
404.5  Administrative appeal of refusal to disclose.
404.6  Schedule of fees.
404.7  Annual Report to Congress.
404.8  Appearances and testimony by Eximbank officers and employees.

    Authority:  5 U.S.C. 552; 12 U.S.C. 635; Freedom of Information 
Reform Act of 1986, Pub. L. 99-570; Debt Collection Act of 1982, Pub. L. 
97-365.

    Source:  40 FR 7238, Feb. 19, 1975, unless otherwise noted.



Sec. 404.1  Purpose and policy.

    (a) This part establishes policy and procedures governing public 
access to information contained in the files, documents, and records of 
the Export-Import Bank of the United States (Eximbank). In keeping with 
the spirit as well as the letter of Pub. L. 90-23, which codified and 
repealed Pub. L. 89-487, amending 5 U.S.C. 552, formerly section 30 of 
the Administrative Procedure Act, 60 Stat. 236, 5 U.S.C. 1002 (1964 Ed), 
and Pub. L. 93-502, further amending 5 U.S.C. 552, it reflects Eximbank 
policy that disclosure is the general rule rather than the exception. It 
is in addition a recognition that this policy in favor of disclosure 
extends in many instances to information technically exempt from 
disclosure under the law where such disclosure would not adversely 
affect some legitimate public or private interest intended to be 
protected by law, would not otherwise violate law or other authority, 
and would not impose an unreasonable burden upon Eximbank.
    (b) This part is also a recognition that the soundness of many 
Eximbank programs, e.g. loans, guarantees and insurance, depends in 
large measure upon the reliability of commercial, technical, financial 
and business information relating to the affairs of applicants for 
Eximbank assistance. Since the release of such information would 
jeopardize the credit and competitive business position of an applicant 
it is essential that applicants be assured that confidential commercial 
or financial information which is submitted to Eximbank will not be 
disclosed to the public. By this assurance, applicants will be 
encouraged to make complete disclosure of material bearing upon an 
application.



Sec. 404.2  Scope.

    This part applies to all files, documents, records, and information 
obtained or produced by officers and employees of Eximbank in the course 
of their official duties as well as all files, documents, records and 
other information in the custody or control of any Eximbank officer or 
employee. It does not purport to describe or set forth every file, 
document, record, or item of information which may or may not be

[[Page 410]]

disclosed or to incorporate every exemption from disclosure provided by 
law. Material described is illustrative rather than exclusive.



Sec. 404.3  Information and records available to the public and exempt from disclosure.

    (a) General. All Eximbank information and records in existence which 
are not exempt by law are available for public inspection and copying in 
the manner specified in Sec. 404.4. In addition, certain materials 
technically qualifying for exemption from disclosure will be made 
available where disclosure would not adversely affect some legitimate 
public or private interest, would not otherwise violate law or other 
authority, and would not impose an unreasonable burden on Eximbank. 
Reasonable requests for material not in existence may also be honored 
where their tabulation or compilation will not unduly interfere with 
Eximbank activities, programs and operations. As provided in Sec. 404.6, 
a fee will be charged for Eximbank's expenses incurred in searching for, 
duplicating, tabulating or compiling such information and records.
    (b) Information and records which are available to the public.

The following kinds of records and information are available to the 
public in the manner specified in Sec. 404.4:
    (1) Names of recipients of loans, guarantees, insurance and other 
assistance,
    (2) The kind and amount of assistance,
    (3) The purpose of the approved assistance in general terms,
    (4) The extent of outside participation, if any, and
    (5) Statistical data on Eximbank programs.
    (c) Information which is generally not available to the public. The 
following kinds of information are generally not available to the 
public:
    (1) Information on declined, withdrawn, or cancelled applications 
for assistance,
    (2) Trade secrets obtained from applicants for Eximbank assistance,
    (3) Privileged or confidential commercial or financial information 
obtained from any person, including, for example, such information 
contained in individual case files relating to such activities as loans, 
guarantees and insurance,
    (4) Loan agreements, insurance policies and bank guarantee 
agreements relating to individual borrowers or foreign buyers receiving 
Eximbank assistance,
    (5) Information concerning losses, delinquencies and defaults in 
individual cases, and
    (6) Names of participating lending institutions and the terms of 
their participation without their consent.
    (d) Minutes of the meetings of the Board of Directors. These are 
available for inspection and copying in Eximbank's Office of the 
Secretary in Room 933, 811 Vermont Avenue NW., Washington, DC 20571.
    (e) Personnel and similar files. Exempt from disclosure are 
personnel, medical and other files containing private or personal 
information. The names, position titles, and duty stations of Eximbank 
employees are public information but their home addresses are not. The 
disclosure of private or personal information contained in other files, 
for example, in the files relating to members of Eximbank's Advisory 
Board and to applicants for Eximbank assistance, also would be exempt.
    (f) Eximbank staff directives and other instructions to staff. All 
staff directives are considered public information except: (1) Those 
relating to audits and investigations, internal financial management and 
fiscal operations, and (2) portions of directives containing 
confidential standards and instructions, as, for example, instructions 
concerning processing loan, guarantee or insurance applications, 
negotiations or bargaining in connection with the disposition and 
liquidation of loans, and loan collateral held by Eximbank.
    (g) Litigation materials. Copies of pleadings, motions, orders, 
transcripts of testimony, and documentary evidence introduced in pending 
or closed litigation are available once such items are a matter of 
public record.
    (h) Internal communications. Interagency or intraagency 
communications not routinely available to a party to litigation with 
Eximbank are exempt from disclosure. These would include,

[[Page 411]]

among other things, drafts, memoranda between officials or agencies, 
Eximbank staff memoranda, opinions and interpretations prepared by 
Eximbank attorneys or consultants for use of Eximbank, research studies 
performed internally or under contract for internal management purposes, 
and internal management reports.
[40 FR 7238, Feb. 19, 1975, as amended at 52 FR 37438, Oct. 7, 1987]



Sec. 404.4  Public access to information and records.

    (a) Facilities. Eximbank facilities are available to the public 
during normal business hours for requesting, inspecting and copying 
information and records. Reproduction machines will also be available in 
or through such facilities. The Public Affairs Office is located in Room 
1267, 811 Vermont Avenue NW., Washington, DC 20571.
    (b) Materials available in Public Affairs Office. (1) For the 
convenience of the public, certain Eximbank materials will be maintained 
and readily available in the public information office. These will 
include:
    (i) All Eximbank directives and manuals not exempt from disclosure,
    (ii) Eximbank Rules and Regulations (including Interpretations), and
    (iii) Index of Eximbank materials, including lists of staff 
directives, forms, reports, and Eximbank official actions.
    (2) The public affairs office will, in addition to the above, have 
normally available, among other things:
    (i) Pamphlets describing Eximbank Programs,
    (ii) Press releases,
    (iii) Names of recipients of Eximbank support and related 
information not exempt from disclosure,
    (iv) Eximbank's Annual Report to the President and the Congress,
    (v) Routine statistical reports on Eximbank activities,
    (vi) Minutes of Meetings of the Board of Directors, and
    (vii) Blank Eximbank forms.
    (c) Requests for information and records. Requests for information, 
records and other materials not readily available at the Public Affairs 
Office are to be submitted and processed in accordance with the 
following procedures:
    (1) Form of request. Each request shall be addressed to the Export-
Import Bank of the United States, Attention: Office of the Secretary in 
Room 933, 811 Vermont Avenue, NW., Washington, DC 20571. The envelope 
and the letter containing the request must be clearly marked in capital 
letters as follows: FREEDOM OF INFORMATION ACT REQUEST. A request 
submitted in an envelope which is not addressed to the Senior Vice 
President--Research and Communications will not be deemed to have been 
received by Eximbank until such time as the request is forwarded to such 
officer. All requests must be in writing and must be marked and 
addressed as specified in this section.
    (2) Description of material requested. Each request shall reasonably 
describe the document or information with respect to names, dates and 
subject matter to permit it to be located among the records maintained 
by Eximbank. A request that does not substantially comply with paragraph 
(c)(2) of this section will not be deemed to have been received by 
Eximbank until such time as the requester has clarified his request to 
meet this standard. Eximbank will make every reasonable effort by 
telephone or by letter to assist the person making the request to be 
more specific in describing the document or information.
    (3) Notification of Eximbank action. The person making the request 
normally will be notified of the availability of the material within 10 
working days after the date of receipt of the request. If Eximbank 
determines to comply in whole or part with a request for records, the 
information or records shall be made available promptly provided the 
requirements of paragraph (c)(6) of this section regarding payment of 
fees are satisfied. Any denial of a request in whole or in part shall be 
made in writing by the General Counsel or his designee. The letter shall 
set forth the reasons for the denial. Any person whose request for 
information has been denied may appeal from such determination in 
accordance with Sec. 404.5.
    (4) Extension of time. In certain unusual circumstances, as set 
forth below, the period of time within which

[[Page 412]]

Eximbank will respond to an initial request (10 working days) may be 
extended by an additional 10 working days. A determination that an 
extension of time to respond to a request is appropriate will be made by 
the General Counsel or his designee by giving written notice to the 
requester setting forth the reasons for the extension and the date on 
which a determination is expected to be made. Unusual circumstances 
which could necessitate the extension are the following:
    (i) The need to search for and collect the requested records from 
field facilities or other establishments that are separate from the 
office processing the request;
    (ii) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are demanded in 
a single request; or
    (iii) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request or among two or more components of the 
agency having substantial subject-matter interest therein.
    (5) Fees. A fee will be imposed for Eximbank expenses incurred in 
searching for, duplicating, tabulating, or compiling the record or 
information in accordance with the schedule set forth in Sec. 404.6. A 
letter requesting a document or information should specifically state 
that all costs involved will be paid or, alternatively, that they will 
be paid up to a specified limit. If the letter makes no reference to 
anticipated fees, and the request is expected to involve fees in excess 
of $25, or it is estimated by Eximbank that the fee will exceed the 
dollar limit specified in the request, Eximbank will notify the 
requester of the estimated fee promptly upon receipt of the request. The 
request will not be deemed to have been received until Eximbank receives 
a reply from the requester stating his willingness to pay the estimated 
fee.
    (6) Deletions. If it is determined that a portion of a record is 
exempt from disclosure, any reasonably segregable portion of the record 
will be provided the requester after deletion of the exempt portions.
[40 FR 7238, Feb. 19, 1975, as amended at 42 FR 56316, Oct. 25, 1977; 52 
FR 37438, Oct. 7, 1987]



Sec. 404.5  Administrative appeal of refusal to disclose.

    (a) Who may appeal. Any person whose request for information or 
records has been denied in whole or in part shall be entitled to submit 
a written appeal to Eximbank.
    (b) Time for appeal. An appeal from a denial may be filed with 
Eximbank anytime following the date of receipt of the initial 
determination, in cases of denials of an entire request, or from the 
date of receipt of any records being made available under an initial 
determination, in cases of partial denials.
    (c) Form of appeal. An appeal shall be in a letter addressed to the 
Export-Import Bank of the United States, Attention: President and 
Chairman, 811 Vermont Avenue, Washington, DC 20571. The envelope and the 
letter setting forth the appeal shall be clearly marked in capital 
letters: FREEDOM OF INFORMATION ACT APPEAL. The letter shall reasonably 
describe the information or records requested, the name and title of the 
Eximbank official or employee who denied the request, and such other 
pertinent facts and statements as the appellant may deem appropriate. An 
appeal submitted in an envelope which is not addressed to the President 
and Chairman will not be deemed to have been received until such time as 
the appeal is forwarded to such officer.
    (d) Eximbank decision. Final Eximbank decision on appeals from 
denials of requests for information or records shall be made in writing 
by the President and Chairman or his designee within 20 working days 
after the date of receipt of the request, unless an extension of up to 
10 working days has been deemed necessary in accordance with the 
procedures set forth in Sec. 404.4(c)(4) of this part. The 10-day 
extension may be applied to the response to the initial request or to 
the appeal, or to both, but in no event shall the extension exceed a 
total of 10 working days. If the decision upholds the denial of the 
request, the appellant shall be

[[Page 413]]

notified in writing, which notice shall set forth the reasons for 
upholding the previous denial. The notification shall also refer to the 
provisions for judicial review of Eximbank's determination, 5 U.S.C. 
552. If the President and Chairman or his designee acts favorably on the 
appeal, the information or records requested shall be made available 
promptly provided the requirements of Sec. 404.4(c)(6) regarding payment 
of fees are satisfied.
[40 FR 7238, Feb. 19, 1975, as amended at 42 FR 56316, Oct. 25, 1977; 43 
FR 14438 Apr. 6, 1978]



Sec. 404.6  Schedule of fees.

    (a) Definitions. (1) The term direct costs means those expenditures 
which Eximbank actually incurs in searching for and duplicating (and in 
the case of commercial requesters, reviewing) documents to respond to a 
FOIA request. Direct costs include, for example, the salary of the 
employee performing the work (the basic rate of pay for the employee 
plus 16 percent of that rate to cover benefits) and the cost of 
operating duplicating machinery.
    (2) The term search includes all time spent looking for material 
that is responsive to a request, including page-by-page or line-by-line 
identification of material within documents. Searches may be done 
manually or by computer using existing programming.
    (3) The term duplication refers to the process of making a copy of a 
document necessary to respond to a FOIA request. Such copies can take 
the form of paper copy, microform, audio-visual materials, or machine 
readable documentation (e.g., magnetic tape or disk), among others. The 
copy provided must be in a form that is usable by requesters.
    (4) The term review refers to the process of examining documents 
located in response to a request that is for a commericial use to 
determine whether any portion of any document located is permitted to be 
withheld. It also includes processing any documents for disclosure, 
e.g., doing all that is necessary to excise them and otherwise prepare 
them for release. Review does not include time spent resolving general 
legal or policy issues regarding the application of exemptions.
    (5) The term commercial request refers to a request from or on 
behalf of one who seeks information for a use or purpose that furthers 
the commercial, trade, or profit interests of the requester or the 
person on whose behalf the request is made. In determining whether a 
requester belongs in this category, Eximbank must determine the use to 
which a requester will put the documents requested. Where Eximbank has 
reasonable cause to doubt the use to which a requester will put the 
records sought, or where that use is not clear from the request itself, 
Eximbank may seek additional clarification before assigning the request 
to a specific category.
    (6) The term educational institution refers to a preschool, a public 
or private elementary or secondary school, an institution of graduate 
higher education, an institution of undergraduate higher education, an 
institution of professional education, and an institution of vocational 
education, which operates a program or programs of scholarly research.
    (7) The term non-commercial scientific institution refers to an 
institution that is not operated on a commercial basis as that term is 
referenced in paragraph (a)(5) of this section, and which is operated 
solely for the purpose of conducting scientific research the results of 
which are not intended to promote any particular product or industry.
    (8) The term representative of the news media refers to any person 
actively gathering news for an entity that is organized and operated to 
publish or broadcast news to the public. The term news means information 
that is about current events or that would be of current interest to the 
public. Examples of news media entities include television or radio 
stations broadcasting to the public at large, and publishers of 
periodicals (but only in those instances when they can qualify as 
disseminators of news) who make their products available for purchase or 
subscription by the general public. These examples are not intended to 
be all-inclusive. As traditional methods of news delivery evolve (e.g., 
electronic dissemination of newspapers through telecommunications 
services), such alternative

[[Page 414]]

media would be included in this category. Freelance journalists may be 
regarded as working for a news organization if they can demonstrate a 
solid basis for expecting publication through that organization, even 
though not actually employed by it. A publication contract would be the 
clearest proof, but Eximbank may also look to the past publication 
record of a requester in making this determination.
    (b) Fees to be charged--general. Eximbank will charge fees that 
recoup the full allowable direct costs it incurs, and will use the most 
efficient and least costly methods to comply with requests for documents 
made under the FOIA. Eximbank may contract with private sector services 
to locate, reproduce and disseminate records in response to FOIA 
requests when that is the most efficient and least costly method, and 
does not result in an ultimate cost to the requester greater than it 
would be if Eximbank had performed these tasks. Eximbank will not 
contract out responsibilities which the FOIA provides that it alone may 
discharge, such as determining applicability of an exemption, or 
determining whether to waive or reduce fees. When documents responsive 
to a request are maintained for distribution by agencies operating 
statutory-based fee schedule programs, such as the Government Printing 
Office or the National Technical Information Service, Eximbank will 
inform requesters of the steps necessary to obtain records from those 
sources.
    (1) Manual searches for records. Eximbank will charge for search and 
review work performed by its employees according to the following fee 
schedule:

    Clerical, hourly rate--$12.00
    Professional, hourly rate--$24.00

    (2) Computer searches for records. Eximbank will charge the actual 
direct cost of providing the service. This will include the cost of 
operating the central processing unit for that portion of operating time 
that is directly attributable to searching for records responsive to a 
FOIA request and operator/programmer salary apportionable to the search. 
Operator/programmer salary will be calculated at basic pay plus 16 
percent. Average rates for CPU operating costs and operator-programmer 
salaries involved in FOIA searches will be established and periodically 
revised to reflect actual direct costs. These rates will be available 
upon request.
    (3) Review of records. Only requesters who are seeking documents for 
commercial use will be charged for time Eximbank spends reviewing 
records to determine whether they are exempt from mandatory disclosure. 
Charges will be assessed only for the initial review, i.e., the review 
undertaken the first time Eximbank analyzes the applicability of a 
specific exemption to a particular record or portion of a record. 
Eximbank will not charge for review at the administrative appeal level 
of an exemption already applied. However, records or portions of records 
withheld in full under an exemption which is subsequently determined not 
to apply may be reviewed again to determine the applicability of other 
exemptions not previously considered. The costs for such a subsequent 
review may be assessed. Eximbank will charge for employee time spent in 
review according to the rates set forth in paragraph (b)(1) of this 
section.
    (4) Duplication of records. The per page charge for paper copy 
reproduction of documents is $.25. For copies prepared by computer, such 
as tape or printouts, or for other methods of reproduction or 
duplication, Eximbank will charge according to their actual direct cost. 
If Eximbank estimates that duplication charges are likely to exceed 
$25.00, it will notify the requester of the estimated amount of fees, 
unless the requester has indicated in advance his willingness to pay 
fees as high as those anticipated. Such notice will offer a requester 
the opportunity to confer with Eximbank personnel with the object of 
reformulating the request to meet his or her needs at a lower cost.
    (5) Other charges. Complying with requests for special services such 
as those listed below is entirely at the discretion of Eximbank. 
Eximbank will recover the full costs of providing services such as those 
enumerated below to the extent that it elects to provide them:

[[Page 415]]

    (i) Certifying that records are true copies;
    (ii) Sending records by special methods such as express mail, etc. 
(Charges will not be made for ordinary packaging and mailing.)
    (6) Restrictions on assessing fees. With the exception of requesters 
seeking documents for a commercial use, Eximbank will provide the first 
100 pages of duplication and the first two hours of search time without 
charge. Except for commercial use requesters, Eximbank will not begin to 
assess fees until after it has provided the free search and 
reproduction, and will not charge a fee in any case of $6.00 or less. 
For example, for a request that involved two hours and ten minutes of 
search time and resulted in 105 pages of documents, Eximbank would 
determine the cost of only 10 minutes of search time and only five pages 
of reproduction. If this cost was equal to or less than $6.00, no 
charges would result. For searches made by computer, when the cost of 
the search (including the operator time and the cost of operating the 
computer to process a request) equals the equivalent dollar amount of 
two hours of the salary of the person performing the search, Eximbank 
will begin to assess charges for computer search.
    (c) Fees to be charged--categories of requesters. There are four 
categories of FOIA requesters, with specific levels of fees for each 
category prescribed by law. Requesters in each category must reasonably 
describe the records sought.
    (1) Commercial use requesters. When Eximbank receives a request for 
documents for commercial use, it will assess charges which recover the 
full direct costs of searching for, reviewing for release, and 
duplicating the records sought. Inclusion in this fee category is 
determined not by the identity of the requester, but by the use to which 
the information will be put. Commercial use requesters are not entitled 
to two hours of free search time nor 100 free pages of reproduction of 
documents. Eximbank will recover the cost of searching for and reviewing 
records even if there is ultimately no disclosure of records.
    (2) Educational and non-commercial scientific institution 
requesters. Eximbank will provide documents to requesters in this 
category for the cost of reproduction alone, excluding charges for the 
first 100 pages. To be eligible for inclusion in this category, 
requesters must show that the request is being made as authorized by and 
under the auspices of a qualifying institution and that the records are 
not sought for a commercial use, but are sought in furtherance of 
scholarly (if the request is from an educational institution) or 
scientific (if the request is from a non-commercial scientific 
institution) research. To be included in this category it must be 
apparent from the nature of the request that the request serves a 
scholarly research goal of the institution, rather than an individual 
goal.
    (3) Requesters who are representatives of the news media. Eximbank 
will provide documents to requesters in this category for the cost of 
reproduction alone, excluding charges for the first 100 pages. To be 
eligible for inclusion in this category, a requester must meet the 
criteria in paragraph (a)(8) of this section, and his or her request 
must not be made for a commercial use. A request for records supporting 
the news dissemination function of the requester will not be considered 
to be a request that is for a commercial use.
    (4) All other requesters. Eximbank will charge requesters who do not 
fit into any of the categories above fees which recover the full 
reasonable direct cost of searching for and reproducing records that are 
responsive to the request, except that the first 100 pages of 
reproduction and the first two hours of search time will be furnished 
without charge. Requests from record subjects for records about 
themselves filed in Eximbank systems of records will continue to be 
treated under the fee provisions of the Privacy Act of 1974 which permit 
fees only for reproduction.
    (d) Charging interest--notice and rate. Eximbank will begin 
assessing interest charges on an unpaid bill starting on the 31st day 
following the day on which the billing was sent. Receipt of the fee at 
Eximbank will stay the accrual of interest. Interest will be at the rate 
prescribed in section 3717 of title 31 U.S.C. and will accrue from the 
date of the billing.

[[Page 416]]

    (e) Charges for unsuccessful search. Eximbank will assess charges 
for time spent searching, even if it fails to locate the records or if 
records located are determined to be exempt from disclosure. Prior to 
undertaking a search, if Eximbank estimates that search fees are likely 
to exceed $25.00, it will notify the requester of the estimated amount 
of the fees, unless the requester has indicated in advance his 
willingness to pay fees as high as those anticipated. The notice will 
offer the requester the opportunity to consult with agency personnel 
with the object of reformulating the request to meet the requester's 
needs at lower cost.
    (f) Aggregating requests. A requester may not file multiple requests 
at the same time each seeking a portion of a document or documents, 
solely in order to avoid payment of fees. When Eximbank reasonably 
believes that a requester or a group of requesters acting in concert is 
attempting to break a request down into a series of requests for the 
purpose of evading the assessment of fees, Eximbank may aggregate any 
such requests and charge accordingly. In no case will Eximbank aggregate 
multiple requests on unrelated subjects from one requester.
    (g) Method of payment and advance payments. All payments to Eximbank 
shall be in the form of cash, check, or money order payable to the 
Export-Import Bank of the United States. Eximbank will not require a 
requester to make an advance payment--i.e., payment before work is 
commenced or continued on a request, unless:
    (1) Eximbank estimates or determines that allowable charges that a 
requester may be required to pay are likely to exceed $250.00, in which 
case Eximbank will notify the requester of the likely cost and obtain 
satisfactory assurance of full payment where the requester has a history 
of prompt payment of FOIA fees, or require an advance payment of an 
amount up the full estimated charges in the case of requesters with no 
history of payment or;
    (2) A requester has previously failed to pay a fee charged in a 
timely fashion (i.e., within 30 days of the date of the billing), in 
which case Eximbank will require the requester to pay the full amount 
owed plus any applicable interest or demonstrate that he has, in fact, 
paid the fee, and to make an advance payment of the full amount of the 
estimated fee before Eximbank begins to process a new request or a 
pending request from the requester. The administrative time limits 
prescribed in subsection (a)(6) of the FOIA (i.e., 10 working days from 
receipt of initial requests and 20 working days from receipt of appeals 
from initial denial, plus permissible extensions of these time limits) 
will begin only after Eximbank has received fee payments described 
above.
    (h) Effect of the Debt Collection Act of 1982 (Pub. L. 97-365). In 
accordance with the provisions and authorities of the Debt Collection 
Act of 1982, Eximbank reserves the right to disclose information to 
consumer reporting agencies and to use collection agencies, where 
appropriate, to encourage payment of fees.
    (i) Fee waivers and appeals. (1) Eximbank will waive or reduce 
applicable fees upon request, only if it determines that in the 
particular instance, disclosure of the information is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operations or activities of the government, and the 
disclosure is not primarily in the commercial interest of the requester.
    (i) In determining whether disclosure of the information is in the 
public interest because it is likely to contribute significantly to 
public understanding of the operations or activities of the government, 
Eximbank will consider the following factors:
    (A) The subject of the request: Whether the subject of the requested 
records concerns the operations or activities of the government;
    (B) The informative value of the information to be disclosed: 
Whether the disclosure is likely to contribute to an understanding of 
government operations or activities;
    (C) The contribution to an understanding of the subject by the 
general public likely to result from disclosure: Whether disclosure of 
the requested information will contribute to public understanding and;
    (D) The significance of the contribution to public understanding: 
Whether

[[Page 417]]

the disclosure is likely to contribute significantly to public 
understanding of government operations or activities.
    (ii) In determining whether disclosure of the information is not 
primarily in the commercial interest of the requester, Eximbank will 
consider the following factors:
    (A) The existence and magnitude of a commercial interest: Whether 
the requester has a commercial interest that would be furthered by the 
requested disclosure; and, if so
    (B) The primary interest in disclosure: Whether the magnitude of the 
identified commercial interest of the requester is sufficiently large, 
in comparison with the public interest in disclosure, that disclosure is 
primarily in the commercial interest of the requester.
    (2) The requester in all cases has the burden of presenting 
sufficient evidence or information to justify the requested waiver or 
reduction. The requester may use the procedures set forth in Sec. 404.5 
to appeal the denial of a waiver request under this section.
[52 FR 37438, Oct. 7, 1987]



Sec. 404.7  Annual Report to Congress.

    On March 1 of each calendar year, Eximbank will report to Congress 
on the administration of the public requests for information and records 
during the prior calendar year.



Sec. 404.8  Appearances and testimony by Eximbank officers and employees.

    Whenever an officer or employee of Eximbank is served with a 
subpoena demanding the disclosure of the information or the production 
of files, documents, and records described in this part, or is requested 
by court, committee or other body to disclose such information, the 
officer or employee shall promptly inform his superior of the 
requirements of the subpoena or request and shall ask for instructions 
from the General Counsel or his designee with respect thereto. Such 
officer or employee shall appear before the court, committee or body 
and, if the President and Chairman or his designee has not authorized 
disclosure, the employee shall respectfully decline to disclose the 
information or produce the files, documents, and records demanded or 
requested, basing such refusal upon this part
[40 FR 7238, Feb. 19, 1975, as amended at 42 FR 56316, Oct. 25, 1977]



PART 405--PRIVACY ACT RULES--Table of Contents




Sec.
405.1  Purpose and scope.
405.2  Procedures for notification of existence of records pertaining to 
          individuals.
405.3  Procedures for requests for access to or disclosure of records 
          pertaining to individuals.
405.4  Correction of records pertaining to individuals.
405.5  Disclosure of records pertaining to individuals to agencies or to 
          individuals other than the individual to whom said records 
          pertain.

    Authority:  5 U.S.C. 552a(f).

    Source:  41 FR 19299, May 12, 1976, unless otherwise noted.



Sec. 405.1  Purpose and scope.

    This part sets forth the Eximbank procedures under the Privacy Act 
of 1974, as required by 5 U.S.C. 552a(f), whereby individuals may 
safeguard their privacy by obtaining access to and requesting 
corrections of those records under the control of Eximbank which contain 
information about them.



Sec. 405.2  Procedures for notification of existence of records pertaining to individuals.

    (a) The systems of records, as defined in the Privacy Act of 1974, 
maintained by Eximbank are listed annually in the Federal Register as 
required by that Act. Any individual who wishes to know whether any of 
these systems of records contains a record pertaining to him or her may 
either appear in person at Room 1031, 811 Vermont Avenue, NW., 
Washington, DC 20571, on work days between the hours of 8:45 a.m. and 
5:00 p.m. or may write to the Vice President--Administration, Export-
Import Bank of the United States, 811 Vermont Avenue, NW., Room 1031, 
Washington, DC 20571. It is recommended that requests be made in 
writing, as it will not always be possible to determine the existence of 
a

[[Page 418]]

record on the same day that the request is made. Verification of the 
identity of the requester will be in accordance with the requirements of 
Sec. 405.3 (a) and (b), of this part.
    (b) Requests for notification of the existence of a record should 
specifically identify the system of records involved, and should state, 
if the requester is other than the individual to whom the record 
pertains, the relationship of the requester to that individual. (Note 
that requests pursuant to the Privacy Act will not be honored by 
Eximbank unless made:
    (1) By the individual to whom the record pertains, or
    (2) By such individual's parent, if the individual is a minor, or
    (3) By such individual's legal guardian, if the individual has been 
declared to be incompetent due to physical or mental incapacity or age 
by a court of competent jurisdiction.)

If an individual is unable to specifically identify the system of 
records in which that individual is interested, as above required, he or 
she may so inform Eximbank in writing, stating the reason for the 
inability, with as full a description of said system of records or the 
record itself as possible. Eximbank will thereupon use its best efforts 
to specifically identify the desired system of records.
    (c) Eximbank will attempt to respond in writing to a request as to 
whether a record exists or for assistance in identifying the relevant 
system of records within 10 days from the time it receives the request 
or from the time any required identification is established, whichever 
is later.



Sec. 405.3  Procedures for requests for access to or disclosure of records pertaining to individuals.

    (a) Verification of the identity of individuals making written 
requests to the Vice President--Administration for access to or 
disclosure of records pertaining to him or her ordinarily will not be 
required. The signature upon such requests shall be deemed to be a 
certification by the individual signing that he or she is the individual 
to whom the record pertains or the parent of a minor or the duly 
appointed legal guardian of the individual to whom the record pertains. 
The Vice President--Administration may, however, require additional 
verification of identity as specified by him in any instance in which he 
deems it advisable.
    (b) In the case of individuals making requests by appearing at 
Eximbank, the amount of personal identification required will of 
necessity vary with the sensitivity of the record involved. Reasonable 
identification such as employment identification cards, drivers 
licenses, or credit cards will normally be accepted as sufficient 
evidence of identity in the absence of any indications to the contrary.
    (c) Any individual (subject to the requirements of Sec. 405.2(b) of 
this part) may request access to or disclosure of records pertaining to 
him or her by either appearing at Eximbank or by writing to Eximbank 
(all as provided in of Sec. 405.2(a) of this part). The request should 
specifically identify the system of records involved and the nature of 
the information therein which is desired. Eximbank will attempt to 
provide individuals who appear at Eximbank with access to their records 
(providing that all of the other relevant rules hereof are properly met) 
on the same day as their appearance, if such occurs before 11:00 a.m. 
Eximbank will attempt to answer written requests by making the record 
available within 10 working days of the request or by informing the 
requester of the need for additional identification or the tendering of 
fees (as specified in paragraph (d) of this section) within said time 
period. If the record is to be made available, Eximbank will so notify 
the requester, which notice will state when the requested disclosure 
will be sent or when and where the records will be available for 
personal inspection, and, if a copy of a record has been requested, the 
number of pages Eximbank will copy to comply with the individual's 
request and that the copy will be mailed to the individual or held at 
Eximbank for the individual upon receipt of a check or money order 
payable to Eximbank for the sum due for copying these documents. In the 
case of an adverse determination with respect to a request, the Vice 
President--Administration shall so notify the individual in writing,

[[Page 419]]

shall specify the reasons therefor and shall advise of the procedure for 
appealing such adverse determination to the General Counsel, as 
specified in Sec. 405.4(d) of this part.
    (d) Charges for copies of records will be at the rate of $0.10 per 
photocopy of each page. Where records are not susceptible to photo-
copying, e.g. punch cards, magnetic tapes or oversize materials, the 
amount charged will be actual cost, as determined on a case-by-case 
basis. Only one copy of each record requested will be supplied. No 
charge will be made unless the charge as computed above would exceed $3 
for each request or related series of requests. If a fee in excess of 
$25 would be required, the requester shall be notified and the fee must 
be tendered before the records will be copied.
    (e) If Eximbank refuses to comply with an individual's request for 
access, as above provided, that individual may, among other things, 
bring a civil action for relief against Eximbank in a district court of 
the United States.
    (f) Any individual may also request (in accordance with the 
procedures above set forth) a copy of the ``accounting'' kept of each 
disclosure made by Eximbank to another person or agency (except for 
certain specified disclosures) of the record pertaining to that 
individual.
[41 FR 19299, May 12, 1976, as amended at 43 FR 57864, Dec. 11, 1978]



Sec. 405.4  Correction of records pertaining to individuals.

    (a) Any individual (subject to the requirements of Sec. 405.2(b) of 
this part) is entitled to request amendment of records pertaining to him 
or her pursuant to 5 U.S.C. 552a(d)(2). Such a request shall be made in 
writing and addressed to the Vice President--Administration, Export-
Import Bank of the United States, 811 Vermont Avenue, NW., Room 1031, 
Washington, DC 20571.
    (b) The request should specify the record and systems of records 
involved, and should specify the exact correction desired and state that 
the request is made pursuant to the Privacy Act. An edited copy of the 
record showing the desired correction should be submitted, if possible. 
Within 10 working days of the receipt of a properly addressed request 
(or within 10 working days of the time the Vice President--
Administration becomes aware that a particular communication not 
addressed as prescribed above is a request for correction of a record 
under the Privacy Act), the Vice President--Administration shall 
acknowledge receipt of the request.
    (c) The Vice President--Administration upon the receipt of such a 
request shall promptly confer with the officer responsible for the 
record. In the event it is felt that correction is not warranted in 
whole or in part, the matter shall be brought to the attention of the 
General Counsel of Eximbank. If, after review by the General Counsel and 
discussion with the requester, if deemed helpful, it is determined that 
correction as requested is not warranted, a letter shall be sent by the 
Vice President--Administration to the requester denying his or her 
request and/or explaining what correction might be made if agreeable to 
the requester. This letter shall set forth the reasons for the refusal 
to honor the request for correction. It shall also inform him or her of 
his or her right to appeal this decision, and include a description of 
the appeals procedure set forth in paragraph (d) of this section.
    (d) An appeal may be taken from an adverse determination under 
paragraph (c) of this section to the President and Chairman or his 
designee. Such appeal must be made in writing and should clearly 
indicate that it is an appeal. The basis for the appeal should be set 
forth in the letter, and it should be mailed to the same address as 
listed in paragraph (a) of this section. A hearing at Eximbank may be 
requested. Such hearing will be informal, and shall be before the 
President and Chairman or his designee. Where no hearing is requested, 
the President and Chairman or his designee shall render his decision 
within thirty working days after receipt of the written appeal at 
Eximbank, unless the President and Chairman, for good cause shown, 
extends the 30-day period, and the appellant is advised in writing of 
such extension. If a hearing is requested, then Eximbank will attempt to 
contact the appellant within five working days and arrange a suitable 
time for the hearing.

[[Page 420]]

In such cases the decision of the President and Chairman or his designee 
shall be made within 30 working days after the hearing, unless the time 
is extended, as above provided, and the appellant is advised in writing 
of such extension.
    (e) The final decision of the President and Chairman or his designee 
in an appeal shall be in writing and the appellant shall be informed of 
the decision; if it is adverse to the appellant, the appellant shall be 
informed of the reasons for the refusal to amend the record and advised 
of his or her right to appeal the decision under 5 U.S.C. 552a(g)(1). 
The individual shall also be notified that he or she has the right to 
file with Eximbank a concise statement setting forth the reasons for his 
or her disagreement with the refusal of Eximbank to amend his or her 
record. Eximbank shall promptly inform any person or other agency about 
the correction of any record previously disclosed to that person or 
other agency (provided that an accounting of said disclosures was made). 
Eximbank shall, with respect to all prior disclosures and in any 
disclosure of a record made after the filing of a disagreement statement 
by the requesting individual, clearly note any portion of the record 
which is disputed and provide said recipient with copies of said 
statement, plus, at the agency's discretion, copies of a concise 
statement of the reasons for its decision not to make any corrections.
    (f) Assistance in preparing a request to amend a record or in 
appealing an adverse determination on such a request may be obtained 
from the Office of the General Counsel of Eximbank.
[41 FR 19299, May 12, 1976, as amended at 43 FR 57864, Dec. 11, 1978]



Sec. 405.5  Disclosure of records pertaining to individuals to agencies or to individuals other than the individual to whom said records pertain.

    Records subject to the Privacy Act that are requested by any 
individual other than the individual to whom they pertain (or as 
provided by Sec. 405.2(b) of this part) will not be made available 
except under the following circumstances:
    (a) Records required to be made available by the Freedom of 
Information Act will be released in response to a request formulated in 
accordance with regulations found at 12 CFR part 404.
    (b) Records not required by the Freedom of Information Act to be 
released, may be released, at the discretion of Eximbank, if the written 
consent of the individual to whom they pertain has been obtained or if 
such release would be authorized under 5 U.S.C. 552a (b) (1) or (3) 
through (11).
    (c) If an individual elects to inspect a record in person and 
desires to be accompanied by another person, the individual shall 
present to the Vice President--Administration a signed statement 
addressed to the Vice President--Administration by that individual 
authorizing his or her record to be disclosed to him or her in the 
presence of the accompanying named person.



PART 407--REGULATIONS GOVERNING PUBLIC OBSERVATION OF EXIMBANK MEETINGS--Table of Contents




Sec.
407.1  Purpose, scope and definitions.
407.2  Closing meetings.
407.3  Procedures applicable to regularly scheduled meetings.
407.4  Procedures applicable to other meetings.
407.5  Certification by General Counsel.
407.6  Transcripts, recordings and minutes of closed meetings.
407.7  Relationship to Freedom of Information Act.

    Authority:  Sec. (g) Government in the Sunshine Act, 5 U.S.C. 
552b(g); secs. (b) through (f), 5 U.S.C. 552b.

    Source:  42 FR 12417, Mar. 4, 1977, unless otherwise noted.



Sec. 407.1  Purpose, scope and definitions.

    (a) Consistent with the principles that: (1) The public is entitled 
to the fullest practicable information regarding the decision-making 
processes of the Federal Government, and (2) the rights of individuals 
and the ability of the Export-Import Bank of the United States to carry 
out its statutory responsibilities should be protected, this part is 
promulgated pursuant to the directive of section (g) of the Government 
in the Sunshine Act, 5 U.S.C.

[[Page 421]]

552b(g), and specifically implements sections (b) through (f) of said 
Act, 5 U.S.C. 552b (b) through (f).
    (b) The term meeting means any meeting of the Board of Directors of 
Eximbank at which a quorum is present or any meeting of the Executive 
Committee of the Board of Directors where deliberations of the Board of 
Directors or the Executive Committee determine or result in the joint 
conduct or disposition of official Eximbank business.
    (c) The term regularly scheduled meeting means meetings of the Board 
of Directors or the Executive Committee which are held at 9:00 a.m. on 
Thursday of each week.
    (d) The term General Counsel means the General Counsel and his or 
her designees.
[42 FR 12417, Mar. 4, 1977, as amended at 47 FR 12136, Mar. 22, 1982; 49 
FR 41237, Oct. 22, 1984]



Sec. 407.2  Closing meetings.

    (a) Except where Eximbank finds that the public interest requires 
otherwise, a meeting, or any portion thereof, may be closed to the 
public, where the Board of Directors or the Executive Committee 
determines that such meetings, or any portion thereof, or information 
pertaining to such meeting, or any portion thereof, is likely to:
    (1) Disclose matters that are: (i) Specifically authorized under 
criteria established by an Executive order to be kept secret in the 
interests of national defense or foreign policy and (ii) in fact 
properly classified pursuant to such Executive order;
    (2) Relate solely to the internal personnel rules and practices of 
Eximbank or any other agency;
    (3) Disclose matters specifically exempted from disclosure by 
statute (other than section 552 of title 5 U.S.C.), provided that such 
statute: (i) Requires that the matters be withheld from the public in 
such a manner as to leave no discretion on the issue, or (ii) 
establishes particular criteria for withholding or refers to particular 
types of matters to be withheld;
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would:
    (i) Interfere with enforcement proceedings,
    (ii) Deprive a person of a right to a fair trial or an impartial 
adjudication,
    (iii) Constitute an unwarranted invasion of personal privacy,
    (iv) Disclose the identity of a confidential source and, in the case 
of a record compiled by a criminal law enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
funished only by the confidential source,
    (v) Disclose investigative techniques and procedures, or
    (vi) Endanger the life or physical safety of law enforcement 
personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of an agency responsible for the regulation or supervision of 
financial institutions;
    (9) Disclose information the premature disclosure of which would:
    (i) In the case of an agency which regulates currencies, securities, 
commodities, or financial institutions, be likely to: (A) Lead to 
significant financial speculation in currencies, securities, or 
commodities, or (B) significantly endanger the stability of any 
financial institution; or
    (ii) In the case of Eximbank or any other agency, be likely to 
significantly frustrate implementation of a proposed agency action;

except that paragraph (a)(9)(ii) of this section shall not apply in any 
instance where the agency has already disclosed to the public the 
content or nature of its proposed action, or where the agency is 
required by law to make such disclosure on its own initiative prior to

[[Page 422]]

taking final agency on such proposal; or
    (10) Specifically concern Eximbank's issuance of a subpoena, or 
Eximbank's participation in a civil action or proceeding, an action in a 
foreign court or international tribunal, or an arbitration.
    (b) Inasmuch as opening any regularly scheduled meeting, or any 
portion thereof, to public observation will be likely to result in the 
disclosure of the kind of information set forth in paragraph (a) (4), 
(8), (9)(i) or (a)(10) of this section, or any combination thereof, of 
paragraph (a) of this section, the Board of Directors expects to close 
all regularly scheduled meetings to the public.
    (c) Any other meeting of Eximbank, or any portion thereof, will be 
open to public observation except where the Board of Directors 
determines that such meeting, or any portion thereof, is likely to 
disclose information of the kind set forth in any paragraph of 
Sec. 407.2(a). In the event that the Board of Directors closes such 
meeting, or any portion thereof, by virtue of paragraph (a)(4), (8), 
(9)(i)(A) or (a)(10) of this section, or any combination thereof, the 
procedure set forth in Sec. 407.3 below will apply, and in the event 
that the Board of Directors closes such meeting, or any portion thereof, 
by virtue of any of the remaining paragraphs of Sec. 407.2(a), or any 
combination thereof, the procedures set forth in Sec. 407.4 will apply.



Sec. 407.3  Procedures applicable to regularly scheduled meetings.

    (a) Announcements. Regularly scheduled meetings of the Board of 
Directors or the Executive Committee will be held at 9:00 a.m. every 
Thursday in the Board Room (Room 1141) of the Bank's headquarters. In 
the event that a regularly scheduled meeting is rescheduled, public 
announcement of the time, date and place of such meeting will be made at 
the earliest practicable time in the form of a notice posted in the 
Office of the Secretary. An agenda setting forth the subject matter of 
each regularly scheduled meeting will be made available in the Office of 
the Secretary (Room 935), telephone number (202) (566-8871) at the 
earliest practicable time, Provided, That individual items may be added 
to or deleted from any agenda at any time. Inquiries from the public 
regarding any regularly scheduled meeting shall be directed to the 
Office of the Secretary.
    (b) Voting. At the beginning of each regularly scheduled meeting, 
the Board of Directors or the Executive Committee will vote by recorded 
vote on whether to close such meeting. No proxy vote will be permitted. 
A record of such vote indicating the vote of each Director will be 
posted in the Office of the Secretary immediately following the 
conclusion of such meeting.
[42 FR 12417, Mar. 4, 1977, as amended at 47 FR 12136, Mar. 22, 1982; 49 
FR 9560, Mar. 14, 1984; 49 FR 41237, Oct. 22, 1984; 50 FR 8606, Mar. 4, 
1985]



Sec. 407.4  Procedures applicable to other meetings.

    (a) Amendments. (1) For every meeting which is to be open to public 
observation or which is to be closed pursuant to any paragraph of 
Sec. 407.2(a) other than paragraphs (a) (4), (8), (9)(i) or (10), or any 
combination thereof, public announcement will be made at least one week 
before the meeting of the time, place, and the agenda setting forth the 
subject matter of such meeting, and whether the meeting, or any portion 
thereof, is to be open or closed to the public.
    (2) Inquiries from the public regarding any such meeting shall be 
directed to the Office of the Secretary.
    (3) The one-week period for the announcement required by paragraph 
(a)(1) of this section may be reduced if the Board of Directors or the 
Executive Committee determines by a recorded vote that Eximbank business 
requires such meeting to be called at an earlier date. Public 
announcement of the time, place, and subject matter of such meeting, and 
whether open or closed to the public, will be made at the earliest 
practicable time.
    (4) The time or place of a meeting may be changed following the 
announcement required by paragraph (a)(1) of this section only if public 
announcement is made of such change at the earliest practicable time.
    (5) The subject matter of a meeting or the determination of the 
Board of Directors or the Executive Committee

[[Page 423]]

to open or close a meeting, or any portion thereof, to the public, may 
be changed following the announcement required by paragraph (a) of this 
section only if:
    (i) A majority of the entire voting membership of the Board of 
Directors or the Executive Committee determines by a recorded vote that 
Eximbank business so requires and that no earlier announcement of the 
change was possible; and
    (ii) The Board of Directors or the Executive Committee announces 
such change and the vote of each Director upon such change at the 
earliest practicable time.
    (6) Individual items may be added to or deleted from any agenda at 
any time.
    (7) The announcements required pursuant to this section shall be 
made in the form of a notice posted in the Office of the Secretary. In 
addition, immediately following each announcement required by this 
section, notice of: (i) The time, place and subject matter of a meeting 
which is to be open to public observation or which is to be closed 
pursuant to any section of Sec. 407.2(a) other than paragraphs (a) (4), 
(8), (9)(i) or (10), or any combination thereof, (ii) the decision to 
open or close such meeting, or any portion thereof, or (iii) any change 
in any announcement previously made shall be submitted for publication 
in the Federal Register.
    (8) The information required by this subsection shall be disclosed 
except to the extent that it is exempt from disclosure under any section 
of Sec. 407.2(a).
    (b) Voting. (1) Action to close a meeting, or any portion thereof, 
pursuant to any section of Sec. 407.2(a), other than paragraphs (a) (4), 
(8), (9)(i), or (10), or any combination thereof, shall be taken only 
when a majority of the entire voting membership of the Board of 
Directors or the Executive Committee votes to take such action.
    (2) A separate vote of the Board of Directors or the Executive 
Committee shall be taken with respect to each meeting, or any portion 
thereof, which is proposed to be closed to the public pursuant to any 
section of Sec. 407.2(a) other than paragraphs (a) (4), (8), (9)(i) or 
(10), or any combination thereof, or with respect to any information 
which is proposed to be withheld under any section of Sec. 407.2(a), 
other than paragraphs (a) (4), (8), (9)(i) or (10), or any combination 
thereof.
    (3) A single vote of the Board of Directors or the Executive 
Committee may be taken with respect to a series of meetings, or any 
portion thereof, which are proposed to be closed to the public pursuant 
to any paragraph of Sec. 407.2(a), other than paragraphs (a) (4), (8), 
(9)(i) or (10), or combination thereof, or with respect to any 
information concerning such series of meetings, so long as each meeting 
in such series involves the same particular matters and is scheduled to 
be held no more than 30 days after the initial meeting in such series.
    (4) Whenever any person whose interests may be directly affected by 
any portion of a meeting which is to be open to public observation 
submits a request in writing to the Office of the Secretary that the 
Board of Directors or the Executive Committee close such portion to the 
public under paragraph (a) (5), (6) or (7) of Sec. 407.2, the Board of 
Directors or the Executive Committee, shall vote by recorded vote on 
whether to close such portion.
    (5) No proxy vote will be permitted for any vote required under this 
section.
    (6) A record of each vote indicating the vote of each Director 
pursuant to paragraphs (b) (1), (2), (3) or (4) of this section will be 
posted in the Office of the Secretary within one day after it has been 
taken, Provided, That if a meeting or portion thereof is to be closed, 
such record shall be accompanied by: (i) A full written explanation of 
the reasons for closing such meeting or portion thereof and (ii) a list 
of all persons expected to attend such meeting or portion thereof and 
their affiliation.



Sec. 407.5  Certification by General Counsel.

    For every meeting closed pursuant to any paragraph of Sec. 407.2(a), 
the General Counsel of Eximbank will be asked to certify prior to such 
meeting that in his or her opinion such meeting may properly be closed 
to the public, and to state which of the exemptions set forth

[[Page 424]]

in Sec. 407.2(a) he or she has relied upon. A copy of such certification 
will be posted in the Office of the Secretary. The original 
certification together with a statement from the presiding officer of 
such meeting setting forth the time, date and place of such meeting and 
the persons present will be retained by Eximbank as part of the 
transcript, recording or minutes of such meeting described below.



Sec. 407.6  Transcripts, recordings and minutes of closed meetings.

    Eximbank will maintain a complete transcript or electronic recording 
of the proceedings of every meeting or portion thereof closed to the 
public, Provided, however, That if any meeting or portion thereof is 
closed pursuant to paragraphs (8), (9)(i) or (10) of Sec. 407.2(a), 
Eximbank may maintain a set of detailed minutes for such meetings in 
lieu of a transcript or electronic recording. The entire transcript, 
electronic recording or set of minutes of a meeting will be made 
promptly available to the public for inspection and copying in the 
Office of the Secretary. Copies of such transcript or minutes, as well 
as copies of the transcription of such recording disclosing the identity 
of each speaker, will be furnished to any person at the actual cost of 
duplication or transcription. However, Eximbank will not make available 
for inspection or copying the transcript, electronic recording or 
minutes of the discussions of any item on the agenda of such meeting 
which contains information of the kind described in Sec. 407.2(a). 
Requests to inspect or to have copies made of any transcript, electronic 
recording or set of minutes of any meeting or item(s) on the agenda, 
thereof should be made in writing to the General Counsel and if 
possible, identify the time, date and place of such meeting and briefly 
describe the item(s) being sought. Eximbank will maintain a complete 
verbatim copy of the transcript, a complete electronic recording or a 
complete copy of the minutes of each meeting, or portion thereof, closed 
to the public for two years after such meeting or one year from the date 
of final action of the Board of Directors or the Executive Committee on 
all items on the agenda of such meeting, whichever occurs later.



Sec. 407.7  Relationship to Freedom of Information Act.

    Nothing in this part expands or limits the present rights of any 
person under part 404, except that the exemptions contained in 
Sec. 407.2 shall govern in the case of any request made pursuant to part 
404 to copy or inspect the transcripts, recordings or minutes described 
in Sec. 407.6.



PART 408--PROCEDURES FOR COMPLIANCE WITH THE NATIONAL ENVIRONMENTAL POLICY ACT--Table of Contents




                           Subpart A--General

Sec.
408.1  Background.
408.2  Purpose.
408.3  Applicability.

               Subpart B--Eximbank Implementing Procedures

408.4  Early involvement in foreign activities for which Eximbank 
          financing may be requested.
408.5  Ensuring environmental documents are actually considered in 
          Agency decision-making.
408.6  Typical classes of action.
408.7  Environmental information.

    Authority:  National Environmental Policy Act of 1969; 42 U.S.C. 
4321 et seq.

    Source:  44 FR 50811, Aug. 30, 1979, unless otherwise noted.



                           Subpart A--General



Sec. 408.1  Background.

    (a) The National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 
4321 et seq.) establishes national policies and goals for the protection 
of the environment. Section 102(2) of NEPA contains certain procedural 
requirements directed toward the attainment of such goals. In 
particular, all Federal agencies are required to give appropriate 
consideration to the environmental effects of their proposed actions in 
their decision-making and to prepare detailed environmental statements 
on

[[Page 425]]

recommendations or reports on proposals for legislation and other major 
Federal Actions significantly affecting the quality of the human 
environment.
    (b) Executive Order 11991 of May 24, 1977, directed the Council on 
Environmental Quality (CEQ) to issue regulations to implement the 
procedural provisions of NEPA (NEPA Regulations). Accordingly, CEQ 
issued final NEPA Regulations which are binding on all Federal agencies 
as of July 30, 1979 (40 CFR parts 1500 through 1508) on November 29, 
1979. These Regulations provide that each Federal agency shall as 
necessary adopt implementing procedures to supplement the NEPA 
Regulations. Section 1507.3(b) of the NEPA Regulations identifies those 
sections of the NEPA Regulations which must be addressed in agency 
procedures.



Sec. 408.2  Purpose.

    The purpose of this part is to establish procedures which supplement 
the NEPA Regulations and provide for the implementation of those 
provisions identified in Sec. 1507.3(b) of the NEPA Regulations.



Sec. 408.3  Applicability.

    Historically, virtually all financing provided by Eximbank has been 
in aid of U.S. exports which involve no effects on the quality of the 
environment within the United States, its territories or possessions. 
Eximbank has separate procedures for conducting environmental reviews 
where such reviews are required by E.O. 12114 (January 4, 1979) because 
of potential effects on the environment of global commons areas or on 
the environment of foreign nations. The procedures set forth in this 
part apply to the relatively rare cases where Eximbank financing of U.S. 
exports may affect environmental quality in the United States, its 
territories or possessions.



               Subpart B--Eximbank Implementing Procedures



Sec. 408.4  Early involvement in foreign activities for which Eximbank financing may be requested.

    (a) Section 1501.2(d) of the NEPA Regulations requires agencies to 
provide for early involvement in actions which, while planned by private 
applicants or other non-Federal entities, require some form of Federal 
approval. Pursuant to the Export-Import Bank Act of 1945, as amended, 
Eximbank is asked to provide financing for transactions involving 
exports of U.S. goods and services for projects in foreign countries 
which are planned by non-U.S. entities (Transactions).
    (b) To implement the requirements of Sec. 1501.2(d) with respect to 
these Transactions, Eximbank:
    (1) Will provide on a project-by-project basis to applicant seeking 
financing from Eximbank guidance as to the scope and level of 
environmental information to be used in evaluating a proposed 
Transaction where: (i) The proposed Eximbank financing would be a major 
action and (ii) a Transaction may significantly affect the quality of 
the human environment in the United States, its territories or 
possessions.
    (2) Upon receipt of an application for Eximbank financing or 
notification that an application will be filed, will consult as required 
with other appropriate parties to initiate and coordinate the necessary 
environmental analyses.

These responsibilities will be performed by the General Counsel and the 
Engineers of Eximbank.
    (c) To facilitate Eximbank review of Transactions for which positive 
determinations have been made under paragraphs (b)(1)(i) and (ii) of 
this section, applicants should:
    (1) Consult with the Engineer as early as possible in the planning 
process for guidance on the scope and level of environmental information 
required to be submitted in support of their application;
    (2) Conduct any studies which are deemed necessary and appropriate 
by Eximbank to determine the impact of the proposed action on the 
quality of the human environment;
    (3) Consult with appropriate U.S. (Federal, regional, State and 
local) agencies and other potentially interested parties during 
preliminary planning stages to ensure that all environmental factors are 
identified;

[[Page 426]]

    (4) Submit applications for all U.S. (Federal, regional, State and 
local) approvals as early as possible in the planning process;
    (5) Notify Eximbank as early as possible of all other applicable 
legal requirements for project completion so that all applicable Federal 
environmental reviews may be coordinated; and
    (6) Notify Eximbank of all known parties potentially affected by or 
interested in the proposed action.



Sec. 408.5  Ensuring environmental documents are actually considered in Agency decision-making.

    Section 1505.1 of the NEPA Regulations contains requirements to 
ensure adequate consideration of environmental documents in agency 
decision-making. To implement these requirements, Eximbank officials 
will:
    (a) Consider all relevant environmental documents in evaluating 
applications for Eximbank financing;
    (b) Ensure that all relevant environmental documents, comments and 
responses accompany the application through Eximbank's review processes;
    (c) Consider only those alternatives encompassed by the range of 
alternatives discussed in the relevant environmental documents when 
evaluating an application which is the subject of an EIS.

----------------------------------------------------------------------------------------------------------------
                                                                                     Key officials or offices   
         Eximbank actions           Start of NEPA process    Completion of NEPA        required to consider     
                                                                  process             environmental documents   
----------------------------------------------------------------------------------------------------------------
Issuance of Preliminary Commitment  When application is    When the Board of      Under Sec.  408.4(b)(1) (i)   
 (P.C.).                             received.              Directors meets to     and (ii), General Counsel to 
                                                            consider               determine whether requested  
                                                            application. The       Eximbank financing is a major
                                                            Board may notify       action and Engineer to       
                                                            applicant that         determine whether proposed   
                                                            environmental          Transaction may significantly
                                                            effects will be        affect the quality of the    
                                                            considered when        human environment in the     
                                                            final commitment is    United States, its           
                                                            requested and          territories or possessions.  
                                                            request information                                 
                                                            on environmental                                    
                                                            matters.                                            
Issuance of Final Commitment......  When application is    When the Board of      (If no P.C. has been issued,  
                                     received.              Directors meets to     key offices will make        
                                                            consider application.  determinations mentioned     
                                                                                   above.) Engineer to collect, 
                                                                                   prepare or arrange for       
                                                                                   preparation of all           
                                                                                   environmental documents.     
----------------------------------------------------------------------------------------------------------------



Sec. 408.6  Typical classes of action.

    (a) Section 1507.3(c)(2) of the NEPA Regulations in conjunction with 
Sec. 1508.4 thereof requires agencies to establish three typical classes 
of action for similar treatment under NEPA. These typical classes of 
action are set forth below:

----------------------------------------------------------------------------------------------------------------
                                              Actions normally requiring                                        
    Actions normally requiring EIS's        assessments but not necessarily      Actions normally not requiring 
                                                         EIS's                        assessments or EIS's      
----------------------------------------------------------------------------------------------------------------
None...................................  Applications for Eximbank financing   Applications for Eximbank        
                                          under the direct lending program in   financing in the form of        
                                          support of transactions for which     insurance or guarantees.        
                                          determinations under Sec.                                             
                                          408.4(b)(1) (i) and (ii) above may                                    
                                          be affirmative.                                                       
----------------------------------------------------------------------------------------------------------------

    (b) Eximbank will independently determine whether an EIS or an 
environmental assessment is required where:
    (1) A proposal for agency action is not covered by one of the 
typical classes of action above; or
    (2) For actions which are covered, the presence of extraordinary 
circumstances indicates that some other level of environmental review 
may be appropriate.



Sec. 408.7  Environmental information.

    Interested persons may contact the General Counsel regarding 
Eximbank's compliance with NEPA.

[[Page 427]]



PART 410--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY EXPORT-IMPORT BANK OF THE UNITED STATES--Table of Contents




Sec.
410.101  Purpose.
410.102  Application.
410.103  Definitions.
410.104--410.109  [Reserved]
410.110  Self-evaluation.
410.111  Notice.
410.112--410.129  [Reserved]
410.130  General prohibitions against discrimination.
410.131--410.139  [Reserved]
410.140  Employment.
410.141--410.148  [Reserved]
410.149  Program accessibility: Discrimination prohibited.
410.150  Program accessibility: Existing facilities.
410.151  Program accessibility: New construction and alterations.
410.152--410.159  [Reserved]
410.160  Communications.
410.161--410.169  [Reserved]
410.170  Compliance procedures.
410.171--410.999  [Reserved]

    Authority:  29 U.S.C. 794.

    Source:  51 FR 4575, 4579, Feb. 5, 1986, unless otherwise noted.



Sec. 410.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by Executive agencies or the United States Postal 
Service.



Sec. 410.102  Application.

    This part applies to all programs or activities conducted by the 
agency.



Sec. 410.103  Definitions.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, telecommunications devices and other similar services 
and devices. Auxiliary aids useful for persons with impaired hearing 
include telephone handset amplifiers, telephones compatible with hearing 
aids, telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment.
    As used in this definition, the phrase:
    (l) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one of more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited

[[Page 428]]

to, such diseases and conditions as orthopedic, visual, speech, and 
hearing impairments, cerebral palsy, epilepsy, muscular dystrophy, 
multiple sclerosis, cancer, heart disease, diabetes, mental retardation, 
emotional illness, and drug addition and alcholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the agency as having such an impairment.
    Qualified handicapped person means--
    (1) With respect to any agency program or activity under which a 
person is required to perform services or to achieve a level of 
accomplishment, a handicapped person who meets the essential eligibility 
requirements and who can achieve the purpose of the program or activity 
without modifications in the program or activity that the agency can 
demonstrate would result in a fundamental alteration in its nature; or
    (2) With respect to any other program or activity, a handicapped 
person who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity.
    (3) Qualified handicapped person is defined for purposes of 
employment in 29 CFR 1613.702(f), which is made applicable to this part 
by Sec. 410.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617), 
and the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As used 
in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
[51 FR 4575, 4579, Feb. 5, 1986; 51 FR 7543, Mar. 5, 1986]



Secs. 410.104--410.109  [Reserved]



Sec. 410.110  Self-evaluation.

    (a) The agency shall, by April 9, 1987, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including handicapped persons or organizations representing handicapped 
persons, to participate in the self-evaluation process by submitting 
comments (both oral and written).
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspections:
    (1) A description of areas examined and any problems identified, and
    (2) A description of any modifications made.



Sec. 410.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this regulation.

[[Page 429]]



Secs. 410.112--410.129  [Reserved]



Sec. 410.130  General prohibitions against discrimination.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination under any program or activity 
conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualfied handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective in affording equal opportunity to 
obtain the same result, to gain the same benefit, or to reach the same 
level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons than is 
provided to others unless such action is necessary to provide qualified 
handicapped persons with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified handicapped person in the enjoyment 
of any right, privilege, advantage, or opportunity enjoyed by others 
receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified handicapped person the 
opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified handicapped persons to discrimination on the 
basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to handicapped persons.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude handicapped persons from, deny them the benefits of, or 
otherwise subject them to discrimination under any program or activity 
conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to handicapped persons.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified handicapped persons to 
discrimination on the basis of handicap.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to handicapped 
persons or the exclusion of a specific class of handicapped persons from 
a program limited by Federal statute or Executive order to a different 
class of handicapped persons is not prohibited by this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified handicapped 
persons.



Secs. 410.131--410.139  [Reserved]



Sec. 410.140  Employment.

    No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
conducted by the agency. The definitions, requirements, and procedures 
of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613, shall apply to employment in federally conducted programs or 
activities.

[[Page 430]]



Secs. 410.141--410.148  [Reserved]



Sec. 410.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 410.150, no qualified 
handicapped person shall, because the agency's facilities are 
inaccessible to or unusable by handicapped persons, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 410.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by handicapped persons. This paragraph does 
not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by handicapped persons; or
    (2) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 410.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
handicapped persons receive the benefits and services of the program or 
activity.
    (b) Methods. The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any other methods that result in 
making its programs or activities readily accessible to and usable by 
handicapped persons. The agency is nor required to make structural 
changes in existing facilities where other methods are effective in 
achieving compliance with this section. The agency, in making 
alterations to existing buildings, shall meet accessibility requirements 
to the extent compelled by the Architectural Barriers Act of 1968, as 
amended (42 U.S.C. 4151 through 4157), and any regulations implementing 
it. In choosing among available methods for meeting the requirements of 
this section, the agency shall give priority to those methods that offer 
programs and activities to qualified handicapped persons in the most 
integrated setting appropriate.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by June 6, 1986, except that 
where structural changes in facilities are undertaken, such changes 
shall be made by April 7, 1989, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by October 7, 1986, a transition plan setting 
forth the steps necessary to complete such changes. The agency shall 
provide an opportunity to interested persons, including handicapped 
persons or organizations representing handicapped persons, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to handicapped 
persons;

[[Page 431]]

    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.
[51 FR 4575, 4579, Feb. 5, 1986; 51 FR 7543, Mar. 5, 1986]



Sec. 410.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
handicapped persons. The definitions, requirements, and standards of the 
Architectural Barriers Act (42 U.S.C. 4151 through 4157), as established 
in 41 CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 410.152--410.159  [Reserved]



Sec. 410.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford a handicapped person an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
handicapped person.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf persons (TDD's) or 
equally effective telecommunication systems shall be used.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 410.160 would result 
in such alteration or burdens. The decision that compliance would result 
in such alteration or burdens must be made by the agency head or his or 
her designee after considering all agency resources available for use in 
the funding and operation of the conducted program or activity, and must 
be accompanied by a written statement of the reasons for reaching that 
conclusion. If an action required to comply with this section would 
result in such an alteration or such burdens, the agency shall take any 
other action that would not result in such an alteration or such burdens 
but would nevertheless ensure that, to the maximum extent possible, 
handicapped persons receive the benefits and services of the program or 
activity.



Secs. 410.161--410.169  [Reserved]



Sec. 410.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section

[[Page 432]]

504 with respect to employment according to the procedures established 
by the Equal Employment Opportunity Commission in 29 CFR part 1613 
pursuant to section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 
791).
    (c) General Counsel, Export-Import Bank of the United States shall 
be responsible for coordinating implementation of this section. 
Complaints may be sent to General Counsel, Export-Import Bank of the 
United States, 811 Vermont Avenue, NW., Room 947, Washington, DC 20571.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151 through 4157), or section 502 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily 
accessible to and usable by handicapped persons.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found;
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 410.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.
[51 FR 4575, 4579, Feb. 5, 1986, as amended at 51 FR 7543, Mar. 5, 1986]



Secs. 410.171--410.999  [Reserved]



PART 411--NEW RESTRICTIONS ON LOBBYING--Table of Contents




                           Subpart A--General

411.100  Conditions on use of funds.
411.105  Definitions.
411.110  Certification and disclosure.

                 Subpart B--Activities by Own Employees

411.200  Agency and legislative liaison.
411.205  Professional and technical services.
411.210  Reporting.

            Subpart C--Activities by Other Than Own Employees

411.300  Professional and technical services.

                  Subpart D--Penalties and Enforcement

411.400  Penalties.
411.405  Penalty procedures.
411.410  Enforcement.

                          Subpart E--Exemptions

411.500  Secretary of Defense.

                        Subpart F--Agency Reports

411.600  Semi-annual compilation.
411.605  Inspector General report.

Appendix A to Part 411--Certification Regarding Lobbying
Appendix B to Part 411--Disclosure Form to Report Lobbying

    Authority:  Sec. 319, Pub. L. 101-121 (31 U.S.C. 1352); 5 U.S.C. 
552a.

[[Page 433]]


    Source:  55 FR 6737 and 6747, Feb. 26, 1990, unless otherwise noted.

    Cross Reference: See also Office of Management and Budget notice 
published at 54 FR 52306, Dec. 20, 1989.



                           Subpart A--General



Sec. 411.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative ageement to pay any person 
for influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with any of the following 
covered Federal actions: the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (b) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or cooperative agreement shall file with that 
agency a certification, set forth in appendix A, that the person has not 
made, and will not make, any payment prohibited by paragraph (a) of this 
section.
    (c) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or a cooperative agreement shall file with that 
agency a disclosure form, set forth in appendix B, if such person has 
made or has agreed to make any payment using nonappropriated funds (to 
include profits from any covered Federal action), which would be 
prohibited under paragraph (a) of this section if paid for with 
appropriated funds.
    (d) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a statement, set forth in appendix A, whether that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.
    (e) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a disclosure form, set forth in appendix B, if that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.



Sec. 411.105  Definitions.

    For purposes of this part:
    (a) Agency, as defined in 5 U.S.C. 552(f), includes Federal 
executive departments and agencies as well as independent regulatory 
commissions and Government corporations, as defined in 31 U.S.C. 
9101(1).
    (b) Covered Federal action means any of the following Federal 
actions:
    (1) The awarding of any Federal contract;
    (2) The making of any Federal grant;
    (3) The making of any Federal loan;
    (4) The entering into of any cooperative agreement; and,
    (5) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement.

Covered Federal action does not include receiving from an agency a 
commitment providing for the United States to insure or guarantee a 
loan. Loan guarantees and loan insurance are addressed independently 
within this part.
    (c) Federal contract means an acquisition contract awarded by an 
agency, including those subject to the Federal Acquisition Regulation 
(FAR), and any other acquisition contract for real or personal property 
or services not subject to the FAR.
    (d) Federal cooperative agreement means a cooperative agreement 
entered into by an agency.
    (e) Federal grant means an award of financial assistance in the form 
of money, or property in lieu of money, by the Federal Government or a 
direct

[[Page 434]]

appropriation made by law to any person. The term does not include 
technical assistance which provides services instead of money, or other 
assistance in the form of revenue sharing, loans, loan guarantees, loan 
insurance, interest subsidies, insurance, or direct United States cash 
assistance to an individual.
    (f) Federal loan means a loan made by an agency. The term does not 
include loan guarantee or loan insurance.
    (g) Indian tribe and tribal organization have the meaning provided 
in section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450B). Alaskan Natives are included under the definitions 
of Indian tribes in that Act.
    (h) Influencing or attempting to influence means making, with the 
intent to influence, any communication to or appearance before an 
officer or employee or any agency, a Member of Congress, an officer or 
employee of Congress, or an employee of a Member of Congress in 
connection with any covered Federal action.
    (i) Loan guarantee and loan insurance means an agency's guarantee or 
insurance of a loan made by a person.
    (j) Local government means a unit of government in a State and, if 
chartered, established, or otherwise recognized by a State for the 
performance of a governmental duty, including a local public authority, 
a special district, an intrastate district, a council of governments, a 
sponsor group representative organization, and any other instrumentality 
of a local government.
    (k) Officer or employee of an agency includes the following 
individuals who are employed by an agency:
    (1) An individual who is appointed to a position in the Government 
under title 5, U.S. Code, including a position under a temporary 
appointment;
    (2) A member of the uniformed services as defined in section 101(3), 
title 37, U.S. Code;
    (3) A special Government employee as defined in section 202, title 
18, U.S. Code; and,
    (4) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, U.S. Code 
appendix 2.
    (l) Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, and local government, 
regardless of whether such entity is operated for profit or not for 
profit. This term excludes an Indian tribe, tribal organization, or any 
other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (m) Reasonable compensation means, with respect to a regularly 
employed officer or employee of any person, compensation that is 
consistent with the normal compensation for such officer or employee for 
work that is not furnished to, not funded by, or not furnished in 
cooperation with the Federal Government.
    (n) Reasonable payment means, with respect to perfessional and other 
technical services, a payment in an amount that is consistent with the 
amount normally paid for such services in the private sector.
    (o) Recipient includes all contractors, subcontractors at any tier, 
and subgrantees at any tier of the recipient of funds received in 
connection with a Federal contract, grant, loan, or cooperative 
agreement. The term excludes an Indian tribe, tribal organization, or 
any other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (p) Regularly employed means, with respect to an officer or employee 
of a person requesting or receiving a Federal contract, grant, loan, or 
cooperative agreement or a commitment providing for the United States to 
insure or guarantee a loan, an officer or employee who is employed by 
such person for at least 130 working days within one year immediately 
preceding the date of the submission that initiates agency consideration 
of such person for receipt of such contract, grant, loan, cooperative 
agreement, loan insurance commitment, or loan guarantee commitment. An 
officer or employee who is employed by such person for less than 130 
working days within one year immediately preceding the date of the 
submission that initiates agency consideration of such person shall be 
considered to be regularly employed as

[[Page 435]]

soon as he or she is employed by such person for 130 working days.
    (q) State means a State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, a territory or possession of 
the United States, an agency or instrumentality of a State, and a multi-
State, regional, or interstate entity having governmental duties and 
powers.



Sec. 411.110  Certification and disclosure.

    (a) Each person shall file a certification, and a disclosure form, 
if required, with each submission that initiates agency consideration of 
such person for:
    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000.
    (b) Each person shall file a certification, and a disclosure form, 
if required, upon receipt by such person of:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000,

Unless such person previously filed a certification, and a disclosure 
form, if required, under paragraph (a) of this section.
    (c) Each person shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by such person under 
paragraph (a) or (b) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or,
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.
    (d) Any person who requests or receives from a person referred to in 
paragraph (a) or (b) of this section:
    (1) A subcontract exceeding $100,000 at any tier under a Federal 
contract;
    (2) A subgrant, contract, or subcontract exceeding $100,000 at any 
tier under a Federal grant;
    (3) A contract or subcontract exceeding $100,000 at any tier under a 
Federal loan exceeding $150,000; or,
    (4) A contract or subcontract exceeding $100,000 at any tier under a 
Federal cooperative agreement,

Shall file a certification, and a disclosure form, if required, to the 
next tier above.
    (e) All disclosure forms, but not certifications, shall be forwarded 
from tier to tier until received by the person referred to in paragraph 
(a) or (b) of this section. That person shall forward all disclosure 
forms to the agency.
    (f) Any certification or disclosure form filed under paragraph (e) 
of this section shall be treated as a material representation of fact 
upon which all receiving tiers shall rely. All liability arising from an 
erroneous representation shall be borne solely by the tier filing that 
representation and shall not be shared by any tier to which the 
erroneous representation is forwarded. Submitting an erroneous 
certification or disclosure constitutes a failure to file the required 
certification or disclosure, respectively. If a person fails to file a 
required certification or disclosure, the United States may pursue all 
available remedies, including those authorized by section 1352, title 
31, U.S. Code.
    (g) For awards and commitments in process prior to December 23, 
1989, but not made before that date, certifications shall be required at 
award or commitment, covering activities occurring between December 23, 
1989, and the date of award or commitment. However, for awards and 
commitments in process prior to the December 23, 1989 effective date of 
these provisions, but not made before December 23, 1989, disclosure 
forms shall not be required at time of award or commitment but shall be 
filed within 30 days.

[[Page 436]]

    (h) No reporting is required for an activity paid for with 
appropriated funds if that activity is allowable under either subpart B 
or C.



                 Subpart B--Activities by Own Employees



Sec. 411.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 411.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement if 
the payment is for agency and legislative liaison activities not 
directly related to a covered Federal action.
    (b) For purposes of paragraph (a) of this section, providing any 
information specifically requested by an agency or Congress is allowable 
at any time.
    (c) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable at any time only 
where they are not related to a specific solicitation for any covered 
Federal action:
    (1) Discussing with an agency (including individual demonstrations) 
the qualities and characteristics of the person's products or services, 
conditions or terms of sale, and service capabilities; and,
    (2) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for an 
agency's use.
    (d) For purposes of paragraph (a) of this section, the following 
agencies and legislative liaison activities are allowable only where 
they are prior to formal solicitation of any covered Federal action:
    (1) Providing any information not specifically requested but 
necessary for an agency to make an informed decision about initiation of 
a covered Federal action;
    (2) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and,
    (3) Capability presentations by persons seeking awards from an 
agency pursuant to the provisions of the Small Business Act, as amended 
by Pub. L. 95-507 and other subsequent amendments.
    (e) Only those activities expressly authorized by this section are 
allowable under this section.



Sec. 411.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 411.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement or 
an extension, continuation, renewal, amendment, or modification of a 
Federal contract, grant, loan, or cooperative agreement if payment is 
for professional or technical services rendered directly in the 
preparation, submission, or negotiation of any bid, proposal, or 
application for that Federal contract, grant, loan, or cooperative 
agreement or for meeting requirements imposed by or pursuant to law as a 
condition for receiving that Federal contract, grant, loan, or 
cooperative agreement.
    (b) For purposes of paragraph (a) of this section, professional and 
technical services shall be limited to advice and analysis directly 
applying any professional or technical discipline. For example, drafting 
of a legal document accompanying a bid or proposal by a lawyer is 
allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one

[[Page 437]]

proposal over another are not allowable under this section because the 
lawyer is not providing professional legal services. Similarly, 
communications with the intent to influence made by an engineer 
providing an engineering analysis prior to the preparation or submission 
of a bid or proposal are not allowable under this section since the 
engineer is providing technical services but not directly in the 
preparation, submission or negotiation of a covered Federal action.
    (c) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (d) Only those services expressly authorized by this section are 
allowable under this section.



Sec. 411.210  Reporting.

    No reporting is required with respect to payments of reasonable 
compensation made to regularly employed officers or employees of a 
person.



            Subpart C--Activities by Other Than Own Employees



Sec. 411.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 411.100 (a), does not apply in the case of any reasonable payment 
to a person, other than an officer or employee of a person requesting or 
receiving a covered Federal action, if the payment is for professional 
or technical services rendered directly in the preparation, submission, 
or negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) The reporting requirements in Sec. 411.110 (a) and (b) regarding 
filing a disclosure form by each person, if required, shall not apply 
with respect to professional or technical services rendered directly in 
the preparation, submission, or negotiation of any commitment providing 
for the United States to insure or guarantee a loan.
    (c) For purposes of paragraph (a) of this section, professional and 
technical services shall be limited to advice and analysis directly 
applying any professional or technical discipline. For example, drafting 
or a legal document accompanying a bid or proposal by a lawyer is 
allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (d) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (e) Persons other than officers or employees of a person requesting 
or receiving a covered Federal action include consultants and trade 
associations.

[[Page 438]]

    (f) Only those services expressly authorized by this section are 
allowable under this section.



                  Subpart D--Penalties and Enforcement



Sec. 411.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such expenditure.
    (b) Any person who fails to file or amend the disclosure form (see 
appendix B) to be filed or amended if required herein, shall be subject 
to a civil penalty of not less than $10,000 and not more than $100,000 
for each such failure.
    (c) A filing or amended filing on or after the date on which an 
administrative action for the imposition of a civil penalty is commenced 
does not prevent the imposition of such civil penalty for a failure 
occurring before that date. An administrative action is commenced with 
respect to a failure when an investigating official determines in 
writing to commence an investigation of an allegation of such failure.
    (d) In determining whether to impose a civil penalty, and the amount 
of any such penalty, by reason of a violation by any person, the agency 
shall consider the nature, circumstances, extent, and gravity of the 
violation, the effect on the ability of such person to continue in 
business, any prior violations by such person, the degree of culpability 
of such person, the ability of the person to pay the penalty, and such 
other matters as may be appropriate.
    (e) First offenders under paragraph (a) or (b) of this section shall 
be subject to a civil penalty of $10,000, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $10,000 and $100,000, as 
determined by the agency head or his or her designee.
    (f) An imposition of a civil penalty under this section does not 
prevent the United States from seeking any other remedy that may apply 
to the same conduct that is the basis for the imposition of such civil 
penalty.



Sec. 411.405  Penalty procedures.

    Agencies shall impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 
sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 
3812, insofar as these provisions are not inconsistent with the 
requirements herein.



Sec. 411.410  Enforcement.

    The head of each agency shall take such actions as are necessary to 
ensure that the provisions herein are vigorously implemented and 
enforced in that agency.



                          Subpart E--Exemptions



Sec. 411.500  Secretary of Defense.

    (a) The Secretary of Defense may exempt, on a case-by-case basis, a 
covered Federal action from the prohibition whenever the Secretary 
determines, in writing, that such an exemption is in the national 
interest. The Secretary shall transmit a copy of each such written 
exemption to Congress immediately after making such a determination.
    (b) The Department of Defense may issue supplemental regulations to 
implement paragraph (a) of this section.



                        Subpart F--Agency Reports



Sec. 411.600  Semi-annual compilation.

    (a) The head of each agency shall collect and compile the disclosure 
reports (see appendix B) and, on May 31 and November 30 of each year, 
submit to the Secretary of the Senate and the Clerk of the House of 
Representatives a report containing a compilation of the information 
contained in the disclosure reports received during the six-month period 
ending on March 31 or September 30, respectively, of that year.
    (b) The report, including the compilation, shall be available for 
public inspection 30 days after receipt of the report by the Secretary 
and the Clerk.
    (c) Information that involves intelligence matters shall be reported 
only to the Select Committee on Intelligence of the Senate, the 
Permanent Select Committee on Intelligence of

[[Page 439]]

the House of Representatives, and the Committees on Appropriations of 
the Senate and the House of Representatives in accordance with 
procedures agreed to by such committees. Such information shall not be 
available for public inspection.
    (d) Information that is classified under Executive Order 12356 or 
any successor order shall be reported only to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of the 
House of Representatives or the Committees on Armed Services of the 
Senate and the House of Representatives (whichever such committees have 
jurisdiction of matters involving such information) and to the 
Committees on Appropriations of the Senate and the House of 
Representatives in accordance with procedures agreed to by such 
committees. Such information shall not be available for public 
inspection.
    (e) The first semi-annual compilation shall be submitted on May 31, 
1990, and shall contain a compilation of the disclosure reports received 
from December 23, 1989 to March 31, 1990.
    (f) Major agencies, designated by the Office of Management and 
Budget (OMB), are required to provide machine-readable compilations to 
the Secretary of the Senate and the Clerk of the House of 
Representatives no later than with the compilations due on May 31, 1991. 
OMB shall provide detailed specifications in a memorandum to these 
agencies.
    (g) Non-major agencies are requested to provide machine-readable 
compilations to the Secretary of the Senate and the Clerk of the House 
of Representatives.
    (h) Agencies shall keep the originals of all disclosure reports in 
the official files of the agency.



Sec. 411.605  Inspector General report.

    (a) The Inspector General, or other official as specified in 
paragraph (b) of this section, of each agency shall prepare and submit 
to Congress each year, commencing with submission of the President's 
Budget in 1991, an evaluation of the compliance of that agency with, and 
the effectiveness of, the requirements herein. The evaluation may 
include any recommended changes that may be necessary to strengthen or 
improve the requirements.
    (b) In the case of an agency that does not have an Inspector 
General, the agency official comparable to an Inspector General shall 
prepare and submit the annual report, or, if there is no such comparable 
official, the head of the agency shall prepare and submit the annual 
report.
    (c) The annual report shall be submitted at the same time the agency 
submits its annual budget justifications to Congress.
    (d) The annual report shall include the following: All alleged 
violations relating to the agency's covered Federal actions during the 
year covered by the report, the actions taken by the head of the agency 
in the year covered by the report with respect to those alleged 
violations and alleged violations in previous years, and the amounts of 
civil penalties imposed by the agency in the year covered by the report.

        Appendix A to Part 411--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

    The undersigned certifies, to the best of his or her knowledge and 
belief, that:
    (1) No Federal appropriated funds have been paid or will be paid, by 
or on behalf of the undersigned, to any person for influencing or 
attempting to influence an officer or employee of an agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (2) If any funds other than Federal appropriated funds have been 
paid or will be paid to any person for influencing or attempting to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a Member of Congress 
in connection with this Federal contract, grant, loan, or cooperative 
agreement, the undersigned shall complete and submit Standard Form-LLL, 
``Disclosure Form to Report Lobbying,'' in accordance with its 
instructions.
    (3) The undersigned shall require that the language of this 
certification be included in the award documents for all subawards at 
all tiers (including subcontracts, subgrants, and

[[Page 440]]

contracts under grants, loans, and cooperative agreements) and that all 
subrecipients shall certify and disclose accordingly.
    This certification is a material representation of fact upon which 
reliance was placed when this transaction was made or entered into. 
Submission of this certification is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required certification shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

            Statement for Loan Guarantees and Loan Insurance

    The undersigned states, to the best of his or her knowledge and 
belief, that:
    If any funds have been paid or will be paid to any person for 
influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with this commitment 
providing for the United States to insure or guarantee a loan, the 
undersigned shall complete and submit Standard Form-LLL, ``Disclosure 
Form to Report Lobbying,'' in accordance with its instructions.
    Submission of this statement is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

[[Page 441]]

       Appendix B to Part 411--Disclosure Form to Report Lobbying
[GRAPHIC] [TIFF OMITTED] TC23SE91.003


[[Page 442]]


[GRAPHIC] [TIFF OMITTED] TC23SE91.004


[[Page 443]]


[GRAPHIC] [TIFF OMITTED] TC23SE91.005


[[Page 444]]





PART 412--ACCEPTANCE OF PAYMENT FROM A NON-FEDERAL SOURCE FOR TRAVEL EXPENSES--Table of Contents




Sec.
412.1  Authority.
412.3  General.
412.5  Policy.
412.7  Conditions for acceptance.
412.9  Conflict of interest analysis.
412.11  Payment guidelines.
412.13  Limitations and penalties.

    Authority:  5 U.S.C. 5701-5709; 12 U.S.C. 635(2)(a)(1).

    Source:  59 FR 31136, June 17, 1994, unless otherwise noted.



Sec. 412.1  Authority.

    This part is issued under the authority of 5 U.S.C. 553, 5 U.S.C. 
5701-5709 and 12 U.S.C. 635(2)(a)(1).



Sec. 412.3  General.

    (a) Applicability. This part applies to acceptance by the Export-
Import Bank of the United States (Eximbank) of payment from a non-
Federal source for travel, subsistence, and related expenses with 
respect to the attendance of an employee in a travel status at any 
meeting or similar event relating to the official duties of the 
employee, other than those described in 41 CFR 304-1.2. This part does 
not authorize acceptance of such payments by an employee in his/her 
personal capacity.
    (b) Solicitation prohibited. An employee shall not solicit payment 
for travel, subsistence and related expenses from a non-Federal source. 
However, after receipt of an invitation from a non-Federal source to 
attend a meeting or similar event, Eximbank or the employee may inform 
the non-Federal source of this authority.
    (c) Definitions. As used in this part, the following definitions 
apply:
    (1) Conflicting non-Federal source. Conflicting non-Federal source 
means any person who, or entity other than the Government of the United 
States which, has interests that may be substantially affected by the 
performance or nonperformance of the employee's duties.
    (2) Employee. Employee means any director, officer or other employee 
of Eximbank.
    (3) Meeting or similar event. Meeting or similar event means a 
meeting, formal gathering, site visit, negotiation session or similar 
event that takes place away from the employee's official station and 
which is directly related to the mission of Eximbank. This term does not 
include any meeting or similar function described in 41 CFR 304-1.2 or 
sponsored by Eximbank. A meeting or similar event need not be widely 
attended for purposes of this definition.
    (4) Non-Federal source. Non-Federal source means any person or 
entity other than the Government of the United States. The term includes 
any individual, private or commercial entity, nonprofit organization or 
association, state, local, or foreign government, or international or 
multinational organization.
    (5) Payment. Payment means funds paid or reimbursed to Eximbank by a 
non-Federal source for travel, subsistence, and related expenses by 
check or similar instrument, or payment in kind.
    (6) Payment in kind. Payment in kind means goods, services or other 
benefits provided by a non-Federal source for travel, subsistence, and 
related expenses in lieu of funds paid to Eximbank by check or similar 
instrument for the same purpose.
    (7) Travel, subsistence and related expenses. Travel, subsistence 
and related expenses means the same types of expenses payable under 41 
CFR chapter 301.



Sec. 412.5  Policy.

    As provided in this part, Eximbank may accept payment from a non-
Federal source (or authorize an employee to receive such payment on its 
behalf) with respect to attendance of the employee at a meeting or 
similar event which the employee has been authorized to attend in an 
official capacity on behalf of Eximbank. The employee's immediate 
supervisor and Eximbank's designated agency ethics official or his/her 
designee (DAEO) must approve any offer and acceptance of payment under 
this part in accordance with the procedures described below. If the 
employee is a member of Eximbank's Board of Directors, only the DAEO's 
approval is required. Any employee authorized to

[[Page 445]]

travel in accordance with this part is subject to the maximum per diem 
or actual subsistence expense rates and transportation class of service 
limitations prescribed in 41 CFR chapter 301.



Sec. 412.7  Conditions for acceptance.

    (a) Eximbank may accept payment for employee travel from a non-
Federal source when a written authorization to accept payment is issued 
in advance of the travel following a determination by the employee's 
supervisor (except in the case of Board members) and the DAEO that the 
payment is:
    (1) For travel relating to an employee's official duties under an 
official travel authorization issued to the employee;
    (2) For attendance at a meeting or similar event as defined in 
Sec. 412.3(c)(3):
    (i) In which the employee's participation is necessary in order to 
further the mission of Eximbank;
    (ii) Which cannot be held at the offices of Eximbank for justifiable 
business reasons in light of the location and number of participants and 
the purpose of the meeting or similar event; and
    (iii) Which is taking place at a location and for a period of time 
that is appropriate for the purpose of the meeting or similar event;
    (3) From a non-Federal source that is not a conflicting non-Federal 
source or from a conflicting non-Federal source that has been approved 
under Sec. 412.9; and
    (4) In an amount which does not exceed the maximum per diem or 
actual subsistence expense rates and transportation class of service 
limitations prescribed in 41 CFR chapter 301.
    (b) An employee requesting approval of payment of travel expenses by 
a non-Federal source under this part shall submit to the employee's 
supervisor (except in the case of Board members) and the DAEO a written 
description of the following: the nature of the meeting or similar event 
and the reason that it cannot be held at Eximbank, the date(s) and 
location of the meeting or similar event, the identities of all 
participants in the meeting or similar event, the name of the non-
Federal source offering to make the payment, the amount and method of 
the proposed payment, and the nature of the expenses.
    (c) Payments may be accepted from multiple sources under paragraph 
(a) of this section.



Sec. 412.9  Conflict of interest analysis.

    Eximbank may accept payment from a conflicting non-Federal source if 
the conditions of Sec. 412.7 are met and the employee's supervisor 
(except in the case of Board members) and the DAEO determine that 
Eximbank's interest in the employee's attendance at or participation in 
the meeting or similar event outweighs concern that acceptance of the 
payment by Eximbank may cause a reasonable person to question the 
integrity of Eximbank's programs and operations. In determining whether 
to accept payment, Eximbank shall consider all relevant factors, 
including the purpose of the meeting or similar event, the importance of 
the travel for Eximbank, the nature and sensitivity of any pending 
matter affecting the interests of the conflicting non-Federal source, 
the significance of the employee's role in any such matter, the identity 
of other expected participants, and the location and duration of the 
meeting or similar event.



Sec. 412.11  Payment guidelines.

    (a) Payments from a non-Federal source, other than payments in kind, 
shall be by check or similar instrument made payable to Eximbank. 
Payments from a non-Federal source, including payments in kind, are 
subject to the maximum per diem or actual subsistence expense rates and 
transportation class of service limitations prescribed in 41 CFR chapter 
301.
    (b) If Eximbank determines in advance of the travel that a payment 
covers some but not all of the per diem costs to be incurred by the 
employee, Eximbank shall authorize a reduced per diem rate, in 
accordance with 41 CFR part 301-7.12.



Sec. 412.13  Limitations and penalties.

    (a) This part is in addition to and not in place of any other 
authority under which Eximbank may accept payment from a non-Federal 
source or authorize an employee to accept such payment on behalf of 
Eximbank. This part shall

[[Page 446]]

not be applied in connection with the acceptance by Eximbank of payment 
for travel, subsistence, and related expenses incurred by an employee to 
attend a meeting or similar function described in and authorized by 41 
CFR part 304-1.
    (b) An employee who accepts any payment in violation of this part is 
subject to the following:
    (1) The employee may be required, in addition to any penalty 
provided by law and applicable regulations, to repay for deposit to the 
general fund of the Treasury, an amount equal to the amount of the 
payment so accepted; and
    (2) When repayment is required under paragraph (b)(1) of this 
section, the employee shall not be entitled to any payment or 
reimbursement from Eximbank for such expenses.



PARTS 413--499  [RESERVED]--Table of Contents



[[Page 447]]


                              FINDING AIDS




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  Redesignation Tables
  List of CFR Sections Affected--Transferred Regulations Formerly 
Appearing in Title 12 CFR, Chapter V
  List of CFR Sections Affected



[[Page 449]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 1998)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2--[Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)
        II  Federal Claims Collection Standards (General 
                Accounting Office--Department of Justice) (Parts 
                100--299)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Advisory Committee on Federal Pay (Parts 1400--1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
       VII  Advisory Commission on Intergovernmental Relations 
                (Parts 1700--1799)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)

[[Page 450]]

      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)
    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                          Title 6--[Reserved]

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Consumer Service, Department of Agriculture 
                (Parts 210--299)

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       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
      XIII  Northeast Dairy Compact Commission (Parts 1300--1399)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  [Reserved]
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)

[[Page 452]]

     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Justice (Parts 1--499)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Meat and Poultry 
                Inspection, Department of Agriculture (Parts 300--
                599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
        XI  United States Enrichment Corporation (Parts 1100--
                1199)
        XV  Office of the Federal Inspector for the Alaska Natural 
                Gas Transportation System (Parts 1500--1599)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)

[[Page 453]]

      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Thrift Depositor Protection Oversight Board (Parts 
                1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700-1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Export Administration, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)

[[Page 454]]

            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)

[[Page 455]]

        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development, International 
                Development Cooperation Agency (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  United States Information Agency (Parts 500--599)
        VI  United States Arms Control and Disarmament Agency 
                (Parts 600--699)
       VII  Overseas Private Investment Corporation, International 
                Development Cooperation Agency (Parts 700--799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Board for International Broadcasting (Parts 1300--
                1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

[[Page 456]]

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs and Section 202 Direct Loan Program) 
                (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--999)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Part 1001)

[[Page 457]]

       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--799)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Bureau of Alcohol, Tobacco and Firearms, Department of 
                the Treasury (Parts 1--299)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

[[Page 458]]

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
        VI  Bureau of Mines, Department of the Interior (Parts 
                600--699)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)
      XXIX  Presidential Commission on the Assignment of Women in 
                the Armed Forces (Part 2900)

[[Page 459]]

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799)
        XI  National Institute for Literacy (Parts 1100-1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
       XIV  Assassination Records Review Board (Parts 1400-1499)

[[Page 460]]

             Title 37--Patents, Trademarks, and Copyrights

         I  Patent and Trademark Office, Department of Commerce 
                (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
         V  Council on Environmental Quality (Parts 1500--1599)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans 
                Employment and Training, Department of Labor 
                (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       301  Travel Allowances (Parts 301-1--301-99)
       302  Relocation Allowances (Parts 302-1--302-99)

[[Page 461]]

       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Parts 303-1--303-2)
       304  Payment from a Non-Federal Source for Travel Expenses 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Health Care Financing Administration, Department of 
                Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)

[[Page 462]]

         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  ACTION (Parts 1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
      XXII  Christopher Columbus Quincentenary Jubilee Commission 
                (Parts 2200--2299)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)

[[Page 463]]

        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  United States Information Agency (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Part 
                5452)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)

[[Page 464]]

       III  Federal Highway Administration, Department of 
                Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 465]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 1998)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

ACTION                                            45, XII
Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Commission on Intergovernmental          5, VII
     Relations
Advisory Committee on Federal Pay                 5, IV
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Consumer Service                       7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Alaska Natural Gas Transportation System, Office  10, XV
     of the Federal Inspector
Alcohol, Tobacco and Firearms, Bureau of          27, I
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII

[[Page 466]]

Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Arms Control and Disarmament Agency, United       22, VI
     States
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Assassination Records Review Board                36, XIV
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Board for International Broadcasting              22, XIII
Census Bureau                                     15, I
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Christopher Columbus Quincentenary Jubilee        45, XXII
     Commission
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Commerce Department                               44, IV
  Census Bureau                                   15, I`
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Export Administration, Bureau of                15, VII
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office                     37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII

[[Page 467]]

  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Enrichment Corporation, United States             10, XI
Environmental Protection Agency                   5, LIV; 40, I
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                25, III, LXXVII; 48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export Administration, Bureau of                  15, VII
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII

[[Page 468]]

Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               4, II
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II; 49, III
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Inspector for the Alaska Natural Gas      10, XV
     Transportation System, Office of
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Pay, Advisory Committee on                5, IV
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Property Management Regulations System    41, Subtitle C
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Consumer Service                         7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I, II
General Services Administration                   5, LVII
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Property Management Regulations System  41, 101, 105
  Federal Travel Regulation System                41, Subtitle F
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
     of Certain Employees
[[Page 469]]

  Relocation Allowances                           41, 302
  Travel Allowances                               41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Great Lakes Pilotage                              46, III
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Health Care Financing Administration            42, IV
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Health Care Financing Administration              42, IV
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Information Agency, United States                 22, V
  Federal Acquisition Regulation                  48, 19
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Intergovernmental Relations, Advisory Commission  5, VII
     on
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II

[[Page 470]]

  Mines, Bureau of                                30, VI
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
  International Development, United States        22, II; 48, 7
       Agency for
  Overseas Private Investment Corporation         5, XXXIII; 22, VII
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             4, II
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration and Naturalization Service          8, I
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training, Office of    41, 61; 20, IX
       the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
Management and Budget, Office of                  5, III, LXXVII; 48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II

[[Page 471]]

Mines, Bureau of                                  30, VI
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National and Community Service, Corporation for   45, XXV
National Council on Disability                    34, XII
National Credit Union Administration              12, VII
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Dairy Compact Commission                7, XIII
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office                       37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
     Acquisition Regulation
[[Page 472]]

  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Commission on the Assignment of      32, XXIX
     Women in the Armed Forces
Presidential Documents                            3
Prisons, Bureau of                                28, V
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Depositor Protection Oversight Board       12, XV
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II; 49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X

[[Page 473]]

Transportation, Office of                         7, XXXIII
Travel Allowances                                 41, 301
Treasury Department                               5, XXI; 17, IV
  Alcohol, Tobacco and Firearms, Bureau of        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
United States Enrichment Corporation              10, XI
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training, Office of the  41, 61; 20, IX
     Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 475]]

                           Redesignation Table I

                            Derivation Table                            
------------------------------------------------------------------------
              New section                          Old section          
------------------------------------------------------------------------
304.1--new                                                              
304.2..................................  304.3 introductory paragraph.  
304.3 introductory paragraph...........  304.1.                         
304.3(a)...............................  304.3(r).                      
304.3(b)...............................  304.3(s).                      
304.3(c)...............................  304.3(t).                      
304.3(d)...............................  304.3(u).                      
304.4 introductory paragraph...........  304.2.                         
304.4(a)...............................  304.3(m), 304.3(o)             
304.4(b)...............................  304.3(n), 304.3(p).            
304.5 introductory paragraph--new......  ...............................
304.5(a)...............................  304.3(q).                      
304.5(b)...............................  304.3(v).                      
304.5(c)...............................  304.3(l).                      
304.5(d)...............................  304.3(x).                      
304.5(e)...............................  304.3(y).                      
304.6(a)(1)............................  304.4(a)(1).                   
304.5(a)(2)............................  304.4(a)(2).                   
304.5(b)(1)............................  304.4(b)(1).                   
304.5(b)(2)............................  304.4(b)(2).                   
304.6(b)(3)............................  304.4(b)(3).                   
304.6(b)(4)............................  304.4(b)(4).                   
304.6(b)(5)............................  304.4(b)(5).                   
304.6(b)(6)............................  304.4(b)(6).                   
304.7--new.............................  ...............................
------------------------------------------------------------------------


                           Distribution Table                           
------------------------------------------------------------------------
              Old section                          New section          
------------------------------------------------------------------------
304.1..................................  304.3 introductory paragraph.  
304.2..................................  304.4 introductory paragraph.  
304.3 introductory paragraph...........  304.2.                         
304.3(a)-(k)...........................  Unnecessary.                   
304.3(l)...............................  304.5(c).                      
304.3(m)...............................  304.4(a).                      
304.3(n)...............................  304.4(b).                      
304.3(o)...............................  304.4(a).                      
304.3(p)...............................  304.4(b).                      
304.3(q)...............................  304.5(a).                      
304.3(r)...............................  304.3(a).                      
304.3(s)...............................  304.3(b).                      
304.3(t)...............................  304.3(c).                      
304.3(u)...............................  304.3(d).                      
304.3(v)...............................  304.5(b).                      
304.3(w)...............................  Obsolete.                      
304.3(x)...............................  304.5(d).                      
304.3(y)...............................  304.5(e).                      
304.3(a)(1)............................  304.6(a)(1).                   
304.3(a)(2)............................  304.6(a)(2).                   
304.4(b)(1)............................  304.6(b)(1).                   
304.4(b)(2)............................  304.6(b)(2).                   
304.4(b)(3)............................  304.6(b)(3).                   
304.4(b)(4)............................  304.6(b)(4).                   
304.4(b)(5)............................  304.6(b)(5).                   
304.4(b)(6)............................  304.6(b)(6).                   
304.4(c)...............................  Unnecessary.                   
304.4(d)...............................  304.7.                         
------------------------------------------------------------------------


[[Page 477]]

                          Redesignation Table II

                         Note.--Derivation Table                        
------------------------------------------------------------------------
                New section                   Old section (as revised)  
------------------------------------------------------------------------
303.0(a)..................................  303.0(a).                   
303.0(b)(1) through (3) new                                             
303.0(b)(4)...............................  303.0(b)(1).                
303.0(b)(5) through (6) new                                             
303.0(b)(7)...............................  303.0(b)(2).                
303.0(b)(8) through (16) new                                            
303.0(b)(17)..............................  303.2(c)(1).                
303.0(b)(18) through (23) new                                           
303.0(b)(24)..............................  303.0(b)(3).                
303.2(c)(1)...............................  303.2(c)(2)(i).             
303.2(c)(2)...............................  303.2(c)(2)(ii).            
303.6(b)..................................  303.6(b).                   
303.6(e)(1)...............................  303.6(e).                   
303.6(e)(2)...............................  303.6(e).                   
303.6(l)..................................  303.6(m).                   
303.6(m)..................................  303.6(n).                   
303.7(a)(1)(i) through (ii)...............  303.7(a)(6), (c)(1).        
303.7(a)(1)(iii)..........................  303.7(c)(1)(i)(A) through   
                                             (D), (iii).                
303.7(a)(1)(iv)...........................  303.10(a).                  
303.7(a)(2)(i) through (ii) new                                         
303.7(a)(2)(iii)..........................  303.7(c)(6)(ii).            
303.7(b)(1) through (2) new                                             
303.7(b)(3)...............................  303.7(c)(5)(i).             
303.7(b)(4) through (5) new                                             
303.7(c)(1) through (2)...................  303.7(c)(8).                
303.7(c)(3)...............................  303.8(g).                   
303.7(d)(1)...............................  303.7(c)(2).                
303.7(d)(2)...............................  303.7(c)(4).                
303.7(d)(3)...............................  303.7(c)(3).                
303.7(d)(4)...............................  303.10(a).                  
303.7(e)(1)...............................  303.7(c)(9).                
303.7(e)(2) new                                                         
303.7(f)..................................  303.7(a)(1) through (5),    
                                             (b).                       
303.8(a)..................................  303.7(c)(1).                
303.8(b)(1)...............................  303.11(b).                  
303.8(b)(2)...............................  303.11(c).                  
303.8(c)..................................  303.11(d).                  
303.8(d)..................................  303.11(e).                  
303.8(e)(1)...............................  303.11(f).                  
303.8(e)(2)...............................  303.11(g).                  
303.8(f)..................................  303.11(h).                  
303.8(g)..................................  303.11(j).                  
303.9(a) through (e) new                                                
303.9(f)..................................  303.12(d).                  
303.9(g)(1) new                                                         
303.9(g)(2)...............................  303.12(e).                  
303.9(h)..................................  303.12(c)(10).              
303.9(i) new                                                            
303.9(j)..................................  303.12(c)(12).              
303.9(k)(1)...............................  303.12(a).                  
303.9(k)(2) new                                                         
303.9(k)(3)...............................  303.12(c)(3)(i).            
303.9(k)(4) through (6) new                                             
303.9(l)..................................  303.12(b).                  
303.10(a)(1)..............................  303.11(a).                  
303.10(a)(2)..............................  303.10(b).                  
303.10(b) through (c) new                                               
303.11(a)(1)..............................  303.9(a).                   
303.11(a)(2)..............................  303.7(c).                   
303.11(b)(1)..............................  303.9(b)(1).                
303.11(b)(2)(i)...........................  303.9(b)(1).                
303.11(b)(2)(ii) new                                                    
303.11(b)(2)(iii).........................  303.9(b)(2).                
303.11(c).................................  303.12(c)(7).               
303.12....................................  303.13.                     
------------------------------------------------------------------------


[[Page 479]]

                          Redesignation Table III

                         Note.--Derivation Table                        
------------------------------------------------------------------------
          Former section numbers                 New section numbers    
------------------------------------------------------------------------
Part 548..................................  Part 382                    
Part 549..................................  Part 383                    
Part 562..................................  Part 384                    
563.8-2...................................  385.5                       
563.15....................................  385.6                       
563.16....................................  385.7                       
563.16-2..................................  385.8                       
563.28....................................  385.9                       
563.29-1..................................  385.1                       
563.30....................................  385.2                       
563.31....................................  385.3                       
563.36....................................  385.4                       
Part 564..................................  Part 386                    
564.1.....................................  386.1                       
564.2.....................................  386.2                       
564.3.....................................  386.3                       
564.4.....................................  386.4                       
564.5.....................................  386.5                       
564.6.....................................  386.6                       
564.7.....................................  386.7                       
564.8.....................................  386.8                       
564.9.....................................  386.9                       
564.10....................................  386.10                      
564.11....................................  386.11                      
Appendix to Part 564......................  Appendix to Part 386        
Part 565..................................  Part 387                    
569a.4....................................  388.1                       
569a.5....................................  388.2                       
569a.6....................................  388.3                       
569a.7....................................  388.4                       
569a.8....................................  388.5                       
569a.9....................................  388.6                       
569a.10...................................  388.7                       
569a.11...................................  388.8                       
569a.12...................................  388.9                       
569a.13...................................  388.10                      
Part 569c.................................  Part 389                    
570.12....................................  386.12                      
570.13....................................  386.13                      
Part 572..................................  Part 390                    
Part 572a.................................  Part 391                    
Part 575..................................  Part 392                    
Part 575a.................................  Part 393                    
Part 576..................................  Part 394                    
Part 577..................................  Part 395                    
Part 578..................................  Part 396                    
------------------------------------------------------------------------


[[Page 481]]



List of CFR Sections Affected--Transferred Regulations Formerly 
Appearing in Title 12 CFR, Chapter V



Regulations formerly issued by the Federal Home Loan Bank Board were 
transferred to the Federal Deposit Insurance Corporation at 54 FR 42800, 
Oct. 18, 1989. The following list contains all changes since April 1, 
1986, to the regulations formerly codified in 12 CFR chapter V prior to 
transfer into 12 CFR chapter III.
For the period before January 1, 1986, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, and 1973-1985'' published in seven 
separate volumes. For subsequent changes to the Federal Deposit 
Insurance Corporation regulations, see the ``List of CFR Sections 
Affected'' at the end of this volume.

                                  1986

12 CFR
                                                                   51 FR
                                                                    Page
Chapter V
562.3  Authority citation removed..................................40147
563.15  (b)(1)(i) and (2) corrected.................................1246
563.31  Authority citation removed.................................10820
    (b) revised....................................................26228
564  Authority citation revised.............................10820, 12123
564.1  Authority citation removed..................................10820
564.2  Authority citation removed..................................10820
    (b)(3) removed; (b) (4) and (5) redesignated as (b) (3) and 
(4)................................................................12123
564.8  Authority citation removed..................................12123
569a.6  (c) revised................................................35501
569a.7  Authority citation removed.................................35501
570.12  Authority citation removed.................................29459
570.13  Added......................................................29459

                                  1987

12 CFR
                                                                   52 FR
                                                                    Page
Chapter V
563.15  Heading and (b)(1) introductory text revised; (a) (3) and 
        (4) added; (c) and (d) redesignated as (d) and (e); new 
        (c) added..................................................33402
563.16  Amended....................................................33402
563.31  (b)(1) amended.............................................36751
564  Authority citation revised.....................................7124
564.9  (b) amended..................................................7124
    (b) revised....................................................10558
572  Authority citation revised.....................................7124
572a  Authority citation revised....................................9801

                                  1988

12 CFR
                                                                   53 FR
                                                                    Page
Chapter V
548  Interim procedures............................................13105
    Interim procedures removed.....................................43852
549  Interim procedures............................................13105
    Authority citation revised.....................................25132
    Interim procedures removed.....................................43852
563.31  (b)(1) revised.............................................20612
564.2  (b)(3) removed...............................................8169
564.9  Revised......................................................8169
564  Appendix amended...............................................8170

[[Page 482]]

569a.7  Revised....................................................25132
570.13  (c) revised................................................27675
575  Added.........................................................43852
576  Added.........................................................43857
577  Added......................................................43858...

                                  1989

12 CFR
                                                                   54 FR
                                                                    Page
Chapter V
Heading revised....................................................35453
    Revised.....................................................49440...
548  Redesignated as Part 382 and amended..........................42801
549  Redesignated as Part 383 and amended.......................42801...
549.5-1  (b)(6) added..............................................19156
562  Redesignated as Part 384 and amended.......................42801...
563.8-2  Redesignated as 385.5 and amended.........................42801
563.15  Redesignated as 385.6 and amended.......................42801...
563.16  Redesignated as 385.7 and amended..........................42801
563.16-2  Redesignated as 385.8 and amended.....................42801...
563.28  Redesignated as 385.9 and amended..........................42801
563.29-1  Redesignated as 385.1 and amended.....................42801...
563.30  Redesignated as 385.2 and amended..........................42801
563.31  Redesignated as 385.3 and amended.......................42801...
563.36  Redesignated as 385.4 and amended..........................42801
564  Redesignated as Part 386 and amended.......................42801...
564.1  Redesignated as 386.1 and amended...........................42801
564.2  Redesignated as 386.2 and amended........................42801...
564.3  Redesignated as 386.3 and amended...........................42801
564.4  Redesignated as 386.4 and amended........................42801...
564.5  Redesignated as 386.5 and amended...........................42801
564.6  Redesignated as 386.6 and amended........................42801...
564.7  Redesignated as 386.7 and amended...........................42801
564.8  Redesignated as 386.8 and amended........................42801...
564.9  Redesignated as 386.9 and amended...........................42801
564.10  Redesignated as 386.10 and amended......................42801...
564.11  Redesignated as 386.11 and amended.........................42801
564  Appendix redesignated as Part 386 Appendix and amended.....42801...
565  Redesignated as Part 387 and amended..........................42801
569a.4  Redesignated as 388.1 and amended.......................42801...
569a.5  Redesignated as 388.2 and amended..........................42801
569a.6  Redesignated as 388.3 and amended.......................42801...
569a.7  Revised....................................................19156
    Redesignated as 388.4 and amended..............................42801
569a.8  Redesignated as 388.5 and amended.......................42801...
569a.9  Redesignated as 388.6 and amended..........................42801
569a.10  Redesignated as 388.7 and amended......................42801...
569a.11  Redesignated as 388.8 and amended.........................42801
569a.12  Redesignated as 388.9 and amended......................42801...
569a.13  Redesignated as 388.10 and amended........................42801
569c  Redesignated as Part 389 and amended......................42801...
569c.7-1  Added.....................................................6112
569c.8-1  Added.................................................19156...
570.12  Redesignated as 386.12 and amended.........................42801
570.13  Redesignated as 386.13 and amended......................42801...
572  Redesignated as Part 390 and amended..........................42801
572a  Redesignated as Part 391 and amended......................42801...
575  Redesignated as Part 392 and amended..........................42801
575a  Added........................................................12414
    Redesignated as Part 393 and amended........................42801...
576  Redesignated as Part 394 and amended..........................42801
577  Redesignated as Part 395 and amended..........................42801
    Redesignation table corrected...............................42801...
578  Added..........................................................6109
    Redesignated as Part 396 and amended...........................42801

[[Page 483]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
1986, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 1986, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, and 1973-1985'' published in seven 
separate volumes.

                                  1986

12 CFR
                                                                   51 FR
                                                                    Page
Chapter III
303.0  (b)(7) added................................................27827
303.4  (b) revised.................................................10803
303.12  (c)(3)(iv), (7), and (12) revised..........................27827
304  Revised.......................................................36684
308.81  Revised.....................................................8643
309.4  (c)(2) removed; (c)(3) redesignated as (c)(2); (d) revised 
                                                                   10804
309.6  (c) introductory text and (7)(iv) corrected.................47208
329  Revised.......................................................10808
330.0  Revision at 49 FR 13010 withdrawn.............................731
330.1  (b)(3) removed..............................................21138
330.2  Revision at 49 FR 13010 withdrawn.............................731
330.10  Revision at 49 FR 13010 withdrawn............................731
330.13  Addition at 49 FR 13010 withdrawn............................731
337  Authority citation revised....................................23406
    Authority citation corrected...................................29630
337.4  (h) revised...................................................880
    (h)(3) revised..........................................23406, 45756
346.20  (a) correctly revised......................................24302
347.3  (a) (1), (2), and undesignated text correctly removed.......47209
352  Added..........................................................9643
353  Added.........................................................16486
Chapter IV
410  Added....................................................4575, 4579
410.103  Corrected..................................................7543
410.150  (c) corrected..............................................7543
410.170  (c) revised................................................4575

                                  1987

12 CFR
                                                                   52 FR
                                                                    Page
Chapter III
303.0  Revised.....................................................35402
303.2  (c)(1) and (c)(2) heading removed; (c)(2) (i) and (ii) 
        redesignated as (c) (1) and (2); new (c) (1) and (2) 
        amended....................................................35403
303.6  (l) removed; (m) and (n) redesignated as (l) and (m); (b) 
        and (e) revised............................................35403
303.7  Revised.....................................................35404
303.8  Revised.....................................................35407
303.9  Revised.....................................................35408
303.10  Revised....................................................35410
303.11  Revised....................................................35410
303.12  Removed; new 303.12 redesignated from 303.13...............35411
303.13  Redesignated as 303.12.....................................35411
304.6  (a) revised; eff. 1-20-88...................................48184
308.01  (b) amended................................................35411
308.03  (c) (1), (2) (i) and (ii) amended; (c)(2)(iii) and (3) 
        added......................................................35411
309.5  (a)(1), (b), and (c)(7) revised.............................23426
    Technical correction...........................................24090
310  Heading revised...............................................34209
310.9  Revised.....................................................34209

[[Page 484]]

310.13  (a) amended................................................34209
324  Added; interim; eff. to 6-30-88...............................41968
324.7  OMB number corrected........................................43190
325.2  (a), (j) and (k) revised....................................41972
325.3  (c)(4) revised..............................................41973
325.5  (c) revised; (f) added......................................41973
325.101  Added.....................................................41973
325.102  Added.....................................................41973
326  Heading and authority citation revised.........................2860
326.0--326.7 (Subpart A)  Heading added.............................2860
326.0  Heading revised..............................................2860
326.8 (Subpart B)  Added............................................2860
337  Authority citation revised....................................39216
337.4  (h)(3) revised.......................................23544, 39216
    (a)(2)(iii) and footnote 5 and (c)(5) and footnote 8 removed; 
(a)(2) (iv) through (ix), (c)(6), and footnotes 6 and 7 and 9 
through 12 redesignated as (a)(2) (iii) through (viii), (c)(5), 
and footnotes 5 through 10; footnotes 4 and new 6 and (h) revised 
                                                                   47386
341.4  (a) revised..................................................1182
346.19  (d)(6) revised.............................................34210
346.23  Amended....................................................49156
350  Added; eff. 2-1-88............................................49379
Chapter IV
404  Authority citation revised....................................37438
404.3  (d) amended.................................................37438
404.4  (c) (1), (3), and (4) amended; (c) (6) and (7) and (d) 
        removed; (c)(8) redesignated as (c)(6).....................37438
404.6  Revised.....................................................37438

                                  1988

12 CFR
                                                                   53 FR
                                                                    Page
Chapter III
303  Authority citation revised....................................52112
303.4  (b)(3) revised; (b)(6) added................................52112
308  Revised.......................................................51668
310.13  (a) amended.................................................7340
324.2  Revised.....................................................22133
    (a)(3) correctly revised.......................................36963
324.3  (a)(2) revised..............................................22134
324.5  (c) revised.................................................22134
324.6  (d) revised.................................................22134
324.7  (a) and (b)(6) introductory text revised....................22134
326  Heading and authority citation revised........................17917
326.0  Introductory text and (a) amended...........................17917
326.1  (a), (c), and (d) revised...................................17917
326.2  Revised.....................................................17917
326.3  (a) and (c) amended.........................................17917
326.4  (a) amended.................................................17917
326.5  (a), (c), and (d) amended; (b) removed; OMB number..........17917
326.6  Amended.....................................................17917
326.7  Amended.....................................................17917
326.8  (a) amended; footnote 3 added...............................17917
329  Authority citation revised....................................47523
329.1  Footnote 1 removed; footnote 2 redesignated as footnote 1 
        and revised................................................47523
336  Revised.......................................................47930
337.4  (a)(2)(vi) correctly redesignated as (a)(2)(v); (h)(3) 
        corrected....................................................597
    (h)(1), (2), and (3) corrected..................................2223
338.1  (f) revised.................................................30837
338.4  (a)(2)(i)(G) and (ii)(C)(1)(v) revised......................30838
346.23  Amended.............................................21986, 51094

                                  1989

12 CFR
                                                                   54 FR
                                                                    Page
Chapter III
303  Authority citation revised......................53042, 53548, 53554
303.0  Revised.....................................................53555
303.1  Revised.....................................................53556
303.2  Revised.....................................................53556
303.3  Revised.....................................................53556
303.4  Revised.....................................................53557
303.5  Revised.....................................................53558
303.6  Revised.....................................................53559
303.7  Revised.....................................................53562
303.8  (f) revised.................................................14066
    Revised........................................................53567
303.9  Revised.....................................................53567
303.10  Revised....................................................53570
303.11  Revised....................................................53570
303.12  Revised....................................................53571
303.13  Added; interim.............................................53548
303.14  Added; interim.............................................53042

[[Page 485]]

308  Authority citation revised....................................53044
308.94--308.98 (Subpart L)  Added; interim.........................53044
309  Authority citation revised....................................46364
309.2  (a), (f), and (h) amended; (d) revised......................46364
309.4  (a) introductory text and (1), (c) introductory text, (d) 
        introductory text, (2)(i), (e) (1) and (2), and (f) 
        amended....................................................46364
309.5  (h) amended.................................................46364
309.6  (c) introductory text, (1) heading, (2) (i), (ii), (3), (4) 
        (i), (ii), (iii), (iv), (C), (c)(4)(iv), (B)(1), (5) 
        heading and introductory text, (6) introductory text, 
        (ii), (c)(7) (A), (B), (B)(3) and (D), (iv) and (c)(7), 
        introductory text, (7)(i), (ii), (iii) introductory text, 
        and (11) amended; (c)(7)(iii) revised......................46364
310.13  (a) and (b) revised........................................38507
311  Authority citation revised....................................38965
311.2  (b) amended.................................................38965
311.6  (a) amended.................................................38965
312  Added; interim................................................40380
    Technical correction...........................................43521
    Authority citation revised.....................................52927
312.1  (a) and (c) corrected.......................................43521
    (c) revised; interim...........................................52927
312.3  Added; interim..............................................52928
312.4  Correctly designated........................................43521
312.6  Added; interim..............................................52928
312.7  Added; interim..............................................52928
325  Appendix A added; eff. in part 12-31-90 and 12-31-92..........11509
327  Authority citation revised....................................37938
    Revised........................................................51374
327.07  Added......................................................37938
328  Authority citation revised....................................33670
328.0  Revised.....................................................33670
328.1  Redesignated as 328.2 and revised; new 328.1 added..........33670
328.2  Redesignated as 328.3 and heading revised; new 328.2 
        redesignated from 328.1 and revised........................33670
328.3  Redesignated from 328.2 and heading revised.................33670
328.4  Added.......................................................33672
335.101  Amended; eff. in part 1-29-90 and 12-15-90................53574
335.102  (b) through (d), (e), (f) through (h), (i) through (n), 
        (p) through (bb), (cc), and (dd) through (jj) redesignated 
        as (c) through (e), (g), (j) through (l), (o) through (t), 
        (u), (v) through (hh), (ii), and (mm) through (ss); new 
        (u), new (ii), and new (rr) revised; new (b), (f), (h), 
        (i), (m), (n), (jj), (kk), and (ll) added; new (l) 
        removed; eff. in part 1-29-90 and 12-15-90.................53574
335.201  (a) and (b) revised; eff. in part 1-29-90 and 12-15-90....53575
335.203  (a) introductory text, (1), (7), and (11) revised; (a)(9) 
        note and (b)(2) note added; (b) introductory text amended; 
        (b) designated in part as concluding text; eff. in part 1-
        29-90 and 12-15-90.........................................53575
335.204  (a) Notes 1 and 2 added; (b) and (c) amended; (e) through 
        (j) redesignated as (f) through (k); new (e) added; new 
        (f) through (i) revised; eff. in part 1-29-90 and 12-15-90
                                                                   53575
335.206  (a) amended; eff. in part 1-29-90 and 12-15-90............53576
335.207  (d) revised; eff. in part 1-29-90 and 12-15-90............53576
335.209  (e) revised; eff. in part 1-29-90 and 12-15-90............53576
335.210  (b) (2) and (3) revised; eff. in part 1-29-90 and 12-15-
        90.........................................................53576
335.212  Amended; eff. in part 1-29-90 and 12-15-90................53576
335.214  Added; eff. in part 1-29-90 and 12-15-90..................53586
335.220  (b)(1)(iii) revised; eff. in part 1-29-90 and 12-15-90....53587
335.307  (b)(3) amended; eff. in part 1-29-90 and 12-15-90.........53587
335.309a  Amended; eff. in part 1-29-90 and 12-15-90...............53587
335.310  (c) amended; eff. in part 1-29-90 and 12-15-90............53590
335.312  Amended; eff. in part 1-29-90 and 12-15-90................53590
335.321  Amended; eff. in part 1-29-90 and 12-15-90................53592

[[Page 486]]

335.331  Amended; eff. in part 1-29-90 and 12-15-90................53592
335.332  Amended; eff. in part 1-29-90 and 12-15-90................53592
335.359  (a) amended; eff. in part 1-29-90 and 12-15-90............53592
335.401  (a) and (c) amended; eff. in part 1-29-90 and 12-15-90....53592
335.402  (a) and (b) amended; eff. in part 1-29-90 and 12-15-90....53592
335.407  Amended; eff. in part 1-29-90 and 12-15-90................53592
335.408  Amended; eff. in part 1-29-90 and 12-15-90................53592
335.409  Added; eff. in part 1-29-90 and 12-15-90..................53592
335.410  (h) (1) and (2) amended; eff. in part 1-29-90 and 12-15-
        90.........................................................53592
335.503  (a)(1) and (b) amended; eff. in part 1-29-90 and 12-15-90
                                                                   53592
335.507  (a) introductory text revised; eff. in part 1-29-90 and 
        12-15-90...................................................53592
335.509  (a)(1) and (b)(1) amended; eff. in part 1-29-90 and 12-
        15-90......................................................53592
335.509a  Added; eff. in part 1-29-90 and 12-15-90.................53592
335.510  (b) revised; eff. in part 1-29-90 and 12-15-90............53593
335.512  Amended; eff. in part 1-29-90 and 12-15-90................53593
335.513  Amended; eff. in part 1-29-90 and 12-15-90................53593
335.521  Added; eff. in part 1-29-90 and 12-15-90..................53593
335.602--335.604  Undesignated center heading revised; eff. in 
        part 1-29-90 and 12-15-90..................................53593
335.602  Revised; eff. in part 1-29-90 and 12-15-90................53593
335.603  Removed; eff. in part 1-29-90 and 12-15-90................53593
335.604  (a) (1) and (2) revised; eff. in part 1-29-90 and 12-15-
        90.........................................................53593
335.610  Amended; eff. in part 1-29-90 and 12-15-90................53593
335.618  Revised; eff. in part 1-29-90 and 12-15-90................53593
335.621  (e) amended; eff. in part 1-29-90 and 12-15-90............53594
335.622  (d)(4) added; (g)(2)(i) revised; eff. in part 1-29-90 and 
        12-15-90...................................................53594
335.623  (g) amended; eff. in part 1-29-90 and 12-15-90............53594
335.625  Revised; eff. in part 1-29-90 and 12-15-90................53594
335.626  (a) revised; eff. in part 1-29-90 and 12-15-90............53594
335.627  Amended; eff. in part 1-29-90 and 12-15-90................53594
335.628  Added; eff. in part 1-29-90 and 12-15-90..................53597
335.701  Note added; eff. in part 1-29-90 and 12-15-90.............53600
335.702  Amended; eff. in part 1-29-90 and 12-15-90................53600
336.12  (c)(2) corrected.............................................227
336.16  (c) corrected................................................227
336.17  (b)(1)(i) corrected..........................................227
336.24  Heading corrected............................................227
337  Authority citation revised....................................51014
337.6  Added; interim..............................................51014
338  Authority citation revised....................................52930
338.1  (f) redesignated as (g); new (f) added......................52930
338.2  (a) introductory text revised...............................52930
338.3  Revised.....................................................52930
346  Authority citation revised....................................14066
346.1  (a), (k) and (p) revised....................................14066
346.4  (a) designation removed; (b) removed; (a) (1) and (2) 
        redesignated as (a) and (b)................................14067
346.6  (a)(1) footnotes 2 and 3, (a)(4), and (7) removed; (a) 
        introductory text, (1), (5), and (6) revised; (a)(6) 
        redesignated as (a)(4) and revised.........................14067
    (a) introductory text republished; (a)(6) added................27155
346.7  Revised.....................................................14067
346.16  Amended....................................................14067
346.17  Heading revised; (a)(1) amended............................14067
346.19  (b)(3) amended; (b)(1), (c), (d) introductory text, (3), 
        (5), (7) and (e) revised; (d)(8) added; footnote 5 
        redesignated as footnote 3 and revised.....................14067

[[Page 487]]

346.20  Revised....................................................14069
346.21  Removed....................................................14070
346.23  Removed....................................................14070
346  Appendix A removed............................................14070
382--396 (Subchapter C)  Added.....................................42800
382  Redesignated from Part 548 and amended........................42801
383  Redesignated from Part 549 and amended........................42801
384  Redesignated from Part 562 and amended........................42801
385.1  Redesignated from 563.29-1 and amended......................42801
385.2  Redesignated from 563.30 and amended........................42801
385.3  Redesignated from 563.31 and amended........................42801
385.4  Redesignated from 563.36 and amended........................42801
385.5  Redesignated from 563.8-2 and amended.......................42801
385.6  Redesignated from 563.15 and amended........................42801
385.7  Redesignated from 563.16 and amended........................42801
385.8  Redesignated from 563.16-2 and amended......................42801
385.9  Redesignated from 563.28 and amended........................42801
386  Redesignated from Part 564 and amended........................42801
386.1  Redesignated from 564.1 and amended.........................42801
386.2  Redesignated from 564.2 and amended.........................42801
386.3  Redesignated from 564.3 and amended.........................42801
386.4  Redesignated from 564.4 and amended.........................42801
386.5  Redesignated from 564.5 and amended.........................42801
386.6  Redesignated from 564.6 and amended.........................42801
386.7  Redesignated from 564.7 and amended.........................42801
386.8  Redesignated from 564.8 and amended.........................42801
386.9  Redesignated from 564.9 and amended.........................42801
386.10  Redesignated from 564.10 and amended.......................42801
386.11  Redesignated from 564.11 and amended.......................42801
386.12  Redesignated from 570.12 and amended.......................42801
386.13  Redesignated from 570.13 and amended.......................42801
386  Appendix redesignated from Part 564 Appendix and amended......42801
387  Redesignated from Part 565 and amended........................42801
388.1  Redesignated from 569a.4 and amended........................42801
388.2  Redesignated from 568a.5 and amended........................42801
388.3  Redesignated from 569a.6 and amended........................42801
388.4  Redesignated from 569a.7 and amended........................42801
388.5  Redesignated from 569a.8 and amended........................42801
388.6  Redesignated from 569a.9 and amended........................42801
388.7  Redesignated from 569a.10 and amended.......................42801
388.8  Redesignated from 569a.11 and amended.......................42801
388.9  Redesignated from 569a.12 and amended.......................42801
388.10  Redesignated from 569a.13 and amended......................42801
389  Redesignated from Part 569c and amended.......................42801
390  Redesignated from Part 572 and amended........................42801
391  Redesignated from Part 572a and amended.......................42801
392  Redesignated from Part 575 and amended........................42801
393  Redesignated from Part 575a and amended.......................42801
394  Redesignated from Part 576 and amended........................42801
    Redesignation Table corrected..................................42801
395  Redesignated from Part 577 and amended........................42801
396  Redesignated from Part 578 and amended........................42801

                                  1990

12 CFR
                                                                   55 FR
                                                                    Page
Chapter III
303  Authority citation revised....................................38042

[[Page 488]]

303.13  (a)(5)(ii), (b)(1), (2), (c)(1)(i), (d)(1) and (2)(i) 
        amended; (c)(2) revised; (f)(4) added (OMB number).........38042
304.6  Revised.....................................................21015
312  Technical correction...........................................1912
312.1  (c) revised; (f) through (j) added; interim.................10412
312.4  Revised; interim............................................10413
312.5  Added; interim..............................................10413
312.6  Revised; interim............................................10413
312.7  Revised; interim............................................10413
312.8  Added; interim..............................................10414
312.9  Added; interim..............................................10414
312.10  Added; interim.............................................10414
323  Added.........................................................33888
    Appendix A added; interim; eff. 1-30-91.................53612, 53617
325  Authority citation revised....................................53146
325.1  Amended; eff. 1-28-91.......................................53146
325.2  (f) amended; eff. 1-28-91...................................53146
325.5  (g) added; eff. 1-28-91.....................................53146
325  Appendix A amended; eff. 1-28-91..............................53147
327.13  (c) added..................................................40817
327.23  (d) added..................................................40817
330  Revised.......................................................20122
331  Removed.......................................................20122
337  Authority citation revised....................................23187
337.6  (g) revised; interim; eff. to 8-11-90.......................23187
    Eff. to 11-9-90................................................28885
    Revised........................................................39139
345.4  (f) revised; interim........................................26627
345.5  (a)(2) and (3) redesignated as (a)(3) and (4); new (a)(3), 
        (4), (c)(1), and (2) revised; new (a)(2), new (c)(3), and 
        (d) added; interim.........................................26627
345.6  Existing text designated as (a) and amended; (b) added; 
        interim....................................................26627
348  Authority citation revised....................................50543
348.2  (l) amended; (h)(1) revised; (o) added......................50543
348.4  (a)(5), (6), (b) introductory text and (c) amended; (a)(7), 
        (8), (b)(6) and (c)(2) added; (c)(1) newly designated.....50543, 
                                                                   50544
348.5  Amended.....................................................50544
357  Added; interim................................................11161
    Regulation at 55 FR 11161 confirmed............................38045
360  Added.........................................................46496
360.1  Redesignated from 389.8-1...................................46496
360.2  Redesignated from 389.11....................................46496
    (c) removed....................................................46497
382  Removed.......................................................46496
383  Removed.......................................................46496
384  Removed.......................................................46496
385  Removed.......................................................46496
386.1  (d) removed.................................................46496
386.2--386.13  Removed.............................................20122
386  Appendix removed..............................................20122
387  Removed.......................................................46496
388  Removed.......................................................46496
389  Removed.......................................................46497
389.7-1  Correctly added...........................................35564
389.8-1  Correctly added...........................................35564
    Redesignated as 360.1..........................................46496
389.11  Redesignated as 360.2......................................46496
390  Removed.......................................................46496
391  Removed.......................................................46496
392  Removed.......................................................46496
393  Removed.......................................................46496
394  Removed.......................................................46496
395  Removed.......................................................46496
396  Removed.......................................................46496
Chapter IV
411  Added; interim...........................................6737, 6747

                                  1991

12 CFR
                                                                   56 FR
                                                                    Page
Chapter III
303  Authority citation revised....................................23011
303.0  (b)(21), (22) and (23) amended..............................23011
303.9  (i)(3) revised..............................................18684
    (a)(1) and (2) amended.........................................23011
303.10  (c)(1)(i) amended..........................................23011
308  Revised.......................................................37975
312  Authority citation revised....................................29895
312.2  Revised.....................................................29895
312.3  Revised.....................................................29895
323  Appendix A corrected...........................................1229
324  Authority citation revised....................................23011
324.4  Amended.....................................................23011
325  Authority citation revised....................................10160
325.1  Revised.....................................................10160
325.2  Revised.....................................................10160

[[Page 489]]

325.3  Revised.....................................................10162
325.4  Revised.....................................................10162
325.5  Revised.....................................................10163
325.6  Revised.....................................................10164
325.101  Removed...................................................10165
325.102  Removed...................................................10165
325  Appendix A amended............................................10165
    Appendix B added...............................................10166
326.0--326.4 (Subpart A)  Revised..................................13581
326  Appendixes A and B removed....................................13582
327.13  (c) revised................................................21068
333  Authority citation revised....................................20528
333.3  Added.......................................................20528
338  Authority citation revised....................................50038
338.1--338.4  Designated as subpart A and heading added............50040
338.1  Revised.....................................................50038
338.2  Redesignated as 338.3; new 338.2 added......................50039
338.3  Redesignated as 338.4; new 338.3 redesignated from 338.2; 
        (a)(1) revised.............................................50039
338.4  Redesignated as 338.7; new 338.4 redesignated from 338.3....50039
338.5--338.9  Designated as subpart B and heading added............50040
338.5  Redesignated as 338.9; new 338.5 added......................50039
338.6  Added.......................................................50040
338.7  Redesignated from 338.4; (a)(1) introductory text, (i) 
        heading, (B)(3), (2) introductory text, (i) heading, 
        (B)(3), (c), and (d) revised; (a) footnote 2 and 
        (a)(2)(ii) footnote 3 redesignated as footnote 1 and 
        footnote 2 and republished; (a)(2)(iv), (f) and (g) 
        removed (OMB number).......................................50039
338.8  Added.......................................................50040
338.9  Redesignated from 338.5; text amended; (a), (b) and (c) 
        added......................................................50039
338.5--338.9 (Subpart B)  Appendix A redesignated from Appendix A 
        to part 338 and revised....................................50040
    Appendix B added...............................................50042
338  Appendix A designated as Appendix A to subpart B and revised 
                                                                   50040
345.4  Regulation at 55 FR 26627 confirmed.........................26904
345.5  Regulation at 55 FR 26627 confirmed; (a)(3) and (c)(3) 
        revised (OMB number).......................................26904
345.6  Regulation at 55 FR 26627 confirmed.........................26904

                                  1992

12 CFR
                                                                   57 FR
                                                                    Page
Chapter III
303  Statement and order...........................................59284
303.3  (d) redesignated as (e); new (d) added.......................5815
303.7  (f)(5) redesignated as (f)(6); new (f)(5) added..............5815
304  Authority citation revised....................................23932
304.4  Revised.....................................................23932
304.5  (d) amended.................................................23933
304  Appendix A amended............................................23933
308  Authority citation revised....................................44897
308.200--308.204 (Subpart Q)  Added................................44897
308.200  Corrected.................................................48426
308.204  (c) corrected.............................................48426
323  Authority citation revised.....................................9049
    Temporary exceptions...........................................54173
323.2  (g) through (k) redesignated as (h) through (l); new (g) 
        added.......................................................9049
323.3  (a) introductory text, (1) and (4)(iv) revised; (a)(5) 
        amended; (a)(6), (7) and (d) added..........................9050
323.4  (b) and (c) redesignated as (c) and (d); new (b) added.......9050
325  Authority citation revised..............................7647, 44899
325.1--325.6  Designated as subpart A..............................44899
325.1  Amended......................................................7647
325.2  (e) through (o) redesignated as (h), (i), (j), (m) through 
        (p), (r), (t), (v) and (x); new (e), (f), (g), (k), (l), 
        (q), (s), (u) and (w) added................................44899
325.5  (f)(5) and (8) removed; (f)(6) and (7) redesignated as 
        (f)(5) and (6); (f)(4), new (f)(5) and (6) amended..........7647

[[Page 490]]

325.1--325.6 (Subpart A)  Appendixes A and B redesignated from 
        part 325 Appendixes A and B; headings revised..............44899
325.101--325.105 (Subpart B)  Added................................44900
325.104  (a)(2) corrected..........................................48426
325  Appendixes A and B redesignated as subpart A Appendixes A and 
        B..........................................................44899
327.3  (d) through (h) added.......................................45284
327.7  (a)(1)(ii)(A), (2), (b)(1) and (2) revised..................45286
327.13  (c) revised; (d) added.....................................45286
327.23  (d) revised................................................45286
327.31--327.33 (Subpart D)  Revised................................45286
328.1  (b) amended.................................................45977
328.2  (c) amended.................................................45977
328.4  (c) amended.................................................45977
333.3  (a) amended.................................................53213
335.102  (r)(2) and (nn)(2)(ii)(C) amended.........................58136
335.203  (c) amended...............................................58136
335.212  Amended....................................................4702
    Corrected......................................................58136
335.309a  Amended..................................................58136
335.312  Amended....................................................4702
    (d) redesignated as (c)........................................58136
335.331  Amended...................................................58136
335.401  (b)(1) introductory text and (2) amended..................58136
335.410  Revised....................................................4702
335.411  Revised....................................................4702
335.412  Removed....................................................4702
335.413  Removed...................................................58136
335.414  Removed...................................................58136
335.420  Added......................................................4703
335.421  Added......................................................4703
335.422  Added......................................................4703
335.627  Amended...................................................58136
335.628  (a)(1), (2), (b)(6) and (c)(1) amended....................58137
337  Authority citation revised................7649, 17850, 23941, 28457
337.3  (a) amended..................................................7649
    (c) added......................................................17850
    Corrected; OMB number..........................................28457
337.6  Revised.....................................................23941
360  Transferred to subchapter B; subchapter C heading removed.....10415
361  Added.........................................................15004
362  Added.........................................................53234
365  Added; eff. 3-19-93...........................................62900
365  Appendix A added; eff. 3-19-93.........................62896, 62900
386  Heading removed...............................................10415

                                  1993

12 CFR
                                                                   58 FR
                                                                    Page
Chapter III
303  Authority citation revised.....................................8216
    Heading revised.................................................8216
303.2  (a) amended..................................................8216
303.3  (a) amended..................................................8216
303.5  Heading revised; (e) added...................................8217
303.7  (f) heading revised; (f)(1)(iii) amended; (f)(1)(ix) added 
                                                                    8217
303.8  (i) added....................................................8217
303.9  (h) and (m)(5) revised.......................................8218
303.10  (c)(5) and (6) revised; (c)(7) added........................8219
303.13  (a)(6), (b)(1) introductory text, (d)(1) introductory text 
        and (2)(i) amended; (a)(9) revised.........................64458
323  Temporary exceptions..........................................42640
325  Authority citation revised....................................12151
325.1  Revised......................................................8219
325.2  (t) and (v) amended..........................................6368
    (h)(1) and (t) amended..........................................8219
    (q), (s), (u) and (w) amended..................................60103
325.3  (c)(3) revised...............................................8219
325.5  (f) revised..................................................6369
    (b) amended.....................................................8219
325.1--325.6 (Subpart A)  Appendixes A and B amended..........6369, 8219
    appendix A amended.............................................12151
    Appendixes A and B redesignated as part 325 Appendixes A and B
                                                                   60103
325  Appendixes A and B redesignated from subpart A Appendixes A 
        and B and amended..........................................60103
327.3  (d)(1)(B)(1) corrected.......................................3069

[[Page 491]]

    (d) through (h) redesignated as (e) through (i); (c), new 
(e)(1) introductory text, (1)(i) introductory text, (A), (B)(2) 
introductory text, (2)(ii), (e)(1)(ii) heading and introductory 
text, (2) and new (g) revised; new (d) added; new (h) amended......34364
    (e)(1)(i)(B)(1), (C) and (i) amended...........................34365
327.4  (c)(1) introductory text revised............................34365
327.5  (a)(1)(i) revised...........................................34365
327.7  (a)(1)(ii)(A) corrected......................................3069
327.13  (d) revised................................................31159
    (c)(2) amended.................................................34365
327.23  (d)(2) amended.............................................34365
329.3  Removed.....................................................27922
330  Authority citation revised....................................29963
330.1  (j) revised.................................................29963
330.2  Revised.....................................................29963
330.10  (b) introductory text amended; (a) and (b)(2) revised......29963
330.12  Revised....................................................29964
    (c)(2)(i)(C) and (e) corrected.................................40688
330.13  Revised....................................................29964
330.15  Revised....................................................29965
330.16  Revised....................................................29965
332  Removed.......................................................64460
333  Authority citation revised....................................64461
333.3  Removed.....................................................64461
336  Authority citation revised....................................39628
336.24--336.28 (Subpart D)  Removed; interim.......................39628
337.6  (a)(1), (9) and (10) removed; (a)(2) and (3) redesignated 
        as (a)(1) and (2); new (a)(3) added........................54935
353  Revised.......................................................28774
360  Authority citation revised.............................43070, 67664
    Heading revised; eff. 1-21-94..................................67664
360.1  Redesignated as 360.2; new 360.1 added; eff. 1-21-94........67664
360.2  (f) added...................................................43070
    Redesignated as 360.3; new 360.2 redesignated from 360.1; eff. 
1-21-94............................................................67664
360.3  Added.......................................................43070
    Redesignated as 360.4; new 360.3 redesignated from 360.2; eff. 
1-21-94............................................................67664
360.4  Redesignated from 360.3; eff. 1-21-94.......................67664
362.1  Amended.....................................................64483
362.2  Introductory text revised; (a), (b), (c), (d) through (h), 
        (i), and (j) through (p) redesignated as (e), (f), (g), 
        (i) through (m), (o) and (r) through (x); new (a) through 
        (d), (h), (n), (p) and (q) added; new (x) amended..........64483
362.3  (d)(5)(ii) corrected........................................59787
362.4  Redesignated as 362.5.......................................64483
    Added..........................................................64484
362.5  Redesignated as 362.6; new 362.5 redesignated from 362.4....64483
362.6  Redesignated from 362.5 and amended.........................64483
363  Added.........................................................31335
365  Appendix A corrected...........................................4460

                                  1994

12 CFR
                                                                   59 FR
                                                                    Page
Chapter III
303  Authority citation revised.....................................7198
303.0  Revised.....................................................52660
303.2  Heading and (a) introductory text revised....................4250
    (a)  introductory text amended; (c) revised....................43282
303.4  (b)(1) amended..............................................52662
303.5  (e) introductory text amended...............................52662
303.6  (a)(3), (f)(1)(ii)(B) heading and (2) revised; (f)(1)(ii) 
        introductory text, (3) and (4) amended......................4250
    Footnote  5 removed; (a)(2), (3), (f)(1)(ii)(A) heading and 
revised............................................................43282
    (e)(1)  concluding text redesignated as (e)(1)(iii); (b), new 
(e)(1)(iii), (2) revised; (e)(1)(i), (ii), (i)(3) and (k)(2) 
Footnote 7 amended.................................................52662
    (f)(1)(i),  (3) and (4) revised................................66655

[[Page 492]]

303.7  Heading, (a)(1)(i), (ii), (iii)(D), (2)(i), (ii), (B), 
        (b)(1), (2), (5), (8), (9), (c)(1), (3), (d)(1)(i), 
        (iii)(A), (2)(i), (3), (4)(xii), (e)(1), (2)(i), (f)(1), 
        (2), (3)(i), (ii), (iii), (4)(i), (5) and (6) amended......52663
303.8  (a)(1), (b)(1), (c), (e), (f)(1), (g)(1), (2), (h), (i)(1) 
        and (2) amended............................................52663
303.9  Revised.....................................................52663
303.10  (a)(2), (b)(2)(i) and (c)(1)(i) amended....................52667
303.11  (b) revised................................................52667
303.13  (b)(1), (c)(1)(i), (2), (d)(1), (2)(i), (e), (f)(1), (3), 
        (4) and (g) amended; (h) revised...........................52667
303.14  (a)(4)(iv) amended; (e) revised............................52667
303.15  Added; interim..............................................7198
    Regulation  at 59 FR 7198 confirmed and revised................61245
304.3  Revised; eff. 4-1-95........................................67160
304.6  Removed.....................................................50828
304.7  Table amended...............................................50828
304  Appendix A amended; eff. 4-1-95...............................67160
323  Statement and order.....................................6531, 40202
    Authority  citation revised....................................29501
    Temporary  exceptions..........................................62562
323.2  (d) through (l) redesignated as (e) through (m); new (d) 
        added......................................................29501
323.3  Heading and (a) revised; (d) amended; (b), (c) and (d) 
        redesignated as (d), (e) and (f); new (b) and new (c) 
        added......................................................29501
323.4  Revised.....................................................29502
323.5  (b) revised.................................................29502
323  Appendix A removed............................................29502
325  Authority citation revised..............................3784, 64564
325.2  (d) revised; eff. 1-27-95...................................66666
325.3  (a) amended; eff. 1-17-95...................................64564
325.1--325.6 (Subpart  A) Appendix A amended........................3784
325  Appendix A amended; eff. 1-17-95..............................64564
    Appendix A  amended.....................................66660, 66661
    Appendix A  amended; eff. 1-27-95..............................66666
327.2  Revised; eff. 4-1-95........................................67160
327.3  Redesignated as 327.4; new 327.3 added; eff. 4-1-95.........67161
327.4  (b)(2)(iv)(B) amended; (b)(2)(v) added......................29715
    Redesignated  as 327.5; new 327.4 redesignated from 327.3; 
eff. 4-1-95........................................................67161
    Revised;  eff. 4-1-95..........................................67162
327.5  Removed; eff. 4-1-95........................................67161
    Redesignated  from 327.4; eff. 4-1-95..........................67161
    Revised;  eff. 4-1-95..........................................67163
327.6  Heading and (a) revised; eff. 4-1-95........................67164
327.7  Heading and (a) revised; eff. 4-1-95........................67164
327.8  (d)(2) revised; (h) added; eff. 4-1-95......................67164
327.9  Redesignated from 327.13; (a) and (b) removed; (c) and (d) 
        redesignated as (a) and (b); heading, new (a) and new (b) 
        heading revised; new (b) amended; new (c) added; eff. 4-1-
        95.........................................................67165
327.11--327.13 (Subpart  B) Removed; 327.31--327.33 new Subpart B 
        redesignated from Subpart D; eff. 4-1-95...................67165
327.13  Redesignated as 327.9; eff. 4-1-95.........................67165
327.21--327.24 (Subpart  C) Removed; eff. 4-1-95...................67165
327.31--327.33 (Subpart  D) Redesignated as Subpart B; eff. 4-1-95
                                                                   67165
327.31  Amended; eff. 4-1-95.......................................67165
327.32  Revised; eff. 4-1-95.......................................67165
327.33  Removed; eff. 4-1-95.......................................67165
333  Authority citation revised....................................61246
333.4  Added.......................................................61246
335.102  (y) amended; (oo) through (ss) redesignated as (pp) 
        through (tt); new (oo) added; new (pp)(3) revised; eff. 7-
        1-95.......................................................67168
335.201  (a) amended; (d) added; eff. 7-1-95.......................67168
335.202  Introductory text revised; (f) added; note removed; eff. 
        7-1-95.....................................................67168
335.203  Note added; (c) and Instructions 1, 2 and 3 removed; eff. 
        7-1-95.....................................................67169
335.204  (f) revised; (h) amended; (l) added; eff. 7-1-95..........67169

[[Page 493]]

335.205  (a)(3) and (4) revised; eff. 7-1-95.......................67169
335.207  (b)(1) amended; (d) introductory text, (1) through (4) 
        and concluding text redesignated as (d)(1) introductory 
        text, (d)(1)(i) through (iv) and (2); (a) and new (d)(2) 
        revised; (f) added; eff. 7-1-95............................67169
335.210  Revised; eff. 7-1-95......................................67170
335.212  Amended; eff. 7-1-95......................................67171
335.213  Note amended; eff. 7-1-95.................................67173
335.214  (a) introductory text, (1)(i)(A), (3), (4), (5), Note 2, 
        Note 3 and (d) revised; (a) Note 4 added; (a)(1)(i)(C) 
        (ii)(A), (2), (b) introductory text, (1) and (c) amended; 
        eff. 7-1-95................................................67173
335.220  (b) and (c) removed; (d) through (h) redesignated as (b) 
        through (f); new (b) and new (e) revised; eff. 7-1-95......67174
335.221  Removed; eff. 7-1-95......................................67174
335.222  Added; eff. 7-1-95........................................67174
335.301  Amended; note added; eff. 7-1-95..........................67174
335.309a  Amended; eff. 7-1-95.....................................67174
335.310  (c) note added; eff. 7-1-95...............................67175
335.312  Amended; eff. 7-1-95......................................67175
335.321  Amended; eff. 7-1-95......................................67175
335.330  Amended; eff. 7-1-95......................................67175
335.331  Amended; eff. 7-1-95......................................67175
335.622  (g)(1) revised; eff. 7-1-95...............................67175
337.3  (a) and (c)(2) revised......................................66668
338.4  (b) revised.................................................52668
346  Authority citation revised....................................60706
346.1  (r) added...................................................60706
346.6  (a)(7) correctly removed; CFR correction....................53568
346.101 (Subpart  D) Removed; new 346.101 (Subpart D) added........60706
Chapter IV
412  Added.........................................................31136

                                  1995

12 CFR
                                                                   60 FR
                                                                    Page
Chapter III
Chapter  III Regulation status notification........................66483
303  Authority citation revised....................................35683
303.0  (c) heading and (1) removed; (c)(2) redesignated as (c).....31384
303.9  (o) added...................................................35683
304.5  (a) and (c) amended.........................................31384
308  Authority citation revised.............................24762, 35684
308.9  (a) and (b) revised; (e) added..............................24762
308.145  Amended...................................................31384
308.300--308.305 (Subpart R)  Added................................35684
309  Revised; eff. 1-2-96..........................................61465
309.4  (e) and (g) amended.........................................31384
309.5  (h) amended.................................................31384
324.2  (d) amended.................................................31384
324.7  (a) amended.................................................31384
325  Authority citation revised.............................15861, 45609
325.2  (t) and (v) amended..........................................8187
    (n) amended; (s) revised; interim..............................39232
325.3  (e) added; interim..........................................45609
325.5  (f)(3)(i) and (4)(i) amended; (g) added......................8187
    (f), (g)(2)(i)(B) and (5) amended; interim.....................39232
325  Appendix A amended.................8188, 15861, 39493, 46183, 46184
    Appendixes A and B amended; interim............................39232
    Appendix A amended; interim....................................45609
    Appendix A amended; eff. 4-1-96................................66045
327  Assessment rate schedule........................42741, 63400, 63406
327.3  (c)(2), (d)(2), (e) and (f) revised; (c)(3) and (j) added 
                                                                   50407
327.7  (a)(2), (3) and (b) revised; (c) added......................50409
327.8  (i) added...................................................42741
327.9  (a) revised; (b) removed; (c) redesignated as (d); new (b) 
        and new (c) added..........................................42741
    (b)(3)(i), (c)(2) introductory text and (3) amended............67055
330.6  (a) revised..................................................7709
330.7  (c) revised..................................................7710
330.10  Heading revised.............................................7710
330.11  (d) added...................................................7710

[[Page 494]]

330.12  (g) heading and introductory text revised; (g)(1), (2) and 
        (3) redesignated as (g)(2), (3) and (4); new (g)(1) and 
        (h) added...................................................7710
336  Authority citation revised....................................20177
336.1  Revised.....................................................20178
336.2  Removed.....................................................20178
336.3  Removed.....................................................20178
336.4  Removed.....................................................20178
336.5  Removed.....................................................20178
336.6  Removed.....................................................20178
336.7--336.14 (Subpart B)  Removed.................................20178
336.15--336.23 (Subpart C)  Removed................................20178
336.29--336.31 (Subpart D)  Removed................................20178
336.32--336.37 (Subpart E)  Removed................................20178
336  Appendix removed..............................................20178
337.6  (e)(1) amended; (h)(3) revised..............................31384
339  Authority citation revised....................................35288
339.7  Added; eff. 1-2-96..........................................35288
341.3  (c) amended.................................................31384
341.5  (b) amended.................................................31384
343.3  (e) amended.................................................31384
344.8  Added........................................................7111
345  Authority citation revised....................................22201
345.1  Removed.....................................................22212
345.2  Removed.....................................................22212
345.3  Removed; eff. 7-1-97........................................22212
345.4  Removed; eff. 7-1-97........................................22212
345.5  Removed; eff. 7-1-97........................................22212
345.6  Removed; eff. 7-1-97........................................22212
345.7  Removed; eff. 7-1-97........................................22212
345.8  Removed.....................................................22212
345.11--345.12 (Subpart A)  Added..................................22201
345.12  (h)(3) amended.............................................66050
345.21--345.29 (Subpart B)  Added..................................22202
345.27  (h) amended................................................66050
345.41--345.45 (Subpart C)  Added..................................22206
345.51 (Subpart D)  Added..........................................22209
    Removed; eff. 7-1-97...........................................22212
    (a) amended; eff. to 7-1-97....................................66050
345.101  Undesignated center heading and section removed...........22212
345.102  Removed...................................................22212
345  Appendix A added..............................................22209
    Appendix B added...............................................22211
346.20  (a) amended................................................31384
346.101  (g) revised...............................................31384
360  Authority citation revised.............................35488, 66865
360.3  (f) revised.................................................35488
360.4  Revised.....................................................35488
360.5  Added.......................................................66865
361.7  (b) amended.................................................31384
362.6  Revised.....................................................31384
364  Added.........................................................35685
364  Appendix A added.......................................35678, 35685
Chapter IV
400  Revised.......................................................17628
401  Removed.......................................................16045
402  Removed.......................................................16045
406  Removed.......................................................16045
409  Removed........................................................9613

                                  1996

12 CFR
                                                                   61 FR
                                                                    Page
Chapter III
303.7  (g) added....................................................5930
308  Authority citation revised......................20347, 48403, 57990
308.1  (e)(8) amended; (f) redesignated as (g) and revised; 
        (e)(10), (11) and new (f) added............................20347
308.6  (a)(3) revised..............................................20347
308.8  (b) revised.................................................20347
308.11  (c)(2) and (d) revised.....................................20347
308.12  (a), (c)(1), (2) and (3) revised...........................20348
308.20  Revised....................................................20348
308.24  (a) and (b) revised........................................20348
308.25  (a), (b), (e) and (g) revised..............................20348
308.33  (a) revised................................................20349
308.34  (a) and (b)(1) revised.....................................20349
308.35  (a)(3) redesignated as (a)(4); new (a)(3) added; (b) 
        revised....................................................20349
308.37  Heading and (a)(1) revised.................................20349
308.38  Revised....................................................20350
308.116  (b)(4) added..............................................57990
308.132  (c)(2) revised; (c)(3) added..............................57991
308.400--308.402 (Subpart S)  Added................................48403
310  Nomenclature change...........................................43419

[[Page 495]]

310.1  Revised.....................................................43419
310.3  (a) revised.................................................43419
310.4  (b) and (c) revised.........................................43419
310.6  Amended.....................................................43420
310.9  (d) redesignated as (e); new (d) added......................43420
310.10  (b)(6) and (10) revised; (b)(12) added; (c) removed; (d) 
        and (e) redesignated as (c) and (d); new (c) and new (d) 
        amended....................................................43420
310.11  (b) amended................................................43420
310.13  Amended....................................................43420
311.2  (a) revised; (b)(3) amended.................................38357
311.7  Amended.....................................................38357
311.8  Heading revised; (d)(1) amended; (e) added..................38357
324  Removed; eff. 1-1-99..........................................33843
325  Appendix A amended............................................47375
    Appendix C added...............................................47376
327  Assessment rate schedules.......................26078, 26083, 64609
    Authority citation revised.....................................53839
327.3  (c)(1) amended..............................................67696
327.4  (a) introductory text amended; (a)(1)(i)(A), (ii)(A) and 
        (c) revised................................................67696
327.6  Heading and (a) revised.....................................64983
327.8  (h) revised; (j) and (k) added..............................64983
    (i) removed....................................................67696
327.9  Revised.....................................................67696
327.10  Added......................................................67698
327.32  (a)(2)(i)(A) and (3)(i) revised; (c) added.................53839
    (a)(1), (2) and (4) introductory text revised; (a)(5) removed 
                                                                   64983
327.33  Added......................................................64983
327.34  Added......................................................64984
327.35  Added......................................................64984
327.36  Added......................................................64984
327.37  Added......................................................64984
327.41--327.45 (Subpart C)  Added..................................53839
336  Revised.......................................................28728
339  Revised.......................................................45706
342  Removed.......................................................48403
345.12  (h)(3) amended.............................................21364
346.1  (a) amended; (o) revised; (s) through (v) added..............5674
346.6  Revised......................................................5674
348  Revised.......................................................40305
353  Revised........................................................6099
359  Added..........................................................5930
363.1  (b) revised..................................................6493
363.4  (b) revised..................................................6493
363.5  (b) revised..................................................6493
363  Appendix A amended.............................................6494
364  Appendix A amended............................................43951
366  Added; interim.................................................9596
367  Added; interim................................................35117
    Regulation at 61 FR 35117 confirmed; revised...................68559

                                  1997

12 CFR
                                                                   62 FR
                                                                    Page
Chapter III
303.0  (b)(12) revised.............................................16664
304.1  Amended......................................................4896
304.2  Revised......................................................4896
304.3  Revised......................................................4896
304.4  Revised......................................................4896
304.5  Revised......................................................4897
304  Appendix A revised.............................................4897
    Appendix B removed..............................................4899
325.3  Regulation at 60 FR 45609 confirmed; (e) removed............55493
325  Regulation at 60 FR 45609 confirmed...........................55493
    Appendix A corrected; CFR correction...........................60161
    Appendix C amended; interim....................................68068
327.8  Introductory text added; (f) and (g) revised................27176
327.9  (b) revised.................................................27176
327.41--327.45 (Subpart C)  Removed................................27177
329.103  (a)(1) amended; (e) added.................................40732
335  Revised........................................................6856
337  Authority citation revised.....................................6453
337.12  Added; interim..............................................6453
338  Authority citation revised....................................36204
338.1  Revised.....................................................36204
338.3  (a)(1) and (2) revised......................................36204
338.4  Heading and (a) revised.....................................36204
338.5--338.9 (Subpart B)  Heading revised..........................36204
338.5  Revised.....................................................36204
338.6  Revised.....................................................36204
338.7  Revised.....................................................36204
338.8  Revised.....................................................36204
338.9  Introductory text revised...................................36204

[[Page 496]]

338.5--338.9 (Subpart B)  Appendixes A and B removed...............36204
344  Revised........................................................9919
350.3  Revised.....................................................10200
350.4  Revised.....................................................10200
350.5  Revised.....................................................10200
350.6  Revised.....................................................10200
350.12  Revised....................................................10201
363.3  (b) revised.................................................63257
363.4  (a) and (b) revised.........................................63257
363  Appendix A amended.....................................63258, 63259
368  Added.........................................................13287
369  Added.........................................................47737