[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2019 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

                                 Title 12

                            Banks and Banking
                       ________________________

                          Parts 347 to 599

                    Revised as of January 1, 2019

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2019
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

          U.S. GOVERNMENT OFFICIAL EDITION NOTICE

          Legal Status and Use of Seals and Logos
          
          
          The seal of the National Archives and Records Administration 
              (NARA) authenticates the Code of Federal Regulations (CFR) as 
              the official codification of Federal regulations established 
              under the Federal Register Act. Under the provisions of 44 
              U.S.C. 1507, the contents of the CFR, a special edition of the 
              Federal Register, shall be judicially noticed. The CFR is 
              prima facie evidence of the original documents published in 
              the Federal Register (44 U.S.C. 1510).

          It is prohibited to use NARA's official seal and the stylized Code 
              of Federal Regulations logo on any republication of this 
              material without the express, written permission of the 
              Archivist of the United States or the Archivist's designee. 
              Any person using NARA's official seals and logos in a manner 
              inconsistent with the provisions of 36 CFR part 1200 is 
              subject to the penalties specified in 18 U.S.C. 506, 701, and 
              1017.

          Use of ISBN Prefix

          This is the Official U.S. Government edition of this publication 
              and is herein identified to certify its authenticity. Use of 
              the 0-16 ISBN prefix is for U.S. Government Publishing Office 
              Official Editions only. The Superintendent of Documents of the 
              U.S. Government Publishing Office requests that any reprinted 
              edition clearly be labeled as a copy of the authentic work 
              with a new ISBN.

              
              
          U . S . G O V E R N M E N T P U B L I S H I N G O F F I C E

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

          U.S. Superintendent of Documents  Washington, DC 
              20402-0001

          http://bookstore.gpo.gov

          Phone: toll-free (866) 512-1800; DC area (202) 512-1800

[[Page iii]]







As of January 1, 2019

Title 12, Parts 500 to 599

Revised as of January 1, 2018

Is Replaced by

Title 12, Parts 347 to 599



[[Page v]]





                            Table of Contents



                                                                    Page
  Explanation.................................................     vii

  Title 12:
          Chapter III--Federal Deposit Insurance Corporation 
          (Continued)                                                3
          Chapter IV--Export-Import Bank of the United States      473
          Chapter V [Reserved]
  Finding Aids:
      Table of CFR Titles and Chapters........................     531
      Alphabetical List of Agencies Appearing in the CFR......     551
      List of CFR Sections Affected...........................     561

[[Page vi]]





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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 12 CFR 347.101 
                       refers to title 12, part 
                       347, section 101.

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

[[Page vii]]



                               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, 2019), 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 
exercised by the user in determining the actual effective date. In 
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 viii]]

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.

PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
the revision date stated on the cover of each volume are not carried. 
Code users may find the text of provisions in effect on any given date 
in the past by using the appropriate List of CFR Sections Affected 
(LSA). For the convenience of the reader, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume. For changes to 
the Code prior to the LSA listings at the end of the volume, consult 
previous annual editions of the LSA. For changes to the Code prior to 
2001, consult the List of CFR Sections Affected compilations, published 
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
editorially to indicate that a portion of the CFR was left vacant and 
not accidentally dropped due to a printing or computer error.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed as 
an approved incorporation by reference, please contact the agency that 
issued the regulation containing that incorporation. If, after 
contacting the agency, you find the material is not available, please 
notify the Director of the Federal Register, National Archives and 
Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001, 
or call 202-741-6010.

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 Authorities 
and Rules. A list of CFR titles, chapters, subchapters, and parts and an 
alphabetical list of agencies publishing in the CFR are also included in 
this volume.

[[Page ix]]

    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 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, 8601 Adelphi Road, College Park, MD 
20740-6001 or e-mail [email protected].

SALES

    The Government Publishing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call toll-free, 
866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or 
fax your order to 202-512-2104, 24 hours a day. For payment by check, 
write to: US Government Publishing Office - New Orders, P.O. Box 979050, 
St. Louis, MO 63197-9000.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers of the Presidents of the United 
States, Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format via www.ofr.gov. For more 
information, contact the GPO Customer Contact Center, U.S. Government 
Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-
mail, [email protected].
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal-
register.
    The e-CFR is a regularly updated, unofficial editorial compilation 
of CFR material and Federal Register amendments, produced by the Office 
of the Federal Register and the Government Publishing Office. It is 
available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register
    January 1, 2019







[[Page xi]]



                               THIS TITLE

    Title 12--Banks and Banking is composed of ten volumes. The parts in 
these volumes are arranged in the following order: Parts 1-199, 200-219, 
220-229, 230-299, 300-346, 347-599, 600-899, 900-1025, 1026-1099, and 
1100-end. The contents of these volumes represent all current 
regulations codified under this title of the CFR as of January 1, 2019.

    For this volume, Gabrielle E. Burns was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of John 
Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                       TITLE 12--BANKS AND BANKING




                  (This book contains parts 347 to 599)

  --------------------------------------------------------------------
                                                                    Part

chapter iii--Federal Deposit Insurance Corporation 
  (Continued)...............................................         347

chapter iv--Export-Import Bank of the United States.........         400
chapter v [Reserved]

[[Page 3]]



     CHAPTER III--FEDERAL DEPOSIT INSURANCE CORPORATION (CONTINUED)




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

 SUBCHAPTER B--REGULATIONS AND STATEMENTS OF GENERAL POLICY (CONTINUED)
Part                                                                Page
347             International banking.......................           5
348             Management official interlocks..............          30
349             Derivatives.................................          34
350             Disclosure of financial and other 
                    information by FDIC-insured State 
                    nonmember banks.........................          69
351             Proprietary trading and certain interests in 
                    and relationships with covered funds....          72
352             Nondiscrimination on the basis of disability         116
353             Suspicious activity reports.................         120
357             Determination of economically depressed 
                    regions.................................         122
359             Golden parachute and indemnification 
                    payments................................         122
360             Resolution and receivership rules...........         130
361             Minority and Women Outreach Program 
                    contracting.............................         171
362             Activities of insured State banks and 
                    insured savings associations............         173
363             Annual independent audits and reporting 
                    requirements............................         195
364             Standards for safety and soundness..........         222
365             Real estate lending standards...............         231
366             Minimum standards of integrity and fitness 
                    for an FDIC contractor..................         243
367             Suspension and exclusion of contractor and 
                    termination of contracts................         247
368             Government securities sales practices.......         256
369             Prohibition against use of interstate 
                    branches primarily for deposit 
                    production..............................         259
370             Recordkeeping for timely deposit insurance 
                    determination...........................         261
371             Recordkeeping requirements for qualified 
                    financial contracts.....................         272
373             Credit risk retention.......................         300
380             Orderly liquidation authority...............         342

[[Page 4]]

381             Resolution plans............................         374
382             Restrictions on qualified financial 
                    contracts...............................         385
390             Regulations transferred from the Office of 
                    Thrift Supervision......................         395
391-399         [Reserved]

[[Page 5]]



  SUBCHAPTER B_REGULATIONS AND STATEMENTS OF GENERAL POLICY 
                        (CONTINUED)





PART 347_INTERNATIONAL BANKING--Table of Contents



  Subpart A_Foreign Banking and Investment by Insured State Nonmember 
                                  Banks

Sec.
347.101 Authority, purpose, and scope.
347.102 Definitions.
347.103 Effect of state law on actions taken under this subpart.
347.104 Insured state nonmember bank investment in foreign 
          organizations.
347.105 Permissible financial activities outside the United States.
347.106 Going concerns.
347.107 Joint ventures.
347.108 Portfolio investments.
347.109 Limitations on indirect investments in nonfinancial 
          organizations.
347.110 Affiliate holdings.
347.111 Underwriting and dealing limits applicable to foreign 
          organizations held by insured state nonmember banks.
347.112 Restrictions applicable to foreign organizations that act as 
          futures commission merchants.
347.113 Restrictions applicable to activities by a foreign organization 
          in the United States.
347.114 Extensions of credit to foreign organizations held by insured 
          state nonmember banks; shares of foreign organizations held in 
          connection with debts previously contracted.
347.115 Permissible activities for a foreign branch of an insured state 
          nonmember bank.
347.116 Recordkeeping and supervision of the foreign activities of 
          insured state nonmember banks.
347.117 General consent.
347.118 Expedited processing.
347.119 Specific consent.
347.120 Computation of investment amounts.
347.121 Requirements for insured state nonmember bank to close a foreign 
          branch.
347.122 Limitations applicable to the authority provided in this 
          subpart.

                         Subpart B_Foreign Banks

347.201 Authority, purpose, and scope.
347.202 Definitions.
347.203 Deposit insurance required for all branches of foreign banks 
          engaged in domestic retail deposit activity in the same state.
347.204 Commitment to be examined and provide information.
347.205 Record maintenance.
347.206 Domestic retail deposit activity requiring deposit insurance by 
          U.S. branch of a foreign bank.
347.207 Disclosure of supervisory information to foreign supervisors.
347.208 Assessment base deductions by insured branch.
347.209 Pledge of assets.
347.210 Asset maintenance.
347.211 Examination of branches of foreign banks.
347.212 FDIC approval to conduct activities that are not permissible for 
          federal branches.
347.213 Establishment or operation of noninsured foreign branch.
347.214 Branch established under section 5 of the International Banking 
          Act.
347.215 Exemptions from deposit insurance requirement.
347.216 Depositor notification.

                     Subpart C_International Lending

347.301 Purpose, authority, and scope.
347.302 Definitions.
347.303 Allocated transfer risk reserve.
347.304 Accounting for fees on international loans.
347.305 Reporting and disclosure of international assets.

    Authority: 12 U.S.C. 1813, 1815, 1817, 1819, 1820, 1828, 3103, 3104, 
3105, 3108, 3109; Pub L. No. 111-203, section 939A, 124 Stat. 1376, 1887 
(July 21, 2010) (codified 15 U.S.C. 78o-7 note).

    Source: 70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, 
unless otherwise noted.



Sec.347.101  Authority, purpose, and scope.

    (a) This subpart is issued pursuant to section 18(d) and (l) of the 
Federal Deposit Insurance Act (12 U.S.C. 1828(d), 1828(l)).
    (b) The rules in subpart A address the FDIC's requirements for 
insured state nonmember bank investments in foreign organizations, 
permissible foreign financial activities, loans or extensions of credit 
to or for the account of foreign organizations, and the FDIC's 
recordkeeping, supervision, and approval requirements. The rules also 
address the permissible activities for foreign branches of insured state 
nonmember

[[Page 6]]

banks, as well as the FDIC's requirements for establishing, operating, 
relocating and closing of branches in foreign countries.



Sec.347.102  Definitions.

    For the purposes of this subpart:
    (a) An affiliate of an insured state nonmember bank means:
    (1) Any entity of which the insured state nonmember bank is a direct 
or indirect subsidiary or which otherwise controls the insured state 
nonmember bank;
    (2) Any organization which is a direct or indirect subsidiary of 
such entity or which is otherwise controlled by such entity; or
    (3) Any other organization that is a direct or indirect subsidiary 
of the insured state nonmember bank or is otherwise controlled by the 
insured state nonmember bank.
    (b) Control means the ability to control in any manner the election 
of a majority of an organization's directors or trustees; or the ability 
to exercise a controlling influence over the management and policies of 
an organization. An insured state nonmember bank is deemed to control an 
organization of which it is a general partner or its affiliate is a 
general partner.
    (c) Domestic means United States.
    (d) Eligible insured state nonmember bank means an eligible 
depository institution as defined in Sec.303.2(r) of this chapter.
    (e) Equity interest means any ownership interest or rights in an 
organization, whether through an equity security, contribution to 
capital, general or limited partnership interest, debt or warrants 
convertible into ownership interests or rights, loans providing profit 
participation, binding commitments to acquire any such items, or some 
other form of business transaction.
    (f) Equity security means voting or nonvoting shares, stock, 
investment contracts, or other interests representing ownership or 
participation in a company or similar enterprise, as well as any 
instrument convertible to any such interest at the option of the holder 
without payment of substantial additional consideration.
    (g) FRB means the Board of Governors of the Federal Reserve System.
    (h) Foreign bank means an organization that is organized under the 
laws of a foreign country, a territory of the United States, Puerto 
Rico, Guam, American Samoa, or the Virgin Islands that:
    (1) Is recognized as a bank by the bank supervisory or monetary 
authority of the country of its organization or the country in which its 
principal banking operations are located;
    (2) Receives deposits to a substantial extent in the regular course 
of its business; and
    (3) Has the power to accept demand deposits.
    (i) Foreign banking organization means a foreign organization that 
is formed for the sole purpose of either holding shares of a foreign 
bank or performing nominee, fiduciary, or other banking services 
incidental to the activities of a foreign branch or foreign bank 
affiliate of the insured state nonmember bank.
    (j) Foreign branch means an office or place of business located 
outside the United States, its territories, Puerto Rico, Guam, American 
Samoa, the Trust Territory of the Pacific Islands, or the Virgin 
Islands, at which banking operations are conducted, but does not include 
a representative office.
    (k) Foreign country means any country other than the United States 
and includes any territory, dependency, or possession of any such 
country or of the United States.
    (l) Foreign organization means an organization that is organized 
under the laws of a foreign country.
    (m) Insured state nonmember bank or bank means a state bank, as 
defined by Sec.3(a)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(a)(2)), whose deposits are insured by the FDIC and that is not a 
member of the Federal Reserve System.
    (n) Indirectly means investments held or activities conducted by a 
subsidiary of an organization.
    (o) Investment grade means a security issued by an entity that has 
adequate capacity to meet financial commitments for the projected life 
of the exposure. Such an entity has adequate

[[Page 7]]

capacity to meet financial commitments if the risk of its default is low 
and the full and timely repayment of principal and interest is expected.
    (p) Loan or extension of credit means all direct and indirect 
advances of funds to a person, government, or entity made on the basis 
of any obligation of that person, government, or entity to repay funds.
    (q) Organization or entity means a corporation, partnership, 
association, bank, or other similar entity.
    (r) NRSRO means a nationally recognized statistical rating 
organization as designated by the Securities and Exchange Commission.
    (s) Representative office means an office that engages solely in 
representative functions such as soliciting new business for its home 
office or acting as liaison between the home office and local customers, 
but which has no authority to make business or contracting decisions 
other than those relating to the personnel and premises of the 
representative office.
    (t) Subsidiary means any organization more than 50 percent of the 
voting equity interests of which are directly or indirectly held by 
another organization.
    (u) Tier 1 capital means Tier 1 capital as defined in Sec.324.2 of 
this chapter.
    (v) Well capitalized means well capitalized as defined in Sec.
324.403 of this chapter.

[70 FR 17560, Apr. 6, 2005, as amended at 78 FR 55595, Sept. 10, 2013; 
83 FR 9143, Mar. 5, 2018; 83 FR 17741, Apr. 24, 2018]



Sec.347.103  Effect of state law on actions taken under this subpart.

    A bank may acquire and retain equity interests in a foreign 
organization or establish a foreign branch, subject to the requirements 
of this subpart, if it is authorized to do so by the law of the state in 
which the bank is chartered.



Sec.347.104  Insured state nonmember bank investments in foreign
organizations.

    (a) Investment in foreign banks or foreign banking organizations. A 
bank may directly or indirectly acquire and retain equity interests in a 
foreign bank or foreign banking organization.
    (b) Investment in other foreign organizations. A bank may only:
    (1) acquire and retain equity interests in foreign organizations, 
other than foreign banks or foreign banking organizations in amounts of 
50 percent or less of the foreign organization's voting equity 
interests, if the equity interest is held through a domestic or foreign 
subsidiary; and
    (2) The bank meets its minimum capital requirements.



Sec.347.105  Permissible financial activities outside the 
United States.

    (a) Limitation on authorized activities. A bank may not directly or 
indirectly acquire or hold equity interests in a foreign organization 
that will result in the bank and its affiliates:
    (1) Holding more than 50 percent, in the aggregate, of the voting 
equity interest in such foreign organization; or
    (2) Controlling such foreign organization, unless the activities of 
a foreign organization are limited to those authorized under paragraph 
(b) of this section.
    (b) Authorized activities. The following financial activities are 
authorized outside the United States:
    (1) Commercial and other banking activities.
    (2) Financing, including commercial financing, consumer financing, 
mortgage banking, and factoring, subject to compliance with any 
attendant restrictions contained in 12 CFR 225.28(b).
    (3) Leasing real or personal property, acting as agent, broker or 
advisor in leasing real or personal property, subject to compliance with 
any attendant restrictions in 12 CFR 225.28(b).
    (4) Acting as a fiduciary, subject to compliance with any attendant 
restrictions in 12 CFR 225.28(b).
    (5) Underwriting credit life, credit accident and credit health 
insurance.
    (6) Performing services for other direct or indirect operations of a 
domestic banking organization, including representative functions, sale 
of long-term debt, name saving, liquidating assets acquired to prevent 
loss on a debt previously contracted in good faith, and other activities 
that are permissible for a bank holding company under sections 
4(a)(2)(A) and 4(c)(1)(C) of the Bank Holding Company Act.

[[Page 8]]

    (7) Holding the premises of a branch of an Edge corporation or 
insured state nonmember bank or the premises of a direct or indirect 
subsidiary, or holding or leasing the residence of an officer or 
employee of a branch or a subsidiary.
    (8) Providing investment, financial, or economic services, subject 
to compliance with any attendant restrictions in 12 CFR 225.28(b).
    (9) General insurance agency and brokerage.
    (10) Data processing.
    (11) Organizing, sponsoring, and managing a mutual fund if the 
fund's shares are not sold or distributed in the United States or to 
U.S. residents and the fund does not exercise management control over 
the firms in which it invests.
    (12) Performing management consulting services, provided that such 
services when rendered with respect to the domestic market must be 
restricted to the initial entry.
    (13) Underwriting, distributing, and dealing in debt securities 
outside the United States.
    (14) With the prior approval of the FDIC under section 347.119(d), 
underwriting, distributing, and dealing in equity securities outside the 
United States.
    (15) Operating a travel agency in connection with financial services 
offered outside the United States by the bank or others.
    (16) Providing futures commission merchant services, subject to 
compliance with any attendant restrictions in 12 CFR 225.28(b).
    (17) Engaging in activities that the FRB has determined in 
Regulation Y (12 CFR 225.28(b)) are closely related to banking under 
section 4(c)(8) of the Bank Holding Company Act.
    (18) Engaging in other activities, with the prior approval of the 
FDIC.
    (c) Limitation on activities authorized under Regulation Y. If a 
bank relies solely on the cross-reference to Regulation Y contained in 
paragraph (b)(17) of this section as authority to engage in an activity, 
compliance with any attendant restrictions on the activity that are 
contained in 12 CFR 225.28(b) is required.
    (d) Approval of other activities. Activities that are not 
specifically authorized by this section, but that are authorized by 12 
CFR 211.10 or FRB interpretations of activities authorized by that 
section, may be authorized by specific consent of the FDIC on an 
individual basis and upon such terms and conditions as the FDIC may 
consider appropriate. Activities that will be engaged in as principal 
(defined by reference to section 362.1(b) of this chapter), and that are 
not authorized by 12 CFR 211.10 or FRB interpretations of activities 
authorized under that section, must satisfy the requirements of part 362 
of this chapter and be approved by the FDIC under this part as well as 
part 362 of this chapter.



Sec.347.106  Going concerns.

    Going concerns. If a bank acquires an equity interest in a foreign 
organization that is a going concern, no more than 5 percent of either 
the consolidated assets or revenues of the foreign organization may be 
attributable to activities that are not permissible under Sec.
347.105(b).



Sec.347.107  Joint ventures.

    (a) Joint ventures. If a bank, directly or indirectly, acquires or 
holds an equity interest in a foreign organization that is a joint 
venture, and the bank or its affiliates do not control the foreign 
organization, no more than 10 percent of either the consolidated assets 
or revenues of the foreign organization may be attributable to 
activities that are not permissible under Sec.347.105(b).
    (b) Joint venture defined. For purposes of this section, the term 
``joint venture'' means any organization in which 20 percent or more but 
not in excess of 50 percent of the voting equity interests, in the 
aggregate, are directly or indirectly held by a bank or its affiliates.



Sec.347.108  Portfolio investments.

    (a) Portfolio investments. If a bank, directly or indirectly, 
acquires or holds an equity interest in a foreign organization as a 
portfolio investment and the foreign organization is not controlled, 
directly or indirectly, by the bank or its affiliates:
    (1) No more than 10 percent of either the consolidated assets or 
revenues of

[[Page 9]]

the foreign organization may be attributable to activities that are not 
permissible under Sec.347.105(b); and
    (2) Any loans or extensions of credit made by the bank and its 
affiliates to the foreign organization must be on substantially the same 
terms, including interest rates and collateral, as those prevailing at 
the same time for comparable transactions between the bank or its 
affiliates and nonaffiliated organizations.
    (b) Portfolio investment defined. For purposes of this section, the 
term ``portfolio investment'' means an investment in an organization in 
which less than 20 percent of the voting equity interests, in the 
aggregate, are directly or indirectly held by a bank or its affiliates.



Sec.347.109  Limitations on indirect investments in nonfinancial 
foreign organizations.

    (a) A bank may, through a subsidiary authorized by Sec. Sec.
347.105 or 347.106, or an Edge corporation if also authorized by the 
FRB, acquire and hold equity interests in foreign organizations that are 
not foreign banks or foreign banking organizations and that engage 
generally in activities beyond those listed in Sec.347.105(b), subject 
to the following:
    (1) The amount of the investment does not exceed 15 percent of the 
bank's Tier 1 capital;
    (2) The aggregate holding of voting equity interests of one foreign 
organization by the bank and its affiliates must be less than:
    (i) 20 percent of the foreign organization's voting equity 
interests; and
    (ii) 40 percent of the foreign organization's voting and nonvoting 
equity interests;
    (b) The bank or its affiliates must not otherwise control the 
foreign organization; and
    (c) Loans or extensions of credit made by the bank and its 
affiliates to the foreign organization must be on substantially the same 
terms, including interest rates and collateral, as those prevailing at 
the same time for comparable transactions between the bank or its 
affiliates and nonaffiliated organizations.



Sec.347.110  Affiliate holdings.

    References in Sec. Sec.347.107, 347.108, and 347.109 to equity 
interests of foreign organizations held by an affiliate of a bank 
include equity interests held in connection with an underwriting or for 
distribution or dealing by an affiliate permitted to do so by Sec. Sec.
362.8 or 362.18 of this chapter or section 4(c)(8) of the Bank Holding 
Company Act (12 U.S.C. 1843(c)(8)).



Sec.347.111  Underwriting and dealing limits applicable to foreign 
organizations held by insured state nonmember banks.

    A bank that holds an equity interest in one or more foreign 
organizations which underwrite, deal, or distribute equity securities 
outside the United States as authorized by Sec.347.105(b)(14) is 
subject to the following limitations:
    (a) Underwriting commitment limits. (1) The aggregate underwriting 
commitments by the foreign organizations for the equity securities of a 
single entity, taken together with underwriting commitments by any 
affiliate of the bank under the authority of 12 CFR 211.10(b), may not 
exceed the lesser of $60 million or 25 percent of the bank's Tier 1 
capital, except as otherwise provided in this paragraph.
    (2) Underwriting commitments in excess of this limit must be either:
    (i) Covered by binding commitments from subunderwriters or 
purchasers; or
    (ii) Deducted from the capital of the bank, with at least 50 percent 
of the deduction being taken from Tier 1 capital, with the bank 
remaining well capitalized after this deduction.
    (b) Distribution and dealing limits. The equity securities of any 
single entity held for distribution or dealing by the foreign 
organizations, taken together with equity securities held for 
distribution or dealing by any affiliate of the bank under the authority 
of 12 CFR 211.10:
    (1) May not exceed the lesser of $30 million or 5 percent of the 
bank's Tier 1 capital, subject to the following:
    (i) Any equity securities acquired pursuant to any underwriting 
commitment extending up to 90 days after the payment date for the 
underwriting may be excluded from this limit;

[[Page 10]]

    (ii) Any equity securities of the entity held under the authority of 
Sec. Sec.347.105 through 347.109 or 12 CFR 211.10 for purposes other 
than distribution or dealing must be included in this limit; and
    (iii) Up to 75 percent of the position in an equity security may be 
reduced by netting long and short positions in the same security, or 
offsetting cash positions against derivative instruments referenced to 
the same security so long as the derivatives are part of a prudent 
hedging strategy; and
    (2) Must be included in calculating the general consent limits under 
Sec.347.117(b)(3) if the bank relies on the general consent provisions 
as authority to acquire equity interests of the same foreign entity for 
investment or trading.
    (c) Additional distribution and dealing limits. With the exception 
of equity securities acquired pursuant to any underwriting commitment 
extending up to 90 days after the payment date for the underwriting, 
equity securities of a single entity held for distribution or dealing by 
all affiliates of the bank (this includes shares held in connection with 
an underwriting or for distribution or dealing by an affiliate permitted 
to do so by Sec. Sec.362.8 or 362.18 of this chapter or section 
4(c)(8) of the Bank Holding Company Act), combined with any equity 
interests held for investment or trading purposes by all affiliates of 
the bank, must conform to the limits of Sec. Sec.347.105 through 
347.109.
    (d) Combined limits. The aggregate of the following may not exceed 
25 percent of the bank's Tier 1 capital:
    (1) All equity interests of foreign organizations held for 
investment or trading under Sec.347.109 or by an affiliate of the bank 
under the corresponding paragraph of 12 CFR 211.10.
    (2) All underwriting commitments under paragraph (a) of this 
section, taken together with all underwriting commitments by any 
affiliate of the bank under the authority of 12 CFR 211.10, after 
excluding the amount of any underwriting commitment:
    (i) Covered by binding commitments from subunderwriters or 
purchasers under paragraph (a)(1) of this section or the comparable 
provision of 12 CFR 211.10; or
    (ii) Already deducted from the bank's capital under paragraph (a)(2) 
of this section, or the appropriate affiliate's capital under the 
comparable provisions of 12 CFR 211.10; and
    (3) All equity securities held for distribution or dealing under 
paragraph (b) of this section, taken together with all equity securities 
held for distribution or dealing by any affiliate of the bank under the 
authority of 12 CFR 211.10, after reducing by up to 75 percent the 
position in any equity security by netting and offset, as permitted by 
paragraph (b)(1)(iii) of this section or the comparable provision of 12 
CFR 211.10.



Sec.347.112  Restrictions applicable to foreign organizations that 
act as futures commission merchants.

    (a) If a bank acquires or retains an equity interest in a foreign 
organization that acts as a futures commission merchant pursuant to 
Sec.347.105(b)(16), the foreign organization may not be a member of an 
exchange or clearing association that requires members to guarantee or 
otherwise contract to cover losses suffered by other members unless the:
    (1) Foreign organization's liability does not exceed two percent of 
the bank's Tier 1 capital, or
    (2) Bank has obtained the prior approval of the FDIC under Sec.
347.120(d).
    (b) [Reserved]



Sec.347.113  Restrictions applicable to activities by a foreign 
organization in the United States.

    (a) A bank, acting under the authority provided in this subpart, may 
not directly or indirectly hold:
    (1) Equity interests of any foreign organization that engages in the 
general business of buying or selling goods, wares, merchandise, or 
commodities in the United States; or
    (2) More than 5 percent of the equity interests of any foreign 
organization that engages in activities in the United States unless any 
activities in which the foreign organization engages in the United 
States are incidental to its international or foreign business.
    (b) For purposes of this section:
    (1) A foreign organization is not engaged in any business or 
activities in

[[Page 11]]

the United States unless it maintains an office in the United States 
other than a representative office.
    (2) The following activities are incidental to international or 
foreign business:
    (i) Activities that are permissible for an Edge corporation in the 
United States under 12 CFR 211.6; or
    (ii) Other activities approved by the FDIC.



Sec.347.114  Extensions of credit to foreign organizations held by 
insured state nonmember banks; shares of foreign organizations held
in connection with debts previously contracted.

    (a) Loans or extensions of credit. A bank that directly or 
indirectly holds equity interests in a foreign organization pursuant to 
the authority of this subpart may make loans or extensions of credit to 
or for the accounts of the organization without regard to the provisions 
of section 18(j) of the FDI Act (12 U.S.C. 1828(j)).
    (b) Debts previously contracted. Equity interests acquired to 
prevent a loss upon a debt previously contracted in good faith are not 
subject to the limitations or procedures of this subpart; however, they 
must be disposed of promptly but in no event later than two years after 
their acquisition, unless the FDIC authorizes retention for a longer 
period.



Sec.347.115  Permissible activities for a foreign branch of an 
insured state nonmember bank.

    In addition to its general banking powers and if permitted by the 
law of the state in which the bank is chartered, a foreign branch of a 
bank may conduct the following activities to the extent that they are 
consistent with banking practices in a foreign country where the bank 
maintains a branch:
    (a) Guarantees. Guarantee debts, or otherwise agree to make payments 
on the occurrence of readily ascertainable events including, without 
limitation, nonpayment of taxes, rentals, customs duties, or costs of 
transport and loss or nonconformance of shipping documents, if:
    (1) The guarantee or agreement specifies a maximum monetary 
liability; and
    (2) To the extent the guarantee or agreement is not subject to a 
separate amount limit under state or federal law, the amount of the 
guarantee or agreement is combined with loans and other obligations for 
purposes of applying any legal lending limits.
    (b) Government obligations. Engage in the following types of 
transactions with respect to the obligations of foreign countries, so 
long as aggregate investments, securities held in connection with 
distribution and dealing, and underwriting commitments do not exceed ten 
percent of the bank's Tier 1 capital:
    (1) Underwrite, distribute and deal, invest in, or trade obligations 
of:
    (i) The national government of the country in which the branch is 
located or its political subdivisions; and
    (ii) An agency or instrumentality of such national government if 
supported by the taxing authority, guarantee, or full faith and credit 
of the national government.
    (2) Underwrite, distribute and deal, invest in or trade obligations 
\1\ rated as investment grade of:
---------------------------------------------------------------------------

    \1\ If the obligation is an equity interest, it must be held through 
a subsidiary of the foreign branch and the insured state nonmember bank 
must meet its minimum capital requirements.
---------------------------------------------------------------------------

    (i) The national government of any foreign country or its political 
subdivisions, to the extent permissible under the law of the issuing 
foreign country; and
    (ii) An agency or instrumentality of the national government of any 
foreign country to the extent permissible under the law of the issuing 
foreign country, if supported by the taxing authority, guarantee, or 
full faith and credit of the national government.
    (c) Local investments. (1) Acquire and hold local investments in:
    (i) Equity securities of the central bank, clearinghouses, 
governmental entities, and government sponsored development banks of the 
country in which the branch is located;
    (ii) Other debt securities eligible to meet local reserve or similar 
requirements; and

[[Page 12]]

    (iii) Shares of automated electronic payment networks, professional 
societies, schools, and similar entities necessary to the business of 
the branch.
    (2) Aggregate local investments (other than those required by the 
law of the foreign country or permissible under section 5136 of the 
Revised Statutes (12 U.S.C. 24 (Seventh)) by all the bank's branches in 
a single foreign country must not exceed 1 percent of the total deposits 
in all the bank's branches in that country as reported in the preceding 
year-end Report of Income and Condition (Call Report): \2\
---------------------------------------------------------------------------

    \2\ If a branch has recently been acquired by the bank and the 
branch was not previously required to file a Call Report, branch 
deposits as of the acquisition date must be used.
---------------------------------------------------------------------------

    (d) Insurance. Act as an insurance agent or broker.
    (e) Employee benefits program. Pay to an employee of a branch, as 
part of an employee benefits program, a greater rate of interest than 
that paid to other depositors of the branch.
    (f) Repurchase agreements. Engage in repurchase agreements involving 
securities and commodities that are the functional equivalents of 
extensions of credit.
    (g) Other activities. Engage in other activities, with the prior 
approval of the FDIC.
    (h) Approval of other activities. Activities that are not 
specifically authorized by this section, but that are authorized by 12 
CFR 211.4 or FRB interpretations of activities authorized by that 
section, may be authorized by specific consent of the FDIC on an 
individual basis and upon such terms and conditions as the FDIC may 
consider appropriate. Activities that will be engaged in as principal 
(defined by reference to section 362.1(b) of this chapter), and that are 
not authorized by 12 CFR 211.4 or FRB interpretations of activities 
authorized under that section, must satisfy the requirements of part 362 
of this chapter and be approved by the FDIC under this part as well as 
part 362 of this chapter.



Sec.347.116  Recordkeeping and supervision of foreign activities
of insured state nonmember banks.

    (a) Records, controls and reports. A bank with any foreign branch, 
any investment in a foreign organization of 20 percent or more of the 
organization's voting equity interests, or control of a foreign 
organization must maintain a system of records, controls 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 risk assets, including loans and other extensions of credit. Coverage 
should extend to a substantial proportion of the risk assets in the 
branch or foreign organization, and include the status of all large 
credit lines and of credits to customers also borrowing from other 
offices or affiliates of the bank. Appropriate information on risk 
assets may include:
    (i) A recent financial statement of the borrower or obligee and 
current information on the borrower's or obligee's financial condition;
    (ii) 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, and other 
funding sources employed in the branch or foreign organization 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 guarantees 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 foreign organization in sufficient detail to permit 
determination of conformance to auditing guidelines. Appropriate audit 
reports may include coverage of:

[[Page 13]]

    (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, accounting procedures in compliance with 
applicable accounting standards, and discretionary authority of local 
management;
    (v) Compliance with local laws and regulations; and
    (vi) Compliance with applicable U.S. laws and regulations.
    (b) Availability of information to examiners; reports. (1) 
Information about foreign branches or foreign organizations must be made 
available to the FDIC by the bank for examination and other supervisory 
purposes.
    (2) The FDIC may from time to time require a bank to make and submit 
such reports and information as may be necessary to implement and 
enforce the provisions of this subpart, and the bank shall submit an 
annual report of condition for each foreign branch pursuant to 
instructions provided by the FDIC.



Sec.347.117  General consent.

    (a) General consent to establish or relocate a foreign branch. 
General consent of the FDIC is granted, subject to the written 
notification requirement contained in section 303.182(a) and consistent 
with the requirements of this subpart, for an:
    (1) Eligible bank to establish a foreign branch conducting 
activities authorized by section 347.115 of this section in any foreign 
country in which:
    (i) The bank already operates one or more foreign branches or 
foreign bank subsidiaries;
    (ii) The bank's holding company operates a foreign bank subsidiary; 
or
    (iii) An affiliated bank or Edge or Agreement corporation operates 
one or more foreign branches or foreign bank subsidiaries.
    (2) Insured state nonmember bank to relocate an existing foreign 
branch within a foreign country.
    (b) General consent to invest in a foreign organization. General 
consent of the FDIC is granted, subject to the written notification 
requirement contained in section 303.183(a) (unless no notification is 
required because the investment is acquired for trading purposes) and 
consistent with the requirements of this subpart, for an eligible bank 
to make investments in foreign organizations, directly or indirectly, 
if:
    (1) The bank operates at least one foreign bank subsidiary or 
foreign branch, an affiliated bank or Edge or Agreement corporation 
operates at least one foreign bank subsidiary or foreign branch, or the 
bank's holding company operates at least one foreign bank subsidiary in 
the country where the foreign organization will be located;
    (2) In any instance where the bank and its affiliates will hold 20 
percent or more of the foreign organization's voting equity interests or 
control the foreign organization, at least one state nonmember bank has 
a foreign bank subsidiary or foreign branch (other than a shell branch) 
in the country where the foreign organization will be located; \3\ and
---------------------------------------------------------------------------

    \3\ A list of these countries can be obtained from the FDIC's 
Internet Web Site at http://www.fdic.gov.
---------------------------------------------------------------------------

    (3) The investment is within one of the following limits:
    (i) The investment is acquired at net asset value from an affiliate;
    (ii) The investment is a reinvestment of cash dividends received 
from the same foreign organization during the preceding 12 months; or
    (iii) The total investment, directly or indirectly, in a single 
foreign organization in any transaction or series of transactions during 
a twelve-month period does not exceed 2 percent of the bank's Tier 1 
capital, and such investments in all foreign organizations in the 
aggregate do not exceed:
    (A) 5 percent of the bank's Tier 1 capital during a 12-month period; 
and
    (B) Up to an additional 5 percent of the bank's Tier 1 capital if 
the investments are acquired for trading purposes.

[[Page 14]]



Sec.347.118  Expedited processing.

    (a) Expedited processing of branch applications. An eligible bank 
may establish a foreign branch conducting activities authorized by Sec.
347.115 in an additional foreign country, after complying with the 
expedited processing requirements contained in Sec.303.182(b) and 
(c)(1), if any of the following are located in two or more foreign 
countries:
    (1) Foreign branches or foreign bank subsidiaries of the eligible 
bank;
    (2) Foreign branches or foreign bank subsidiaries of banks and Edge 
or Agreement corporations affiliated with the eligible bank; and
    (3) Foreign bank subsidiaries of the eligible bank's holding 
company.
    (b) Expedited processing of applications for investment in foreign 
organizations. An investment that does not qualify for general consent 
but is otherwise in conformity with the limits and requirements of this 
subpart may be made 45 days after an eligible bank files a substantially 
complete application with the FDIC in compliance with the expedited 
processing requirements contained in Sec.303.183(b) and (c)(1), or 
within such earlier time as authorized by the FDIC.



Sec.347.119  Specific consent.

    General consent and expedited processing under this subpart do not 
apply in the following circumstances:
    (a) Limitation on access to supervisory information in foreign 
country. (1) Applicable law or practice in the foreign country where the 
foreign organization or foreign branch would be located would limit the 
FDIC's access to information for supervisory purposes; and
    (i) A bank would hold 20 percent or more of the voting equity 
interests of a foreign organization or control such organization as a 
result of a foreign investment; or
    (ii) A bank would be establishing a foreign branch.
    (b) World Heritage site. A foreign branch of a bank would be located 
on a site on the World Heritage List or on the foreign country's 
equivalent of the National Register of Historic Places, in accordance 
with section 403 of the National Historic Preservation Act Amendments of 
1980 (16 U.S.C. 470a-2).
    (c) Modification or suspension of general consent or expedited 
processing. The FDIC at any time notifies the bank that the FDIC is 
modifying or suspending its general consent or expedited processing 
procedure.
    (d) Specific consent. Direct or indirect investments in or 
activities of foreign organizations by banks, the establishment of 
foreign branches or issues regarding the types or amounts of activity 
that can be engaged in by foreign branches, which are not authorized 
under Sec. Sec.347.117 or 347.118 require prior review and specific 
consent of the FDIC.



Sec.347.120  Computation of investment amounts.

    In computing the amount that may be invested in any foreign 
organization under Sec. Sec.347.117 through 347.119, any investments 
held by an affiliate of a bank must be included.



Sec.347.121  Requirements for insured state nonmember bank to close
a foreign branch.

    A bank must comply with the written notification requirement 
contained in Sec.303.182(d) when it closes a foreign branch.



Sec.347.122  Limitations applicable to the authority provided in this
subpart.

    The FDIC may impose such conditions on authority granted in this 
subpart as it considers appropriate. If a bank is unable or fails to 
comply with the requirements of this subpart or any conditions imposed 
by the FDIC regarding transactions under this subpart, the FDIC may 
require termination of any activities or divestiture of investments 
permitted under this subpart after giving the bank notice and a 
reasonable opportunity to be heard on the matter.



                         Subpart B_Foreign Banks



Sec.347.201  Authority, purpose, and scope.

    (a) This subpart is issued pursuant to sections 5(c) and 10(b)(4) of 
the Federal Deposit Insurance Act (FDI Act)(12 U.S.C. 1815(c) and 
1820(b)(4)) and sections 6, 7, and 15 of the International

[[Page 15]]

Banking Act of 1978 (IBA)(12 U.S.C. 3104, 3105, and 3109).
    (b) This subpart implements the insured branch asset pledge and 
examination commitment requirement for foreign banks in the FDI Act. It 
also implements the deposit insurance, permissible activity, and cross-
border cooperation provisions of the IBA regarding the FDIC. Sections 
347.203-347.211 apply to state and federal branches whose deposits are 
insured. Sections 347.204 and 347.207 are applicable to depository 
institution subsidiaries of a foreign bank. Section 347.212 applies to 
insured state branches and Sec. Sec.347.213-347.216 apply to state 
branches whose deposits are not insured by the FDIC.



Sec.347.202  Definitions.

    For the purposes of this subpart:
    (a) 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.
    (b) Agency means any office or any place of business of a foreign 
bank located in any State of the United States at which credit balances 
are maintained incidental to or arising out of the exercise of banking 
powers, checks are paid, or money is lent but at which deposits may not 
be accepted from citizens or residents of the United States.
    (c) 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.
    (d) Deposit has the same meaning as that term in section 3(l) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(l)).
    (e) Depository means any insured state bank, national bank, or 
insured branch.
    (f) Domestic retail deposit activity means the acceptance by a 
Federal or State branch of any initial deposit of less than an amount 
equal to the standard maximum deposit insurance amount (``SMDIA'').
    (g) 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).
    (h) 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 
Sec. Sec.347.204, 347.205, 347.209, and 347.210.
    (i) 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 foreign country or any 
United States entity which is owned or controlled by an entity which is 
organized under the laws of a foreign country or a foreign national.
    (j) Foreign country means any country other than the United States 
and includes any colony, dependency or possession of any such country.
    (k) FRB means the Board of Governors of the Federal Reserve System.
    (l) Highly liquid means, with respect to a security, that the 
security has low credit and market risk; is traded in an active 
secondary two-way market that has committed market makers and 
independent bona fide offers to buy and sell so that a price reasonably 
related to the last sales price or current bona fide competitive bid and 
offer

[[Page 16]]

quotations can be determined within one day and settled at that price 
within a reasonable time period conforming with trade custom; is a type 
of asset that investors historically have purchased in periods of 
financial market distress during which market liquidity has been 
impaired.
    (m) 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.
    (n) Immediate family member of a natural person means the spouse, 
father, mother, brother, sister, son or daughter of that natural person.
    (o) Initial deposit means the first deposit transaction between a 
depositor and the branch where there is no existing deposit 
relationship. 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.
    (p) Insured bank means any bank, including a foreign bank with an 
insured branch, the deposits of which are insured in accordance with the 
provisions of the Federal Deposit Insurance Act.
    (q) 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.
    (r) Investment grade means a security issued by an entity that has 
adequate capacity to meet financial commitments for the projected life 
of the exposure. Such an entity has adequate capacity to meet financial 
commitments if the risk of its default is low and the full and timely 
repayment of principal and interest is expected.
    (s) Large United States 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 
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.
    (t) A majority owned subsidiary means a company the voting stock of 
which is more than 50 percent owned or controlled by another company.
    (u) 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.
    (v) OCC means the Office of the Comptroller of the Currency.
    (w) Person means an individual, bank, corporation, partnership, 
trust, association, foundation, joint venture, pool, syndicate, sole 
proprietorship, unincorporated organization, or any other form of 
entity.
    (x) Significant risk to the deposit insurance fund shall be 
understood to be present whenever there is a high probability that the 
Deposit Insurance Fund administered by the FDIC may suffer a loss.
    (y) Standard maximum deposit insurance amount, referred to as the 
``SMDIA'' hereafter, means $250,000 adjusted pursuant to subparagraph 
(F) of section 11(a)(1) of the FDI Act (12 U.S.C. 1821(a)(1)(F)).
    (z) State means any state of the United States or the District of 
Columbia.
    (aa) State branch means a branch of a foreign bank established and 
operating under the laws of any state.
    (bb) 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.

[70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 71 
FR 20527, Apr. 21, 2006; 74 FR 47718, Sept. 17, 2009; 75 FR 49365, Aug. 
13, 2010; 83 FR 9143, Mar. 5, 2018]



Sec.347.203  Deposit insurance required for all branches of foreign
banks engaged in domestic retail deposit activity in the same State.

    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

[[Page 17]]

bank in the same state that engages in domestic retail deposit activity 
will be an insured branch.



Sec.347.204  Commitment to be examined and provide information.

    (a) In connection with an application for deposit insurance for a 
U.S. branch or depository institution subsidiary of a foreign bank that 
has been determined to be subject to comprehensive consolidated 
supervision by the appropriate Federal banking agency, as defined in 
section 3(q) of the FDI Act (12 U.S.C. 1813(q)), the foreign bank shall 
provide binding written commitments (including a consent to U.S. 
jurisdiction and designation of agent for service, acceptable to the 
FDIC) to the following terms:
    (1) The FDIC will be provided with any information about the foreign 
bank and its affiliates located outside of the United States that the 
FDIC requests to determine:
    (i) The relationship between the U.S. branch or depository 
institution subsidiary and its affiliates; and
    (ii) The effect of such relationship on such U.S. branch or 
depository institution subsidiary;
    (2) The FDIC will be allowed to examine the affairs of any office, 
agency, branch or affiliate of the foreign bank located in the United 
States and will be provided any information requested to determine:
    (i) The relationship between the U.S. branch or depository 
institution subsidiary and such offices, agencies, branches or 
affiliates; and
    (ii) The effect of such relationship on such U.S. branch or 
depository institution subsidiary.
    (3) The FDIC will not process a deposit insurance application for 
any U.S. branch or depository institution subsidiary of a foreign bank 
if the foreign bank fails to provide the written commitments, consent to 
U.S. jurisdiction, and designation of agent for service required by this 
section.
    (b) The FDIC will consider the existence and extent of any 
prohibition or restrictions, if any, on its ability to utilize the 
commitments, consent to U.S. jurisdiction, and designation of agent for 
service required by this section, in determining whether to grant or 
deny a deposit insurance application for the U.S. branch or depository 
institution subsidiary of the foreign bank. In addition, the FDIC may 
consider any additional assurances or commitments provided by the 
foreign bank, including that it will cooperate and assist the FDIC, 
without limitation, by seeking to obtain waivers and exemptions from 
applicable confidentiality or secrecy restrictions or requirements to 
enable the foreign bank or its affiliates to make information about the 
foreign bank and its affiliates located outside of the United States 
available to the FDIC for review.
    (c) The foreign bank's commitments, consent to U.S. jurisdiction, 
and designation of agent for service shall be signed by an officer of 
the foreign bank who has been so authorized by the foreign bank's board 
of directors and in all instances will be executed in a manner 
acceptable to the FDIC and shall be included with the branch or 
depository institution application for insurance. Any documents that are 
not in English shall be accompanied by an English translation.



Sec.347.205  Record maintenance.

    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. Each insured branch must keep a 
set of accounts and records in the words and figures of the English 
language that accurately reflects the business transactions of the 
insured branch on a daily basis. A foreign bank that has more than one 
insured branch in a state may treat such insured branches as one entity 
for record-keeping purposes and may designate one branch to maintain 
records for all the branches in the state.

[[Page 18]]



Sec.347.206  Domestic retail deposit activity requiring deposit
insurance by U.S. branch of a foreign bank.

    (a) Domestic retail deposit activity. To initiate or conduct 
domestic retail deposit activity requiring deposit insurance protection 
in any state after December 19, 1991, a foreign bank must establish one 
or more insured U.S. bank subsidiaries for that purpose.
    (b) Exception. Paragraph (a) of this section does not apply to 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 FDIC pursuant to the Federal Deposit Insurance 
Act.
    (c) Grandfathered insured branches. Domestic retail accounts with 
balances of less than an amount equal to the SMDIA that require deposit 
insurance protection may be accepted or maintained in an insured branch 
of a foreign bank only if such branch was an insured branch on December 
19, 1991
    (d) Change in ownership of grandfathered insured branch. The 
grandfathered status of an insured branch may not be transferred, except 
in certain merger and acquisition transactions that the FDIC determines 
are not designed, or motivated by the desire, to avoid compliance with 
section 6(d)(1) of the International Banking Act (12 U.S.C. 3104(d)(1)).

[70 FR 17560, Apr. 6, 2005, as amended at 74 FR 47718, Sept. 17, 2009]



Sec.347.207  Disclosure of supervisory information to foreign 
supervisors.

    (a) Disclosure by the FDIC. The FDIC may disclose information 
obtained in the course of exercising its supervisory or examination 
authority to a foreign bank regulatory or supervisory authority, if the 
FDIC determines that disclosure is appropriate for bank supervisory or 
regulatory purposes and will not prejudice the interests of the United 
States.
    (b) Confidentiality. Before making any disclosure of information 
pursuant to paragraph (a) of this section, the FDIC will obtain, to the 
extent necessary, the agreement of the foreign bank regulatory or 
supervisory authority to maintain the confidentiality of such 
information to the extent possible under applicable law. The disclosure 
or transfer of information to a foreign bank regulatory or supervisory 
authority under this section will not waive any privilege applicable to 
the information that is disclosed or transferred.



Sec.347.208  Assessment base deductions by insured branch.

    Deposits in an insured branch to the credit of the foreign bank or 
any of its offices, branches, agencies, or wholly owned subsidiaries may 
be deducted from the assessment base of the insured branch.



Sec.347.209  Pledge of assets.

    (a) Purpose. A foreign bank that has an insured branch must 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 must become the property of the 
FDIC and be used to the extent necessary to protect the Deposit 
Insurance Fund.
    (b) Amount of assets to be pledged. (1) For a newly insured branch, 
a foreign bank must pledge assets equal to at least 5 percent of the 
liabilities of the branch, based on the branch's projection of its 
liabilities at the end of each of the first three years of operations. 
For all other insured branches, a foreign bank must pledge assets equal 
to the appropriate percentage applicable to the insured branch, as 
determined by reference to the risk-based assessment schedule contained 
in this paragraph, of the insured branch's average liabilities for the 
last 30 days of the most recent calendar quarter. \4\
---------------------------------------------------------------------------

    \4\ This average must be computed by using the sum of the close of 
business figures for the 30 calendar days of the most recent calendar 
quarter, ending with and including the last day of the calendar quarter, 
divided by 30. For days on which the branch is closed, however, balances 
from the previous business day are to be used in determining its average 
liabilities. In determining its average liabilities, the insured branch 
may exclude liabilities to other offices, agencies, branches, and wholly 
owned subsidiaries of the foreign bank. The value of the pledged assets 
must 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 day of the most recent calendar quarter.

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

[[Page 19]]

    (2) Risk-based assessment schedule. The risk-based asset pledge 
required by paragraph (b)(1) will be determined by utilizing the 
following risk-based assessment schedule:

------------------------------------------------------------------------
                                         Supervisory risk subgroup
     Asset maintenance level      --------------------------------------
                                      A (%)        B (%)        C (%)
------------------------------------------------------------------------
Equal to or greater than 108%....            2            3            4
Equal to or greater than 106%....            4            5            6
Less than 106%...................            6            7            8
------------------------------------------------------------------------

    The appropriate asset pledge percentage will be determined based on 
the supervisory risk subgroup and asset maintenance level applicable to 
the insured branch.
    (3) Supervisory risk factors. For purposes of this section, within 
each asset maintenance group, each institution will be assigned to one 
of three subgroups based on consideration by the FDIC of supervisory 
evaluations provided by the primary federal regulator for the insured 
branch. 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 FDIC will take into consideration such other information (such as 
state examination findings, if appropriate) as it determines to be 
relevant to the financial condition and the risk posed to the Deposit 
Insurance Fund. 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 deposit insurance fund; and
    (iii) Subgroup ``C''. This subgroup consists of institutions that 
pose a substantial probability of loss to the deposit insurance fund.
    (4) 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 condition of the foreign bank or the insured branch is such 
that the assets pledged under this section will not adequately protect 
the deposit insurance fund. In requiring a foreign bank to pledge 
additional assets, the FDIC will consult with the primary regulator for 
the insured branch. Among the factors to be considered in imposing these 
requirements are the concentration of risk to any one borrower or group 
of related borrowers, the concentration of transfer risk related to any 
one country, including the country in which the foreign bank's head 
office is located or any other factor the FDIC determines is relevant.
    (5) Each insured branch must separately comply with the requirements 
of this section. A foreign bank which has more than one insured branch 
in a state may, however, treat all of its insured branches in the same 
state as one entity and will designate one insured branch to be 
responsible for compliance with this section.
    (c) Depository. A foreign bank must place pledged assets for 
safekeeping at any depository which is located in any state. However, a 
depository may not be an affiliate of the foreign bank whose insured 
branch is seeking to use the depository. 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 pledge 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 paragraph (a) of this section.

[[Page 20]]

    (d) Assets that may be pledged. (1) This paragraph sets forth the 
kinds of assets that may be pledged to satisfy the requirements of this 
section. A foreign bank shall be deemed to have pledged any such assets 
for the benefit of the FDIC or its designee at such time as any such 
asset is placed with the depository. The FDIC reserves the right to 
require the substitution of pledged assets with other assets deemed 
acceptable to the FDIC.
    (2) A foreign bank may pledge the kinds of assets set forth in this 
paragraph (d)(2), provided that: Such assets are denominated in United 
States dollars; such assets are investment grade, as that term is 
defined in Sec.347.202(r); and such assets are highly liquid, as that 
term is defined in Sec.347.202(l). Furthermore, for the purposes of 
calculating the amount of assets required to be pledged under paragraph 
(b) of this section, the assets that are eligible for pledging under 
this paragraph (d)(2) must be discounted at the rates set forth in Table 
1 to Sec.347.209.
    (i) Cash;
    (ii) Treasury bills, 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 thereof;
    (iii) Obligations of United States government-sponsored enterprises;
    (iv) Negotiable certificates of deposit that are payable in the 
United States and that are issued by any state bank, national bank, 
state or federal savings association, 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;
    (v) Obligations of the African Development Bank, Asian Development 
Bank, Inter-American Development Bank, and the International Bank for 
Reconstruction and Development;
    (vi) Commercial paper;
    (vii) Notes issued by bank and savings and loan holding companies, 
banks, or savings associations organized under the laws of the United 
States or any state thereof or notes issued by branches or agencies of 
foreign banks, provided that the notes are payable in the United States, 
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;
    (viii) Banker's acceptances that are payable in the United States 
and that are issued by any state bank, national bank, state or federal 
savings association, 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;
    (ix) 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;
    (x) Any other 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 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 paragraph (d) of this 
section, having an aggregate value in the amount as required pursuant to 
paragraph (b) of this section.
    (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 paragraph (b)(4) of this section, it shall 
deliver (within two business days after the last day of the most

[[Page 21]]

recent calendar quarter, unless otherwise ordered) additional assets of 
the kind described in paragraph (d) of this section, 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 
paragraph (d) of this section 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 will 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. The foreign bank shall provide copies of all 
such documents described in this paragraph (e)(4) to the appropriate 
regional director concurrently with their delivery to the depository.
    (5) Acceptance and safekeeping responsibilities of the depository. 
(i) The depository will 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 designee. 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 assets 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 insured branch and the depository. 
(i) Initial reports. Upon the original pledge of assets as provided in 
paragraph (e)(1) of this section:
    (A) The depository shall provide to the foreign bank and to the 
appropriate FDIC regional director 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 appropriate regional 
director 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 at least equal to the amount required pursuant to paragraph 
(b) of this section and that all such assets are of the kind described 
in paragraph (d) of this section.
    (ii) Quarterly reports. Within ten calendar days after the end of 
the most recent calendar quarter:
    (A) The depository shall provide to the appropriate regional 
director a written report specifying in reasonable detail with respect 
to each asset currently pledged (including any asset pledged to satisfy 
the requirements of paragraph (b)(4) of this section and identified as 
such), as of two business days after the end of the most recent calendar 
quarter, 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 reporting need 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 the most recent calendar quarter to the appropriate regional 
director a written report certified as correct by the foreign bank which 
sets forth the

[[Page 22]]

value of each pledged asset and the aggregate value of all such assets, 
which states that the aggregate value of all such assets is at least 
equal to the amount required pursuant to paragraph (b) of this section 
and that all such assets are of the kind described in paragraph (d) of 
this section, and which states the average of the liabilities of each 
insured branch of the foreign bank computed in the manner and for the 
period prescribed in paragraph (b) of this section.
    (iii) Additional reports. The foreign bank shall, from time to time, 
as may be required, provide to the appropriate regional director 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 with 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 appropriate regional director, 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 obligated under 
section 11(f) of the Federal Deposit Insurance Act 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 retain 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 60 days' 
written notice thereof to the other party and to the appropriate 
regional director. The FDIC, upon 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 any term or condition of the 
pledge agreement.

[[Page 23]]



           Table 1 to Sec. 347.209--Supervisory Haircuts for Assets Pledged Under Sec. 347.209(d)
----------------------------------------------------------------------------------------------------------------
                                                       Haircut % assigned based on maturity and risk weight
                                                 ---------------------------------------------------------------
               Remaining maturity                      Risk weight (%) by issuer as specified in part 324.32
                                                 ---------------------------------------------------------------
                                                        0%              20%             50%            100%
----------------------------------------------------------------------------------------------------------------
<=to 1 Year.....................................               0             1.0             2.0             4.0
1 Year but <=5 Years.................               0             4.0             6.0             8.0
5 years..............................               0             8.0            12.0            16.0
----------------------------------------------------------------------------------------------------------------


[70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 71 
FR 20527, Apr. 21, 2006; 83 FR 9143, Mar. 5, 2018]



Sec.347.210  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 percent of the 
preceding quarter's average book value of the insured branch's 
liabilities or, in the case of a newly-established insured 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 and Consumer 
Protection 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 FDIC Board of Directors, after consulting with 
the insured branch's primary regulator, may require that a higher ratio 
of eligible assets be maintained if the financial condition of the 
insured 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, 
the concentration of transfer risk to any one country, including the 
country in which the foreign bank's head office is located or any other 
factor the FDIC determines is relevant. Eligible assets shall be payable 
in United States dollars.
    (b) In determining eligible assets for the purposes of compliance 
with paragraph (a) of this section, the insured branch shall exclude the 
following:
    (1) Any asset due from the foreign bank's head office, or its other 
branches, agencies, offices or affiliates;
    (2) Any asset classified ``Value Impaired,'' to the extent 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 insured 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, as follows:
    (i) 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 insured branch must have adequate documentation to 
show that the asset is of good quality and is being supervised 
adequately by the foreign 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 foreign 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;
    (ii) Subsequent to the determination that an asset lacks sufficient 
credit information, an insured branch may not

[[Page 24]]

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 insured branch, by the appropriate regional director;
    (5) Any asset not in the insured branch's actual possession unless 
the insured branch holds title to such asset and the insured branch 
maintains records sufficient to enable independent verification of the 
insured branch's ownership of the asset, as determined at the most 
recent state or federal examination;
    (6) Any intangible asset;
    (7) Any other asset not considered bankable by the FDIC.
    (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 insured branch to be responsible for maintaining the 
records of the insured branches' compliance with this section.
    (d) The average book value of the insured branch's liabilities for a 
quarter shall be, at the insured 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 insured branch is 
closed, balances from the previous business day are to be used. 
Calculations of the average book value of the insured branch's 
liabilities for a quarter shall be retained by the insured branch until 
the next federal examination.



Sec.347.211  Examination of branches of foreign banks.

    (a) Frequency of on-site examination. Each branch or agency of a 
foreign bank shall be examined on-site at least once during each 12-
month period (beginning on the date the most recent examination of the 
office ended) by:
    (1) The FRB;
    (2) The FDIC, if an insured branch;
    (3) The OCC, if the branch or agency of the foreign bank is licensed 
by the OCC; or
    (4) The state supervisor, if the office of the foreign bank is 
licensed or chartered by the state.
    (b) 18-month cycle for certain small institutions--(1) Mandatory 
standards. 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 insured branch:
    (i) Has total assets of less than $3 billion;
    (ii) Has received a composite ROCA supervisory rating (which rates 
risk management, operational controls, compliance, and asset quality) of 
1 or 2 at its most recent examination;
    (iii) Satisfies the requirement of either the following paragraph 
(b)(iii)(A) or (B):
    (A) The foreign bank's most recently reported capital adequacy 
position consists of, or is equivalent to, Tier 1 and total risk-based 
capital ratios of at least 6 percent and 10 percent, respectively, on a 
consolidated basis; or
    (B) The insured branch has maintained on a daily basis, over the 
past three quarters, eligible assets in an amount not less than 108 
percent of the preceding quarter's average third party liabilities 
(determined consistent with applicable federal and state law) and 
sufficient liquidity is currently available to meet its obligations to 
third parties;
    (iv) Is not subject to a formal enforcement action or order by the 
FRB, FDIC, or the OCC; and
    (v) Has not experienced a change in control during the preceding 12-
month period in which a full-scope, on-site examination would have been 
required but for this section.
    (2) Discretionary standards. In determining whether an insured 
branch that meets the standards of paragraph (b)(1) of this section 
should not be eligible for an 18-month examination cycle pursuant to 
this paragraph (b), the FDIC may consider additional factors, including 
whether:
    (i) Any of the individual components of the ROCA supervisory rating 
of an insured branch is rated ``3'' or worse;

[[Page 25]]

    (ii) The results of any off-site monitoring indicate a deterioration 
in the condition of the insured branch;
    (iii) The size, relative importance, and role of a particular 
insured branch when reviewed in the context of the foreign bank's entire 
U.S. operations otherwise necessitate an annual examination; and
    (iv) The condition of the parent foreign bank gives rise to such a 
need.
    (c) Authority to conduct more frequent examinations. Nothing in 
paragraphs (a) and (b) of this section limits the authority of the FDIC 
to examine any insured branch as frequently as it deems necessary.

[70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 72 
FR 17803, Apr. 10, 2007; 81 FR 10070, Feb. 29, 2016; 83 FR 43965, Aug. 
29, 2018]



Sec.347.212  FDIC approval to conduct activities that are not
permissible for federal branches.

    (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, written order or interpretation, or 
decision of a court of competent jurisdiction, must file a written 
application for permission to conduct such activity with the FDIC.
    (b) Exceptions. If the FDIC has already determined, pursuant to part 
362 of this chapter, ``Activities and Investment of Insured State 
Banks,'' that an activity does not present a significant risk to the 
Deposit Insurance Fund, no application is required under paragraph (a) 
of this section for a foreign bank operating an insured branch to engage 
or continue to engage in the same activity.
    (c) Agency activities. A foreign bank operating an insured state 
branch is not required to submit an application pursuant to paragraph 
(a) of this section to engage in or continue engaging in an activity 
conducted as agent if the activity is:
    (1) permissible agency activity for a state-chartered bank located 
in the state which the state-licensed insured branch of the foreign bank 
is located;
    (2) permissible agency activity for a state-licensed branch of a 
foreign bank located in that state; and
    (3) permissible pursuant to any other applicable federal law or 
regulation.
    (d) Conditions of approval. (1) Approval of such an application 
required by paragraph (a) of this section may be conditioned on the 
agreement by the foreign bank and its insured state branch to conduct 
the activity subject to specific limitations, which may include pledging 
of assets in excess of the asset pledge and asset maintenance 
requirements contained in Sec. Sec.347.209 and 347.210.
    (2) In the case of an application to initially engage in an 
activity, as opposed to an application to continue to conduct an 
activity, the insured state branch shall not commence the activity until 
it has been approved in writing by the FDIC pursuant to this part and 
the FRB, and any and all conditions imposed in such approvals have been 
satisfied.
    (e) Divestiture or cessation. (1) If an application for permission 
to continue to conduct an activity is not approved by the FDIC or the 
FRB, the applicant shall submit a plan of divestiture or cessation of 
the activity to the appropriate regional director.
    (2) A foreign bank operating an insured state branch which elects 
not to apply to the FDIC for permission to continue to conduct an 
activity which is rendered impermissible by any change in statute, 
regulation, official bulletin or circular, written order or 
interpretation, or decision of a court of competent jurisdiction shall 
submit a plan of divestiture or cessation to the appropriate regional 
director.
    (3) All plans of divestitures or cessation required by this 
paragraph must be completed within one year from the date of the 
disapproval, or within such shorter period as the FDIC may direct.
    (f) Procedures. Procedures for applications under this section are 
set out in section 303.187.

[70 FR 17560, Apr. 6, 2005; 70 FR 20704, Apr. 21, 2005, as amended at 71 
FR 20527, Apr. 21, 2006]

[[Page 26]]



Sec.347.213  Establishment or operation of noninsured foreign branch.

    (a) A foreign bank may establish or operate a state branch, as 
provided by state law, without federal deposit insurance whenever:
    (1) The branch only accepts initial deposits in an amount equal to 
the SMDIA or greater; or
    (2) The branch meets the criteria set forth in Sec.347.214 or 
Sec.347.215.
    (b) [Reserved]

[70 FR 17560, Apr. 6, 2005, as amended at 74 FR 47718, Sept. 17, 2009]



Sec.347.214  Branch 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 FRB 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 FRB (12 CFR 211).



Sec.347.215  Exemptions from deposit insurance requirement.

    (a) Deposit activities not requiring insurance. A State branch will 
not be considered to be engaged in domestic retail deposit activity that 
requires the foreign bank parent to establish an insured U.S. bank 
subsidiary if the State branch accepts initial deposits only in an 
amount of less than an amount equal to the SMDIA that 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 or agreement corporation may accept deposits under 12 
CFR 211.6(a)(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:
    (i) The branch's average deposits under this paragraph (a)(7) do not 
exceed one percent of the branch's average total deposits, as calculated 
under paragraph (a)(7)(ii) if this section (de minimis exception).
    (ii) For purposes of calculating this exception:
    (A) The branch's average deposits under this paragraph and the 
average total deposits must be computed by summing the close of business 
figures for each of the last 30 calendar days, ending with and including 
the last day of the calendar quarter, and dividing the resulting sum by 
30;
    (B) For days on which the branch is closed, balances from the last 
previous business day are to be used;
    (C) The branch may exclude deposits in the branch of other offices, 
branches, agencies or wholly owned subsidiaries of the bank to determine 
its average deposits;
    (D) The branch must not solicit deposits from the general public by 
advertising, display of signs, or similar activity designed to attract 
the attention of the general public; and
    (E) A foreign bank that 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).

[[Page 27]]

    (b) Application for an exemption. (1) Whenever a foreign bank 
proposes to accept at a State branch initial deposits of less than an 
amount equal to the SMDIA and such deposits are not otherwise exempted 
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 States 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) Procedures for applications under this section are set out in 
Sec.303.186.
    (c) Transition period. A noninsured state branch may maintain a 
retail deposit lawfully accepted prior to April 1, 1996 pursuant to 
regulations in effect prior to July 1, 1998:
    (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, in the case of a time deposit, no later than the first 
maturity date of the time deposit after April 1, 1996.

[70 FR 17560, Apr. 6, 2005, as amended at 74 FR 47718, Sept. 17, 2009]



Sec.347.216  Depositor notification.

    Any state branch that is exempt from the insurance requirement 
pursuant to Sec.347.215 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.



                     Subpart C_International Lending



Sec.347.301  Purpose, authority, and scope.

    Under the International Lending Supervision Act of 1983 (Title IX, 
Pub. L. 98-181, 97 Stat. 1153) (12 U.S.C. 3901 et seq.) (ILSA), the 
Federal Deposit Insurance Corporation prescribes the regulations in this 
subpart relating to international lending activities of banks.



Sec.347.302  Definitions.

    For the purposes of this subpart:
    (a) Administrative cost means 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. No portion of supervisory and administrative expenses 
or other indirect expenses such as occupancy and other similar overhead 
costs shall be included.
    (b) Banking institution means an insured state nonmember bank.
    (c) Federal banking agencies means the Board of Governors of the 
Federal Reserve System, the Office of the Comptroller of the Currency, 
and the Federal Deposit Insurance Corporation.
    (d) International assets means those assets required to be included 
in banking institutions' ``Country Exposure Report'' form (FFIEC No. 
009).
    (e) 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

[[Page 28]]

not a citizen of, resident in, or organized or incorporated in the 
United States.
    (f) Restructured international loan means a loan that meets the 
following criteria:
    (1) 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
    (2) Either:
    (i) The terms of the existing loan are amended to reduce stated 
interest or extend the schedule of payments; or
    (ii) A new loan is made to, or for the benefit of, the borrower, 
enabling the borrower to service or refinance the existing debt.
    (g) 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.



Sec.347.303  Allocated transfer risk reserve.

    (a) 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.
    (b) Procedures and standards--(1) Joint agency determination. At 
least annually, the federal banking agencies shall determine jointly, 
based on the standards set forth in paragraph (b)(2) of this section, 
the following:
    (i) Which international assets subject to transfer risk warrant 
establishment of an ATRR;
    (ii) The amount of the ATRR for the specified assets; and
    (iii) Whether an ATRR established for specified assets may be 
reduced.
    (2) Standards for requiring ATRR--(i) Evaluation of assets. The 
federal banking agencies shall apply the following criteria in 
determining whether an ATRR is required for particular international 
assets:
    (A) 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:
    (1) Such obligors have failed to make full interest payments on 
external indebtedness; or
    (2) Such obligors have failed to comply with the terms of any 
restructured indebtedness; or
    (3) A foreign country has failed to comply with any International 
Monetary Fund or other suitable adjustment program; or
    (B) Whether no definite prospects exist for the orderly restoration 
of debt service.
    (ii) Determination of amount of ATRR. (A) In determining the amount 
of the ATRR, the federal banking agencies shall consider:
    (1) The length of time the quality of the asset has been impaired;
    (2) Recent actions taken to restore debt service capability;
    (3) Prospects for restored asset quality; and
    (4) Such other factors as the federal banking agencies may consider 
relevant to the quality of the asset.
    (B) 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 determined by the federal 
banking agencies.
    (3) FDIC notification. Based on the joint agency determinations 
under paragraph (b)(1) of this section, the FDIC shall notify each 
banking institution holding assets subject to an ATRR:
    (i) Of the amount of the ATRR to be established by the institution 
for specified international assets; and
    (ii) That an ATRR established for specified assets may be reduced.
    (c) Accounting treatment of ATRR--(1) Charge to current income. A 
banking institution shall establish an ATRR by a charge to current 
income and the

[[Page 29]]

amounts so charged shall not be included in the banking institution's 
capital or surplus.
    (2) Separate accounting. A banking institution shall account for an 
ATRR separately from the Allowance for Loan and Lease 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 percentage amount specified.
    (3) 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).
    (4) 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 (c)(4), international assets may 
be written down by a charge to the Allowance for Loan and Lease Losses 
or a reduction in the principal amount of the asset by application of 
interest payments or other collections on the asset; provided, that only 
those international assets that may be charged to the Allowance for Loan 
and Lease Losses pursuant to generally accepted accounting principles 
may be written down by a charge to the Allowance for Loan and Lease 
Losses. However, the Allowance for Loan and Lease 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 and lease portfolio.
    (5) 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.



Sec.347.304  Accounting for fees on international loans.

    (a) Restrictions on fees for restructured international loans. No 
banking institution shall charge, in connection with the restructuring 
of an international loan, any fee exceeding the administrative cost of 
the restructuring unless it amortizes the amount of the fee exceeding 
the administrative cost over the effective life of the loan.
    (b) Accounting treatment. Subject to paragraph (a) of this section, 
banking institutions shall account for fees on international loans in 
accordance with generally accepted accounting principles.



Sec.347.305  Reporting and disclosure of international assets.

    (a) Requirements. (1) Pursuant to section 907(a) of 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 subpart 
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.

[[Page 30]]



PART 348_MANAGEMENT OFFICIAL INTERLOCKS--Table of Contents



Sec.
348.1 Purpose and scope.
348.2 Other definitions and rules of construction.
348.3 Prohibitions.
348.4 Interlocking relationships permitted by statute.
348.5 Small market share exemption.
348.6 General exemption.
348.7 Change in circumstances.
348.8 Enforcement.

    Authority: 12 U.S.C. 3207, 12 U.S.C. 1823(k).

    Source: 80 FR 79252, Dec. 21, 2015, unless otherwise noted.



Sec.348.1  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 FDIC-
supervised institutions and their affiliates.



Sec.348.2  Other definitions and rules of construction.

    For purposes of this part, the following definitions apply:
    (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 FDIC-
supervised institution 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) 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.
    (c) Community means a city, town, or village, and contiguous or 
adjacent cities, towns, or villages.
    (d) 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.
    (e) 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.
    (f) 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.
    (g) Depository institution affiliate means a depository institution 
that is

[[Page 31]]

an affiliate of a depository organization.
    (h) Depository organization means a depository institution or a 
depository holding company.
    (i) FDIC-supervised institution means either an insured state 
nonmember bank or a State savings association.
    (j) 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.
    (k) 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 
303.101(b).
    (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 (j)(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;
    (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).
    (l) 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.
    (m) Person means a natural person, corporation, or other business 
entity.
    (n) 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.
    (o) 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.
    (p) State savings association has the same meaning as in section 
(3)(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).
    (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

[[Page 32]]

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 $50 million or 
more.
    (c) Major assets. A management official of a depository organization 
with total assets exceeding $2.5 billion (or any affiliate of such an 
organization) may not serve at the same time as a management official of 
an unaffiliated depository organization with total assets exceeding $1.5 
billion (or any affiliate of such an organization), regardless of the 
location of the two depository organizations. The FDIC will adjust these 
thresholds, as necessary, based on the year-to-year change in the 
average of the Consumer Price Index for the Urban Wage Earners and 
Clerical Workers, not seasonally adjusted, with rounding to the nearest 
$100 million. The FDIC will announce the revised thresholds by 
publishing a final rule without notice and comment in the Federal 
Register.



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 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;
    (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

[[Page 33]]

    (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; and
    (j) Any FDIC-supervised institution which is a State savings 
association that has issued stock in connection with a qualified stock 
issuance pursuant to section 10(q) of the Home Owners' Loan Act, except 
that this paragraph (j) shall apply only with regard to service as a 
single management official of such State savings association or any 
subsidiary of such State savings association by a single management 
official of a savings and loan holding company which purchased the stock 
issued in connection with such qualified stock issuance, and shall apply 
only when the FDIC has determined that such service is consistent with 
the purposes of the Interlocks Act and the Home Owners' Loan Act.



Sec.348.5  Small market share exemption.

    (a) Exemption. A management interlock that is prohibited by Sec.
348.3 is permissible, if:
    (1) The interlock is not prohibited by Sec.348.3(c); and
    (2) The depository organizations (and their depository institution 
affiliates) hold, in the aggregate, no more than 20 percent of the 
deposits in each RMSA or community in which both depository 
organizations (or their depository institution affiliates) have offices. 
The amount of deposits shall be determined by reference to the most 
recent annual Summary of Deposits published by the FDIC for the RMSA or 
community.
    (b) Confirmation and records. Each depository organization must 
maintain records sufficient to support its determination of eligibility 
for the exemption under paragraph (a) of this section, and must 
reconfirm that determination on an annual basis.



Sec.348.6  General exemption.

    (a) Exemption. The FDIC may by agency order exempt an interlock from 
the prohibitions in Sec.348.3 if the FDIC finds that the interlock 
would not result in a monopoly or substantial lessening of competition 
and would not present safety and soundness concerns.
    (b) Presumptions. In reviewing an application for an exemption under 
this section, the FDIC will apply a rebuttable presumption that an 
interlock will not result in a monopoly or substantial lessening of 
competition if the depository organization seeking to add a management 
official:
    (1) Primarily serves low- and moderate-income areas;
    (2) Is controlled or managed by persons who are members of a 
minority group, or women;
    (3) Is a depository institution that has been chartered for less 
than two years; or
    (4) Is deemed to be in ``troubled condition'' as defined in Sec.
303.101(c).
    (c) Duration. Unless a shorter expiration period is provided in the 
FDIC approval, an exemption permitted by paragraph (a) of this section 
may continue so long as it does not result in a monopoly or substantial 
lessening of competition, or is unsafe or unsound. If the FDIC grants an 
interlock exemption in reliance upon a presumption under paragraph (b) 
of this section, the interlock may continue for three years, unless 
otherwise provided by the FDIC in writing.
    (d) Procedures. Procedures for applying for an exemption under this 
section are set forth in 12 CFR 303.249.



Sec.348.7  Change in circumstances.

    (a) Termination. A management official shall terminate his or her 
service or apply for an exemption if a change in circumstances causes 
the service to become prohibited. A change in circumstances may include 
an increase in asset size of an organization, a change in the 
delineation of the RMSA or community, the establishment of an office, an 
increase in the aggregate deposits of the depository organization, or an 
acquisition, merger, consolidation, or 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

[[Page 34]]

this section may continue to serve the FDIC-supervised institution 
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 FDIC-supervised institutions 
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 FDIC-supervised institution 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_DERIVATIVES--Table of Contents



   Subpart A_Margin and Capital Requirements for Covered Swap Entities

Sec.
349.1 Authority, purpose, scope, exemptions and compliance dates.
349.2 Definitions.
349.3 Initial margin.
349.4 Variation margin.
349.5 Netting arrangements, minimum transfer amount and satisfaction of 
          collecting and posting requirements.
349.6 Eligible collateral.
349.7 Segregation of collateral.
349.8 Initial margin models and standardized amounts.
349.9 Cross-border application of margin requirements.
349.10 Documentation of margin matters.
349.11 Special rules for affiliates.
349.12 Capital.

Appendix A to Subpart A of Part 349--Standardized Minimum Initial Margin 
          Requirements for Non-Cleared Swaps and Non-Cleared Security-
          Based Swaps
Appendix B to Subpart A of Part 349--Margin Values for Cash and Eligible 
          Noncash Margin Collateral

             Subpart B_Retail Foreign Exchange Transactions

349.13 Authority, purpose, and scope.
349.14 Definitions.
349.15 Prohibited transactions.
349.16 Filing procedures.
349.17 Application and closing out of offsetting long and short 
          positions.
349.18 Disclosure.
349.19 Recordkeeping.
349.20 Capital requirements.
349.21 Margin requirements.
349.22 Required reporting to customers.
349.23 Unlawful representations.
349.24 Authorization to trade.
349.25 Trading and operational standards.
349.26 Supervision.
349.27 Notice of transfers.
349.28 Customer dispute resolution.

    Source: 76 FR 40789, July 12, 2011, unless otherwise noted.



   Subpart A_Margin and Capital Requirements for Covered Swap Entities

    Authority: 7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), and 12 U.S.C. 1818 
and 12 U.S.C. 1819(a)(Tenth), 12 U.S.C.1813(q), 1818, 1819, and 3108.

    Source: 80 FR 74912, Nov. 30, 2015, unless otherwise noted.



Sec.349.1  Authority, purpose, scope, exemptions and compliance
dates.

    (a) Authority. This subpart is issued by the Federal Deposit 
Insurance Corporation (FDIC) under section 4s(e) of the Commodity 
Exchange Act (7 U.S.C. 6s(e)), section 15F(e) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78o-10(e)), and section 8 of the Federal Deposit 
Insurance Act (12 U.S.C. 1818).
    (b) Purpose. Section 4s of the Commodity Exchange Act (7 U.S.C. 6s) 
and section 15F of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
10) require the FDIC to establish capital and margin requirements for 
any FDIC-insured state-chartered bank that is not a member of the 
Federal Reserve System or FDIC-insured state-chartered savings 
association that is registered as a swap dealer, major swap participant, 
security-based swap dealer, or major security-based swap participant 
with respect to all non-cleared swaps and non-cleared security-based 
swaps. This subpart implements section 4s of the Commodity Exchange Act 
and section 15F of the Securities Exchange Act of 1934 by defining terms 
used in the statutes and related terms, establishing

[[Page 35]]

capital and margin requirements, and explaining the statutes' 
requirements.
    (c) Scope. This subpart establishes minimum capital and margin 
requirements for each covered swap entity subject to this subpart with 
respect to all non-cleared swaps and non-cleared security-based swaps. 
This subpart applies to any non-cleared swap or non-cleared security-
based swap entered into by a covered swap entity on or after the 
relevant compliance date set forth in paragraph (e) of this section. 
Nothing in this subpart is intended to prevent a covered swap entity 
from collecting margin in amounts greater than are required under this 
subpart.
    (d) Exemptions--(1) Swaps. The requirements of this part (except for 
Sec.45.12) shall not apply to a non-cleared swap if the counterparty:
    (i) Qualifies for an exception from clearing under section 
2(h)(7)(A) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(7)(A)) 
and implementing regulations;
    (ii) Qualifies for an exemption from clearing under a rule, 
regulation, or order that the Commodity Futures Trading Commission 
issued pursuant to its authority under section 4(c)(1) of the Commodity 
Exchange Act of 1936 (7 U.S.C. 6(c)(1)) concerning cooperative entities 
that would otherwise be subject to the requirements of section 
2(h)(1)(A) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(1)(A)); 
or
    (iii) Satisfies the criteria in section 2(h)(7)(D) of the Commodity 
Exchange Act of 1936 (7 U.S.C. 2(h)(7)(D)) and implementing regulations.
    (2) Security-based swaps. The requirements of this part (except for 
Sec.349.12) shall not apply to a non-cleared security-based swap if 
the counterparty:
    (i) Qualifies for an exception from clearing under section 3C(g)(1) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78c-3(g)(1)) and 
implementing regulations; or
    (ii) Satisfies the criteria in section 3C(g)(4) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c-3(g)(4)) and implementing 
regulations.
    (e) Compliance dates. Covered swap entities shall comply with the 
minimum margin requirements of this subpart on or before the following 
dates for non-cleared swaps and non-cleared security-based swaps entered 
into on or after the following dates:
    (1) September 1, 2016 with respect to the requirements in Sec.
349.3 for initial margin and Sec.349.4 for variation margin for any 
non-cleared swaps and non-cleared security-based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, non-
cleared security-based swaps, foreign exchange forwards and foreign 
exchange swaps for March, April and May 2016 that exceeds $3 trillion, 
where such amounts are calculated only for business days; and
    (iii) In calculating the amounts in paragraphs (e)(1)(i) and (ii) of 
this section, an entity shall count the average daily aggregate notional 
amount of a non-cleared swap, a non-cleared security-based swap, a 
foreign exchange forward or a foreign exchange swap between the entity 
and an affiliate only one time, and shall not count a swap or security-
based swap that is exempt pursuant to paragraph (d) of this section.
    (2) March 1, 2017 with respect to the requirements in Sec.349.4 
for variation margin for any other covered swap entity with respect to 
non-cleared swaps and non-cleared security-based swaps entered into with 
any other counterparty.
    (3) September 1, 2017 with respect to the requirements in Sec.
349.3 for initial margin for any non-cleared swaps and non-cleared 
security-based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, non-
cleared security-based swaps, foreign exchange forwards and foreign 
exchange swaps for March, April and May 2017 that exceeds $2.25 
trillion, where such amounts are calculated only for business days; and
    (iii) In calculating the amounts in paragraphs (e)(3)(i) and (ii) of 
this section, an entity shall count the average daily aggregate notional 
amount of a

[[Page 36]]

non-cleared swap, a non-cleared security-based swap, a foreign exchange 
forward or a foreign exchange swap between the entity and an affiliate 
only one time, and shall not count a swap or security-based swap that is 
exempt pursuant to paragraph (d) of this section.
    (4) September 1, 2018 with respect to the requirements in Sec.
349.3 for initial margin for any non-cleared swaps and non-cleared 
security-based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, non-
cleared security-based swaps, foreign exchange forwards and foreign 
exchange swaps for March, April and May 2018 that exceeds $1.5 trillion, 
where such amounts are calculated only for business days; and
    (iii) In calculating the amounts in paragraphs (e)(4)(i) and (ii) of 
this section, an entity shall count the average daily aggregate notional 
amount of a non-cleared swap, a non-cleared security-based swap, a 
foreign exchange forward or a foreign exchange swap between the entity 
and an affiliate only one time, and shall not count a swap or security-
based swap that is exempt pursuant to paragraph (d) of this section.
    (5) September 1, 2019 with respect to the requirements in Sec.
349.3 for initial margin for any non-cleared swaps and non-cleared 
security-based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, non-
cleared security-based swaps, foreign exchange forwards and foreign 
exchange swaps for March, April and May 2019 that exceeds $0.75 
trillion, where such amounts are calculated only for business days; and
    (iii) In calculating the amounts in paragraphs (e)(5)(i) and (ii) of 
this section, an entity shall count the average daily aggregate notional 
amount of a non-cleared swap, a non-cleared security-based swap, a 
foreign exchange forward or a foreign exchange swap between the entity 
and an affiliate only one time, and shall not count a swap or security-
based swap that is exempt pursuant to paragraph (d) of this section.
    (6) September 1, 2020 with respect to the requirements in Sec.
349.3 for initial margin for any other covered swap entity with respect 
to non-cleared swaps and non-cleared security-based swaps entered into 
with any other counterparty.
    (7) For purposes of determining the date on which a non-cleared swap 
or a non-cleared security-based swap was entered into, a Covered Swap 
Entity will not take into account amendments to the non-cleared swap or 
the non-cleared security-based swap that were entered into solely to 
comply with the requirements of part 47, Subpart I of part 252 or part 
382 of Title 12, as applicable.
    (f) Once a covered swap entity must comply with the margin 
requirements for non-cleared swaps and non-cleared security-based swaps 
with respect to a particular counterparty based on the compliance dates 
in paragraph (e) of this section, the covered swap entity shall remain 
subject to the requirements of this subpart with respect to that 
counterparty.
    (g)(1) If a covered swap entity's counterparty changes its status 
such that a non-cleared swap or non-cleared security-based swap with 
that counterparty becomes subject to stricter margin requirements under 
this subpart (such as if the counterparty's status changes from a 
financial end user without material swaps exposure to a financial end 
user with material swaps exposure), then the covered swap entity shall 
comply with the stricter margin requirements for any non-cleared swap or 
non-cleared security-based swap entered into with that counterparty 
after the counterparty changes its status.
    (2) If a covered swap entity's counterparty changes its status such 
that a non-cleared swap or non-cleared security-based swap with that 
counterparty becomes subject to less strict margin requirements under 
this subpart (such as if the counterparty's status changes from a 
financial end user with material swaps exposure to a

[[Page 37]]

financial end user without material swaps exposure), then the covered 
swap entity may comply with the less strict margin requirements for any 
non-cleared swap or non-cleared security-based swap entered into with 
that counterparty after the counterparty changes its status as well as 
for any outstanding non-cleared swap or non-cleared security-based swap 
entered into after the applicable compliance date in paragraph (e) of 
this section and before the counterparty changed its status.

[80 FR 74912, Nov. 30, 2015, as amended at 83 FR 50812, Oct. 10, 2018]



Sec.349.2  Definitions.

    Affiliate. A company is an affiliate of another company if:
    (1) Either company consolidates the other on financial statements 
prepared in accordance with U.S. Generally Accepted Accounting 
Principles, the International Financial Reporting Standards, or other 
similar standards;
    (2) Both companies are consolidated with a third company on a 
financial statement prepared in accordance with such principles or 
standards;
    (3) For a company that is not subject to such principles or 
standards, if consolidation as described in paragraph (1) or (2) of this 
definition would have occurred if such principles or standards had 
applied; or
    (4) The FDIC has determined that a company is an affiliate of 
another company, based on FDIC's conclusion that either company provides 
significant support to, or is materially subject to the risks or losses 
of, the other company.
    Bank holding company has the meaning specified in section 2 of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841).
    Broker has the meaning specified in section 3(a)(4) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)).
    Business day means any day other than a Saturday, Sunday, or legal 
holiday.
    Clearing agency has the meaning specified in section 3(a)(23) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(23)).
    Company means a corporation, partnership, limited liability company, 
business trust, special purpose entity, association, or similar 
organization.
    Counterparty means, with respect to any non-cleared swap or non-
cleared security-based swap to which a person is a party, each other 
party to such non-cleared swap or non-cleared security-based swap.
    Covered swap entity means any FDIC-insured state-chartered bank that 
is not a member of the Federal Reserve System or FDIC-insured state-
chartered savings association that is a swap entity, or any other entity 
that the FDIC determines.
    Cross-currency swap means a swap in which one party exchanges with 
another party principal and interest rate payments in one currency for 
principal and interest rate payments in another currency, and the 
exchange of principal occurs on the date the swap is entered into, with 
a reversal of the exchange of principal at a later date that is agreed 
upon when the swap is entered into.
    Currency of settlement means a currency in which a party has agreed 
to discharge payment obligations related to a non-cleared swap, a non-
cleared security-based swap, a group of non-cleared swaps, or a group of 
non-cleared security-based swaps subject to a master agreement at the 
regularly occurring dates on which such payments are due in the ordinary 
course.
    Day of execution means the calendar day at the time the parties 
enter into a non-cleared swap or non-cleared security-based swap, 
provided:
    (1) If each party is in a different calendar day at the time the 
parties enter into the non-cleared swap or non-cleared security-based 
swap, the day of execution is deemed the latter of the two dates; and
    (2) If a non-cleared swap or non-cleared security-based swap is:
    (i) Entered into after 4:00 p.m. in the location of a party; or
    (ii) Entered into on a day that is not a business day in the 
location of a party, then the non-cleared swap or non-cleared security-
based swap is deemed to have been entered into on the immediately 
succeeding day that is a business day for both parties, and both parties 
shall determine the day of execution with reference to that business 
day.

[[Page 38]]

    Dealer has the meaning specified in section 3(a)(5) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(5)).
    Depository institution has the meaning specified in section 3(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(c)).
    Derivatives clearing organization has the meaning specified in 
section 1a(15) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(15)).
    Eligible collateral means collateral described in Sec.349.6.
    Eligible master netting agreement means a written, legally 
enforceable agreement provided that:
    (1) The agreement creates a single legal obligation for all 
individual transactions covered by the agreement upon an event of 
default following any stay permitted by paragraph (2) of this 
definition, including upon an event of receivership, conservatorship, 
insolvency, liquidation, or similar proceeding, of the counterparty;
    (2) The agreement provides the covered swap entity the right to 
accelerate, terminate, and close-out on a net basis all transactions 
under the agreement and to liquidate or set-off collateral promptly upon 
an event of default, including upon an event of receivership, 
conservatorship, insolvency, liquidation, or similar proceeding, of the 
counterparty, provided that, in any such case,
    (i) Any exercise of rights under the agreement will not be stayed or 
avoided under applicable law in the relevant jurisdictions, other than:
    (A) In receivership, conservatorship, or resolution under the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), Title II of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 
5381 et seq.), the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992, as amended (12 U.S.C. 4617), or the Farm Credit 
Act of 1971, as amended (12 U.S.C. 2183 and 2279cc), or laws of foreign 
jurisdictions that are substantially similar to the U.S. laws referenced 
in this paragraph (2)(i)(A) in order to facilitate the orderly 
resolution of the defaulting counterparty; or
    (B) Where the agreement is subject by its terms to, or incorporates, 
any of the laws referenced in paragraph (2)(i)(A) of this definition; 
and
    (ii) The agreement may limit the right to accelerate, terminate, and 
close-out on a net basis all transactions under the agreement and to 
liquidate or set-off collateral promptly upon an event of default of the 
counterparty to the extent necessary for the counterparty to comply with 
the requirements of part 47, Subpart I of part 252 or part 382 of Title 
12, as applicable;
    (3) The agreement does not contain a walkaway clause (that is, a 
provision that permits a non-defaulting counterparty to make a lower 
payment than it otherwise would make under the agreement, or no payment 
at all, to a defaulter or the estate of a defaulter, even if the 
defaulter or the estate of the defaulter is a net creditor under the 
agreement); and
    (4) A covered swap entity that relies on the agreement for purposes 
of calculating the margin required by this part must:
    (i) Conduct sufficient legal review to conclude with a well-founded 
basis (and maintain sufficient written documentation of that legal 
review) that:
    (A) The agreement meets the requirements of paragraph (2) of this 
definition; and
    (B) In the event of a legal challenge (including one resulting from 
default or from receivership, conservatorship, insolvency, liquidation, 
or similar proceeding), the relevant court and administrative 
authorities would find the agreement to be legal, valid, binding, and 
enforceable under the law of the relevant jurisdictions; and
    (ii) Establish and maintain written procedures to monitor possible 
changes in relevant law and to ensure that the agreement continues to 
satisfy the requirements of this definition.
    Financial end user means:
    (1) Any counterparty that is not a swap entity and that is:
    (i) A bank holding company or an affiliate thereof; a savings and 
loan holding company; a U.S. intermediate holding company established or 
designated for purposes of compliance with 12 CFR 252.153; or a nonbank 
financial institution supervised by the Board of Governors of the 
Federal Reserve System

[[Page 39]]

under Title I of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5323);
    (ii) A depository institution; a foreign bank; a Federal credit 
union or State credit union as defined in section 2 of the Federal 
Credit Union Act (12 U.S.C. 1752(1) & (6)); an institution that 
functions solely in a trust or fiduciary capacity as described in 
section 2(c)(2)(D) of the Bank Holding Company Act (12 U.S.C. 
1841(c)(2)(D)); an industrial loan company, an industrial bank, or other 
similar institution described in section 2(c)(2)(H) of the Bank Holding 
Company Act (12 U.S.C. 1841(c)(2)(H));
    (iii) An entity that is state-licensed or registered as:
    (A) A credit or lending entity, including a finance company; money 
lender; installment lender; consumer lender or lending company; mortgage 
lender, broker, or bank; motor vehicle title pledge lender; payday or 
deferred deposit lender; premium finance company; commercial finance or 
lending company; or commercial mortgage company; except entities 
registered or licensed solely on account of financing the entity's 
direct sales of goods or services to customers;
    (B) A money services business, including a check casher; money 
transmitter; currency dealer or exchange; or money order or traveler's 
check issuer;
    (iv) A regulated entity as defined in section 1303(20) of the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 
as amended (12 U.S.C. 4502(20)) or any entity for which the Federal 
Housing Finance Agency or its successor is the primary federal 
regulator;
    (v) Any institution chartered in accordance with the Farm Credit Act 
of 1971, as amended, 12 U.S.C. 2001 et seq., that is regulated by the 
Farm Credit Administration;
    (vi) A securities holding company; a broker or dealer; an investment 
adviser as defined in section 202(a) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b-2(a)); an investment company registered with the 
U.S. Securities and Exchange Commission under the Investment Company Act 
of 1940 (15 U.S.C. 80a-1 et seq.); or a company that has elected to be 
regulated as a business development company pursuant to section 54(a) of 
the Investment Company Act of 1940 (15 U.S.C. 80a-53(a));
    (vii) A private fund as defined in section 202(a) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80-b-2(a)); an entity that would be an 
investment company under section 3 of the Investment Company Act of 1940 
(15 U.S.C. 80a-3) but for section 3(c)(5)(C); or an entity that is 
deemed not to be an investment company under section 3 of the Investment 
Company Act of 1940 pursuant to Investment Company Act Rule 3a-7 (17 CFR 
270.3a-7) of the U.S. Securities and Exchange Commission;
    (viii) A commodity pool, a commodity pool operator, or a commodity 
trading advisor as defined, respectively, in section 1a(10), 1a(11), and 
1a(12) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(10), 1a(11), 
and 1a(12)); a floor broker, a floor trader, or introducing broker as 
defined, respectively, in 1a(22), 1a(23) and 1a(31) of the Commodity 
Exchange Act of 1936 (7 U.S.C. 1a(22), 1a(23), and 1a(31)); or a futures 
commission merchant as defined in 1a(28) of the Commodity Exchange Act 
of 1936 (7 U.S.C. 1a(28));
    (ix) An employee benefit plan as defined in paragraphs (3) and (32) 
of section 3 of the Employee Retirement Income and Security Act of 1974 
(29 U.S.C. 1002);
    (x) An entity that is organized as an insurance company, primarily 
engaged in writing insurance or reinsuring risks underwritten by 
insurance companies, or is subject to supervision as such by a State 
insurance regulator or foreign insurance regulator;
    (xi) An entity, person or arrangement that is, or holds itself out 
as being, an entity, person, or arrangement that raises money from 
investors, accepts money from clients, or uses its own money primarily 
for the purpose of investing or trading or facilitating the investing or 
trading in loans, securities, swaps, funds or other assets for resale or 
other disposition or otherwise trading in loans, securities, swaps, 
funds or other assets; or
    (xii) An entity that would be a financial end user described in 
paragraph (1) of this definition or a swap entity, if it were organized 
under the laws of the United States or any State thereof.

[[Page 40]]

    (2) The term ``financial end user'' does not include any 
counterparty that is:
    (i) A sovereign entity;
    (ii) A multilateral development bank;
    (iii) The Bank for International Settlements;
    (iv) An entity that is exempt from the definition of financial 
entity pursuant to section 2(h)(7)(C)(iii) of the Commodity Exchange Act 
of 1936 (7 U.S.C. 2(h)(7)(C)(iii)) and implementing regulations; or
    (v) An affiliate that qualifies for the exemption from clearing 
pursuant to section 2(h)(7)(D) of the Commodity Exchange Act of 1936 (7 
U.S.C. 2(h)(7)(D)) or section 3C(g)(4) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c-3(g)(4)) and implementing regulations.
    Foreign bank means an organization that is organized under the laws 
of a foreign country and that engages directly in the business of 
banking outside the United States.
    Foreign exchange forward has the meaning specified in section 1a(24) 
of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(24)).
    Foreign exchange swap has the meaning specified in section 1a(25) of 
the Commodity Exchange Act of 1936 (7 U.S.C. 1a(25)).
    Initial margin means the collateral as calculated in accordance with 
Sec.349.8 that is posted or collected in connection with a non-cleared 
swap or non-cleared security-based swap.
    Initial margin collection amount means:
    (1) In the case of a covered swap entity that does not use an 
initial margin model, the amount of initial margin with respect to a 
non-cleared swap or non-cleared security-based swap that is required 
under appendix A of this subpart; and
    (2) In the case of a covered swap entity that uses an initial margin 
model pursuant to Sec.349.8, the amount of initial margin with respect 
to a non-cleared swap or non-cleared security-based swap that is 
required under the initial margin model.
    Initial margin model means an internal risk management model that:
    (1) Has been developed and designed to identify an appropriate, 
risk-based amount of initial margin that the covered swap entity must 
collect with respect to one or more non-cleared swaps or non-cleared 
security-based swaps to which the covered swap entity is a party; and
    (2) Has been approved by the FDIC pursuant to Sec.349.8.
    Initial margin threshold amount means an aggregate credit exposure 
of $50 million resulting from all non-cleared swaps and non-cleared 
security-based swaps between a covered swap entity and its affiliates, 
and a counterparty and its affiliates. For purposes of this calculation, 
an entity shall not count a swap or security-based swap that is exempt 
pursuant to Sec.349.1(d).
    Major currency means:
    (1) United States Dollar (USD);
    (2) Canadian Dollar (CAD);
    (3) Euro (EUR);
    (4) United Kingdom Pound (GBP);
    (5) Japanese Yen (JPY);
    (6) Swiss Franc (CHF);
    (7) New Zealand Dollar (NZD);
    (8) Australian Dollar (AUD);
    (9) Swedish Kronor (SEK);
    (10) Danish Kroner (DKK);
    (11) Norwegian Krone (NOK); or
    (12) Any other currency as determined by the FDIC.
    Margin means initial margin and variation margin.
    Market intermediary means a securities holding company; a broker or 
dealer; a futures commission merchant as defined in 1a(28) of the 
Commodity Exchange Act of 1936 (7 U.S.C. 1a(28)); a swap dealer as 
defined in section 1a(49) of the Commodity Exchange Act of 1936 (7 
U.S.C. 1a(49)); or a security-based swap dealer as defined in section 
3(a)(71) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(71)).
    Material swaps exposure for an entity means that an entity and its 
affiliates have an average daily aggregate notional amount of non-
cleared swaps, non-cleared security-based swaps, foreign exchange 
forwards, and foreign exchange swaps with all counterparties for June, 
July, and August of the previous calendar year that exceeds $8 billion, 
where such amount is calculated only for business days. An entity shall 
count the average daily aggregate notional amount of a non-cleared swap, 
a

[[Page 41]]

non-cleared security-based swap, a foreign exchange forward or a foreign 
exchange swap between the entity and an affiliate only one time. For 
purposes of this calculation, an entity shall not count a swap or 
security-based swap that is exempt pursuant to Sec.349.1(d).
    Multilateral development bank means the International Bank for 
Reconstruction and Development, the Multilateral Investment Guarantee 
Agency, the International Finance Corporation, the Inter-American 
Development Bank, the Asian Development Bank, the African Development 
Bank, the European Bank for Reconstruction and Development, the European 
Investment Bank, the European Investment Fund, the Nordic Investment 
Bank, the Caribbean Development Bank, the Islamic Development Bank, the 
Council of Europe Development Bank, and any other entity that provides 
financing for national or regional development in which the U.S. 
government is a shareholder or contributing member or which the FDIC 
determines poses comparable credit risk.
    Non-cleared swap means a swap that is not cleared by a derivatives 
clearing organization registered with the Commodity Futures Trading 
Commission pursuant to section 5b(a) of the Commodity Exchange Act of 
1936 (7 U.S.C. 7a-1(a)) or by a clearing organization that the Commodity 
Futures Trading Commission has exempted from registration by rule or 
order pursuant to section 5b(h) of the Commodity Exchange Act of 1936 (7 
U.S.C. 7a-1(h)).
    Non-cleared security-based swap means a security-based swap that is 
not, directly or indirectly, submitted to and cleared by a clearing 
agency registered with the U.S. Securities and Exchange Commission 
pursuant to section 17A of the Securities Exchange Act of 1934 (15 
U.S.C. 78q-1) or by a clearing agency that the U.S. Securities and 
Exchange Commission has exempted from registration by rule or order 
pursuant to section 17A of the Securities Exchange Act of 1934 (15 
U.S.C. 78q-1).
    Prudential regulator has the meaning specified in section 1a(39) of 
the Commodity Exchange Act of 1936 (7 U.S.C. 1a(39)).
    Savings and loan holding company has the meaning specified in 
section 10(n) of the Home Owners' Loan Act (12 U.S.C. 1467a(n)).
    Securities holding company has the meaning specified in section 618 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 
U.S.C. 1850a).
    Security-based swap has the meaning specified in section 3(a)(68) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(68)).
    Sovereign entity means a central government (including the U.S. 
government) or an agency, department, ministry, or central bank of a 
central government.
    State means any State, commonwealth, territory, or possession of the 
United States, the District of Columbia, the Commonwealth of Puerto 
Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, 
Guam, or the United States Virgin Islands.
    Subsidiary. A company is a subsidiary of another company if:
    (1) The company is consolidated by the other company on financial 
statements prepared in accordance with U.S. Generally Accepted 
Accounting Principles, the International Financial Reporting Standards, 
or other similar standards;
    (2) For a company that is not subject to such principles or 
standards, if consolidation as described in paragraph (1) of this 
definition would have occurred if such principles or standards had 
applied; or
    (3) The FDIC has determined that the company is a subsidiary of 
another company, based on FDIC's conclusion that either company provides 
significant support to, or is materially subject to the risks of loss 
of, the other company.
    Swap has the meaning specified in section 1a(47) of the Commodity 
Exchange Act of 1936 (7 U.S.C. 1a(47)).
    Swap entity means a person that is registered with the Commodity 
Futures Trading Commission as a swap dealer or major swap participant 
pursuant to the Commodity Exchange Act of 1936 (7 U.S.C. 1 et seq.), or 
a person that is registered with the U.S. Securities and Exchange 
Commission as a security-based swap dealer or a major security-based 
swap participant pursuant

[[Page 42]]

to the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
    U.S. Government-sponsored enterprise means an entity established or 
chartered by the U.S. government to serve public purposes specified by 
federal statute but whose debt obligations are not explicitly guaranteed 
by the full faith and credit of the U.S. government.
    Variation margin means collateral provided by one party to its 
counterparty to meet the performance of its obligations under one or 
more non-cleared swaps or non-cleared security-based swaps between the 
parties as a result of a change in value of such obligations since the 
last time such collateral was provided.
    Variation margin amount means the cumulative mark-to-market change 
in value to a covered swap entity of a non-cleared swap or non-cleared 
security-based swap, as measured from the date it is entered into (or, 
in the case of a non-cleared swap or non-cleared security-based swap 
that has a positive or negative value to a covered swap entity on the 
date it is entered into, such positive or negative value plus any 
cumulative mark-to-market change in value to the covered swap entity of 
a non-cleared swap or non-cleared security-based swap after such date), 
less the value of all variation margin previously collected, plus the 
value of all variation margin previously posted with respect to such 
non-cleared swap or non-cleared security-based swap.

[80 FR 74912, Nov. 30, 2015, as amended at 83 FR 50812, Oct. 10, 2018]



Sec.349.3  Initial margin.

    (a) Collection of margin. A covered swap entity shall collect 
initial margin with respect to any non-cleared swap or non-cleared 
security-based swap from a counterparty that is a financial end user 
with material swaps exposure or that is a swap entity in an amount that 
is no less than the greater of:
    (1) Zero; or
    (2) The initial margin collection amount for such non-cleared swap 
or non-cleared security-based swap less the initial margin threshold 
amount (not including any portion of the initial margin threshold amount 
already applied by the covered swap entity or its affiliates to other 
non-cleared swaps or non-cleared security-based swaps with the 
counterparty or its affiliates), as applicable.
    (b) Posting of margin. A covered swap entity shall post initial 
margin with respect to any non-cleared swap or non-cleared security-
based swap to a counterparty that is a financial end user with material 
swaps exposure. Such initial margin shall be in an amount at least as 
large as the covered swap entity would be required to collect under 
paragraph (a) of this section if it were in the place of the 
counterparty.
    (c) Timing. A covered swap entity shall comply with the initial 
margin requirements described in paragraphs (a) and (b) of this section 
on each business day, for a period beginning on or before the business 
day following the day of execution and ending on the date the non-
cleared swap or non-cleared security-based swap terminates or expires.
    (d) Other counterparties. A covered swap entity is not required to 
collect or post initial margin with respect to any non-cleared swap or 
non-cleared security-based swap described in Sec.349.1(d). For any 
other non-cleared swap or non-cleared security-based swap between a 
covered swap entity and a counterparty that is neither a financial end 
user with a material swaps exposure nor a swap entity, the covered swap 
entity shall collect initial margin at such times and in such forms and 
such amounts (if any), that the covered swap entity determines 
appropriately addresses the credit risk posed by the counterparty and 
the risks of such non-cleared swap or non-cleared security-based swap.



Sec.349.4  Variation margin.

    (a) General. After the date on which a covered swap entity enters 
into a non-cleared swap or non-cleared security-based swap with a swap 
entity or financial end user, the covered swap entity shall collect 
variation margin equal to the variation margin amount from the 
counterparty to such non-cleared swap or non-cleared security-based swap 
when the amount is positive and post variation margin equal to the 
variation margin amount to the counterparty to

[[Page 43]]

such non-cleared swap or non-cleared security-based swap when the amount 
is negative.
    (b) Timing. A covered swap entity shall comply with the variation 
margin requirements described in paragraph (a) of this section on each 
business day, for a period beginning on or before the business day 
following the day of execution and ending on the date the non-cleared 
swap or non-cleared security based swap terminates or expires.
    (c) Other counterparties. A covered swap entity is not required to 
collect or post variation margin with respect to any non-cleared swap or 
non-cleared security-based swap described in Sec.349.1(d). For any 
other non-cleared swap or non-cleared security-based swap between a 
covered swap entity and a counterparty that is neither a financial end 
user nor a swap entity, the covered swap entity shall collect variation 
margin at such times and in such forms and such amounts (if any), that 
the covered swap entity determines appropriately addresses the credit 
risk posed by the counterparty and the risks of such non-cleared swap or 
non-cleared security-based swap.



Sec.349.5  Netting arrangements, minimum transfer amount, 
and satisfaction of collecting and posting requirements.

    (a) Netting arrangements. (1) For purposes of calculating and 
complying with the initial margin requirements of Sec.349.3 using an 
initial margin model as described in Sec.349.8, or with the variation 
margin requirements of Sec.349.4, a covered swap entity may net non-
cleared swaps or non-cleared security-based swaps in accordance with 
this subsection.
    (2) To the extent that one or more non-cleared swaps or non-cleared 
security-based swaps are executed pursuant to an eligible master netting 
agreement between a covered swap entity and its counterparty that is a 
swap entity or financial end user, a covered swap entity may calculate 
and comply with the applicable requirements of this subpart on an 
aggregate net basis with respect to all non-cleared swaps and non-
cleared security-based swaps governed by such agreement, subject to 
paragraph (a)(3) of this section.
    (3)(i) Except as permitted in paragraph (a)(3)(ii) of this section, 
if an eligible master netting agreement covers non-cleared swaps and 
non-cleared security-based swaps entered into on or after the applicable 
compliance date set forth in Sec.349.1(e) or (g), all the non-cleared 
swaps and non-cleared security-based swaps covered by that agreement are 
subject to the requirements of this subpart and included in the 
aggregate netting portfolio for the purposes of calculating and 
complying with the margin requirements of this subpart.
    (ii) An eligible master netting agreement may identify one or more 
separate netting portfolios that independently meet the requirements in 
paragraph (1) of the definition of ``Eligible master netting agreement'' 
in Sec.349.2 and to which collection and posting of margin applies on 
an aggregate net basis separate from and exclusive of any other non-
cleared swaps or non-cleared security-based swaps covered by the 
eligible master netting agreement. Any such netting portfolio that 
contains any non-cleared swap or non-cleared security-based swap entered 
into on or after the applicable compliance date set forth in Sec.
349.1(e) or (g) is subject to the requirements of this subpart. Any such 
netting portfolio that contains only non-cleared swaps or non-cleared 
security-based swaps entered into before the applicable compliance date 
is not subject to the requirements of this subpart.
    (4) If a covered swap entity cannot conclude after sufficient legal 
review with a well-founded basis that the netting agreement described in 
this section meets the definition of eligible master netting agreement 
set forth in Sec.349.2, the covered swap entity must treat the non-
cleared swaps and non-cleared security based swaps covered by the 
agreement on a gross basis for the purposes of calculating and complying 
with the requirements of this subpart to collect margin, but the covered 
swap entity may net those non-cleared swaps and non-cleared security-
based swaps in accordance with paragraphs (a)(1) through (3) of this 
section for the purposes of calculating and complying with the 
requirements of this subpart to post margin.

[[Page 44]]

    (b) Minimum transfer amount. Notwithstanding Sec.349.3 or Sec.
349.4, a covered swap entity is not required to collect or post margin 
pursuant to this subpart with respect to a particular counterparty 
unless and until the combined amount of initial margin and variation 
margin that is required pursuant to this subpart to be collected or 
posted and that has not yet been collected or posted with respect to the 
counterparty is greater than $500,000.
    (c) Satisfaction of collecting and posting requirements. A covered 
swap entity shall not be deemed to have violated its obligation to 
collect or post margin from or to a counterparty under Sec.349.3, 
Sec.349.4, or Sec.349.6(e) if:
    (1) The counterparty has refused or otherwise failed to provide or 
accept the required margin to or from the covered swap entity; and
    (2) The covered swap entity has:
    (i) Made the necessary efforts to collect or post the required 
margin, including the timely initiation and continued pursuit of formal 
dispute resolution mechanisms, or has otherwise demonstrated upon 
request to the satisfaction of the FDIC that it has made appropriate 
efforts to collect or post the required margin; or
    (ii) Commenced termination of the non-cleared swap or non-cleared 
security-based swap with the counterparty promptly following the 
applicable cure period and notification requirements.



Sec.349.6  Eligible collateral.

    (a) Non-cleared swaps and non-cleared security-based swaps with a 
swap entity. For a non-cleared swap or non-cleared security-based swap 
with a swap entity, a covered swap entity shall collect initial margin 
and variation margin required pursuant to this subpart solely in the 
form of the following types of collateral:
    (1) Immediately available cash funds that are denominated in:
    (i) U.S. dollars or another major currency; or
    (ii) The currency of settlement for the non-cleared swap or non-
cleared security-based swap;
    (2) With respect to initial margin only:
    (i) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury;
    (ii) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, a U.S. government 
agency (other than the U.S. Department of Treasury) whose obligations 
are fully guaranteed by the full faith and credit of the United States 
government;
    (iii) A security that is issued by, or fully guaranteed as to the 
payment of principal and interest by, the European Central Bank or a 
sovereign entity that is assigned no higher than a 20 percent risk 
weight under the capital rules applicable to the covered swap entity as 
set forth in Sec.349.12;
    (iv) A publicly traded debt security issued by, or an asset-backed 
security fully guaranteed as to the payment of principal and interest 
by, a U.S. Government-sponsored enterprise that is operating with 
capital support or another form of direct financial assistance received 
from the U.S. government that enables the repayments of the U.S. 
Government-sponsored enterprise's eligible securities;
    (v) A publicly traded debt security that meets the terms of 12 CFR 
1.2(d) and is issued by a U.S. Government-sponsored enterprise not 
operating with capital support or another form of direct financial 
assistance from the U.S. government, and is not an asset-backed 
security;
    (vi) A security that is issued by, or fully guaranteed as to the 
payment of principal and interest by, the Bank for International 
Settlements, the International Monetary Fund, or a multilateral 
development bank;
    (vii) A security solely in the form of:
    (A) Publicly traded debt not otherwise described in paragraph (a)(2) 
of this section that meets the terms of 12 CFR 1.2(d) and is not an 
asset-backed security;
    (B) Publicly traded common equity that is included in:
    (1) The Standard & Poor's Composite 1500 Index or any other similar 
index of liquid and readily marketable equity securities as determined 
by the FDIC; or
    (2) An index that a covered swap entity's supervisor in a foreign 
jurisdiction

[[Page 45]]

recognizes for purposes of including publicly traded common equity as 
initial margin under applicable regulatory policy, if held in that 
foreign jurisdiction;
    (viii) Securities in the form of redeemable securities in a pooled 
investment fund representing the security-holder's proportional interest 
in the fund's net assets and that are issued and redeemed only on the 
basis of the market value of the fund's net assets prepared each 
business day after the security-holder makes its investment commitment 
or redemption request to the fund, if:
    (A) The fund's investments are limited to the following:
    (1) Securities that are issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury, and immediately-available cash funds denominated in 
U.S. dollars; or
    (2) Securities denominated in a common currency and issued by, or 
fully guaranteed as to the payment of principal and interest by, the 
European Central Bank or a sovereign entity that is assigned no higher 
than a 20 percent risk weight under the capital rules applicable to the 
covered swap entity as set forth in Sec.349.12, and immediately-
available cash funds denominated in the same currency; and
    (B) Assets of the fund may not be transferred through securities 
lending, securities borrowing, repurchase agreements, reverse repurchase 
agreements, or other means that involve the fund having rights to 
acquire the same or similar assets from the transferee; or
    (ix) Gold.
    (b) Non-cleared swaps and non-cleared security-based swaps with a 
financial end user. For a non-cleared swap or non-cleared security-based 
swap with a financial end user, a covered swap entity shall collect and 
post initial margin and variation margin required pursuant to this 
subpart solely in the form of the following types of collateral:
    (1) Immediately available cash funds that are denominated in:
    (i) U.S. dollars or another major currency; or
    (ii) The currency of settlement for the non-cleared swap or non-
cleared security-based swap;
    (2) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury;
    (3) A security that is issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, a U.S. government 
agency (other than the U.S. Department of Treasury) whose obligations 
are fully guaranteed by the full faith and credit of the United States 
government;
    (4) A security that is issued by, or fully guaranteed as to the 
payment of principal and interest by, the European Central Bank or a 
sovereign entity that is assigned no higher than a 20 percent risk 
weight under the capital rules applicable to the covered swap entity as 
set forth in Sec.349.12;
    (5) A publicly traded debt security issued by, or an asset-backed 
security fully guaranteed as to the payment of principal and interest 
by, a U.S. Government-sponsored enterprise that is operating with 
capital support or another form of direct financial assistance received 
from the U.S. government that enables the repayments of the U.S. 
Government-sponsored enterprise's eligible securities;
    (6) A publicly traded debt security that meets the terms of 12 CFR 
1.2(d) and is issued by a U.S. Government-sponsored enterprise not 
operating with capital support or another form of direct financial 
assistance from the U.S. government, and is not an asset-backed 
security;
    (7) A security that is issued by, or fully guaranteed as to the 
payment of principal and interest by, the Bank for International 
Settlements, the International Monetary Fund, or a multilateral 
development bank;
    (8) A security solely in the form of:
    (i) Publicly traded debt not otherwise described in this paragraph 
(b) that meets the terms of 12 CFR 1.2(d) and is not an asset-backed 
security;
    (ii) Publicly traded common equity that is included in:
    (A) The Standard & Poor's Composite 1500 Index or any other similar 
index of liquid and readily marketable equity

[[Page 46]]

securities as determined by the FDIC; or
    (B) An index that a covered swap entity's supervisor in a foreign 
jurisdiction recognizes for purposes of including publicly traded common 
equity as initial margin under applicable regulatory policy, if held in 
that foreign jurisdiction;
    (9) Securities in the form of redeemable securities in a pooled 
investment fund representing the security-holder's proportional interest 
in the fund's net assets and that are issued and redeemed only on the 
basis of the market value of the fund's net assets prepared each 
business day after the security-holder makes its investment commitment 
or redemption request to the fund, if:
    (i) The fund's investments are limited to the following:
    (A) Securities that are issued by, or unconditionally guaranteed as 
to the timely payment of principal and interest by, the U.S. Department 
of the Treasury, and immediately-available cash funds denominated in 
U.S. dollars; or
    (B) Securities denominated in a common currency and issued by, or 
fully guaranteed as to the payment of principal and interest by, the 
European Central Bank or a sovereign entity that is assigned no higher 
than a 20 percent risk weight under the capital rules applicable to the 
covered swap entity as set forth in Sec.349.12, and immediately-
available cash funds denominated in the same currency; and
    (ii) Assets of the fund may not be transferred through securities 
lending, securities borrowing, repurchase agreements, reverse repurchase 
agreements, or other means that involve the fund having rights to 
acquire the same or similar assets from the transferee; or
    (10) Gold.
    (c)(1) The value of any eligible collateral collected or posted to 
satisfy margin requirements pursuant to this subpart is subject to the 
sum of the following discounts, as applicable:
    (i) An 8 percent discount for variation margin collateral 
denominated in a currency that is not the currency of settlement for the 
non-cleared swap or non-cleared security-based swap, except for 
immediately available cash funds denominated in U.S. dollars or another 
major currency;
    (ii) An 8 percent discount for initial margin collateral denominated 
in a currency that is not the currency of settlement for the non-cleared 
swap or non-cleared security-based swap, except for eligible types of 
collateral denominated in a single termination currency designated as 
payable to the non-posting counterparty as part of the eligible master 
netting agreement; and
    (iii) For variation and initial margin non-cash collateral, the 
discounts described in appendix B of this subpart.
    (2) The value of variation margin or initial margin collateral is 
computed as the product of the cash or market value of the eligible 
collateral asset times one minus the applicable discounts pursuant to 
paragraph (c)(1) of this section expressed in percentage terms. The 
total value of all variation margin or initial margin collateral is 
calculated as the sum of those values for each eligible collateral 
asset.
    (d) Notwithstanding paragraphs (a) and (b) of this section, eligible 
collateral for initial margin and variation margin required by this 
subpart does not include a security issued by:
    (1) The party or an affiliate of the party pledging such collateral;
    (2) A bank holding company, a savings and loan holding company, a 
U.S. intermediate holding company established or designated for purposes 
of compliance with 12 CFR 252.153, a foreign bank, a depository 
institution, a market intermediary, a company that would be any of the 
foregoing if it were organized under the laws of the United States or 
any State, or an affiliate of any of the foregoing institutions; or
    (3) A nonbank financial institution supervised by the Board of 
Governors of the Federal Reserve System under Title I of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (12 U.S.C. 5323).
    (e) A covered swap entity shall monitor the market value and 
eligibility of all collateral collected and posted to satisfy the 
minimum initial margin and minimum variation margin requirements of this 
subpart. To the extent that the market value of such collateral has 
declined, the covered swap entity shall promptly collect or post

[[Page 47]]

such additional eligible collateral as is necessary to maintain 
compliance with the margin requirements of this subpart. To the extent 
that the collateral is no longer eligible, the covered swap entity shall 
promptly collect or post sufficient eligible replacement collateral to 
comply with the margin requirements of this subpart.
    (f) A covered swap entity may collect or post initial margin and 
variation margin that is required by Sec.349.3(d) or Sec.349.4(c) or 
that is not required pursuant to this subpart in any form of collateral.

[80 FR 74912, Nov. 30, 2015]



Sec.349.7  Segregation of collateral.

    (a) A covered swap entity that posts any collateral other than for 
variation margin with respect to a non-cleared swap or a non-cleared 
security-based swap shall require that all funds or other property other 
than variation margin provided by the covered swap entity be held by one 
or more custodians that are not the covered swap entity or counterparty 
and not affiliates of the covered swap entity or the counterparty.
    (b) A covered swap entity that collects initial margin required by 
Sec.349.3(a) with respect to a non-cleared swap or a non-cleared 
security-based swap shall require that such initial margin be held by 
one or more custodians that are not the covered swap entity or 
counterparty and not affiliates of the covered swap entity or the 
counterparty.
    (c) For purposes of paragraphs (a) and (b) of this section, the 
custodian must act pursuant to a custody agreement that:
    (1) Prohibits the custodian from rehypothecating, repledging, 
reusing, or otherwise transferring (through securities lending, 
securities borrowing, repurchase agreement, reverse repurchase agreement 
or other means) the collateral held by the custodian, except that cash 
collateral may be held in a general deposit account with the custodian 
if the funds in the account are used to purchase an asset described in 
Sec.349.6(a)(2) or (b), such asset is held in compliance with this 
Sec.349.7, and such purchase takes place within a time period 
reasonably necessary to consummate such purchase after the cash 
collateral is posted as initial margin; and
    (2) Is a legal, valid, binding, and enforceable agreement under the 
laws of all relevant jurisdictions, including in the event of 
bankruptcy, insolvency, or a similar proceeding.
    (d) Notwithstanding paragraph (c)(1) of this section, a custody 
agreement may permit the posting party to substitute or direct any 
reinvestment of posted collateral held by the custodian, provided that, 
with respect to collateral collected by a covered swap entity pursuant 
to Sec.349.3(a) or posted by a covered swap entity pursuant to Sec.
349.3(b), the agreement requires the posting party to:
    (1) Substitute only funds or other property that would qualify as 
eligible collateral under Sec.349.6, and for which the amount net of 
applicable discounts described in appendix B of this subpart would be 
sufficient to meet the requirements of Sec.349.3; and
    (2) Direct reinvestment of funds only in assets that would qualify 
as eligible collateral under Sec.349.6, and for which the amount net 
of applicable discounts described in appendix B of this subpart would be 
sufficient to meet the requirements of Sec.349.3.



Sec.349.8  Initial margin models and standardized amounts.

    (a) Standardized amounts. Unless a covered swap entity's initial 
margin model conforms to the requirements of this section, the covered 
swap entity shall calculate the amount of initial margin required to be 
collected or posted for one or more non-cleared swaps or non-cleared 
security-based swaps with a given counterparty pursuant to Sec.349.3 
on a daily basis pursuant to appendix A of this subpart.
    (b) Use of initial margin models. A covered swap entity may 
calculate the amount of initial margin required to be collected or 
posted for one or more non-cleared swaps or non-cleared security-based 
swaps with a given counterparty pursuant to Sec.349.3 on a daily basis 
using an initial margin model only if the initial margin model meets the 
requirements of this section.
    (c) Requirements for initial margin model. (1) A covered swap entity 
must obtain the prior written approval of

[[Page 48]]

the FDIC before using any initial margin model to calculate the initial 
margin required in this subpart.
    (2) A covered swap entity must demonstrate that the initial margin 
model satisfies all of the requirements of this section on an ongoing 
basis.
    (3) A covered swap entity must notify the FDIC in writing 60 days 
prior to:
    (i) Extending the use of an initial margin model that the FDIC has 
approved under this section to an additional product type;
    (ii) Making any change to any initial margin model approved by the 
FDIC under this section that would result in a material change in the 
covered swap entity's assessment of initial margin requirements; or
    (iii) Making any material change to modeling assumptions used by the 
initial margin model.
    (4) The FDIC may rescind its approval of the use of any initial 
margin model, in whole or in part, or may impose additional conditions 
or requirements if the FDIC determines, in its sole discretion, that the 
initial margin model no longer complies with this section.
    (d) Quantitative requirements. (1) The covered swap entity's initial 
margin model must calculate an amount of initial margin that is equal to 
the potential future exposure of the non-cleared swap, non-cleared 
security-based swap or netting portfolio of non-cleared swaps or non-
cleared security-based swaps covered by an eligible master netting 
agreement. Potential future exposure is an estimate of the one-tailed 99 
percent confidence interval for an increase in the value of the non-
cleared swap, non-cleared security-based swap or netting portfolio of 
non-cleared swaps or non-cleared security-based swaps due to an 
instantaneous price shock that is equivalent to a movement in all 
material underlying risk factors, including prices, rates, and spreads, 
over a holding period equal to the shorter of ten business days or the 
maturity of the non-cleared swap, non-cleared security-based swap or 
netting portfolio.
    (2) All data used to calibrate the initial margin model must be 
based on an equally weighted historical observation period of at least 
one year and not more than five years and must incorporate a period of 
significant financial stress for each broad asset class that is 
appropriate to the non-cleared swaps and non-cleared security-based 
swaps to which the initial margin model is applied.
    (3) The covered swap entity's initial margin model must use risk 
factors sufficient to measure all material price risks inherent in the 
transactions for which initial margin is being calculated. The risk 
categories must include, but should not be limited to, foreign exchange 
or interest rate risk, credit risk, equity risk, and commodity risk, as 
appropriate. For material exposures in significant currencies and 
markets, modeling techniques must capture spread and basis risk and must 
incorporate a sufficient number of segments of the yield curve to 
capture differences in volatility and imperfect correlation of rates 
along the yield curve.
    (4) In the case of a non-cleared cross-currency swap, the covered 
swap entity's initial margin model need not recognize any risks or risk 
factors associated with the fixed, physically-settled foreign exchange 
transaction associated with the exchange of principal embedded in the 
non-cleared cross-currency swap. The initial margin model must recognize 
all material risks and risk factors associated with all other payments 
and cash flows that occur during the life of the non-cleared cross-
currency swap.
    (5) The initial margin model may calculate initial margin for a non-
cleared swap or non-cleared security-based swap or a netting portfolio 
of non-cleared swaps or non-cleared security-based swaps covered by an 
eligible master netting agreement. It may reflect offsetting exposures, 
diversification, and other hedging benefits for non-cleared swaps and 
non-cleared security-based swaps that are governed by the same eligible 
master netting agreement by incorporating empirical correlations within 
the following broad risk categories, provided the covered swap entity 
validates and demonstrates the reasonableness of its process for 
modeling and measuring hedging benefits: Commodity, credit,

[[Page 49]]

equity, and foreign exchange or interest rate. Empirical correlations 
under an eligible master netting agreement may be recognized by the 
initial margin model within each broad risk category, but not across 
broad risk categories.
    (6) If the initial margin model does not explicitly reflect 
offsetting exposures, diversification, and hedging benefits between 
subsets of non-cleared swaps or non-cleared security-based swaps within 
a broad risk category, the covered swap entity must calculate an amount 
of initial margin separately for each subset within which such 
relationships are explicitly recognized by the initial margin model. The 
sum of the initial margin amounts calculated for each subset of non-
cleared swaps and non-cleared security-based swaps within a broad risk 
category will be used to determine the aggregate initial margin due from 
the counterparty for the portfolio of non-cleared swaps and non-cleared 
security-based swaps within the broad risk category.
    (7) The sum of the initial margin amounts calculated for each broad 
risk category will be used to determine the aggregate initial margin due 
from the counterparty.
    (8) The initial margin model may not permit the calculation of any 
initial margin collection amount to be offset by, or otherwise take into 
account, any initial margin that may be owed or otherwise payable by the 
covered swap entity to the counterparty.
    (9) The initial margin model must include all material risks arising 
from the nonlinear price characteristics of option positions or 
positions with embedded optionality and the sensitivity of the market 
value of the positions to changes in the volatility of the underlying 
rates, prices, or other material risk factors.
    (10) The covered swap entity may not omit any risk factor from the 
calculation of its initial margin that the covered swap entity uses in 
its initial margin model unless it has first demonstrated to the 
satisfaction of the FDIC that such omission is appropriate.
    (11) The covered swap entity may not incorporate any proxy or 
approximation used to capture the risks of the covered swap entity's 
non-cleared swaps or non-cleared security-based swaps unless it has 
first demonstrated to the satisfaction of the FDIC that such proxy or 
approximation is appropriate.
    (12) The covered swap entity must have a rigorous and well-defined 
process for re-estimating, re-evaluating, and updating its internal 
margin model to ensure continued applicability and relevance.
    (13) The covered swap entity must review and, as necessary, revise 
the data used to calibrate the initial margin model at least annually, 
and more frequently as market conditions warrant, to ensure that the 
data incorporate a period of significant financial stress appropriate to 
the non-cleared swaps and non-cleared security-based swaps to which the 
initial margin model is applied.
    (14) The level of sophistication of the initial margin model must be 
commensurate with the complexity of the non-cleared swaps and non-
cleared security-based swaps to which it is applied. In calculating an 
initial margin collection amount, the initial margin model may make use 
of any of the generally accepted approaches for modeling the risk of a 
single instrument or portfolio of instruments.
    (15) The FDIC may in its sole discretion require a covered swap 
entity using an initial margin model to collect a greater amount of 
initial margin than that determined by the covered swap entity's initial 
margin model if the FDIC determines that the additional collateral is 
appropriate due to the nature, structure, or characteristics of the 
covered swap entity's transaction(s), or is commensurate with the risks 
associated with the transaction(s).
    (e) Periodic review. A covered swap entity must periodically, but no 
less frequently than annually, review its initial margin model in light 
of developments in financial markets and modeling technologies, and 
enhance the initial margin model as appropriate to ensure that the 
initial margin model continues to meet the requirements for approval in 
this section.

[[Page 50]]

    (f) Control, oversight, and validation mechanisms. (1) The covered 
swap entity must maintain a risk control unit that reports directly to 
senior management and is independent from the business trading units.
    (2) The covered swap entity's risk control unit must validate its 
initial margin model prior to implementation and on an ongoing basis. 
The covered swap entity's validation process must be independent of the 
development, implementation, and operation of the initial margin model, 
or the validation process must be subject to an independent review of 
its adequacy and effectiveness. The validation process must include:
    (i) An evaluation of the conceptual soundness of (including 
developmental evidence supporting) the initial margin model;
    (ii) An ongoing monitoring process that includes verification of 
processes and benchmarking by comparing the covered swap entity's 
initial margin model outputs (estimation of initial margin) with 
relevant alternative internal and external data sources or estimation 
techniques. The benchmark(s) must address the chosen model's 
limitations. When applicable, the covered swap entity should consider 
benchmarks that allow for non-normal distributions such as historical 
and Monte Carlo simulations. When applicable, validation shall include 
benchmarking against observable margin standards to ensure that the 
initial margin required is not less than what a derivatives clearing 
organization or a clearing agency would require for similar cleared 
transactions; and
    (iii) An outcomes analysis process that includes backtesting the 
initial margin model. This analysis must recognize and compensate for 
the challenges inherent in back-testing over periods that do not contain 
significant financial stress.
    (3) If the validation process reveals any material problems with the 
initial margin model, the covered swap entity must promptly notify the 
FDIC of the problems, describe to the FDIC any remedial actions being 
taken, and adjust the initial margin model to ensure an appropriately 
conservative amount of required initial margin is being calculated.
    (4) The covered swap entity must have an internal audit function 
independent of business-line management and the risk control unit that 
at least annually assesses the effectiveness of the controls supporting 
the covered swap entity's initial margin model measurement systems, 
including the activities of the business trading units and risk control 
unit, compliance with policies and procedures, and calculation of the 
covered swap entity's initial margin requirements under this subpart. At 
least annually, the internal audit function must report its findings to 
the covered swap entity's board of directors or a committee thereof.
    (g) Documentation. The covered swap entity must adequately document 
all material aspects of its initial margin model, including the 
management and valuation of the non-cleared swaps and non-cleared 
security-based swaps to which it applies, the control, oversight, and 
validation of the initial margin model, any review processes and the 
results of such processes.
    (h) Escalation procedures. The covered swap entity must adequately 
document internal authorization procedures, including escalation 
procedures, that require review and approval of any change to the 
initial margin calculation under the initial margin model, demonstrable 
analysis that any basis for any such change is consistent with the 
requirements of this section, and independent review of such 
demonstrable analysis and approval.



Sec.349.9  Cross-border application of margin requirements.

    (a) Transactions to which this rule does not apply. The requirements 
of Sec. Sec.349.3 through 349.8 and Sec. Sec.349.10 through 349.12 
shall not apply to any foreign non-cleared swap or foreign non-cleared 
security-based swap of a foreign covered swap entity.
    (b) For purposes of this section, a foreign non-cleared swap or 
foreign non-cleared security-based swap is any non-cleared swap or non-
cleared security-based swap with respect to which neither the 
counterparty to the foreign covered swap entity nor any party that 
provides a guarantee of either party's

[[Page 51]]

obligations under the non-cleared swap or non-cleared security-based 
swap is:
    (1) An entity organized under the laws of the United States or any 
State (including a U.S. branch, agency, or subsidiary of a foreign bank) 
or a natural person who is a resident of the United States;
    (2) A branch or office of an entity organized under the laws of the 
United States or any State; or
    (3) A swap entity that is a subsidiary of an entity that is 
organized under the laws of the United States or any State.
    (c) For purposes of this section, a foreign covered swap entity is 
any covered swap entity that is not:
    (1) An entity organized under the laws of the United States or any 
State, including a U.S. branch, agency, or subsidiary of a foreign bank;
    (2) A branch or office of an entity organized under the laws of the 
United States or any State; or
    (3) An entity that is a subsidiary of an entity that is organized 
under the laws of the United States or any State.
    (d) Transactions for which substituted compliance determination may 
apply--(1) Determinations and reliance. For non-cleared swaps and non-
cleared security-based swaps entered into by covered swap entities 
described in paragraph (d)(3) of this section, a covered swap entity may 
satisfy the provisions of this subpart by complying with the foreign 
regulatory framework for non-cleared swaps and non-cleared security-
based swaps that the prudential regulators jointly, conditionally or 
unconditionally, determine by public order satisfy the corresponding 
requirements of Sec. Sec.349.3 through 349.8 and Sec. Sec.349.10 
through 349.12.
    (2) Standard. In determining whether to make a determination under 
paragraph (d)(1) of this section, the prudential regulators will 
consider whether the requirements of such foreign regulatory framework 
for non-cleared swaps and non-cleared security-based swaps applicable to 
such covered swap entities are comparable to the otherwise applicable 
requirements of this subpart and appropriate for the safe and sound 
operation of the covered swap entity, taking into account the risks 
associated with non-cleared swaps and non-cleared security-based swaps.
    (3) Covered swap entities eligible for substituted compliance. A 
covered swap entity may rely on a determination under paragraph (d)(1) 
of this section only if:
    (i) The covered swap entity's obligations under the non-cleared swap 
or non-cleared security-based swap do not have a guarantee from:
    (A) An entity organized under the laws of the United States or any 
State (other than a U.S. branch or agency of a foreign bank) or a 
natural person who is a resident of the United States; or
    (B) A branch or office of an entity organized under the laws of the 
United States or any State; and
    (ii) The covered swap entity is:
    (A) A foreign covered swap entity;
    (B) A U.S. branch or agency of a foreign bank; or
    (C) An entity that is not organized under the laws of the United 
States or any State and is a subsidiary of a depository institution, 
Edge corporation, or agreement corporation.
    (4) Compliance with foreign margin collection requirement. A covered 
swap entity satisfies its requirement to post initial margin under Sec.
349.3(b) by posting to its counterparty initial margin in the form and 
amount, and at such times, that its counterparty is required to collect 
pursuant to a foreign regulatory framework, provided that the 
counterparty is subject to the foreign regulatory framework and the 
prudential regulators have made a determination under paragraph (d)(1) 
of this section, unless otherwise stated in that determination, and the 
counterparty's obligations under the non-cleared swap or non-cleared 
security-based swap do not have a guarantee from:
    (i) An entity organized under the laws of the United States or any 
State (including a U.S. branch, agency, or subsidiary of a foreign bank) 
or a natural person who is a resident of the United States; or
    (ii) A branch or office of an entity organized under the laws of the 
United States or any State.
    (e) Requests for determinations. (1) A covered swap entity described 
in paragraph (d)(3) of this section may request that the prudential 
regulators make a

[[Page 52]]

determination pursuant to this section. A request for a determination 
must include a description of:
    (i) The scope and objectives of the foreign regulatory framework for 
non-cleared swaps and non-cleared security-based swaps;
    (ii) The specific provisions of the foreign regulatory framework for 
non-cleared swaps and non-cleared security-based swaps that govern:
    (A) The scope of transactions covered;
    (B) The determination of the amount of initial margin and variation 
margin required and how that amount is calculated;
    (C) The timing of margin requirements;
    (D) Any documentation requirements;
    (E) The forms of eligible collateral;
    (F) Any segregation and rehypothecation requirements; and
    (G) The approval process and standards for models used in 
calculating initial margin and variation margin;
    (iii) The supervisory compliance program and enforcement authority 
exercised by a foreign financial regulatory authority or authorities in 
such system to support its oversight of the application of the non-
cleared swap or non-cleared security-based swap regulatory framework and 
how that framework applies to the non-cleared swaps or non-cleared 
security-based swaps of the covered swap entity; and
    (iv) Any other descriptions and documentation that the prudential 
regulators determine are appropriate.
    (2) A covered swap entity described in paragraph (d)(3) of this 
section may make a request under this section only if the non-cleared 
swap or non-cleared security-based swap activities of the covered swap 
entity are directly supervised by the authorities administering the 
foreign regulatory framework for non-cleared swaps and non-cleared 
security-based swaps.
    (f) Segregation unavailable. Sections __.3(b) and __.7 do not apply 
to a non-cleared swap or non-cleared security-based swap entered into 
by:
    (1) A foreign branch of a covered swap entity that is a depository 
institution; or
    (2) A covered swap entity that is not organized under the laws of 
the United States or any State and is a subsidiary of a depository 
institution, Edge corporation, or agreement corporation, if:
    (i) Inherent limitations in the legal or operational infrastructure 
in the foreign jurisdiction make it impracticable for the covered swap 
entity and the counterparty to post any form of eligible initial margin 
collateral recognized pursuant to Sec.349.6(b) in compliance with the 
segregation requirements of Sec.349.7;
    (ii) The covered swap entity is subject to foreign regulatory 
restrictions that require the covered swap entity to transact in the 
non-cleared swap or non-cleared security-based swap with the 
counterparty through an establishment within the foreign jurisdiction 
and do not accommodate the posting of collateral for the non-cleared 
swap or non-cleared security-based swap outside the jurisdiction;
    (iii) The counterparty to the non-cleared swap or non-cleared 
security-based swap is not, and the counterparty's obligations under the 
non-cleared swap or non-cleared security-based swap do not have a 
guarantee from:
    (A) An entity organized under the laws of the United States or any 
State (including a U.S. branch, agency, or subsidiary of a foreign bank) 
or a natural person who is a resident of the United States; or
    (B) A branch or office of an entity organized under the laws of the 
United States or any State;
    (iv) The covered swap entity collects initial margin for the non-
cleared swap or non-cleared security-based swap in accordance with Sec.
349.3(a) in the form of cash pursuant to Sec.349.6(b)(1), and posts 
and collects variation margin in accordance with Sec.349.4(a) in the 
form of cash pursuant to Sec.349.6(b)(1); and
    (v) The FDIC provides the covered swap entity with prior written 
approval for the covered swap entity's reliance on this paragraph (f) 
for the foreign jurisdiction.
    (g) Guarantee means an arrangement pursuant to which one party to a 
non-cleared swap or non-cleared security-based swap has rights of 
recourse against a third-party guarantor, with

[[Page 53]]

respect to its counterparty's obligations under the non-cleared swap or 
non-cleared security-based swap. For these purposes, a party to a non-
cleared swap or non-cleared security-based swap has rights of recourse 
against a guarantor if the party has a conditional or unconditional 
legally enforceable right to receive or otherwise collect, in whole or 
in part, payments from the guarantor with respect to its counterparty's 
obligations under the non-cleared swap or non-cleared security-based 
swap. In addition, any arrangement pursuant to which the guarantor has a 
conditional or unconditional legally enforceable right to receive or 
otherwise collect, in whole or in part, payments from any other third 
party guarantor with respect to the counterparty's obligations under the 
non-cleared swap or non-cleared security-based swap, such arrangement 
will be deemed a guarantee of the counterparty's obligations under the 
non-cleared swap or non-cleared security-based swap by the other 
guarantor.



Sec.349.10  Documentation of margin matters.

    A covered swap entity shall execute trading documentation with each 
counterparty that is either a swap entity or financial end user 
regarding credit support arrangements that:
    (a) Provides the covered swap entity and its counterparty with the 
contractual right to collect and post initial margin and variation 
margin in such amounts, in such form, and under such circumstances as 
are required by this subpart; and
    (b) Specifies:
    (1) The methods, procedures, rules, and inputs for determining the 
value of each non-cleared swap or non-cleared security-based swap for 
purposes of calculating variation margin requirements; and
    (2) The procedures by which any disputes concerning the valuation of 
non-cleared swaps or non-cleared security-based swaps, or the valuation 
of assets collected or posted as initial margin or variation margin, may 
be resolved; and
    (c) Describes the methods, procedures, rules, and inputs used to 
calculate initial margin for non-cleared swaps and non-cleared security 
based swaps entered into between the covered swap entity and the 
counterparty.



Sec.349.11  Special rules for affiliates.

    (a) Affiliates. This subpart applies to a non-cleared swap or non-
cleared security-based swap of a covered swap entity with its affiliate, 
unless the swap or security-based swap is excluded from coverage under 
Sec.349.1(d) or as otherwise provided in this section. To the extent 
of any inconsistency between this section and any other provision of 
this subpart, this section will apply.
    (b) Initial margin--(1) Posting of initial margin. The requirement 
for a covered swap entity to post initial margin under Sec.349.3(b) 
does not apply with respect to any non-cleared swap or non-cleared 
security-based swap with a counterparty that is an affiliate. A covered 
swap entity shall calculate the amount of initial margin that would be 
required to be posted to an affiliate that is a financial end user with 
material swaps exposure pursuant to Sec.349.3(b) and provide 
documentation of such amount to each affiliate on a daily basis.
    (2) Initial margin threshold amount. For purposes of calculating the 
amount of initial margin to be collected from an affiliate counterparty 
in accordance with Sec.349.3(a) or calculating the amount of initial 
margin that would have been posted to an affiliate counterparty in 
accordance with paragraph (b)(1) of this section, the initial margin 
threshold amount is an aggregate credit exposure of $20 million 
resulting from all non-cleared swaps and non-cleared security-based 
swaps between the covered swap entity and that affiliate. For purposes 
of this calculation, an entity shall not count a non-cleared swap or 
non-cleared security-based swap that is exempt pursuant to Sec.
349.1(d).
    (c) Variation margin. A covered swap entity shall collect and post 
variation margin with respect to a non-cleared swap or non-cleared 
security-based swap with any counterparty that is an affiliate as 
provided in Sec.349.4.
    (d) Custodian for non-cash collateral. To the extent that a covered 
swap entity collects initial margin required by Sec.349.3(a) from an 
affiliate with respect to any non-cleared swap or non-cleared

[[Page 54]]

security-based swap in the form of collateral other than cash 
collateral, the custodian for such collateral may be the covered swap 
entity or an affiliate of the covered swap entity.
    (e) Model holding period and netting--(1) Model holding period. For 
any non-cleared swap or non-cleared security-based swap (or netting 
portfolio) between a covered swap entity and an affiliate that would be 
subject to the clearing requirements of section 2(h)(1)(A) of the 
Commodity Exchange Act of 1936 or section 3C(a)(1) of the Securities 
Exchange Act of 1934 but for an exemption under section 2(h)(7)(C)(iii) 
or (D) or section 4(c)(1) of the Commodity Exchange Act of 1936 or 
regulations of the Commodity Futures Trading Commission or section 
3C(g)(4) of the Securities Exchange Act of 1934 or regulations of the 
U.S. Securities and Exchange Commission, the covered swap entity's 
initial margin model calculation as described in Sec.349.8(d)(1) may 
use a holding period equal to the shorter of five business days or the 
maturity of the non-cleared swap or non-cleared security-based swap (or 
netting portfolio).
    (2) Netting arrangements. Any netting portfolio that contains any 
non-cleared swap or non-cleared security-based swap with a model holding 
period equal to the shorter of five business days or the maturity of the 
non-cleared swap or non-cleared security-based swap pursuant to 
paragraph (e)(1) of this section must be identified and separate from 
any other netting portfolio for purposes of calculating and complying 
with the initial margin requirements of this subpart.
    (f) Standardized amounts. If a covered swap entity's initial margin 
model does not conform to the requirements of Sec.349.8, the covered 
swap entity shall calculate the amount of initial margin required to be 
collected for one or more non-cleared swaps or non-cleared security-
based swaps with a given affiliate counterparty pursuant to section 
Sec.349.3 on a daily basis pursuant to Appendix A with the gross 
initial margin multiplied by 0.7.



Sec.349.12  Capital.

    A covered swap entity shall comply with the capital requirements 
that are applicable to the covered swap entity under part 324 of this 
chapter.

[80 FR 74912, Nov. 30, 2015]



 Sec. Appendix A to Subpart A of Part 349--Standardized Minimum Initial 
  Margin Requirements for Non-cleared Swaps and Non--cleared Security-
                               based Swaps

Table A--Standardized Minimum Gross Initial Margin Requirements for Non-
          cleared Swaps and Non-cleared Security-Based Swaps\1\
------------------------------------------------------------------------
                                                           Gross initial
                                                           margin (% of
                       Asset Class                           notional
                                                             exposure)
------------------------------------------------------------------------
Credit: 0-2 year duration...............................               2
Credit: 2-5 year duration...............................               5
Credit: 5+ year duration................................              10
Commodity...............................................              15
Equity..................................................              15
Foreign Exchange/Currency...............................               6
Cross Currency Swaps: 0-2 year duration.................               1
Cross-Currency Swaps: 2-5 year duration.................               2
Cross-Currency Swaps: 5+ year duration..................               4
Interest Rate: 0-2 year duration........................               1
Interest Rate: 2-5 year duration........................               2
Interest Rate: 5+ year duration.........................               4
Other...................................................              15
------------------------------------------------------------------------
\1\ The initial margin amount applicable to multiple non-cleared swaps
  or non-cleared security-based swaps subject to an eligible master
  netting agreement that is calculated according to Appendix A will be
  computed as follows:
Initial Margin=0.4xGross Initial Margin +0.6x NGRxGross Initial Margin
where;
Gross Initial Margin = the sum of the product of each non-cleared swap's
  or non-cleared security-based swap's effective notional amount and the
  gross initial margin requirement for all non-cleared swaps and non-
  cleared security-based swaps subject to the eligible master netting
  agreement;

[[Page 55]]

 
and
NGR = the net-to-gross ratio (that is, the ratio of the net current
  replacement cost to the gross current replacement cost). In
  calculating NGR, the gross current replacement cost equals the sum of
  the replacement cost for each non-cleared swap and non-cleared
  security-based swap subject to the eligible master netting agreement
  for which the cost is positive. The net current replacement cost
  equals the total replacement cost for all non-cleared swaps and non-
  cleared security-based swaps subject to the eligible master netting
  agreement. In cases where the gross replacement cost is zero, the NGR
  should be set to 1.0.



  Sec. Appendix B to Subpart A of Part 349--Margin Values for Eligible 
                        Noncash Margin Collateral

      Table B--Margin Values for Eligible Noncash Margin Collateral
------------------------------------------------------------------------
                       Asset class                         Discount (%)
------------------------------------------------------------------------
Eligible government and related (e.g., central bank,                 0.5
 multilateral development bank, GSE securities
 identified in Sec. 349.6(a)(2)(iv) or (b)(5) debt:
 residual maturity less than one-year...................
Eligible government and related (e.g., central bank,                 2.0
 multilateral development bank, GSE securities
 identified in Sec. 349.6(a)(2)(iv) or (b)(5) debt:
 residual maturity between one and five years...........
Eligible government and related (e.g., central bank,                 4.0
 multilateral development bank, GSE securities
 identified in Sec. 349.6(a)(2)(iv) or (b)(5) debt:
 residual maturity greater than five years..............
Eligible GSE debt securities not identified in Sec.1.0
 349.6(a)(2)(iv) or (b)(5): residual maturity less than
 one-year...............................................
Eligible GSE debt securities not identified in Sec.4.0
 349.6(a)(2)(iv) or (b)(5): residual maturity between
 one and five years:....................................
Eligible GSE debt securities not identified in Sec.8.0
 349.6(a)(2)(iv) or (b)(5): residual maturity greater
 than five years:.......................................
Other eligible publicly traded debt: residual maturity               1.0
 less than one-year.....................................
Other eligible publicly traded debt: residual maturity               4.0
 between one and five years.............................
Other eligible publicly traded debt: residual maturity               8.0
 greater than five years................................
Equities included in S&P 500 or related index...........            15.0
Equities included in S&P 1500 Composite or related index            25.0
 but not S&P 500 or related index.......................
Gold....................................................            15.0
------------------------------------------------------------------------
\1\ The discount to be applied to an eligible investment fund is the
  weighted average discount on all assets within the eligible investment
  fund at the end of the prior month. The weights to be applied in the
  weighted average should be calculated as a fraction of the fund's
  total market value that is invested in each asset with a given
  discount amount. As an example, an eligible investment fund that is
  comprised solely of $100 of 91 day Treasury bills and $100 of 3 year
  US Treasury bonds would receive a discount of (100/200)*0.5+(100/
  200)*2.0=(0.5)*0.5+(0.5)*2.0=1.25 percent.



             Subpart B_Retail Foreign Exchange Transactions

    Authority: 12 U.S.C.1813(q), 1818, 1819, and 3108; 7 U.S.C. 
2(c)(2)(E), 27 et seq.



Sec.349.13  Authority, purpose, and scope.

    (a) Authority. An FDIC-supervised insured depository institution 
that engages in retail forex transactions shall comply with the 
requirements of this part.
    (b) Purpose. This part establishes rules applicable to retail forex 
transactions engaged in by FDIC-supervised insured depository 
institutions and applies on or after the effective date.
    (c) Scope. Except as provided in paragraph (d) of this section, this 
part applies to FDIC-supervised insured depository institutions.
    (d) International applicability. Sections 349.15 and 349.17 through 
349.28 do not apply to retail foreign exchange transactions between a 
foreign branch of an FDIC-supervised IDI and a non-U.S. customer. With 
respect to those transactions, an FDIC-supervised IDI must comply with 
any disclosure, recordkeeping, capital, margin, reporting, business 
conduct, documentation, and other requirements of applicable foreign 
law.

[76 FR 40789, July 12, 2011. Redesignated and amended at 80 FR 74912, 
Nov. 30, 2015]



Sec.349.14  Definitions.

    For purposes of this part--
    The following terms have the same meaning as in the Commodity 
Exchange Act: ``Affiliated person of a futures commission merchant''; 
``Associated person''; ``Contract of sale''; ``Commodity''; ``Eligible 
contract participant''; ``Futures commission merchant''; ``Security''; 
and ``Security futures product''.
    Affiliate has the same meaning as in Sec.2(k) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841(k)).
    Commodity Exchange Act means the Commodity Exchange Act (7 U.S.C. 1 
et seq.).
    FDIC-supervised insured depository institution means any insured 
depository

[[Page 56]]

institution for which the Federal Deposit Insurance Corporation is the 
appropriate Federal banking agency pursuant to Sec.3(q) of the Federal 
Deposit Insurance Act, 12 U.S.C. 1813(q).
    Forex means foreign exchange.
    Institution-affiliated party or IAP has the same meaning as in 12 
U.S.C. 1813(u)(1), (2), or (3).
    Insured depository institution or IDI has the same meaning as in 12 
U.S.C. 1813(c)(2).
    Introducing broker means any person who solicits or accepts orders 
from a retail forex customer in connection with retail forex 
transactions.
    Related person, when used in reference to a retail forex 
counterparty, means:
    (1) Any general partner, officer, director, or owner of ten percent 
or more of the capital stock of the FDIC-supervised insured depository 
institution;
    (2) An associated person or employee of the retail forex 
counterparty, if the retail forex counterparty is not an FDIC-supervised 
insured depository institution;
    (3) An IAP, if the retail forex counterparty is an FDIC-supervised 
insured depository institution; and
    (4) Any relative or spouse of any of the foregoing persons, or any 
relative of such spouse, who shares the same home as any of the 
foregoing persons.
    Retail forex account means the account of a retail forex customer, 
established with an FDIC-supervised insured depository institution, in 
which retail forex transactions with the FDIC-supervised insured 
depository institution as counterparty are undertaken, or the account of 
a retail forex customer that is established in order to enter into such 
transactions.
    Retail forex account agreement means the contractual agreement 
between an FDIC-supervised insured depository institution and a retail 
forex customer that contains the terms governing the customer's retail 
forex account with the FDIC-supervised insured depository institution.
    Retail forex business means engaging in one or more retail forex 
transactions with the intent to derive income from those transactions, 
either directly or indirectly.
    Retail forex counterparty includes, as appropriate:
    (1) An FDIC-supervised insured depository institution;
    (2) A retail foreign exchange dealer;
    (3) A futures commission merchant; and
    (4) An affiliated person of a futures commission merchant.
    Retail forex customer means a customer that is not an eligible 
contract participant, acting on his, her, or its own behalf and engaging 
in retail forex transactions.
    Retail forex obligations means obligations of a retail forex 
customer with respect to retail forex transactions, including, but not 
limited to, trading losses, fees, and commissions.
    Retail forex proprietary account means: a retail forex account 
carried on the books of an FDIC-supervised insured depository 
institution for one of the following persons; a retail forex account of 
which 10 percent or more is owned by one of the following persons; or a 
retail forex account of which an aggregate of 10 percent or more of 
which is owned by more than one of the following persons:
    (1) The FDIC-supervised insured depository institution;
    (2) An officer, director or owner of ten percent or more of the 
capital stock of the FDIC-supervised insured depository institution; or
    (3) An employee of the FDIC-supervised insured depository 
institution, whose duties include:
    (i) The management of the FDIC-supervised insured depository 
institution's business;
    (ii) The handling of the FDIC-supervised insured depository 
institution's retail forex transactions;
    (iii) The keeping of records, including without limitation the 
software used to make or maintain those records, pertaining to the FDIC-
supervised insured depository institution's retail forex transactions; 
or
    (iv) The signing or co-signing of checks or drafts on behalf of the 
FDIC-supervised insured depository institution;
    (4) A spouse or minor dependent living in the same household as of 
any of the foregoing persons; or
    (5) An affiliate of the FDIC-supervised insured depository 
institution;

[[Page 57]]

    Retail forex transaction means an agreement, contract, or 
transaction in foreign currency, other than an identified banking 
product or a part of an identified banking product, that is offered or 
entered into by FDIC-supervised insured depository institution with a 
person that is not an eligible contract participant and that is:
    (1) A contract of sale of a commodity for future delivery or an 
option on such a contract;
    (2) An option, other than an option executed or traded on a national 
securities exchange registered pursuant to Sec.6(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78(f)(a)); or
    (3) Offered or entered into on a leveraged or margined basis, or 
financed by an FDIC-supervised insured depository institution, its 
affiliate, or any person acting in concert with the FDIC-supervised 
insured depository institution or its affiliate on a similar basis, 
other than:
    (i) A security that is not a security futures product as defined in 
Sec.1a(47) of the Commodity Exchange Act (7 U.S.C. 1a(47)); or
    (ii) A contract of sale that--
    (A) Results in actual delivery within two days; or
    (B) Creates an enforceable obligation to deliver between a seller 
and buyer that have the ability to deliver and accept delivery, 
respectively, in connection with their line of business; or
    (iii) An agreement, contract, or transaction that the FDIC 
determines is not functionally or economically similar to:
    (A) A contract of sale of a commodity for future delivery or an 
option on such a contract; or
    (B) An option, other than an option executed or traded on a national 
securities exchange registered pursuant to Section 6(a) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78(f)(a)).
    Retail forex obligations means obligations of a retail forex 
customer with respect to retail forex transactions, including, but not 
limited to, trading losses, fees, and commissions.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.15  Prohibited transactions.

    (a) Fraudulent conduct prohibited. No FDIC-supervised insured 
depository institution or its IAPs may, directly or indirectly, in or in 
connection with any retail forex transaction:
    (1) Cheat or defraud or attempt to cheat or defraud any person;
    (2) Willfully make or cause to be made to any person any false 
report or statement or cause to be entered for any person any false 
record; or
    (3) Willfully deceive or attempt to deceive any person by any means 
whatsoever.
    (b) Acting as counterparty and exercising discretion prohibited. If 
an FDIC-supervised insured depository institution can cause retail forex 
transactions to be effected for a retail forex customer without the 
retail forex customer's specific authorization, then neither the FDIC-
supervised insured depository institution nor its affiliates may act as 
the counterparty for any retail forex transaction with that retail forex 
customer.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.16  Filing procedures.

    (a) General. Before commencing a retail forex business, an FDIC-
supervised insured depository institution shall provide the FDIC prior 
written notice and obtain the FDIC's prior written consent.
    (b) Where to file. A notice required by this section shall be 
submitted in writing to the appropriate FDIC office.
    (c) Contents of filing. A complete letter notice shall include the 
following information:
    (1) Filings generally. (i) A brief description of the FDIC-
supervised institution's proposed retail forex business and the manner 
in which it will be conducted;
    (ii) The amount of the institution's existing or proposed direct or 
indirect investment in the retail forex business as well as calculations 
sufficient to indicate compliance with all capital requirements in Sec.
349.20 and all other applicable capital standards;
    (iii) A copy of the FDIC-supervised insured depository institution's 
comprehensive business plan that includes

[[Page 58]]

a discussion of, among other things, how the operation of the retail 
forex business is consistent with the institution's overall strategy;
    (iv) A description of the FDIC-supervised insured depository 
institution's target customers for its proposed retail forex business 
and related information, including without limitation credit 
evaluations, customer appropriateness, and ``know your customer'' 
documentation;
    (v) A resolution by the FDIC-supervised insured depository 
institution's board of directors that the proposed retail forex business 
is an appropriate activity for the institution and that the 
institution's written policies, procedures, and risk measurement and 
management systems and controls address conducting retail forex business 
in a safe and sound manner and in compliance with this part;
    (vi) Sample risk disclosures sufficient to demonstrate compliance 
with Sec.349.18.
    (2) Copy of application or notice filed with another agency. If an 
FDIC-supervised insured depository institution has filed an application 
or notice with another regulatory authority which contains all of the 
information required by subparagraph (c)(1) of this part, the 
institution may submit a copy to the FDIC in lieu of a separate filing.
    (3) Additional information. The FDIC may request additional 
information to complete the processing of the notification.
    (d) Treatment of Existing Retail Forex Business. Any FDIC-supervised 
insured depository institution that is engaged in retail forex business 
on July 15, 2011 may continue to do so for up to six months, subject to 
an extension of time by the FDIC, provided that it notifies the FDIC of 
its retail forex business and requests the FDIC's written consent in 
accordance with paragraph (a) of this section.
    (e) Compliance with the Commodities Exchange Act. Any FDIC-
supervised insured depository institution that is engaged in retail 
forex business on July 15, 2011 shall be deemed, during the six-month 
period (including any extension) provided in paragraph (e) of this 
section, to be acting pursuant to a rule or regulation described in 
Sec.2(c)(2)(E)(ii)(I) of the Commodity Exchange Act (7 U.S.C. 
2(c)(2)(E)(ii)(I)).

[76 FR 40789, July 12, 2011. Redesignated and amended at 80 FR 74912, 
Nov. 30, 2015]



Sec.349.17  Application and closing out of offsetting long and short
positions.

    (a) Application of purchases and sales. Any FDIC-supervised insured 
depository institution that--
    (1) Engages in a retail forex transaction involving the purchase of 
any currency for the account of any retail forex customer when the 
account of such retail forex customer at the time of such purchase has 
an open retail forex transaction for the sale of the same currency;
    (2) Engages in a retail forex transaction involving the sale of any 
currency for the account of any retail forex customer when the account 
of such retail forex customer at the time of such sale has an open 
retail forex transaction for the purchase of the same currency;
    (3) Purchases a put or call option involving foreign currency for 
the account of any retail forex customer when the account of such retail 
forex customer at the time of such purchase has a short put or call 
option position with the same underlying currency, strike price, and 
expiration date as that purchased; or
    (4) Sells a put or call option involving foreign currency for the 
account of any retail forex customer when the account of such retail 
forex customer at the time of such sale has a long put or call option 
position with the same underlying currency, strike price, and expiration 
date as that sold shall:
    (i) Immediately apply such purchase or sale against such previously 
held opposite transaction; and
    (ii) Promptly furnish such retail forex customer with a statement 
showing the financial result of the transactions involved and the name 
of any introducing broker to the account.
    (b) Close-out against oldest open position. In all instances where 
the short or long position in a customer's retail forex account 
immediately prior to an offsetting purchase or sale is greater than the 
quantity purchased or sold, the FDIC-supervised insured depository

[[Page 59]]

institution shall apply such offsetting purchase or sale to the oldest 
portion of the previously held short or long position.
    (c) Transactions to be applied as directed by customer. 
Notwithstanding paragraphs (a) and (b) of this section, the offsetting 
transaction shall be applied as directed by a retail forex customer's 
specific instructions. These instructions may not be made by the FDIC-
supervised insured depository institution or an IAP.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.18  Disclosure.

    (a) Risk disclosure statement required. No FDIC-supervised insured 
depository institution may open or maintain open an account that will 
engage in retail forex transactions for a retail forex customer unless 
the FDIC-supervised insured depository institution has furnished the 
retail forex customer with a separate written disclosure statement 
containing only the language set forth in paragraph (d) of this section 
and the disclosures required by paragraphs (e) and (f) of this section.
    (b) Acknowledgement of risk disclosure statement required. The FDIC-
supervised insured depository institution must receive from the retail 
forex customer a written acknowledgement signed and dated by the 
customer that the customer received and understood the written 
disclosure statement required by paragraph (a) of this section.
    (c) Placement of risk disclosure statement. The disclosure statement 
may be attached to other documents as the initial page(s) of such 
documents and as the only material on such page(s).
    (d) Content of risk disclosure statement. The language set forth in 
the written disclosure statement required by paragraph (a) of this 
section shall be as follows:

                        Risk Disclosure Statement

    Retail forex transactions involve the leveraged trading of contracts 
denominated in foreign currency with an FDIC-supervised insured 
depository institution as your counterparty. Because of the leverage and 
the other risks disclosed here, you can rapidly lose all of the funds or 
property you give the FDIC-supervised insured depository institution as 
margin for such trading and you may lose more than you pledge as margin.
    Your FDIC-supervised insured depository institution is prohibited 
from applying losses that you experience on retail forex transactions on 
any funds or property of yours other than funds or property that you 
have given or pledged as margin for retail forex transactions.
    You should be aware of and carefully consider the following points 
before determining whether such trading is appropriate for you.
    (1) Trading is a not on a regulated market or exchange--your FDIC-
supervised insured depository institution is your trading counterparty 
and has conflicting interests. The retail forex transaction you are 
entering into is not conducted on an interbank market, nor is it 
conducted on a futures exchange subject to regulation as a designated 
contract market by the Commodity Futures Trading Commission. The foreign 
currency trades you transact are trades with your FDIC-supervised 
insured depository institution as the counterparty. When you sell, the 
FDIC-supervised insured depository institution is the buyer. When you 
buy, the FDIC-supervised insured depository institution is the seller. 
As a result, when you lose money trading, your FDIC-supervised insured 
depository institution is making money on such trades, in addition to 
any fees, commissions, or spreads the FDIC-supervised insured depository 
institution may charge.
    (2) An electronic trading platform for retail foreign currency 
transactions is not an exchange. It is an electronic connection for 
accessing your FDIC-supervised insured depository institution. The terms 
of availability of such a platform are governed only by your contract 
with your FDIC-supervised insured depository institution. Any trading 
platform that you may use to enter into off-exchange foreign currency 
transactions is only connected to your FDIC-supervised insured 
depository institution. You are accessing that trading platform only to 
transact with your FDIC-supervised insured depository institution. You 
are not trading with any other entities or customers of the FDIC-
supervised insured depository institution by accessing such platform. 
The availability and operation of any such platform, including the 
consequences of the unavailability of the trading platform for any 
reason, is governed only by the terms of your account agreement with the 
FDIC-supervised insured depository institution.
    (3) You may be able to offset or liquidate any trading positions 
only through your banking entity because the transactions are not made 
on an exchange or regulated contract market, and your FDIC-supervised 
insured depository institution may set its own prices. Your ability to 
close your transactions or offset positions is limited to what

[[Page 60]]

your FDIC-supervised insured depository institution will offer to you, 
as there is no other market for these transactions. Your FDIC-supervised 
insured depository institution may offer any prices it wishes, including 
prices derived from outside sources or not in its discretion. Your FDIC-
supervised insured depository institution may establish its prices by 
offering spreads from third party prices, but it is under no obligation 
to do so or to continue to do so. Your FDIC-supervised insured 
depository institution may offer different prices to different customers 
at any point in time on its own terms. The terms of your account 
agreement alone govern the obligations your FDIC-supervised insured 
depository institution has to you to offer prices and offer offset or 
liquidating transactions in your account and make any payments to you. 
The prices offered by your FDIC-supervised insured depository 
institution may or may not reflect prices available elsewhere at any 
exchange, interbank, or other market for foreign currency.
    (4) Paid solicitors may have undisclosed conflicts. The FDIC-
supervised insured depository institution may compensate introducing 
brokers for introducing your account in ways that are not disclosed to 
you. Such paid solicitors are not required to have, and may not have, 
any special expertise in trading, and may have conflicts of interest 
based on the method by which they are compensated. You should thoroughly 
investigate the manner in which all such solicitors are compensated and 
be very cautious in granting any person or entity authority to trade on 
your behalf. You should always consider obtaining dated written 
confirmation of any information you are relying on from your FDIC-
supervised insured depository institution in making any trading or 
account decisions.
    (5) Retail forex transactions are not insured by the Federal Deposit 
Insurance Corporation.
    (6) Retail forex transactions are not a deposit in, or guaranteed 
by, an FDIC-supervised insured depository institution.
    (7) Retail forex transactions are subject to investment risks, 
including possible loss of all amounts invested.
    Finally, you should thoroughly investigate any statements by any 
FDIC-supervised insured depository institution that minimize the 
importance of, or contradict, any of the terms of this risk disclosure. 
These statements may indicate sales fraud.
    This brief statement cannot, of course, disclose all the risks and 
other aspects of trading off-exchange foreign currency with an FDIC-
supervised insured depository institution.
    I hereby acknowledge that I have received and understood this risk 
disclosure statement.
________________________________________________________________________
Date

________________________________________________________________________
Signature of Customer

    (e)(1) Disclosure of profitable accounts ratio. Immediately 
following the language set forth in paragraph (d) of this section, the 
statement required by paragraph (a) of this section shall include, for 
each of the most recent four calendar quarters during which the FDIC-
supervised insured depository institution maintained retail forex 
customer accounts:
    (i) The total number of retail forex customer accounts maintained by 
the FDIC-supervised insured depository institution over which the FDIC-
supervised insured depository institution does not exercise investment 
discretion;
    (ii) The percentage of such accounts that were profitable for retail 
forex customer accounts during the quarter; and
    (iii) The percentage of such accounts that were not profitable for 
retail forex customer accounts during the quarter.
    (2) The FDIC-supervised insured depository institution's statement 
of profitable trades shall include the following legend: ``Past 
performance is not necessarily indicative of future results.'' Each 
FDIC-supervised insured depository institution shall provide, upon 
request, to any retail forex customer or prospective retail forex 
customer the total number of retail forex accounts maintained by the 
FDIC-supervised insured depository institution for which the FDIC-
supervised insured depository institution does not exercise investment 
discretion, the percentage of such accounts that were profitable, and 
the percentage of such accounts that were not profitable for each 
calendar quarter during the most recent five-year period during which 
the FDIC-supervised insured depository institution maintained such 
accounts.
    (f) Disclosure of fees and other charges. Immediately following the 
language required by paragraph (e) of this section, the statement 
required by paragraph (a) of this section shall include:
    (1) The amount of any fee, charge, commission, or spreads that the 
FDIC-supervised insured depository institution may impose on the retail 
forex customer in connection with a retail

[[Page 61]]

forex account or retail forex transaction;
    (2) An explanation of how the FDIC-supervised insured depository 
institution will determine the amount of such fees, charges, 
commissions, or spreads; and
    (3) The circumstances under which the FDIC-supervised insured 
depository institution may impose such fees, charges, commissions, or 
spreads.
    (g) Future disclosure requirements. If, with regard to a retail 
forex customer, the FDIC-supervised insured depository institution 
changes any fee, charge, commission or spreads required to be disclosed 
under paragraph (f) of this section, then the FDIC-supervised insured 
depository institution shall mail or deliver to the retail forex 
customer a notice of the changes at least 15 days prior to the effective 
date of the change.
    (h) Form of disclosure requirements. The disclosures required by 
this section shall be clear and conspicuous and designed to call 
attention to the nature and significance of the information provided.
    (i) Other disclosure requirements unaffected. This section does not 
relieve an FDIC-supervised insured depository institution from any other 
disclosure obligation it may have under applicable law.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.19  Recordkeeping.

    (a) General rule. An FDIC-supervised insured depository institution 
engaging in retail forex transactions shall keep full, complete and 
systematic records, together with all pertinent data and memoranda, 
pertaining to its retail forex business, including:
    (1) Retail forex account records. For each retail forex account:
    (i) The name and address of the person for whom the account is 
carried or introduced and the principal occupation or business of the 
person.
    (ii) The name of any other person guaranteeing the account or 
exercising trading control with respect to the account;
    (iii) The establishment or termination of the account; and
    (iv) A means to identify the person who has solicited and is 
responsible for the account or assign account numbers in such a manner 
as to identify that person.
    (v) The funds in the account, net of any commissions and fees;
    (vi) The account's net profits and losses on open trades;
    (vii) The funds in the account plus or minus the net profits and 
losses on open trades, adjusted for the net option value in the case of 
open options positions;
    (viii) Financial ledger records that show separately for each retail 
forex customer all charges against and credits to such retail forex 
customer's account, including deposits, withdrawals, and transfers, and 
charges or credits resulting from losses or gains on closed 
transactions; and
    (ix) A list of all retail forex transactions executed for the 
account, with the details specified in paragraph (a)(2) of this section;
    (2) Retail forex transaction records. For each retail forex 
transaction:
    (i) The price at which the FDIC-supervised insured depository 
institution placed the order, or, in the case of an option, the premium 
that the retail forex customer paid;
    (ii) The customer account identification information;
    (iii) The currency pair;
    (iv) The size or quantity of the order;
    (v) Whether the order was a buy or sell order;
    (vi) The type of order, if the order was not a market order;
    (vii) The size and price at which the order is executed, or in the 
case of an option, the amount of the premium paid for each option 
purchased, or the amount credited for each option sold;
    (viii) For options, whether the option is a put or call, expiration 
date, quantity, underlying contract for future delivery or underlying 
physical, strike price, and details of the purchase price of the option, 
including premium, mark-up, commission, and fees; and
    (ix) For futures, the delivery date; and
    (x) If the order was made on a trading platform:
    (A) The price quoted on the trading platform when the order was 
placed, or,

[[Page 62]]

in the case of an option, the premium quoted;
    (B) The date and time the order was transmitted to the trading 
platform; and
    (C) The date and time the order was executed;
    (3) Price changes on a trading platform. If a trading platform is 
used, daily logs showing each price change on the platform, the time of 
the change to the nearest second, and the trading volume at that time 
and price;
    (4) Methods or algorithms. Any method or algorithm used to determine 
the bid or asked price for any retail forex transaction or the prices at 
which customer orders are executed, including, but not limited to, any 
markups, fees, commissions or other items which affect the profitability 
or risk of loss of a retail forex customer's transaction;
    (5) Daily records which show for each business day complete details 
of:
    (i) All retail forex transactions that are futures transactions 
executed on that day, including the date, price, quantity, market, 
currency pair, delivery date, and the person for whom such transaction 
was made;
    (ii) All retail forex transactions that are option transactions 
executed on that day, including the date, whether the transaction 
involved a put or call, the expiration date, quantity, currency pair, 
delivery date, strike price, details of the purchase price of the 
option, including premium, mark-up, commission and fees, and the person 
for whom the transaction was made;
    (iii) All other retail forex transactions executed on that day for 
such account, including the date, price, quantity, currency and the 
person for whom such transaction was made; and
    (6) Other records. Written acknowledgements of receipt of the risk 
disclosure statement required by Sec.349.18(b), records required under 
paragraph (b) through (f) of this section, trading cards, signature 
cards, street books, journals, ledgers, payment records, copies of 
statements of purchase, and all other records, data and memoranda that 
have been prepared in the course of the FDIC-supervised insured 
depository institution's retail forex business.
    (b) Ratio of profitable accounts. (1) With respect to its active 
retail forex customer accounts over which it did not exercise investment 
discretion and that are not retail forex proprietary accounts open for 
any period of time during the quarter, an FDIC-supervised insured 
depository institution shall prepare and maintain on a quarterly basis 
(calendar quarter):
    (i) A calculation of the percentage of such accounts that were 
profitable;
    (ii) A calculation of the percentage of such accounts that were not 
profitable; and
    (iii) Data supporting the calculations described in paragraphs 
(b)(1)(i) and (b)(1)(ii) of this section.
    (2) In calculating whether a retail forex account was profitable or 
not profitable during the quarter, the FDIC-supervised insured 
depository institution shall compute the realized and unrealized gains 
or losses on all retail forex transactions carried in the retail forex 
account at any time during the quarter, and subtract all fees, 
commissions, and any other charges posted to the retail forex account 
during the quarter, and add any interest income and other income or 
rebates credited to the retail forex account during the quarter. All 
deposits and withdrawals of funds made by the retail forex customer 
during the quarter must be excluded from the computation of whether the 
retail forex account was profitable or not profitable during the 
quarter. Computations that result in a zero or negative number shall be 
considered a retail forex account that was not profitable. Computations 
that result in a positive number shall be considered a retail forex 
account that was profitable.
    (3) A retail forex account shall be considered ``active'' for 
purposes of paragraph (b)(1) of this section if and only if, for the 
relevant calendar quarter, a retail forex transaction was executed in 
that account or the retail forex account contained an open position 
resulting from a retail forex transaction.
    (c) Records related to possible violations of law. An FDIC-
supervised insured depository institution engaging in retail forex 
transactions shall make a record of all communications, including 
customer complaints, received by the

[[Page 63]]

FDIC-supervised insured depository institution or its IAPs concerning 
facts giving rise to possible violations of law related to the FDIC-
supervised insured depository institution's retail forex business. The 
record shall contain: the name of the complainant, if provided; the date 
of the communication; the relevant agreement, contract, or transaction; 
the substance of the communication; the name of the person who received 
the communication, and the final disposition of the matter.
    (d) Records for noncash margin. An FDIC-supervised insured 
depository institution shall maintain a record of all noncash margin 
collected pursuant to Sec.349.21. The record shall show separately for 
each retail forex customer:
    (1) A description of the securities or property received;
    (2) The name and address of such retail forex customer;
    (3) The dates when the securities or property were received;
    (4) The identity of the depositories or other places where such 
securities or property are segregated or held, if applicable;
    (5) The dates in which the FDIC-supervised insured depository 
institution placed or removed such securities or property into or from 
such depositories; and
    (6) The dates of return of such securities or property to such 
retail forex customer, or other disposition thereof, together with the 
facts and circumstances of such other disposition.
    (e) Order Tickets. (1) Except as provided in paragraph (e)(2) of 
this section, immediately upon the receipt of a retail forex transaction 
order, an FDIC-supervised insured depository institution must prepare an 
order ticket for the order (whether unfulfilled, executed, or canceled). 
The order ticket must include:
    (i) Account identification (account or customer name with which the 
retail forex transaction was effected);
    (ii) Order number;
    (iii) Type of order (market order, limit order, or subject to 
special instructions);
    (iv) Date and time, to the nearest minute, the retail forex 
transaction order was received (as evidenced by timestamp or other 
timing device);
    (v) Time, to the nearest minute, the retail forex transaction order 
was executed; and
    (vi) Price at which the retail forex transaction was executed.
    (2) Post-execution allocation of bunched orders. Specific 
identifiers for retail forex accounts included in bunched orders need 
not be recorded at time of order placement or upon report of execution 
as required under paragraph (e)(1) of this section if the following 
requirements are met:
    (i) The FDIC-supervised insured depository institution placing and 
directing the allocation of an order eligible for post-execution 
allocation has been granted written investment discretion with regard to 
participating customer accounts and makes the following information 
available to retail forex customers upon request:
    (A) The general nature of the post-execution allocation methodology 
the FDIC-supervised insured depository institution will use;
    (B) Whether the FDIC-supervised insured depository institution has 
any interest in accounts which may be included with customer accounts in 
bunched orders eligible for post-execution allocation; and
    (C) Summary or composite data sufficient for that customer to 
compare its results with those of other comparable customers and, if 
applicable, any account in which the FDIC-supervised insured depository 
institution has an interest.
    (ii) Post-execution allocations are made as soon as practicable 
after the entire transaction is executed;
    (iii) Post-execution allocations are fair and equitable, with no 
account or group of accounts receiving consistently favorable or 
unfavorable treatment; and
    (iv) The post-execution allocation methodology is sufficiently 
objective and specific to permit the FDIC to verify the fairness of the 
allocations using that methodology.
    (f) Record of monthly statements and confirmations. An FDIC-
supervised insured depository institution shall retain a copy of each 
monthly statement and confirmation required by Sec.349.22.
    (g) Manner of maintenance. The records required by this section must

[[Page 64]]

clearly and accurately reflect the information required and provide an 
adequate basis for the audit of the information. Record maintenance may 
include the use of automated or electronic records provided that the 
records are easily retrievable, readily available for inspection, and 
capable of being reproduced in hard copy.
    (h) Length of maintenance. An FDIC-supervised insured depository 
institution shall keep each record required by this section for at least 
five years from the date the record is created.

[76 FR 40789, July 12, 2011. Redesignated and amended at 80 FR 74912, 
Nov. 30, 2015]



Sec.349.20  Capital requirements.

    An FDIC-supervised insured depository institution offering or 
entering into retail forex transactions must be well capitalized as 
defined by 12 CFR part 324, unless specifically exempted by the FDIC in 
writing.

[83 FR 17741, Apr. 24, 2018]



Sec.349.21  Margin requirements.

    (a) Margin required. An FDIC-supervised insured depository 
institution engaging, or offering to engage, in retail forex 
transactions must collect from each retail forex customer an amount of 
margin not less than:
    (1) Two percent of the notional value of the retail forex 
transaction for major currency pairs and 5 percent of the notional value 
of the retail forex transaction for all other currency pairs;
    (2) For short options, 2 percent for major currency pairs and 5 
percent for all other currency pairs of the notional value of the retail 
forex transaction, plus the premium received by the retail forex 
customer; or
    (3) For long options, the full premium charged and received by the 
FDIC-supervised insured depository institution.
    (b)(1) Form of margin. Margin collected under paragraph (a) of this 
section or pledged by a retail forex customer for retail forex 
transactions in excess of the requirements of paragraph (a) of this 
section must be in the form of cash or the following financial 
instruments:
    (i) Obligations of the United States and obligations fully 
guaranteed as to principal and interest by the United States;
    (ii) General obligations of any State or of any political 
subdivision thereof;
    (iii) General obligations issued or guaranteed by any enterprise, as 
defined in 12 U.S.C. 4502(10);
    (iv) Certificates of deposit issued by an insured depository 
institution, as defined in Sec.3(c)(2) of the Federal Deposit 
Insurance Act (12 U.S.C. 1813(c)(2));
    (v) Commercial paper;
    (vi) Corporate notes or bonds;
    (vii) General obligations of a sovereign nation;
    (viii) Interests in money market mutual funds; and
    (ix) Such other financial instruments as the FDIC deems appropriate.
    (2) Haircuts. An FDIC-supervised insured depository institution 
shall establish written policies and procedures that include:
    (i) Haircuts for noncash margin collected under this section; and
    (ii) Annual evaluation, and, if appropriate, modification of the 
haircuts.
    (c) Separate margin account. Margin collected by the FDIC-supervised 
insured depository institution from a retail forex customer for retail 
forex transactions or pledged by a retail forex customer for retail 
forex transactions shall be placed into a separate account containing 
only such margin.
    (d) Margin calls; liquidation of position. For each retail forex 
customer, at least once per day, an FDIC-supervised insured depository 
institution shall:
    (1) Mark the value of the retail forex customer's open retail forex 
positions to market;
    (2) Mark the value of the margin collected under this section from 
the retail forex customer to market;
    (3) Determine if, based on the marks in paragraphs (c)(1) and (2) of 
this section, the FDIC-supervised insured depository institution has 
collected margin from the retail forex customer sufficient to satisfy 
the requirements of this section; and
    (4) Collect such margin from the retail forex customer as the FDIC-
supervised insured depository institution

[[Page 65]]

may require to satisfy the requirements of this section, or liquidate 
the retail forex customer's retail forex transactions.
    (e) Set-off prohibited. An FDIC-supervised insured depository 
institution may not:
    (1) Apply a retail forex customer's retail forex obligations against 
any funds or other asset of the retail forex customer other than margin 
in the separate margin account described in paragraph (c) of this 
section;
    (2) Apply a retail forex customer's retail forex obligations to 
increase the amount owed by the retail forex customer to the FDIC-
supervised insured depository institution under any loan; or
    (3) Collect the margin required under this section by use of any 
right of set-off.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.22  Required reporting to customers.

    (a) Monthly statements. Each FDIC-supervised insured depository 
institution must promptly furnish to each retail forex customer, as of 
the close of the last business day of each month or as of any regular 
monthly date selected, except for accounts in which there are neither 
open positions at the end of the statement period nor any changes to the 
account balance since the prior statement period, but in any event not 
less frequently than once every three months, a statement that clearly 
shows:
    (1) For each retail forex customer:
    (i) The open retail forex transactions with prices at which 
acquired;
    (ii) The net unrealized profits or losses in all open retail forex 
transactions marked to the market;
    (iii) Any money, securities or other property in the separate margin 
account required by Sec.349.21(c); and
    (iv) A detailed accounting of all financial charges and credits to 
the retail forex customer's retail forex accounts during the monthly 
reporting period, including: money, securities, or property received 
from or disbursed to such customer; realized profits and losses; and 
fees, charges, commissions, and spreads.
    (2) For each retail forex customer engaging in retail forex 
transactions that are options:
    (i) All such options purchased, sold, exercised, or expired during 
the monthly reporting period, identified by underlying retail forex 
transaction or underlying currency, strike price, transaction date, and 
expiration date;
    (ii) The open option positions carried for such customer and arising 
as of the end of the monthly reporting period, identified by underlying 
retail forex transaction or underlying currency, strike price, 
transaction date, and expiration date;
    (iii) All such option positions marked to the market and the amount 
each position is in the money, if any;
    (iv) Any money, securities or other property in the separate margin 
account required by Sec.349.21(c); and
    (v) A detailed accounting of all financial charges and credits to 
the retail forex customer's retail forex accounts during the monthly 
reporting period, including: money, securities, or property received 
from or disbursed to such customer; realized profits and losses; 
premiums and mark-ups; and fees, charges, and commissions.
    (b) Confirmation statement. Each FDIC-supervised insured depository 
institution must, not later than the next business day after any retail 
forex transaction, send:
    (1) To each retail forex customer, a written confirmation of each 
retail forex transaction caused to be executed by it for the customer, 
including offsetting transactions executed during the same business day 
and the rollover of an open retail forex transaction to the next 
business day;
    (2) To each retail forex customer engaging in forex option 
transactions, a written confirmation of each forex option transaction, 
containing at least the following information:
    (i) The retail forex customer's account identification number;
    (ii) A separate listing of the actual amount of the premium, as well 
as each mark-up thereon, if applicable, and all other commissions, 
costs, fees and other charges incurred in connection with the forex 
option transaction;
    (iii) The strike price;

[[Page 66]]

    (iv) The underlying retail forex transaction or underlying currency;
    (v) The final exercise date of the forex option purchased or sold; 
and
    (vi) The date the forex option transaction was executed.
    (3) To each retail forex customer engaging in forex option 
transactions, upon the expiration or exercise of any option, a written 
confirmation statement thereof, which statement shall include the date 
of such occurrence, a description of the option involved, and, in the 
case of exercise, the details of the retail forex or physical currency 
position which resulted therefrom including, if applicable, the final 
trading date of the retail forex transaction underlying the option.
    (c) Notwithstanding the provisions of paragraphs (b)(1) through (3) 
of this section, a retail forex transaction that is caused to be 
executed for a pooled investment vehicle that engages in retail forex 
transactions need be confirmed only to the operator of such pooled 
investment vehicle.
    (d) Controlled accounts. With respect to any account controlled by 
any person other than the retail forex customer for whom such account is 
carried, each FDIC-supervised insured depository institution shall 
promptly furnish in writing to such other person the information 
required by paragraphs (a) and (b) of this section.
    (e) Introduced accounts. Each statement provided pursuant to the 
provisions of this section must, if applicable, show that the account 
for which the FDIC-supervised insured depository institution was 
introduced by an introducing broker and the name of the introducing 
broker.

[76 FR 40789, July 12, 2011. Redesignated and amended at 80 FR 74912, 
Nov. 30, 2015]



Sec.349.23  Unlawful representations.

    (a) No implication or representation of limiting losses. No FDIC-
supervised insured depository institution engaged in retail foreign 
exchange transactions or its IAPs may imply or represent that it will, 
with respect to any retail customer forex account, for or on behalf of 
any person:
    (1) Guarantee such person or account against loss;
    (2) Limit the loss of such person or account; or
    (3) Not call for or attempt to collect margin as established for 
retail forex customers.
    (b) No implication of representation of engaging in prohibited acts. 
No FDIC-supervised insured depository institution or its IAPs may in any 
way imply or represent that it will engage in any of the acts or 
practices described in paragraph (a) of this section.
    (c) No Federal government endorsement. No FDIC-supervised insured 
depository institution or its IAPs may represent or imply in any manner 
whatsoever that any retail forex transaction or retail forex product has 
been sponsored, recommended, or approved by the FDIC, the Federal 
government, or any agency thereof.
    (d) Assuming or sharing of liability from bank error. This section 
shall not be construed to prevent an FDIC-supervised insured depository 
institution from assuming or sharing in the losses resulting from the 
FDIC-supervised insured depository institution's error or mishandling of 
a retail forex transaction.
    (e) Certain guaranties unaffected. This section shall not affect any 
guarantee entered into prior to the effective date of this part, but 
this section shall apply to any extension, modification or renewal 
thereof entered into after such date.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.24  Authorization to trade.

    (a) Specific authorization required. No FDIC-supervised insured 
depository institution may directly or indirectly effect a retail forex 
transaction for the account of any retail forex customer unless, before 
the transaction occurs, the retail forex customer specifically 
authorized the FDIC-supervised insured depository institution to effect 
the retail forex transaction.
    (b) Requirements for specific authorization. A retail forex 
transaction is ``specifically authorized'' for purposes of this section 
if the retail forex customer specifies:
    (1) The precise retail forex transaction to be effected;

[[Page 67]]

    (2) The exact amount of the foreign currency to be purchased or 
sold; and
    (3) In the case of an option, the identity of the foreign currency 
or contract that underlies the option.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.25  Trading and operational standards.

    (a) Internal rules, procedures, and controls required. An FDIC-
supervised insured depository institution engaging in retail forex 
transactions shall establish and implement internal policies, 
procedures, and controls designed, at a minimum, to:
    (1) Ensure, to the extent reasonable, that each order received from 
a retail forex transaction that is executable at or near the price that 
the FDIC-supervised insured depository institution has quoted to the 
retail forex customer is entered for execution before any order in any 
retail forex transaction for
    (i) A any proprietary account;
    (ii) An account in which a related person has an interest, or any 
account for which such a related person may originate orders without the 
prior specific consent of the account owner if the related person has 
gained knowledge of the retail forex customer's order prior to the 
transmission of an order for a proprietary account;
    (iii) an account in which such a related person has an interest, if 
the related person has gained knowledge of the retail forex customer's 
order prior to the transmission of an order for a proprietary account; 
or
    (iv) an account in which such a related person may originate orders 
without the prior specific consent of the account owner if the related 
person has gained knowledge of the retail forex customer's order prior 
to the transmission of an order for a proprietary account.
    (2) Prevent FDIC-supervised insured depository institution related 
persons from placing orders, directly or indirectly, with another person 
in a manner designed to circumvent the provisions of paragraph (a)(1) of 
this section;
    (3) Fairly and objectively establish settlement prices for retail 
forex transactions; and
    (b) Disclosure of retail forex transactions. No FDIC-supervised 
insured depository institution engaging in retail forex transactions may 
disclose that an order of another person is being held by the FDIC-
supervised insured depository institution, unless the disclosure is 
necessary to the effective execution of such order or the disclosure is 
made at the request of the FDIC.
    (c) Handling of retail forex accounts of related persons of retail 
forex counterparties. No FDIC-supervised insured depository institution 
engaging in retail forex transactions may knowingly handle the retail 
forex account of an employee of another retail forex counterparty's 
retail forex business unless the FDIC-supervised insured depository 
institution:
    (1) Receives written authorization from a person designated by the 
other retail forex counterparty with responsibility for the surveillance 
over the account pursuant to paragraph (a)(2) of this section;
    (2) Prepares immediately upon receipt of an order for the account a 
written record of the order, including the account identification and 
order number, and records thereon to the nearest minute, by time-stamp 
or other timing device, the date and time the order is received; and
    (3) Transmits on a regular basis to the other retail forex 
counterparty copies of all statements for the account and of all written 
records prepared upon the receipt of orders for such account pursuant to 
paragraph (a)(2) of this section.
    (d) Related person of FDIC-supervised insured depository institution 
establishing account at another retail forex counterparty. No related 
person of an FDIC-supervised insured depository institution working in 
the institution's retail forex business may have an account, directly or 
indirectly, with another retail forex counterparty unless the other 
retail forex counterparty:
    (1) Receives written authorization to open and maintain the an 
account from a person designated by the FDIC-supervised insured 
depository institution of which it is a related person with 
responsibility for the surveillance over the account pursuant to 
paragraph (a)(2) of this section; and

[[Page 68]]

    (2) Transmits on a regular basis to the FDIC-supervised insured 
depository institution copies of all statements for such account and of 
all written records prepared by the other retail forex counterparty upon 
receipt of orders for the account pursuant to paragraph (c)(2) of this 
section are transmitted on a regular basis to the retail forex 
counterparty of which it is a related person.
    (e) Prohibited trading practices. No FDIC-supervised insured 
depository institution engaging in retail forex transactions may:
    (1) Enter into a retail forex transaction, to be executed pursuant 
to a market or limit order at a price that is not at or near the price 
at which other retail forex customers, during that same time period, 
have executed retail forex transactions with the FDIC-supervised insured 
depository institution;
    (2) Adjust or alter prices for a retail forex transaction after the 
transaction has been confirmed to the retail forex customer;
    (3) Provide a retail forex customer a new bid price for a retail 
forex transaction that is higher than its previous bid without providing 
a new asked price that is also higher than its previous asked price by a 
similar amount;
    (4) Provide a retail forex customer a new bid price for a retail 
forex transaction that is lower than its previous bid without providing 
a new asked price that is also lower than its previous asked price by a 
similar amount; or
    (5) Establish a new position for a retail forex customer (except one 
that offsets an existing position for that retail forex customer) where 
the FDIC-supervised insured depository institution holds outstanding 
orders of other retail forex customers for the same currency pair at a 
comparable price.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.26  Supervision.

    (a) Supervision by the FDIC-supervised insured depository 
institution. An FDIC-supervised insured depository institution engaging 
in retail forex transactions shall diligently supervise the handling by 
its officers, employees, and agents (or persons occupying a similar 
status or performing a similar function) of all retail forex accounts 
carried, operated, or advised by at the FDIC-supervised insured 
depository institution and all activities of its officers, employees, 
and agents (or persons occupying a similar status or performing a 
similar function) relating to its retail forex business.
    (b) Supervision by officers, employees, or agents. An officer, 
employee, or agent of an FDIC-supervised insured depository institution 
must diligently supervise his or her subordinates' handling of all 
retail forex accounts at the FDIC-supervised insured depository 
institution and all the subordinates' activities relating to the FDIC-
supervised insured depository institution's retail forex business.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.27  Notice of transfers.

    (a) Prior notice generally required. Except as provided in paragraph 
(b) of this section, an FDIC-supervised insured depository institution 
must provide a retail forex customer with 30 days' prior notice of any 
assignment of any position or transfer of any account of the retail 
forex customer. The notice must include a statement that the retail 
forex customer is not required to accept the proposed assignment or 
transfer and may direct the FDIC-supervised insured depository 
institution to liquidate the positions of the retail forex customer or 
transfer the account to a retail forex counterparty of the retail forex 
customer's selection.
    (b) Exceptions. The requirements of paragraph (a) of this section 
shall not apply to transfers:
    (1) Requested by the retail forex customer;
    (2) Made by the Federal Deposit Insurance Corporation as receiver or 
conservator under the Federal Deposit Insurance Act; or
    (3) Otherwise authorized by applicable law.
    (c) Obligations of transferee FDIC-supervised insured depository 
institution. An FDIC-supervised insured depository institution to which 
retail forex accounts or positions are assigned or transferred under 
paragraph (a) of this

[[Page 69]]

section must provide to the affected retail forex customers the risk 
disclosure statements and forms of acknowledgment required by this part 
and receive the required signed acknowledgments within sixty days of 
such assignments or transfers. This requirement shall not apply if the 
FDIC-supervised insured depository institution has clear written 
evidence that the retail forex customer has received and acknowledged 
receipt of the required disclosure statements.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



Sec.349.28  Customer dispute resolution.

    (a) Voluntary submission of claims to dispute or settlement 
procedures. No FDIC-supervised insured depository institution may enter 
into any agreement or understanding with a retail forex customer in 
which the customer agrees, prior to the time a claim or grievance 
arises, to submit such claim or grievance to any settlement procedure.
    (b) Election of forum. (1) Within ten business days after receipt of 
notice from the retail forex customer that the customer intends to 
submit a claim to arbitration, the FDIC-supervised insured depository 
institution must provide the customer with a list of persons qualified 
in dispute resolution.
    (2) The customer shall, within 45 days after receipt of such list, 
notify the FDIC-supervised insured depository institution of the person 
selected. The customer's failure to provide such notice shall give the 
FDIC-supervised insured depository institution the right to select a 
person from the list.
    (c) Enforceability. A dispute settlement procedure may require 
parties using such procedure to agree, under applicable state law, 
submission agreement or otherwise, to be bound by an award rendered in 
the procedure, provided that the agreement to submit the claim or 
grievance to the voluntary procedure under paragraph (a) of this section 
or that agreement to submit the claim or grievance was made after the 
claim or grievance arose. Any award so rendered shall be enforceable in 
accordance with applicable law.
    (d) Time limits for submission of claims. The dispute settlement 
procedure used by the parties shall not include any unreasonably short 
limitation period foreclosing submission of a customer's claims or 
grievances or counterclaims.
    (e) Counterclaims. A procedure for the settlement of a retail forex 
customer's claims or grievances against an FDIC-supervised insured 
depository institution or employee thereof may permit the submission of 
a counterclaim in the procedure by a person against whom a claim or 
grievance is brought. Such a counterclaim may be permitted where it 
arises out of the transaction or occurrence that is the subject of the 
customer's claim or grievance and does not require for adjudication the 
presence of essential witnesses, parties, or third persons over which 
the settlement process lacks jurisdiction.

[76 FR 40789, July 12, 2011. Redesignated at 80 FR 74912, Nov. 30, 2015]



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

[[Page 70]]

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
    (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);

[[Page 71]]

    (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 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.

[[Page 72]]

    (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_PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND 
RELATIONSHIPS WITH COVERED FUNDS--Table of Contents



                   Subpart A_Authority and Definitions

Sec.
351.1 Authority, purpose, scope, and relationship to other authorities.
351.2 Definitions.

                      Subpart B_Proprietary Trading

351.3 Prohibition on proprietary trading.
351.4 Permitted underwriting and market making-related activities.
351.5 Permitted risk-mitigating hedging activities.
351.6 Other permitted proprietary trading activities.
351.7 Limitations on permitted proprietary trading activities.
351.8-351.9 [Reserved]

            Subpart C_Covered Fund Activities and Investments

351.10 Prohibition on acquiring or retaining an ownership interest in 
          and having certain relationships with a covered fund.
351.11 Permitted organizing and offering, underwriting, and market 
          making with respect to a covered fund.
351.12 Permitted investment in a covered fund.
351.13 Other permitted covered fund activities and investments.
351.14 Limitations on relationships with a covered fund.
351.15 Other limitations on permitted covered fund activities and 
          investments.
351.16 Ownership of interests in and sponsorship of issuers of certain 
          collateralized debt obligations backed by trust-preferred 
          securities.
351.17-351.19 [Reserved]

          Subpart D_Compliance Program Requirement; Violations

351.20 Program for compliance; reporting.
351.21 Termination of activities or investments; penalties for 
          violations.

Appendix A to Part 351--Reporting and Recordkeeping Requirements for 
          Covered Trading Activities
Appendix B to Part 351--Enhanced Minimum Standards for Compliance 
          Programs

    Authority: 12 U.S.C. 1851; 1811 et seq.; 3101 et seq.; and 5412.

    Source: 79 FR 5805, Jan. 31, 2014, unless otherwise noted.



                   Subpart A_Authority and Definitions



Sec.351.1  Authority, purpose, scope, and relationship to other 
authorities.

    (a) Authority. This part is issued by the FDIC under section 13 of 
the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1851).
    (b) Purpose. Section 13 of the Bank Holding Company Act establishes 
prohibitions and restrictions on proprietary trading and investments in 
or relationships with covered funds by certain banking entities, 
including any insured depository institution as defined in section 
3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2)) and 
certain subsidiaries thereof for which the FDIC is the appropriate 
Federal banking agency as defined in section 3(q) of the Federal Deposit 
Insurance

[[Page 73]]

Act (12 U.S.C. 1813(q)). This part implements section 13 of the Bank 
Holding Company Act by defining terms used in the statute and related 
terms, establishing prohibitions and restrictions on proprietary trading 
and investments in or relationships with covered funds, and explaining 
the statute's requirements.
    (c) Scope. This part implements section 13 of the Bank Holding 
Company Act with respect to insured depository institutions for which 
the FDIC is the appropriate Federal banking agency, as defined in 
section 3(q) of the Federal Deposit Insurance Act, and certain 
subsidiaries of the foregoing.
    (d) Relationship to other authorities. Except as otherwise provided 
in under section 13 of the Bank Holding Company Act, and notwithstanding 
any other provision of law, the prohibitions and restrictions under 
section 13 of Bank Holding Company Act shall apply to the activities and 
investments of a banking entity, even if such activities and investments 
are authorized for a banking entity under other applicable provisions of 
law.
    (e) Preservation of authority. Nothing in this part limits in any 
way the authority of the FDIC to impose on a banking entity identified 
in paragraph (c) of this section additional requirements or restrictions 
with respect to any activity, investment, or relationship covered under 
section 13 of the Bank Holding Company Act or this part, or additional 
penalties for violation of this part provided under any other applicable 
provision of law.

[79 FR 5805, Jan. 31, 2014]



Sec.351.2  Definitions.

    Unless otherwise specified, for purposes of this part:
    (a) Affiliate has the same meaning as in section 2(k) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841(k)).
    (b) Bank holding company has the same meaning as in section 2 of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841).
    (c) Banking entity. (1) Except as provided in paragraph (c)(2) of 
this section, banking entity means:
    (i) Any insured depository institution;
    (ii) Any company that controls an insured depository institution;
    (iii) Any company that is treated as a bank holding company for 
purposes of section 8 of the International Banking Act of 1978 (12 
U.S.C. 3106); and
    (iv) Any affiliate or subsidiary of any entity described in 
paragraphs (c)(1)(i), (ii), or (iii) of this section.
    (2) Banking entity does not include:
    (i) A covered fund that is not itself a banking entity under 
paragraphs (c)(1)(i), (ii), or (iii) of this section;
    (ii) A portfolio company held under the authority contained in 
section 4(k)(4)(H) or (I) of the BHC Act (12 U.S.C. 1843(k)(4)(H), (I)), 
or any portfolio concern, as defined under 13 CFR 107.50, that is 
controlled by a small business investment company, as defined in section 
103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), so 
long as the portfolio company or portfolio concern is not itself a 
banking entity under paragraphs (c)(1)(i), (ii), or (iii) of this 
section; or
    (iii) The FDIC acting in its corporate capacity or as conservator or 
receiver under the Federal Deposit Insurance Act or Title II of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act.
    (d) Board means the Board of Governors of the Federal Reserve 
System.
    (e) CFTC means the Commodity Futures Trading Commission.
    (f) Dealer has the same meaning as in section 3(a)(5) of the 
Exchange Act (15 U.S.C. 78c(a)(5)).
    (g) Depository institution has the same meaning as in section 3(c) 
of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)).
    (h) Derivative. (1) Except as provided in paragraph (h)(2) of this 
section, derivative means:
    (i) Any swap, as that term is defined in section 1a(47) of the 
Commodity Exchange Act (7 U.S.C. 1a(47)), or security-based swap, as 
that term is defined in section 3(a)(68) of the Exchange Act (15 U.S.C. 
78c(a)(68));
    (ii) Any purchase or sale of a commodity, that is not an excluded 
commodity, for deferred shipment or delivery that is intended to be 
physically settled;

[[Page 74]]

    (iii) Any foreign exchange forward (as that term is defined in 
section 1a(24) of the Commodity Exchange Act (7 U.S.C. 1a(24)) or 
foreign exchange swap (as that term is defined in section 1a(25) of the 
Commodity Exchange Act (7 U.S.C. 1a(25));
    (iv) Any agreement, contract, or transaction in foreign currency 
described in section 2(c)(2)(C)(i) of the Commodity Exchange Act (7 
U.S.C. 2(c)(2)(C)(i));
    (v) Any agreement, contract, or transaction in a commodity other 
than foreign currency described in section 2(c)(2)(D)(i) of the 
Commodity Exchange Act (7 U.S.C. 2(c)(2)(D)(i)); and
    (vi) Any transaction authorized under section 19 of the Commodity 
Exchange Act (7 U.S.C. 23(a) or (b));
    (2) A derivative does not include:
    (i) Any consumer, commercial, or other agreement, contract, or 
transaction that the CFTC and SEC have further defined by joint 
regulation, interpretation, guidance, or other action as not within the 
definition of swap, as that term is defined in section 1a(47) of the 
Commodity Exchange Act (7 U.S.C. 1a(47)), or security-based swap, as 
that term is defined in section 3(a)(68) of the Exchange Act (15 U.S.C. 
78c(a)(68)); or
    (ii) Any identified banking product, as defined in section 402(b) of 
the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27(b)), that 
is subject to section 403(a) of that Act (7 U.S.C. 27a(a)).
    (i) Employee includes a member of the immediate family of the 
employee.
    (j) Exchange Act means the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.).
    (k) Excluded commodity has the same meaning as in section 1a(19) of 
the Commodity Exchange Act (7 U.S.C. 1a(19)).
    (l) FDIC means the Federal Deposit Insurance Corporation.
    (m) Federal banking agencies means the Board, the Office of the 
Comptroller of the Currency, and the FDIC.
    (n) Foreign banking organization has the same meaning as in section 
211.21(o) of the Board's Regulation K (12 CFR 211.21(o)), but does not 
include a foreign bank, as defined in section 1(b)(7) of the 
International Banking Act of 1978 (12 U.S.C. 3101(7)), that is organized 
under the laws of the Commonwealth of Puerto Rico, Guam, American Samoa, 
the United States Virgin Islands, or the Commonwealth of the Northern 
Mariana Islands.
    (o) Foreign insurance regulator means the insurance commissioner, or 
a similar official or agency, of any country other than the United 
States that is engaged in the supervision of insurance companies under 
foreign insurance law.
    (p) General account means all of the assets of an insurance company 
except those allocated to one or more separate accounts.
    (q) Insurance company means a company that is organized as an 
insurance company, primarily and predominantly engaged in writing 
insurance or reinsuring risks underwritten by insurance companies, 
subject to supervision as such by a state insurance regulator or a 
foreign insurance regulator, and not operated for the purpose of evading 
the provisions of section 13 of the BHC Act (12 U.S.C. 1851).
    (r) Insured depository institution has the same meaning as in 
section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)), 
but does not include an insured depository institution that is described 
in section 2(c)(2)(D) of the BHC Act (12 U.S.C. 1841(c)(2)(D)).
    (s) Loan means any loan, lease, extension of credit, or secured or 
unsecured receivable that is not a security or derivative.
    (t) Primary financial regulatory agency has the same meaning as in 
section 2(12) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5301(12)).
    (u) Purchase includes any contract to buy, purchase, or otherwise 
acquire. For security futures products, purchase includes any contract, 
agreement, or transaction for future delivery. With respect to a 
commodity future, purchase includes any contract, agreement, or 
transaction for future delivery. With respect to a derivative, purchase 
includes the execution, termination (prior to its scheduled maturity 
date), assignment, exchange, or similar transfer or conveyance of, or 
extinguishing of rights or obligations under, a derivative, as the 
context may require.

[[Page 75]]

    (v) Qualifying foreign banking organization means a foreign banking 
organization that qualifies as such under section 211.23(a), (c) or (e) 
of the Board's Regulation K (12 CFR 211.23(a), (c), or (e)).
    (w) SEC means the Securities and Exchange Commission.
    (x) Sale and sell each include any contract to sell or otherwise 
dispose of. For security futures products, such terms include any 
contract, agreement, or transaction for future delivery. With respect to 
a commodity future, such terms include any contract, agreement, or 
transaction for future delivery. With respect to a derivative, such 
terms include the execution, termination (prior to its scheduled 
maturity date), assignment, exchange, or similar transfer or conveyance 
of, or extinguishing of rights or obligations under, a derivative, as 
the context may require.
    (y) Security has the meaning specified in section 3(a)(10) of the 
Exchange Act (15 U.S.C. 78c(a)(10)).
    (z) Security-based swap dealer has the same meaning as in section 
3(a)(71) of the Exchange Act (15 U.S.C. 78c(a)(71)).
    (aa) Security future has the meaning specified in section 3(a)(55) 
of the Exchange Act (15 U.S.C. 78c(a)(55)).
    (bb) Separate account means an account established and maintained by 
an insurance company in connection with one or more insurance contracts 
to hold assets that are legally segregated from the insurance company's 
other assets, under which income, gains, and losses, whether or not 
realized, from assets allocated to such account, are, in accordance with 
the applicable contract, credited to or charged against such account 
without regard to other income, gains, or losses of the insurance 
company.
    (cc) State means any State, the District of Columbia, the 
Commonwealth of Puerto Rico, Guam, American Samoa, the United States 
Virgin Islands, and the Commonwealth of the Northern Mariana Islands.
    (dd) Subsidiary has the same meaning as in section 2(d) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841(d)).
    (ee) State insurance regulator means the insurance commissioner, or 
a similar official or agency, of a State that is engaged in the 
supervision of insurance companies under State insurance law.
    (ff) Swap dealer has the same meaning as in section 1(a)(49) of the 
Commodity Exchange Act (7 U.S.C. 1a(49)).



                      Subpart B_Proprietary Trading



Sec.351.3  Prohibition on proprietary trading.

    (a) Prohibition. Except as otherwise provided in this subpart, a 
banking entity may not engage in proprietary trading. Proprietary 
trading means engaging as principal for the trading account of the 
banking entity in any purchase or sale of one or more financial 
instruments.
    (b) Definition of trading account. (1) Trading account means any 
account that is used by a banking entity to:
    (i) Purchase or sell one or more financial instruments principally 
for the purpose of:
    (A) Short-term resale;
    (B) Benefitting from actual or expected short-term price movements;
    (C) Realizing short-term arbitrage profits; or
    (D) Hedging one or more positions resulting from the purchases or 
sales of financial instruments described in paragraphs (b)(1)(i)(A), 
(B), or (C) of this section;
    (ii) Purchase or sell one or more financial instruments that are 
both market risk capital rule covered positions and trading positions 
(or hedges of other market risk capital rule covered positions), if the 
banking entity, or any affiliate of the banking entity, is an insured 
depository institution, bank holding company, or savings and loan 
holding company, and calculates risk-based capital ratios under the 
market risk capital rule; or
    (iii) Purchase or sell one or more financial instruments for any 
purpose, if the banking entity:
    (A) Is licensed or registered, or is required to be licensed or 
registered, to engage in the business of a dealer, swap dealer, or 
security-based swap dealer, to the extent the instrument is purchased or 
sold in connection with the activities that require the banking entity 
to be licensed or registered as such; or

[[Page 76]]

    (B) Is engaged in the business of a dealer, swap dealer, or 
security-based swap dealer outside of the United States, to the extent 
the instrument is purchased or sold in connection with the activities of 
such business.
    (2) Rebuttable presumption for certain purchases and sales. The 
purchase (or sale) of a financial instrument by a banking entity shall 
be presumed to be for the trading account of the banking entity under 
paragraph (b)(1)(i) of this section if the banking entity holds the 
financial instrument for fewer than sixty days or substantially 
transfers the risk of the financial instrument within sixty days of the 
purchase (or sale), unless the banking entity can demonstrate, based on 
all relevant facts and circumstances, that the banking entity did not 
purchase (or sell) the financial instrument principally for any of the 
purposes described in paragraph (b)(1)(i) of this section.
    (c) Financial instrument. (1) Financial instrument means:
    (i) A security, including an option on a security;
    (ii) A derivative, including an option on a derivative; or
    (iii) A contract of sale of a commodity for future delivery, or 
option on a contract of sale of a commodity for future delivery.
    (2) A financial instrument does not include:
    (i) A loan;
    (ii) A commodity that is not:
    (A) An excluded commodity (other than foreign exchange or currency);
    (B) A derivative;
    (C) A contract of sale of a commodity for future delivery; or
    (D) An option on a contract of sale of a commodity for future 
delivery; or
    (iii) Foreign exchange or currency.
    (d) Proprietary trading. Proprietary trading does not include:
    (1) Any purchase or sale of one or more financial instruments by a 
banking entity that arises under a repurchase or reverse repurchase 
agreement pursuant to which the banking entity has simultaneously 
agreed, in writing, to both purchase and sell a stated asset, at stated 
prices, and on stated dates or on demand with the same counterparty;
    (2) Any purchase or sale of one or more financial instruments by a 
banking entity that arises under a transaction in which the banking 
entity lends or borrows a security temporarily to or from another party 
pursuant to a written securities lending agreement under which the 
lender retains the economic interests of an owner of such security, and 
has the right to terminate the transaction and to recall the loaned 
security on terms agreed by the parties;
    (3) Any purchase or sale of a security by a banking entity for the 
purpose of liquidity management in accordance with a documented 
liquidity management plan of the banking entity that:
    (i) Specifically contemplates and authorizes the particular 
securities to be used for liquidity management purposes, the amount, 
types, and risks of these securities that are consistent with liquidity 
management, and the liquidity circumstances in which the particular 
securities may or must be used;
    (ii) Requires that any purchase or sale of securities contemplated 
and authorized by the plan be principally for the purpose of managing 
the liquidity of the banking entity, and not for the purpose of short-
term resale, benefitting from actual or expected short-term price 
movements, realizing short-term arbitrage profits, or hedging a position 
taken for such short-term purposes;
    (iii) Requires that any securities purchased or sold for liquidity 
management purposes be highly liquid and limited to securities the 
market, credit, and other risks of which the banking entity does not 
reasonably expect to give rise to appreciable profits or losses as a 
result of short-term price movements;
    (iv) Limits any securities purchased or sold for liquidity 
management purposes, together with any other instruments purchased or 
sold for such purposes, to an amount that is consistent with the banking 
entity's near-term funding needs, including deviations from normal 
operations of the banking entity or any affiliate thereof, as estimated 
and documented pursuant to methods specified in the plan;

[[Page 77]]

    (v) Includes written policies and procedures, internal controls, 
analysis, and independent testing to ensure that the purchase and sale 
of securities that are not permitted under Sec. Sec.351.6(a) or (b) of 
this subpart are for the purpose of liquidity management and in 
accordance with the liquidity management plan described in paragraph 
(d)(3) of this section; and
    (vi) Is consistent with the FDIC's supervisory requirements, 
guidance, and expectations regarding liquidity management;
    (4) Any purchase or sale of one or more financial instruments by a 
banking entity that is a derivatives clearing organization or a clearing 
agency in connection with clearing financial instruments;
    (5) Any excluded clearing activities by a banking entity that is a 
member of a clearing agency, a member of a derivatives clearing 
organization, or a member of a designated financial market utility;
    (6) Any purchase or sale of one or more financial instruments by a 
banking entity, so long as:
    (i) The purchase (or sale) satisfies an existing delivery obligation 
of the banking entity or its customers, including to prevent or close 
out a failure to deliver, in connection with delivery, clearing, or 
settlement activity; or
    (ii) The purchase (or sale) satisfies an obligation of the banking 
entity in connection with a judicial, administrative, self-regulatory 
organization, or arbitration proceeding;
    (7) Any purchase or sale of one or more financial instruments by a 
banking entity that is acting solely as agent, broker, or custodian;
    (8) Any purchase or sale of one or more financial instruments by a 
banking entity through a deferred compensation, stock-bonus, profit-
sharing, or pension plan of the banking entity that is established and 
administered in accordance with the law of the United States or a 
foreign sovereign, if the purchase or sale is made directly or 
indirectly by the banking entity as trustee for the benefit of persons 
who are or were employees of the banking entity; or
    (9) Any purchase or sale of one or more financial instruments by a 
banking entity in the ordinary course of collecting a debt previously 
contracted in good faith, provided that the banking entity divests the 
financial instrument as soon as practicable, and in no event may the 
banking entity retain such instrument for longer than such period 
permitted by the FDIC.
    (e) Definition of other terms related to proprietary trading. For 
purposes of this subpart:
    (1) Anonymous means that each party to a purchase or sale is unaware 
of the identity of the other party(ies) to the purchase or sale.
    (2) Clearing agency has the same meaning as in section 3(a)(23) of 
the Exchange Act (15 U.S.C. 78c(a)(23)).
    (3) Commodity has the same meaning as in section 1a(9) of the 
Commodity Exchange Act (7 U.S.C. 1a(9)), except that a commodity does 
not include any security;
    (4) Contract of sale of a commodity for future delivery means a 
contract of sale (as that term is defined in section 1a(13) of the 
Commodity Exchange Act (7 U.S.C. 1a(13)) for future delivery (as that 
term is defined in section 1a(27) of the Commodity Exchange Act (7 
U.S.C. 1a(27))).
    (5) Derivatives clearing organization means:
    (i) A derivatives clearing organization registered under section 5b 
of the Commodity Exchange Act (7 U.S.C. 7a-1);
    (ii) A derivatives clearing organization that, pursuant to CFTC 
regulation, is exempt from the registration requirements under section 
5b of the Commodity Exchange Act (7 U.S.C. 7a-1); or
    (iii) A foreign derivatives clearing organization that, pursuant to 
CFTC regulation, is permitted to clear for a foreign board of trade that 
is registered with the CFTC.
    (6) Exchange, unless the context otherwise requires, means any 
designated contract market, swap execution facility, or foreign board of 
trade registered with the CFTC, or, for purposes of securities or 
security-based swaps, an exchange, as defined under section 3(a)(1) of 
the Exchange Act (15 U.S.C.

[[Page 78]]

78c(a)(1)), or security-based swap execution facility, as defined under 
section 3(a)(77) of the Exchange Act (15 U.S.C. 78c(a)(77)).
    (7) Excluded clearing activities means:
    (i) With respect to customer transactions cleared on a derivatives 
clearing organization, a clearing agency, or a designated financial 
market utility, any purchase or sale necessary to correct trading errors 
made by or on behalf of a customer provided that such purchase or sale 
is conducted in accordance with, for transactions cleared on a 
derivatives clearing organization, the Commodity Exchange Act, CFTC 
regulations, and the rules or procedures of the derivatives clearing 
organization, or, for transactions cleared on a clearing agency, the 
rules or procedures of the clearing agency, or, for transactions cleared 
on a designated financial market utility that is neither a derivatives 
clearing organization nor a clearing agency, the rules or procedures of 
the designated financial market utility;
    (ii) Any purchase or sale in connection with and related to the 
management of a default or threatened imminent default of a customer 
provided that such purchase or sale is conducted in accordance with, for 
transactions cleared on a derivatives clearing organization, the 
Commodity Exchange Act, CFTC regulations, and the rules or procedures of 
the derivatives clearing organization, or, for transactions cleared on a 
clearing agency, the rules or procedures of the clearing agency, or, for 
transactions cleared on a designated financial market utility that is 
neither a derivatives clearing organization nor a clearing agency, the 
rules or procedures of the designated financial market utility;
    (iii) Any purchase or sale in connection with and related to the 
management of a default or threatened imminent default of a member of a 
clearing agency, a member of a derivatives clearing organization, or a 
member of a designated financial market utility;
    (iv) Any purchase or sale in connection with and related to the 
management of the default or threatened default of a clearing agency, a 
derivatives clearing organization, or a designated financial market 
utility; and
    (v) Any purchase or sale that is required by the rules or procedures 
of a clearing agency, a derivatives clearing organization, or a 
designated financial market utility to mitigate the risk to the clearing 
agency, derivatives clearing organization, or designated financial 
market utility that would result from the clearing by a member of 
security-based swaps that reference the member or an affiliate of the 
member.
    (8) Designated financial market utility has the same meaning as in 
section 803(4) of the Dodd-Frank Act (12 U.S.C. 5462(4)).
    (9) Issuer has the same meaning as in section 2(a)(4) of the 
Securities Act of 1933 (15 U.S.C. 77b(a)(4)).
    (10) Market risk capital rule covered position and trading position 
means a financial instrument that is both a covered position and a 
trading position, as those terms are respectively defined:
    (i) In the case of a banking entity that is a bank holding company, 
savings and loan holding company, or insured depository institution, 
under the market risk capital rule that is applicable to the banking 
entity; and
    (ii) In the case of a banking entity that is affiliated with a bank 
holding company or savings and loan holding company, other than a 
banking entity to which a market risk capital rule is applicable, under 
the market risk capital rule that is applicable to the affiliated bank 
holding company or savings and loan holding company.
    (11) Market risk capital rule means the market risk capital rule 
that is contained in subpart F of 12 CFR part 3, 12 CFR parts 208 and 
225, or 12 CFR part 324, as applicable.
    (12) Municipal security means a security that is a direct obligation 
of or issued by, or an obligation guaranteed as to principal or interest 
by, a State or any political subdivision thereof, or any agency or 
instrumentality of a State or any political subdivision thereof, or any 
municipal corporate instrumentality of one or more States or political 
subdivisions thereof.
    (13) Trading desk means the smallest discrete unit of organization 
of a banking entity that purchases or sells financial instruments for 
the trading account of the banking entity or an affiliate thereof.

[[Page 79]]



Sec.351.4  Permitted underwriting and market making-related 
activities.

    (a) Underwriting activities--(1) Permitted underwriting activities. 
The prohibition contained in Sec.351.3(a) does not apply to a banking 
entity's underwriting activities conducted in accordance with this 
paragraph (a).
    (2) Requirements. The underwriting activities of a banking entity 
are permitted under paragraph (a)(1) of this section only if:
    (i) The banking entity is acting as an underwriter for a 
distribution of securities and the trading desk's underwriting position 
is related to such distribution;
    (ii) The amount and type of the securities in the trading desk's 
underwriting position are designed not to exceed the reasonably expected 
near term demands of clients, customers, or counterparties, and 
reasonable efforts are made to sell or otherwise reduce the underwriting 
position within a reasonable period, taking into account the liquidity, 
maturity, and depth of the market for the relevant type of security;
    (iii) The banking entity has established and implements, maintains, 
and enforces an internal compliance program required by subpart D of 
this part that is reasonably designed to ensure the banking entity's 
compliance with the requirements of paragraph (a) of this section, 
including reasonably designed written policies and procedures, internal 
controls, analysis and independent testing identifying and addressing:
    (A) The products, instruments or exposures each trading desk may 
purchase, sell, or manage as part of its underwriting activities;
    (B) Limits for each trading desk, based on the nature and amount of 
the trading desk's underwriting activities, including the reasonably 
expected near term demands of clients, customers, or counterparties, on 
the:
    (1) Amount, types, and risk of its underwriting position;
    (2) Level of exposures to relevant risk factors arising from its 
underwriting position; and
    (3) Period of time a security may be held;
    (C) Internal controls and ongoing monitoring and analysis of each 
trading desk's compliance with its limits; and
    (D) Authorization procedures, including escalation procedures that 
require review and approval of any trade that would exceed a trading 
desk's limit(s), demonstrable analysis of the basis for any temporary or 
permanent increase to a trading desk's limit(s), and independent review 
of such demonstrable analysis and approval;
    (iv) The compensation arrangements of persons performing the 
activities described in this paragraph (a) are designed not to reward or 
incentivize prohibited proprietary trading; and
    (v) The banking entity is licensed or registered to engage in the 
activity described in this paragraph (a) in accordance with applicable 
law.
    (3) Definition of distribution. For purposes of this paragraph (a), 
a distribution of securities means:
    (i) An offering of securities, whether or not subject to 
registration under the Securities Act of 1933, that is distinguished 
from ordinary trading transactions by the presence of special selling 
efforts and selling methods; or
    (ii) An offering of securities made pursuant to an effective 
registration statement under the Securities Act of 1933.
    (4) Definition of underwriter. For purposes of this paragraph (a), 
underwriter means:
    (i) A person who has agreed with an issuer or selling security 
holder to:
    (A) Purchase securities from the issuer or selling security holder 
for distribution;
    (B) Engage in a distribution of securities for or on behalf of the 
issuer or selling security holder; or
    (C) Manage a distribution of securities for or on behalf of the 
issuer or selling security holder; or
    (ii) A person who has agreed to participate or is participating in a 
distribution of such securities for or on behalf of the issuer or 
selling security holder.
    (5) Definition of selling security holder. For purposes of this 
paragraph (a), selling security holder means any person, other than an 
issuer, on whose behalf a distribution is made.

[[Page 80]]

    (6) Definition of underwriting position. For purposes of this 
paragraph (a), underwriting position means the long or short positions 
in one or more securities held by a banking entity or its affiliate, and 
managed by a particular trading desk, in connection with a particular 
distribution of securities for which such banking entity or affiliate is 
acting as an underwriter.
    (7) Definition of client, customer, and counterparty. For purposes 
of this paragraph (a), the terms client, customer, and counterparty, on 
a collective or individual basis, refer to market participants that may 
transact with the banking entity in connection with a particular 
distribution for which the banking entity is acting as underwriter.
    (b) Market making-related activities--(1) Permitted market making-
related activities. The prohibition contained in Sec.351.3(a) does not 
apply to a banking entity's market making-related activities conducted 
in accordance with this paragraph (b).
    (2) Requirements. The market making-related activities of a banking 
entity are permitted under paragraph (b)(1) of this section only if:
    (i) The trading desk that establishes and manages the financial 
exposure routinely stands ready to purchase and sell one or more types 
of financial instruments related to its financial exposure and is 
willing and available to quote, purchase and sell, or otherwise enter 
into long and short positions in those types of financial instruments 
for its own account, in commercially reasonable amounts and throughout 
market cycles on a basis appropriate for the liquidity, maturity, and 
depth of the market for the relevant types of financial instruments;
    (ii) The amount, types, and risks of the financial instruments in 
the trading desk's market-maker inventory are designed not to exceed, on 
an ongoing basis, the reasonably expected near term demands of clients, 
customers, or counterparties, based on:
    (A) The liquidity, maturity, and depth of the market for the 
relevant types of financial instrument(s); and
    (B) Demonstrable analysis of historical customer demand, current 
inventory of financial instruments, and market and other factors 
regarding the amount, types, and risks, of or associated with financial 
instruments in which the trading desk makes a market, including through 
block trades;
    (iii) The banking entity has established and implements, maintains, 
and enforces an internal compliance program required by subpart D of 
this part that is reasonably designed to ensure the banking entity's 
compliance with the requirements of paragraph (b) of this section, 
including reasonably designed written policies and procedures, internal 
controls, analysis and independent testing identifying and addressing:
    (A) The financial instruments each trading desk stands ready to 
purchase and sell in accordance with paragraph (b)(2)(i) of this 
section;
    (B) The actions the trading desk will take to demonstrably reduce or 
otherwise significantly mitigate promptly the risks of its financial 
exposure consistent with the limits required under paragraph 
(b)(2)(iii)(C) of this section; the products, instruments, and exposures 
each trading desk may use for risk management purposes; the techniques 
and strategies each trading desk may use to manage the risks of its 
market making-related activities and inventory; and the process, 
strategies, and personnel responsible for ensuring that the actions 
taken by the trading desk to mitigate these risks are and continue to be 
effective;
    (C) Limits for each trading desk, based on the nature and amount of 
the trading desk's market making-related activities, that address the 
factors prescribed by paragraph (b)(2)(ii) of this section, on:
    (1) The amount, types, and risks of its market-maker inventory;
    (2) The amount, types, and risks of the products, instruments, and 
exposures the trading desk may use for risk management purposes;
    (3) The level of exposures to relevant risk factors arising from its 
financial exposure; and
    (4) The period of time a financial instrument may be held;
    (D) Internal controls and ongoing monitoring and analysis of each 
trading desk's compliance with its limits; and

[[Page 81]]

    (E) Authorization procedures, including escalation procedures that 
require review and approval of any trade that would exceed a trading 
desk's limit(s), demonstrable analysis that the basis for any temporary 
or permanent increase to a trading desk's limit(s) is consistent with 
the requirements of this paragraph (b), and independent review of such 
demonstrable analysis and approval;
    (iv) To the extent that any limit identified pursuant to paragraph 
(b)(2)(iii)(C) of this section is exceeded, the trading desk takes 
action to bring the trading desk into compliance with the limits as 
promptly as possible after the limit is exceeded;
    (v) The compensation arrangements of persons performing the 
activities described in this paragraph (b) are designed not to reward or 
incentivize prohibited proprietary trading; and
    (vi) The banking entity is licensed or registered to engage in 
activity described in this paragraph (b) in accordance with applicable 
law.
    (3) Definition of client, customer, and counterparty. For purposes 
of paragraph (b) of this section, the terms client, customer, and 
counterparty, on a collective or individual basis refer to market 
participants that make use of the banking entity's market making-related 
services by obtaining such services, responding to quotations, or 
entering into a continuing relationship with respect to such services, 
provided that:
    (i) A trading desk or other organizational unit of another banking 
entity is not a client, customer, or counterparty of the trading desk if 
that other entity has trading assets and liabilities of $50 billion or 
more as measured in accordance with Sec.351.20(d)(1) of subpart D, 
unless:
    (A) The trading desk documents how and why a particular trading desk 
or other organizational unit of the entity should be treated as a 
client, customer, or counterparty of the trading desk for purposes of 
paragraph (b)(2) of this section; or
    (B) The purchase or sale by the trading desk is conducted 
anonymously on an exchange or similar trading facility that permits 
trading on behalf of a broad range of market participants.
    (4) Definition of financial exposure. For purposes of this paragraph 
(b), financial exposure means the aggregate risks of one or more 
financial instruments and any associated loans, commodities, or foreign 
exchange or currency, held by a banking entity or its affiliate and 
managed by a particular trading desk as part of the trading desk's 
market making-related activities.
    (5) Definition of market-maker inventory. For the purposes of this 
paragraph (b), market-maker inventory means all of the positions in the 
financial instruments for which the trading desk stands ready to make a 
market in accordance with paragraph (b)(2)(i) of this section, that are 
managed by the trading desk, including the trading desk's open positions 
or exposures arising from open transactions.



Sec.351.5  Permitted risk-mitigating hedging activities.

    (a) Permitted risk-mitigating hedging activities. The prohibition 
contained in Sec.351.3(a) does not apply to the risk-mitigating 
hedging activities of a banking entity in connection with and related to 
individual or aggregated positions, contracts, or other holdings of the 
banking entity and designed to reduce the specific risks to the banking 
entity in connection with and related to such positions, contracts, or 
other holdings.
    (b) Requirements. The risk-mitigating hedging activities of a 
banking entity are permitted under paragraph (a) of this section only 
if:
    (1) The banking entity has established and implements, maintains and 
enforces an internal compliance program required by subpart D of this 
part that is reasonably designed to ensure the banking entity's 
compliance with the requirements of this section, including:
    (i) Reasonably designed written policies and procedures regarding 
the positions, techniques and strategies that may be used for hedging, 
including documentation indicating what positions, contracts or other 
holdings a particular trading desk may use in its risk-mitigating 
hedging activities, as well as position and aging limits with respect to 
such positions, contracts or other holdings;

[[Page 82]]

    (ii) Internal controls and ongoing monitoring, management, and 
authorization procedures, including relevant escalation procedures; and
    (iii) The conduct of analysis, including correlation analysis, and 
independent testing designed to ensure that the positions, techniques 
and strategies that may be used for hedging may reasonably be expected 
to demonstrably reduce or otherwise significantly mitigate the specific, 
identifiable risk(s) being hedged, and such correlation analysis 
demonstrates that the hedging activity demonstrably reduces or otherwise 
significantly mitigates the specific, identifiable risk(s) being hedged;
    (2) The risk-mitigating hedging activity:
    (i) Is conducted in accordance with the written policies, 
procedures, and internal controls required under this section;
    (ii) At the inception of the hedging activity, including, without 
limitation, any adjustments to the hedging activity, is designed to 
reduce or otherwise significantly mitigate and demonstrably reduces or 
otherwise significantly mitigates one or more specific, identifiable 
risks, including market risk, counterparty or other credit risk, 
currency or foreign exchange risk, interest rate risk, commodity price 
risk, basis risk, or similar risks, arising in connection with and 
related to identified positions, contracts, or other holdings of the 
banking entity, based upon the facts and circumstances of the identified 
underlying and hedging positions, contracts or other holdings and the 
risks and liquidity thereof;
    (iii) Does not give rise, at the inception of the hedge, to any 
significant new or additional risk that is not itself hedged 
contemporaneously in accordance with this section;
    (iv) Is subject to continuing review, monitoring and management by 
the banking entity that:
    (A) Is consistent with the written hedging policies and procedures 
required under paragraph (b)(1) of this section;
    (B) Is designed to reduce or otherwise significantly mitigate and 
demonstrably reduces or otherwise significantly mitigates the specific, 
identifiable risks that develop over time from the risk-mitigating 
hedging activities undertaken under this section and the underlying 
positions, contracts, and other holdings of the banking entity, based 
upon the facts and circumstances of the underlying and hedging 
positions, contracts and other holdings of the banking entity and the 
risks and liquidity thereof; and
    (C) Requires ongoing recalibration of the hedging activity by the 
banking entity to ensure that the hedging activity satisfies the 
requirements set out in paragraph (b)(2) of this section and is not 
prohibited proprietary trading; and
    (3) The compensation arrangements of persons performing risk-
mitigating hedging activities are designed not to reward or incentivize 
prohibited proprietary trading.
    (c) Documentation requirement--(1) A banking entity must comply with 
the requirements of paragraphs (c)(2) and (3) of this section with 
respect to any purchase or sale of financial instruments made in 
reliance on this section for risk-mitigating hedging purposes that is:
    (i) Not established by the specific trading desk establishing or 
responsible for the underlying positions, contracts, or other holdings 
the risks of which the hedging activity is designed to reduce;
    (ii) Established by the specific trading desk establishing or 
responsible for the underlying positions, contracts, or other holdings 
the risks of which the purchases or sales are designed to reduce, but 
that is effected through a financial instrument, exposure, technique, or 
strategy that is not specifically identified in the trading desk's 
written policies and procedures established under paragraph (b)(1) of 
this section or under Sec.351.4(b)(2)(iii)(B) of this subpart as a 
product, instrument, exposure, technique, or strategy such trading desk 
may use for hedging; or
    (iii) Established to hedge aggregated positions across two or more 
trading desks.
    (2) In connection with any purchase or sale identified in paragraph 
(c)(1) of this section, a banking entity must, at a minimum, and 
contemporaneously with the purchase or sale, document:

[[Page 83]]

    (i) The specific, identifiable risk(s) of the identified positions, 
contracts, or other holdings of the banking entity that the purchase or 
sale is designed to reduce;
    (ii) The specific risk-mitigating strategy that the purchase or sale 
is designed to fulfill; and
    (iii) The trading desk or other business unit that is establishing 
and responsible for the hedge.
    (3) A banking entity must create and retain records sufficient to 
demonstrate compliance with the requirements of this paragraph (c) for a 
period that is no less than five years in a form that allows the banking 
entity to promptly produce such records to the FDIC on request, or such 
longer period as required under other law or this part.



Sec.351.6  Other permitted proprietary trading activities.

    (a) Permitted trading in domestic government obligations. The 
prohibition contained in Sec.351.3(a) does not apply to the purchase 
or sale by a banking entity of a financial instrument that is:
    (1) An obligation of, or issued or guaranteed by, the United States;
    (2) An obligation, participation, or other instrument of, or issued 
or guaranteed by, an agency of the United States, the Government 
National Mortgage Association, the Federal National Mortgage 
Association, the Federal Home Loan Mortgage Corporation, a Federal Home 
Loan Bank, the Federal Agricultural Mortgage Corporation or a Farm 
Credit System institution chartered under and subject to the provisions 
of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.);
    (3) An obligation of any State or any political subdivision thereof, 
including any municipal security; or
    (4) An obligation of the FDIC, or any entity formed by or on behalf 
of the FDIC for purpose of facilitating the disposal of assets acquired 
or held by the FDIC in its corporate capacity or as conservator or 
receiver under the Federal Deposit Insurance Act or Title II of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act.
    (b) Permitted trading in foreign government obligations--(1) 
Affiliates of foreign banking entities in the United States. The 
prohibition contained in Sec.351.3(a) does not apply to the purchase 
or sale of a financial instrument that is an obligation of, or issued or 
guaranteed by, a foreign sovereign (including any multinational central 
bank of which the foreign sovereign is a member), or any agency or 
political subdivision of such foreign sovereign, by a banking entity, so 
long as:
    (i) The banking entity is organized under or is directly or 
indirectly controlled by a banking entity that is organized under the 
laws of a foreign sovereign and is not directly or indirectly controlled 
by a top-tier banking entity that is organized under the laws of the 
United States;
    (ii) The financial instrument is an obligation of, or issued or 
guaranteed by, the foreign sovereign under the laws of which the foreign 
banking entity referred to in paragraph (b)(1)(i) of this section is 
organized (including any multinational central bank of which the foreign 
sovereign is a member), or any agency or political subdivision of that 
foreign sovereign; and
    (iii) The purchase or sale as principal is not made by an insured 
depository institution.
    (2) Foreign affiliates of a U.S. banking entity. The prohibition 
contained in Sec.351.3(a) does not apply to the purchase or sale of a 
financial instrument that is an obligation of, or issued or guaranteed 
by, a foreign sovereign (including any multinational central bank of 
which the foreign sovereign is a member), or any agency or political 
subdivision of that foreign sovereign, by a foreign entity that is owned 
or controlled by a banking entity organized or established under the 
laws of the United States or any State, so long as:
    (i) The foreign entity is a foreign bank, as defined in section 
211.2(j) of the Board's Regulation K (12 CFR 211.2(j)), or is regulated 
by the foreign sovereign as a securities dealer;
    (ii) The financial instrument is an obligation of, or issued or 
guaranteed by, the foreign sovereign under the laws of which the foreign 
entity is organized (including any multinational central bank of which 
the foreign sovereign is a member), or any agency or political 
subdivision of that foreign sovereign; and

[[Page 84]]

    (iii) The financial instrument is owned by the foreign entity and is 
not financed by an affiliate that is located in the United States or 
organized under the laws of the United States or of any State.
    (c) Permitted trading on behalf of customers--(1) Fiduciary 
transactions. The prohibition contained in Sec.351.3(a) does not apply 
to the purchase or sale of financial instruments by a banking entity 
acting as trustee or in a similar fiduciary capacity, so long as:
    (i) The transaction is conducted for the account of, or on behalf 
of, a customer; and
    (ii) The banking entity does not have or retain beneficial ownership 
of the financial instruments.
    (2) Riskless principal transactions. The prohibition contained in 
Sec.351.3(a) does not apply to the purchase or sale of financial 
instruments by a banking entity acting as riskless principal in a 
transaction in which the banking entity, after receiving an order to 
purchase (or sell) a financial instrument from a customer, purchases (or 
sells) the financial instrument for its own account to offset a 
contemporaneous sale to (or purchase from) the customer.
    (d) Permitted trading by a regulated insurance company. The 
prohibition contained in Sec.351.3(a) does not apply to the purchase 
or sale of financial instruments by a banking entity that is an 
insurance company or an affiliate of an insurance company if:
    (1) The insurance company or its affiliate purchases or sells the 
financial instruments solely for:
    (i) The general account of the insurance company; or
    (ii) A separate account established by the insurance company;
    (2) The purchase or sale is conducted in compliance with, and 
subject to, the insurance company investment laws, regulations, and 
written guidance of the State or jurisdiction in which such insurance 
company is domiciled; and
    (3) The appropriate Federal banking agencies, after consultation 
with the Financial Stability Oversight Council and the relevant 
insurance commissioners of the States and foreign jurisdictions, as 
appropriate, have not jointly determined, after notice and comment, that 
a particular law, regulation, or written guidance described in paragraph 
(d)(2) of this section is insufficient to protect the safety and 
soundness of the covered banking entity, or the financial stability of 
the United States.
    (e) Permitted trading activities of foreign banking entities. (1) 
The prohibition contained in Sec.351.3(a) does not apply to the 
purchase or sale of financial instruments by a banking entity if:
    (i) The banking entity is not organized or directly or indirectly 
controlled by a banking entity that is organized under the laws of the 
United States or of any State;
    (ii) The purchase or sale by the banking entity is made pursuant to 
paragraph (9) or (13) of section 4(c) of the BHC Act; and
    (iii) The purchase or sale meets the requirements of paragraph 
(e)(3) of this section.
    (2) A purchase or sale of financial instruments by a banking entity 
is made pursuant to paragraph (9) or (13) of section 4(c) of the BHC Act 
for purposes of paragraph (e)(1)(ii) of this section only if:
    (i) The purchase or sale is conducted in accordance with the 
requirements of paragraph (e) of this section; and
    (ii)(A) With respect to a banking entity that is a foreign banking 
organization, the banking entity meets the qualifying foreign banking 
organization requirements of section 211.23(a), (c) or (e) of the 
Board's Regulation K (12 CFR 211.23(a), (c) or (e)), as applicable; or
    (B) With respect to a banking entity that is not a foreign banking 
organization, the banking entity is not organized under the laws of the 
United States or of any State and the banking entity, on a fully-
consolidated basis, meets at least two of the following requirements:
    (1) Total assets of the banking entity held outside of the United 
States exceed total assets of the banking entity held in the United 
States;
    (2) Total revenues derived from the business of the banking entity 
outside of the United States exceed total revenues derived from the 
business of the banking entity in the United States; or
    (3) Total net income derived from the business of the banking entity 
outside

[[Page 85]]

of the United States exceeds total net income derived from the business 
of the banking entity in the United States.
    (3) A purchase or sale by a banking entity is permitted for purposes 
of this paragraph (e) if:
    (i) The banking entity engaging as principal in the purchase or sale 
(including any personnel of the banking entity or its affiliate that 
arrange, negotiate or execute such purchase or sale) is not located in 
the United States or organized under the laws of the United States or of 
any State;
    (ii) The banking entity (including relevant personnel) that makes 
the decision to purchase or sell as principal is not located in the 
United States or organized under the laws of the United States or of any 
State;
    (iii) The purchase or sale, including any transaction arising from 
risk-mitigating hedging related to the instruments purchased or sold, is 
not accounted for as principal directly or on a consolidated basis by 
any branch or affiliate that is located in the United States or 
organized under the laws of the United States or of any State;
    (iv) No financing for the banking entity's purchases or sales is 
provided, directly or indirectly, by any branch or affiliate that is 
located in the United States or organized under the laws of the United 
States or of any State; and
    (v) The purchase or sale is not conducted with or through any U.S. 
entity, other than:
    (A) A purchase or sale with the foreign operations of a U.S. entity 
if no personnel of such U.S. entity that are located in the United 
States are involved in the arrangement, negotiation, or execution of 
such purchase or sale;
    (B) A purchase or sale with an unaffiliated market intermediary 
acting as principal, provided the purchase or sale is promptly cleared 
and settled through a clearing agency or derivatives clearing 
organization acting as a central counterparty; or
    (C) A purchase or sale through an unaffiliated market intermediary 
acting as agent, provided the purchase or sale is conducted anonymously 
on an exchange or similar trading facility and is promptly cleared and 
settled through a clearing agency or derivatives clearing organization 
acting as a central counterparty.
    (4) For purposes of this paragraph (e), a U.S. entity is any entity 
that is, or is controlled by, or is acting on behalf of, or at the 
direction of, any other entity that is, located in the United States or 
organized under the laws of the United States or of any State.
    (5) For purposes of this paragraph (e), a U.S. branch, agency, or 
subsidiary of a foreign banking entity is considered to be located in 
the United States; however, the foreign bank that operates or controls 
that branch, agency, or subsidiary is not considered to be located in 
the United States solely by virtue of operating or controlling the U.S. 
branch, agency, or subsidiary.
    (6) For purposes of this paragraph (e), unaffiliated market 
intermediary means an unaffiliated entity, acting as an intermediary, 
that is:
    (i) A broker or dealer registered with the SEC under section 15 of 
the Exchange Act or exempt from registration or excluded from regulation 
as such;
    (ii) A swap dealer registered with the CFTC under section 4s of the 
Commodity Exchange Act or exempt from registration or excluded from 
regulation as such;
    (iii) A security-based swap dealer registered with the SEC under 
section 15F of the Exchange Act or exempt from registration or excluded 
from regulation as such; or
    (iv) A futures commission merchant registered with the CFTC under 
section 4f of the Commodity Exchange Act or exempt from registration or 
excluded from regulation as such.



Sec.351.7  Limitations on permitted proprietary trading activities.

    (a) No transaction, class of transactions, or activity may be deemed 
permissible under Sec. Sec.351.4 through 351.6 if the transaction, 
class of transactions, or activity would:
    (1) Involve or result in a material conflict of interest between the 
banking entity and its clients, customers, or counterparties;

[[Page 86]]

    (2) Result, directly or indirectly, in a material exposure by the 
banking entity to a high-risk asset or a high-risk trading strategy; or
    (3) Pose a threat to the safety and soundness of the banking entity 
or to the financial stability of the United States.
    (b) Definition of material conflict of interest. (1) For purposes of 
this section, a material conflict of interest between a banking entity 
and its clients, customers, or counterparties exists if the banking 
entity engages in any transaction, class of transactions, or activity 
that would involve or result in the banking entity's interests being 
materially adverse to the interests of its client, customer, or 
counterparty with respect to such transaction, class of transactions, or 
activity, and the banking entity has not taken at least one of the 
actions in paragraph (b)(2) of this section.
    (2) Prior to effecting the specific transaction or class or type of 
transactions, or engaging in the specific activity, the banking entity:
    (i) Timely and effective disclosure. (A) Has made clear, timely, and 
effective disclosure of the conflict of interest, together with other 
necessary information, in reasonable detail and in a manner sufficient 
to permit a reasonable client, customer, or counterparty to meaningfully 
understand the conflict of interest; and
    (B) Such disclosure is made in a manner that provides the client, 
customer, or counterparty the opportunity to negate, or substantially 
mitigate, any materially adverse effect on the client, customer, or 
counterparty created by the conflict of interest; or
    (ii) Information barriers. Has established, maintained, and enforced 
information barriers that are memorialized in written policies and 
procedures, such as physical separation of personnel, or functions, or 
limitations on types of activity, that are reasonably designed, taking 
into consideration the nature of the banking entity's business, to 
prevent the conflict of interest from involving or resulting in a 
materially adverse effect on a client, customer, or counterparty. A 
banking entity may not rely on such information barriers if, in the case 
of any specific transaction, class or type of transactions or activity, 
the banking entity knows or should reasonably know that, notwithstanding 
the banking entity's establishment of information barriers, the conflict 
of interest may involve or result in a materially adverse effect on a 
client, customer, or counterparty.
    (c) Definition of high-risk asset and high-risk trading strategy. 
For purposes of this section:
    (1) High-risk asset means an asset or group of related assets that 
would, if held by a banking entity, significantly increase the 
likelihood that the banking entity would incur a substantial financial 
loss or would pose a threat to the financial stability of the United 
States.
    (2) High-risk trading strategy means a trading strategy that would, 
if engaged in by a banking entity, significantly increase the likelihood 
that the banking entity would incur a substantial financial loss or 
would pose a threat to the financial stability of the United States.



Sec. Sec.351.8-351.9  [Reserved]



           Subpart C_Covered Funds Activities and Investments



Sec.351.10  Prohibition on acquiring or retaining an ownership
interest in and having certain relationships with a covered fund.

    (a) Prohibition. (1) Except as otherwise provided in this subpart, a 
banking entity may not, as principal, directly or indirectly, acquire or 
retain any ownership interest in or sponsor a covered fund.
    (2) Paragraph (a)(1) of this section does not include acquiring or 
retaining an ownership interest in a covered fund by a banking entity:
    (i) Acting solely as agent, broker, or custodian, so long as;
    (A) The activity is conducted for the account of, or on behalf of, a 
customer; and
    (B) The banking entity and its affiliates do not have or retain 
beneficial ownership of such ownership interest;
    (ii) Through a deferred compensation, stock-bonus, profit-sharing, 
or pension

[[Page 87]]

plan of the banking entity (or an affiliate thereof) that is established 
and administered in accordance with the law of the United States or a 
foreign sovereign, if the ownership interest is held or controlled 
directly or indirectly by the banking entity as trustee for the benefit 
of persons who are or were employees of the banking entity (or an 
affiliate thereof);
    (iii) In the ordinary course of collecting a debt previously 
contracted in good faith, provided that the banking entity divests the 
ownership interest as soon as practicable, and in no event may the 
banking entity retain such ownership interest for longer than such 
period permitted by the FDIC; or
    (iv) On behalf of customers as trustee or in a similar fiduciary 
capacity for a customer that is not a covered fund, so long as:
    (A) The activity is conducted for the account of, or on behalf of, 
the customer; and
    (B) The banking entity and its affiliates do not have or retain 
beneficial ownership of such ownership interest.
    (b) Definition of covered fund. (1) Except as provided in paragraph 
(c) of this section, covered fund means:
    (i) An issuer that would be an investment company, as defined in the 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), but for 
section 3(c)(1) or 3(c)(7) of that Act (15 U.S.C. 80a-3(c)(1) or (7));
    (ii) Any commodity pool under section 1a(10) of the Commodity 
Exchange Act (7 U.S.C. 1a(10)) for which:
    (A) The commodity pool operator has claimed an exemption under 17 
CFR 4.7; or
    (B)(1) A commodity pool operator is registered with the CFTC as a 
commodity pool operator in connection with the operation of the 
commodity pool;
    (2) Substantially all participation units of the commodity pool are 
owned by qualified eligible persons under 17 CFR 4.7(a)(2) and (3); and
    (3) Participation units of the commodity pool have not been publicly 
offered to persons who are not qualified eligible persons under 17 CFR 
4.7(a)(2) and (3); or
    (iii) For any banking entity that is, or is controlled directly or 
indirectly by a banking entity that is, located in or organized under 
the laws of the United States or of any State, an entity that:
    (A) Is organized or established outside the United States and the 
ownership interests of which are offered and sold solely outside the 
United States;
    (B) Is, or holds itself out as being, an entity or arrangement that 
raises money from investors primarily for the purpose of investing in 
securities for resale or other disposition or otherwise trading in 
securities; and
    (C)(1) Has as its sponsor that banking entity (or an affiliate 
thereof); or
    (2) Has issued an ownership interest that is owned directly or 
indirectly by that banking entity (or an affiliate thereof).
    (2) An issuer shall not be deemed to be a covered fund under 
paragraph (b)(1)(iii) of this section if, were the issuer subject to 
U.S. securities laws, the issuer could rely on an exclusion or exemption 
from the definition of ``investment company'' under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1 et seq.) other than the exclusions 
contained in section 3(c)(1) and 3(c)(7) of that Act.
    (3) For purposes of paragraph (b)(1)(iii) of this section, a U.S. 
branch, agency, or subsidiary of a foreign banking entity is located in 
the United States; however, the foreign bank that operates or controls 
that branch, agency, or subsidiary is not considered to be located in 
the United States solely by virtue of operating or controlling the U.S. 
branch, agency, or subsidiary.
    (c) Notwithstanding paragraph (b) of this section, unless the 
appropriate Federal banking agencies, the SEC, and the CFTC jointly 
determine otherwise, a covered fund does not include:
    (1) Foreign public funds. (i) Subject to paragraphs (ii) and (iii) 
below, an issuer that:
    (A) Is organized or established outside of the United States;
    (B) Is authorized to offer and sell ownership interests to retail 
investors in the issuer's home jurisdiction; and
    (C) Sells ownership interests predominantly through one or more 
public offerings outside of the United States.

[[Page 88]]

    (ii) With respect to a banking entity that is, or is controlled 
directly or indirectly by a banking entity that is, located in or 
organized under the laws of the United States or of any State and any 
issuer for which such banking entity acts as sponsor, the sponsoring 
banking entity may not rely on the exemption in paragraph (c)(1)(i) of 
this section for such issuer unless ownership interests in the issuer 
are sold predominantly to persons other than:
    (A) Such sponsoring banking entity;
    (B) Such issuer;
    (C) Affiliates of such sponsoring banking entity or such issuer; and
    (D) Directors and employees of such entities.
    (iii) For purposes of paragraph (c)(1)(i)(C) of this section, the 
term ``public offering'' means a distribution (as defined in Sec.
351.4(a)(3) of subpart B) of securities in any jurisdiction outside the 
United States to investors, including retail investors, provided that:
    (A) The distribution complies with all applicable requirements in 
the jurisdiction in which such distribution is being made;
    (B) The distribution does not restrict availability to investors 
having a minimum level of net worth or net investment assets; and
    (C) The issuer has filed or submitted, with the appropriate 
regulatory authority in such jurisdiction, offering disclosure documents 
that are publicly available.
    (2) Wholly-owned subsidiaries. An entity, all of the outstanding 
ownership interests of which are owned directly or indirectly by the 
banking entity (or an affiliate thereof), except that:
    (i) Up to five percent of the entity's outstanding ownership 
interests, less any amounts outstanding under paragraph (c)(2)(ii) of 
this section, may be held by employees or directors of the banking 
entity or such affiliate (including former employees or directors if 
their ownership interest was acquired while employed by or in the 
service of the banking entity); and
    (ii) Up to 0.5 percent of the entity's outstanding ownership 
interests may be held by a third party if the ownership interest is 
acquired or retained by the third party for the purpose of establishing 
corporate separateness or addressing bankruptcy, insolvency, or similar 
concerns.
    (3) Joint ventures. A joint venture between a banking entity or any 
of its affiliates and one or more unaffiliated persons, provided that 
the joint venture:
    (i) Is comprised of no more than 10 unaffiliated co-venturers;
    (ii) Is in the business of engaging in activities that are 
permissible for the banking entity or affiliate, other than investing in 
securities for resale or other disposition; and
    (iii) Is not, and does not hold itself out as being, an entity or 
arrangement that raises money from investors primarily for the purpose 
of investing in securities for resale or other disposition or otherwise 
trading in securities.
    (4) Acquisition vehicles. An issuer:
    (i) Formed solely for the purpose of engaging in a bona fide merger 
or acquisition transaction; and
    (ii) That exists only for such period as necessary to effectuate the 
transaction.
    (5) Foreign pension or retirement funds. A plan, fund, or program 
providing pension, retirement, or similar benefits that is:
    (i) Organized and administered outside the United States;
    (ii) A broad-based plan for employees or citizens that is subject to 
regulation as a pension, retirement, or similar plan under the laws of 
the jurisdiction in which the plan, fund, or program is organized and 
administered; and
    (iii) Established for the benefit of citizens or residents of one or 
more foreign sovereigns or any political subdivision thereof.
    (6) Insurance company separate accounts. A separate account, 
provided that no banking entity other than the insurance company 
participates in the account's profits and losses.
    (7) Bank owned life insurance. A separate account that is used 
solely for the purpose of allowing one or more banking entities to 
purchase a life insurance policy for which the banking entity or 
entities is beneficiary, provided that no banking entity that purchases 
the policy:
    (i) Controls the investment decisions regarding the underlying 
assets or holdings of the separate account; or

[[Page 89]]

    (ii) Participates in the profits and losses of the separate account 
other than in compliance with applicable supervisory guidance regarding 
bank owned life insurance.
    (8) Loan securitizations. (i) Scope. An issuing entity for asset-
backed securities that satisfies all the conditions of this paragraph 
(c)(8) and the assets or holdings of which are comprised solely of:
    (A) Loans as defined in Sec.351.2(s) of subpart A;
    (B) Rights or other assets designed to assure the servicing or 
timely distribution of proceeds to holders of such securities and rights 
or other assets that are related or incidental to purchasing or 
otherwise acquiring and holding the loans, provided that each asset 
meets the requirements of paragraph (c)(8)(iii) of this section;
    (C) Interest rate or foreign exchange derivatives that meet the 
requirements of paragraph (c)(8)(iv) of this section; and
    (D) Special units of beneficial interest and collateral certificates 
that meet the requirements of paragraph (c)(8)(v) of this section.
    (ii) Impermissible assets. For purposes of this paragraph (c)(8), 
the assets or holdings of the issuing entity shall not include any of 
the following:
    (A) A security, including an asset-backed security, or an interest 
in an equity or debt security other than as permitted in paragraph 
(c)(8)(iii) of this section;
    (B) A derivative, other than a derivative that meets the 
requirements of paragraph (c)(8)(iv) of this section; or
    (C) A commodity forward contract.
    (iii) Permitted securities. Notwithstanding paragraph (c)(8)(ii)(A) 
of this section, the issuing entity may hold securities if those 
securities are:
    (A) Cash equivalents for purposes of the rights and assets in 
paragraph (c)(8)(i)(B) of this section; or
    (B) Securities received in lieu of debts previously contracted with 
respect to the loans supporting the asset-backed securities.
    (iv) Derivatives. The holdings of derivatives by the issuing entity 
shall be limited to interest rate or foreign exchange derivatives that 
satisfy all of the following conditions:
    (A) The written terms of the derivative directly relate to the 
loans, the asset-backed securities, or the contractual rights of other 
assets described in paragraph (c)(8)(i)(B) of this section; and
    (B) The derivatives reduce the interest rate and/or foreign exchange 
risks related to the loans, the asset-backed securities, or the 
contractual rights or other assets described in paragraph (c)(8)(i)(B) 
of this section.
    (v) Special units of beneficial interest and collateral 
certificates. The assets or holdings of the issuing entity may include 
collateral certificates and special units of beneficial interest issued 
by a special purpose vehicle, provided that:
    (A) The special purpose vehicle that issues the special unit of 
beneficial interest or collateral certificate meets the requirements in 
this paragraph (c)(8);
    (B) The special unit of beneficial interest or collateral 
certificate is used for the sole purpose of transferring to the issuing 
entity for the loan securitization the economic risks and benefits of 
the assets that are permissible for loan securitizations under this 
paragraph (c)(8) and does not directly or indirectly transfer any 
interest in any other economic or financial exposure;
    (C) The special unit of beneficial interest or collateral 
certificate is created solely to satisfy legal requirements or otherwise 
facilitate the structuring of the loan securitization; and
    (D) The special purpose vehicle that issues the special unit of 
beneficial interest or collateral certificate and the issuing entity are 
established under the direction of the same entity that initiated the 
loan securitization.
    (9) Qualifying asset-backed commercial paper conduits. (i) An 
issuing entity for asset-backed commercial paper that satisfies all of 
the following requirements:
    (A) The asset-backed commercial paper conduit holds only:
    (1) Loans and other assets permissible for a loan securitization 
under paragraph (c)(8)(i) of this section; and
    (2) Asset-backed securities supported solely by assets that are 
permissible

[[Page 90]]

for loan securitizations under paragraph (c)(8)(i) of this section and 
acquired by the asset-backed commercial paper conduit as part of an 
initial issuance either directly from the issuing entity of the asset-
backed securities or directly from an underwriter in the distribution of 
the asset-backed securities;
    (B) The asset-backed commercial paper conduit issues only asset-
backed securities, comprised of a residual interest and securities with 
a legal maturity of 397 days or less; and
    (C) A regulated liquidity provider has entered into a legally 
binding commitment to provide full and unconditional liquidity coverage 
with respect to all of the outstanding asset-backed securities issued by 
the asset-backed commercial paper conduit (other than any residual 
interest) in the event that funds are required to redeem maturing asset-
backed securities.
    (ii) For purposes of this paragraph (c)(9), a regulated liquidity 
provider means:
    (A) A depository institution, as defined in section 3(c) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(c));
    (B) A bank holding company, as defined in section 2(a) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1841(a)), or a subsidiary 
thereof;
    (C) A savings and loan holding company, as defined in section 10a of 
the Home Owners' Loan Act (12 U.S.C. 1467a), provided all or 
substantially all of the holding company's activities are permissible 
for a financial holding company under section 4(k) of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1843(k)), or a subsidiary thereof;
    (D) A foreign bank whose home country supervisor, as defined in 
Sec.211.21(q) of the Board's Regulation K (12 CFR 211.21(q)), has 
adopted capital standards consistent with the Capital Accord for the 
Basel Committee on banking Supervision, as amended, and that is subject 
to such standards, or a subsidiary thereof; or
    (E) The United States or a foreign sovereign.
    (10) Qualifying covered bonds--(i) Scope. An entity owning or 
holding a dynamic or fixed pool of loans or other assets as provided in 
paragraph (c)(8) of this section for the benefit of the holders of 
covered bonds, provided that the assets in the pool are comprised solely 
of assets that meet the conditions in paragraph (c)(8)(i) of this 
section.
    (ii) Covered bond. For purposes of this paragraph (c)(10), a covered 
bond means:
    (A) A debt obligation issued by an entity that meets the definition 
of foreign banking organization, the payment obligations of which are 
fully and unconditionally guaranteed by an entity that meets the 
conditions set forth in paragraph (c)(10)(i) of this section; or
    (B) A debt obligation of an entity that meets the conditions set 
forth in paragraph (c)(10)(i) of this section, provided that the payment 
obligations are fully and unconditionally guaranteed by an entity that 
meets the definition of foreign banking organization and the entity is a 
wholly-owned subsidiary, as defined in paragraph (c)(2) of this section, 
of such foreign banking organization.
    (11) SBICs and public welfare investment funds. An issuer:
    (i) That is a small business investment company, as defined in 
section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 
662), or that has received from the Small Business Administration notice 
to proceed to qualify for a license as a small business investment 
company, which notice or license has not been revoked; or
    (ii) The business of which is to make investments that are:
    (A) Designed primarily to promote the public welfare, of the type 
permitted under paragraph (11) of section 5136 of the Revised Statutes 
of the United States (12 U.S.C. 24), including the welfare of low- and 
moderate-income communities or families (such as providing housing, 
services, or jobs); or
    (B) Qualified rehabilitation expenditures with respect to a 
qualified rehabilitated building or certified historic structure, as 
such terms are defined in section 47 of the Internal Revenue Code of 
1986 or a similar State historic tax credit program.
    (12) Registered investment companies and excluded entities. An 
issuer:
    (i) That is registered as an investment company under section 8 of 
the Investment Company Act of 1940 (15

[[Page 91]]

U.S.C. 80a-8), or that is formed and operated pursuant to a written plan 
to become a registered investment company as described in Sec.
351.20(e)(3) of subpart D and that complies with the requirements of 
section 18 of the Investment Company Act of 1940 (15 U.S.C. 80a-18);
    (ii) That may rely on an exclusion or exemption from the definition 
of ``investment company'' under the Investment Company Act of 1940 (15 
U.S.C. 80a-1 et seq.) other than the exclusions contained in section 
3(c)(1) and 3(c)(7) of that Act; or
    (iii) That has elected to be regulated as a business development 
company pursuant to section 54(a) of that Act (15 U.S.C. 80a-53) and has 
not withdrawn its election, or that is formed and operated pursuant to a 
written plan to become a business development company as described in 
Sec.351.20(e)(3) of subpart D and that complies with the requirements 
of section 61 of the Investment Company Act of 1940 (15 U.S.C. 80a-60).
    (13) Issuers in conjunction with the FDIC's receivership or 
conservatorship operations. An issuer that is an entity formed by or on 
behalf of the FDIC for the purpose of facilitating the disposal of 
assets acquired in the FDIC's capacity as conservator or receiver under 
the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act.
    (14) Other excluded issuers. (i) Any issuer that the appropriate 
Federal banking agencies, the SEC, and the CFTC jointly determine the 
exclusion of which is consistent with the purposes of section 13 of the 
BHC Act.
    (ii) A determination made under paragraph (c)(14)(i) of this section 
will be promptly made public.
    (d) Definition of other terms related to covered funds. For purposes 
of this subpart:
    (1) Applicable accounting standards means U.S. generally accepted 
accounting principles, or such other accounting standards applicable to 
a banking entity that the FDIC determines are appropriate and that the 
banking entity uses in the ordinary course of its business in preparing 
its consolidated financial statements.
    (2) Asset-backed security has the meaning specified in Section 
3(a)(79) of the Exchange Act (15 U.S.C. 78c(a)(79).
    (3) Director has the same meaning as provided in section 215.2(d)(1) 
of the Board's Regulation O (12 CFR 215.2(d)(1)).
    (4) Issuer has the same meaning as in section 2(a)(22) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(22)).
    (5) Issuing entity means with respect to asset-backed securities the 
special purpose vehicle that owns or holds the pool assets underlying 
asset-backed securities and in whose name the asset-backed securities 
supported or serviced by the pool assets are issued.
    (6) Ownership interest--(i) Ownership interest means any equity, 
partnership, or other similar interest. An ``other similar interest'' 
means an interest that:
    (A) Has the right to participate in the selection or removal of a 
general partner, managing member, member of the board of directors or 
trustees, investment manager, investment adviser, or commodity trading 
advisor of the covered fund (excluding the rights of a creditor to 
exercise remedies upon the occurrence of an event of default or an 
acceleration event);
    (B) Has the right under the terms of the interest to receive a share 
of the income, gains or profits of the covered fund;
    (C) Has the right to receive the underlying assets of the covered 
fund after all other interests have been redeemed and/or paid in full 
(excluding the rights of a creditor to exercise remedies upon the 
occurrence of an event of default or an acceleration event);
    (D) Has the right to receive all or a portion of excess spread (the 
positive difference, if any, between the aggregate interest payments 
received from the underlying assets of the covered fund and the 
aggregate interest paid to the holders of other outstanding interests);
    (E) Provides under the terms of the interest that the amounts 
payable by the covered fund with respect to the interest could be 
reduced based on losses arising from the underlying assets of the 
covered fund, such as allocation of losses, write-downs or charge-offs 
of the outstanding principal balance, or

[[Page 92]]

reductions in the amount of interest due and payable on the interest;
    (F) Receives income on a pass-through basis from the covered fund, 
or has a rate of return that is determined by reference to the 
performance of the underlying assets of the covered fund; or
    (G) Any synthetic right to have, receive, or be allocated any of the 
rights in paragraphs (d)(6)(i)(A) through (F) of this section.
    (ii) Ownership interest does not include: Restricted profit 
interest. An interest held by an entity (or an employee or former 
employee thereof) in a covered fund for which the entity (or employee 
thereof) serves as investment manager, investment adviser, commodity 
trading advisor, or other service provider so long as:
    (A) The sole purpose and effect of the interest is to allow the 
entity (or employee or former employee thereof) to share in the profits 
of the covered fund as performance compensation for the investment 
management, investment advisory, commodity trading advisory, or other 
services provided to the covered fund by the entity (or employee or 
former employee thereof), provided that the entity (or employee or 
former employee thereof) may be obligated under the terms of such 
interest to return profits previously received;
    (B) All such profit, once allocated, is distributed to the entity 
(or employee or former employee thereof) promptly after being earned or, 
if not so distributed, is retained by the covered fund for the sole 
purpose of establishing a reserve amount to satisfy contractual 
obligations with respect to subsequent losses of the covered fund and 
such undistributed profit of the entity (or employee or former employee 
thereof) does not share in the subsequent investment gains of the 
covered fund;
    (C) Any amounts invested in the covered fund, including any amounts 
paid by the entity (or employee or former employee thereof) in 
connection with obtaining the restricted profit interest, are within the 
limits of Sec.351.12 of this subpart; and
    (D) The interest is not transferable by the entity (or employee or 
former employee thereof) except to an affiliate thereof (or an employee 
of the banking entity or affiliate), to immediate family members, or 
through the intestacy, of the employee or former employee, or in 
connection with a sale of the business that gave rise to the restricted 
profit interest by the entity (or employee or former employee thereof) 
to an unaffiliated party that provides investment management, investment 
advisory, commodity trading advisory, or other services to the fund.
    (7) Prime brokerage transaction means any transaction that would be 
a covered transaction, as defined in section 23A(b)(7) of the Federal 
Reserve Act (12 U.S.C. 371c(b)(7)), that is provided in connection with 
custody, clearance and settlement, securities borrowing or lending 
services, trade execution, financing, or data, operational, and 
administrative support.
    (8) Resident of the United States means a person that is a ``U.S. 
person'' as defined in rule 902(k) of the SEC's Regulation S (17 CFR 
230.902(k)).
    (9) Sponsor means, with respect to a covered fund:
    (i) To serve as a general partner, managing member, or trustee of a 
covered fund, or to serve as a commodity pool operator with respect to a 
covered fund as defined in (b)(1)(ii) of this section;
    (ii) In any manner to select or to control (or to have employees, 
officers, or directors, or agents who constitute) a majority of the 
directors, trustees, or management of a covered fund; or
    (iii) To share with a covered fund, for corporate, marketing, 
promotional, or other purposes, the same name or a variation of the same 
name.
    (10) Trustee. (i) For purposes of paragraph (d)(9) of this section 
and Sec.351.11 of subpart C, a trustee does not include:
    (A) A trustee that does not exercise investment discretion with 
respect to a covered fund, including a trustee that is subject to the 
direction of an unaffiliated named fiduciary who is not a trustee 
pursuant to section 403(a)(1) of the Employee's Retirement Income 
Security Act (29 U.S.C. 1103(a)(1)); or
    (B) A trustee that is subject to fiduciary standards imposed under 
foreign law that are substantially equivalent to those described in 
paragraph (d)(10)(i)(A) of this section;

[[Page 93]]

    (ii) Any entity that directs a person described in paragraph 
(d)(10)(i) of this section, or that possesses authority and discretion 
to manage and control the investment decisions of a covered fund for 
which such person serves as trustee, shall be considered to be a trustee 
of such covered fund.



Sec.351.11  Permitted organizing and offering, underwriting, 
and market making with respect to a covered fund.

    (a) Organizing and offering a covered fund in general. 
Notwithstanding Sec.351.10(a) of this subpart, a banking entity is not 
prohibited from acquiring or retaining an ownership interest in, or 
acting as sponsor to, a covered fund in connection with, directly or 
indirectly, organizing and offering a covered fund, including serving as 
a general partner, managing member, trustee, or commodity pool operator 
of the covered fund and in any manner selecting or controlling (or 
having employees, officers, directors, or agents who constitute) a 
majority of the directors, trustees, or management of the covered fund, 
including any necessary expenses for the foregoing, only if:
    (1) The banking entity (or an affiliate thereof) provides bona fide 
trust, fiduciary, investment advisory, or commodity trading advisory 
services;
    (2) The covered fund is organized and offered only in connection 
with the provision of bona fide trust, fiduciary, investment advisory, 
or commodity trading advisory services and only to persons that are 
customers of such services of the banking entity (or an affiliate 
thereof), pursuant to a written plan or similar documentation outlining 
how the banking entity or such affiliate intends to provide advisory or 
similar services to its customers through organizing and offering such 
fund;
    (3) The banking entity and its affiliates do not acquire or retain 
an ownership interest in the covered fund except as permitted under 
Sec.351.12 of this subpart;
    (4) The banking entity and its affiliates comply with the 
requirements of Sec.351.14 of this subpart;
    (5) The banking entity and its affiliates do not, directly or 
indirectly, guarantee, assume, or otherwise insure the obligations or 
performance of the covered fund or of any covered fund in which such 
covered fund invests;
    (6) The covered fund, for corporate, marketing, promotional, or 
other purposes:
    (i) Does not share the same name or a variation of the same name 
with the banking entity (or an affiliate thereof); and
    (ii) Does not use the word ``bank'' in its name;
    (7) No director or employee of the banking entity (or an affiliate 
thereof) takes or retains an ownership interest in the covered fund, 
except for any director or employee of the banking entity or such 
affiliate who is directly engaged in providing investment advisory, 
commodity trading advisory, or other services to the covered fund at the 
time the director or employee takes the ownership interest; and
    (8) The banking entity:
    (i) Clearly and conspicuously discloses, in writing, to any 
prospective and actual investor in the covered fund (such as through 
disclosure in the covered fund's offering documents):
    (A) That ``any losses in [such covered fund] will be borne solely by 
investors in [the covered fund] and not by [the banking entity] or its 
affiliates; therefore, [the banking entity's] losses in [such covered 
fund] will be limited to losses attributable to the ownership interests 
in the covered fund held by [the banking entity] and any affiliate in 
its capacity as investor in the [covered fund] or as beneficiary of a 
restricted profit interest held by [the banking entity] or any 
affiliate'';
    (B) That such investor should read the fund offering documents 
before investing in the covered fund;
    (C) That the ``ownership interests in the covered fund are not 
insured by the FDIC, and are not deposits, obligations of, or endorsed 
or guaranteed in any way, by any banking entity'' (unless that happens 
to be the case); and
    (D) The role of the banking entity and its affiliates and employees 
in sponsoring or providing any services to the covered fund; and
    (ii) Complies with any additional rules of the appropriate Federal 
banking agencies, the SEC, or the CFTC, as

[[Page 94]]

provided in section 13(b)(2) of the BHC Act, designed to ensure that 
losses in such covered fund are borne solely by investors in the covered 
fund and not by the covered banking entity and its affiliates.
    (b) Organizing and offering an issuing entity of asset-backed 
securities. (1) Notwithstanding Sec.351.10(a) of this subpart, a 
banking entity is not prohibited from acquiring or retaining an 
ownership interest in, or acting as sponsor to, a covered fund that is 
an issuing entity of asset-backed securities in connection with, 
directly or indirectly, organizing and offering that issuing entity, so 
long as the banking entity and its affiliates comply with all of the 
requirements of paragraph (a)(3) through (8) of this section.
    (2) For purposes of this paragraph (b), organizing and offering a 
covered fund that is an issuing entity of asset-backed securities means 
acting as the securitizer, as that term is used in section 15G(a)(3) of 
the Exchange Act (15 U.S.C. 78o-11(a)(3)) of the issuing entity, or 
acquiring or retaining an ownership interest in the issuing entity as 
required by section 15G of that Act (15 U.S.C.78o-11) and the 
implementing regulations issued thereunder.
    (c) Underwriting and market making in ownership interests of a 
covered fund. The prohibition contained in Sec.351.10(a) of this 
subpart does not apply to a banking entity's underwriting activities or 
market making-related activities involving a covered fund so long as:
    (1) Those activities are conducted in accordance with the 
requirements of Sec.351.4(a) or Sec.351.4(b) of subpart B, 
respectively;
    (2) With respect to any banking entity (or any affiliate thereof) 
that: Acts as a sponsor, investment adviser or commodity trading advisor 
to a particular covered fund or otherwise acquires and retains an 
ownership interest in such covered fund in reliance on paragraph (a) of 
this section; acquires and retains an ownership interest in such covered 
fund and is either a securitizer, as that term is used in section 
15G(a)(3) of the Exchange Act (15 U.S.C. 78o-11(a)(3)), or is acquiring 
and retaining an ownership interest in such covered fund in compliance 
with section 15G of that Act (15 U.S.C.78o-11) and the implementing 
regulations issued thereunder each as permitted by paragraph (b) of this 
section; or, directly or indirectly, guarantees, assumes, or otherwise 
insures the obligations or performance of the covered fund or of any 
covered fund in which such fund invests, then in each such case any 
ownership interests acquired or retained by the banking entity and its 
affiliates in connection with underwriting and market making related 
activities for that particular covered fund are included in the 
calculation of ownership interests permitted to be held by the banking 
entity and its affiliates under the limitations of Sec.
351.12(a)(2)(ii) and Sec.351.12(d) of this subpart; and
    (3) With respect to any banking entity, the aggregate value of all 
ownership interests of the banking entity and its affiliates in all 
covered funds acquired and retained under Sec.351.11 of this subpart, 
including all covered funds in which the banking entity holds an 
ownership interest in connection with underwriting and market making 
related activities permitted under this paragraph (c), are included in 
the calculation of all ownership interests under Sec.351.12(a)(2)(iii) 
and Sec.351.12(d) of this subpart.



Sec.351.12  Permitted investment in a covered fund.

    (a) Authority and limitations on permitted investments in covered 
funds. (1) Notwithstanding the prohibition contained in Sec.351.10(a) 
of this subpart, a banking entity may acquire and retain an ownership 
interest in a covered fund that the banking entity or an affiliate 
thereof organizes and offers pursuant to Sec.351.11, for the purposes 
of:
    (i) Establishment. Establishing the fund and providing the fund with 
sufficient initial equity for investment to permit the fund to attract 
unaffiliated investors, subject to the limits contained in paragraphs 
(a)(2)(i) and (iii) of this section; or
    (ii) De minimis investment. Making and retaining an investment in 
the covered fund subject to the limits contained in paragraphs 
(a)(2)(ii) and (iii) of this section.

[[Page 95]]

    (2) Investment limits--(i) Seeding period. With respect to an 
investment in any covered fund made or held pursuant to paragraph 
(a)(1)(i) of this section, the banking entity and its affiliates:
    (A) Must actively seek unaffiliated investors to reduce, through 
redemption, sale, dilution, or other methods, the aggregate amount of 
all ownership interests of the banking entity in the covered fund to the 
amount permitted in paragraph (a)(2)(i)(B) of this section; and
    (B) Must, no later than 1 year after the date of establishment of 
the fund (or such longer period as may be provided by the Board pursuant 
to paragraph (e) of this section), conform its ownership interest in the 
covered fund to the limits in paragraph (a)(2)(ii) of this section;
    (ii) Per-fund limits. (A) Except as provided in paragraph 
(a)(2)(ii)(B) of this section, an investment by a banking entity and its 
affiliates in any covered fund made or held pursuant to paragraph 
(a)(1)(ii) of this section may not exceed 3 percent of the total number 
or value of the outstanding ownership interests of the fund.
    (B) An investment by a banking entity and its affiliates in a 
covered fund that is an issuing entity of asset-backed securities may 
not exceed 3 percent of the total fair market value of the ownership 
interests of the fund measured in accordance with paragraph (b)(3) of 
this section, unless a greater percentage is retained by the banking 
entity and its affiliates in compliance with the requirements of section 
15G of the Exchange Act (15 U.S.C. 78o-11) and the implementing 
regulations issued thereunder, in which case the investment by the 
banking entity and its affiliates in the covered fund may not exceed the 
amount, number, or value of ownership interests of the fund required 
under section 15G of the Exchange Act and the implementing regulations 
issued thereunder.
    (iii) Aggregate limit. The aggregate value of all ownership 
interests of the banking entity and its affiliates in all covered funds 
acquired or retained under this section may not exceed 3 percent of the 
tier 1 capital of the banking entity, as provided under paragraph (c) of 
this section, and shall be calculated as of the last day of each 
calendar quarter.
    (iv) Date of establishment. For purposes of this section, the date 
of establishment of a covered fund shall be:
    (A) In general. The date on which the investment adviser or similar 
entity to the covered fund begins making investments pursuant to the 
written investment strategy for the fund;
    (B) Issuing entities of asset-backed securities. In the case of an 
issuing entity of asset-backed securities, the date on which the assets 
are initially transferred into the issuing entity of asset-backed 
securities.
    (b) Rules of construction--(1) Attribution of ownership interests to 
a covered banking entity. (i) For purposes of paragraph (a)(2) of this 
section, the amount and value of a banking entity's permitted investment 
in any single covered fund shall include any ownership interest held 
under Sec.351.12 directly by the banking entity, including any 
affiliate of the banking entity.
    (ii) Treatment of registered investment companies, SEC-regulated 
business development companies and foreign public funds. For purposes of 
paragraph (b)(1)(i) of this section, a registered investment company, 
SEC-regulated business development companies or foreign public fund as 
described in Sec.351.10(c)(1) of this subpart will not be considered 
to be an affiliate of the banking entity so long as the banking entity:
    (A) Does not own, control, or hold with the power to vote 25 percent 
or more of the voting shares of the company or fund; and
    (B) Provides investment advisory, commodity trading advisory, 
administrative, and other services to the company or fund in compliance 
with the limitations under applicable regulation, order, or other 
authority.
    (iii) Covered funds. For purposes of paragraph (b)(1)(i) of this 
section, a covered fund will not be considered to be an affiliate of a 
banking entity so long as the covered fund is held in compliance with 
the requirements of this subpart.
    (iv) Treatment of employee and director investments financed by the 
banking entity. For purposes of paragraph (b)(1)(i)

[[Page 96]]

of this section, an investment by a director or employee of a banking 
entity who acquires an ownership interest in his or her personal 
capacity in a covered fund sponsored by the banking entity will be 
attributed to the banking entity if the banking entity, directly or 
indirectly, extends financing for the purpose of enabling the director 
or employee to acquire the ownership interest in the fund and the 
financing is used to acquire such ownership interest in the covered 
fund.
    (2) Calculation of permitted ownership interests in a single covered 
fund. Except as provided in paragraph (b)(3) or (4), for purposes of 
determining whether an investment in a single covered fund complies with 
the restrictions on ownership interests under paragraphs (a)(2)(i)(B) 
and (a)(2)(ii)(A) of this section:
    (i) The aggregate number of the outstanding ownership interests held 
by the banking entity shall be the total number of ownership interests 
held under this section by the banking entity in a covered fund divided 
by the total number of ownership interests held by all entities in that 
covered fund, as of the last day of each calendar quarter (both measured 
without regard to committed funds not yet called for investment);
    (ii) The aggregate value of the outstanding ownership interests held 
by the banking entity shall be the aggregate fair market value of all 
investments in and capital contributions made to the covered fund by the 
banking entity, divided by the value of all investments in and capital 
contributions made to that covered fund by all entities, as of the last 
day of each calendar quarter (all measured without regard to committed 
funds not yet called for investment). If fair market value cannot be 
determined, then the value shall be the historical cost basis of all 
investments in and contributions made by the banking entity to the 
covered fund;
    (iii) For purposes of the calculation under paragraph (b)(2)(ii) of 
this section, once a valuation methodology is chosen, the banking entity 
must calculate the value of its investment and the investments of all 
others in the covered fund in the same manner and according to the same 
standards.
    (3) Issuing entities of asset-backed securities. In the case of an 
ownership interest in an issuing entity of asset-backed securities, for 
purposes of determining whether an investment in a single covered fund 
complies with the restrictions on ownership interests under paragraphs 
(a)(2)(i)(B) and (a)(2)(ii)(B) of this section:
    (i) For securitizations subject to the requirements of section 15G 
of the Exchange Act (15 U.S.C. 78o-11), the calculations shall be made 
as of the date and according to the valuation methodology applicable 
pursuant to the requirements of section 15G of the Exchange Act (15 
U.S.C. 78o-11) and the implementing regulations issued thereunder; or
    (ii) For securitization transactions completed prior to the 
compliance date of such implementing regulations (or as to which such 
implementing regulations do not apply), the calculations shall be made 
as of the date of establishment as defined in paragraph (a)(2)(iv)(B) of 
this section or such earlier date on which the transferred assets have 
been valued for purposes of transfer to the covered fund, and thereafter 
only upon the date on which additional securities of the issuing entity 
of asset-backed securities are priced for purposes of the sales of 
ownership interests to unaffiliated investors.
    (iii) For securitization transactions completed prior to the 
compliance date of such implementing regulations (or as to which such 
implementing regulations do not apply), the aggregate value of the 
outstanding ownership interests in the covered fund shall be the fair 
market value of the assets transferred to the issuing entity of the 
securitization and any other assets otherwise held by the issuing entity 
at such time, determined in a manner that is consistent with its 
determination of the fair market value of those assets for financial 
statement purposes.
    (iv) For purposes of the calculation under paragraph (b)(3)(iii) of 
this section, the valuation methodology used to calculate the fair 
market value of the ownership interests must be the same for both the 
ownership interests

[[Page 97]]

held by a banking entity and the ownership interests held by all others 
in the covered fund in the same manner and according to the same 
standards.
    (4) Multi-tier fund investments--(i) Master-feeder fund investments. 
If the principal investment strategy of a covered fund (the ``feeder 
fund'') is to invest substantially all of its assets in another single 
covered fund (the ``master fund''), then for purposes of the investment 
limitations in paragraphs (a)(2)(i)(B) and (a)(2)(ii) of this section, 
the banking entity's permitted investment in such funds shall be 
measured only by reference to the value of the master fund. The banking 
entity's permitted investment in the master fund shall include any 
investment by the banking entity in the master fund, as well as the 
banking entity's pro-rata share of any ownership interest of the master 
fund that is held through the feeder fund; and
    (ii) Fund-of-funds investments. If a banking entity organizes and 
offers a covered fund pursuant to Sec.351.11 of this subpart for the 
purpose of investing in other covered funds (a ``fund of funds'') and 
that fund of funds itself invests in another covered fund that the 
banking entity is permitted to own, then the banking entity's permitted 
investment in that other fund shall include any investment by the 
banking entity in that other fund, as well as the banking entity's pro-
rata share of any ownership interest of the fund that is held through 
the fund of funds. The investment of the banking entity may not 
represent more than 3 percent of the amount or value of any single 
covered fund.
    (c) Aggregate permitted investments in all covered funds. (1) For 
purposes of paragraph (a)(2)(iii) of this section, the aggregate value 
of all ownership interests held by a banking entity shall be the sum of 
all amounts paid or contributed by the banking entity in connection with 
acquiring or retaining an ownership interest in covered funds (together 
with any amounts paid by the entity (or employee thereof) in connection 
with obtaining a restricted profit interest under Sec.351.10(d)(6)(ii) 
of this subpart), on a historical cost basis.
    (2) Calculation of tier 1 capital. For purposes of paragraph 
(a)(2)(iii) of this section:
    (i) Entities that are required to hold and report tier 1 capital. If 
a banking entity is required to calculate and report tier 1 capital, the 
banking entity's tier 1 capital shall be equal to the amount of tier 1 
capital of the banking entity as of the last day of the most recent 
calendar quarter, as reported to its primary financial regulatory 
agency; and
    (ii) If a banking entity is not required to calculate and report 
tier 1 capital, the banking entity's tier 1 capital shall be determined 
to be equal to:
    (A) In the case of a banking entity that is controlled, directly or 
indirectly, by a depository institution that calculates and reports tier 
1 capital, be equal to the amount of tier 1 capital reported by such 
controlling depository institution in the manner described in paragraph 
(c)(2)(i) of this section;
    (B) In the case of a banking entity that is not controlled, directly 
or indirectly, by a depository institution that calculates and reports 
tier 1 capital:
    (1) Bank holding company subsidiaries. If the banking entity is a 
subsidiary of a bank holding company or company that is treated as a 
bank holding company, be equal to the amount of tier 1 capital reported 
by the top-tier affiliate of such covered banking entity that calculates 
and reports tier 1 capital in the manner described in paragraph 
(c)(2)(i) of this section; and
    (2) Other holding companies and any subsidiary or affiliate thereof. 
If the banking entity is not a subsidiary of a bank holding company or a 
company that is treated as a bank holding company, be equal to the total 
amount of shareholders' equity of the top-tier affiliate within such 
organization as of the last day of the most recent calendar quarter that 
has ended, as determined under applicable accounting standards.
    (iii) Treatment of foreign banking entities--(A) Foreign banking 
entities. Except as provided in paragraph (c)(2)(iii)(B) of this 
section, with respect to a banking entity that is not itself, and is not 
controlled directly or indirectly by, a banking entity that is located 
or organized under the laws of the United States or of any State, the 
tier 1 capital of the banking entity shall be the consolidated tier 1 
capital of the entity

[[Page 98]]

as calculated under applicable home country standards.
    (B) U.S. affiliates of foreign banking entities. With respect to a 
banking entity that is located or organized under the laws of the United 
States or of any State and is controlled by a foreign banking entity 
identified under paragraph (c)(2)(iii)(A) of this section, the banking 
entity's tier 1 capital shall be as calculated under paragraphs 
(c)(2)(i) or (ii) of this section.
    (d) Capital treatment for a permitted investment in a covered fund. 
For purposes of calculating compliance with the applicable regulatory 
capital requirements, a banking entity shall deduct from the banking 
entity's tier 1 capital (as determined under paragraph (c)(2) of this 
section) the greater of:
    (1) The sum of all amounts paid or contributed by the banking entity 
in connection with acquiring or retaining an ownership interest 
(together with any amounts paid by the entity (or employee thereof) in 
connection with obtaining a restricted profit interest under Sec.
351.10(d)(6)(ii) of subpart C), on a historical cost basis, plus any 
earnings received; and
    (2) The fair market value of the banking entity's ownership 
interests in the covered fund as determined under paragraph (b)(2)(ii) 
or (b)(3) of this section (together with any amounts paid by the entity 
(or employee thereof) in connection with obtaining a restricted profit 
interest under Sec.351.10(d)(6)(ii) of subpart C), if the banking 
entity accounts for the profits (or losses) of the fund investment in 
its financial statements.
    (e) Extension of time to divest an ownership interest. (1) Upon 
application by a banking entity, the Board may extend the period under 
paragraph (a)(2)(i) of this section for up to 2 additional years if the 
Board finds that an extension would be consistent with safety and 
soundness and not detrimental to the public interest. An application for 
extension must:
    (i) Be submitted to the Board at least 90 days prior to the 
expiration of the applicable time period;
    (ii) Provide the reasons for application, including information that 
addresses the factors in paragraph (e)(2) of this section; and
    (iii) Explain the banking entity's plan for reducing the permitted 
investment in a covered fund through redemption, sale, dilution or other 
methods as required in paragraph (a)(2) of this section.
    (2) Factors governing Board determinations. In reviewing any 
application under paragraph (e)(1) of this section, the Board may 
consider all the facts and circumstances related to the permitted 
investment in a covered fund, including:
    (i) Whether the investment would result, directly or indirectly, in 
a material exposure by the banking entity to high-risk assets or high-
risk trading strategies;
    (ii) The contractual terms governing the banking entity's interest 
in the covered fund;
    (iii) The date on which the covered fund is expected to have 
attracted sufficient investments from investors unaffiliated with the 
banking entity to enable the banking entity to comply with the 
limitations in paragraph (a)(2)(i) of this section;
    (iv) The total exposure of the covered banking entity to the 
investment and the risks that disposing of, or maintaining, the 
investment in the covered fund may pose to the banking entity and the 
financial stability of the United States;
    (v) The cost to the banking entity of divesting or disposing of the 
investment within the applicable period;
    (vi) Whether the investment or the divestiture or conformance of the 
investment would involve or result in a material conflict of interest 
between the banking entity and unaffiliated parties, including clients, 
customers or counterparties to which it owes a duty;
    (vi) The banking entity's prior efforts to reduce through 
redemption, sale, dilution, or other methods its ownership interests in 
the covered fund, including activities related to the marketing of 
interests in such covered fund;
    (viii) Market conditions; and
    (ix) Any other factor that the Board believes appropriate.
    (3) Authority to impose restrictions on activities or investment 
during any extension period. The Board may impose such conditions on any 
extension approved under paragraph (e)(1) of this section as

[[Page 99]]

the Board determines are necessary or appropriate to protect the safety 
and soundness of the banking entity or the financial stability of the 
United States, address material conflicts of interest or other unsound 
banking practices, or otherwise further the purposes of section 13 of 
the BHC Act and this part.
    (4) Consultation. In the case of a banking entity that is primarily 
regulated by another Federal banking agency, the SEC, or the CFTC, the 
Board will consult with such agency prior to acting on an application by 
the banking entity for an extension under paragraph (e)(1) of this 
section.



Sec.351.13  Other permitted covered fund activities and investments.

    (a) Permitted risk-mitigating hedging activities. (1) The 
prohibition contained in Sec.351.10(a) of this subpart does not apply 
with respect to an ownership interest in a covered fund acquired or 
retained by a banking entity that is designed to demonstrably reduce or 
otherwise significantly mitigate the specific, identifiable risks to the 
banking entity in connection with a compensation arrangement with an 
employee of the banking entity or an affiliate thereof that directly 
provides investment advisory, commodity trading advisory or other 
services to the covered fund.
    (2) Requirements. The risk-mitigating hedging activities of a 
banking entity are permitted under this paragraph (a) only if:
    (i) The banking entity has established and implements, maintains and 
enforces an internal compliance program required by subpart D of this 
part that is reasonably designed to ensure the banking entity's 
compliance with the requirements of this section, including:
    (A) Reasonably designed written policies and procedures; and
    (B) Internal controls and ongoing monitoring, management, and 
authorization procedures, including relevant escalation procedures; and
    (ii) The acquisition or retention of the ownership interest:
    (A) Is made in accordance with the written policies, procedures and 
internal controls required under this section;
    (B) At the inception of the hedge, is designed to reduce or 
otherwise significantly mitigate and demonstrably reduces or otherwise 
significantly mitigates one or more specific, identifiable risks arising 
in connection with the compensation arrangement with the employee that 
directly provides investment advisory, commodity trading advisory, or 
other services to the covered fund;
    (C) Does not give rise, at the inception of the hedge, to any 
significant new or additional risk that is not itself hedged 
contemporaneously in accordance with this section; and
    (D) Is subject to continuing review, monitoring and management by 
the banking entity.
    (iii) The compensation arrangement relates solely to the covered 
fund in which the banking entity or any affiliate has acquired an 
ownership interest pursuant to this paragraph and such compensation 
arrangement provides that any losses incurred by the banking entity on 
such ownership interest will be offset by corresponding decreases in 
amounts payable under such compensation arrangement.
    (b) Certain permitted covered fund activities and investments 
outside of the United States. (1) The prohibition contained in Sec.
351.10(a) of this subpart does not apply to the acquisition or retention 
of any ownership interest in, or the sponsorship of, a covered fund by a 
banking entity only if:
    (i) The banking entity is not organized or directly or indirectly 
controlled by a banking entity that is organized under the laws of the 
United States or of one or more States;
    (ii) The activity or investment by the banking entity is pursuant to 
paragraph (9) or (13) of section 4(c) of the BHC Act;
    (iii) No ownership interest in the covered fund is offered for sale 
or sold to a resident of the United States; and
    (iv) The activity or investment occurs solely outside of the United 
States.
    (2) An activity or investment by the banking entity is pursuant to 
paragraph (9) or (13) of section 4(c) of the BHC Act for purposes of 
paragraph (b)(1)(ii) of this section only if:

[[Page 100]]

    (i) The activity or investment is conducted in accordance with the 
requirements of this section; and
    (ii)(A) With respect to a banking entity that is a foreign banking 
organization, the banking entity meets the qualifying foreign banking 
organization requirements of section 211.23(a), (c) or (e) of the 
Board's Regulation K (12 CFR 211.23(a), (c) or (e)), as applicable; or
    (B) With respect to a banking entity that is not a foreign banking 
organization, the banking entity is not organized under the laws of the 
United States or of one or more States and the banking entity, on a 
fully-consolidated basis, meets at least two of the following 
requirements:
    (1) Total assets of the banking entity held outside of the United 
States exceed total assets of the banking entity held in the United 
States;
    (2) Total revenues derived from the business of the banking entity 
outside of the United States exceed total revenues derived from the 
business of the banking entity in the United States; or
    (3) Total net income derived from the business of the banking entity 
outside of the United States exceeds total net income derived from the 
business of the banking entity in the United States.
    (3) An ownership interest in a covered fund is not offered for sale 
or sold to a resident of the United States for purposes of paragraph 
(b)(1)(iii) of this section only if it is sold or has been sold pursuant 
to an offering that does not target residents of the United States.
    (4) An activity or investment occurs solely outside of the United 
States for purposes of paragraph (b)(1)(iv) of this section only if:
    (i) The banking entity acting as sponsor, or engaging as principal 
in the acquisition or retention of an ownership interest in the covered 
fund, is not itself, and is not controlled directly or indirectly by, a 
banking entity that is located in the United States or organized under 
the laws of the United States or of any State;
    (ii) The banking entity (including relevant personnel) that makes 
the decision to acquire or retain the ownership interest or act as 
sponsor to the covered fund is not located in the United States or 
organized under the laws of the United States or of any State;
    (iii) The investment or sponsorship, including any transaction 
arising from risk-mitigating hedging related to an ownership interest, 
is not accounted for as principal directly or indirectly on a 
consolidated basis by any branch or affiliate that is located in the 
United States or organized under the laws of the United States or of any 
State; and
    (iv) No financing for the banking entity's ownership or sponsorship 
is provided, directly or indirectly, by any branch or affiliate that is 
located in the United States or organized under the laws of the United 
States or of any State.
    (5) For purposes of this section, a U.S. branch, agency, or 
subsidiary of a foreign bank, or any subsidiary thereof, is located in 
the United States; however, a foreign bank of which that branch, agency, 
or subsidiary is a part is not considered to be located in the United 
States solely by virtue of operation of the U.S. branch, agency, or 
subsidiary.
    (c) Permitted covered fund interests and activities by a regulated 
insurance company. The prohibition contained in Sec.351.10(a) of this 
subpart does not apply to the acquisition or retention by an insurance 
company, or an affiliate thereof, of any ownership interest in, or the 
sponsorship of, a covered fund only if:
    (1) The insurance company or its affiliate acquires and retains the 
ownership interest solely for the general account of the insurance 
company or for one or more separate accounts established by the 
insurance company;
    (2) The acquisition and retention of the ownership interest is 
conducted in compliance with, and subject to, the insurance company 
investment laws, regulations, and written guidance of the State or 
jurisdiction in which such insurance company is domiciled; and
    (3) The appropriate Federal banking agencies, after consultation 
with the Financial Stability Oversight Council and the relevant 
insurance commissioners of the States and foreign jurisdictions, as 
appropriate, have not

[[Page 101]]

jointly determined, after notice and comment, that a particular law, 
regulation, or written guidance described in paragraph (c)(2) of this 
section is insufficient to protect the safety and soundness of the 
banking entity, or the financial stability of the United States.



Sec.351.14  Limitations on relationships with a covered fund.

    (a) Relationships with a covered fund. (1) Except as provided for in 
paragraph (a)(2) of this section, no banking entity that serves, 
directly or indirectly, as the investment manager, investment adviser, 
commodity trading advisor, or sponsor to a covered fund, that organizes 
and offers a covered fund pursuant to Sec.351.11 of this subpart, or 
that continues to hold an ownership interest in accordance with Sec.
351.11(b) of this subpart, and no affiliate of such entity, may enter 
into a transaction with the covered fund, or with any other covered fund 
that is controlled by such covered fund, that would be a covered 
transaction as defined in section 23A of the Federal Reserve Act (12 
U.S.C. 371c(b)(7)), as if such banking entity and the affiliate thereof 
were a member bank and the covered fund were an affiliate thereof.
    (2) Notwithstanding paragraph (a)(1) of this section, a banking 
entity may:
    (i) Acquire and retain any ownership interest in a covered fund in 
accordance with the requirements of Sec.351.11, Sec.351.12, or Sec.
351.13 of this subpart; and
    (ii) Enter into any prime brokerage transaction with any covered 
fund in which a covered fund managed, sponsored, or advised by such 
banking entity (or an affiliate thereof) has taken an ownership 
interest, if:
    (A) The banking entity is in compliance with each of the limitations 
set forth in Sec.351.11 of this subpart with respect to a covered fund 
organized and offered by such banking entity (or an affiliate thereof);
    (B) The chief executive officer (or equivalent officer) of the 
banking entity certifies in writing annually to the FDIC (with a duty to 
update the certification if the information in the certification 
materially changes) that the banking entity does not, directly or 
indirectly, guarantee, assume, or otherwise insure the obligations or 
performance of the covered fund or of any covered fund in which such 
covered fund invests; and
    (C) The Board has not determined that such transaction is 
inconsistent with the safe and sound operation and condition of the 
banking entity.
    (b) Restrictions on transactions with covered funds. A banking 
entity that serves, directly or indirectly, as the investment manager, 
investment adviser, commodity trading advisor, or sponsor to a covered 
fund, or that organizes and offers a covered fund pursuant to Sec.
351.11 of this subpart, or that continues to hold an ownership interest 
in accordance with Sec.351.11(b) of this subpart, shall be subject to 
section 23B of the Federal Reserve Act (12 U.S.C. 371c-1), as if such 
banking entity were a member bank and such covered fund were an 
affiliate thereof.
    (c) Restrictions on prime brokerage transactions. A prime brokerage 
transaction permitted under paragraph (a)(2)(ii) of this section shall 
be subject to section 23B of the Federal Reserve Act (12 U.S.C. 371c-1) 
as if the counterparty were an affiliate of the banking entity.



Sec.351.15  Other limitations on permitted covered fund activities.

    (a) No transaction, class of transactions, or activity may be deemed 
permissible under Sec. Sec.351.11 through 351.13 of this subpart if 
the transaction, class of transactions, or activity would:
    (1) Involve or result in a material conflict of interest between the 
banking entity and its clients, customers, or counterparties;
    (2) Result, directly or indirectly, in a material exposure by the 
banking entity to a high-risk asset or a high-risk trading strategy; or
    (3) Pose a threat to the safety and soundness of the banking entity 
or to the financial stability of the United States.
    (b) Definition of material conflict of interest. (1) For purposes of 
this section, a material conflict of interest between a banking entity 
and its clients, customers, or counterparties exists if the banking 
entity engages in any transaction, class of transactions, or activity 
that would involve or result in the

[[Page 102]]

banking entity's interests being materially adverse to the interests of 
its client, customer, or counterparty with respect to such transaction, 
class of transactions, or activity, and the banking entity has not taken 
at least one of the actions in paragraph (b)(2) of this section.
    (2) Prior to effecting the specific transaction or class or type of 
transactions, or engaging in the specific activity, the banking entity:
    (i) Timely and effective disclosure. (A) Has made clear, timely, and 
effective disclosure of the conflict of interest, together with other 
necessary information, in reasonable detail and in a manner sufficient 
to permit a reasonable client, customer, or counterparty to meaningfully 
understand the conflict of interest; and
    (B) Such disclosure is made in a manner that provides the client, 
customer, or counterparty the opportunity to negate, or substantially 
mitigate, any materially adverse effect on the client, customer, or 
counterparty created by the conflict of interest; or
    (ii) Information barriers. Has established, maintained, and enforced 
information barriers that are memorialized in written policies and 
procedures, such as physical separation of personnel, or functions, or 
limitations on types of activity, that are reasonably designed, taking 
into consideration the nature of the banking entity's business, to 
prevent the conflict of interest from involving or resulting in a 
materially adverse effect on a client, customer, or counterparty. A 
banking entity may not rely on such information barriers if, in the case 
of any specific transaction, class or type of transactions or activity, 
the banking entity knows or should reasonably know that, notwithstanding 
the banking entity's establishment of information barriers, the conflict 
of interest may involve or result in a materially adverse effect on a 
client, customer, or counterparty.
    (c) Definition of high-risk asset and high-risk trading strategy. 
For purposes of this section:
    (1) High-risk asset means an asset or group of related assets that 
would, if held by a banking entity, significantly increase the 
likelihood that the banking entity would incur a substantial financial 
loss or would pose a threat to the financial stability of the United 
States.
    (2) High-risk trading strategy means a trading strategy that would, 
if engaged in by a banking entity, significantly increase the likelihood 
that the banking entity would incur a substantial financial loss or 
would pose a threat to the financial stability of the United States.



Sec.351.16  Ownership of Interests in and Sponsorship of Issuers 
of Certain Collateralized Debt Obligations Backed by Trust-Preferred 
Securities.

    (a) The prohibition contained in Sec.351.10(a)(1) does not apply 
to the ownership by a banking entity of an interest in, or sponsorship 
of, any issuer if:
    (1) The issuer was established, and the interest was issued, before 
May 19, 2010;
    (2) The banking entity reasonably believes that the offering 
proceeds received by the issuer were invested primarily in Qualifying 
TruPS Collateral; and
    (3) The banking entity acquired such interest on or before December 
10, 2013 (or acquired such interest in connection with a merger with or 
acquisition of a banking entity that acquired the interest on or before 
December 10, 2013).
    (b) For purposes of this Sec.351.16, Qualifying TruPS Collateral 
shall mean any trust preferred security or subordinated debt instrument 
issued prior to May 19, 2010 by a depository institution holding company 
that, as of the end of any reporting period within 12 months immediately 
preceding the issuance of such trust preferred security or subordinated 
debt instrument, had total consolidated assets of less than 
$15,000,000,000 or issued prior to May 19, 2010 by a mutual holding 
company.
    (c) Notwithstanding paragraph (a)(3) of this section, a banking 
entity may act as a market maker with respect to the interests of an 
issuer described in paragraph (a) of this section in accordance with the 
applicable provisions of Sec. Sec.351.4 and 351.11.
    (d) Without limiting the applicability of paragraph (a) of this 
section, the Board, the FDIC and the OCC will make public a non-
exclusive list of

[[Page 103]]

issuers that meet the requirements of paragraph (a). A banking entity 
may rely on the list published by the Board, the FDIC and the OCC.

[79 FR 5228, Jan. 31, 2014]



Sec. Sec.351.17-351.19  [Reserved]



          Subpart D_Compliance Program Requirement; Violations



Sec.351.20  Program for compliance; reporting

    (a) Program requirement. Each banking entity shall develop and 
provide for the continued administration of a compliance program 
reasonably designed to ensure and monitor compliance with the 
prohibitions and restrictions on proprietary trading and covered fund 
activities and investments set forth in section 13 of the BHC Act and 
this part. The terms, scope and detail of the compliance program shall 
be appropriate for the types, size, scope and complexity of activities 
and business structure of the banking entity.
    (b) Contents of compliance program. Except as provided in paragraph 
(f) of this section, the compliance program required by paragraph (a) of 
this section, at a minimum, shall include:
    (1) Written policies and procedures reasonably designed to document, 
describe, monitor and limit trading activities subject to subpart B 
(including those permitted under Sec. Sec.351.3 to 351.6 of subpart 
B), including setting, monitoring and managing required limits set out 
in Sec.351.4 and Sec.351.5, and activities and investments with 
respect to a covered fund subject to subpart C (including those 
permitted under Sec. Sec.351.11 through 351.14 of subpart C) conducted 
by the banking entity to ensure that all activities and investments 
conducted by the banking entity that are subject to section 13 of the 
BHC Act and this part comply with section 13 of the BHC Act and this 
part;
    (2) A system of internal controls reasonably designed to monitor 
compliance with section 13 of the BHC Act and this part and to prevent 
the occurrence of activities or investments that are prohibited by 
section 13 of the BHC Act and this part;
    (3) A management framework that clearly delineates responsibility 
and accountability for compliance with section 13 of the BHC Act and 
this part and includes appropriate management review of trading limits, 
strategies, hedging activities, investments, incentive compensation and 
other matters identified in this part or by management as requiring 
attention;
    (4) Independent testing and audit of the effectiveness of the 
compliance program conducted periodically by qualified personnel of the 
banking entity or by a qualified outside party;
    (5) Training for trading personnel and managers, as well as other 
appropriate personnel, to effectively implement and enforce the 
compliance program; and
    (6) Records sufficient to demonstrate compliance with section 13 of 
the BHC Act and this part, which a banking entity must promptly provide 
to the FDIC upon request and retain for a period of no less than 5 years 
or such longer period as required by the FDIC.
    (c) Additional standards. In addition to the requirements in 
paragraph (b) of this section, the compliance program of a banking 
entity must satisfy the requirements and other standards contained in 
Appendix B, if:
    (1) The banking entity engages in proprietary trading permitted 
under subpart B and is required to comply with the reporting 
requirements of paragraph (d) of this section;
    (2) The banking entity has reported total consolidated assets as of 
the previous calendar year end of $50 billion or more or, in the case of 
a foreign banking entity, has total U.S. assets as of the previous 
calendar year end of $50 billion or more (including all subsidiaries, 
affiliates, branches and agencies of the foreign banking entity 
operating, located or organized in the United States); or
    (3) The FDIC notifies the banking entity in writing that it must 
satisfy the requirements and other standards contained in Appendix B to 
this part.
    (d) Reporting requirements under Appendix A to this part. (1) A 
banking entity engaged in proprietary trading activity permitted under 
subpart B shall comply with the reporting requirements described in 
Appendix A, if:
    (i) The banking entity (other than a foreign banking entity as 
provided in

[[Page 104]]

paragraph (d)(1)(ii) of this section) has, together with its affiliates 
and subsidiaries, trading assets and liabilities (excluding trading 
assets and liabilities involving obligations of or guaranteed by the 
United States or any agency of the United States) the average gross sum 
of which (on a worldwide consolidated basis) over the previous 
consecutive four quarters, as measured as of the last day of each of the 
four prior calendar quarters, equals or exceeds the threshold 
established in paragraph (d)(2) of this section;
    (ii) In the case of a foreign banking entity, the average gross sum 
of the trading assets and liabilities of the combined U.S. operations of 
the foreign banking entity (including all subsidiaries, affiliates, 
branches and agencies of the foreign banking entity operating, located 
or organized in the United States and excluding trading assets and 
liabilities involving obligations of or guaranteed by the United States 
or any agency of the United States) over the previous consecutive four 
quarters, as measured as of the last day of each of the four prior 
calendar quarters, equals or exceeds the threshold established in 
paragraph (d)(2) of this section; or
    (iii) The FDIC notifies the banking entity in writing that it must 
satisfy the reporting requirements contained in Appendix A.
    (2) The threshold for reporting under paragraph (d)(1) of this 
section shall be $50 billion beginning on June 30, 2014; $25 billion 
beginning on April 30, 2016; and $10 billion beginning on December 31, 
2016.
    (3) Frequency of reporting: Unless the FDIC notifies the banking 
entity in writing that it must report on a different basis, a banking 
entity with $50 billion or more in trading assets and liabilities (as 
calculated in accordance with paragraph (d)(1) of this section) shall 
report the information required by Appendix A for each calendar month 
within 30 days of the end of the relevant calendar month; beginning with 
information for the month of January 2015, such information shall be 
reported within 10 days of the end of each calendar month. Any other 
banking entity subject to Appendix A shall report the information 
required by Appendix A for each calendar quarter within 30 days of the 
end of that calendar quarter unless the FDIC notifies the banking entity 
in writing that it must report on a different basis.
    (e) Additional documentation for covered funds. Any banking entity 
that has more than $10 billion in total consolidated assets as reported 
on December 31 of the previous two calendar years shall maintain records 
that include:
    (1) Documentation of the exclusions or exemptions other than 
sections 3(c)(1) and 3(c)(7) of the Investment Company Act of 1940 
relied on by each fund sponsored by the banking entity (including all 
subsidiaries and affiliates) in determining that such fund is not a 
covered fund;
    (2) For each fund sponsored by the banking entity (including all 
subsidiaries and affiliates) for which the banking entity relies on one 
or more of the exclusions from the definition of covered fund provided 
by Sec. Sec.351.10(c)(1),351.10(c)(5), 351.10(c)(8), 351.10(c)(9), or 
351.10(c)(10) of subpart C, documentation supporting the banking 
entity's determination that the fund is not a covered fund pursuant to 
one or more of those exclusions;
    (3) For each seeding vehicle described in Sec.351.10(c)(12)(i) or 
(iii) of subpart C that will become a registered investment company or 
SEC-regulated business development company, a written plan documenting 
the banking entity's determination that the seeding vehicle will become 
a registered investment company or SEC-regulated business development 
company; the period of time during which the vehicle will operate as a 
seeding vehicle; and the banking entity's plan to market the vehicle to 
third-party investors and convert it into a registered investment 
company or SEC-regulated business development company within the time 
period specified in Sec.351.12(a)(2)(i)(B) of subpart C;
    (4) For any banking entity that is, or is controlled directly or 
indirectly by a banking entity that is, located in or organized under 
the laws of the United States or of any State, if the aggregate amount 
of ownership interests in foreign public funds that are described in 
Sec.351.10(c)(1) of subpart C owned by such banking entity (including 
ownership interests owned by any affiliate that is

[[Page 105]]

controlled directly or indirectly by a banking entity that is located in 
or organized under the laws of the United States or of any State) 
exceeds $50 million at the end of two or more consecutive calendar 
quarters, beginning with the next succeeding calendar quarter, 
documentation of the value of the ownership interests owned by the 
banking entity (and such affiliates) in each foreign public fund and 
each jurisdiction in which any such foreign public fund is organized, 
calculated as of the end of each calendar quarter, which documentation 
must continue until the banking entity's aggregate amount of ownership 
interests in foreign public funds is below $50 million for two 
consecutive calendar quarters; and
    (5) For purposes of paragraph (e)(4) of this section, a U.S. branch, 
agency, or subsidiary of a foreign banking entity is located in the 
United States; however, the foreign bank that operates or controls that 
branch, agency, or subsidiary is not considered to be located in the 
United States solely by virtue of operating or controlling the U.S. 
branch, agency, or subsidiary.
    (f) Simplified programs for less active banking entities--(1) 
Banking entities with no covered activities. A banking entity that does 
not engage in activities or investments pursuant to subpart B or subpart 
C (other than trading activities permitted pursuant to Sec.351.6(a) of 
subpart B) may satisfy the requirements of this section by establishing 
the required compliance program prior to becoming engaged in such 
activities or making such investments (other than trading activities 
permitted pursuant to Sec.351.6(a) of subpart B).
    (2) Banking entities with modest activities. A banking entity with 
total consolidated assets of $10 billion or less as reported on December 
31 of the previous two calendar years that engages in activities or 
investments pursuant to subpart B or subpart C (other than trading 
activities permitted under Sec.351.6(a) of subpart B) may satisfy the 
requirements of this section by including in its existing compliance 
policies and procedures appropriate references to the requirements of 
section 13 of the BHC Act and this part and adjustments as appropriate 
given the activities, size, scope and complexity of the banking entity.



Sec.351.21  Termination of activities or investments; penalties 
for violations.

    (a) Any banking entity that engages in an activity or makes an 
investment in violation of section 13 of the BHC Act or this part, or 
acts in a manner that functions as an evasion of the requirements of 
section 13 of the BHC Act or this part, including through an abuse of 
any activity or investment permitted under subparts B or C, or otherwise 
violates the restrictions and requirements of section 13 of the BHC Act 
or this part, shall, upon discovery, promptly terminate the activity 
and, as relevant, dispose of the investment.
    (b) Whenever the FDIC finds reasonable cause to believe any banking 
entity has engaged in an activity or made an investment in violation of 
section 13 of the BHC Act or this part, or engaged in any activity or 
made any investment that functions as an evasion of the requirements of 
section 13 of the BHC Act or this part, the FDIC may take any action 
permitted by law to enforce compliance with section 13 of the BHC Act 
and this part, including directing the banking entity to restrict, 
limit, or terminate any or all activities under this part and dispose of 
any investment.





 Sec. Appendix A to Part 351--Reporting and Recordkeeping Requirements 
                     for Covered Trading Activities

                               I. Purpose

    a. This appendix sets forth reporting and recordkeeping requirements 
that certain banking entities must satisfy in connection with the 
restrictions on proprietary trading set forth in subpart B 
(``proprietary trading restrictions''). Pursuant to Sec.351.20(d), 
this appendix generally applies to a banking entity that, together with 
its affiliates and subsidiaries, has significant trading assets and 
liabilities. These entities are required to (i) furnish periodic reports 
to the FDIC regarding a variety of quantitative measurements of their 
covered trading activities, which vary depending on the scope and size 
of covered trading activities, and (ii) create and

[[Page 106]]

maintain records documenting the preparation and content of these 
reports. The requirements of this appendix must be incorporated into the 
banking entity's internal compliance program under Sec.351.20 and 
Appendix B.
    b. The purpose of this appendix is to assist banking entities and 
the FDIC in:
    (i) Better understanding and evaluating the scope, type, and profile 
of the banking entity's covered trading activities;
    (ii) Monitoring the banking entity's covered trading activities;
    (iii) Identifying covered trading activities that warrant further 
review or examination by the banking entity to verify compliance with 
the proprietary trading restrictions;
    (iv) Evaluating whether the covered trading activities of trading 
desks engaged in market making-related activities subject to Sec.
351.4(b) are consistent with the requirements governing permitted market 
making-related activities;
    (v) Evaluating whether the covered trading activities of trading 
desks that are engaged in permitted trading activity subject to 
Sec. Sec.351.4, 351.5, or 351.6(a)-(b) (i.e., underwriting and market 
making-related related activity, risk-mitigating hedging, or trading in 
certain government obligations) are consistent with the requirement that 
such activity not result, directly or indirectly, in a material exposure 
to high-risk assets or high-risk trading strategies;
    (vi) Identifying the profile of particular covered trading 
activities of the banking entity, and the individual trading desks of 
the banking entity, to help establish the appropriate frequency and 
scope of examination by the FDIC of such activities; and
    (vii) Assessing and addressing the risks associated with the banking 
entity's covered trading activities.
    c. The quantitative measurements that must be furnished pursuant to 
this appendix are not intended to serve as a dispositive tool for the 
identification of permissible or impermissible activities.
    d. In order to allow banking entities and the Agencies to evaluate 
the effectiveness of these metrics, banking entities must collect and 
report these metrics for all trading desks beginning on the dates 
established in Sec.351.20 of the final rule. The Agencies will review 
the data collected and revise this collection requirement as appropriate 
based on a review of the data collected prior to September 30, 2015.
    e. In addition to the quantitative measurements required in this 
appendix, a banking entity may need to develop and implement other 
quantitative measurements in order to effectively monitor its covered 
trading activities for compliance with section 13 of the BHC Act and 
this part and to have an effective compliance program, as required by 
Sec.351.20 and Appendix B to this part. The effectiveness of 
particular quantitative measurements may differ based on the profile of 
the banking entity's businesses in general and, more specifically, of 
the particular trading desk, including types of instruments traded, 
trading activities and strategies, and history and experience (e.g., 
whether the trading desk is an established, successful market maker or a 
new entrant to a competitive market). In all cases, banking entities 
must ensure that they have robust measures in place to identify and 
monitor the risks taken in their trading activities, to ensure that the 
activities are within risk tolerances established by the banking entity, 
and to monitor and examine for compliance with the proprietary trading 
restrictions in this part.
    f. On an ongoing basis, banking entities must carefully monitor, 
review, and evaluate all furnished quantitative measurements, as well as 
any others that they choose to utilize in order to maintain compliance 
with section 13 of the BHC Act and this part. All measurement results 
that indicate a heightened risk of impermissible proprietary trading, 
including with respect to otherwise-permitted activities under 
Sec. Sec.351.4 through 351.6(a) and (b), or that result in a material 
exposure to high-risk assets or high-risk trading strategies, must be 
escalated within the banking entity for review, further analysis, 
explanation to the FDIC, and remediation, where appropriate. The 
quantitative measurements discussed in this appendix should be helpful 
to banking entities in identifying and managing the risks related to 
their covered trading activities.

                             II. Definitions

    The terms used in this appendix have the same meanings as set forth 
in Sec. Sec.351.2 and 351.3. In addition, for purposes of this 
appendix, the following definitions apply:
    Calculation period means the period of time for which a particular 
quantitative measurement must be calculated.
    Comprehensive profit and loss means the net profit or loss of a 
trading desk's material sources of trading revenue over a specific 
period of time, including, for example, any increase or decrease in the 
market value of a trading desk's holdings, dividend income, and interest 
income and expense.
    Covered trading activity means trading conducted by a trading desk 
under Sec. Sec.351.4, 351.5, 351.6(a), or 351.6(b). A banking entity 
may include trading under Sec. Sec.351.3(d),351.6(c), 351.6(d) or 
351.6(e).
    Measurement frequency means the frequency with which a particular 
quantitative metric must be calculated and recorded.
    Trading desk means the smallest discrete unit of organization of a 
banking entity that purchases or sells financial instruments for the 
trading account of the banking entity or an affiliate thereof.

[[Page 107]]

      III. Reporting and Recordkeeping of Quantitative Measurements

                     a. Scope of Required Reporting

    General scope. Each banking entity made subject to this part by 
Sec.351.20 must furnish the following quantitative measurements for 
each trading desk of the banking entity, calculated in accordance with 
this appendix:
     Risk and Position Limits and Usage;
     Risk Factor Sensitivities;
     Value-at-Risk and Stress VaR;
     Comprehensive Profit and Loss Attribution;
     Inventory Turnover;
     Inventory Aging; and
     Customer-Facing Trade Ratio

           b. Frequency of Required Calculation and Reporting

    A banking entity must calculate any applicable quantitative 
measurement for each trading day. A banking entity must report each 
applicable quantitative measurement to the FDIC on the reporting 
schedule established in Sec.351.20 unless otherwise requested by the 
FDIC. All quantitative measurements for any calendar month must be 
reported within the time period required by Sec.351.20.

                            c. Recordkeeping

    A banking entity must, for any quantitative measurement furnished to 
the FDIC pursuant to this appendix and Sec.351.20(d), create and 
maintain records documenting the preparation and content of these 
reports, as well as such information as is necessary to permit the FDIC 
to verify the accuracy of such reports, for a period of 5 years from the 
end of the calendar year for which the measurement was taken.

                      IV. Quantitative Measurements

                     a. Risk-Management Measurements

                  1. Risk and Position Limits and Usage

    i. Description: For purposes of this appendix, Risk and Position 
Limits are the constraints that define the amount of risk that a trading 
desk is permitted to take at a point in time, as defined by the banking 
entity for a specific trading desk. Usage represents the portion of the 
trading desk's limits that are accounted for by the current activity of 
the desk. Risk and position limits and their usage are key risk 
management tools used to control and monitor risk taking and include, 
but are not limited, to the limits set out in Sec.351.4 and Sec.
351.5. A number of the metrics that are described below, including 
``Risk Factor Sensitivities'' and ``Value-at-Risk and Stress Value-at-
Risk,'' relate to a trading desk's risk and position limits and are 
useful in evaluating and setting these limits in the broader context of 
the trading desk's overall activities, particularly for the market 
making activities under Sec.351.4(b) and hedging activity under Sec.
351.5. Accordingly, the limits required under Sec.351.4(b)(2)(iii) and 
Sec.351.5(b)(1)(i) must meet the applicable requirements under Sec.
351.4(b)(2)(iii) and Sec.351.5(b)(1)(i) and also must include 
appropriate metrics for the trading desk limits including, at a minimum, 
the ``Risk Factor Sensitivities'' and ``Value-at-Risk and Stress Value-
at-Risk'' metrics except to the extent any of the ``Risk Factor 
Sensitivities'' or ``Value-at-Risk and Stress Value-at-Risk'' metrics 
are demonstrably ineffective for measuring and monitoring the risks of a 
trading desk based on the types of positions traded by, and risk 
exposures of, that desk.
    ii. General Calculation Guidance: Risk and Position Limits must be 
reported in the format used by the banking entity for the purposes of 
risk management of each trading desk. Risk and Position Limits are often 
expressed in terms of risk measures, such as VaR and Risk Factor 
Sensitivities, but may also be expressed in terms of other observable 
criteria, such as net open positions. When criteria other than VaR or 
Risk Factor Sensitivities are used to define the Risk and Position 
Limits, both the value of the Risk and Position Limits and the value of 
the variables used to assess whether these limits have been reached must 
be reported.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

                      2. Risk Factor Sensitivities

    i. Description: For purposes of this appendix, Risk Factor 
Sensitivities are changes in a trading desk's Comprehensive Profit and 
Loss that are expected to occur in the event of a change in one or more 
underlying variables that are significant sources of the trading desk's 
profitability and risk.
    ii. General Calculation Guidance: A banking entity must report the 
Risk Factor Sensitivities that are monitored and managed as part of the 
trading desk's overall risk management policy. The underlying data and 
methods used to compute a trading desk's Risk Factor Sensitivities will 
depend on the specific function of the trading desk and the internal 
risk management models employed. The number and type of Risk Factor 
Sensitivities that are monitored and managed by a trading desk, and 
furnished to the FDIC, will depend on the explicit risks assumed by the 
trading desk. In general, however, reported Risk Factor Sensitivities 
must be sufficiently granular to account for a preponderance of the 
expected price variation in the trading desk's holdings.
    A. Trading desks must take into account any relevant factors in 
calculating Risk Factor Sensitivities, including, for example, the 
following with respect to particular asset classes:

[[Page 108]]

     Commodity derivative positions: risk factors with 
respect to the related commodities set out in 17 CFR 20.2, the maturity 
of the positions, volatility and/or correlation sensitivities (expressed 
in a manner that demonstrates any significant non-linearities), and the 
maturity profile of the positions;
     Credit positions: risk factors with respect to 
credit spreads that are sufficiently granular to account for specific 
credit sectors and market segments, the maturity profile of the 
positions, and risk factors with respect to interest rates of all 
relevant maturities;
     Credit-related derivative positions: risk factor 
sensitivities, for example credit spreads, shifts (parallel and non-
parallel) in credit spreads--volatility, and/or correlation 
sensitivities (expressed in a manner that demonstrates any significant 
non-linearities), and the maturity profile of the positions;
     Equity derivative positions: risk factor 
sensitivities such as equity positions, volatility, and/or correlation 
sensitivities (expressed in a manner that demonstrates any significant 
non-linearities), and the maturity profile of the positions;
     Equity positions: risk factors for equity prices 
and risk factors that differentiate between important equity market 
sectors and segments, such as a small capitalization equities and 
international equities;
     Foreign exchange derivative positions: risk 
factors with respect to major currency pairs and maturities, exposure to 
interest rates at relevant maturities, volatility, and/or correlation 
sensitivities (expressed in a manner that demonstrates any significant 
non-linearities), as well as the maturity profile of the positions; and
     Interest rate positions, including interest rate 
derivative positions: risk factors with respect to major interest rate 
categories and maturities and volatility and/or correlation 
sensitivities (expressed in a manner that demonstrates any significant 
non-linearities), and shifts (parallel and non-parallel) in the interest 
rate curve, as well as the maturity profile of the positions.
    B. The methods used by a banking entity to calculate sensitivities 
to a common factor shared by multiple trading desks, such as an equity 
price factor, must be applied consistently across its trading desks so 
that the sensitivities can be compared from one trading desk to another.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

                3. Value-at-Risk and Stress Value-at-Risk

    i. Description: For purposes of this appendix, Value-at-Risk 
(``VaR'') is the commonly used percentile measurement of the risk of 
future financial loss in the value of a given set of aggregated 
positions over a specified period of time, based on current market 
conditions. For purposes of this appendix, Stress Value-at-Risk 
(``Stress VaR'') is the percentile measurement of the risk of future 
financial loss in the value of a given set of aggregated positions over 
a specified period of time, based on market conditions during a period 
of significant financial stress.
    ii. General Calculation Guidance: Banking entities must compute and 
report VaR and Stress VaR by employing generally accepted standards and 
methods of calculation. VaR should reflect a loss in a trading desk that 
is expected to be exceeded less than one percent of the time over a one-
day period. For those banking entities that are subject to regulatory 
capital requirements imposed by a Federal banking agency, VaR and Stress 
VaR must be computed and reported in a manner that is consistent with 
such regulatory capital requirements. In cases where a trading desk does 
not have a standalone VaR or Stress VaR calculation but is part of a 
larger aggregation of positions for which a VaR or Stress VaR 
calculation is performed, a VaR or Stress VaR calculation that includes 
only the trading desk's holdings must be performed consistent with the 
VaR or Stress VaR model and methodology used for the larger aggregation 
of positions.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

                    b. Source-of-Revenue Measurements

              1. Comprehensive Profit and Loss Attribution

    i. Description: For purposes of this appendix, Comprehensive Profit 
and Loss Attribution is an analysis that attributes the daily 
fluctuation in the value of a trading desk's positions to various 
sources. First, the daily profit and loss of the aggregated positions is 
divided into three categories: (i) profit and loss attributable to a 
trading desk's existing positions that were also positions held by the 
trading desk as of the end of the prior day (``existing positions''); 
(ii) profit and loss attributable to new positions resulting from the 
current day's trading activity (``new positions''); and (iii) residual 
profit and loss that cannot be specifically attributed to existing 
positions or new positions. The sum of (i), (ii), and (iii) must equal 
the trading desk's comprehensive profit and loss at each point in time. 
In addition, profit and loss measurements must calculate volatility of 
comprehensive profit and loss (i.e., the standard deviation of the 
trading desk's one-day profit and loss, in dollar terms) for the 
reporting period for at least a 30-, 60- and 90-day lag period, from the 
end of the reporting period, and any other period that the banking 
entity deems necessary to meet the requirements of the rule.
    A. The comprehensive profit and loss associated with existing 
positions must reflect changes in the value of these positions on the 
applicable day. The comprehensive profit

[[Page 109]]

and loss from existing positions must be further attributed, as 
applicable, to changes in (i) the specific Risk Factors and other 
factors that are monitored and managed as part of the trading desk's 
overall risk management policies and procedures; and (ii) any other 
applicable elements, such as cash flows, carry, changes in reserves, and 
the correction, cancellation, or exercise of a trade.
    B. The comprehensive profit and loss attributed to new positions 
must reflect commissions and fee income or expense and market gains or 
losses associated with transactions executed on the applicable day. New 
positions include purchases and sales of financial instruments and other 
assets/liabilities and negotiated amendments to existing positions. The 
comprehensive profit and loss from new positions may be reported in the 
aggregate and does not need to be further attributed to specific 
sources.
    C. The portion of comprehensive profit and loss that cannot be 
specifically attributed to known sources must be allocated to a residual 
category identified as an unexplained portion of the comprehensive 
profit and loss. Significant unexplained profit and loss must be 
escalated for further investigation and analysis.
    ii. General Calculation Guidance: The specific categories used by a 
trading desk in the attribution analysis and amount of detail for the 
analysis should be tailored to the type and amount of trading activities 
undertaken by the trading desk. The new position attribution must be 
computed by calculating the difference between the prices at which 
instruments were bought and/or sold and the prices at which those 
instruments are marked to market at the close of business on that day 
multiplied by the notional or principal amount of each purchase or sale. 
Any fees, commissions, or other payments received (paid) that are 
associated with transactions executed on that day must be added 
(subtracted) from such difference. These factors must be measured 
consistently over time to facilitate historical comparisons.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

                c. Customer-Facing Activity Measurements

                          1. Inventory Turnover

    i. Description: For purposes of this appendix, Inventory Turnover is 
a ratio that measures the turnover of a trading desk's inventory. The 
numerator of the ratio is the absolute value of all transactions over 
the reporting period. The denominator of the ratio is the value of the 
trading desk's inventory at the beginning of the reporting period.
    ii. General Calculation Guidance: For purposes of this appendix, for 
derivatives, other than options and interest rate derivatives, value 
means gross notional value, for options, value means delta adjusted 
notional value, and for interest rate derivatives, value means 10-year 
bond equivalent value.
    iii. Calculation Period: 30 days, 60 days, and 90 days.
    iv. Measurement Frequency: Daily.

                           2. Inventory Aging

    i. Description: For purposes of this appendix, Inventory Aging 
generally describes a schedule of the trading desk's aggregate assets 
and liabilities and the amount of time that those assets and liabilities 
have been held. Inventory Aging should measure the age profile of the 
trading desk's assets and liabilities.
    ii. General Calculation Guidance: In general, Inventory Aging must 
be computed using a trading desk's trading activity data and must 
identify the value of a trading desk's aggregate assets and liabilities. 
Inventory Aging must include two schedules, an asset-aging schedule and 
a liability-aging schedule. Each schedule must record the value of 
assets or liabilities held over all holding periods. For derivatives, 
other than options, and interest rate derivatives, value means gross 
notional value, for options, value means delta adjusted notional value 
and, for interest rate derivatives, value means 10-year bond equivalent 
value.
    iii. Calculation Period: One trading day.
    iv. Measurement Frequency: Daily.

    3. Customer-Facing Trade Ratio--Trade Count Based and Value Based

    i. Description: For purposes of this appendix, the Customer-Facing 
Trade Ratio is a ratio comparing (i) the transactions involving a 
counterparty that is a customer of the trading desk to (ii) the 
transactions involving a counterparty that is not a customer of the 
trading desk. A trade count based ratio must be computed that records 
the number of transactions involving a counterparty that is a customer 
of the trading desk and the number of transactions involving a 
counterparty that is not a customer of the trading desk. A value based 
ratio must be computed that records the value of transactions involving 
a counterparty that is a customer of the trading desk and the value of 
transactions involving a counterparty that is not a customer of the 
trading desk.
    ii. General Calculation Guidance: For purposes of calculating the 
Customer-Facing Trade Ratio, a counterparty is considered to be a 
customer of the trading desk if the counterparty is a market participant 
that makes use of the banking entity's market making-related services by 
obtaining such services, responding to quotations, or entering into a 
continuing relationship with respect to such services. However, a 
trading desk or other organizational unit of another

[[Page 110]]

banking entity would not be a client, customer, or counterparty of the 
trading desk if the other entity has trading assets and liabilities of 
$50 billion or more as measured in accordance with Sec.351.20(d)(1) 
unless the trading desk documents how and why a particular trading desk 
or other organizational unit of the entity should be treated as a 
client, customer, or counterparty of the trading desk. Transactions 
conducted anonymously on an exchange or similar trading facility that 
permits trading on behalf of a broad range of market participants would 
be considered transactions with customers of the trading desk. For 
derivatives, other than options, and interest rate derivatives, value 
means gross notional value, for options, value means delta adjusted 
notional value, and for interest rate derivatives, value means 10-year 
bond equivalent value.
    iii. Calculation Period: 30 days, 60 days, and 90 days.
    iv. Measurement Frequency: Daily.



 Sec. Appendix B to Part 351--Enhanced Minimum Standards for Compliance 
                                Programs

                               I. Overview

    Section 351.20(c) requires certain banking entities to establish, 
maintain, and enforce an enhanced compliance program that includes the 
requirements and standards in this Appendix as well as the minimum 
written policies and procedures, internal controls, management 
framework, independent testing, training, and recordkeeping provisions 
outlined in Sec.351.20. This Appendix sets forth additional minimum 
standards with respect to the establishment, oversight, maintenance, and 
enforcement by these banking entities of an enhanced internal compliance 
program for ensuring and monitoring compliance with the prohibitions and 
restrictions on proprietary trading and covered fund activities and 
investments set forth in section 13 of the BHC Act and this part.
    a. This compliance program must:
    1. Be reasonably designed to identify, document, monitor, and report 
the permitted trading and covered fund activities and investments of the 
banking entity; identify, monitor and promptly address the risks of 
these covered activities and investments and potential areas of 
noncompliance; and prevent activities or investments prohibited by, or 
that do not comply with, section 13 of the BHC Act and this part;
    2. Establish and enforce appropriate limits on the covered 
activities and investments of the banking entity, including limits on 
the size, scope, complexity, and risks of the individual activities or 
investments consistent with the requirements of section 13 of the BHC 
Act and this part;
    3. Subject the effectiveness of the compliance program to periodic 
independent review and testing, and ensure that the entity's internal 
audit, corporate compliance and internal control functions involved in 
review and testing are effective and independent;
    4. Make senior management, and others as appropriate, accountable 
for the effective implementation of the compliance program, and ensure 
that the board of directors and chief executive officer (or equivalent) 
of the banking entity review the effectiveness of the compliance 
program; and
    5. Facilitate supervision and examination by the Agencies of the 
banking entity's permitted trading and covered fund activities and 
investments.

                     II. Enhanced Compliance Program

    a. Proprietary Trading Activities. A banking entity must establish, 
maintain and enforce a compliance program that includes written policies 
and procedures that are appropriate for the types, size, and complexity 
of, and risks associated with, its permitted trading activities. The 
compliance program may be tailored to the types of trading activities 
conducted by the banking entity, and must include a detailed description 
of controls established by the banking entity to reasonably ensure that 
its trading activities are conducted in accordance with the requirements 
and limitations applicable to those trading activities under section 13 
of the BHC Act and this part, and provide for appropriate revision of 
the compliance program before expansion of the trading activities of the 
banking entity. A banking entity must devote adequate resources and use 
knowledgeable personnel in conducting, supervising and managing its 
trading activities, and promote consistency, independence and rigor in 
implementing its risk controls and compliance efforts. The compliance 
program must be updated with a frequency sufficient to account for 
changes in the activities of the banking entity, results of independent 
testing of the program, identification of weaknesses in the program, and 
changes in legal, regulatory or other requirements.
    1. Trading Desks: The banking entity must have written policies and 
procedures governing each trading desk that include a description of:
    i. The process for identifying, authorizing and documenting 
financial instruments each trading desk may purchase or sell, with 
separate documentation for market making-related activities conducted in 
reliance on Sec.351.4(b) and for hedging activity conducted in 
reliance on Sec.351.5;
    ii. A mapping for each trading desk to the division, business line, 
or other organizational structure that is responsible for managing and 
overseeing the trading desk's activities;

[[Page 111]]

    iii. The mission (i.e., the type of trading activity, such as 
market-making, trading in sovereign debt, etc.) and strategy (i.e., 
methods for conducting authorized trading activities) of each trading 
desk;
    iv. The activities that the trading desk is authorized to conduct, 
including (i) authorized instruments and products, and (ii) authorized 
hedging strategies, techniques and instruments;
    v. The types and amount of risks allocated by the banking entity to 
each trading desk to implement the mission and strategy of the trading 
desk, including an enumeration of material risks resulting from the 
activities in which the trading desk is authorized to engage (including 
but not limited to price risks, such as basis, volatility and 
correlation risks, as well as counterparty credit risk). Risk 
assessments must take into account both the risks inherent in the 
trading activity and the strength and effectiveness of controls designed 
to mitigate those risks;
    vi. How the risks allocated to each trading desk will be measured;
    vii. Why the allocated risks levels are appropriate to the 
activities authorized for the trading desk;
    viii. The limits on the holding period of, and the risk associated 
with, financial instruments under the responsibility of the trading 
desk;
    ix. The process for setting new or revised limits, as well as 
escalation procedures for granting exceptions to any limits or to any 
policies or procedures governing the desk, the analysis that will be 
required to support revising limits or granting exceptions, and the 
process for independently reviewing and documenting those exceptions and 
the underlying analysis;
    x. The process for identifying, documenting and approving new 
products, trading strategies, and hedging strategies;
    xi. The types of clients, customers, and counterparties with whom 
the trading desk may trade; and
    xii. The compensation arrangements, including incentive 
arrangements, for employees associated with the trading desk, which may 
not be designed to reward or incentivize prohibited proprietary trading 
or excessive or imprudent risk-taking.
    2. Description of risks and risk management processes: The 
compliance program for the banking entity must include a comprehensive 
description of the risk management program for the trading activity of 
the banking entity. The compliance program must also include a 
description of the governance, approval, reporting, escalation, review 
and other processes the banking entity will use to reasonably ensure 
that trading activity is conducted in compliance with section 13 of the 
BHC Act and this part. Trading activity in similar financial instruments 
should be subject to similar governance, limits, testing, controls, and 
review, unless the banking entity specifically determines to establish 
different limits or processes and documents those differences. 
Descriptions must include, at a minimum, the following elements:
    i. A description of the supervisory and risk management structure 
governing all trading activity, including a description of processes for 
initial and senior-level review of new products and new strategies;
    ii. A description of the process for developing, documenting, 
testing, approving and reviewing all models used for valuing, 
identifying and monitoring the risks of trading activity and related 
positions, including the process for periodic independent testing of the 
reliability and accuracy of those models;
    iii. A description of the process for developing, documenting, 
testing, approving and reviewing the limits established for each trading 
desk;
    iv. A description of the process by which a security may be 
purchased or sold pursuant to the liquidity management plan, including 
the process for authorizing and monitoring such activity to ensure 
compliance with the banking entity's liquidity management plan and the 
restrictions on liquidity management activities in this part;
    v. A description of the management review process, including 
escalation procedures, for approving any temporary exceptions or 
permanent adjustments to limits on the activities, positions, 
strategies, or risks associated with each trading desk; and
    vi. The role of the audit, compliance, risk management and other 
relevant units for conducting independent testing of trading and hedging 
activities, techniques and strategies.
    3. Authorized risks, instruments, and products. The banking entity 
must implement and enforce limits and internal controls for each trading 
desk that are reasonably designed to ensure that trading activity is 
conducted in conformance with section 13 of the BHC Act and this part 
and with the banking entity's written policies and procedures. The 
banking entity must establish and enforce risk limits appropriate for 
the activity of each trading desk. These limits should be based on 
probabilistic and non-probabilistic measures of potential loss (e.g., 
Value-at-Risk and notional exposure, respectively), and measured under 
normal and stress market conditions. At a minimum, these internal 
controls must monitor, establish and enforce limits on:
    i. The financial instruments (including, at a minimum, by type and 
exposure) that the trading desk may trade;
    ii. The types and levels of risks that may be taken by each trading 
desk; and
    iii. The types of hedging instruments used, hedging strategies 
employed, and the amount of risk effectively hedged.

[[Page 112]]

    4. Hedging policies and procedures. The banking entity must 
establish, maintain, and enforce written policies and procedures 
regarding the use of risk-mitigating hedging instruments and strategies 
that, at a minimum, describe:
    i. The positions, techniques and strategies that each trading desk 
may use to hedge the risk of its positions;
    ii. The manner in which the banking entity will identify the risks 
arising in connection with and related to the individual or aggregated 
positions, contracts or other holdings of the banking entity that are to 
be hedged and determine that those risks have been properly and 
effectively hedged;
    iii. The level of the organization at which hedging activity and 
management will occur;
    iv. The manner in which hedging strategies will be monitored and the 
personnel responsible for such monitoring;
    v. The risk management processes used to control unhedged or 
residual risks; and
    vi. The process for developing, documenting, testing, approving and 
reviewing all hedging positions, techniques and strategies permitted for 
each trading desk and for the banking entity in reliance on Sec.351.5.
    5. Analysis and quantitative measurements. The banking entity must 
perform robust analysis and quantitative measurement of its trading 
activities that is reasonably designed to ensure that the trading 
activity of each trading desk is consistent with the banking entity's 
compliance program; monitor and assist in the identification of 
potential and actual prohibited proprietary trading activity; and 
prevent the occurrence of prohibited proprietary trading. Analysis and 
models used to determine, measure and limit risk must be rigorously 
tested and be reviewed by management responsible for trading activity to 
ensure that trading activities, limits, strategies, and hedging 
activities do not understate the risk and exposure to the banking entity 
or allow prohibited proprietary trading. This review should include 
periodic and independent back-testing and revision of activities, 
limits, strategies and hedging as appropriate to contain risk and ensure 
compliance. In addition to the quantitative measurements reported by any 
banking entity subject to Appendix A to this part, each banking entity 
must develop and implement, to the extent appropriate to facilitate 
compliance with this part, additional quantitative measurements 
specifically tailored to the particular risks, practices, and strategies 
of its trading desks. The banking entity's analysis and quantitative 
measurements must incorporate the quantitative measurements reported by 
the banking entity pursuant to Appendix A (if applicable) and include, 
at a minimum, the following:
    i. Internal controls and written policies and procedures reasonably 
designed to ensure the accuracy and integrity of quantitative 
measurements;
    ii. Ongoing, timely monitoring and review of calculated quantitative 
measurements;
    iii. The establishment of numerical thresholds and appropriate 
trading measures for each trading desk and heightened review of trading 
activity not consistent with those thresholds to ensure compliance with 
section 13 of the BHC Act and this part, including analysis of the 
measurement results or other information, appropriate escalation 
procedures, and documentation related to the review; and
    iv. Immediate review and compliance investigation of the trading 
desk's activities, escalation to senior management with oversight 
responsibilities for the applicable trading desk, timely notification to 
the FDIC, appropriate remedial action (e.g., divesting of impermissible 
positions, cessation of impermissible activity, disciplinary actions), 
and documentation of the investigation findings and remedial action 
taken when quantitative measurements or other information, considered 
together with the facts and circumstances, or findings of internal 
audit, independent testing or other review suggest a reasonable 
likelihood that the trading desk has violated any part of section 13 of 
the BHC Act or this part.
    6. Other Compliance Matters. In addition to the requirements 
specified above, the banking entity's compliance program must:
    i. Identify activities of each trading desk that will be conducted 
in reliance on exemptions contained in Sec. Sec.351.4 through 351.6, 
including an explanation of:
    A. How and where in the organization the activity occurs; and
    B. Which exemption is being relied on and how the activity meets the 
specific requirements for reliance on the applicable exemption;
    ii. Include an explanation of the process for documenting, approving 
and reviewing actions taken pursuant to the liquidity management plan, 
where in the organization this activity occurs, the securities 
permissible for liquidity management, the process for ensuring that 
liquidity management activities are not conducted for the purpose of 
prohibited proprietary trading, and the process for ensuring that 
securities purchased as part of the liquidity management plan are highly 
liquid and conform to the requirements of this part;
    iii. Describe how the banking entity monitors for and prohibits 
potential or actual material exposure to high-risk assets or high-risk 
trading strategies presented by each trading desk that relies on the 
exemptions contained in Sec. Sec.351.3(d)(3), and 351.4 through 351.6, 
which must take into account potential or actual exposure to:

[[Page 113]]

    A. Assets whose values cannot be externally priced or, where 
valuation is reliant on pricing models, whose model inputs cannot be 
externally validated;
    B. Assets whose changes in value cannot be adequately mitigated by 
effective hedging;
    C. New products with rapid growth, including those that do not have 
a market history;
    D. Assets or strategies that include significant embedded leverage;
    E. Assets or strategies that have demonstrated significant 
historical volatility;
    F. Assets or strategies for which the application of capital and 
liquidity standards would not adequately account for the risk; and
    G. Assets or strategies that result in large and significant 
concentrations to sectors, risk factors, or counterparties;
    iv. Establish responsibility for compliance with the reporting and 
recordkeeping requirements of subpart B and Sec.351.20; and
    v. Establish policies for monitoring and prohibiting potential or 
actual material conflicts of interest between the banking entity and its 
clients, customers, or counterparties.
    7. Remediation of violations. The banking entity's compliance 
program must be reasonably designed and established to effectively 
monitor and identify for further analysis any trading activity that may 
indicate potential violations of section 13 of the BHC Act and this part 
and to prevent actual violations of section 13 of the BHC Act and this 
part. The compliance program must describe procedures for identifying 
and remedying violations of section 13 of the BHC Act and this part, and 
must include, at a minimum, a requirement to promptly document, address 
and remedy any violation of section 13 of the BHC Act or this part, and 
document all proposed and actual remediation efforts. The compliance 
program must include specific written policies and procedures that are 
reasonably designed to assess the extent to which any activity indicates 
that modification to the banking entity's compliance program is 
warranted and to ensure that appropriate modifications are implemented. 
The written policies and procedures must provide for prompt notification 
to appropriate management, including senior management and the board of 
directors, of any material weakness or significant deficiencies in the 
design or implementation of the compliance program of the banking 
entity.
    b. Covered Fund Activities or Investments. A banking entity must 
establish, maintain and enforce a compliance program that includes 
written policies and procedures that are appropriate for the types, 
size, complexity and risks of the covered fund and related activities 
conducted and investments made, by the banking entity.
    1. Identification of covered funds. The banking entity's compliance 
program must provide a process, which must include appropriate 
management review and independent testing, for identifying and 
documenting covered funds that each unit within the banking entity's 
organization sponsors or organizes and offers, and covered funds in 
which each such unit invests. In addition to the documentation 
requirements for covered funds, as specified under Sec.351.20(e), the 
documentation must include information that identifies all pools that 
the banking entity sponsors or has an interest in and the type of 
exemption from the Commodity Exchange Act (whether or not the pool 
relies on section 4.7 of the regulations under the Commodity Exchange 
Act), and the amount of ownership interest the banking entity has in 
those pools.
    2. Identification of covered fund activities and investments. The 
banking entity's compliance program must identify, document and map each 
unit within the organization that is permitted to acquire or hold an 
interest in any covered fund or sponsor any covered fund and map each 
unit to the division, business line, or other organizational structure 
that will be responsible for managing and overseeing that unit's 
activities and investments.
    3. Explanation of compliance. The banking entity's compliance 
program must explain how:
    i. The banking entity monitors for and prohibits potential or actual 
material conflicts of interest between the banking entity and its 
clients, customers, or counterparties related to its covered fund 
activities and investments;
    ii. The banking entity monitors for and prohibits potential or 
actual transactions or activities that may threaten the safety and 
soundness of the banking entity related to its covered fund activities 
and investments; and
    iii. The banking entity monitors for and prohibits potential or 
actual material exposure to high-risk assets or high-risk trading 
strategies presented by its covered fund activities and investments, 
taking into account potential or actual exposure to:
    A. Assets whose values cannot be externally priced or, where 
valuation is reliant on pricing models, whose model inputs cannot be 
externally validated;
    B. Assets whose changes in values cannot be adequately mitigated by 
effective hedging;
    C. New products with rapid growth, including those that do not have 
a market history;
    D. Assets or strategies that include significant embedded leverage;
    E. Assets or strategies that have demonstrated significant 
historical volatility;
    F. Assets or strategies for which the application of capital and 
liquidity standards would not adequately account for the risk; and

[[Page 114]]

    G. Assets or strategies that expose the banking entity to large and 
significant concentrations with respect to sectors, risk factors, or 
counterparties;
    4. Description and documentation of covered fund activities and 
investments. For each organizational unit engaged in covered fund 
activities and investments, the banking entity's compliance program must 
document:
    i. The covered fund activities and investments that the unit is 
authorized to conduct;
    ii. The banking entity's plan for actively seeking unaffiliated 
investors to ensure that any investment by the banking entity conforms 
to the limits contained in Sec.351.12 or registered in compliance with 
the securities laws and thereby exempt from those limits within the time 
periods allotted inSec.351.12; and
    iii. How it complies with the requirements of subpart C.
    5. Internal Controls. A banking entity must establish, maintain, and 
enforce internal controls that are reasonably designed to ensure that 
its covered fund activities or investments comply with the requirements 
of section 13 of the BHC Act and this part and are appropriate given the 
limits on risk established by the banking entity. These written internal 
controls must be reasonably designed and established to effectively 
monitor and identify for further analysis any covered fund activity or 
investment that may indicate potential violations of section 13 of the 
BHC Act or this part. The internal controls must, at a minimum require:
    i. Monitoring and limiting the banking entity's individual and 
aggregate investments in covered funds;
    ii. Monitoring the amount and timing of seed capital investments for 
compliance with the limitations under subpart C (including but not 
limited to the redemption, sale or disposition requirements) of Sec.
351.12, and the effectiveness of efforts to seek unaffiliated investors 
to ensure compliance with those limits;
    iii. Calculating the individual and aggregate levels of ownership 
interests in one or more covered fund required by Sec.351.12;
    iv. Attributing the appropriate instruments to the individual and 
aggregate ownership interest calculations above;
    v. Making disclosures to prospective and actual investors in any 
covered fund organized and offered or sponsored by the banking entity, 
as provided under Sec.351.11(a)(8);
    vi. Monitoring for and preventing any relationship or transaction 
between the banking entity and a covered fund that is prohibited under 
Sec.351.14, including where the banking entity has been designated as 
the sponsor, investment manager, investment adviser, or commodity 
trading advisor to a covered fund by another banking entity; and
    vii. Appropriate management review and supervision across legal 
entities of the banking entity to ensure that services and products 
provided by all affiliated entities comply with the limitation on 
services and products contained in Sec.351.14.
    6. Remediation of violations. The banking entity's compliance 
program must be reasonably designed and established to effectively 
monitor and identify for further analysis any covered fund activity or 
investment that may indicate potential violations of section 13 of the 
BHC Act or this part and to prevent actual violations of section 13 of 
the BHC Act and this part. The banking entity's compliance program must 
describe procedures for identifying and remedying violations of section 
13 of the BHC Act and this part, and must include, at a minimum, a 
requirement to promptly document, address and remedy any violation of 
section 13 of the BHC Act or this part, including Sec.351.21, and 
document all proposed and actual remediation efforts. The compliance 
program must include specific written policies and procedures that are 
reasonably designed to assess the extent to which any activity or 
investment indicates that modification to the banking entity's 
compliance program is warranted and to ensure that appropriate 
modifications are implemented. The written policies and procedures must 
provide for prompt notification to appropriate management, including 
senior management and the board of directors, of any material weakness 
or significant deficiencies in the design or implementation of the 
compliance program of the banking entity.

    III. Responsibility and Accountability for the Compliance Program

    a. A banking entity must establish, maintain, and enforce a 
governance and management framework to manage its business and employees 
with a view to preventing violations of section 13 of the BHC Act and 
this part. A banking entity must have an appropriate management 
framework reasonably designed to ensure that: appropriate personnel are 
responsible and accountable for the effective implementation and 
enforcement of the compliance program; a clear reporting line with a 
chain of responsibility is delineated; and the compliance program is 
reviewed periodically by senior management. The board of directors (or 
equivalent governance body) and senior management should have the 
appropriate authority and access to personnel and information within the 
organizations as well as appropriate resources to conduct their 
oversight activities effectively.
    1. Corporate governance. The banking entity must adopt a written 
compliance program approved by the board of directors, an appropriate 
committee of the board, or equivalent governance body, and senior 
management.
    2. Management procedures. The banking entity must establish, 
maintain, and enforce a

[[Page 115]]

governance framework that is reasonably designed to achieve compliance 
with section 13 of the BHC Act and this part, which, at a minimum, 
provides for:
    i. The designation of appropriate senior management or committee of 
senior management with authority to carry out the management 
responsibilities of the banking entity for each trading desk and for 
each organizational unit engaged in covered fund activities;
    ii. Written procedures addressing the management of the activities 
of the banking entity that are reasonably designed to achieve compliance 
with section 13 of the BHC Act and this part, including:
    A. A description of the management system, including the titles, 
qualifications, and locations of managers and the specific 
responsibilities of each person with respect to the banking entity's 
activities governed by section 13 of the BHC Act and this part; and
    B. Procedures for determining compensation arrangements for traders 
engaged in underwriting or market making-related activities under Sec.
351.4 or risk-mitigating hedging activities under Sec.351.5 so that 
such compensation arrangements are designed not to reward or incentivize 
prohibited proprietary trading and appropriately balance risk and 
financial results in a manner that does not encourage employees to 
expose the banking entity to excessive or imprudent risk.
    3. Business line managers. Managers with responsibility for one or 
more trading desks of the banking entity are accountable for the 
effective implementation and enforcement of the compliance program with 
respect to the applicable trading desk(s).
    4. Board of directors, or similar corporate body, and senior 
management. The board of directors, or similar corporate body, and 
senior management are responsible for setting and communicating an 
appropriate culture of compliance with section 13 of the BHC Act and 
this part and ensuring that appropriate policies regarding the 
management of trading activities and covered fund activities or 
investments are adopted to comply with section 13 of the BHC Act and 
this part. The board of directors or similar corporate body (such as a 
designated committee of the board or an equivalent governance body) must 
ensure that senior management is fully capable, qualified, and properly 
motivated to manage compliance with this part in light of the 
organization's business activities and the expectations of the board of 
directors. The board of directors or similar corporate body must also 
ensure that senior management has established appropriate incentives and 
adequate resources to support compliance with this part, including the 
implementation of a compliance program meeting the requirements of this 
appendix into management goals and compensation structures across the 
banking entity.
    5. Senior management. Senior management is responsible for 
implementing and enforcing the approved compliance program. Senior 
management must also ensure that effective corrective action is taken 
when failures in compliance with section 13 of the BHC Act and this part 
are identified. Senior management and control personnel charged with 
overseeing compliance with section 13 of the BHC Act and this part 
should review the compliance program for the banking entity periodically 
and report to the board, or an appropriate committee thereof, on the 
effectiveness of the compliance program and compliance matters with a 
frequency appropriate to the size, scope, and risk profile of the 
banking entity's trading activities and covered fund activities or 
investments, which shall be at least annually.
    6. CEO attestation. Based on a review by the CEO of the banking 
entity, the CEO of the banking entity must, annually, attest in writing 
to the FDIC that the banking entity has in place processes to establish, 
maintain, enforce, review, test and modify the compliance program 
established under this Appendix and Sec.351.20 of this part in a 
manner reasonably designed to achieve compliance with section 13 of the 
BHC Act and this part. In the case of a U.S. branch or agency of a 
foreign banking entity, the attestation may be provided for the entire 
U.S. operations of the foreign banking entity by the senior management 
officer of the United States operations of the foreign banking entity 
who is located in the United States.

                         IV. Independent Testing

    a. Independent testing must occur with a frequency appropriate to 
the size, scope, and risk profile of the banking entity's trading and 
covered fund activities or investments, which shall be at least 
annually. This independent testing must include an evaluation of:
    1. The overall adequacy and effectiveness of the banking entity's 
compliance program, including an analysis of the extent to which the 
program contains all the required elements of this appendix;
    2. The effectiveness of the banking entity's internal controls, 
including an analysis and documentation of instances in which such 
internal controls have been breached, and how such breaches were 
addressed and resolved; and
    3. The effectiveness of the banking entity's management procedures.
    b. A banking entity must ensure that independent testing regarding 
the effectiveness of the banking entity's compliance program is 
conducted by a qualified independent party, such as the banking entity's 
internal audit department, compliance personnel or risk managers 
independent of the organizational unit being tested, outside auditors, 
consultants, or other qualified independent

[[Page 116]]

parties. A banking entity must promptly take appropriate action to 
remedy any significant deficiencies or material weaknesses in its 
compliance program and to terminate any violations of section 13 of the 
BHC Act or this part.

                               V. Training

    Banking entities must provide adequate training to personnel and 
managers of the banking entity engaged in activities or investments 
governed by section 13 of the BHC Act or this part, as well as other 
appropriate supervisory, risk, independent testing, and audit personnel, 
in order to effectively implement and enforce the compliance program. 
This training should occur with a frequency appropriate to the size and 
the risk profile of the banking entity's trading activities and covered 
fund activities or investments.

                            VI. Recordkeeping

    Banking entities must create and retain records sufficient to 
demonstrate compliance and support the operations and effectiveness of 
the compliance program. A banking entity must retain these records for a 
period that is no less than 5 years or such longer period as required by 
the FDIC in a form that allows it to promptly produce such records to 
the FDIC on request.



PART 352_NONDISCRIMINATION ON THE BASIS OF DISABILITY--
Table of Contents



Sec.
352.1 Purpose.
352.2 Application.
352.3 Definitions.
352.4 Nondiscrimination in any program or activity conducted by the 
          FDIC.
352.5 Accessibility to electronic and information technology.
352.6 Employment.
352.7 Accessibility of programs, and activities: 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(a); 29 U.S.C. 794d.

    Source: 69 FR 26492, May 13, 2004, unless otherwise noted.



Sec.352.1  Purpose.

    (a) One purpose of this part is to implement the spirit of section 
504 of the Rehabilitation Act of 1973 (the Rehabilitation Act) as 
amended by section 119 of the Rehabilitation, Comprehensive Services, 
and Developmental Disabilities Amendments of 1978 and the Workforce 
Investment Act of 1998. Section 504 prohibits discrimination on the 
basis of disability in programs and activities conducted by a federal 
executive agency. Although the FDIC does not believe that Congress 
contemplated coverage of non-appropriated, independent regulatory 
agencies such as the FDIC, the FDIC has chosen to promulgate this final 
regulation to ensure that, to the extent practicable, persons with 
disabilities are provided with equal access to FDIC programs and 
activities.
    (b) This part is also intended to implement section 508 of the 
Rehabilitation Act as amended. Section 508 requires each federal agency 
or department to ensure that the electronic and information technology 
they procure allows individuals with disabilities access to that 
technology comparable to the access of those who are not disabled, 
unless the agency would incur an undue burden.



Sec.352.2  Application.

    (a) This part applies to all programs, activities, and electronic 
and information technology developed, procured, maintained, used or 
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 
Legislative Affairs and Office of Public Affairs;
    (3) Using the FDIC library in Washington, DC;
    (4) Using the FDIC Web site on the Internet;
    (5) 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

[[Page 117]]

of debts which they previously owed to such bank, prior to its failure 
or purchase by another bank under FDIC supervision;
    (6) Seeking employment with the FDIC;
    (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, and Electronic and Information Technology set 
forth in Sec.352.2.
    (b) ``Electronic and Information Technology'' (``EIT'') has the same 
meaning as ``information technology'' except EIT also includes any 
equipment or interconnected system or subsystem of equipment that is 
used in the creation, conversion, or duplication of data or information. 
The term EIT includes, but is not limited to, telecommunication products 
(such as telephones), information kiosks and transaction machines, 
worldwide web sites, multimedia, and office equipment (such as copiers 
and fax machines).
    (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) ``Individual with a disability'' 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.
    (e) ``Qualified individual with a disability'' means--
    (1) With respect to any FDIC program or activity in which a person 
is required to perform services or to achieve a level of accomplishment, 
an individual with a disability 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, an individual 
with a disability who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity;
    (3) With respect to employment, an individual with a disability as 
defined in 29 CFR 1630.2(g), which is made applicable to this part by 
Sec.352.6.
    (f) ``Sections 504 and 508'' mean sections 504 and 508 of the 
Rehabilitation Act of 1973 (Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794 
and 794d)), as amended by the Rehabilitation Act Amendments of 1974 
(Pub. L. 93-516, 88 Stat. 1617), the Rehabilitation, Comprehensive 
Services, and Developmental Disabilities Amendments of 1978 (Pub. L. 95-
602, 92 Stat. 2955), and the Workforce Investment Act of 1998 (Pub. L. 
105-220, 112 Stat. 936). As used in this regulation, sections 504 and 
508 shall be applied only to the programs, activities, and EIT conducted 
by the FDIC as set forth in Sec. Sec.352.2 and 352.3(b) of this 
regulation.



Sec.352.4  Nondiscrimination in any program or activity conducted by
the FDIC.

    In accordance with section 504 of the Rehabilitation Act, no 
qualified individual with a disability shall, solely by reason of his or 
her disability, be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination in any program or 
activity conducted by the FDIC.

[[Page 118]]



Sec.352.5  Accessibility to electronic and information technology.

    (a) In accordance with section 508 of the Rehabilitation Act, the 
FDIC shall ensure, absent an undue burden, that the electronic and 
information technology the agency develops, procures, maintains or 
allows:
    (1) Individuals with disabilities who are FDIC employees or 
applicants to have access to and use of information and data that is 
comparable to the access to and use of information and data by FDIC 
employees or applicants who are not individuals with disabilities; and
    (2) Individuals with disabilities who are members of the public 
seeking information or services from the FDIC to have access to and use 
of information and data that is comparable to the access to and use of 
information and data by members of the public who are not individuals 
with disabilities.
    (b) When development or procurement of electronic and information 
technology that meets the standards published by the Architectural and 
Transportation Barriers Compliance Board, 36 CFR 1194, would pose an 
undue burden, the FDIC shall provide individuals with disabilities 
covered by paragraph (a) of this section with the information and data 
by an alternative means of access that allows the individuals to use the 
information and data.



Sec.352.6  Employment.

    No qualified individual with a disability shall, on the basis of 
that disability, be subjected to discrimination in employment in any 
program or activity conducted by the FDIC. The definitions, 
requirements, and procedures (including those pertaining to employment 
discrimination complaints) of sections 501 of the Rehabilitation Act of 
1973, as established in 29 CFR parts 1614 and 1630, shall apply to 
employment in the FDIC.



Sec.352.7  Accessibility of programs and activities: Existing 
facilities.

    The FDIC shall operate each of the programs or activities set forth 
in Sec.352.2 of this part so that when viewed in its entirety, the 
program or activity is readily accessible to and usable by individuals 
with disabilities.



Sec.352.8  Program accessibility: New construction and alterations.

    Each building or part of a building, whether newly constructed, or 
substantially altered, in which FDIC programs or activities will be 
conducted, shall be designed, constructed or altered so as to be readily 
accessible to, and usable by, individuals with disabilities.



Sec.352.9  Communications.

    (a) The FDIC shall take appropriate steps to ensure effective 
communication with participants in FDIC programs, activities and EIT.
    (1) The FDIC shall furnish appropriate auxiliary aids where 
necessary to afford an individual with a disability an equal opportunity 
to participate in, and enjoy the benefits of, the FDIC programs or 
activities.
    (i) In determining what type of auxiliary aid is necessary, the FDIC 
shall give primary consideration to any reasonable requests of the 
individual with a disability.
    (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, facilities 
and EIT. Interested persons may obtain such information by calling, 
writing or visiting the FDIC Office of Minority and Women Inclusion 
(OMWI), located at 3501 Fairfax Drive, Arlington, VA 22226. The FDIC 
telephone number is (877) 275-3342 or (703) 562-2473 (TTY).
    (c) The FDIC shall provide information at a primary entrance to each 
of its facilities where programs or activities are conducted, directing 
users to a location at which they can obtain information about 
accessible facilities.

[[Page 119]]

The international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.

[69 FR 26492, May 13, 2004, as amended at 73 FR 45857, Aug. 7, 2008; 80 
FR 62445, Oct. 16, 2015]



Sec.352.10  Compliance procedures.

    (a) Applicability. Paragraph (b) of this section applies to 
employment complaints. The remaining sections concern complaints 
alleging disability discrimination in FDIC programs or activities and 
denial of technology access.
    (b) Employment complaints. The FDIC shall process complaints 
alleging employment discrimination on the basis of disability according 
to the procedures established by the Equal Employment Opportunity 
Commission in 29 CFR parts 1614 and 1630 pursuant to section 501 of the 
Rehabilitation Act of 1973 (29 U.S.C. 791).
    (c) Informal process. A complainant shall first exhaust informal 
administrative procedures before filing a formal complaint alleging 
disability discrimination in FDIC programs or activities, or a denial of 
technology access. The FDIC's Office of Minority and Women Inclusion 
shall be responsible for coordinating implementation of this section. An 
aggrieved individual initiates the process by filing an informal 
complaint with OMWI within 180 calendar days from the date of the 
alleged disability discrimination or denial of access to electronic 
information technology. An informal complaint with respect to any FDIC 
program or activity must include a written statement containing the 
individual's name and address which describes the FDIC's action in 
sufficient detail to inform the FDIC of the nature and date of the 
alleged violation of these regulations. An informal complaint for denial 
of technology access must clearly identify the individual and the manner 
in which the EIT was inaccessible. All informal complaints shall be 
signed by the complainant or one authorized to do so on his or her 
behalf. Informal complaints filed on behalf of third parties shall 
describe or identify (by name if possible) the alleged victim of 
discrimination or denial of technology access. During the informal 
resolution process, OMWI has 30 days to attempt a resolution of the 
matter. If the aggrieved individual elects to participate in mediation, 
the period for attempting informal resolution will be extended for an 
additional 60 calendar days. If the matter is not resolved informally, 
the individual will be provided written notice of the right to file a 
formal complaint. All complaints should be sent to the FDIC's Office of 
Minority and Women Inclusion, 3501 Fairfax Drive, Arlington, VA 22226.
    (d) 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.
    (e) Formal complaints. The individual must file a written formal 
complaint within 15 calendar days after receiving the notice of a right 
to file a formal complaint. Formal complaints must be filed with the 
FDIC Chairman or the OMWI Director. Within 120 days of the receipt of 
such a complaint for which it has jurisdiction, the FDIC shall notify 
the complainant of the results of the investigation in a letter 
containing--
    (1) A finding regarding the alleged violations;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (f) Appeals of the findings or remedies must be filed by the 
complainant within 30 days of receipt from the FDIC of the letter 
required by Sec.352.10 (e). The FDIC may extend this time for good 
cause.
    (g) Timely appeals shall be accepted and processed by the FDIC 
Chairman or OMWI Director.
    (h) The FDIC Chairman or ODEO Director shall notify the complainant 
of the results of the appeal within 60 days of the receipt of the 
request. If the FDIC Chairman or OMWI Director 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.
    (i) The time limits set forth in (e) and (h) above may be extended 
for an individual case when the FDIC Chairman or OMWI Director 
determines that there is good cause, based on the particular 
circumstances of that case.

[[Page 120]]

    (j) The FDIC may delegate its authority for conducting complaint 
investigations to other federal agencies or independent contractors, 
except that the authority for making the final determination may not be 
delegated.

[69 FR 26492, May 13, 2004, as amended at 73 FR 45857, Aug. 7, 2008; 80 
FR 62445, Oct. 16, 2015]



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 programs or activities conducted by the FDIC, and make such 
information available to them in such manner as the Chairman or designee 
finds necessary to apprise such persons of the protections against 
discrimination under section 504 or technology access provided under 
section 508 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, 
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

[[Page 121]]

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, the bank 
shall immediately notify, by telephone, an appropriate law enforcement 
authority and the appropriate FDIC regional office (Division of 
Supervision and Consumer Protection (DSC)) 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.

[[Page 122]]

    (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 and 
Consumer Protection (DSC)).
    (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. 1819, 1823(k)(5).



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 insured savings associations 
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. (1) For the purpose of 
determining ``economically depressed regions'', the FDIC will determine 
whether an institution qualifies as being located in an ``economically 
depressed region'' on a case-by-case basis. That determination will be 
based on four criteria:
    (i) High unemployment rates;
    (ii) Significant declines in non-farm employment;
    (iii) High delinquency rates of real estate assets at insured 
depository institutions; and
    (iv) Evidence indicating declining real estate values.
    (2) In addition, the FDIC will also consider relevant information 
from institutions regarding their geographic market area, as well as 
information on whether that market is ``economically depressed''.

[55 FR 11161, Mar. 27, 1990, as amended at 63 FR 10295, Mar. 3, 1998; 71 
FR 20527, Apr. 21, 2006]



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.
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

[[Page 123]]

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 (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

[[Page 124]]

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 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

[[Page 125]]

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.303.101(c) 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 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

[[Page 126]]

    (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:
    (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

[[Page 127]]

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.

[61 FR 5930, Feb. 15, 1996, as amended at 68 FR 50461, Aug. 21, 2003]



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 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

[[Page 128]]

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 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

[[Page 129]]

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 appropriate regional 
director (DSC). For filing requirements, consult 12 CFR 303.244. 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 only the prior consent 
of 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.

[63 FR 44751, Aug. 20, 1998]



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 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).

[[Page 130]]



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.
360.6 Treatment of financial assets transferred in connection with a 
          securitization or participation.
360.7 Post-insolvency interest.
360.8 Method for determining deposit and other liability account 
          balances at a failed insured depository institution.
360.9 Large-bank deposit insurance determination modernization.
360.10 Resolution plans required for insured depository institutions 
          with $50 billion or more in total assets.
360.11 Records of failed insured depository institutions.

Appendix A to Part 360--Non-Monetary Transaction File Structure
Appendix B to Part 360--Debit/Credit File Structure
Appendix C to Part 360--Deposit File Structure
Appendix D to Part 360--Sweep/Automated Credit Account File Structure
Appendix E to Part 360--Hold File Structure
Appendix F to Part 360--Customer File Structure
Appendix G to Part 360--Deposit-Customer Join File Structure
Appendix H to Part 360--Possible File Combinations for Deposit data

    Authority: 12 U.S.C. 1821(d)(1), 1821(d)(10)(C), 1821(d)(11), 
1821(e)(1), 1821(e)(8)(D)(i), 1823(c)(4), 1823(e)(2); 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. 1823(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, as amended at 63 FR 37761, July 14, 1998]



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

[[Page 131]]

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 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) The claim is 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 section 306(d) of the Competitive Equality Banking Act 
of 1987 (CEBA) (12 U.S.C. 1430(e), footnote (1), or otherwise so that 
the aggregate of the outstanding principal on the advances secured by 
such collateral, the accrued but 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, as amended at 63 FR 37761, July 14, 1998]



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

[[Page 132]]

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;
    (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.

[[Page 133]]

    (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 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 324.2 (definition of sovereign exposure), as may 
be amended from time to time) of the OECD-based group of countries (as 
generally discussed in 12 CFR 324.32) 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

[[Page 134]]

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, as amended at 78 FR 55595, Sept. 10, 2013; 
83 FR 17741, Apr. 24, 2018]



Sec.360.6  Treatment of financial assets transferred in connection
with a securitization or participation.

    (a) Definitions--
    (1) Applicable compliance date means, with respect to a 
securitization, the date on which compliance with Section 15G of the 
Securities Exchange Act, 15 U.S.C. 78a et seq., added by Section 941(b) 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act is 
required with respect to that securitization.
    (2) Financial asset means cash or a contract or instrument that 
conveys to one entity a contractual right to receive cash or another 
financial instrument from another entity.
    (3) Investor means a person or entity that owns an obligation issued 
by an issuing entity.
    (4) Issuing entity means an entity that owns a financial asset or 
financial assets transferred by the sponsor and issues obligations 
supported by such asset or assets. Issuing entities may include, but are 
not limited to, corporations, partnerships, trusts, and limited 
liability companies and are commonly referred to as special purpose 
vehicles or special purpose entities. To the extent a securitization is 
structured as a multi-step transfer, the term issuing entity would 
include both the issuer of the obligations and any intermediate entities 
that may be a transferee. Notwithstanding the foregoing, a Specified GSE 
or an entity established or guaranteed by a Specified GSE shall not 
constitute an issuing entity.
    (5) Monetary default means a default in the payment of principal or 
interest when due following the expiration of any cure period.
    (6) Obligation means a debt or equity (or mixed) beneficial interest 
or security that is primarily serviced by the cash flows of one or more 
financial assets or financial asset pools, either fixed or revolving, 
that by their terms convert into cash within a finite time period, or 
upon the disposition of the underlying financial assets, and by any 
rights or other assets designed to assure the servicing or timely 
distributions of proceeds to the security holders issued by an issuing 
entity. The term may include beneficial interests in a grantor trust, 
common law trust or similar issuing entity to the extent that such 
interests satisfy the criteria set forth in the preceding sentence, but 
does not include LLC interests, partnership interests, common or 
preferred equity, or similar instruments evidencing ownership of the 
issuing entity.
    (7) Participation means the transfer or assignment of an undivided 
interest in all or part of a financial asset, that has all of the 
characteristics of a ``participating interest,'' from a seller, known as 
the ``lead,'' to a buyer, known as the ``participant,'' without recourse 
to the lead, pursuant to an agreement between the lead and the 
participant. ``Without recourse'' means that the participation is not 
subject to any agreement that requires the lead to repurchase the 
participant's interest or to otherwise compensate the participant upon 
the borrower's default on the underlying obligation.
    (8) Securitization means the issuance by an issuing entity of 
obligations for which the investors are relying on the cash flow or 
market value characteristics and the credit quality of transferred 
financial assets (together with any external credit support permitted by 
this section) to repay the obligations.
    (9) Servicer means any entity responsible for the management or 
collection of some or all of the financial assets on behalf of the 
issuing entity or making allocations or distributions to holders of the 
obligations, including reporting on the overall cash flow and credit 
characteristics of the financial assets supporting the securitization to 
enable the issuing entity to make payments to investors on the 
obligations. The term ``servicer'' does not include a trustee for the 
issuing entity or the holders of obligations that makes allocations or 
distributions to holders of the obligations if the trustee receives such 
allocations or distributions from

[[Page 135]]

a servicer and the trustee does not otherwise perform the functions of a 
servicer.
    (10) Specified GSE means each of the following:
    (i) The Federal National Mortgage Association and any affiliate 
thereof;
    (ii) Federal Home Loan Mortgage Corporation and any affiliate 
thereof;
    (iii) The Government National Mortgage Association; and
    (iv) Any federal or state sponsored mortgage finance agency.
    (11) Sponsor means a person or entity that organizes and initiates a 
securitization by transferring financial assets, either directly or 
indirectly, including through an affiliate, to an issuing entity, 
whether or not such person owns an interest in the issuing entity or 
owns any of the obligations issued by the issuing entity.
    (12) Transfer means:
    (i) The conveyance of a financial asset or financial assets to an 
issuing entity or
    (ii) The creation of a security interest in such asset or assets for 
the benefit of the issuing entity.
    (b) Coverage. This section shall apply to securitizations that meet 
the following criteria:
    (1) Capital Structure and Financial Assets. The documents creating 
the securitization must define the payment structure and capital 
structure of the transaction.
    (i) Requirements applicable to all securitizations:
    (A) The securitization shall not consist of re-securitizations of 
obligations or collateralized debt obligations unless the documents 
creating the securitization require that disclosures required in 
paragraph (b)(2) of this section are made available to investors for the 
underlying assets supporting the securitization at initiation and while 
obligations are outstanding; and
    (B) The documents creating the securitization shall require that 
payment of principal and interest on the securitization obligation must 
be primarily based on the performance of financial assets that are 
transferred to the issuing entity and, except for interest rate or 
currency mismatches between the financial assets and the obligations, 
shall not be contingent on market or credit events that are independent 
of such financial assets. The securitization may not be an unfunded 
securitization or a synthetic transaction.
    (ii) Requirements applicable only to securitizations in which the 
financial assets include any residential mortgage loans:
    (A) The capital structure of the securitization shall be limited to 
no more than six credit tranches and cannot include ``sub-tranches,'' 
grantor trusts or other structures. Notwithstanding the foregoing, the 
most senior credit tranche may include time-based sequential pay or 
planned amortization and companion sub-tranches; and
    (B) The credit quality of the obligations cannot be enhanced at the 
issuing entity or pool level through external credit support or 
guarantees. However, the credit quality of the obligations may be 
enhanced by credit support or guarantees provided by Specified GSEs and 
the temporary payment of principal and/or interest may be supported by 
liquidity facilities, including facilities designed to permit the 
temporary payment of interest following appointment of the FDIC as 
conservator or receiver. Individual financial assets transferred into a 
securitization may be guaranteed, insured or otherwise benefit from 
credit support at the loan level through mortgage and similar insurance 
or guarantees, including by private companies, agencies or other 
governmental entities, or government-sponsored enterprises, and/or 
through co-signers or other guarantees.
    (2) Disclosures. The documents shall require that the sponsor, 
issuing entity, and/or servicer, as appropriate, shall make available to 
investors, information describing the financial assets, obligations, 
capital structure, compensation of relevant parties, and relevant 
historical performance data set forth in paragraph (b)(2) of this 
section.
    (i) Requirements applicable to all securitizations:
    (A) The documents shall require that, on or prior to issuance of 
obligations and at the time of delivery of any periodic distribution 
report and, in any event, at least once per calendar quarter, while 
obligations are outstanding,

[[Page 136]]

information about the obligations and the securitized financial assets 
shall be disclosed to all potential investors at the financial asset or 
pool level, as appropriate for the financial assets, and security-level 
to enable evaluation and analysis of the credit risk and performance of 
the obligations and financial assets. The documents shall require that 
such information and its disclosure, at a minimum, shall comply with the 
requirements of Securities and Exchange Commission Regulation AB, 17 CFR 
229.1100 through 1123 (to the extent then in effect) or any successor 
disclosure requirements for public issuances, even if the obligations 
are issued in a private placement or are not otherwise required to be 
registered. Information that is unknown or not available to the sponsor 
or the issuer after reasonable investigation may be omitted if the 
issuer includes a statement in the offering documents disclosing that 
the specific information is otherwise unavailable;
    (B) The documents shall require that, on or prior to issuance of 
obligations, the structure of the securitization and the credit and 
payment performance of the obligations shall be disclosed, including the 
capital or tranche structure, the priority of payments and specific 
subordination features; representations and warranties made with respect 
to the financial assets, the remedies for and the time permitted for 
cure of any breach of representations and warranties, including the 
repurchase of financial assets, if applicable; liquidity facilities and 
any credit enhancements permitted by this rule, any waterfall triggers 
or priority of payment reversal features; and policies governing 
delinquencies, servicer advances, loss mitigation, and write-offs of 
financial assets;
    (C) The documents shall require that while obligations are 
outstanding, the issuing entity shall provide to investors information 
with respect to the credit performance of the obligations and the 
financial assets, including periodic and cumulative financial asset 
performance data, delinquency and modification data for the financial 
assets, substitutions and removal of financial assets, servicer 
advances, as well as losses that were allocated to such tranche and 
remaining balance of financial assets supporting such tranche, if 
applicable, and the percentage of each tranche in relation to the 
securitization as a whole; and
    (D) In connection with the issuance of obligations, the documents 
shall require that the nature and amount of compensation paid to the 
originator, sponsor, rating agency or third-party advisor, any mortgage 
or other broker, and the servicer(s), and the extent to which any risk 
of loss on the underlying assets is retained by any of them for such 
securitization be disclosed. The securitization documents shall require 
the issuer to provide to investors while obligations are outstanding any 
changes to such information and the amount and nature of payments of any 
deferred compensation or similar arrangements to any of the parties.
    (ii) Requirements applicable only to securitizations in which the 
financial assets include any residential mortgage loans:
    (A) Prior to issuance of obligations, sponsors shall disclose loan 
level information about the financial assets including, but not limited 
to, loan type, loan structure (for example, fixed or adjustable, resets, 
interest rate caps, balloon payments, etc.), maturity, interest rate 
and/or Annual Percentage Rate, and location of property; and
    (B) Prior to issuance of obligations, sponsors shall affirm 
compliance in all material respects with applicable statutory and 
regulatory standards for origination of mortgage loans, including that 
the mortgages are underwritten at the fully indexed rate relying on 
documented income, and comply with supervisory guidance governing the 
underwriting of residential mortgages, including the Interagency 
Guidance on Non-Traditional Mortgage Products, October 5, 2006, and the 
Interagency Statement on Subprime Mortgage Lending, July 10, 2007, and 
such other or additional guidance applicable at the time of loan 
origination. Sponsors shall disclose a third party due diligence report 
on compliance with such standards and the representations and warranties 
made with respect to the financial assets; and
    (C) The documents shall require that prior to issuance of 
obligations and

[[Page 137]]

while obligations are outstanding, servicers shall disclose any 
ownership interest by the servicer or an affiliate of the servicer in 
other whole loans secured by the same real property that secures a loan 
included in the financial asset pool. The ownership of an obligation, as 
defined in this regulation, shall not constitute an ownership interest 
requiring disclosure.
    (3) Documentation and recordkeeping. The documents creating the 
securitization must specify the respective contractual rights and 
responsibilities of all parties and include the requirements described 
in paragraph (b)(3) of this section and use as appropriate any available 
standardized documentation for each different asset class.
    (i) Requirements applicable to all securitizations. The documents 
shall define the contractual rights and responsibilities of the parties, 
including but not limited to representations and warranties and ongoing 
disclosure requirements, and any measures to avoid conflicts of 
interest; and provide authority for the parties, including but not 
limited to the originator, sponsor, servicer, and investors, to fulfill 
their respective duties and exercise their rights under the contracts 
and clearly distinguish between any multiple roles performed by any 
party.
    (ii) Requirements applicable only to securitizations in which the 
financial assets include any residential mortgage loans:
    (A) Servicing and other agreements must provide servicers with 
authority, subject to contractual oversight by any master servicer or 
oversight advisor, if any, to mitigate losses on financial assets 
consistent with maximizing the net present value of the financial asset. 
Servicers shall have the authority to modify assets to address 
reasonably foreseeable default, and to take other action to maximize the 
value and minimize losses on the securitized financial assets. The 
documents shall require that the servicers apply industry best practices 
for asset management and servicing. The documents shall require the 
servicer to act for the benefit of all investors, and not for the 
benefit of any particular class of investors, that the servicer maintain 
records of its actions to permit full review by the trustee or other 
representative of the investors and that the servicer must commence 
action to mitigate losses no later than ninety (90) days after an asset 
first becomes delinquent unless all delinquencies have been cured, 
provided that this requirement shall not be deemed to require that the 
documents include any provision concerning loss mitigation that requires 
any action that may conflict with the requirements of Regulation X (12 
CFR part 1024), as Regulation X may be amended or modified from time to 
time.
    (B) The servicing agreement shall not require a primary servicer to 
advance delinquent payments of principal and interest for more than 
three payment periods, unless financing or reimbursement facilities are 
available, which may include, but are not limited to, the obligations of 
the master servicer or issuing entity to fund or reimburse the primary 
servicer, or alternative reimbursement facilities. Such ``financing or 
reimbursement facilities'' under this paragraph shall not be dependent 
for repayment on foreclosure proceeds.
    (4) Compensation. The following requirements apply only to 
securitizations in which the financial assets include any residential 
mortgage loans. Compensation to parties involved in the securitization 
of such financial assets must be structured to provide incentives for 
sustainable credit and the long-term performance of the financial assets 
and securitization as follows:
    (i) The documents shall require that any fees or other compensation 
for services payable to credit rating agencies or similar third-party 
evaluation companies shall be payable, in part, over the five (5) year 
period after the first issuance of the obligations based on the 
performance of surveillance services and the performance of the 
financial assets, with no more than sixty (60) percent of the total 
estimated compensation due at closing; and
    (ii) The documents shall provide that compensation to servicers 
shall include incentives for servicing, including payment for loan 
restructuring or other

[[Page 138]]

loss mitigation activities, which maximizes the net present value of the 
financial assets. Such incentives may include payments for specific 
services, and actual expenses, to maximize the net present value or a 
structure of incentive fees to maximize the net present value, or any 
combination of the foregoing that provides such incentives.
    (5) Origination and retention requirements--(i) Requirements 
applicable to all securitizations. (A) Prior to the applicable 
compliance date for regulations required under Section 15G of the 
Securities Exchange Act, 15 U.S.C. 78a et seq., added by Section 941(b) 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the 
documents creating the securitization shall require that the sponsor 
retain an economic interest in a material portion, defined as not less 
than five (5) percent, of the credit risk of the financial assets. This 
retained interest may be either in the form of an interest of not less 
than five (5) percent in each of the credit tranches sold or transferred 
to the investors or in a representative sample of the securitized 
financial assets equal to not less than five (5) percent of the 
principal amount of the financial assets at transfer. This retained 
interest may not be sold, pledged or hedged, except for the hedging of 
interest rate or currency risk, during the term of the securitization.
    (B) For any securitization that closes upon or following the 
applicable compliance date for regulations required under Section 15G of 
the Securities Exchange Act, 15 U.S.C. 78a et seq., added by Section 
941(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 
the documents creating the securitization shall instead require 
retention of an economic interest in the credit risk of the financial 
assets in accordance with such regulations, including the restrictions 
on sale, pledging and hedging set forth therein.
    (C) Notwithstanding paragraph (b)(5)(i)(A) of this section, for any 
securitization that closes following ________ November 24, 2015 and 
prior to the applicable compliance date for regulations required under 
Section 15G of the Securities Exchange Act, 15 U.S.C. 78a et seq., added 
by Section 941(b) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, at the option of the sponsor, the requirements of 
paragraph (b)(5)(i)(B) of this section may be satisfied if (in lieu of 
the requirement set forth in paragraph (b)(5)(i)(A) of this section) the 
documents creating the securitization require retention of an economic 
interest in the credit risk of the financial assets in accordance with 
the requirements of the Section 15G regulations as though such 
regulations were then in effect.
    (ii) Requirements applicable only to securitizations in which the 
financial assets include any residential mortgage loans:
    (A) The documents shall require the establishment of a reserve fund 
equal to at least five (5) percent of the cash proceeds of the 
securitization payable to the sponsor to cover the repurchase of any 
financial assets required for breach of representations and warranties. 
The balance of such fund, if any, shall be released to the sponsor one 
year after the date of issuance.
    (B) The documents shall include a representation that the assets 
shall have been originated in all material respects in compliance with 
statutory, regulatory, and originator underwriting standards in effect 
at the time of origination. The documents shall include a representation 
that the mortgages included in the securitization were underwritten at 
the fully indexed rate, based upon the borrowers' ability to repay the 
mortgage according to its terms, and rely on documented income and 
comply with all existing supervisory guidance governing the underwriting 
of residential mortgages, including the Interagency Guidance on Non-
Traditional Mortgage Products, October 5, 2006, and the Interagency 
Statement on Subprime Mortgage Lending, July 10, 2007, and such other or 
additional regulations or guidance applicable to insured depository 
institutions at the time of loan origination. Residential mortgages 
originated prior to the issuance of such guidance shall meet all 
supervisory guidance governing the underwriting of residential mortgages 
then in effect at the time of loan origination.

[[Page 139]]

    (c) Other requirements. (1) The transaction should be an arms 
length, bona fide securitization transaction. The documents shall 
require that the obligations issued in a securitization shall not be 
predominantly sold to an affiliate (other than a wholly-owned subsidiary 
consolidated for accounting and capital purposes with the sponsor) or 
insider of the sponsor;
    (2) The securitization agreements are in writing, approved by the 
board of directors of the bank or its loan committee (as reflected in 
the minutes of a meeting of the board of directors or committee), and 
have been, continuously, from the time of execution in the official 
record of the bank;
    (3) The securitization was entered into in the ordinary course of 
business, not in contemplation of insolvency and with no intent to 
hinder, delay or defraud the bank or its creditors;
    (4) The transfer was made for adequate consideration;
    (5) The transfer and/or security interest was properly perfected 
under the UCC or applicable state law;
    (6) The transfer and duties of the sponsor as transferor must be 
evidenced in a separate agreement from its duties, if any, as servicer, 
custodian, paying agent, credit support provider or in any capacity 
other than the transferor; and
    (7) The documents shall require that the sponsor separately identify 
in its financial asset data bases the financial assets transferred into 
any securitization and maintain an electronic or paper copy of the 
closing documents for each securitization in a readily accessible form, 
a current list of all of its outstanding securitizations and issuing 
entities, and the most recent Form 10-K, if applicable, or other 
periodic financial report for each securitization and issuing entity. 
The documents shall provide that to the extent serving as servicer, 
custodian or paying agent for the securitization, the sponsor shall not 
comingle amounts received with respect to the financial assets with its 
own assets except for the time, not to exceed two business days, 
necessary to clear any payments received. The documents shall require 
that the sponsor shall make these records readily available for review 
by the FDIC promptly upon written request.
    (d) Safe harbor--(1) Participations. With respect to transfers of 
financial assets made in connection with participations, the FDIC as 
conservator or receiver shall not, in the exercise of its statutory 
authority to disaffirm or repudiate contracts, reclaim, recover, or 
recharacterize as property of the institution or the receivership any 
such transferred financial assets, provided that such transfer satisfies 
the conditions for sale accounting treatment under generally accepted 
accounting principles, except for the ``legal isolation'' condition that 
is addressed by this section. The foregoing paragraph shall apply to a 
last-in, first-out participation, provided that the transfer of a 
portion of the financial asset satisfies the conditions for sale 
accounting treatment under generally accepted accounting principles that 
would have applied to such portion if it had met the definition of a 
``participating interest,'' except for the ``legal isolation'' condition 
that is addressed by this section.
    (2) Transition period safe harbor. With respect to:
    (i) Any participation or securitization for which transfers of 
financial assets were made on or before December 31, 2010 or
    (ii) Any obligations of revolving trusts or master trusts, for which 
one or more obligations were issued as of the date of adoption of this 
rule, or
    (iii) Any obligations issued under open commitments up to the 
maximum amount of such commitments as of the date of adoption of this 
rule if one or more obligations were issued under such commitments on or 
before December 31, 2010, the FDIC as conservator or receiver shall not, 
in the exercise of its statutory authority to disaffirm or repudiate 
contracts, reclaim, recover, or recharacterize as property of the 
institution or the receivership the transferred financial assets 
notwithstanding that the transfer of such financial assets does not 
satisfy all conditions for sale accounting treatment under generally 
accepted accounting principles as effective for reporting periods after 
November 15, 2009, provided that such transfer satisfied the conditions 
for

[[Page 140]]

sale accounting treatment under generally accepted accounting principles 
in effect for reporting periods before November 15, 2009, except for the 
``legal isolation'' condition that is addressed by this paragraph and 
the transaction otherwise satisfied the provisions of Sec.360.6 in 
effect prior to the effective date of this regulation.
    (3) For securitizations meeting sale accounting requirements. With 
respect to any securitization for which transfers of financial assets 
were made after December 31, 2010, or from a master trust or revolving 
trust established after adoption of this rule or from any open 
commitments that do not meet the requirements of paragraph (d)(2) of 
this section, and which complies with the requirements applicable to 
that securitization as set forth in paragraphs (b) and (c) of this 
section, the FDIC as conservator or receiver shall not, in the exercise 
of its statutory authority to disaffirm or repudiate contracts, reclaim, 
recover, or recharacterize as property of the institution or the 
receivership such transferred financial assets, provided that such 
transfer satisfies the conditions for sale accounting treatment under 
generally accepted accounting principles in effect for reporting periods 
after November 15, 2009, except for the ``legal isolation'' condition 
that is addressed by this paragraph (d)(3).
    (4) For securitization not meeting sale accounting requirements. 
With respect to any securitization for which transfers of financial 
assets were made after December 31, 2010, or from a master trust or 
revolving trust established after adoption of this rule or from any open 
commitments that do not meet the requirements of paragraph (d)(2) or 
(d)(3) of this section, and which complies with the requirements 
applicable to that securitization as set forth in paragraphs (b) and (c) 
of this section, but where the transfer does not satisfy the conditions 
for sale accounting treatment set forth by generally accepted accounting 
principles in effect for reporting periods after November 15, 2009:
    (i) Monetary default. If at any time after appointment, the FDIC as 
conservator or receiver is in a monetary default under a securitization 
due to its failure to pay or apply collections from the financial assets 
received by it in accordance with the securitization documents, whether 
as servicer or otherwise, and remains in monetary default for ten (10) 
business days after actual delivery of a written notice to the FDIC 
pursuant to paragraph (f) of this section requesting the exercise of 
contractual rights because of such monetary default, the FDIC hereby 
consents pursuant to 12 U.S.C. 1821(e)(13)(C) and 12 U.S.C. 1825(b)(2) 
to the exercise of any contractual rights in accordance with the 
documents governing such securitization, including but not limited to 
taking possession of the financial assets and exercising self-help 
remedies as a secured creditor under the transfer agreements, provided 
no involvement of the receiver or conservator is required other than 
such consents, waivers, or execution of transfer documents as may be 
reasonably requested in the ordinary course of business in order to 
facilitate the exercise of such contractual rights. Such consent shall 
not waive or otherwise deprive the FDIC or its assignees of any seller's 
interest or other obligation or interest issued by the issuing entity 
and held by the FDIC or its assignees, but shall serve as full 
satisfaction of the obligations of the insured depository institution in 
conservatorship or receivership and the FDIC as conservator or receiver 
for all amounts due.
    (ii) Repudiation. If the FDIC as conservator or receiver provides a 
written notice of repudiation of the securitization agreement pursuant 
to which the financial assets were transferred, and the FDIC does not 
pay damages, defined in this paragraph, within ten (10) business days 
following the effective date of the notice, the FDIC hereby consents 
pursuant to 12 U.S.C. 1821(e)(13)(C) and 12 U.S.C. 1825(b)(2) to the 
exercise of any contractual rights in accordance with the documents 
governing such securitization, including but not limited to taking 
possession of the financial assets and exercising self-help remedies as 
a secured creditor under the transfer agreements, provided no 
involvement of the receiver or conservator is required other than such 
consents, waivers, or execution of transfer documents as may be 
reasonably requested in the ordinary course

[[Page 141]]

of business in order to facilitate the exercise of such contractual 
rights. For purposes of this paragraph, the damages due shall be in an 
amount equal to the par value of the obligations outstanding on the date 
of appointment of the conservator or receiver, less any payments of 
principal received by the investors through the date of repudiation, 
plus unpaid, accrued interest through the date of repudiation in 
accordance with the contract documents to the extent actually received 
through payments on the financial assets received through the date of 
repudiation. Upon payment of such repudiation damages, all liens or 
claims on the financial assets created pursuant to the securitization 
documents shall be released. Such consent shall not waive or otherwise 
deprive the FDIC or its assignees of any seller's interest or other 
obligation or interest issued by the issuing entity and held by the FDIC 
or its assignees, but shall serve as full satisfaction of the 
obligations of the insured depository institution in conservatorship or 
receivership and the FDIC as conservator or receiver for all amounts 
due.
    (iii) Effect of repudiation. If the FDIC repudiates or disaffirms a 
securitization agreement, it shall not assert that any interest payments 
made to investors in accordance with the securitization documents before 
any such repudiation or disaffirmance remain the property of the 
conservatorship or receivership.
    (e) Consent to certain actions. Prior to repudiation or, in the case 
of a monetary default referred to in paragraph (d)(4)(i) of this 
section, prior to the effectiveness of the consent referred to therein, 
the FDIC as conservator or receiver consents pursuant to 12 U.S.C. 
1821(e)(13)(C) to the making of, or if serving as servicer, shall make, 
the payments to the investors to the extent actually received through 
payments on the financial assets (but in the case of repudiation, only 
to the extent supported by payments on the financial assets received 
through the date of the giving of notice of repudiation) in accordance 
with the securitization documents, and, subject to the FDIC's rights to 
repudiate such agreements, consents to any servicing activity required 
in furtherance of the securitization or, if acting as servicer the FDIC 
as receiver or conservator shall perform such servicing activities in 
accordance with the terms of the applicable servicing agreements, with 
respect to the financial assets included in securitizations that meet 
the requirements applicable to that securitization as set forth in 
paragraphs (b) and (c) of this section.
    (f) Notice for consent. Any party requesting the FDIC's consent as 
conservator or receiver under 12 U.S.C. 1821(e)(13)(C) and 12 U.S.C. 
1825(b)(2) pursuant to paragraph (d)(4)(i) of this section shall provide 
notice to the Deputy Director, Division of Resolutions and 
Receiverships, Federal Deposit Insurance Corporation, 550 17th Street, 
NW., F-7076, Washington, DC 20429-0002, and a statement of the basis 
upon which such request is made, and copies of all documentation 
supporting such request, including without limitation a copy of the 
applicable agreements and of any applicable notices under the contract.
    (g) Contemporaneous requirement. The FDIC will not seek to avoid an 
otherwise legally enforceable agreement that is executed by an insured 
depository institution in connection with a securitization or in the 
form of a participation solely because the agreement does not meet the 
``contemporaneous'' requirement of 12 U.S.C. 1821(d)(9), 1821(n)(4)(I), 
or 1823(e).
    (h) Limitations. The consents set forth in this section do not act 
to waive or relinquish any rights granted to the FDIC in any capacity, 
pursuant to any other applicable law or any agreement or contract except 
as specifically set forth herein. Nothing contained in this section 
alters the claims priority of the securitized obligations.
    (i) No waiver. Except as specifically set forth herein, this section 
does not authorize, and shall not be construed as authorizing the waiver 
of the prohibitions in 12 U.S.C. 1825(b)(2) against levy, attachment, 
garnishment, foreclosure, or sale of property of the FDIC, nor does it 
authorize nor shall it be construed as authorizing the attachment of any 
involuntary lien upon the property of the FDIC. Nor shall this

[[Page 142]]

section be construed as waiving, limiting or otherwise affecting the 
rights or powers of the FDIC to take any action or to exercise any power 
not specifically mentioned, including but not limited to any rights, 
powers or remedies of the FDIC regarding transfers or other conveyances 
taken in contemplation of the institution's insolvency or with the 
intent to hinder, delay or defraud the institution or the creditors of 
such institution, or that is a fraudulent transfer under applicable law.
    (j) No assignment. The right to consent under 12 U.S.C. 
1821(e)(13)(C) or 12 U.S.C. 1825(b)(2), may not be assigned or 
transferred to any purchaser of property from the FDIC, other than to a 
conservator or bridge bank.
    (k) Repeal. This section may be repealed by the FDIC upon 30 days 
notice provided in the Federal Register, but any repeal shall not apply 
to any issuance made in accordance with this section before such repeal.

[75 FR 60297, Sept. 30, 2010, as amended at 80 FR 73089, Nov. 24, 2015; 
81 FR 41423, June 27, 2016]



Sec.360.7  Post-insolvency interest.

    (a) Purpose and scope. This section establishes rules governing the 
calculation and distribution of post-insolvency interest to creditors 
with proven claims in all FDIC-administered receiverships established 
after June 13, 2002.
    (b) Definitions--(1) Equityholder. The owner of an equity interest 
in a failed depository institution, whether such ownership is 
represented by stock, membership in a mutual association, or otherwise.
    (2) Post-insolvency interest. Interest calculated from the date the 
receivership is established on proven creditor claims in receiverships 
with surplus funds.
    (3) Post-insolvency interest rate. For any calendar quarter, the 
coupon equivalent yield of the average discount rate set on the three-
month Treasury bill at the last auction held by the United States 
Treasury Department during the preceding calendar quarter, and adjusted 
each quarter thereafter.
    (4) Principal amount. The proven claim amount and any interest 
accrued thereon as of the date the receivership is established.
    (5) Proven claim. A claim that is allowed by a receiver or upon 
which a final non-appealable judgment has been entered in favor of a 
claimant against a receivership by a court with jurisdiction to 
adjudicate the claim.
    (c) Post-insolvency interest distributions. (1) Post-insolvency 
interest shall only be distributed following satisfaction by the 
receiver of the principal amount of all creditor claims.
    (2) The receiver shall distribute post-insolvency interest at the 
post-insolvency interest rate prior to making any distribution to 
equityholders. Post-insolvency interest distributions shall be made in 
the order of priority set forth in section 11(d)(11)(A) of the Federal 
Deposit Insurance Act, 12 U.S.C. 1821(d)(11)(A).
    (3) Post-insolvency interest distributions shall be made at such 
time as the receiver determines that such distributions are appropriate 
and only to the extent of funds available in the receivership estate. 
Post-insolvency interest shall be calculated on the outstanding balance 
of a proven claim, as reduced from time to time by any interim dividend 
distributions, from the date the receivership is established until the 
principal amount of a proven claim has been fully distributed but not 
thereafter. Post-insolvency interest shall be calculated on a contingent 
claim from the date such claim becomes proven.
    (4) Post-insolvency interest shall be determined using a simple 
interest method of calculation.

[67 FR 34386, May 14, 2002]



Sec.360.8  Method for determining deposit and other liability account
balances at a failed insured depository institution.

    (a) Purpose. The purpose of this section is to describe the process 
the FDIC will use to determine deposit and other liability account 
balances for insurance coverage and receivership purposes at a failed 
insured depository institution.
    (b) Definitions. (1) The FDIC Cutoff Point means the point in time 
the FDIC establishes after it has been appointed receiver of a failed 
insured depository

[[Page 143]]

institution and takes control of the failed institution.
    (2) The Applicable Cutoff Time for a specific type of deposit 
account transaction means the earlier of either the failed institution's 
normal cutoff time for that specific type of transaction or the FDIC 
Cutoff Point.
    (3) Close-of-Business Account Balance means the closing end-of-day 
ledger balance of a deposit or other liability account on the day of 
failure of an insured depository institution determined by using the 
Applicable Cutoff Times. This balance may be adjusted to reflect steps 
taken by the receiver to ensure that funds are not received by or 
removed from the institution after the FDIC Cutoff Point.
    (4) A sweep account is an account held pursuant to a contract 
between an insured depository institution and its customer involving the 
pre-arranged, automated transfer of funds from a deposit account to 
either another account or investment vehicle located within the 
depository institution (internal sweep account), or an investment 
vehicle located outside the depository institution (external sweep 
account).
    (c) Principles. (1) In making deposit insurance determinations and 
in determining the value and nature of claims against the receivership 
on the institution's date of failure, the FDIC, as insurer and receiver, 
will treat deposits and other liabilities of the failed institution 
according to the ownership and nature of the underlying obligations 
based on end-of-day ledger balances for each account using, except as 
expressly provided otherwise in this section, the depository 
institution's normal posting procedures.
    (2) In its role as receiver of a failed insured depository 
institution, in order to ensure the proper distribution of the failed 
institution's assets under the FDI Act (12 U.S.C. 1821(d)(11)) as of the 
FDIC Cutoff Point, the FDIC will use its best efforts to take all steps 
necessary to stop the generation, via transactions or transfers coming 
from or going outside the institution, of new liabilities or 
extinguishing existing liabilities for the depository institution.
    (3) End-of-day ledger balances are subject to corrections for posted 
transactions that are inconsistent with the above principles.
    (d) Determining closing day balances. (1) In determining account 
balances for insurance coverage and receivership purposes at a failed 
insured depository institution, the FDIC will use Close-of-Business 
Account Balances.
    (2) A check posted to the Close-of-Business Account Balance but not 
collected by the depository institution will be included as part of the 
balance, subject to the correction of errors and omissions and 
adjustments for uncollectible items that the FDIC may make in its role 
as receiver of the failed depository institution.
    (3) In determining Close-of-Business Account Balances involving 
sweep accounts:
    (i) For internal sweep accounts, the FDIC will determine the 
ownership of the funds and the nature of the receivership claim based on 
the records established and maintained by the institution for that 
specific account or investment vehicle as of the closing day end-of-day 
ledger balance. (For example, if a sweep account entails the daily 
transfer of funds from a demand deposit account to a Eurodollar account 
at a foreign branch of the insured depository institution, if the 
institution should fail on that day, the FDIC would treat the funds 
swept to the Eurodollar account, as reflected on the institution's end-
of-day records, as an unsecured general creditor's claim against the 
receivership.);
    (ii) For external sweep accounts, the FDIC will treat swept funds 
consistent with their status in the end-of-day ledger balances of the 
depository institution and the external entity, as long as the transfer 
of funds is completed prior to the Applicable Cutoff Time. (For example, 
if funds held in connection with a money market sweep account are wired 
from a customer's deposit account at the insured depository institution 
to the mutual fund prior to the Applicable Cutoff Time, if the 
institution should fail on that day, the FDIC would recognize that sweep 
transaction as completed for claims and receivership purposes.);
    (iii) For repurchase agreement sweep accounts, where, as a result of 
the

[[Page 144]]

sweep transaction, the customer becomes either the legal owner of 
identified assets subject to repurchase or obtains a perfected security 
interest in those assets, the FDIC will recognize, for receivership 
purposes, the customer's ownership interest or security interest in the 
assets.
    (4) For deposit insurance and receivership purposes in connection 
with the failure of an insured depository institution, the FDIC will 
determine the rights of the depositor or other liability holder as of 
the point the Close-of-Business Account Balance is calculated.
    (e) Disclosure requirements. Beginning July 1, 2009, in all new 
sweep account contracts, in renewals of existing sweep account contracts 
and within sixty days after July 1, 2009, and no less than annually 
thereafter, institutions must prominently disclose in writing to sweep 
account customers whether their swept funds are deposits within the 
meaning of 12 U.S.C. 1813(l). If the funds are not deposits, the 
institution must further disclose the status such funds would have if 
the institution failed--for example, general creditor status or secured 
creditor status. Such disclosures must be consistent with how the 
institution reports such funds on its quarterly Consolidated Reports of 
Condition and Income or Thrift Financial Reports. The disclosure 
requirements imposed under this provision do not apply to sweep accounts 
where: The transfers are within a single account, or a sub-account; or 
the sweep account involves only deposit-to-deposit sweeps, such as zero-
balance accounts, unless the sweep results in a change in the customer's 
insurance coverage.

[74 FR 5806, Feb. 2, 2009]



Sec.360.9  Large-bank deposit insurance determination modernization.

    (a) Purpose and scope. This section is intended to allow the deposit 
and other operations of a large insured depository institution (defined 
as a ``Covered Institution'') to continue functioning on the day 
following failure. It also is intended to permit the FDIC to fulfill its 
legal mandates regarding the resolution of failed insured institutions 
to provide liquidity to depositors promptly, enhance market discipline, 
ensure equitable treatment of depositors at different institutions and 
reduce the FDIC's costs by preserving the franchise value of a failed 
institution.
    (b) Definitions. (1) A covered Institution means an insured 
depository institution which, based on items as defined in Reports of 
Income and Condition or Thrift Financial Reports filed with the 
applicable federal regulator, has at least $2 billion in deposits and at 
least either:
    (i) 250,000 deposit accounts; or
    (ii) $20 billion in total assets, regardless of the number of 
deposit accounts.
    (2) Deposits, number of deposit accounts and total assets are as 
defined in the instructions for the filing of Reports of Income and 
Condition and Thrift Financial Reports, as applicable to the insured 
depository institution for determining whether it qualifies as a covered 
institution. A foreign deposit means an uninsured deposit liability 
maintained in a foreign branch of an insured depository institution. An 
international banking facility deposit is as defined by the Board of 
Governors of the Federal Reserve System in Regulation D (12 CFR Sec.
204.8(a)(2)). A demand deposit account, NOW account, money market 
deposit account, savings deposit account and time deposit account are as 
defined in the instructions for the filing of Reports of Income and 
Condition and Thrift Financial Reports.
    (3) Sweep account arrangements consist of a deposit account linked 
to an interest-bearing investment vehicle whereby funds are swept to and 
from the deposit account according to prearranged rules, usually on a 
daily basis, where the sweep investment vehicle is not a deposit and is 
reflected on the books and records of the Covered Institution.
    (4) Automated credit account arrangements consist of a deposit 
account into which funds are automatically credited from an interest-
bearing investment vehicle where the funds in the interest-bearing 
investment vehicle were not invested by prearranged rules.
    (5) Non-covered institution means an insured depository institution 
that does not meet the definition of a covered institution.
    (6) Provisional hold means an effective restriction on access to 
some or all of

[[Page 145]]

a deposit or other liability account after the failure of an insured 
depository institution.
    (c) Posting and removing provisional holds. (1) A covered 
institution shall have in place an automated process for implementing a 
provisional hold on deposit accounts, foreign deposit accounts and sweep 
and automated credit account arrangements immediately following the 
determination of the close-of-business account balances, as defined in 
Sec.360.8(b)(3), at the failed covered institution.
    (2) The system requirements under paragraph (c)(1) must have the 
capability of placing the provisional holds prescribed under that 
provision no later than 9 a.m. local time the day following the FDIC 
cutoff point, as defined in Sec.360.8(b)(1).
    (3) Pursuant to instructions to be provided by the FDIC, a covered 
institution must notify the FDIC of the person(s) responsible for 
producing the standard data download and administering provisional 
holds, both while the functionality is being constructed and on an on-
going basis.
    (4) For deposit accounts held in domestic offices of an insured 
depository institution, the provisional hold algorithm must be designed 
to exempt accounts below a specific account balance threshold, as 
determined by the FDIC. The account balance threshold could be any 
amount, including zero. For accounts above the account balance threshold 
determined by the FDIC, the algorithm must be designed to calculate and 
place a hold equal to the dollar amount of funds in excess of the 
account balance threshold multiplied by the provisional hold percentage 
determined by the FDIC. The provisional hold percentage could be any 
amount, from zero to one hundred percent. The account balance threshold 
as well as the provisional hold percentage could vary for the following 
four categories, as the covered institution customarily defines consumer 
accounts:
    (i) Consumer demand deposit, NOW and money market deposit accounts;
    (ii) Other consumer deposit accounts (time deposit and savings 
accounts, excluding NOW and money market deposit accounts);
    (iii) Non-consumer demand deposit, NOW and money market deposit 
accounts; and
    (iv) Other non-consumer deposit accounts (time deposit and savings 
accounts, excluding NOW and money market deposit accounts).
    (5) For deposit accounts held in foreign offices of an insured 
depository institution, other than those connected to a sweep or 
automated credit arrangement, the provisional hold algorithm will apply 
a provisional hold percentage to the entire account balance. For deposit 
accounts held in foreign offices the provisional hold percentage may 
differ from that applied to deposit accounts. Also, the provisional hold 
percentage would not vary by account category (i.e., consumer versus 
non-consumer and transaction versus non-transaction) as is the case with 
deposit accounts.
    (6) For international banking facility deposits, other than those 
connected to a sweep or automated credit arrangements, the provisional 
hold algorithm will apply a provisional hold percentage to the entire 
account balance. For IBF deposits the provisional hold percentage may 
differ from that applied to deposit or foreign deposit accounts. Also, 
the provisional hold percentage would not vary by account category 
(i.e., consumer versus non-consumer, and transaction versus non-
transaction) as is the case with deposit accounts.
    (7) For the interest-bearing investment vehicle of a sweep 
arrangement, the provisional hold algorithm must be designed with the 
capability to place a provisional hold on the interest-bearing 
investment vehicle with possibly a different account balance threshold 
and a different hold percentage according to the type of interest-
bearing investment vehicle.
    (8) For the interest-bearing investment vehicle of an automated 
credit account arrangement, the provisional hold algorithm must be 
designed with the capability to place a provisional hold on the 
interest-bearing investment vehicle with possibly a different account 
balance threshold and a different hold percentage according to the type 
of interest-bearing investment vehicle.

[[Page 146]]

    (9) A covered institution may submit a request to the FDIC, using 
the address indicated in Sec.360.9(g): to develop a provisional hold 
process involving memo holds or alternative account mechanisms; or to 
exempt from the provisional hold requirements of this section those 
account systems servicing a relatively small number of accounts where 
the manual application of provisional holds is feasible. Such requests 
may be in the form of a letter and must include a justification for the 
request and address the relative effectiveness of the alternative for 
posting provisional holds in the event of failure. The FDIC will 
consider such requests on a case-by-case basis in light of the 
objectives of this section.
    (10) The automated process for provisional holds required by 
paragraph (c)(1) of this section must include the capability of removing 
provisional holds in batch mode and, during the same processing cycle, 
applying debits, credits or additional holds on the deposit or other 
accounts from which the provisional holds were removed, as determined by 
the FDIC. The FDIC will provide files listing the accounts subject to: 
removal of provisional holds or additional holds (file format as 
specified in appendix A); application of debits or credits (file format 
as specified in appendix B); and application of additional holds (file 
format as specified in appendix A). In addition to the batch process 
used to remove provisional holds, the Covered Institution is required to 
have in place a mechanism for manual removal of provisional holds on a 
case-by-case basis.
    (d) Providing a standard data format for generating deposit account 
and customer data. (1) A covered institution must have in place 
practices and procedures for providing the FDIC in a standard format 
upon the close of any day's business with required depositor and 
customer data for all deposit accounts held in domestic and foreign 
offices and interest-bearing investment accounts connected with sweep 
and automated credit arrangements. Such standard data files are to be 
created through a mapping of pre-existing data elements and internal 
institution codes into standard data formats. Deposit account and 
customer data provided must be current as of the close of business for 
that day.
    (2) The requirements of paragraph (d)(1) of this section shall be 
provided in five separate files, as indicated in the appendices C 
through G to this part 360.
    (3) Upon request by the FDIC, a covered institution must submit the 
data required by paragraph (d)(1) of this section to the FDIC, in a 
manner prescribed by the FDIC.
    (4) In providing the data required under paragraph (d)(1) of this 
section to the FDIC, the Covered Institution must be able to reconcile 
the total deposit balances and the number of deposit accounts to the 
institution's subsidiary system control totals.
    (e) Implementation requirements. (1) A covered institution must 
comply with the requirements of this section no later than February 18, 
2010.
    (2) An insured depository institution not within the definition of a 
covered institution on the effective date of this section must comply 
with the requirements of this section no later than eighteen months 
following the end of the second calendar quarter for which it meets the 
criteria for a covered institution.
    (3) Upon the merger of two or more non-covered institutions, if the 
resulting institution meets the criteria for a covered institution, that 
covered institution must comply with the requirements of this section no 
later than eighteen months after the effective date of the merger.
    (4) Upon the merger of two or more covered institutions, the merged 
institution must comply with the requirements of this section within 
eighteen months following the effective date of the merger. This 
provision, however, does not supplant any preexisting implementation 
date requirement, in place prior to the date of the merger, for the 
individual covered institution(s) involved in the merger.
    (5) Upon the merger of one or more covered institutions with one or 
more non-covered institutions, the merged institution(s) must comply 
with the requirements of this section within eighteen months following 
the effective date of the merger. This provision,

[[Page 147]]

however, does not supplant any preexisting implementation date 
requirement for the individual covered institution(s) involved in the 
merger.
    (6) Notwithstanding the general requirements of this paragraph (e), 
on a case-by-case basis, the FDIC may accelerate, upon notice, the 
implementation timeframe of all or part of the requirements of this 
section for a covered institution that: Has a composite rating of 3, 4, 
or 5 under the Uniform Financial Institution's Rating System, or in the 
case of an insured branch of a foreign bank, an equivalent rating; is 
undercapitalized, as defined under the prompt corrective action 
provisions of 12 CFR part 324; or is determined by the appropriate 
Federal banking agency or the FDIC in consultation with the appropriate 
Federal banking agency to be experiencing a significant deterioration of 
capital or significant funding difficulties or liquidity stress, 
notwithstanding the composite rating of the institution by its 
appropriate Federal banking agency in its most recent report of 
examination. In implementing this paragraph (e)(6), the FDIC must 
consult with the covered institution's primary federal regulator and 
consider the: Complexity of the institution's deposit systems and 
operations, extent of the institution's asset quality difficulties, 
volatility of the institution's funding sources, expected near-term 
changes in the institution's capital levels, and other relevant factors 
appropriate for the FDIC to consider in its roles as insurer and 
possible receiver of the institution.
    (7) Notwithstanding the general requirements of this paragraph (e), 
a covered institution may request, by letter, that the FDIC extend the 
deadline for complying with the requirements of this section. A request 
for such an extension is subject to the FDIC's rules of general 
applicability under 12 CFR. 303.251.
    (f) A covered institution may apply to the FDIC for an exemption 
from the requirements of this Sec.360.9 if it has a high concentration 
of deposits incidental to credit card operations. The FDIC will consider 
such applications on a case-by-case basis in light of the objectives of 
this section.
    (g) Requests for exemptions from the requirements of this section, 
for flexibility in the use of provisional holds or for extensions of the 
implementation requirements of this section and the submission of point-
of-contact information should be submitted in writing to: Office of the 
Director, Division of Resolutions and Receiverships, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429-0002.
    (h) Testing requirements. Covered institutions must provide 
appropriate assistance to the FDIC in its testing of the systems 
required by this section. The FDIC will provide testing details to 
covered institutions through the issuance of subsequent procedures and/
or guidelines.

[73 FR 41195, July 17, 2008, as amended at 78 FR 55595, Sept. 10, 2013; 
83 FR 17741, Apr. 24, 2018]



Sec.360.10  Resolution plans required for insured depository 
institutions with $50 billion or more in total assets.

    (a) Scope and purpose. This section requires each insured depository 
institution with $50 billion or more in total assets to submit 
periodically to the FDIC a plan for the resolution of such institution 
in the event of its failure. This section also establishes the rules and 
requirements regarding the submission and content of a resolution plan 
as well as procedures for review by the FDIC of a resolution plan. This 
section requires a covered insured depository institution to submit a 
resolution plan that should enable the FDIC, as receiver, to resolve the 
institution under Sections 11 and 13 of the Federal Deposit Insurance 
Act (``FDI Act''), 12 U.S.C. 1821 and 1823, in a manner that ensures 
that depositors receive access to their insured deposits within one 
business day of the institution's failure (two business days if the 
failure occurs on a day other than Friday), maximizes the net present 
value return from the sale or disposition of its assets and minimizes 
the amount of any loss realized by the creditors in the resolution. This 
rule is intended to ensure that the FDIC has access to all of the 
material information it needs to resolve efficiently a covered insured 
depository institution in the event of its failure.

[[Page 148]]

    (b) Definitions--(1) Affiliate has the same meaning given such term 
in Section 3(w)(6) of the FDI Act, 12 U.S.C. 1813(w)(6).
    (2) Company has the same meaning given such term in Sec.362.2(d) 
of the FDIC's Regulations, 12 CFR 362.2(d).
    (3) Core business lines means those business lines of the covered 
insured depository institution (``CIDI''), including associated 
operations, services, functions and support, that, in the view of the 
CIDI, upon failure would result in a material loss of revenue, profit, 
or franchise value.
    (4) Covered insured depository institution (``CIDI'') means an 
insured depository institution with $50 billion or more in total assets, 
as determined based upon the average of the institution's four most 
recent Reports of Condition and Income or Thrift Financial Reports, as 
applicable to the insured depository institution.
    (5) Critical services means services and operations of the CIDI, 
such as servicing, information technology support and operations, human 
resources and personnel that are necessary to continue the day-to-day 
operations of the CIDI.
    (6) Foreign-based company means any company that is not incorporated 
or organized under the laws of the United States.
    (7) Insured depository institution shall have the meaning given such 
term in Section 3(c)(2) of the FDI Act, 12 U.S.C. 1813(c)(2).
    (8) Material entity means a company that is significant to the 
activities of a critical service or core business line.
    (9) Parent company means the company that controls, directly or 
indirectly, an insured depository institution. In a multi-tiered holding 
company structure, parent company means the top-tier of the multi-tiered 
holding company only.
    (10) Parent company affiliate means any affiliate of the parent 
company other than the CIDI and subsidiaries of the CIDI.
    (11) Resolution plan means the plan described in paragraph (c) of 
this section for resolving the CIDI under Sections 11 and 13 of the FDI 
Act, 12 U.S.C. 1821 and 1823.
    (12) Subsidiary has the same meaning given such term in Section 
3(w)(4) of the FDI Act, 12 U.S.C. 1813(w)(4).
    (13) Total assets are defined in the instructions for the filing of 
Reports of Condition and Income and Thrift Financial Reports, as 
applicable to the insured depository institution, for determining 
whether it qualifies as a CIDI.
    (14) United States means the United States and includes any state of 
the United States, the District of Columbia, any territory of the United 
States, Puerto Rico, Guam, American Samoa and the Virgin Islands.
    (c) Resolution Plans to be submitted by CIDI to FDIC--(1) General. 
(i) Initial Resolution Plans Required. Each CIDI shall submit a 
resolution plan to the FDIC, Attention: Office of Complex Financial 
Institutions, 550 17th Street NW., Washington, DC 20429, on or before 
the date set forth below (``Initial Submission Date''):
    (A) July 1, 2012, with respect to a CIDI whose parent company, as of 
November 30, 2011, had $250 billion or more in total nonbank assets (or 
in the case of a parent company that is a foreign-based company, such 
company's total U.S. nonbank assets);
    (B) July 1, 2013, with respect to any CIDI not described paragraph 
(c)(1)(i)(A) of this section whose parent company, as of November 30, 
2011, had $100 billion or more in total nonbank assets (or, in the case 
of a parent company that is a foreign-based company, such company's 
total U.S. nonbank assets); and
    (C) December 31, 2013, with respect to any CIDI not described in of 
this paragraph (c)(1)(i)(A) or (B) of this section.
    (ii) Submission by New CIDIs. An insured depository institution that 
becomes a CIDI after April 1, 2012 shall submit its initial resolution 
plan no later than the next July 1 following the date the insured 
depository institution becomes a CIDI, provided such date occurs no 
earlier than 270 days after the date on which the insured depository 
institution became a CIDI.
    (iii) After filing its initial Resolution Plan pursuant to paragraph 
(c)(1)(i) or (c)(1)(ii) of this section, each CIDI shall submit a 
Resolution Plan to the FDIC

[[Page 149]]

annually on or before each anniversary date of its Initial Submission 
Date.
    (iv) Notwithstanding anything to the contrary in this paragraph 
(c)(1), the FDIC may determine that a CIDI shall file its initial or 
annual Resolution Plan by a date other than as provided in this 
paragraph (c). The FDIC shall provide a CIDI with written notice of a 
determination under this paragraph (c)(1)(iv) no later than 180 days 
prior to the date on which the FDIC determines to require the CIDI to 
submit its Resolution Plan.
    (v) Notice of Material Events. (A) Each CIDI shall file with the 
FDIC a notice no later than 45 days after any event, occurrence, change 
in conditions or circumstances or other change that results in, or could 
reasonably be foreseen to have, a material effect on the resolution plan 
of the CIDI. Such notice shall describe the event, occurrence or change 
and explain why the event, occurrence or change may require changes to 
the resolution plan. The CIDI shall address any event, occurrence or 
change with respect to which it has provided notice pursuant hereto in 
the following resolution plan submitted by the CIDI.
    (B) A CIDI shall not be required to file a notice under paragraph 
(c)(1)(v)(A) of this section if the date on which the CIDI would be 
required to submit a notice under paragraph (c)(1)(v)(A) would be within 
90 days prior to the date on which the CIDI is required to file an 
annual Resolution Plan under paragraph (c)(1)(iii) of this section.
    (vi) Incorporation of data and other information from a Dodd-Frank 
Act resolution plan. The CIDI may incorporate data and other information 
from a resolution plan filed pursuant to Section 165(d) of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. 5365(d), 
by its parent company.
    (2) Content of the Resolution Plan. The resolution plan submitted 
should enable the FDIC, as receiver, to resolve the CIDI in the event of 
its insolvency under the FDI Act in a manner that ensures that 
depositors receive access to their insured deposits within one business 
day of the institution's failure (two business days if the failure 
occurs on a day other than Friday), maximizes the net present value 
return from the sale or disposition of its assets and minimizes the 
amount of any loss realized by the creditors in the resolution in 
accordance with Sections 11 and 13 of the FDI Act, 12 U.S.C. 1821 and 
1823. The resolution plan strategies should take into account that 
failure of the CIDI may occur under the baseline, adverse and severely 
adverse economic conditions developed by the Board of Governors of the 
Federal Reserve System pursuant to 12 U.S.C. 5365(i)(1)(B); provided, 
however, a CIDI may submit its initial resolution plan assuming the 
baseline conditions only, or, if a baseline scenario is not then 
available, a reasonable substitute developed by the CIDI. At a minimum, 
the resolution plan shall:
    (i) Executive Summary. Include an executive summary describing the 
key elements of the CIDI's strategic plan for resolution under the FDI 
Act in the event of its insolvency. After the CIDI files its initial 
plan, each annual resolution plan shall also describe:
    (A) Material events, such as acquisitions, sales, litigation and 
operational changes, since the most recently filed plan that may have a 
material effect on the plan;
    (B) Material changes to the CIDI's resolution plan from its most 
recently filed plan; and
    (C) Any actions taken by the CIDI since filing of the previous plan 
to improve the effectiveness of its resolution plan or remediate or 
otherwise mitigate any material weaknesses or impediments to the 
effective and timely execution of the resolution plan.
    (ii) Organizational Structure: Legal Entities; Core Business Lines 
and Branches. Provide the CIDI's, parent company's, and affiliates' 
legal and functional structures and identify core business lines. 
Provide a mapping of core business lines, including material asset 
holdings and liabilities related thereto, to material entities. Discuss 
the CIDI's overall deposit activities including, among other things, 
unique aspects of the deposit base or underlying systems that may create 
operational complexity for the FDIC, result in extraordinary resolution 
expenses in the event of failure and a description of the

[[Page 150]]

branch organization, both domestic and foreign. Identify key personnel 
tasked with managing core business lines and deposit activities and the 
CIDI's branch organization.
    (iii) Critical Services. Identify critical services and providers of 
critical services. Provide a mapping of critical services to material 
entities and core business lines. Describe the CIDI's strategy for 
continuing critical services in the event of the CIDI's failure. When 
critical services are provided by the parent company or a parent company 
affiliate, describe the CIDI's strategy for continuing critical services 
in the event of the parent company's or parent company affiliate's 
failure. Assess the ability of each parent company affiliate providing 
critical services to function on a stand-alone basis in the event of the 
parent company's failure.
    (iv) Interconnectedness to Parent Company's Organization; Potential 
Barriers or Material Obstacles to Orderly Resolution. Identify the 
elements or aspects of the parent company's organizational structure, 
the interconnectedness of its legal entities, the structure of legal or 
contractual arrangements, or its overall business operations that would, 
in the event the CIDI were placed in receivership, diminish the CIDI's 
franchise value, obstruct its continued business operations or increase 
the operational complexity to the FDIC of resolution of the CIDI. 
Identify potential barriers or other material obstacles to an orderly 
resolution of the CIDI, inter-connections and inter-dependencies that 
hinder the timely and effective resolution of the CIDI, and include the 
remediation steps or mitigating responses necessary to eliminate or 
minimize such barriers or obstacles.
    (v) Strategy to Separate from Parent Company's Organization. Provide 
a strategy to unwind or separate the CIDI and its subsidiaries from the 
organizational structure of its parent company in a cost-effective and 
timely fashion. Describe remediation or mitigating steps that could be 
taken to eliminate or mitigate obstacles to such separation.
    (vi) Strategy for the Sale or Disposition of Deposit Franchise, 
Business Lines and Assets. Provide a strategy for the sale or 
disposition of the deposit franchise, including branches, core business 
lines and major assets of the CIDI in a manner that ensures that 
depositors receive access to their insured deposits within one business 
day of the institution's failure (two business days if the failure 
occurs on a day other than Friday), maximizes the net present value 
return from the sale or disposition of such assets and minimizes the 
amount of any loss realized in the resolution of cases.
    (vii) Least Costly Resolution Method. Describe how the strategies 
for the separation of the CIDI and its subsidiaries from its parent 
company's organization and sale or disposition of deposit franchise, 
core business lines and major assets can be demonstrated to be the least 
costly to the Deposit Insurance Fund of all possible methods for 
resolving the CIDI.
    (viii) Asset Valuation and Sales. Provide a detailed description of 
the processes the CIDI employs for:
    (A) Determining the current market values and marketability of core 
business lines and material asset holdings;
    (B) Assessing the feasibility of the CIDI's plans, under baseline, 
adverse and severely adverse economic condition scenarios for executing 
any sales, divestitures, restructurings, recapitalizations, or similar 
actions contemplated in the CIDI's resolution plan; and
    (C) Assessing the impact of any sales, divestitures, restructurings, 
recapitalizations, or other similar actions on the value, funding and 
operations of the CIDI and its core business lines.
    (ix) Major Counterparties. Identify the major counterparties of the 
CIDI and describe the interconnections, interdependencies and 
relationships with such major counterparties. Analyze whether the 
failure of each major counterparty would likely have an adverse impact 
on or result in the material financial distress or failure of the CIDI.
    (x) Off-balance-sheet Exposures. Describe any material off-balance-
sheet exposures (including unfunded commitments, guarantees and 
contractual obligations) of the CIDI and map those exposures to core 
business lines.

[[Page 151]]

    (xi) Collateral Pledged. Identify and describe processes used by the 
CIDI to:
    (A) Determine to whom the CIDI has pledged collateral;
    (B) Identify the person or entity that holds such collateral; and
    (C) Identify the jurisdiction in which the collateral is located; 
and if different, the jurisdiction in which the security interest in the 
collateral is enforceable against the CIDI.
    (xii) Trading, derivatives and hedges. Describe the practices of the 
CIDI and its core business lines related to the booking of trading and 
derivative activities. Identify each system on which the CIDI conducts a 
material number or value amount of trades. Map each trading system to 
the CIDI's legal entities and core business lines. Identify material 
hedges of the CIDI and its core business lines related to trading and 
derivative activities, including a mapping to legal entity. Describe 
hedging strategies of the CIDI.
    (xiii) Unconsolidated Balance Sheet of CIDI; Material Entity 
Financial Statements. Provide an unconsolidated balance sheet for the 
CIDI and a consolidating schedule for all material entities that are 
subject to consolidation with the CIDI. Provide financial statements for 
material entities. When available, audited financial statements should 
be provided.
    (xiv) Payment, clearing and settlement systems. Identify each 
payment, clearing and settlement system of which the CIDI, directly or 
indirectly, is a member. Map membership in each such system to the 
CIDI's legal entities and core business lines.
    (xv) Capital Structure; Funding Sources. Provide detailed 
descriptions of the funding, liquidity and capital needs of, and 
resources available to, the CIDI and its material entities, which shall 
be mapped to core business lines and critical services. Describe the 
material components of the liabilities of the CIDI and its material 
entities and identify types and amounts of short-term and long-term 
liabilities by type and term to maturity, secured and unsecured 
liabilities and subordinated liabilities.
    (xvi) Affiliate Funding, Transactions, Accounts, Exposures and 
Concentrations. Describe material affiliate funding relationships, 
accounts, and exposures, including terms, purpose, and duration, that 
the CIDI or any of its subsidiaries have with its parent or any parent 
company affiliate. Include in such description material affiliate 
financial exposures, claims or liens, lending or borrowing lines and 
relationships, guaranties, asset accounts, deposits, or derivatives 
transactions. Clearly identify the nature and extent to which parent 
company or parent company affiliates serve as a source of funding to the 
CIDI and its subsidiaries, the terms of any contractual arrangements, 
including any capital maintenance agreements, the location of related 
assets, funds or deposits and the mechanisms by which funds can be 
downstreamed from the parent company to the CIDI and its subsidiaries.
    (xvii) Systemically Important Functions. Describe systemically 
important functions that the CIDI, its subsidiaries and affiliates 
provide, including the nature and extent of the institution's 
involvement in payment systems, custodial or clearing operations, large 
sweep programs, and capital markets operations in which it plays a 
dominant role. Discuss critical vulnerabilities, estimated exposure and 
potential losses, and why certain attributes of the businesses detailed 
in previous sections could pose a systemic risk to the broader economy.
    (xviii) Cross-Border Elements. Describe material components of the 
CIDI's structure that are based or located outside the United States, 
including foreign branches, subsidiaries and offices. Provide detail on 
the location and amount of foreign deposits and assets. Discuss the 
nature and extent of the CIDI's cross-border assets, operations, 
interrelationships and exposures and map to legal entities and core 
business lines.
    (xix) Management Information Systems; Software Licenses; 
Intellectual Property. Provide a detailed inventory and description of 
the key management information systems and applications, including 
systems and applications for risk management, accounting, and financial 
and regulatory reporting, used by the CIDI and its subsidiaries. 
Identify the legal owner or licensor of the systems identified above; 
describe the

[[Page 152]]

use and function of the system or application, and provide a listing of 
service level agreements and any software and systems licenses or 
associated intellectual property related thereto. Identify and discuss 
any disaster recovery or other backup plans. Identify common or shared 
facilities and systems as well as personnel necessary to operate such 
facilities and systems. Describe the capabilities of the CIDI's 
processes and systems to collect, maintain, and report the information 
and other data underlying the resolution plan to management of the CIDI 
and, upon request to the FDIC. Describe any deficiencies, gaps or 
weaknesses in such capabilities and the actions the CIDI intends to take 
to promptly address such deficiencies, gaps, or weaknesses, and the time 
frame for implementing such actions.
    (xx) Corporate Governance. Include a detailed description of:
    (A) How resolution planning is integrated into the corporate 
governance structure and processes of the CIDI;
    (B) The CIDI's policies, procedures, and internal controls governing 
preparation and approval of the resolution plan; and
    (C) The identity and position of the senior management official of 
the CIDI who is primarily responsible and accountable for the 
development, maintenance, implementation, and filing of the resolution 
plan and for the CIDI's compliance with this section.
    (xxi) Assessment of the Resolution Plan. Describe the nature, 
extent, and results of any contingency planning or similar exercise 
conducted by the CIDI since the date of the most recently filed 
resolution plan to assess the viability of or improve the resolution 
plan.
    (xxii) Any other material factor. Identify and discuss any other 
material factor that may impede the resolution of the CIDI.
    (3) Approval. The CIDI's board of directors must approve the 
resolution plan. Such approval shall be noted in the Board minutes.
    (4) Review of Resolution Plan.
    (i) Each resolution plan submitted shall be credible. A resolution 
plan is credible if its strategies for resolving the CIDI, and the 
detailed information required by this section, are well-founded and 
based on information and data related to the CIDI that are observable or 
otherwise verifiable and employ reasonable projections from current and 
historical conditions within the broader financial markets.
    (ii) After receiving a resolution plan, the FDIC shall determine 
whether the submitted plan satisfies the minimum informational 
requirements of paragraph (c)(2) of this section; and either acknowledge 
acceptance of the plan for review or return the resolution plan if the 
FDIC determines that it is incomplete or that substantial additional 
information is required to facilitate review of the resolution plan.
    (iii) If the FDIC determines that a resolution plan is 
informationally incomplete or that additional information is necessary 
to facilitate review of the plan, the FDIC shall inform the CIDI in 
writing of the area(s) in which the plan is informationally incomplete 
or with respect to which additional information is required.
    (iv) The CIDI shall resubmit an informationally complete resolution 
plan or such additional information as requested to facilitate review of 
the resolution plan no later than 30 days after receiving the notice 
described in paragraph (c)(4)(iii) of this section, or such other time 
period as the FDIC may determine.
    (v) Upon acceptance of a resolution plan as informationally 
complete, the FDIC will review the resolution plan in consultation with 
the appropriate Federal banking agency for the CIDI and its parent 
company. If, after consultation with the appropriate Federal banking 
agency for the CIDI, the FDIC determines that the resolution plan of a 
CIDI submitted is not credible, the FDIC shall notify the CIDI in 
writing of such determination. Any notice provided under this paragraph 
shall identify the aspects of the resolution plan that the FDIC 
determines to be deficient.
    (vi) Within 90 days of receiving a notice of deficiencies issued 
pursuant to the preceding paragraph, or such shorter or longer period as 
the FDIC may determine, a CIDI shall submit a revised resolution plan to 
the FDIC that addresses the deficiencies identified by

[[Page 153]]

the FDIC and discusses in detail the revisions made to address such 
deficiencies.
    (vii) Upon its own initiative or a written request by a CIDI, the 
FDIC may extend any time period under this section. Each extension 
request shall be in writing and shall describe the basis and 
justification for the request.
    (d) Implementation Matters. (1) In order to allow evaluation of the 
resolution plan, each CIDI must provide the FDIC such information and 
access to such personnel of the CIDI as the FDIC determines is necessary 
to assess the credibility of the resolution plan and the ability of the 
CIDI to implement the resolution plan. The FDIC will rely to the fullest 
extent possible on examinations conducted by or on behalf of the 
appropriate Federal banking agency for the relevant company.
    (2) Within a reasonable period of time, as determined by the FDIC, 
following its Initial Submission Date, the CIDI shall demonstrate its 
capability to produce promptly, in a time frame and format acceptable to 
the FDIC, the information and data underlying its resolution plan. The 
FDIC shall consult with the appropriate Federal banking agency for the 
CIDI before finding that the CIDI's capability to produce the 
information and data underlying its resolution plan is unacceptable.
    (3) Notwithstanding the general requirements of paragraph (c)(1) of 
this section, on a case-by-case basis, the FDIC may extend, on its own 
initiative or upon written request, the implementation and updating time 
frames for all or part of the requirements of this section.
    (4) FDIC may, on its own initiative or upon written request, exempt 
a CIDI from one or more of the requirements of this section.
    (e) No limiting effect on FDIC. No resolution plan provided pursuant 
to this section shall be binding on the FDIC as supervisor, deposit 
insurer or receiver for a CIDI or otherwise require the FDIC to act in 
conformance with such plan.
    (f) Form of Resolution Plans; Confidential Treatment of Resolution 
Plans. (1) Each resolution plan of a CIDI shall be divided into a Public 
Section and a Confidential Section. Each CIDI shall segregate and 
separately identify the Public Section from the Confidential Section. 
The Public Section shall consist of an executive summary of the 
resolution plan that describes the business of the CIDI and includes, to 
the extent material to an understanding of the CIDI:
    (i) The names of material entities;
    (ii) A description of core business lines;
    (iii) Consolidated financial information regarding assets, 
liabilities, capital and major funding sources;
    (iv) A description of derivative activities and hedging activities;
    (v) A list of memberships in material payment, clearing and 
settlement systems;
    (vi) A description of foreign operations;
    (vii) The identities of material supervisory authorities;
    (viii) The identities of the principal officers;
    (ix) A description of the corporate governance structure and 
processes related to resolution planning;
    (x) A description of material management information systems; and
    (xi) A description, at a high level, of the CIDI's resolution 
strategy, covering such items as the range of potential purchasers of 
the CIDI, its material entities and core business lines.
    (2) The confidentiality of resolution plans shall be determined in 
accordance with applicable exemptions under the Freedom of Information 
Act (5 U.S.C. 552(b)) and the FDIC's Disclosure of Information Rules (12 
CFR part 309).
    (3) Any CIDI submitting a resolution plan or related materials 
pursuant to this section that desires confidential treatment of the 
information submitted pursuant to 5 U.S.C. 552(b)(4) and the FDIC's 
Disclosure of Information Rules (12 CFR part 309) and related policies 
may file a request for confidential treatment in accordance with those 
rules.
    (4) To the extent permitted by law, information comprising the 
Confidential Section of a resolution plan will be treated as 
confidential.
    (5) To the extent permitted by law, the submission of any 
nonpublicly available data or information under

[[Page 154]]

this section shall not constitute a waiver of, or otherwise affect, any 
privilege arising under Federal or state law (including the rules of any 
Federal or state court) to which the data or information is otherwise 
subject. Privileges that apply to resolution plans and related materials 
are protected pursuant to Section 18(x) of the FDI Act, 12 U.S.C. 
1828(x).

[77 FR 3084, Jan. 23, 2012]



Sec.360.11  Records of failed insured depository institutions.

    (a) Definitions. For purposes of this section, the following 
definitions apply--
    (1) Failed insured depository institution is an insured depository 
institution for which the FDIC has been appointed receiver pursuant to 
12 U.S.C. 1821(c)(1).
    (2) Insured depository institution has the same meaning as provided 
by 12 U.S.C. 1813(c)(2).
    (3) Records means any reasonably accessible document, book, paper, 
map, photograph, microfiche, microfilm, computer or electronically-
created record generated or maintained by an insured depository 
institution in the course of and necessary to its transaction of 
business.
    (i) Examples of records include, without limitation, board or 
committee meeting minutes, contracts to which the insured depository 
institution was a party, deposit account information, employee and 
employee benefits information, general ledger and financial reports or 
data, litigation files, and loan documents.
    (ii) Records do not include:
    (A) Multiple copies of records; or
    (B) 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 insured depository institutions.
    (b) Determination of records. In determining whether particular 
documentary material obtained from a failed insured depository 
institution is a record for purposes of 12 U.S.C. 1821(d)(15)(D), the 
FDIC in its discretion will consider the following factors:
    (1) Whether the documentary material related to the business of the 
insured depository institution,
    (2) Whether the documentary material was generated or maintained as 
records in the regular course of the business of the insured depository 
institution in accordance with its own recordkeeping practices and 
procedures or pursuant to standards established by its regulators,
    (3) Whether the documentary material is needed by the FDIC to carry 
out its receivership function, and
    (4) The expected evidentiary needs of the FDIC.
    (c) The FDIC's determination that documentary material from a failed 
insured depository institution constitutes records is solely for the 
purpose of identifying that documentary material that must be maintained 
pursuant to 12 U.S.C. 1821(d)(15)(D) and shall not bear on the 
discoverability or admissibility of such documentary material in any 
court, tribunal or other adjudicative proceeding, nor on whether such 
documentary material is subject to release under the Freedom of 
Information Act, the Privacy Act or other law.
    (d) Destruction of records. (1) Except as provided in paragraph 
(d)(2) of this section, after the end of the six-year period beginning 
on the date the FDIC is appointed as receiver of a failed insured 
depository institution, the FDIC may destroy any records of an 
institution which the FDIC, in its discretion, determines to be 
unnecessary unless directed not to do so by a court of competent 
jurisdiction or governmental agency, prohibited by law, or subject to a 
legal hold imposed by the FDIC.
    (2) Notwithstanding paragraph (d)(1) of this section, the FDIC may 
destroy records of a failed insured depository institution which are at 
least 10 years old as of the date on which the FDIC is appointed as the 
receiver of such institution in accordance with paragraph (d)(1) of this 
section at any time after such appointment is final, without regard to 
the six-year period of limitation contained in paragraph (d)(1) of this 
section.
    (e) Transfer of records. If the FDIC transfers records to a third 
party in

[[Page 155]]

connection with a transaction involving the purchase and assumption of 
assets and liabilities of an insured depository institution, the 
recordkeeping requirements of 12 U.S.C. 1821(d)(15)(D), and paragraph 
(d) of this section shall be satisfied if the transferee agrees that it 
will not destroy such records for at least six years from the date the 
FDIC was appointed as receiver of such failed insured depository 
institution unless otherwise notified in writing by the FDIC.
    (f) Policies and procedures. The FDIC may establish policies and 
procedures with respect to the retention and destruction of records that 
are consistent with this section.

[78 FR 54376, Sept. 4, 2013]



  Sec. Appendix A to Part 360--Non-Monetary Transaction File Structure

    This is the structure of the data file the FDIC will provide to 
remove or add a FDIC hold for an individual account or sub-account. The 
file will be in a tab- or pipe-delimited ASCII format and provided 
through FDICconnect or Direct Connect. The file will be encrypted using 
an FDIC-supplied algorithm.

----------------------------------------------------------------------------------------------------------------
             Field name                  Field description            Comments                   Format
----------------------------------------------------------------------------------------------------------------
1. DP_Acct_Identifier...............  Account Identifier.....  The Account Identifier  Character (25).
                                      The primary field used    may be composed of
                                       to identify the          more than one
                                       account. This field      physical data
                                       may be the Account       element. If multiple
                                       Number..                 fields are required
                                                                to identify the
                                                                account, data should
                                                                be placed in separate
                                                                fields and the FDIC
                                                                instructed how these
                                                                fields are combined
                                                                to uniquely identify
                                                                the account.
2. DP_Acct_Identifier--2............  Account Identifier--2..  ......................  Character (25).
                                      If necessary, the
                                       second element used to
                                       identify the account.
3. DP_Acct_Identifier--3............  Account Identifier--3..  ......................  Character (25).
                                      If necessary, the third
                                       element used to
                                       identify the account.
4. DP_Acct_Identifier--4............  Account Identifier--4..  ......................  Character (25).
                                      If necessary, the
                                       fourth element used to
                                       identify the account.
5. DP_Acct_Identifier--5............  Account Identifier--5..  ......................  Character (25).
                                      If necessary, the fifth
                                       element used to
                                       identify the account.
6. DP_Sub_Acct_Identifier...........  Sub-Account Identifier.  The Sub-Account         Character (25).
                                      If available, the Sub-    Identifier may
                                       Account identifier for   identify separate
                                       the account..            deposits tied to this
                                                                account where there
                                                                are different
                                                                processing parameters
                                                                such as interest
                                                                rates or maturity
                                                                dates, but all owners
                                                                are the same.
7. PH_Hold_Action...................  Hold Action............  ......................  Character (1).
                                      The requested hold
                                       action to be taken for
                                       this account or sub-
                                       account..
                                      Possible values are:
                                       R =
                                       Remove.
                                       A =
                                       Add.
8. PH_Hold_Amt......................  Hold Amount............  ......................  Decimal (14,2).
                                      Dollar amount of the
                                       FDIC hold to be
                                       removed or added.
9. PH_Hold_Desc.....................  Hold Description.......  ......................  Character (225).
                                      FDIC hold to be removed
                                       or added.
----------------------------------------------------------------------------------------------------------------


[73 FR 41197, July 17, 2008]



        Sec. Appendix B to Part 360--Debit/Credit File Structure

    This is the structure of the data file the FDIC will provide to 
apply debits and credits to an individual account or sub-account after 
the removal of FDIC holds. The file will be in a tab- or pipe-delimited 
ASCII format and provided through FDICconnect or Direct

[[Page 156]]

Connect. The file will be encrypted using an FDIC-supplied algorithm.

----------------------------------------------------------------------------------------------------------------
             Field name                  Field description            Comments                   Format
----------------------------------------------------------------------------------------------------------------
1. DP_Acct_Identifier...............  Account Identifier.....  The Account Identifier  Character (25).
                                      The primary field used    may be composed of
                                       to identify the          more than one
                                       account. This field      physical data
                                       may the Account          element. If multiple
                                       Number..                 fields are required
                                                                to identify the
                                                                account, data should
                                                                be placed in separate
                                                                fields and the FDIC
                                                                instructed how these
                                                                fields are combined
                                                                to uniquely identify
                                                                the account.
2. DP_Acct_Identifier--2............  Account Identifier--2..  ......................  Character (25).
                                      If necessary, the
                                       second element used to
                                       identify the account.
3. DP_Acct_Identifier--3............  Account Identifier--3..  ......................  Character (25).
                                      If necessary, the third
                                       element used to
                                       identify the account.
4. DP_Acct_Identifier--4............  Account Identifier--4..  ......................  Character (25).
                                      If necessary, the
                                       fourth element used to
                                       identify the account.
5. DP_Acct_Identifier--5............  Account Identifier--5..  ......................  Character (25).
                                      If necessary, the fifth
                                       element used to
                                       identify the account.
6. DP_Sub_Acct_Identifier...........  Sub-Account Identifier.  The Sub-Account         Character (25).
                                      If available, the sub-    Identifier may
                                       account identifier for   identify separate
                                       the account..            deposits tied to this
                                                                account where there
                                                                are different
                                                                processing parameters
                                                                such as interest
                                                                rates or maturity
                                                                dates, but all owners
                                                                are the same.
7. DC_Debit_Amt.....................  Debit Amount...........  ......................  Decimal (14,2).
                                      Dollar amount of the
                                       debit to be applied to
                                       the account or sub-
                                       account.
8. DC_Credit_Amt....................  Credit Amount..........  ......................  Decimal (14,2).
                                      Dollar amount of the
                                       credit to be applied
                                       to the account or sub-
                                       account.
9. DC_Transaction_Desc..............  Debit/Credit             ......................  Character (225).
                                       Description.
                                      FDIC message associated
                                       with the debit or
                                       credit transaction.
----------------------------------------------------------------------------------------------------------------


[73 FR 41197, July 17, 2008]



           Sec. Appendix C to Part 360--Deposit File Structure

    This is the structure for the data file to provide deposit data to 
the FDIC. If data or information are not maintained or do not apply, a 
null value in the appropriate field should be indicated. The file will 
be in a tab-or pipe-delimited ASCII format. Each file name will contain 
the institution's FDIC Certificate Number, an indication that it is a 
deposit file type and the date of the extract. The files will be 
encrypted using an FDIC-supplied algorithm. The FDIC will transmit to 
the covered institution the encryption algorithm over FDICconnect.
    The total deposit balances and the number of deposit accounts in 
each deposit file must be reconciled to the subsidiary system control 
totals.
    The FDIC intends to fully utilize a covered institution's 
understanding of its customers and the data maintained around deposit 
accounts. Should additional information be available to the covered 
institution to help the FDIC more quickly complete its insurance 
determination process, it may add this information to the end of this 
data file. Should additional data elements be provided, a complete data 
dictionary for these elements must be supplied along with a description 
of how this information could be best used to establish account 
ownership or insurance category.
    The deposit data elements provide information specific to deposit 
account balances and account data. The sequencing of these elements, 
their physical data structures and the field data format and field 
length must be provided to the FDIC along with the data structures 
identified below.
    A header record will also be required at the beginning of this file. 
This record will contain the number of accounts to be included in this 
file, the maximum number of characters contained in largest account 
title

[[Page 157]]

field maintained within the deposit file and the maximum number of 
characters contained in largest address field maintained within the 
deposit file.

    Note: Each record must contain the account title/name and current 
account statement mailing address. Fields 17-33 relate to the account 
name and address information. Some systems provide for separate fields 
for account title/name, street address, city, state, ZIP, and country, 
all of which are parsed out. Others systems may simply provide multiple 
lines for name, street address, city, state, ZIP, with no distinction. 
Populate fields that best fit the system's data, either fields 17-27 or 
fields 28-33.

----------------------------------------------------------------------------------------------------------------
             Field name                  Field description            Comments                   Format
----------------------------------------------------------------------------------------------------------------
1. DP_Acct_Identifier...............  Account Identifier.....  The Account Identifier  Character (25).
                                      The primary field used    may be composed of
                                       to identify the          more than one
                                       account. This field      physical data
                                       may be the Account       element. If multiple
                                       Number..                 fields are required
                                                                to identify the
                                                                account, data should
                                                                be placed in separate
                                                                fields and the FDIC
                                                                instructed how these
                                                                fields are combined
                                                                to uniquely identify
                                                                the account.
2. DP_Acct_Identifier--2............  Account Identifier--2..  ......................  Character (25).
                                      If necessary, the
                                       second element used to
                                       identify the account..
3. DP_Acct_Identifier--3............  Account Identifier--3..  ......................  Character (25).
                                      If necessary, the third
                                       element used to
                                       identify the account..
4. DP_Acct_Identifier--4............  Account Identifier--4..  ......................  Character (25).
                                      If necessary, the
                                       fourth element used to
                                       identify the account..
5. DP_Acct_Identifier--5............  Account Identifier--5..  ......................  Character (25).
                                      If necessary, the fifth
                                       element used to
                                       identify the account..
6. DP_Sub_Acct_Identifier...........  Sub-Account Identifier.  The Sub-Account         Character (25).
                                      If available, the sub-    Identifier may
                                       account identifier for   identify separate
                                       the account..            deposits tied to this
                                                                account where there
                                                                are different
                                                                processing parameters
                                                                such as interest
                                                                rates or maturity
                                                                dates, but all owners
                                                                are the same.
7. DP_Bank_No.......................  Bank Number............  ......................  Character (15).
                                      The bank number
                                       assigned to the
                                       deposit account..
8. DP_Tax_ID........................  Tax ID.................  For consumer accounts,  Character (15).
                                      The tax identification    typically, this would
                                       number maintained on     be the primary
                                       the account..            account holder's
                                                                social security
                                                                number (``SSN''). For
                                                                business accounts it
                                                                would be the federal
                                                                tax identification
                                                                number (``TIN'').
                                                                Hyphens are optional
                                                                in this field.
9. DP_Tax_Code......................  Tax ID Code............  Generally deposit       Character (1).
                                      The type of the tax       systems have flags or
                                       identification number.   indicators set to
                                       Possible values are:.    indicate whether the
                                       S =    number is an SSN or
                                       Social Security          TIN.
                                       Number..
                                       T =
                                       Federal Tax
                                       Identification Number..
                                       O =
                                       Other..
10. DP_Branch.......................  Branch Number..........  In lieu of a branch     Character (15).
                                      The branch or office      number this field may
                                       associated with the      represent a specialty
                                       account..                department or
                                                                division.
11. DP_Cost_Center..................  Cost Center or G/L Code  This field ties to the  Character (20).
                                      The identifier used for   general ledger
                                       organization reporting   accounts.
                                       or ownership of the
                                       account. Insert null
                                       value if the cost
                                       center is not carried
                                       in the deposit record..

[[Page 158]]

 
12. DP_Dep_Type.....................  Deposit Type Indicator.  A deposit--also called  Character (1).
                                      The type of deposit by    a ``domestic
                                       office location.         deposit''--includes
                                       Possible values are:.    only deposit
                                       D =    liabilities payable
                                       Deposit (Domestic)..     in the United States,
                                       F =    typically those
                                       Foreign Deposit..        deposits maintained
                                                                in a domestic office
                                                                of an insured
                                                                depository
                                                                institution, as
                                                                defined in section
                                                                3(l) of the Federal
                                                                Deposit Insurance Act
                                                                (12 U.S.C. 1813(l)).
                                                                A foreign deposit is
                                                                a deposit liability
                                                                in a foreign branch
                                                                payable solely at a
                                                                foreign branch or
                                                                branches.
13. DP_Currency_Type................  Currency Type..........  ......................  Character (3).
                                      The ISO 4217 currency
                                       code..
14. DP_Ownership_Ind................  Customer Ownership       Single: Accounts owned  Character (2).
                                       Indicator.               by an individual and
                                      The type of ownership     those accounts held
                                       at the account level.    as Minor Accounts,
                                       Possible values are:.    Estate Accounts, Non-
                                       S =    Minor Custodian/
                                       Single..                 Guardian Accounts,
                                       J =    Attorney in Fact
                                       Joint Account..          Accounts and Sole
                                       P =    Proprietorships.
                                       Partnership account..   Joint Account:
                                       C =    Accounts owned by two
                                       Corporation..            or more individuals,
                                       B =    but does not include
                                       Brokered Deposits..      the ownership of a
                                       I =    Payable on Death
                                       IRA Accounts..           Account or Trust
                                       U =    Account..
                                       Unincorporated          Partnership Account:
                                       Association..            Accounts owned by a
                                       R =    Partnership.
                                       Revocable Trust..       Corporation: Accounts
                                       IR =   owned by a
                                       Irrevocable Trust..      Corporation (e.g.
                                       G =    Inc., L.L.C., or
                                       Government Accounts..    P.C.)..
                                       E =   Brokered Deposits:
                                       Employee Benefit Plan    Accounts placed by a
                                       Accounts..               deposit broker who
                                       O =    acts as an
                                       Other..                  intermediary for the
                                                                actual owner or sub-
                                                                broker..
                                                               IRA Accounts: Accounts
                                                                for which the owner
                                                                has the right to
                                                                direct how the funds
                                                                are invested
                                                                including Keoghs and
                                                                other Self-Directed
                                                                Retirement Accounts..
                                                               Unincorporated
                                                                Association: An
                                                                account owned by an
                                                                association of two or
                                                                more persons formed
                                                                for some religious,
                                                                educational,
                                                                charitable, social or
                                                                other non-commercial
                                                                purpose.
                                                               Revocable Trusts:
                                                                Including PODs and
                                                                formal revocable
                                                                trusts (e.g. Living
                                                                Trusts, Intervivos
                                                                Trusts or Family
                                                                Trusts).
                                                               Irrevocable Trusts:
                                                                Accounts held by a
                                                                trust established by
                                                                statute or written
                                                                trust in which the
                                                                grantor relinquishes
                                                                all power to revoke
                                                                the trust.
                                                               Government Accounts:
                                                                Accounts owned by a
                                                                government entity
                                                                (e.g. City, State,
                                                                County or Federal
                                                                government entities
                                                                and their sub-
                                                                divisions).
                                                               Employee Benefit Plan:
                                                                Accounts established
                                                                by the administrator
                                                                of an Employee
                                                                Benefit Plan
                                                                including defined
                                                                contribution, defined
                                                                benefit and employee
                                                                welfare plans.

[[Page 159]]

 
                                                               Other Accounts:
                                                                Accounts owned by an
                                                                entity not described
                                                                above.
15. DP_Prod_Cat.....................  Product Category.......  Product Category is     Character (3).
                                      The product               sometimes referred to
                                       classification.          as ``application
                                       Possible values are:.    type'' or ``system
                                                                type''.
                                       DDA
                                       = Non-Interest Bearing
                                       Checking accounts.
                                       NOW
                                       = Interest Bearing
                                       Checking accounts.
                                       MMA
                                       = Money Market Deposit
                                       Accounts.
                                       SAV
                                       = Other savings
                                       accounts.
                                       CDS
                                       = Time Deposit
                                       accounts and
                                       Certificate of Deposit
                                       accounts, including
                                       any accounts with
                                       specified maturity
                                       dates that may or may
                                       not be renewable.
16. DP_Stat_Code....................  Status Code............                          Character (1).
                                      Status or condition of
                                       the account. Possible
                                       values are:.
                                       O =
                                       Open.
                                       D =
                                       Dormant.
                                       I =
                                       Inactive.
                                       E =
                                       Escheatment.
                                       A =
                                       Abandoned.
                                       C =
                                       Closing.
                                       R =
                                       Restricted/Frozen/
                                       Blocked.
17. DP_Acct_Title--1................  Account Title Line 1...  These data will be      Character (100).
                                      Account styling or        used to identify the
                                       titling of the           owners and
                                       account..                beneficiaries of the
                                                                account.
18. DP_Acct_Title--2................  Account Title Line 2...  ......................  Character (100).
                                      If available, the
                                       second account title
                                       line..
19. DP_Acct_Title--3................  Account Title Line 3...  ......................  Character (100).
                                      If available, the third
                                       account title line..
20. DP_Acct_Title--4................  Account Title Line 4...  ......................  Character (100).
                                      If available, the
                                       fourth account title
                                       line..
21. DP_Street_Add_Ln--1.............  Street Address Line 1..  ......................  Character (100).
                                      The current account
                                       statement mailing
                                       address of record..
22. DP_Street_Add_Ln--2.............  Street Address Line 2..  ......................  Character (100).
                                      If available, the
                                       second mailing address
                                       line..
23. DP_Street_Add_Ln--3.............  Street Address Line 3..  ......................  Character (100).
                                      If available, the third
                                       mailing address line..
24. DP_City.........................  City...................  ......................  Character (50).
                                      The city associated
                                       with the mailing
                                       address..
25. DP_State........................  State..................  Use a two-character     Character (2).
                                      The state abbreviation    state code (official
                                       associated with the      U.S. Postal Service
                                       mailing address..        abbreviations).
26. DP_ZIP..........................  ZIP....................  If the `` + 4'' code    Character (10).
                                      The ZIP + 4 code          is not available
                                       associated with the      provide only the 5-
                                       mailing address..        digit ZIP code.
                                                                Hyphens are optional
                                                                in this field.
27. DP_Country......................  Country................  Provide the country     Character (10).
                                      The country associated    name or the standard
                                       with the mailing         IRS country code.
                                       address..
28. DP_NA_Line--1...................  Name/Address Line 1....  Fields 28-33 are to be  Character (100).
                                      Alternate name/address    used if address data
                                       format for the current   are not parsed to
                                       account statement        populate Fields 17-
                                       mailing address of       27.
                                       record, first line..
29. DP_NA_Line--2...................  Name/Address Line 2....  ......................  Character (100).
                                      Alternate name/address
                                       format, second line..

[[Page 160]]

 
30. DP_NA_Line--3...................  Name/Address Line 3....  ......................  Character (100).
                                      Alternate name/address
                                       format, third line..
31. DP_NA_Line--4...................  Name/Address Line 4....  ......................  Character (100).
                                      Alternate name/address
                                       format, fourth line..
32. DP_NA_Line--5...................  Name/Address Line 5....  ......................  Character (100).
                                      Alternate name/address
                                       format, fifth line..
33. DP_NA_Line--6...................  Name/Address Line 6....  ......................  Character (100).
                                      Alternate name/address
                                       format, sixth line..
34. DP_Cur_Bal......................  Current Balance........  This balance should     Decimal (14,2).
                                      The current balance in    not be reduced by
                                       the account at the end   float or holds. For
                                       of business on the       CDs and time
                                       effective date of this   deposits, the balance
                                       file..                   should reflect the
                                                                principal balance
                                                                plus any interest
                                                                paid and available
                                                                for withdrawal not
                                                                already included in
                                                                the principal (do not
                                                                include accrued
                                                                interest). The total
                                                                of all current
                                                                balances in this file
                                                                should reconcile to
                                                                the total deposit
                                                                trial balance totals
                                                                or other summary
                                                                reconciliation of
                                                                deposits performed by
                                                                the institution.
35. DP_Int_Rate.....................  Interest Rate..........  Interest rate should    Decimal (10,9).
                                      The current interest      be expressed in
                                       rate in effect for       decimal format, i.e.,
                                       interest bearing         2.0% should be
                                       accounts..               represented as
                                                                0.020000000.
36. DP_Acc_Int......................  Accrued Interest.......  ......................  Decimal (14,2).
                                      The amount of interest
                                       that has been earned
                                       but not yet paid to
                                       the account as of the
                                       date of the file..
37. DP_Lst_Int_Pd...................  Date Last Interest Paid  ......................  Date (YYYYMMDD).
                                      The date through which
                                       interest was last paid
                                       to the account..
38. DP_Lst_Deposit..................  Date Last Deposit......  For example, a deposit  Date (YYYYMMDD).
                                      The date of the last      that included checks
                                       deposit transaction      and/or cash.
                                       posted to the account..
39. DP_Int_Term_No..................  Interest Term Number...  ......................  Decimal (3,0).
                                      The number of months in
                                       the current interest
                                       term..
40. DP_Nxt_Mat......................  Date of Next Maturity..  For non-renewing CDs    Date (YYYYMMDD).
                                      For CD and time deposit   that have matured and
                                       accounts, the next       are waiting to be
                                       date the account is to   redeemed this date
                                       mature..                 may be in the past.
41. DP_Open_DT......................  Account Open Date......  If the account had      Date (YYYYMMDD).
                                      The date the account      previously been
                                       was opened..             closed and re-opened,
                                                                this should reflect
                                                                the most recent re-
                                                                opened date.
42. DP_Sweep_Code...................  Sweep Code.............  ......................  Character (1).
                                      Indicates if the
                                       account is a sweep
                                       account. Possible
                                       values are:
                                       Y =
                                       Yes.
                                       N =
                                       No.
43. DP_Hold_To_Post.................  Full Hold on the         ......................  Character (1).
                                       account: Indicator if
                                       all postings to this
                                       account are
                                       restricted. Possible
                                       values are:
                                       Y =
                                       Yes.
                                       N =
                                       No.
44. DP_Issue_Val_Amt................  Issued Value Amount....  For CDs only.           Decimal (14,2).
                                      The value of the
                                       current CD when
                                       issued..
45. DP_Int_CD_Cde...................  Type of Interest for CD  For CDs only.           Character (1).
                                      Possible values are:
                                       C =
                                       Rate Change Allowed.
                                       N =
                                       Rate Change Not
                                       Allowed.

[[Page 161]]

 
                                       R =
                                       Change Rate to Default
                                       at Renewal.
                                       T =
                                       Rate Change Allowed
                                       Only During the Term.
46. DP_IRA_Cde......................  IRA Code...............  Optional code field to  Character (1).
                                      The type of IRA.          be used if available
                                       Possible values are:.    to help further
                                       C =    identify the types of
                                       Corporate Retirement.    IRA accounts.
                                       E =
                                       Educational IRA..
                                       I =
                                       IRA Account..
                                       K =
                                       Keogh Account..
                                       R =
                                       Roth IRA Account..
                                       S =
                                       SEP Account..
                                       T =
                                       Transitional Roth IRA..
                                       V =
                                       Versa Account..
                                       H =
                                       Health Savings
                                       Account..
47. DP_Deposit_Class_Type...........  Deposit Class Type.....  The institution may     Character (10).
                                      The deposit class.        also use more or
                                       Possible values are:.    fewer class types.
                                       RTL
                                       = Retail.
                                       FED
                                       = Federal government.
                                      
                                       STATE = State
                                       government.
                                       COMM
                                       = Commercial.
                                       CORP
                                       = Corporate.
                                       BANK
                                       = Bank Owned.
                                       DUE
                                       TO = Other Banks.
48. DP_Product_Class_Cde............  Deposit Class Codes....  These Product Class     Character (2).
                                      The deposit class         codes are used in
                                       codes. Possible values   conjunction with the
                                       are:.                    Deposit Class Types
                                      RTL....................   in field 51. This
                                       1 =    field is to be used
                                       Payable on Death..       in concert with
                                       2 =    fields 12 and 13
                                       Individual..             identified above to
                                       3 =    enable the financial
                                       Living Trust--           institution to
                                       Intervivos or Family..   capture more detailed
                                       4 =    information
                                       Irrevocable Trust        concerning account
                                       (includes Educational    types. It is the
                                       IRAs)..                  intent of the FDIC to
                                       5 =    have the financial
                                       Estate..                 institution map its
                                       6 =    detailed account
                                       Attorney in Fact..       types to the codes
                                       7 =    identified in this
                                       Minor--(includes all     field. The
                                       variations of Uniform    institution may also
                                       Gifts to Minor           use additional codes,
                                       Accounts)..              but in this event the
                                       8 =    institution must
                                       Bankruptcy Personal..    supply the detailed
                                       9 =    description and code
                                       Pre-Need Burial..        value for each
                                       10 =   additional code used.
                                       Escrow..                 If no additional
                                       11 =   account product type
                                       Representative Payee/    detail is available
                                       Beneficiary..            then this field
                                       12 =   should be left blank.
                                       Sole Proprietorship..
                                       13 =
                                       Joint..
                                       14 =
                                       Non-Minor Custodian/
                                       Guardian..
                                       15 =
                                       Other Retail..

[[Page 162]]

 
                                      FED
                                       16 =
                                       FHA..
                                       17 =
                                       Federal Government..
                                      STATE..................
                                       18 =
                                       City..
                                       19 =
                                       State..
                                       20 =
                                       County, Clerk of
                                       Court..
                                       21 =
                                       Other State..
                                      COMMERCIAL.............
                                       22 =
                                       Business Escrow..
                                       23 =
                                       Bankruptcy..
                                       24 =
                                       Club..
                                       25 =
                                       Church..
                                       26 =
                                       Unincorporated
                                       Association..
                                       27 =
                                       Unincorporated Non-
                                       Profit..
                                      
                                        28
                                       = Other Commercial..
                                      CORPORATION............
                                       29 =
                                       Business Trust..
                                       30 =
                                       Business Agent..
                                       31 =
                                       Business Guardian..
                                       32 =
                                       Incorporated
                                       Association..
                                       33 =
                                       Incorporated Non-
                                       Profit..
                                       33 =
                                       Incorporated Non-
                                       Profit..
                                       34 =
                                       Corporation..
                                       35 =
                                       Corporate Partnership..
                                       36 =
                                       Corporate Partnership
                                       Trust..
                                       37 =
                                       Corporate Agent..
                                       38 =
                                       Corporate Guardian..
                                       39 =
                                       Pre-Need Funeral
                                       Trust..
                                       40 =
                                       Limited Liability
                                       Incorporation..
                                       41 =
                                       LLC partnership..
                                       42 =
                                       Lawyer Trust..
                                       43 =
                                       Realtor Trust..
                                       44 =
                                       Other Corporation..
                                      BANK...................
                                       45 =
                                       Certified & Official
                                       Checks, Money Orders,
                                       Loan Disbursements
                                       Checks, and Expense
                                       Checks..
                                       46 =
                                       ATM Settlement..
                                       47 =
                                       Other Bank Owned
                                       Accounts..
                                      DUE TO (Other Banks)...
                                       48 =
                                       Due to U.S. Banks..
                                       49 =
                                       Due to U.S. Branches
                                       of Foreign Banks..
                                       50 =
                                       Due to Other
                                       Depository
                                       Institutions..
                                       51 =
                                       Due to Foreign Banks..
                                       52 =
                                       Due to Foreign
                                       Branches of U.S.
                                       banks..
                                       53 =
                                       Due to Foreign
                                       Governments and
                                       Official Institutions..
----------------------------------------------------------------------------------------------------------------


[73 FR 41197, July 17, 2008]



    Sec. Appendix D to Part 360--Sweep/Automated Credit Account File 
                                Structure

    This is the structure of the data file to provide information to the 
FDIC on funds residing in investment vehicles linked to each non-closed 
deposit account or sub-account: (1) Involved in sweep activity where the 
sweep investment vehicle is not a deposit and is reflected on the books 
and records of the covered institution or (2) which accepts automated 
credits. A single record should be used for each instance where funds 
affiliated with the deposit account are held in an alternative 
investment vehicle. For any alternative investment vehicle, a separate 
account may or may not exist. If an account

[[Page 163]]

exists for the investment vehicle, it should be noted in the record. If 
no account exists, then a null value for the Sweep/Automated Credit 
Account Identifiers should be provided, but the remainder of the data 
fields defined below should be populated.
    For data provided in the Sweep/Automated Credit Account File, the 
total account balances and the number of accounts must be reconciled to 
subsidiary system control totals. The file will be in a tab- or pipe-
delimited ASCII format. The files will be encrypted using an FDIC-
supplied algorithm. The FDIC will transmit the encryption algorithm over 
FDICconnect.

----------------------------------------------------------------------------------------------------------------
             Field name                  Field description            Comments                   Format
----------------------------------------------------------------------------------------------------------------
1. DP_Acct_Identifier...............  Account Identifier.....  The Account Identifier  Character (25).
                                      The primary field used    may be composed of
                                       to identify the          more than one
                                       account from which       physical data
                                       funds are swept or       element. If multiple
                                       debited. The field may   fields are required
                                       be the Account number..  to identify the
                                                                account, data should
                                                                be placed in separate
                                                                fields and the FDIC
                                                                instructed how these
                                                                fields are combined
                                                                to uniquely identify
                                                                the account.
2. DP_Acct_Identifier--2............  Account Identifier--2..  ......................  Character (25).
                                      If necessary, the
                                       second element used to
                                       identify the account
                                       from which funds are
                                       swept or debited..
3. DP_Acct_Identifier--3............  Account Identifier--3..  ......................  Character (25).
                                      If necessary, the third
                                       element used to
                                       identify the account
                                       from which funds are
                                       swept or debited..
4. DP_Acct_Identifier--4............  Account Identifier--4..  ......................  Character (25).
                                      If necessary, the
                                       fourth element used to
                                       identify the account
                                       from which funds are
                                       swept or debited..
5. DP_Acct_Identifier--5............  Account Identifier--5..  ......................  Character (25).
                                      If necessary, the fifth
                                       element used to
                                       identify the account
                                       from which funds are
                                       swept or debited..
6. DP_Sub_Acct_Identifier...........  Sub-Account Identifier.  The Sub-Account         Character (25).
                                      If available, the sub-    Identifier may
                                       account identifier for   identify separate
                                       the account..            deposits tied to this
                                                                account where there
                                                                are different
                                                                processing parameters
                                                                such as interest
                                                                rates or maturity
                                                                dates, but all owners
                                                                are the same.
7. SW_Acct_Identifier...............  Sweep/Automated Credit   Funds may be swept      Character (25).
                                       Account Identifier.      into an investment
                                      The primary field used    vehicle not
                                       to identify the          represented as an
                                       account into which       account. In this case
                                       funds are swept or       this field should be
                                       credited. This field     a null value.
                                       may be the Account      The Sweep/Automated
                                       Number..                 Credit Account
                                                                Identifier may be
                                                                composed of more than
                                                                one physical data
                                                                element. If multiple
                                                                fields are required
                                                                to identify the
                                                                account, data should
                                                                be placed in separate
                                                                fields and the FDIC
                                                                instructed how these
                                                                fields are combined
                                                                to uniquely identify
                                                                the account..
8. SW_Acct_Identifier--2............  Sweep/Automated Credit   ......................  Character (25).
                                       Account Identifier--2.
                                      If necessary, the
                                       second element of the
                                       account identifier
                                       used to identify the
                                       account into which
                                       funds are swept or
                                       credited..
9. SW_Acct_Identifier--3............  Sweep/Automated Credit   ......................  Character (25).
                                       Account Identifier--3.
                                      If necessary, the third
                                       element of the account
                                       identifier used to
                                       identify the account
                                       into which funds are
                                       swept or credited..

[[Page 164]]

 
10. SW_Acct_Identifier--4...........  Sweep/Automated Credit   ......................  Character (25).
                                       Account Identifier--4.
                                      If necessary, the
                                       fourth element of the
                                       account identifier
                                       used to identify the
                                       account into which
                                       funds are swept or
                                       credited..
11. SW_Acct_Identifier--5...........  Sweep/Automated Credit   ......................  Character (25).
                                       Account Identifier-5.
                                      If necessary, the fifth
                                       element of the account
                                       identifier used to
                                       identify the account
                                       into which funds are
                                       swept or credited..
12. SW_Sub_Acct_Identifier..........  Sweep/Automated Credit   ......................  Character (25).
                                       Sub-Account Identifier.
                                      If available, the sub-
                                       account identifier for
                                       the account.
13. SW_Type.........................  Sweep/Automated Credit   The investment          Character (3).
                                       Type.                    vehicle. Possible
                                                                values are:
                                                                RE
                                                                = Repurchase
                                                                Agreement..
                                                                DD
                                                                = Deposit Held in a
                                                                Domestic Office..
                                                                DF
                                                                = Deposit Held in a
                                                                Foreign Office..
                                                                IBF
                                                                = Deposit Held in an
                                                                International Banking
                                                                Facility..
                                                                AI
                                                                = Deposit Held in an
                                                                affiliated depository
                                                                institution..
                                                                FF
                                                                = Federal Funds..
                                                                CP
                                                                = Commercial Paper..
                                                                OT
                                                                = Other..
14. SW_Inv_Amount...................  Fund Balance in Sweep/   ......................  Decimal (14,2).
                                       Automated Credit
                                       Investment Vehicle.
                                      Dollar amount residing
                                       in the investment
                                       vehicle..
15. SW_Currency_Type................  Currency Type..........  ......................  Character (3).
                                      The ISO 4217 currency
                                       code..
16. SW_Hold_Amount..................  FDIC Hold Amount.......  ......................  Decimal (14,2).
                                      Amount of FDIC hold on
                                       funds residing in the
                                       investment vehicle..
17. SW_Sweep_Interval...............  Sweep/Investment         ......................  Character (2).
                                       Frequency.
                                      The frequency with
                                       which the sweep or
                                       investment occurs.
                                       Possible values are:.
                                       D =
                                       Daily..
                                       W =
                                       Weekly..
                                       BW =
                                       Bi-Weekly..
                                       M =
                                       Monthly..
                                       BM =
                                       Bi-Monthly..
                                       Q =
                                       Quarterly..
                                       O =
                                       Other..
----------------------------------------------------------------------------------------------------------------


[73 FR 41197, July 17, 2008]



            Sec. Appendix E to Part 360--Hold File Structure

    This is the structure of the data file to provide information to the 
FDIC for each legal or collateral hold placed on a deposit account or 
sub-account. If data or information are not maintained or do not apply, 
a null value in the appropriate field should be indicated. The file will 
be in a tab-or pipe-delimited ASCII format. Each file name will contain 
the institution's FDIC Certificate Number, an indication that it is a 
hold data file type and the date of the extract. The files will be 
encrypted using an FDIC-supplied algorithm. The FDIC will transmit the 
encryption algorithm over FDICconnect.

[[Page 165]]



----------------------------------------------------------------------------------------------------------------
             Field name                  Field description            Comments                   Format
----------------------------------------------------------------------------------------------------------------
1. DP_Acct_Identifier...............  Account Identifier.....  The Account Identifier  Character (25).
                                      The primary field used    may be composed of
                                       to identify the          more than one
                                       account. This field      physical data
                                       may be the Account       element. If multiple
                                       Number..                 fields are required
                                                                to identify the
                                                                account, data should
                                                                be placed in separate
                                                                fields and the FDIC
                                                                instructed how these
                                                                fields are combined
                                                                to uniquely identify
                                                                the account.
2. DP_Acct_Identifier--2............  Account Identifier--2..  ......................  Character (25).
                                      If necessary, the
                                       second element used to
                                       identify the account.
3. DP_Acct_Identifier--3............  Account Identifier--3..  ......................  Character (25).
                                      If necessary, the third
                                       element used to
                                       identify the account.
4. DP_Acct_Identifier--4............  Account Identifier--4..  ......................  Character (25).
                                      If necessary, the
                                       fourth element used to
                                       identify the account.
5. DP_Acct_Identifier--5............  Account Identifier--5..  ......................  Character (25).
                                      If necessary, the fifth
                                       element used to
                                       identify the account.
6. DP_Sub_Acct_Identifier...........  Sub-Account Identifier.  The Sub-Account         Character (25).
                                      If available, the sub-    Identifier may
                                       account identifier for   identify separate
                                       the account..            deposits tied to this
                                                                account where there
                                                                are different
                                                                processing parameters
                                                                such as interest
                                                                rates or maturity
                                                                dates, but all owners
                                                                are the same.
7. HD_Hold_Amt......................  Hold Amount............  ......................  Decimal (14,2).
                                      Dollar amount of the
                                       hold.
8. HD_Hold_Reason...................  Hold Reason............  ......................  Character (2).
                                      Reason for the hold.
                                       Possible values are:.
                                       LN =
                                       Loan Collateral Hold.
                                       LG =
                                       Court Order Hold.
                                       FD =
                                       FDIC hold.
                                       OT =
                                       Other (do not include
                                       daily operational type
                                       holds).
9. HD_Hold_Desc.....................  Hold Description.......  ......................  Character (255).
                                      Description of the hold
                                       available on the
                                       system.
10. HD_Hold_Start_Dt................  Hold Start Date........  ......................  Date (YYYYMMDD).
                                      The date the hold was
                                       initiated..
11. HD_Hold_Exp_Dt..................  Hold Expiration Date...  ......................  Date (YYYYMMDD)
                                      The date the hold is to
                                       expire..
----------------------------------------------------------------------------------------------------------------


[73 FR 41197, July 17, 2008]



          Sec. Appendix F to Part 360--Customer File Structure

    This is the structure of the data file to provide to the FDIC 
information related to each customer who has an account or sub-account 
reported in the deposit data or sweep/automated credit account file. If 
data or information are not maintained or do not apply, a null value in 
the appropriate field should be indicated. The file will be in a tab-or 
pipe-delimited ASCII format. Each file name will contain the 
institution's FDIC Certificate Number, an indication that it is a 
customer file type and the date of the extract. The files will be 
encrypted using an FDIC-supplied algorithm. The FDIC will transmit the 
encryption algorithm over FDICconnect.

    Note: Each record must contain the customer's name and permanent 
legal address. Fields 4-12 relate to the customer name for individuals 
only. Fields 13-14 relate to the customer name for entities other than 
individuals. Some systems provide for separate fields for name, street 
address, city, state, ZIP, and country, all of which are parsed out. 
Others systems may simply provide multiple lines for name, street 
address, city, state, ZIP, with no distinction. In this case, certain 
name and address data elements must be parsed and provided in the 
appropriate fields.

----------------------------------------------------------------------------------------------------------------
             Field name                  Field description            Comments                   Format
----------------------------------------------------------------------------------------------------------------
1. CS_Cust_Identifier...............  Customer Identifier....  ......................  Character (25).

[[Page 166]]

 
                                      The unique field used
                                       by the institution to
                                       identify the customer.
2. CS_Tax_ID........................  Customer Tax ID Number.  Hyphens are optional    Character (11).
                                                                in this field.
                                      The tax identification
                                       number on record for
                                       the customer.
3. CS_Tax_Code......................  Customer Tax ID Code...  ......................  Character (1).
                                      The type of the tax
                                       identification number
                                       of the customer.
                                       Possible values are:
                                       S =
                                       Social Security Number.
                                       T =
                                       Federal Tax
                                       Identification Number.
                                       O =
                                       Other.
4. CS_Name_Line--1..................  Individual Customer      ......................  Character (100).
                                       Name Line 1.
                                      If available, the free-
                                       form name narrative of
                                       the customer, first
                                       line.
5. CS_Name_Line--2..................  Individual Customer      ......................  Character (100).
                                       Name Line 2.
                                      If available, the free-
                                       form name narrative of
                                       the customer, second
                                       line.
6. CS_Last_Name.....................  Individual Customer      This field is required  Character (50).
                                       Last Name.               if the data element
                                      For individuals, the      is in the
                                       customer's last name..   institution's
                                                                records. If
                                                                necessary, data
                                                                should be parsed from
                                                                fields 4 or 5 to
                                                                obtain this element.
7. CS_First_Name....................  Individual Customer      This field is required  Character (50).
                                       First Name.              if the data element
                                      For individuals, the      is in the
                                       customer's first name..  institution's
                                                                records. If
                                                                necessary, data
                                                                should be parsed from
                                                                fields 4 or 5 to
                                                                obtain this element.
8. CS_Middle_Name...................  Individual Customer      This field is required  Character (50).
                                       Middle Name.             if the data element
                                      For individuals, the      is in the
                                       customer's middle        institution's
                                       name..                   records. If
                                                                necessary, data
                                                                should be parsed from
                                                                fields 4 or 5 to
                                                                obtain this element.
9. CS_Suffix........................  Individual Professional  This field is required  Character (20).
                                       Suffix.                  if the data element
                                      For individuals, the      is in the
                                       suffix designating       institution's
                                       customer's academic,     records. If
                                       professional or          necessary, data
                                       honorary status, such    should be parsed from
                                       as Esq., Ph.D., M.D.,    fields 4 or 5 to
                                       and D.D.S..              obtain this element.
10. CS_Generation...................  Individual Generational  This field is required  Character (10).
                                       Suffix.                  if the data element
                                      For individuals, the      is in the
                                       suffix designating the   institution's
                                       customer's               records. If
                                       generational status,     necessary, data
                                       such as Jr., Sr. or      should be parsed from
                                       III..                    fields 4 or 5 to
                                                                obtain this element.
11. CS_Prefix.......................  Individual Customer      This field is required  Character (10).
                                       Prefix.                  if the data element
                                      For individuals, the      is in the
                                       prefix of the            institution's
                                       customer, such as        records. If
                                       Rev., Dr., Mrs., Mr.     necessary, data
                                       or Ms..                  should be parsed from
                                                                fields 4 or 5 to
                                                                obtain this element.
12. CS_Birth_Dt.....................  Individual Customer      ......................  Date (YYYYMMDD).
                                       Birth Date.
                                      For individuals, the
                                       customer's birth date.
13. CS_Ent_Name_Line--1.............  Entity Name Line 1.....  ......................  Character (100).
                                      For entities other than
                                       individuals, the free-
                                       form name narrative of
                                       the customer, first
                                       line.
14. CS_Ent_Name_Line--2.............  Entity Name Line 2.....  ......................  Character (100).
                                      If available for
                                       entities other than
                                       individuals, the free-
                                       form name narrative of
                                       the customer, second
                                       line.
15. CS_Nar_Addr_Line--1.............  Customer Address Line 1  ......................  Character (100).
                                      If available, the free-
                                       form permanent legal
                                       address narrative for
                                       the customer, line one.
16. CS_Nar_Addr_Line--2.............  Customer Address Line 2  ......................  Character (100).
                                      If available, the free-
                                       form permanent legal
                                       address narrative of
                                       the customer, line two.
17. CS_Nar_Addr_Line--3.............  Customer Address Line 3  ......................  Character (100).

[[Page 167]]

 
                                      If available, the free-
                                       form permanent legal
                                       address narrative of
                                       the customer, line
                                       three.
18. CS_Street_Address--1............  Street Address Line 1..  This field is           Character (100).
                                      The permanent legal       required. If
                                       address of the           necessary, data
                                       customer, line one..     should be parsed from
                                                                fields 16 or 17 to
                                                                obtain this element.
19. CS_Street_Address--2............  Street Address Line 2..  This field is           Character (100).
                                      The permanent legal       required. If
                                       address of the           necessary, data
                                       customer, line two..     should be parsed from
                                                                fields 16 or 17 to
                                                                obtain this element.
20. CS_City.........................  City...................  This field is           Character (25).
                                      The city associated       required. If
                                       with the permanent       necessary, data
                                       legal address..          should be parsed from
                                                                fields 16 or 17 to
                                                                obtain this element.
21. CS_State........................  State..................  This field is           Character (2).
                                      The state abbreviation    required. If
                                       associated with the      necessary, data
                                       permanent legal          should be parsed from
                                       address..                fields 16 or 17 to
                                                                obtain this element.
                                                                Use a two-character
                                                                state code (official
                                                                U.S. Postal Service
                                                                abbreviations).
22. CS_ZIP..........................  ZIP....................  This field is           Character (10).
                                      The ZIP + 4 code          required. If
                                       associated with the      necessary, data
                                       permanent legal          should be parsed from
                                       address..                fields 16 or 17 to
                                                                obtain this element.
                                                                If the `` + 4'' code
                                                                is not available,
                                                                provide only the 5-
                                                                digit ZIP code.
                                                                Hyphens are optional
                                                                in this field.
23. CS_Country......................  Country................  This field is           Character (10).
                                      The country associated    required. If
                                       with the permanent       necessary, data
                                       legal address..          should be parsed from
                                                                fields 16 or 17 to
                                                                obtain this element.
                                                                Provide the name of
                                                                the country or the
                                                                standard IRS country
                                                                code.
24. CS_Telephone....................  Customer Telephone       ......................  Character (20).
                                       Number.
                                      The telephone number on
                                       record for the
                                       customer.
25. CS_Email........................  Customer Email Address.  ......................  Character (150).
                                      The e-mail address on
                                       record for the
                                       customer.
----------------------------------------------------------------------------------------------------------------


[73 FR 41197, July 17, 2008]



    Sec. Appendix G to Part 360--Deposit-Customer Join File Structure

    This is the structure of the data file to provide to the FDIC 
information necessary to link the records in the deposit and customer 
files. If data or information are not maintained or do not apply, a null 
value in the appropriate field should be indicated. The file will be in 
a tab- or pipe-delimited ASCII format. Each file name will contain the 
institution's FDIC Certificate Number, an indication that it is a join 
file type and the date of the extract. The files will be encrypted using 
an FDIC-supplied algorithm. The FDIC will transmit the encryption 
algorithm over FDICconnect.
    The deposit-customer join file will have one or more records for 
each deposit account, depending on the number of relationships to each 
account. A simple individual account, for example, will be associated 
with only one record in the deposit-customer join file indicating the 
owner of the account. A joint account with two owners will be associated 
with two records in the deposit-customer join file, one for each owner. 
The deposit-customer join file will contain other records associated 
with a deposit account to designate, among other things, beneficiaries, 
custodians, trustees and agents. This methodology allows the FDIC to 
know all of the possible relationships for an individual account and 
also whether a single customer is involved in many accounts.

----------------------------------------------------------------------------------------------------------------
             Field name                FDIC field description         Comments                   Format
----------------------------------------------------------------------------------------------------------------
1. CS_Cust_Identifier...............  Customer Identifier....  ......................  Character (25).

[[Page 168]]

 
                                      The unique field used
                                       by the institution to
                                       identify the customer.
2. DP_Acct_Identifier...............  Account Identifier.....  The Account Identifier  Character (25).
                                      The primary field used    may be composed of
                                       to identify the          more than one
                                       account. This field      physical data
                                       may be the Account       element. If multiple
                                       Number..                 fields are required
                                                                to identify the
                                                                account, the data
                                                                should be placed in
                                                                separate fields and
                                                                the FDIC instructed
                                                                how these fields are
                                                                combined to uniquely
                                                                identify the account.
3. DP_Acct_Identifier--2............  Account Identifier--2..  ......................  Character (25).
                                      If necessary, the
                                       second element used to
                                       identify the account.
4. DP_Acct_Identifier--3............  Account Identifier--3..  ......................  Character (25).
                                      If necessary, the third
                                       element used to
                                       identify the account.
5. DP_Acct_Identifier--4............  Account Identifier--4..  ......................  Character (25).
                                      If necessary, the
                                       fourth element used to
                                       identify the account.
6. DP_Acct_Identifier--5............  Account Identifier--5..  ......................  Character (25).
                                      If necessary, the fifth
                                       element used to
                                       identify the account.
7. DP_Sub_Acct_Identifier...........  Sub-Account Identifier.  The Sub-Account         Character (25).
                                      If available, the sub-    Identifier may
                                       account identifier for   identify separate
                                       the account..            deposits tied to this
                                                                account where there
                                                                are different
                                                                processing parameters
                                                                such as interest
                                                                rates or maturity
                                                                dates, but all owners
                                                                are the same.
8. CS_Rel_Code......................  Relationship Code......  Institutions must map   Character (5).
                                      The code indicating how   their relationship
                                       the customer is          codes to the codes in
                                       related to the           the list to the left.
                                       account. Possible        If the institution
                                       values are:.             maintains more
                                       ADM    relationships they
                                       = Administrator..        must supply the
                                       AGT    additional
                                       = Agent/                 relationship codes
                                       Representative..         being utilized along
                                       ATF    with the code
                                       = Attorney For..         definition.
                                       AUT
                                       = Authorized Signer..
                                       BNF
                                       = Beneficiary.
                                       CSV
                                       = Conservator.
                                       CUS
                                       = Custodian.
                                       DBA
                                       = Doing Business As.
                                       EXC
                                       = Executor.
                                       GDN
                                       = Guardian.
                                       MIN
                                       = Minor.
                                       PRI
                                       = Primary Owner.
                                       SEC
                                       = Secondary Owner(s).
                                       TTE
                                       = Trustee.
9. CS_Bene_Code.....................  Beneficiary Type Code..  This includes           Character (1).
                                      If the customer is        beneficiaries on
                                       considered a             retirement accounts,
                                       beneficiary, the type    trust accounts, minor
                                       of account associated    accounts, and payable-
                                       with this customer.      on-death accounts.
                                       Possible values are:.
                                       I =
                                       IRA.
                                       T =
                                       Trust--Irrevocable.
                                       R =
                                       Trust--Revocable.
                                       M =
                                       Uniform Gift to Minor.
                                       P =
                                       Payable on Death.
                                       O =
                                       Other.
----------------------------------------------------------------------------------------------------------------


[73 FR 41197, July 17, 2008]



Sec. Appendix H to Part 360--Possible File Combinations for Deposit Data

    A covered institution must provide deposit data using separate 
deposit, sweep/automated credit, hold, customer, and deposit-customer 
join files. The simplest file structure involves providing one of each 
file. This basic file format is shown in Figure 1.

[[Page 169]]

[GRAPHIC] [TIFF OMITTED] TR17JY08.000

    Multiple combinations of deposit, sweep/automated credit, hold, 
customer, and deposit-customer join files are permissible, but only in 
the following circumstances:
    1. Each separate deposit file must have companion sweep/automated 
credit and hold files covering the same deposit accounts.
    2. A single customer file may be submitted covering customers 
affiliated with deposit accounts in one or more deposit files as long as 
the customer file contains information on all of the customers 
affiliated with the deposit files.
    3. Several customer files may be submitted as long as each separate 
customer file contains information on all of the customers affiliated 
with the associated deposit files.
    Figure 2 shows a permissible file configuration using a single 
Customer File affiliated with Deposit File A and Deposit File B. As 
required, Deposit File A has a companion Sweep/Automated Credit File A 
and Hold File A. The same is true for Deposit File B.
    Another permissible combination of files is shown in Figure 3, which 
is a variation of the basic data file structure shown in Figure 1.

[[Page 170]]

[GRAPHIC] [TIFF OMITTED] TR17JY08.001


[[Page 171]]


[GRAPHIC] [TIFF OMITTED] TR17JY08.002


[73 FR 41197, July 17, 2008]



PART 361_MINORITY AND WOMEN OUTREACH PROGRAM CONTRACTING
--Table of Contents



Sec.
361.1 Why do minority- and women-owned businesses need this outreach 
          regulation?
361.2 Why does the FDIC have this outreach program?
361.3 Who may participate in this outreach program?
361.4 What contracts are eligible for this outreach program?
361.5 What are the FDIC's oversight and monitoring responsibilities in 
          administering this program?

[[Page 172]]

361.6 What outreach efforts are included in this program?

    Authority: 12 U.S.C. 1833e.

    Source: 65 FR 31253, May 17, 2000, unless otherwise noted.



Sec.361.1  Why do minority- and women-owned businesses need this 
outreach regulation?

    The purpose of the FDIC Minority and Women Outreach Program (MWOP) 
is to ensure that minority- and women-owned businesses (MWOBs) are given 
the opportunity to participate fully in all contracts entered into by 
the FDIC.



Sec.361.2  Why does the FDIC have this outreach program?

    It is the policy of the FDIC that minorities and women, and 
businesses owned by them have the maximum practicable opportunity to 
participate in contracts awarded by the FDIC.



Sec.361.3  Who may participate in this outreach program?

    For purposes of this part:
    (a) Minority has the same meaning as defined by the Small Business 
Administration at 13 CFR 124.103(b).
    (b) Legal Services means all services provided by attorneys or law 
firms (including services of support staff).



Sec.361.4  What contracts are eligible for this outreach program?

    The FDIC outreach program applies to all contracts entered into by 
the FDIC. The outreach program is incorporated into FDIC policies and 
guidelines governing contracting and the retention of legal services.



Sec.361.5  What are the FDIC's oversight and monitoring
responsibilities in administering this program?

    (a) The FDIC Office of Minority and Women Inclusion (OMWI) has 
overall responsibility for nationwide outreach oversight, which 
includes, but is not limited to, the monitoring, review and 
interpretation of relevant regulations. In addition, the OMWI is 
responsible for providing the FDIC with technical assistance and 
guidance to facilitate the identification, registration, and 
solicitation of MWOBs.
    (b) Each FDIC office that performs contracting or outreach 
activities will submit information to the OMWI on a quarterly basis, or 
upon request. Quarterly submissions will include, at a minimum, 
statistical information on contract awards and solicitations by 
designated demographic categories.

[65 FR 31253, May 17, 2000, as amended at 80 FR 62445, Oct. 16, 2015]



Sec.361.6  What outreach efforts are included in this program?

    (a) Each office engaged in contracting with the private sector will 
designate one or more MWOP coordinators. The coordinators will perform 
outreach activities for MWOP and act as liaison between the FDIC and the 
public on MWOP issues. On a quarterly basis, or as requested by the 
OMWI, the coordinators will report to the OMWI on their implementation 
of the outreach 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.
    (c) The identification of MWOBs for the provision of legal and non-
legal services will primarily be accomplished by:
    (1) Obtaining various lists and directories of MWOBs 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 the 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.

[65 FR 31253, May 17, 2000, as amended at 80 FR 62445, Oct. 16, 2015]

[[Page 173]]



PART 362_ACTIVITIES OF INSURED STATE BANKS AND INSURED SAVINGS
ASSOCIATIONS--Table of Contents



               Subpart A_Activities of Insured State Banks

Sec.
362.1 Purpose and scope.
362.2 Definitions.
362.3 Activities of insured State banks.
362.4 Subsidiaries of insured State banks.
362.5 Approvals previously granted.

 Subpart B_Safety and Soundness Rules Governing Insured State Nonmember 
                                  Banks

362.6 Purpose and scope.
362.7 Definitions.
362.8 Restrictions on activities of insured State nonmember banks 
          affiliated with certain securities companies.

       Subpart C_Activities of Insured State Savings Associations

362.9 Purpose and scope.
362.10 Definitions.
362.11 Activities of insured savings associations.
362.12 Service corporations of insured State savings associations.
362.13 Approvals previously granted.

Subpart D_Acquiring, Establishing, or Conducting New Activities Through 
             a Subsidiary by an Insured Savings Association

362.14 Purpose and scope.
362.15 Acquiring or establishing a subsidiary; conducting new activities 
          through a subsidiary.

    Subpart E_Financial Subsidiaries of Insured State Nonmember Banks

362.16 Purpose and scope.
362.17 Definitions.
362.18 Financial subsidiaries of insured state nonmember banks.

    Authority: 12 U.S.C. 1816, 1818, 1819(a)(Tenth), 1828(j), 1828(m), 
1828a, 1831a, 1831e, 1831w, 1843(l).

    Source: 63 FR 66326, Dec. 1, 1998, unless otherwise noted.



               Subpart A_Activities of Insured State Banks



Sec.362.1  Purpose and scope.

    (a) This subpart, along with the notice and application procedures 
in subpart G of part 303 of this chapter, implements the provisions of 
section 24 of the Federal Deposit Insurance Act (12 U.S.C. 1831a) that 
restrict and prohibit insured State banks and their subsidiaries from 
engaging in activities and investments that are not permissible for 
national banks and their subsidiaries. The phrase ``activity permissible 
for a national bank'' means any activity authorized for national banks 
under any statute including the National Bank Act (12 U.S.C. 21 et 
seq.), as well as activities recognized as permissible for a national 
bank in regulations, official circulars, bulletins, orders or written 
interpretations issued by the Office of the Comptroller of the Currency 
(OCC).
    (b) This subpart does not cover the following activities:
    (1) Activities conducted other than ``as principal,'' defined for 
purposes of this subpart as activities conducted as agent for a 
customer, conducted in a brokerage, custodial, advisory, or 
administrative capacity, or conducted as trustee, or in any 
substantially similar capacity. For example, this subpart does not cover 
acting solely as agent for the sale of insurance, securities, real 
estate, or travel services; nor does it cover acting as trustee, 
providing personal financial planning advice, or safekeeping services;
    (2) Interests in real estate in which the real property is used or 
intended in good faith to be used within a reasonable time by an insured 
State bank or its subsidiaries as offices or related facilities for the 
conduct of its business or future expansion of its business or used as 
public welfare investments of a type permissible for national banks; and
    (3) Equity investments acquired in connection with debts previously 
contracted (DPC) if the insured State bank does not hold the property 
for speculation and takes only such actions as would be permissible for 
a national bank's DPC. The bank must dispose of the property within the 
shorter of the period set by Federal law for national banks or the 
period allowed under State law. For real estate, national banks may not 
hold DPC for more than 10 years. For equity securities, national banks 
must generally divest

[[Page 174]]

DPC as soon as possible consistent with obtaining a reasonable return.
    (c) A subsidiary of an insured state bank may not engage in real 
estate investment activities that are not permissible for a subsidiary 
of a national bank unless the bank does so through a subsidiary of which 
the bank is a majority owner, is in compliance with applicable capital 
standards, and the FDIC has determined that the activity poses no 
significant risk to the appropriate deposit insurance fund. This subpart 
provides standards for majority-owned subsidiaries of insured state 
banks engaging in real estate investment activities that are not 
permissible for a subsidiary of a national bank.
    (d) The FDIC intends to allow insured State banks and their 
subsidiaries to undertake only safe and sound activities and investments 
that do not present significant risks to the Deposit Insurance Fund and 
that are consistent with the purposes of Federal deposit insurance and 
other applicable law. This subpart does not authorize any insured State 
bank to make investments or to conduct activities that are not 
authorized or that are prohibited by either State or Federal law.

[63 FR 66326, Dec. 1, 1998, as amended at 66 FR 1028, Jan. 5, 2001; 71 
FR 20527, Apr. 21, 2006]



Sec.362.2  Definitions.

    For the purposes of this subpart, the following definitions will 
apply:
    (a) Bank, State bank, savings association, State savings 
association, depository institution, insured depository institution, 
insured State bank, Federal savings association, and insured State 
nonmember bank shall each have the same respective meaning contained in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
    (b) Activity means the conduct of business by a state-chartered 
depository institution, including acquiring or retaining an equity 
investment or other investment.
    (c) Change in control means any transaction:
    (1) By a State bank or its holding company for which a notice is 
required to be filed with the FDIC, or the Board of Governors of the 
Federal Reserve System (FRB), pursuant to 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 the FDIC's or FRB's 
regulations implementing section 7(j);
    (2) As a result of which a State bank eligible for the exception 
described in Sec.362.3(a)(2)(iii) is acquired by or merged into a 
depository institution that is not eligible for the exception, or as a 
result of which its holding company is acquired by or merged into a 
holding company which controls one or more bank subsidiaries not 
eligible for the exception; or
    (3) In which control of the State bank is acquired by a bank holding 
company in a transaction requiring FRB approval under 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.
    (d) Company means any corporation, partnership, limited liability 
company, business trust, association, joint venture, pool, syndicate or 
other similar business organization.
    (e) Control means the power to vote, directly or indirectly, 25 
percent or more of any class of the voting securities 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.
    (f) Convert its charter means an insured State bank undergoes any 
transaction that causes the bank to operate under a different form of 
charter than it had as of December 19, 1991, except a change from mutual 
to stock form shall not be considered a charter conversion.
    (g) Equity investment means an ownership interest in any company; 
any membership interest that includes a voting right in any company; any 
interest in real estate; any transaction which in substance falls into 
any of these categories even though it may be

[[Page 175]]

structured as some other form of business transaction; and includes an 
equity security. The term ``equity investment'' does not include any of 
the foregoing if the interest is taken as security for a loan.
    (h) Equity security means any stock (other than adjustable rate 
preferred stock, money market (auction rate) preferred stock, or other 
newly developed instrument determined by the FDIC to have the character 
of debt securities), 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.
    (i) Extension of credit, executive officer, director, principal 
shareholder, and related interest each has the same respective meaning 
as is applicable for the purposes of section 22(h) of the Federal 
Reserve Act (12 U.S.C. 375b) and Sec.337.3 of this chapter.
    (j) Institution shall have the same meaning as ``state-chartered 
depository institution.''
    (k) Majority-owned subsidiary means any corporation in which the 
parent insured State bank owns a majority of the outstanding voting 
stock.
    (l) 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.
    (m) Real estate investment activity means any interest in real 
estate (other than as security for a loan) held directly or indirectly 
that is not permissible for a national bank.
    (n) Residents of the state includes individuals living in the State, 
individuals employed in the State, any person to whom the company 
provided insurance as principal without interruption since such person 
resided in or was employed in the State, and companies or partnerships 
incorporated in, organized under the laws of, licensed to do business 
in, or having an office in the State.
    (o) Security has the same meaning as it has in part 344 of this 
chapter.
    (p) Significant risk to the Deposit Insurance Fund shall be 
understood to be present whenever the FDIC determines there is a high 
probability that the Deposit Insurance Fund administered by the FDIC may 
suffer a loss. Such risk may be present either when an activity 
contributes or may contribute to the decline in condition of a 
particular state-chartered depository institution or when a type of 
activity is found by the FDIC to contribute or potentially contribute to 
the deterioration of the overall condition of the banking system.
    (q) State-chartered depository institution means any State bank or 
State savings association insured by the FDIC.
    (r) Subsidiary means any company that is owned or controlled 
directly or indirectly by one or more insured depository institutions.
    (s) Tier one capital has the same meaning as set forth in part 324 
of this chapter for an insured State nonmember bank or insured state 
savings association. For other state-chartered depository institutions, 
the term ``tier one capital'' has the same meaning as set forth in the 
capital regulations adopted by the appropriate Federal banking agency.
    (t) Well-capitalized has the same meaning set forth in part 324 of 
this chapter for an insured State nonmember bank or insured state 
savings association. For other state-chartered depository institutions, 
the term ``well-capitalized'' has the same meaning as set forth in the 
capital regulations adopted by the appropriate Federal banking agency.

[63 FR 66326, Dec. 1, 1998, as amended at 66 FR 1028, Jan. 5, 2001; 71 
FR 20527, Apr. 21, 2006; 78 FR 55596, Sept. 10, 2013; 83 FR 17741, Apr. 
24, 2018]

[[Page 176]]



Sec.362.3  Activities of insured State banks.

    (a) Equity investments--(1) Prohibited equity investments. No 
insured State bank may directly or indirectly acquire or retain as 
principal any equity investment of a type that is not permissible for a 
national bank unless one of the exceptions in paragraph (a)(2) of this 
section applies.
    (2) Exceptions-- (i) Equity investment in majority-owned 
subsidiaries. An insured State bank may acquire or retain an equity 
investment in a subsidiary of which the bank is a majority owner, 
provided that the subsidiary is engaging in activities that are allowed 
pursuant to the provisions of or by application under Sec.362.4(b).
    (ii) Investments in qualified housing projects. An insured State 
bank may invest as a limited partner in a partnership, or as a 
noncontrolling interest holder of a limited liability company, the sole 
purpose of which is to invest in the acquisition, rehabilitation, or new 
construction of a qualified housing project, provided that the bank's 
aggregate investment (including legally binding commitments) does not 
exceed, when made, 2 percent of total assets as of the date of the 
bank's most recent consolidated report of condition prior to making the 
investment. For the purposes of this paragraph (a)(2)(ii), Aggregate 
investment means the total book value of the bank's investment in the 
real estate calculated in accordance with the instructions for the 
preparation of the consolidated report of condition. Qualified housing 
project means residential real estate intended to primarily benefit 
lower income persons throughout the period of the bank's investment 
including any project that has received an award of low income housing 
tax credits under section 42 of the Internal Revenue Code (26 U.S.C. 42) 
(such as a reservation or allocation of credits) from a State or local 
housing credit agency. A residential real estate project that does not 
qualify for the tax credit under section 42 of the Internal Revenue Code 
will qualify under this exception if 50 percent or more of the housing 
units are to be occupied by lower income persons. A project 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. Lower income has the same meaning as ``low income'' and 
``moderate income'' as defined for the purposes of Sec.345.12(n) (1) 
and (2) of this chapter.
    (iii) Grandfathered investments in common or preferred stock; shares 
of investment companies-- (A) General. An insured State bank that is 
located in a State which as of September 30, 1991, authorized investment 
in:
    (1)(i) Common or preferred stock listed on a national securities 
exchange (listed stock); or
    (ii) Shares of an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1 et seq.) (registered shares); and
    (2) Which during the period beginning on September 30, 1990, and 
ending on November 26, 1991, made or maintained an investment in listed 
stock or registered shares, may retain whatever lawfully acquired listed 
stock or registered shares it held and may continue to acquire listed 
stock and/or registered shares, provided that the bank files a notice in 
accordance with section 24(f)(6) of the Federal Deposit Insurance Act in 
compliance with Sec.303.121 of this chapter and the FDIC processes the 
notice without objection under Sec.303.122 of this chapter. Approval 
will be granted only if the FDIC determines that acquiring or retaining 
the stock or shares does not pose a significant risk to the Deposit 
Insurance Fund. Approval may be subject to whatever conditions or 
restrictions the FDIC determines are necessary or appropriate.
    (B) Loss of grandfather exception. The exception for grandfathered 
investments under paragraph (a)(2)(iii)(A) of this section shall no 
longer apply if the bank converts its charter or the bank or its parent 
holding company undergoes a change in control. If any of these events 
occur, the bank may retain its existing investments unless directed by 
the FDIC or other applicable authority to divest the listed stock or 
registered shares.
    (C) Maximum permissible investment. A bank's aggregate investment in 
listed

[[Page 177]]

stock and registered shares under paragraph (a)(2)(iii)(A) of this 
section shall in no event exceed, when made, 100 percent of the bank's 
tier one capital as measured on the bank's most recent consolidated 
report of condition (call report) prior to making any such investment. 
The lower of the bank's cost as determined in accordance with call 
report instructions or the market value of the listed stock and shares 
shall be used to determine compliance. The FDIC may determine when 
acting upon a notice filed in accordance with paragraph 
(a)(2)(iii)(A)(2) of this section that the permissible limit for any 
particular insured State bank is something less than 100 percent of tier 
one capital.
    (iv) Stock investment in insured depository institutions owned 
exclusively by other banks and savings associations. An insured State 
bank may acquire or retain the stock of an insured depository 
institution if the insured depository institution engages only in 
activities permissible for national banks; the insured depository 
institution is subject to examination and regulation by a State bank 
supervisor; the voting stock is owned by 20 or more insured depository 
institutions, but no one institution owns more than 15 percent of the 
voting stock; and the insured depository institution's stock (other than 
directors' qualifying shares or shares held under or acquired through a 
plan established for the benefit of the officers and employees) is owned 
only by insured depository institutions.
    (v) Stock investment in insurance companies--(A) Stock of director 
and officer liability insurance company. An insured State bank may 
acquire and retain up to 10 percent of the outstanding stock of a 
corporation that solely provides or reinsures directors', trustees', and 
officers' liability insurance coverage or bankers' blanket bond group 
insurance coverage for insured depository institutions.
    (B) Stock of savings bank life insurance company. An insured State 
bank located in Massachusetts, New York, or Connecticut may own stock in 
a savings bank life insurance company, provided that the savings bank 
life insurance company provides written disclosures to purchasers or 
potential purchasers of life insurance policies, other insurance 
products, and annuities that are consistent with the disclosures 
described in the Interagency Statement on the Retail Sale of Nondeposit 
Investment Products (FIL-9-94, \1\ February 17, 1994) or any successor 
requirement which indicates that the policies, products, and annuities 
are not FDIC insured deposits, are not guaranteed by the bank and are 
subject to investment risks, including possible loss of the principal 
amount invested.
---------------------------------------------------------------------------

    \1\ Financial institution letters (FILs) are available in the FDIC 
Public Information Center, room 100, 801 17th Street, N.W., Washington, 
D.C. 20429.
---------------------------------------------------------------------------

    (b) Activities other than equity investments--(1) Prohibited 
activities. An insured State bank may not directly or indirectly engage 
as principal in any activity, that is not an equity investment, and is 
of a type not permissible for a national bank unless one of the 
exceptions in paragraph (b)(2) of this section applies.
    (2) Exceptions--(i) Consent obtained through application. An insured 
State bank that meets and continues to meet the applicable capital 
standards set by the appropriate Federal banking agency may conduct 
activities prohibited by paragraph (b)(1) of this section if the bank 
obtains the FDIC's prior written consent. Consent will be given only if 
the FDIC determines that the activity poses no significant risk to the 
Deposit Insurance Fund. Applications for consent should be filed in 
accordance with Sec.303.121 of this chapter and will be processed 
under Sec.303.122(b) of this chapter. Approvals granted under Sec.
303.122(b) of this chapter may be made subject to any conditions or 
restrictions found by the FDIC to be necessary to protect the Deposit 
Insurance Fund from risk, to prevent unsafe or unsound banking 
practices, and/or to ensure that the activity is consistent with the 
purposes of Federal deposit insurance and other applicable law.
    (ii) Insurance underwriting--(A) Savings bank life insurance. An 
insured State bank that is located in Massachusetts, New York or 
Connecticut may provide as principal savings bank life insurance through 
a department of

[[Page 178]]

the bank, provided that the department meets the core standards of 
paragraph (c) of this section or submits an application in compliance 
with Sec.303.121 of this chapter and the FDIC grants its consent under 
the procedures in Sec.303.122(b) of this chapter, and the department 
provides purchasers or potential purchasers of life insurance policies, 
other insurance products and annuities written disclosures that are 
consistent with the disclosures described in the Interagency Statement 
on the Retail Sale of Nondeposit Investment Products (FIL-9-94, February 
17, 1994) and any successor requirement which indicates that the 
policies, products and annuities are not FDIC insured deposits, are not 
guaranteed by the bank, and are subject to investment risks, including 
the possible loss of the principal amount invested.
    (B) Federal crop insurance. Any insured State bank that was 
providing insurance as principal 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.
    (C) Grandfathered insurance underwriting. A well-capitalized insured 
State bank that on November 21, 1991, was lawfully providing insurance 
as principal through a department of the bank may continue to provide 
the same types of insurance as principal to the residents of the State 
or States in which the bank did so on such date provided that the bank's 
department meets the core standards of paragraph (c) of this section, or 
submits an application in compliance with Sec.303.121 of this chapter 
and the FDIC grants its consent under the procedures in Sec.303.122(b) 
of this chapter.
    (iii) Acquiring and retaining adjustable rate and money market 
preferred stock. (A) An insured State bank's investment of up to 15 
percent of the bank's tier one capital in adjustable rate preferred 
stock or money market (auction rate) preferred stock does not represent 
a significant risk to the Deposit Insurance Fund. An insured State bank 
may conduct this activity without first obtaining the FDIC's consent, 
provided that the bank meets and continues to meet the applicable 
capital standards as prescribed by the appropriate Federal banking 
agency. The fact that prior consent is not required by this subpart does 
not preclude the FDIC from taking any appropriate action with respect to 
the activities if the facts and circumstances warrant such action.
    (B) An insured State bank may acquire or retain other instruments of 
a type determined by the FDIC to have the character of debt securities 
and not to represent a significant risk to the Deposit Insurance Fund. 
Such instruments shall be included in the 15 percent of tier one capital 
limit imposed in paragraph (b)(2)(iii)(A) of this section. An insured 
State bank may conduct this activity without first obtaining the FDIC's 
consent, provided that the bank meets and continues to meet the 
applicable capital standards as prescribed by the appropriate Federal 
banking agency. The fact that prior consent is not required by this 
subpart does not preclude the FDIC from taking any appropriate action 
with respect to the activities if the facts and circumstances warrant 
such action.
    (c) Core standards. For any insured State bank to be eligible to 
conduct insurance activities listed in paragraph (b)(2)(ii)(A) or (C) of 
this section, the bank must conduct the activities in a department that 
meets the following core separation and operating standards:
    (1) The department is physically distinct from the remainder of the 
bank;
    (2) The department maintains separate accounting and other records;
    (3) The department has assets, liabilities, obligations and expenses 
that are separate and distinct from those of the remainder of the bank;
    (4) The department is subject to State statute that requires its 
obligations, liabilities and expenses be satisfied only with the assets 
of the department; and
    (5) The department informs its customers that only the assets of the 
department may be used to satisfy the obligations of the department.

[63 FR 66326, Dec. 1, 1998, as amended at 71 FR 20527, Apr. 21, 2006]

[[Page 179]]



Sec.362.4  Subsidiaries of insured State banks.

    (a) Prohibition. A subsidiary of an insured State bank may not 
engage as principal in any activity that is not of a type permissible 
for a subsidiary of a national bank, unless it meets one of the 
exceptions in paragraph (b) of this section.
    (b) Exceptions--(1) Consent obtained through application. A 
subsidiary of an insured State bank may conduct otherwise prohibited 
activities if the bank obtains the FDIC's prior written consent and the 
insured State bank meets and continues to meet the applicable capital 
standards set by the appropriate Federal banking agency. Consent will be 
given only if the FDIC determines that the activity poses no significant 
risk to the Deposit Insurance Fund. Applications for consent should be 
filed in accordance with Sec.303.121 of this chapter and will be 
processed under Sec.303.122(b) of this chapter. Approvals granted 
under Sec.303.122(b) of this chapter may be made subject to any 
conditions or restrictions found by the FDIC to be necessary to protect 
the Deposit Insurance Fund from risk, to prevent unsafe or unsound 
banking practices, and/or to ensure that the activity is consistent with 
the purposes of Federal deposit insurance and other applicable law.
    (2) Grandfathered insurance underwriting subsidiaries. A subsidiary 
of an insured State bank may:
    (i) Engage in grandfathered insurance underwriting if the insured 
State bank or its subsidiary on November 21, 1991, was lawfully 
providing insurance as principal. The subsidiary may continue to provide 
the same types of insurance as principal to the residents of the State 
or states in which the bank or subsidiary did so on such date provided 
that:
    (A)(1) The bank meets the capital requirements of paragraph (e) of 
this section; and
    (2) The subsidiary is an ``eligible subsidiary'' as described in 
paragraph (c)(2) of this section; or
    (B) The bank submits an application in compliance with Sec.303.121 
of this chapter and the FDIC grants its consent under the procedures in 
Sec.303.122(b) of this chapter.
    (ii) Continue to provide as principal title insurance, provided 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 neither 
the bank nor its parent holding company undergoes a change in control.
    (iii) May continue to provide as principal insurance which is 
reinsured in whole or in part by the Federal Crop Insurance Corporation 
if the subsidiary was engaged in the activity on or before September 30, 
1991.
    (3) Majority-owned subsidiaries' ownership of equity investments 
that represent a control interest in a company. The FDIC has determined 
that investment in the following by a majority-owned subsidiary of an 
insured State bank does not represent a significant risk to the Deposit 
Insurance Fund:
    (i) Equity investment in a company engaged in real estate or 
securities activities authorized in paragraph (b)(5) of this section if 
the bank complies with the following restrictions and files a notice in 
compliance with Sec.303.121 of this chapter and the FDIC processes the 
notice without objection under Sec.303.122(a) of this chapter. The 
FDIC is not precluded from taking any appropriate action or imposing 
additional requirements with respect to the activity if the facts and 
circumstances warrant such action. If changes to the management or 
business plan of the company at any time result in material changes to 
the nature of the company's business or the manner in which its business 
is conducted, the insured State bank shall advise the appropriate 
regional director (DSC) in writing within 10 business days after such 
change. Investment under this paragraph is authorized if:
    (A) The majority-owned subsidiary controls the company;
    (B) The bank meets the core eligibility criteria of paragraph (c)(1) 
of this section;
    (C) The majority-owned subsidiary meets the core eligibility 
criteria of paragraph (c)(2) of this section (including any 
modifications thereof applicable under paragraph (b)(5)(i) of this 
section), or the company is a corporation meeting such criteria;

[[Page 180]]

    (D) The bank's transactions with the majority-owned subsidiary, and 
the bank's transactions with the company, comply with the investment and 
transaction limits of paragraph (d) of this section;
    (E) The bank complies with the capital requirements of paragraph (e) 
of this section with respect to the majority-owned subsidiary and the 
company; and
    (F) To the extent the company is engaged in securities activities 
authorized by paragraph (b)(5)(ii) of this section, the bank and the 
company comply with the additional requirements therein as if the 
company were a majority-owned subsidiary.
    (ii) Equity securities of a company engaged in the following 
activities, if the majority-owned subsidiary controls the company or the 
company is controlled by insured depository institutions, and the bank 
meets and continues to meet the applicable capital standards as 
prescribed by the appropriate Federal banking agency. The FDIC consents 
that a majority-owned subsidiary may conduct such activity without first 
obtaining the FDIC's consent. The fact that prior consent is not 
required by this subpart does not preclude the FDIC from taking any 
appropriate action with respect to the activity if the facts and 
circumstances warrant such action:
    (A) Any activity that is permissible for a national bank, including 
such permissible activities that may require the company to register as 
a securities broker;
    (B) Acting as an insurance agency;
    (C) Engaging in any activity permissible for an insured State bank 
under Sec.362.3(b)(2)(iii) to the same extent permissible for the 
insured bank thereunder, so long as instruments held under this 
paragraph (b)(3)(ii)(C), paragraph (b)(7) of this section, and Sec.
362.3(b)(2)(iii) in the aggregate do not exceed the limit set by Sec.
362.3(b)(2)(iii);
    (D) Engaging in any activity permissible for a majority-owned 
subsidiary of an insured State bank under paragraph (b)(6) of this 
section to the same extent and manner permissible for the majority-owned 
subsidiary thereunder; and
    (4) Majority-owned subsidiary's ownership of certain securities that 
do not represent a control interest--(i) 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(a)(2)(iii) 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(a)(2)(iii) are met.
    (ii) 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.
    (5) Majority-owned subsidiaries conducting real estate investment 
activities and securities underwriting. The FDIC has determined that the 
following activities do not represent a significant risk to the Deposit 
Insurance Fund, provided that the activities are conducted by a 
majority-owned subsidiary of an insured State bank in compliance with 
the core eligibility requirements listed in paragraph (c) of this 
section; any additional requirements listed in paragraph (b)(5) (i) or 
(ii) of this section; the bank complies with the investment and 
transaction limitations of paragraph (d) of this section; and the bank 
meets the capital requirements of paragraph (e) of this section. The 
FDIC consents that these listed activities may be conducted by a 
majority-owned subsidiary of an insured State bank if the bank files a 
notice in compliance with Sec.303.121 of this chapter and the FDIC 
processes the notice without objection under Sec.303.122(a) of this 
chapter. The FDIC is not precluded from taking any appropriate action or 
imposing additional requirements with respect to the activities if the 
facts and circumstances warrant such action. If changes to the 
management or business plan of the majority-owned subsidiary at any time 
result in material changes to the nature of the majority-owned 
subsidiary's business or the

[[Page 181]]

manner in which its business is conducted, the insured State bank shall 
advise the appropriate regional director (DSC) in writing within 10 
business days after such change. Such a majority-owned subsidiary may:
    (i) Real estate investment activities. Engage in real estate 
investment activities. However, the requirements of paragraph (c)(2) 
(ii), (v), (vi), and (xi) of this section need not be met if the bank's 
investment in the equity securities of the subsidiary does not exceed 2 
percent of the bank's tier one capital; the bank has only one subsidiary 
engaging in real estate investment activities; and the bank's total 
investment in the subsidiary does not include any extensions of credit 
from the bank to the subsidiary, any debt instruments issued by the 
subsidiary, or any other transaction originated by the bank that is used 
to benefit the subsidiary.
    (ii) Securities activities. Engage in the public sale, distribution 
or underwriting of securities that are not permissible for a national 
bank under section 16 of the Banking Act of 1933 (12 U.S.C. 24 Seventh), 
provided that the insured state nonmember bank lawfully controlled or 
acquired the subsidiary and had an approved notice or order from the 
FDIC prior to November 12, 1999 and provided that the following 
additional conditions are, and continue to be, met:
    (A) The state-chartered depository institution adopts policies and 
procedures, including appropriate limits on exposure, to govern the 
institution's participation in financing transactions underwritten or 
arranged by an underwriting majority-owned subsidiary;
    (B) The state-chartered depository institution may not express an 
opinion on the value or the advisability of the purchase or sale of 
securities underwritten or dealt in by a majority-owned subsidiary 
unless the state-chartered depository institution notifies the customer 
that the majority-owned subsidiary is underwriting or distributing the 
security;
    (C) The majority-owned subsidiary is registered with the Securities 
and Exchange Commission, is a member in good standing with the 
appropriate self-regulatory organization, and promptly informs the 
appropriate regional director (DSC) in writing of any material actions 
taken against the majority-owned subsidiary or any of its employees by 
the State, the appropriate self-regulatory organizations or the 
Securities and Exchange Commission; and
    (D) The state-chartered depository institution does not knowingly 
purchase as principal or fiduciary during the existence of any 
underwriting or selling syndicate any securities underwritten by the 
majority-owned subsidiary unless the purchase is approved by the state-
chartered depository institution's board of directors before the 
securities are initially offered for sale to the public.
    (6) Real estate leasing. A majority-owned subsidiary of an insured 
State bank acting as lessor under a real property lease which is the 
equivalent of a financing transaction, meeting the lease criteria of 
paragraph (b)(6)(i) of this section and the underlying real estate 
requirements of paragraph (b)(6)(ii) of this section, does not represent 
a significant risk to the Deposit Insurance Fund. A majority-owned 
subsidiary may conduct this activity without first obtaining the FDIC's 
consent, provided that the bank meets and continues to meet the 
applicable capital standards as prescribed by the appropriate Federal 
banking agency. The fact that prior consent is not required by this 
subpart does not preclude the FDIC from taking any appropriate action 
with respect to the activity if the facts and circumstances warrant such 
action.
    (i) Lease criteria--(A) Capital lease. The lease must qualify as a 
capital lease as to the lessor under generally accepted accounting 
principles.
    (B) Nonoperating basis. The bank and the majority-owned subsidiary 
shall not, directly or indirectly, provide or be obligated to provide 
servicing, repair, or maintenance to the property, except that the lease 
may include provisions permitting the subsidiary to protect the value of 
the leased property in the event of a change in circumstances that 
increases the subsidiary's exposure to loss, or the subsidiary may take 
reasonable and appropriate action to salvage or protect the

[[Page 182]]

value of the leased property in such circumstances.
    (ii) Underlying real property requirements--(A) Acquisition. The 
majority-owned subsidiary may acquire specific real estate to be leased 
only after the subsidiary has entered into:
    (1) A lease meeting the requirements of paragraph (b)(6)(i) of this 
section;
    (2) A legally binding written commitment to enter into such a lease; 
or
    (3) A legally binding written agreement that indemnifies the 
subsidiary against loss in connection with its acquisition of the 
property.
    (B) Improvements. Any expenditures by the majority-owned subsidiary 
to make reasonable repairs, renovations, and improvements necessary to 
render the property suitable to the lessee shall not exceed 25 percent 
of the majority-owned subsidiary's full investment in the real estate.
    (C) Divestiture. At the expiration of the initial lease (including 
any renewals or extensions thereof), the majority-owned subsidiary 
shall, as soon as practicable but in any event no less than two years, 
either:
    (1) Re-lease the property under a lease meeting the requirement of 
paragraph (b)(6)(i)(B) of this section; or
    (2) Divest itself of all interest in the property.
    (7) Acquiring and retaining adjustable rate and money market 
preferred stock and similar instruments. The FDIC has determined it does 
not present a significant risk to the Deposit Insurance Fund for a 
majority-owned subsidiary of an insured State bank to engage in any 
activity permissible for an insured State bank under Sec.
362.3(b)(2)(iii), so long as instruments held under this paragraph, 
paragraph (b)(3)(ii)(C) of this section, and Sec.362.3(b)(2)(iii) in 
the aggregate do not exceed the limit set by Sec.362.3(b)(2)(iii). A 
majority-owned subsidiary may conduct this activity without first 
obtaining the FDIC's consent, provided that the bank meets and continues 
to meet the applicable capital standards as prescribed by the 
appropriate Federal banking agency. The fact that prior consent is not 
required by this subpart does not preclude the FDIC from taking any 
appropriate action with respect to the activity if the facts and 
circumstances warrant such action.
    (c) Core eligibility requirements. If specifically required by this 
part or by FDIC order, any state-chartered depository institution that 
wishes to be eligible and continue to be eligible to conduct as 
principal activities through a subsidiary that are not permissible for a 
subsidiary of a national bank must be an ``eligible depository 
institution'' and the subsidiary must be an ``eligible subsidiary''.
    (1) A state-chartered depository institution is an ``eligible 
depository institution'' if it:
    (i) Has been chartered and operating for three or more years, unless 
the appropriate regional director (DSC) finds that the state-chartered 
depository institution is owned by an established, well-capitalized, 
well-managed holding company or is managed by seasoned management;
    (ii) Has an FDIC-assigned composite rating of 1 or 2 assigned under 
the Uniform Financial Institutions Rating System (UFIRS) (or such other 
comparable rating system as may be adopted in the future) as a result of 
its most recent Federal or State examination for which the FDIC assigned 
a rating;
    (iii) Received a rating of 1 or 2 under the ``management'' component 
of the UFIRS as assigned by the institution's appropriate Federal 
banking agency;
    (iv) Has a satisfactory or better Community Reinvestment Act rating 
at its most recent examination conducted by the institution's 
appropriate Federal banking agency;
    (v) Has a compliance rating of 1 or 2 at its most recent examination 
conducted by the institution's appropriate Federal banking agency; and
    (vi) Is not subject to a cease and desist order, consent order, 
prompt corrective action directive, formal or informal written 
agreement, or other administrative agreement with its appropriate 
Federal banking agency or chartering authority.
    (2) A subsidiary of a state-chartered depository institution is an 
``eligible subsidiary'' if it:
    (i) Meets applicable statutory or regulatory capital requirements 
and has sufficient operating capital in light of

[[Page 183]]

the normal obligations that are reasonably foreseeable for a business of 
its size and character within the industry;
    (ii) Is physically separate and distinct in its operations from the 
operations of the state-chartered depository institution, provided that 
this requirement shall not be construed to prohibit the state-chartered 
depository institution and its subsidiary from sharing the same facility 
if the area where the subsidiary conducts business with the public is 
clearly distinct from the area where customers of the state-chartered 
depository institution conduct business with the institution. The extent 
of the separation will vary according to the type and frequency of 
customer contact;
    (iii) Maintains separate accounting and other business records;
    (iv) Observes separate business entity formalities such as separate 
board of directors' meetings;
    (v) Has a chief executive officer of the subsidiary who is not an 
employee of the institution;
    (vi) Has a majority of its board of directors who are neither 
directors nor executive officers of the state-chartered depository 
institution;
    (vii) 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 
state-chartered depository institution and that the state-chartered 
depository institution is not responsible for and does not guarantee the 
obligations of the subsidiary;
    (viii) Has only one business purpose within the types described in 
paragraphs (b)(2) and (b)(5) of this section;
    (ix) Has a current written business plan that is appropriate to the 
type and scope of business conducted by the subsidiary;
    (x) Has qualified management and employees for the type of activity 
contemplated, including all required licenses and memberships, and 
complies with industry standards; and
    (xi) Establishes policies and procedures to ensure adequate 
computer, audit and accounting systems, internal risk management 
controls, and has necessary operational and managerial infrastructure to 
implement the business plan.
    (d) Investment and transaction limits--(1) General. If specifically 
required by this part or FDIC order, the following conditions and 
restrictions apply to an insured State bank and its subsidiaries that 
engage in and wish to continue to engage in activities which are not 
permissible for a national bank subsidiary.
    (2) Investment limits--(i) Aggregate investment in subsidiaries. An 
insured state bank's aggregate investment in all subsidiaries conducting 
activities subject to this paragraph (d) shall not exceed 20 percent of 
the insured State bank's tier one capital.
    (ii) Definition of investment. (A) For purposes of this paragraph 
(d), the term ``investment'' means:
    (1) Any extension of credit to the subsidiary by the insured State 
bank;
    (2) Any debt securities, as such term is defined in part 344 of this 
chapter, issued by the subsidiary held by the insured State bank;
    (3) The acceptance by the insured State bank of securities issued by 
the subsidiary as collateral for an extension of credit to any person or 
company; and
    (4) Any extensions of credit by the insured State bank to any third 
party for the purpose of making a direct investment in the subsidiary, 
making any investment in which the subsidiary has an interest, or which 
is used for the benefit of, or transferred to, the subsidiary.
    (B) For the purposes of this paragraph (d), the term ``investment'' 
does not include:
    (1) Extensions of credit by the insured State bank to finance sales 
of assets by the subsidiary which do not involve more than the normal 
degree of risk of repayment and are extended on terms that are 
substantially similar to those prevailing at the time for comparable 
transactions with or involving unaffiliated persons or companies;
    (2) An extension of credit by the insured State bank to the 
subsidiary that is fully collateralized by government securities, as 
such term is defined in Sec.344.3 of this chapter; or
    (3) An extension of credit by the insured State bank to the 
subsidiary that

[[Page 184]]

is fully collateralized by a segregated deposit in the insured State 
bank.
    (3) Transaction requirements--(i) Arm's length transaction 
requirement. With the exception of giving the subsidiary immediate 
credit for uncollected items received in the ordinary course of 
business, an insured State bank may not carry out any of the following 
transactions with a subsidiary subject to this paragraph (d) unless the 
transaction is on terms and conditions that are substantially the same 
as those prevailing at the time for comparable transactions with 
unaffiliated parties:
    (A) Make an investment in the subsidiary;
    (B) Purchase from or sell to the subsidiary any assets (including 
securities);
    (C) Enter into a contract, lease, or other type of agreement with 
the subsidiary;
    (D) Pay compensation to a majority-owned subsidiary or any person or 
company who has an interest in the subsidiary; or
    (E) Engage in any such transaction in which the proceeds thereof are 
used for the benefit of, or are transferred to, the subsidiary.
    (ii) Prohibition on purchase of low quality assets. An insured State 
bank is prohibited from purchasing a low quality asset from a subsidiary 
subject to this paragraph (d). For purposes of this subsection, ``low 
quality asset'' means:
    (A) An asset classified as ``substandard'', ``doubtful'', or 
``loss'' or treated as ``other assets especially mentioned'' in the most 
recent report of examination of the bank;
    (B) An asset in a nonaccrual status;
    (C) An asset on which principal or interest payments are more than 
30 days past due; or
    (D) An asset whose terms have been renegotiated or compromised due 
to the deteriorating financial condition of the obligor.
    (iii) Insider transaction restriction. Neither the insured State 
bank nor the subsidiary subject to this paragraph (d) may enter into any 
transaction (exclusive of those covered by Sec.337.3 of this chapter) 
with the bank's executive officers, directors, principal shareholders or 
related interests of such persons which relate to the subsidiary's 
activities unless:
    (A) The transactions are on terms and conditions that are 
substantially the same as those prevailing at the time for comparable 
transactions with persons not affiliated with the insured State bank; or
    (B) The transactions are pursuant to a benefit or compensation 
program that is widely available to employees of the bank, and that does 
not give preference to the bank's executive officers, directors, 
principal shareholders or related interests of such persons over other 
bank employees.
    (iv) Anti-tying restriction. Neither the insured State bank nor the 
majority-owned subsidiary may require a customer to either buy any 
product or use any service from the other as a condition of entering 
into a transaction.
    (4) Collateralization requirements. (i) An insured State bank is 
prohibited from making an investment in a subsidiary subject to this 
paragraph (d) unless such transaction is fully-collateralized at the 
time the transaction is entered into. No insured State bank may accept a 
low quality asset as collateral. An extension of credit is fully 
collateralized if it is secured at the time of the transaction by 
collateral having a market value equal to at least:
    (A) 100 percent of the amount of the transaction if the collateral 
is composed of:
    (1) Obligations of the United States or its agencies;
    (2) Obligations fully guaranteed by the United States or its 
agencies as to principal and interest;
    (3) Notes, drafts, bills of exchange or bankers acceptances that are 
eligible for rediscount or purchase by the Federal Reserve Bank; or
    (4) A segregated, earmarked deposit account with the insured State 
bank;
    (B) 110 percent of the amount of the transaction if the collateral 
is composed of obligations of any State or political subdivision of any 
State;
    (C) 120 percent of the amount of the transaction if the collateral 
is composed of other debt instruments, including receivables; or

[[Page 185]]

    (D) 130 percent of the amount of the transaction if the collateral 
is composed of stock, leases, or other real or personal property.
    (ii) An insured State bank may not release collateral prior to 
proportional payment of the extension of credit; however, collateral may 
be substituted if there is no diminution of collateral coverage.
    (5) Investment and transaction limits extended to insured State bank 
subsidiaries. For purposes of applying paragraphs (d)(2) through (d)(4) 
of this section, any reference to ``insured State bank'' means the 
insured State bank and any subsidiaries of the insured State bank which 
are not themselves subject under this part or FDIC order to the 
restrictions of this paragraph (d).
    (e) Capital requirements. If specifically required by this part or 
by FDIC order, any insured State bank that wishes to conduct or continue 
to conduct as principal activities through a subsidiary that are not 
permissible for a subsidiary of a national bank must:
    (1) Be well-capitalized after deducting from its tier one capital 
the investment in equity securities of the subsidiary as well as the 
bank's pro rata share of any retained earnings of the subsidiary;
    (2) Reflect this deduction on the appropriate schedule of the bank's 
consolidated report of income and condition; and
    (3) Use such regulatory capital amount for the purposes of the 
bank's assessment risk classification under part 327 of this chapter and 
its categorization as a ``well-capitalized'', an ``adequately 
capitalized'', an ``undercapitalized'', or a ``significantly 
undercapitalized'' institution as defined in Sec.324.403(b) of this 
chapter, provided that the capital deduction shall not be used for 
purposes of determining whether the bank is ``critically 
undercapitalized'' under part 324 of this chapter.

[63 FR 66326, Dec. 1, 1998, as amended at 66 FR 1028, Jan. 5, 2001; 71 
FR 20527, Apr. 21, 2006; 78 FR 55596, Sept. 10, 2013; 83 FR 17741, Apr. 
24, 2018]



Sec.362.5  Approvals previously granted.

    (a) FDIC consent by order or notice. An insured State bank that 
previously filed an application or notice under part 362 in effect prior 
to January 1, 1999 (see 12 CFR part 362 revised as of January 1, 1998), 
and obtained the FDIC's consent to engage in an activity or to acquire 
or retain a majority-owned subsidiary engaging as principal in an 
activity or acquiring and retaining any investment that is prohibited 
under this subpart may continue that activity or retain that investment 
without seeking the FDIC's consent, provided that the insured State bank 
and its subsidiary, if applicable, continue to meet the conditions and 
restrictions of the approval. An insured State bank which was granted 
approval based on conditions which differ from the requirements of Sec.
362.4(c)(2), (d) and (e) will be considered to meet the conditions and 
restrictions of the approval relating to being an eligible subsidiary, 
meeting investment and transactions limits, and meeting capital 
requirements if the insured State bank and subsidiary meet the 
requirements of Sec.362.4(c)(2), (d) and (e). If the majority-owned 
subsidiary is engaged in real estate investment activities not exceeding 
2 percent of the tier one capital of a bank and meeting the other 
conditions of Sec.362.4(b)(5)(i), the majority-owned subsidiary's 
compliance with Sec.362.4(c)(2) under the preceding sentence may be 
pursuant to the modifications authorized by Sec.362.4(b)(5)(i). Once 
an insured State bank elects to comply with Sec.362.4 (c)(2), (d), and 
(e), it may not revert to the corresponding provisions of the approval 
order.
    (b) Approvals by regulation--
    (1)-(5) [Reserved]
    (6) Adjustable rate or money market preferred stock. An insured 
State bank owning adjustable rate or money market (auction rate) 
preferred stock pursuant to Sec.362.4(c)(3)(v) in effect prior to 
January 1, 1999 (see 12 CFR part 362 revised as of January 1, 1998), in 
excess of the amount limit in Sec.362.3(b)(2)(iii) may continue to 
hold any overlimit shares of such stock acquired before January 1, 1999, 
until redeemed or repurchased by the issuer, but such stock shall be 
included as part of the amount

[[Page 186]]

limit in Sec.362.3(b)(2)(iii) when determining whether the bank may 
acquire new stock thereunder.
    (c) Charter conversions. (1) An insured State bank that has 
converted its charter from an insured state savings association may 
continue activities through a majority-owned subsidiary that were 
permissible prior to the time it converted its charter only if the 
insured State bank receives the FDIC's consent. Except as provided in 
paragraph (c)(2) of this section, the insured State bank should apply 
under Sec.362.4(b)(1), submit any notice required under Sec.362.4(b) 
(4) or (5), or comply with the provisions of Sec.362.4(b) (3), (6), or 
(7) if applicable, to continue the activity.
    (2) Exception for prior consent. If the FDIC had granted consent to 
the savings association under section 28 of the Federal Deposit 
Insurance Act (12 U.S.C. 1831(e)) prior to the time the savings 
association converted its charter, the insured State bank may continue 
the activities without providing notice or making application to the 
FDIC, provided that the bank and its subsidiary as applicable are in 
compliance with:
    (i) The terms of the FDIC approval order; and
    (ii) The provisions of Sec.362.4(c)(2), (d), and (e) regarding 
operating as an ``eligible subsidiary'', ``investment and transaction 
limits'', and ``capital requirements'.
    (3) Divestiture. An insured State bank that does not receive FDIC 
consent shall divest of the nonconforming investment as soon as 
practical but in no event later than two years from the date of charter 
conversion.

[63 FR 66326, Dec. 1, 1998, as amended at 66 FR 1028, Jan. 5, 2001]



 Subpart B_Safety and Soundness Rules Governing Insured State Nonmember 
                                  Banks



Sec.362.6  Purpose and scope.

    This subpart, along with the notice and application procedures in 
subpart G of part 303 of this chapter apply to certain banking practices 
that may have adverse effects on the safety and soundness of insured 
state nonmember banks. This subpart contains the required prudential 
separations between certain securities underwriting affiliates and 
insured state nonmember banks. The standards only will apply to 
affiliates of insured state nonmember banks that are not controlled by 
an entity that is supervised by a federal banking agency.

[66 FR 1028, Jan. 5, 2001]



Sec.362.7  Definitions.

    For the purposes of this subpart, the following definitions apply:
    (a) Affiliate has the same meaning contained in section 3 of the 
Federal Deposit Insurance Act (12 U.S.C. 1813).
    (b) Activity, company, control, equity security, insured state 
nonmember bank, security and subsidiary have the same meaning as 
provided in subpart A of this part.

[63 FR 66326, Dec. 1, 1998, as amended at 66 FR 1028, Jan. 5, 2001]



Sec.362.8  Restrictions on activities of insured state nonmember
banks affiliated with certain securities companies.

    (a) The FDIC has found that an unrestricted affiliation between an 
insured state nonmember bank and certain companies may have adverse 
effects on the safety and soundness of insured state nonmember banks.
    (b) An insured state nonmember bank is prohibited from becoming or 
remaining affiliated with any securities underwriting affiliate company 
that directly engages in the public sale, distribution or underwriting 
of stocks, bonds, debentures, notes, or other securities activity, of a 
type not permissible for a national bank directly, unless the company is 
controlled by an entity that is supervised by a federal banking agency 
or the state nonmember bank submits an application in compliance with 
Sec.303.121 of this chapter and the FDIC grants its consent under the 
procedure in Sec.303.122(b) of this chapter, or the state nonmember 
bank and the securities underwriting affiliate company comply with the 
following requirements:
    (1) The securities business of the affiliate is physically separate 
and distinct in its operations from the operations of the bank, provided 
that this

[[Page 187]]

requirement shall not be construed to prohibit the bank and its 
affiliate from sharing the same facility if the area where the affiliate 
conducts retail sales activity with the public is physically distinct 
from the routine deposit taking area of the bank;
    (2) 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 the state-chartered depository institution is not responsible 
for and does not guarantee the obligations of the affiliate;
    (3) The bank adopts policies and procedures, including appropriate 
limits on exposure, to govern its participation in financing 
transactions underwritten by an underwriting affiliate;
    (4) The bank does not express an opinion on the value or the 
advisability of the purchase or sale of securities underwritten or dealt 
in by an affiliate unless it notifies the customer that the entity 
underwriting, making a market, distributing or dealing in the securities 
is an affiliate of the bank; and
    (5) The bank complies with the investment and transaction 
limitations in sections 23A and 23B of the Federal Reserve Act (12 
U.S.C. 371c and 371c-1) with respect to the affiliate.

[66 FR 1028, Jan. 5, 2001]



       Subpart C_Activities of Insured State Savings Associations



Sec.362.9  Purpose and scope.

    (a) This subpart, along with the notice and application procedures 
in subpart H of part 303 of this chapter, implements the provisions of 
section 28(a) of the Federal Deposit Insurance Act (12 U.S.C. 1831e(a)) 
that restrict and prohibit insured state savings associations and their 
service corporations from engaging in activities and investments of a 
type that are not permissible for a Federal savings association and 
their service corporations. This subpart also implements the provision 
of section 28(d) of the Federal Deposit Insurance Act (12 U.S.C. 
1831e(d)) that restricts state and federal savings associations from 
investing in certain corporate debt securities. The phrase ``activity 
permissible for a Federal savings association'' means any activity 
authorized for a Federal savings association under any statute including 
the Home Owners' Loan Act (HOLA) (12 U.S.C. 1464 et seq.), as well as 
activities recognized as permissible for a Federal savings association 
in regulations issued by the Office of the Comptroller of the Currency 
(OCC) or in bulletins, orders or written interpretations issued by the 
OCC, or by the former Office of Thrift Supervision until modified, 
terminated, set aside, or superseded by the OCC.
    (b) This subpart does not cover the following activities:
    (1) Activities conducted by the insured state savings association 
other than ``as principal'', defined for purposes of this subpart as 
activities conducted as agent for a customer, conducted in a brokerage, 
custodial, advisory, or administrative capacity, or conducted as 
trustee, or in any substantially similar capacity. For example, this 
subpart does not cover acting solely as agent for the sale of insurance, 
securities, real estate, or travel services; nor does it cover acting as 
trustee, providing personal financial planning advice, or safekeeping 
services.
    (2) Interests in real estate in which the real property is used or 
intended in good faith to be used within a reasonable time by an insured 
savings association or its service corporations as offices or related 
facilities for the conduct of its business or future expansion of its 
business or used as public welfare investments of a type and in an 
amount permissible for Federal savings associations.
    (3) Equity investments acquired in connection with debts previously 
contracted (DPC) if the insured savings association or its service 
corporation takes only such actions as would be permissible for a 
Federal savings association's or its service corporation's DPC holdings.
    (c) The FDIC intends to allow insured state savings associations and 
their service corporations to undertake only safe and sound activities 
and investments that do not present significant risks to the Deposit 
Insurance Fund

[[Page 188]]

and that are consistent with the purposes of Federal deposit insurance 
and other applicable law. This subpart does not authorize any insured 
state savings association to make investments or conduct activities that 
are not authorized or that are prohibited by either Federal or state 
law.

[63 FR 66326, Dec. 1, 1998, as amended at 71 FR 20527, Apr. 21, 2006; 77 
FR 43155, July 24, 2012]



Sec.362.10  Definitions.

    For the purposes of this subpart, the definitions provided in Sec.
362.2 apply. Additionally, the following definitions apply to this 
subpart:
    (a) Affiliate has the same meaning as provided in subpart B of this 
part.
    (b) Corporate debt securities not of investment grade means 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 HOLA 
(12 U.S.C. 1464(c)(1) (D), (E), (F)).
    (c) Insured state savings association means any state-chartered 
savings association insured by the FDIC.
    (d) Qualified affiliate means, in the case of a stock insured state 
savings association, an affiliate other than a subsidiary or an insured 
depository institution. In the case of a mutual savings association, 
``qualified affiliate'' means a subsidiary other than an insured 
depository institution provided that all of the savings association's 
investments in, and extensions of credit to, the subsidiary are deducted 
from the savings association's capital.
    (e) Service corporation means any corporation the capital stock of 
which is available for purchase by savings associations.

[63 FR 66326, Dec. 1, 1998, as amended at 66 FR 1029, Jan. 5, 2001]



Sec.362.11  Activities of insured savings associations.

    (a) Equity investments--(1) Prohibited investments. No insured state 
savings association may directly acquire or retain as principal any 
equity investment of a type, or in an amount, that is not permissible 
for a Federal savings association unless the exception in paragraph 
(a)(2) of this section applies.
    (2) Exception: Equity investment in service corporations. An insured 
state savings association that is and continues to be in compliance with 
the applicable capital standards as prescribed by the appropriate 
Federal banking agency may acquire or retain an equity investment in a 
service corporation:
    (i) Not permissible for a Federal savings association to the extent 
the service corporation is engaging in activities that are allowed 
pursuant to the provisions of or an application under Sec.362.12(b); 
or
    (ii) Of a type permissible for a Federal savings association, but in 
an amount exceeding the investment limits applicable to Federal savings 
associations, if the insured state savings association obtains the 
FDIC's prior consent. Consent will be given only if the FDIC determines 
that the amount of the investment in a service corporation engaged in 
such activities does not present a significant risk to the Deposit 
Insurance Fund. Applications should be filed in accordance with Sec.
303.141 of this chapter and will be processed under Sec.303.142(b) of 
this chapter. Approvals granted under Sec.303.142(b) of this chapter 
may be made subject to any conditions or restrictions found by the FDIC 
to be necessary to protect the Deposit Insurance Fund from significant 
risk, to prevent unsafe or unsound practices, and/or to ensure that the 
activity is consistent with the purposes of Federal deposit insurance 
and other applicable law.
    (b) Activities other than equity investments--(1) Prohibited 
activities. An insured state savings association may not directly engage 
as principal in any activity, that is not an equity investment, of a 
type not permissible for a Federal savings association, and an insured 
state savings association shall not make nonresidential real property 
loans in an amount exceeding that described in section 5(c)(2)(B) of 
HOLA (12 U.S.C. 1464(c)(2)(B)), unless one of the exceptions in 
paragraph (b)(2) of this section applies. This section shall not

[[Page 189]]

be read to require the divestiture of any asset (including a 
nonresidential real estate loan), if the asset was acquired prior to 
August 9, 1989; however, any activity conducted with such asset must be 
conducted in accordance with this subpart. On and after July 21, 2012, 
an insured savings association directly or through a subsidiary (other 
than, in the case of a mutual savings association, a subsidiary that is 
a qualified affiliate), shall not acquire or retain a corporate debt 
security unless the savings association, prior to acquiring the security 
and periodically thereafter, determines that the issuer of the security 
has adequate capacity to meet all financial commitments under the 
security for the projected life of the security. Saving associations 
have until January 1, 2013 to come into compliance with this treatment 
of corporate debt securities.
    (2) Exceptions--(i) Consent obtained through application. An insured 
state savings association that meets and continues to meet the 
applicable capital standards set by the appropriate Federal banking 
agency may directly conduct activities prohibited by paragraph (b)(1) of 
this section if the savings association obtains the FDIC's prior 
consent. Consent will be given only if the FDIC determines that 
conducting the activity designated poses no significant risk to the 
Deposit Insurance Fund. Applications should be filed in accordance with 
Sec.303.141 of this chapter and will be processed under Sec.
303.142(b) of this chapter. Approvals granted under Sec.303.142(b) of 
this chapter may be made subject to any conditions or restrictions found 
by the FDIC to be necessary to protect the Deposit Insurance Fund from 
significant risk, to prevent unsafe or unsound practices, and/or to 
ensure that the activity is consistent with the purposes of Federal 
deposit insurance and other applicable law.
    (ii) Nonresidential realty loans permissible for a Federal savings 
association conducted in an amount not permissible. An insured state 
savings association that meets and continues to meet the applicable 
capital standards set by the appropriate Federal banking agency may make 
nonresidential real property loans in an amount exceeding the amount 
described in section 5(c)(2)(B) of HOLA, if the savings association 
files a notice in compliance with Sec.303.141 of this chapter and the 
FDIC processes the notice without objection under Sec.303.142(a) of 
this chapter. Consent will be given only if the FDIC determines that 
engaging in such lending in the amount designated poses no significant 
risk to the Deposit Insurance Fund.
    (iii) Acquiring and retaining adjustable rate and money market 
preferred stock. (A) An insured state savings association's investment 
of up to 15 percent of the association's tier one capital in adjustable 
rate preferred stock or money market (auction rate) preferred stock does 
not represent a significant risk to the Deposit Insurance Fund. An 
insured state savings association may conduct this activity without 
first obtaining the FDIC's consent, provided that the association meets 
and continues to meet the applicable capital standards as prescribed by 
the appropriate Federal banking agency. The fact that prior consent is 
not required by this subpart does not preclude the FDIC from taking any 
appropriate action with respect to the activities if the facts and 
circumstances warrant such action.
    (B) An insured state savings association may acquire or retain other 
instruments of a type determined by the FDIC to have the character of 
debt securities and not to represent a significant risk to the Deposit 
Insurance Fund. Such instruments shall be included in the 15 percent of 
tier one capital limit imposed in paragraph (b)(2)(iii)(A) of this 
section. An insured state savings association may conduct this activity 
without first obtaining the FDIC's consent, provided that the 
association meets and continues to meet the applicable capital standards 
as prescribed by the appropriate Federal banking agency. The fact that 
prior consent is not required by this subpart does not preclude the FDIC 
from taking any appropriate action with respect to the activities if the 
facts and circumstances warrant such action.
    (3) Activities permissible for a Federal savings association 
conducted in an

[[Page 190]]

amount not permissible. Except as provided in paragraph (b)(2)(ii) of 
this section, an insured state savings association may engage as 
principal in any activity, which is not an equity investment of a type 
permissible for a Federal savings association, in an amount in excess of 
that permissible for a Federal savings association, if the savings 
association meets and continues to meet the applicable capital standards 
set by the appropriate Federal banking agency, the institution has 
advised the appropriate regional director (DSC) under the procedure in 
Sec.303.142(c) of this chapter within thirty days before engaging in 
the activity, and the FDIC has not advised the insured state savings 
association that conducting the activity in the amount indicated poses a 
significant risk to the Deposit Insurance Fund. This section shall not 
be read to require the divestiture of any asset if the asset was 
acquired prior to August 9, 1989; however, any activity conducted with 
such asset must be conducted in accordance with this subpart.

[63 FR 66326, Dec. 1, 1998, as amended at 71 FR 20527, Apr. 21, 2006; 77 
FR 43155, July 24, 2012]



Sec.362.12  Service corporations of insured State savings associations.

    (a) Prohibition. A service corporation of an insured state savings 
association may not engage in any activity that is not permissible for a 
service corporation of a Federal savings association, unless it meets 
one of the exceptions in paragraph (b) of this section.
    (b) Exceptions--(1) Consent obtained through application. A service 
corporation of an insured state savings association may conduct 
activities prohibited by paragraph (a) of this section if the savings 
association obtains the FDIC's prior written consent and the insured 
state savings association meets and continues to meet the applicable 
capital standards set by the appropriate Federal banking agency. Consent 
will be given only if the FDIC determines that the activity poses no 
significant risk to the Deposit Insurance Fund. Applications for consent 
should be filed in accordance with Sec.303.141 of this chapter and 
will be processed under Sec.303.142(b) of this chapter. Approvals 
granted under Sec.303.142(b) of this chapter may be made subject to 
any conditions or restrictions found by the FDIC to be necessary to 
protect the Deposit Insurance Fund from risk, to prevent unsafe or 
unsound banking practices, and/or to ensure that the activity is 
consistent with the purposes of Federal deposit insurance and other 
applicable law. The activities covered by this paragraph may include, 
but are not limited to, acquiring and retaining equity securities of a 
company engaged in the public sale distribution or underwriting of 
securities.
    (2) Service corporations conducting unrestricted activities. The 
FDIC has determined that the following activities do not represent a 
significant risk to the Deposit Insurance Fund:
    (i) [Reserved]
    (ii) A service corporation of an insured state savings association 
may acquire and retain equity securities of a company engaged in the 
following activities, if the service corporation controls the company or 
the company is controlled by insured depository institutions, and the 
association continues to meet the applicable capital standards as 
prescribed by the appropriate Federal banking agency. The FDIC consents 
that such activity may be conducted by a service corporation of an 
insured state savings association without first obtaining the FDIC's 
consent. The fact that prior consent is not required by this subpart 
does not preclude the FDIC from taking any appropriate action with 
respect to the activities if the facts and circumstances warrant such 
action.
    (A) Equity securities of a company that engages in permissible 
activities. A service corporation may own the equity securities of a 
company that engages in any activity permissible for a Federal savings 
association.
    (B) Equity securities of a company that acquires and retains 
adjustable-rate and money market preferred stock. A service corporation 
may own the equity securities of a company that engages in any activity 
permissible for an insured state savings association under Sec.
362.11(b)(2)(iii) so long as instruments held under this paragraph 
(b)(2)(ii)(B), paragraph (b)(2)(iv) of this section, and Sec.
362.11(b)(2)(iii) in the aggregate do not exceed the limit set by Sec.
362.11(b)(2)(iii).

[[Page 191]]

    (C) Equity securities of a company acting as an insurance agency. A 
service corporation may own the equity securities of a company that acts 
as an insurance agency.
    (iii) Activities that are not conducted ``as principal''. A service 
corporation controlled by the insured state savings association may 
engage in activities which are not conducted ``as principal'' such as 
acting as an agent for a customer, acting in a brokerage, custodial, 
advisory, or administrative capacity, or acting as trustee, or in any 
substantially similar capacity.
    (iv) Acquiring and retaining adjustable-rate and money market 
preferred stock. A service corporation may engage in any activity 
permissible for an insured state savings association under Sec.
362.11(b)(2)(iii) so long as instruments held under this paragraph 
(b)(2)(iv), paragraph (b)(2)(ii)(B) of this section, and Sec.
362.11(b)(2)(iii) in the aggregate do not exceed the limit set by Sec.
362.11(b)(2)(iii).
    (3)-(4) [Reserved]
    (c) Investment and transaction limits. The restrictions detailed in 
Sec.362.4(d) apply to transactions between an insured state savings 
association and any service corporation engaging in activities which are 
not permissible for a service corporation of a Federal savings 
association if specifically required by this part or FDIC order. For 
purposes of applying the investment limits in Sec.362.4(d)(2), the 
term ``investment'' includes only those items described in Sec.
362.4(d)(2)(ii)(A) (3) and (4). For purposes of applying Sec.362.4(d) 
(2), (3), and (4) to this paragraph (c), references to the terms 
``insured State bank'' and ``subsidiary'' in Sec.362.4(d)(2), (3), and 
(4), shall be deemed to refer, respectively, to the insured state 
savings association and the service corporation. For purposes of 
applying Sec.362.4(d)(5), references to the terms ``insured State 
bank'' and ``subsidiary'' in Sec.362.4(d)(5) shall be deemed to refer, 
respectively, to the insured state savings association and the service 
corporations or subsidiaries.
    (d) Capital requirements. If specifically required by this part or 
by FDIC order, an insured state savings association that wishes to 
conduct as principal activities through a service corporation which are 
not permissible for a service corporation of a Federal savings 
association must:
    (1) Be well-capitalized after deducting from its capital any 
investment in the service corporation, both equity and debt.
    (2) Use such regulatory capital amount for the purposes of the 
insured state savings association's assessment risk classification under 
part 327 of this chapter.

[63 FR 66326, Dec. 1, 1998, as amended at 66 FR 1029, Jan. 5, 2001; 71 
FR 20527, Apr. 21, 2006]]



Sec.362.13  Approvals previously granted.

    FDIC consent by order or notice. An insured state savings 
association that previously filed an application and obtained the FDIC's 
consent to engage in an activity or to acquire or retain an investment 
in a service corporation engaging as principal in an activity or 
acquiring and retaining any investment that is prohibited under this 
subpart may continue that activity or retain that investment without 
seeking the FDIC's consent, provided the insured state savings 
association and the service corporation, if applicable, continue to meet 
the conditions and restrictions of approval. An insured state savings 
association which was granted approval based on conditions which differ 
from the requirements of Sec. Sec.362.4(c)(2) and 362.12 (c) and (d) 
will be considered to meet the conditions and restrictions of the 
approval if the insured state savings association and any applicable 
service corporation meet the requirements of Sec. Sec.362.4(c)(2) and 
362.12 (c) and (d). For the purposes of applying Sec.362.4(c)(2), 
references to the terms ``eligible subsidiary'' and ``subsidiary'' in 
Sec.362.4(c)(2) shall be deemed to refer, respectively, to the 
eligible service corporation and the service corporation.



Subpart D_Acquiring, Establishing, or Conducting New Activities Through 
             a Subsidiary by an Insured Savings Association



Sec.362.14  Purpose and scope.

    This subpart implements section 18(m) of the Federal Deposit 
Insurance

[[Page 192]]

Act (12 U.S.C. 1828(m)) which requires that prior notice be given the 
FDIC when an insured savings association establishes or acquires a 
subsidiary or engages in any new activity in a subsidiary. For the 
purposes of this subpart, the term ``subsidiary'' does not include any 
insured depository institution as that term is defined in the Federal 
Deposit Insurance Act. Unless otherwise indicated, the definitions 
provided in Sec.362.2 apply to this subpart.



Sec.362.15  Acquiring or establishing a subsidiary; conducting new
activities through a subsidiary.

    No state or Federal insured savings association may establish or 
acquire a subsidiary, or conduct any new activity through a subsidiary, 
unless it files a notice in compliance with Sec.303.142(c) of this 
chapter at least 30 days prior to establishment of the subsidiary or 
commencement of the activity and the FDIC does not object to the notice. 
This requirement does not apply to any Federal savings bank that was 
chartered prior to October 15, 1982, as a savings bank under State law 
or any savings association that acquired its principal assets from such 
an institution.



    Subpart E_Financial Subsidiaries of Insured State Nonmember Banks

    Source: 66 FR 1029, Jan. 5, 2001, unless otherwise noted.



Sec.362.16  Purpose and scope.

    (a) This subpart, along with the notice and application procedures 
in subpart G of part 303 of this chapter, implements section 46 of the 
Federal Deposit Insurance Act (12 U.S.C. 1831w) and requires that an 
insured state nonmember bank certify certain facts and file a notice 
with the FDIC before the insured state nonmember bank may control or 
hold an interest in a financial subsidiary under section 46(a) of the 
Federal Deposit Insurance Act. This subpart also implements the 
statutory Community Reinvestment Act (CRA) (12 U.S.C. 2901 et seq.) 
requirement set forth in subsection (4)(l)(2) of the Bank Holding 
Company Act (12 U.S.C. 1843(l)(2)), which is applicable to state 
nonmember banks that commence new activities through a financial 
subsidiary or directly or indirectly acquire control of a company 
engaged in an activity under section 46(a).
    (b) This subpart does not cover activities conducted other than ``as 
principal''. For purposes of this subpart, activities conducted other 
than ``as principal'' are defined as activities conducted as agent for a 
customer, conducted in a brokerage, custodial, advisory, or 
administrative capacity, or conducted as trustee, or in any 
substantially similar capacity. For example, this subpart does not cover 
acting solely as agent for the sale of insurance, securities, real 
estate, or travel services; nor does it cover acting as trustee, 
providing personal financial planning advice, or safekeeping services.



Sec.362.17  Definitions.

    For the purposes of this subpart, the following definitions will 
apply:
    (a) Activity, company, control, insured depository institution, 
insured state bank, insured state nonmember bank and subsidiary have the 
same meaning as provided in subpart A of this part.
    (b) Affiliate has the same meaning provided in subpart B of this 
part.
    (c) Financial subsidiary means any company that is controlled by one 
or more insured depository institutions other than:
    (1) A subsidiary that only engages in activities that the state 
nonmember bank is permitted to engage in directly and that are conducted 
on the same terms and conditions that govern the conduct of the 
activities by the state nonmember bank; or
    (2) A subsidiary that the state nonmember bank is specifically 
authorized to control by the express terms of a federal statute (other 
than section 46(a) of the Federal Deposit Insurance Act (12 U.S.C. 
1831w)), and not by implication or interpretation, such as the Bank 
Service Company Act (12 U.S.C. 1861 et seq.).
    (d) Tangible equity and Tier 2 capital have the same meaning as set 
forth in part 324 of this chapter.
    (e) Well-managed means:
    (1) Unless otherwise determined in writing by the appropriate 
federal

[[Page 193]]

banking agency, the institution has received a composite rating of 1 or 
2 under the Uniform Financial Institutions Rating System (or an 
equivalent rating under an equivalent rating system) in connection with 
the most recent state or federal examination or subsequent review of the 
depository institution and at least a rating of 2 for management, if 
such a rating is given; or
    (2) In the case of any depository institution that has not been 
examined by its appropriate federal banking agency, the existence and 
use of managerial resources that the appropriate federal banking agency 
determines are satisfactory.

[63 FR 66326, Dec. 1, 1998, as amended at 78 FR 55596, Sept. 10, 2013; 
83 FR 17741, Apr. 24, 2018]



Sec.362.18  Financial subsidiaries of insured state nonmember banks.

    (a) ``As principal'' activities. An insured state nonmember bank may 
not obtain control of or hold an interest in a financial subsidiary that 
engages in activities as principal or commence any such new activity 
pursuant to section 46(a) of the Federal Deposit Insurance Act (12 
U.S.C. 1831w) unless the insured state nonmember bank files a notice 
containing the information required in Sec.303.121(b) of this chapter 
and certifies that:
    (1) The insured state nonmember bank is well-managed;
    (2) The insured state nonmember bank and all of its insured 
depository institution affiliates are well-capitalized as defined in the 
appropriate capital regulation and guidance of each institution's 
primary federal regulator; and
    (3) The insured state nonmember bank will deduct the aggregate 
amount of its outstanding equity investment, including retained 
earnings, in all financial subsidiaries that engage in activities as 
principal pursuant to section 46(a) of the Federal Deposit Act (12 
U.S.C. 1831w(a)), from the bank's total assets and tangible equity and 
deduct such investment from its total risk-based capital (this deduction 
shall be made equally from tier 1 and tier 2 capital) or from common 
equity tier 1 capital in accordance with 12 CFR part 324, subpart C, as 
applicable.
    (b) Community Reinvestment Act (CRA). An insured state nonmember 
bank may not commence any new activity subject to section 46(a) of the 
Federal Deposit Insurance Act (12 U.S.C. 1831w) or directly or 
indirectly acquire control of a company engaged in any such activity 
pursuant to Sec.362.18(a)(1), if the bank or any of its insured 
depository institution affiliates received a CRA rating of less than 
``satisfactory record of meeting community credit needs'' in its most 
recent CRA examination.
    (c) Other requirements. An insured state nonmember bank controlling 
or holding an interest in a financial subsidiary under section 46(a) of 
the Federal Deposit Insurance Act (12 U.S.C. 1831w) must meet and 
continue to meet the requirements set forth in paragraph (a) of this 
section as long as the insured state nonmember bank holds the financial 
subsidiary and:
    (1) Disclose and continue to disclose the capital separation 
required in paragraph (a)(3) in any published financial statements;
    (2) Comply and continue to comply with sections 23A and 23B of the 
Federal Reserve Act (12 U.S.C. 371c and 371c-1) as if the subsidiary 
were a financial subsidiary of a national bank; and
    (3) Comply and continue to comply with the financial and operational 
standards provided by section 5136A(d) of the Revised Statutes of the 
United States (12 U.S.C. 24A(d)), unless otherwise determined by the 
FDIC.
    (d) Securities underwriting. If the financial subsidiary of the 
insured state nonmember bank will engage in the public sale, 
distribution or underwriting of stocks, bonds, debentures, notes, or 
other securities activity of a type permissible for a national bank only 
through a financial subsidiary, then the state nonmember bank and the 
financial subsidiary also must comply and continue to comply with the 
following additional requirements:
    (1) The securities business of the financial subsidiary must be 
physically separate and distinct in its operations from the operations 
of the bank, provided that this requirement shall not

[[Page 194]]

be construed to prohibit the bank and its financial subsidiary from 
sharing the same facility if the area where the financial subsidiary 
conducts securities business with the public is physically distinct from 
the routine deposit taking area of the bank;
    (2) The financial subsidiary must conduct its securities business 
pursuant to independent policies and procedures designed to inform 
customers and prospective customers of the financial subsidiary that the 
financial subsidiary is a separate organization from the insured state 
nonmember bank and that the insured state nonmember bank is not 
responsible for and does not guarantee the obligations of the financial 
subsidiary;
    (3) The bank must adopt policies and procedures, including 
appropriate limits on exposure, to govern its participation in financing 
transactions underwritten by its financial subsidiary; and
    (4) The bank must not express an opinion on the value or the 
advisability of the purchase or sale of securities underwritten or dealt 
in by its financial subsidiary unless the bank notifies the customer 
that the entity underwriting, making a market, distributing or dealing 
in the securities is a financial subsidiary of the bank.
    (e) Applications for exceptions to certain requirements. Any insured 
state nonmember bank that is unable to comply with the well-managed 
requirement of Sec.362.18(a)(1) and (c)(1), any state nonmember bank 
that has appropriate reasons for not meeting the financial and 
operational standards applicable to a financial subsidiary of a national 
bank conducting the same activities as provided in Sec.362.18(c)(3) or 
any state nonmember bank and its financial subsidiary subject to the 
securities underwriting activities requirements in Sec.362.18(d) that 
is unable to meet such requirements may submit an application in 
compliance with Sec.303.121 of this chapter to seek a waiver or 
modification of such requirements under the procedure in Sec.
303.122(b) of this chapter. The FDIC may impose additional prudential 
safeguards as are necessary as a condition of its consent.
    (f) Failure to meet requirements--(1) Notification by FDIC. The FDIC 
will notify the insured state nonmember bank in writing and identify the 
areas of noncompliance, if:
    (i) The FDIC finds that an insured state nonmember bank or any of 
its insured depository institution affiliates is not in compliance with 
the CRA requirement of Sec.362.18(b) at the time any new activity is 
commenced or control of the financial subsidiary is acquired;
    (ii) The FDIC finds that the facts to which an insured state 
nonmember bank certified under Sec.362.18(a) are not accurate in whole 
or in part; or
    (iii) The FDIC finds that the insured state nonmember bank or any of 
its insured depository institution affiliates or the financial 
subsidiary fails to meet or continue to comply with the requirements of 
Sec.362.18(c) and (d), if applicable, and the FDIC has not granted an 
exception under the procedures set forth in Sec.362.18(e) and in Sec.
303.122(b) of this chapter.
    (2) Notification by state nonmember bank. An insured state nonmember 
bank that controls or holds an interest in a financial subsidiary must 
promptly notify the FDIC if the bank becomes aware that any depository 
institution affiliate of the bank has ceased to be well-capitalized.
    (3) Subsequent action by FDIC. The FDIC may take any appropriate 
action or impose any limitations, including requiring that the insured 
state nonmember bank to divest control of any such financial subsidiary, 
on the conduct or activities of the insured state nonmember bank or any 
financial subsidiary of the insured state bank that fails to:
    (i) Meet the requirements listed in Sec.362.18(a) and (b) at the 
time that any new section 46 activity is commenced or control of a 
financial subsidiary is acquired by an insured state nonmember bank; or
    (ii) Meet and continue to meet the requirements listed in Sec.
362.18(c) and (d), as applicable.
    (g) Coordination with section 24 of the Federal Deposit Insurance 
Act--(1) Continuing authority under section 24. Notwithstanding Sec.
362.18(a) through (f), an insured state bank may retain its interest in 
any subsidiary:

[[Page 195]]

    (i) That was conducting a financial activity with authorization in 
accordance with section 24 of the Federal Deposit Insurance Act (12 
U.S.C. 1831a) and the applicable implementing regulation found in 
subpart A of this part 362 before the date on which any such activity 
became for the first time permissible for a financial subsidiary of a 
national bank; and
    (ii) Which insured state nonmember bank and its subsidiary continue 
to meet the conditions and restrictions of the section 24 order or 
regulation approving the activity as well as other applicable law.
    (2) Continuing authority under section 24(f) of the Federal Deposit 
Insurance Act. Notwithstanding Sec.362.18(a) through (f), an insured 
state bank with authority under section 24(f) of the Federal Deposit 
Insurance Act (12 U.S.C. 1831a(f)) to hold equity securities may 
continue to establish new subsidiaries to engage in that investment 
activity.
    (3) Relief from conditions. Any state nonmember bank that meets the 
requirements of paragraph (g)(1) of this section or that is subject to 
section 46(b) of the Federal Deposit Insurance Act (12 U.S.C. 1831w(b)) 
may submit an application in compliance with Sec.303.121 of this 
chapter and seek the consent of the FDIC under the procedure in Sec.
303.122(b) of this chapter for modification of any conditions or 
restrictions the FDIC previously imposed in connection with a section 24 
order or regulation approving the activity.
    (4) New financial subsidiaries. Notwithstanding subpart A of this 
part 362, an insured state bank may not, on or after November 12, 1999, 
acquire control of, or acquire an interest in, a financial subsidiary 
that engages in activities as principal or commences any new activity 
under section 46(a) of the Federal Deposit Insurance Act (12 U.S.C. 
1831w) other than as provided in this section.

[63 FR 66326, Dec. 1, 1998, as amended at 78 FR 55596, Sept. 10, 2013]



PART 363_ANNUAL INDEPENDENT AUDITS AND REPORTING REQUIREMENTS
--Table of Contents



Sec.
363.0 OMB control number.
363.1 Scope and definitions.
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
Appendix B to Part 363--Illustrative Management Reports

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

    Source: 74 FR 35745, July 20, 2009, unless otherwise noted.



Sec.363.0  OMB control number.

    The information collection requirements in this part have been 
approved by the Office of Management and Budget under OMB control number 
3064-0113.



Sec.363.1  Scope and definitions.

    (a) Applicability. This part applies to any insured depository 
institution with respect to any fiscal year in which its consolidated 
total assets as of the beginning of such fiscal year are $500 million or 
more. The requirements specified in this part are in addition to any 
other statutory and regulatory requirements otherwise applicable to an 
insured depository institution.
    (b) Compliance by subsidiaries of holding companies. (1) For an 
insured depository institution that is a subsidiary of a holding 
company, the audited financial statements requirement of Sec.363.2(a) 
may be satisfied:
    (i) For fiscal years ending on or before June 14, 2010, by audited 
consolidated financial statements of the top-tier or any mid-tier 
holding company.
    (ii) For fiscal years ending on or after June 15, 2010, by audited 
consolidated financial statements of the top-tier or any mid-tier 
holding company provided that the consolidated total assets of the 
insured depository institution (or the consolidated total assets of all 
of the holding company's insured depository institution subsidiaries, 
regardless of size, if the holding company owns or controls more than 
one insured depository institution) comprise 75 percent or more of the 
consolidated total assets of this top-tier or mid-tier holding company 
as of the beginning of its fiscal year.
    (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 top-

[[Page 196]]

tier or any mid-tier holding company if the insured depository 
institution meets the criterion specified in Sec.363.1(b)(1) and if:
    (i) The services and functions comparable to those required of the 
insured depository institution by this part are provided at this top-
tier or mid-tier 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 CAMELS 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 Deposit Insurance Fund.
    (c) Financial reporting. For purposes of the management report 
requirement of Sec.363.2(b) and the internal control reporting 
requirement of Sec.363.3(b), ``financial reporting,'' at a minimum, 
includes both financial statements prepared in accordance with generally 
accepted accounting principles for the insured depository institution or 
its holding company and financial statements prepared for regulatory 
reporting purposes. For recognition and measurement purposes, financial 
statements prepared for regulatory reporting purposes shall conform to 
generally accepted accounting principles and section 37 of the Federal 
Deposit Insurance Act.
    (d) Definitions. For purposes of this part, the following 
definitions apply:
    (1) AICPA means the American Institute of Certified Public 
Accountants.
    (2) GAAP means generally accepted accounting principles.
    (3) PCAOB means the Public Company Accounting Oversight Board.
    (4) Public company means an insured depository institution or other 
company that has a class of securities registered with the U.S. 
Securities and Exchange Commission or the appropriate Federal banking 
agency under Section 12 of the Securities Exchange Act of 1934 and 
nonpublic company means an insured depository institution or other 
company that does not meet the definition of a public company.
    (5) SEC means the U.S. Securities and Exchange Commission.
    (6) SOX means the Sarbanes-Oxley Act of 2002.



Sec.363.2  Annual reporting requirements.

    (a) Audited financial statements. Each insured depository 
institution shall prepare annual financial statements in accordance with 
GAAP, which shall be audited by an independent public accountant. The 
annual financial statements must reflect all material correcting 
adjustments necessary to conform with GAAP that were identified by the 
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 that must contain the following:
    (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 that are designated by the FDIC and the 
appropriate Federal banking agency;
    (2) An assessment by management of the insured depository 
institution's compliance with such laws and regulations during such 
fiscal year. The assessment must state management's conclusion as to 
whether the insured depository institution has complied with the 
designated safety and soundness laws and regulations during the fiscal 
year and disclose any noncompliance with these laws and regulations; and
    (3) For an insured depository institution with consolidated total 
assets of $1 billion or more as of the beginning of such fiscal year, an 
assessment by management of the effectiveness of such internal control 
structure and procedures as of the end of such fiscal year that must 
include the following:

[[Page 197]]

    (i) A statement identifying the internal control framework \14\ used 
by management to evaluate the effectiveness of the insured depository 
institution's internal control over financial reporting;
---------------------------------------------------------------------------

    \14\ For example, in the United States, the Committee of Sponsoring 
Organizations (COSO) of the Treadway Commission has published Internal 
Control--Integrated Framework, including an addendum on safeguarding 
assets. Known as the COSO report, this publication provides a suitable 
and available framework for purposes of management's assessment.
---------------------------------------------------------------------------

    (ii) A statement that the assessment included controls over the 
preparation of regulatory financial statements in accordance with 
regulatory reporting instructions including identification of such 
regulatory reporting instructions; and
    (iii) A statement expressing management's conclusion as to whether 
the insured depository institution's internal control over financial 
reporting is effective as of the end of its fiscal year. Management must 
disclose all material weaknesses in internal control over financial 
reporting, if any, that it has identified that have not been remediated 
prior to the insured depository institution's fiscal year-end. 
Management is precluded from concluding that the institution's internal 
control over financial reporting is effective if there are one or more 
material weaknesses.
    (c) Management report signatures. Subject to the criteria specified 
in Sec.363.1(b):
    (1) If the audited financial statements requirement specified in 
Sec.363.2(a) is satisfied at the insured depository institution level 
and the management report requirement specified in Sec.363.2(b) is 
satisfied in its entirety at the insured depository institution level, 
the management report must be signed by the chief executive officer and 
the chief accounting officer or chief financial officer of the insured 
depository institution;
    (2) If the audited financial statements requirement specified in 
Sec.363.2(a) is satisfied at the holding company level and the 
management report requirement specified in Sec.363.2(b) is satisfied 
in its entirety at the holding company level, the management report must 
be signed by the chief executive officer and the chief accounting 
officer or chief financial officer of the holding company; and
    (3) If the audited financial statements requirement specified in 
Sec.363.2(a) is satisfied at the holding company level and (i) the 
management report requirement specified in Sec.363.2(b) is satisfied 
in its entirety at the insured depository institution level or (ii) one 
or more of the components of the management report specified in Sec.
363.2(b) is satisfied at the holding company level and the remaining 
components of the management report are satisfied at the insured 
depository institution level, the management report must be signed by 
the chief executive officers and the chief accounting officers or chief 
financial officers of both the holding company and the insured 
depository institution and the management report must clearly indicate 
the level (institution or holding company) at which each of its 
components is being satisfied.



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 or the PCAOB's auditing standards, if 
applicable, 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 GAAP.
    (b) Internal control over financial reporting. For each insured 
depository institution with total assets of $1 billion or more at the 
beginning of the institution's fiscal year, the independent public 
accountant who audits the institution's financial statements shall 
examine, attest to, and report separately on the assertion of management 
concerning the effectiveness of the institution's internal control 
structure and procedures for financial reporting. The attestation and 
report shall be made in accordance with generally accepted standards for 
attestation engagements

[[Page 198]]

or the PCAOB's auditing standards, if applicable. The accountant's 
report must not be dated prior to the date of the management report and 
management's assessment of the effectiveness of internal control over 
financial reporting. Notwithstanding the requirements set forth in 
applicable professional standards, the accountant's report must include 
the following:
    (1) A statement identifying the internal control framework used by 
the independent public accountant, which must be the same as the 
internal control framework used by management, to evaluate the 
effectiveness of the insured depository institution's internal control 
over financial reporting;
    (2) A statement that the independent public accountant's evaluation 
included controls over the preparation of regulatory financial 
statements in accordance with regulatory reporting instructions 
including identification of such regulatory reporting instructions; and
    (3) A statement expressing the independent public accountant's 
conclusion as to whether the insured depository institution's internal 
control over financial reporting is effective as of the end of its 
fiscal year. The report must disclose all material weaknesses in 
internal control over financial reporting that the independent public 
accountant has identified that have not been remediated prior to the 
insured depository institution's fiscal year-end. The independent public 
accountant is precluded from concluding that the insured depository 
institution's internal control over financial reporting is effective if 
there are one or more material weaknesses.
    (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, the appropriate Federal banking agency, and any appropriate State 
bank supervisor 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. The written notice shall be filed at the place 
identified in Sec.363.4(f).
    (d) Communications with audit committee. In addition to the 
requirements for communications with audit committees set forth in 
applicable professional standards, the independent public accountant 
must report the following on a timely basis to the audit committee:
    (1) All critical accounting policies and practices to be used by the 
insured depository institution,
    (2) All alternative accounting treatments within GAAP for policies 
and practices related to material items that the independent public 
accountant has discussed with management, including the ramifications of 
the use of such alternative disclosures and treatments, and the 
treatment preferred by the independent public accountant, and
    (3) Other written communications the independent public accountant 
has provided to management, such as a management letter or schedule of 
unadjusted differences.
    (e) Retention of working papers. The independent public accountant 
must retain the working papers related to the audit of the insured 
depository institution's financial statements and, if applicable, the 
evaluation of the institution's internal control over financial 
reporting for seven years from the report release date, unless a longer 
period of time is required by law.
    (f) Independence. The independent public accountant must comply with 
the independence standards and interpretations of the AICPA, the SEC, 
and the PCAOB. To the extent that any of the rules within any one of 
these independence standards (AICPA, SEC, and PCAOB) is more or less 
restrictive than the corresponding rule in the other independence 
standards, the independent public accountant must comply with the more 
restrictive rule.
    (g) Peer reviews and inspection reports. (1) Prior to commencing any 
services for an insured depository institution under this part, the 
independent public accountant must have received a peer review, or be 
enrolled in a peer review program, that meets acceptable guidelines. 
Acceptable peer reviews include peer reviews performed in accordance 
with the AICPA's Peer Review Standards and inspections conducted by the 
PCAOB.

[[Page 199]]

    (2) Within 15 days of receiving notification that a peer review has 
been accepted or a PCAOB inspection report has been issued, or before 
commencing any audit under this part, whichever is earlier, the 
independent public accountant must file two copies of the most recent 
peer review report and the public portion of the most recent PCAOB 
inspection report, if any, accompanied by any letters of comments, 
response, and acceptance, with the FDIC, Accounting and Securities 
Disclosure Section, 550 17th Street, NW., Washington, DC 20429, if the 
report has not already been filed. The peer review reports and the 
public portions of the PCAOB inspection reports will be made available 
for public inspection by the FDIC.
    (3) Within 15 days of the PCAOB making public a previously nonpublic 
portion of an inspection report, the independent public accountant must 
file two copies of the previously nonpublic portion of the inspection 
report with the FDIC, Accounting and Securities Disclosure Section, 550 
17th Street, NW., Washington, DC 20429. Such previously nonpublic 
portion of the PCAOB inspection report will be made available for public 
inspection by the FDIC.



Sec.363.4  Filing and notice requirements.

    (a) Part 363 Annual Report. (1) 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 its 
Part 363 Annual Report. A Part 363 Annual Report must contain audited 
comparative annual financial statements, the independent public 
accountant's report thereon, a management report, and, if applicable, 
the independent public accountant's attestation report on management's 
assessment concerning the institution's internal control structure and 
procedures for financial reporting as required by Sec. Sec.363.2(a), 
363.3(a), 363.2(b), and 363.3(b), respectively.
    (2) Subject to the criteria specified in Sec.363.1(b), each 
insured depository institution with consolidated total assets of less 
than $1 billion as of the beginning of its fiscal year that is required 
to file, or whose parent holding company is required to file, 
management's assessment of the effectiveness of internal control over 
financial reporting with the SEC or the appropriate Federal banking 
agency in accordance with section 404 of SOX must submit a copy of such 
assessment to the FDIC, the appropriate Federal banking agency, and any 
appropriate State bank supervisor with its Part 363 Annual Report as 
additional information. This assessment will not be considered part of 
the institution's Part 363 Annual Report.
    (3)(i) Each insured depository institution that is neither a public 
company nor a subsidiary of a public company that meets the criterion 
specified in Sec.363.1(b)(1) shall file its Part 363 Annual Report 
within 120 days after the end of its fiscal year. (ii) Each insured 
depository institution that is a public company or a subsidiary of 
public company that meets the criterion specified in Sec.363.1(b)(1) 
shall file its Part 363 Annual Report within 90 days after the end of 
its fiscal year.
    (b) Public availability. Except for the annual report in paragraph 
(a)(1) of this section and the peer reviews and inspection reports in 
Sec.363.3(g), which shall be available for public inspection, the FDIC 
has determined that all other reports and notifications required by this 
part are exempt from public disclosure by the FDIC.
    (c) Independent public accountant's letters and reports. Except for 
the independent public accountant's reports that are included in its 
Part 363 Annual Report, 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 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. Such reports include, but are 
not limited to:
    (1) Any written communication regarding matters that are required to 
be communicated to the audit committee (for example, critical accounting 
policies, alternative accounting treatments discussed with management, 
and any schedule of unadjusted differences),

[[Page 200]]

    (2) Any written communication of significant deficiencies and 
material weaknesses in internal control required by the AICPA's or the 
PCAOB's auditing standards;
    (3) For institutions with total assets of less than $1 billion as of 
the beginning of their fiscal year that are public companies or 
subsidiaries of public companies that meet the criterion specified in 
Sec.363.1(b)(1), any independent public accountant's report on the 
audit of internal control over financial reporting required by section 
404 of SOX and the PCAOB's auditing standards; and
    (4) For all institutions that are public companies or subsidiaries 
of public companies that meet the criterion specified in Sec.
363.1(b)(1), any independent public accountant's written communication 
of all deficiencies in internal control over financial reporting that 
are of a lesser magnitude than significant deficiencies required by the 
PCAOB's auditing standards.
    (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 resignation or dismissal in reasonable detail.
    (e) Notification of late filing. No extensions of time for filing 
reports required by Sec.363.4 shall be granted. An insured depository 
institution that is unable to timely file all or any portion of its Part 
363 Annual Report or any other report or notice required by Sec.363.4 
shall submit a written notice of late filing to the FDIC, the 
appropriate Federal banking agency, and any appropriate State bank 
supervisor. The notice shall disclose the institution's inability to 
timely file all or specified portions of its Part 363 Annual Report or 
any other report or notice and the reasons therefore in reasonable 
detail. The late filing notice shall also state the date by which the 
report or notice will be filed. The written notice shall be filed on or 
before the deadline for filing the Part 363 Annual Report or any other 
report or notice, as appropriate.
    (f) Place for filing. The Part 363 Annual Report, any written 
notification of late filing, and any other report or notice required by 
Sec.363.4 should be filed as follows:
    (1) FDIC: Appropriate FDIC Regional or Area Office (Division of 
Supervision and Consumer Protection), i.e., the FDIC regional or area 
office in the FDIC region or area that is responsible for monitoring the 
institution or, in the case of a subsidiary institution of a holding 
company, 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.
    (2) Office of the Comptroller of the Currency (OCC): Appropriate OCC 
Supervisory Office.
    (3) Federal Reserve: Appropriate Federal Reserve Bank.
    (4) Office of Thrift Supervision (OTS): Appropriate OTS District 
Office.
    (5) State bank supervisor: The filing office of the appropriate 
State bank supervisor.



Sec.363.5  Audit committees.

    (a) Composition and duties. Each insured depository institution 
shall establish an audit committee of its board of directors, the 
composition of which complies with paragraphs (a)(1), (2), and (3) of 
this section. The duties of the audit committee shall include the 
appointment, compensation, and oversight of the independent public 
accountant who performs services required under this part, and reviewing 
with management and the independent public accountant the basis for the 
reports issued under this part.
    (1) Each insured depository institution with total assets of $1 
billion or more as of the beginning of its fiscal year 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.
    (2) Each insured depository institution with total assets of $500 
million or

[[Page 201]]

more but less than $1 billion as of the beginning of its fiscal year 
shall establish an audit committee of its board of directors, the 
members of which shall be outside directors, the majority of whom shall 
be independent of management of the institution. The appropriate Federal 
banking agency may, by order or regulation, permit the audit committee 
of such an insured depository institution to be made up of less than a 
majority of outside directors who are independent of management, if the 
agency determines that the institution has encountered hardships in 
retaining and recruiting a sufficient number of competent outside 
directors to serve on the audit committee of the institution.
    (3) An outside director is a director who is not, and within the 
preceding fiscal year has not been, an officer or employee of the 
institution or any affiliate of the institution.
    (b) Committees of large institutions. The audit committee of any 
insured depository institution with total assets of more than $3 billion 
as of the beginning of its 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's audit committee shall not include any 
members who are large customers of the subsidiary institution.
    (c) Independent public accountant engagement letters. (1) In 
performing its duties with respect to the appointment of the 
institution's independent public accountant, the audit committee shall 
ensure that engagement letters and any related agreements with the 
independent public accountant for services to be performed under this 
part do not contain any limitation of liability provisions that:
    (i) Indemnify the independent public accountant against claims made 
by third parties;
    (ii) Hold harmless or release the independent public accountant from 
liability for claims or potential claims that might be asserted by the 
client insured depository institution, other than claims for punitive 
damages; or
    (iii) Limit the remedies available to the client insured depository 
institution.
    (2) Alternative dispute resolution agreements and jury trial waiver 
provisions are not precluded from engagement letters provided that they 
do not incorporate any limitation of liability provisions set forth in 
paragraph (c)(1) of this section.



       Sec. Appendix A to Part 363--Guidelines and Interpretations

                            Table of Contents

Introduction
Scope of Rule and Definitions (Sec.363.1)
    1. Measuring Total Assets
    2. Insured Branches of Foreign Banks
    3. Compliance by Holding Company Subsidiaries
    4. Comparable Services and Functions
    4A. Financial Reporting
Annual Reporting Requirements (Sec.363.2)
    5. Annual Financial Statements
    5A. Institutions Merged out of Existence
    6. Holding Company Statements
    7. Insured Branches of Foreign Banks
    7A. Compliance with Designated Laws and Regulations
    8. Management Report
    8A. Management's Reports on Internal Control over Financial 
Reporting under Part 363 and Section 404 of SOX
    8B. Internal Control Reports and Part 363 Annual Reports for 
Acquired Businesses
    8C. Management's Disclosure of Noncompliance with the Designated 
Laws and Regulations
    9. Safeguarding of Assets
    10. Standards for Internal Control
    11. Service Organizations
    12. Reserved
Role of Independent Public Accountant (Sec.363.3)
    13. General Qualifications
    14. Reserved
    15. Peer Review Guidelines
    16. Reserved
    17. Information to be Provided to the Independent Public Accountant
    18. Attestation Report and Management Letters
    18A. Internal Control Attestation Standards for Independent Auditors
    19. Reviews with Audit Committee and Management
    20. Notice of Termination
    21. Reliance on Internal Auditors
Filing and Notice Requirements (Sec.363.4)
    22. Reserved
    23. Notification of Late Filing
    24. Public Availability

[[Page 202]]

    25. Reserved
    26. Notices Concerning Accountants
Audit Committees (Sec.363.5)
    27. Composition
    28. ``Independent of Management'' Considerations
    29. Reserved
    30. Holding Company Audit Committees
    31. Duties
    32. Banking or Related Financial Management Expertise
    33. Large Customers
    34. Access to Counsel
    35. Transition Period for Forming and Restructuring Audit Committees
Other
    36. Modifications of Guidelines

                              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 and Definitions (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 
that are submitted by a holding company for any subsidiary institution 
should be accompanied by a cover letter identifying all subsidiary 
institutions subject to part 363 that are included in the holding 
company's submission. When submitting a Part 363 Annual Report, the 
cover letter should identify all subsidiary institutions subject to part 
363 included in the consolidated financial statements and state whether 
the other annual report requirements (i.e., management's statement of 
responsibilities, management's assessment of compliance with designated 
safety and soundness laws and regulations, and, if applicable, 
management's assessment of the effectiveness of internal control over 
financial reporting and the independent public accountant's attestation 
report on management's internal control assessment) are being satisfied 
for these institutions at the holding company level or at the 
institution level. An institution filing holding company consolidated 
financial statements as permitted by Sec.363.1(b)(1) also may report 
on changes in its independent public accountant on a holding company 
basis. An institution that does not meet the criteria in Sec.
363.1(b)(2) must satisfy the remaining provisions of this part on an 
individual institution basis and maintain its own audit committee. 
Subject to the criteria in Sec. Sec.363.1(b)(1) and (2), a multi-
tiered holding company may satisfy all of the requirements of this part 
at the top-tier or any mid-tier holding company 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;
    (b) Has an audit committee that meets the requirements of this part 
appropriate to its largest subsidiary institution; and
    (c) Prepares and submits management's assessment of compliance with 
the Designated Laws and Regulations defined in guideline

[[Page 203]]

7A and, if applicable, management's assessment of the effectiveness of 
internal control over financial reporting based on information 
concerning the relevant activities and operations of those subsidiary 
institutions within the scope of the Rule.
    4A. Financial Statements Prepared for Regulatory Reporting Purposes. 
(a) As set forth in Sec.363.3(c) of this part, ``financial 
reporting,'' at a minimum, includes both financial statements prepared 
in accordance with generally accepted accounting principles for the 
insured depository institution or its holding company and financial 
statements prepared for regulatory reporting purposes. More 
specifically, financial statements prepared for regulatory reporting 
purposes include the schedules equivalent to the basic financial 
statements that are included in an insured depository institution's or 
its holding company's appropriate regulatory report (for example, 
Schedules RC, RI, and RI-A in the Consolidated Reports of Condition and 
Income (Call Report) for an insured bank; and Schedules SC and SO, and 
the Summary of Changes in Equity Capital section in Schedule SI in the 
Thrift Financial Report (TFR) for an insured thrift institution). For 
recognition and measurement purposes, financial statements prepared for 
regulatory reporting purposes shall conform to generally accepted 
accounting principles and section 37 of the Federal Deposit Insurance 
Act.
    (b) Financial statements prepared for regulatory reporting purposes 
do not include regulatory reports prepared by a non-bank subsidiary of a 
holding company or an institution. For example, if a bank holding 
company or an insured depository institution owns an insurance 
subsidiary, financial statements prepared for regulatory reporting 
purposes would not include any regulatory reports that the insurance 
subsidiary is required to submit to its appropriate insurance regulatory 
agency.

               Annual Reporting Requirements (Sec.363.2)

    5. Annual Financial Statements. Each institution (other than an 
insured branch of a foreign bank) should prepare comparative annual 
consolidated financial statements (balance sheets and statements of 
income, changes in equity capital, and cash flows, with accompanying 
footnote disclosures) in accordance with 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.
    5A. Institutions Merged Out of Existence. An institution that is 
merged out of existence after the end of its fiscal year, but before the 
deadline for filing its Part 363 Annual Report (120 days after the end 
of its fiscal year for an institution that is neither a public company 
nor a subsidiary of a public company that meets the criterion specified 
in Sec.363.1(b)(1), and 90 days after the end of its fiscal year for 
an institution that is a public company or a subsidiary of a public 
company that meets the criterion specified in Sec.363.1(b)(1)), is not 
required to file a Part 363 Annual Report for the last fiscal year of 
its existence.
    6. Holding Company Statements. Subject to the criterion specified in 
Sec.363.1(b)(1), subsidiary institutions may file copies of their 
holding company's audited financial statements filed with the SEC or 
prepared for their FR Y-6 Annual Report under the Bank Holding Company 
Act of 1956 to satisfy the audited financial statements requirement of 
Sec.363.2(a).
    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 each of its two most recent 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.
    7A. Compliance with Designated Laws and Regulations. The designated 
laws and regulations are the Federal laws and regulations concerning 
loans to insiders and the Federal and, if applicable, State laws and 
regulations concerning dividend restrictions (the Designated Laws and 
Regulations). Table 1 to this Appendix A lists the designated Federal 
laws and regulations pertaining to insider loans and dividend 
restrictions (but not the State laws and regulations pertaining to 
dividend restrictions) that are applicable to each type of institution.
    8. Management Report. Management should perform its own 
investigation and review of compliance with the Designated Laws and 
Regulations and, if required, the effectiveness of internal control over 
financial reporting. Management 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 
the appropriate Federal banking agency. Management should provide in its 
assessment of the effectiveness of internal control over financial 
reporting, or supplementally, sufficient information to enable the 
accountant to report on its assertions. 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 officer 
or a chief accounting or financial officer.
    8A. Management's Reports on Internal Control over Financial 
Reporting under Part 363 and Section 404 of SOX. An institution with $1

[[Page 204]]

billion or more in total assets as of the beginning of its fiscal year 
that is subject to both part 363 and the SEC's rules implementing 
section 404 of SOX (as well as a public holding company permitted under 
the holding company exception in Sec.363.1(b)(2) to file an internal 
control report on behalf of one or more subsidiary institutions with $1 
billion or more in total assets) can choose either of the following two 
options for filing management's report on internal control over 
financial reporting.
    (i) Management can prepare two separate reports on the institution's 
or the holding company's internal control over financial reporting to 
satisfy the FDIC's part 363 requirements and the SEC's section 404 
requirements; or
    (ii) Management can prepare a single report on internal control over 
financial reporting provided that it satisfies all of the FDIC's part 
363 requirements and all of the SEC's section 404 requirements.
    8B. Internal Control Reports and Part 363 Annual Reports for 
Acquired Businesses. Generally, the FDIC expects management's and the 
related independent public accountant's report on an institution's 
internal control over financial reporting to include controls at an 
institution in its entirety, including all of its consolidated entities. 
However, it may not always be possible for management to conduct an 
assessment of the internal control over financial reporting of an 
acquired business in the period between the consummation date of the 
acquisition and the due date of management's internal control 
assessment.
    (a) In such instances, the acquired business's internal control 
structure and procedures for financial reporting may be excluded from 
management's assessment report and the accountant's attestation report 
on internal control over financial reporting. However, the FDIC expects 
management's assessment report to identify the acquired business, state 
that the acquired business is excluded, and indicate the significance of 
this business to the institution's consolidated financial statements. 
Notwithstanding management's exclusion of the acquired business's 
internal control from its assessment, management should disclose any 
material change to the institution's internal control over financial 
reporting due to the acquisition of this business. Also, management may 
not omit the assessment of the acquired business's internal control from 
more than one annual part 363 assessment report on internal control over 
financial reporting. When the acquired business's internal control over 
financial reporting is excluded from management's assessment, the 
independent public accountant may likewise exclude this acquired 
business's internal control over financial reporting from the 
accountant's evaluation of internal control over financial reporting.
    (b) If the acquired business is or has a consolidated subsidiary 
that is an insured depository institution subject to part 363 and the 
institution is not merged out of existence before the deadline for 
filing its Part 363 Annual Report (120 days after the end of its fiscal 
year for an institution that is neither a public company nor a 
subsidiary of a public company that meets the criterion specified in 
Sec.363.1(b)(1), and 90 days after the end of its fiscal year for an 
institution that is a public company or a subsidiary of public company 
that meets the criterion specified in Sec.363.1(b)(1)), the acquired 
institution must continue to comply with all of the applicable 
requirements of part 363, including filing its Part 363 Annual Report.
    8C. Management's Disclosure of Noncompliance with the Designated 
Laws and Regulations. Management's disclosure of noncompliance, if any, 
with the Designated Laws and Regulations should separately indicate the 
number of instances or frequency of noncompliance with the Federal laws 
and regulations pertaining to insider loans and the Federal (and, if 
applicable, State) laws and regulations pertaining to dividend 
restrictions. The disclosure is not required to specifically identify by 
name the individuals (e.g., officers or directors) who were responsible 
for or were the subject of any such noncompliance. However, the 
disclosure should include appropriate qualitative and quantitative 
information to describe the nature, type, and severity of the 
noncompliance and the dollar amount of the insider loan(s) or 
dividend(s) involved. Similar instances of noncompliance may be 
aggregated as to number of instances and quantified as to the dollar 
amounts or the range of dollar amounts of insider loans and/or dividends 
for which noncompliance occurred. Management may also wish to describe 
any corrective actions taken in response to the instances of 
noncompliance as well any controls or procedures that are being 
developed or that have been developed and implemented to prevent or 
detect and correct future instances of noncompliance on a timely basis.
    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 and auditing 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

[[Page 205]]

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.\15\
---------------------------------------------------------------------------

    \15\ 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 Control. The management of each insured 
depository institution with $1 billion or more in total assets as of the 
beginning of its fiscal year should base its assessment of the 
effectiveness of the institution's internal control over financial 
reporting on a suitable, recognized control framework established by a 
body of experts that followed due-process procedures, including the 
broad distribution of the framework for public comment. In addition to 
being available to users of management's reports, a framework is 
suitable only when it:
     Is free from bias;
     Permits reasonably consistent qualitative and 
quantitative measurements of an institution's internal control over 
financial reporting;
     Is sufficiently complete so that those relevant 
factors that would alter a conclusion about the effectiveness of an 
institution's internal control over financial reporting are not omitted; 
and
     Is relevant to an evaluation of internal control 
over financial reporting.
    In the United States, Internal Control--Integrated Framework, 
including its addendum on safeguarding assets, which was published by 
the Committee of Sponsoring Organizations of the Treadway Commission, 
and is known as the COSO report, provides a suitable and recognized 
framework for purposes of management's assessment. Other suitable 
frameworks have been published in other countries or may be developed in 
the future. Such other suitable frameworks may be used by management and 
the institution's independent public accountant in assessments, 
attestations, and audits of internal control over financial reporting.
    11. Service Organizations. Although service organizations should be 
considered in determining if internal control over financial reporting 
is effective, an institution's independent public accountant, its 
management, and its audit committee should exercise independent judgment 
concerning that determination. Onsite reviews of service organizations 
may not be necessary to prepare the report required by the Rule, and the 
FDIC does not intend that the Rule establish any such requirement.
    12. [Reserved]

           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 working papers, policies, and procedures relating to 
services performed under this part.
    14. [Reserved]
    15. Peer Review 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 (other than a PCAOB inspection) should be 
generally consistent with AICPA Peer Review Standards; and
    (c) The review should include, if available, at least one audit on 
an insured depository institution or consolidated depository institution 
holding company.
    16. [Reserved]
    17. Information to be Provided to the 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 and Management Letters. The independent 
public accountant should provide the institution with any management 
letter and, if applicable, an internal control attestation report (as 
required by section 36(c)(1)) at the conclusion of the audit. The 
independent public accountant's attestation report on internal control 
over financial reporting must specifically include a statement as to 
regulatory reporting. If a holding company subsidiary relies on its 
holding company's management report to satisfy the Part 363 Annual 
Report requirements, the accountant may attest to and report on the 
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.
    18A. Internal Control Attestation Standards for Independent 
Auditors. (a) Sec.363.3(b) provides

[[Page 206]]

that the independent public accountant's attestation and report on 
management's assertion concerning the effectiveness of an institution's 
internal control structure and procedures for financial reporting shall 
be made in accordance with generally accepted standards for attestation 
engagements or the PCAOB's auditing standards, if applicable. The 
standards that should be followed by the institution's independent 
public accountant concerning internal control over financial reporting 
for institutions with $1 billion or more in total assets can be 
summarized as follows:
    (1) For an insured institution that is neither a public company nor 
a subsidiary of a public company, its independent public accountant need 
only follow the AICPA's attestation standards.
    (2) For an insured institution that is a public company that is 
required to comply with the auditor attestation requirement of section 
404 of SOX, its independent public accountant should follow the PCAOB's 
auditing standards.
    (3) For an insured institution that is a public company but is not 
required to comply with the auditor attestation requirement of section 
404 of SOX, its independent public accountant is not required to follow 
the PCAOB's auditing standards. In this case, the accountant need only 
follow the AICPA's attestation standards.
    (4) For an insured institution that is a subsidiary of a public 
company that is required to comply with the auditor attestation 
requirement of section 404 of SOX, but is not itself a public company, 
the institution and its independent public accountant have flexibility 
in complying with the internal control requirements of part 363. If the 
conditions specified in Sec.363.1(b)(2) are met, management and the 
independent public accountant may choose to report on internal control 
over financial reporting at the consolidated holding company level. In 
this situation, the independent public accountant's work would be 
performed for the public company in accordance with the PCAOB's auditing 
standards. Alternatively, the institution may choose to comply with the 
internal control reporting requirements of part 363 at the institution 
level and its independent public accountant could follow the AICPA's 
attestation standards.
    (b) If an independent public accountant need only follow the AICPA's 
attestation standards, the accountant and the insured institution may 
instead agree to have the internal control attestation performed under 
the PCAOB's auditing standards.
    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 of termination 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 for the accountant's termination. Subject 
to the criterion specified in Sec.363.1(b)(1) regarding compliance 
with the audited financial statements requirement at the holding company 
level, the independent public accountant for an insured depository 
institution that is a public company and files reports with its 
appropriate Federal banking agency, or is a subsidiary of a public 
company that files reports with the SEC, may submit the letter it 
furnished to management to be filed with the institution's or the 
holding company's current report (e.g., SEC Form 8-K) concerning a 
change in accountant to satisfy the notice requirements of Sec.
363.3(c). Alternatively, if the independent public accountant confirms 
that management has filed a current report (e.g., SEC Form 8-K) 
concerning a change in accountant that satisfies the notice requirements 
of Sec.363.4(d) and includes an independent public accountant's letter 
that satisfies the requirements of Sec.363.3(c), the independent 
public accountant may rely on the current report (e.g., SEC Form 8-K) 
filed with the FDIC by management concerning a change in accountant to 
satisfy the notice requirements of Sec.363.3(c).
    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.

              Filing and Notice Requirements (Sec.363.4)

    22. [Reserved]
    23. Notification of Late Filing. (a) An institution's submission of 
a written notice of late filing does not cure the requirement to timely 
file the Part 363 Annual Report or other reports or notices required by 
Sec.363.4. An institution's failure to timely file is considered an 
apparent violation of part 363.
    (b) If the late filing notice submitted pursuant to Sec.363.4(e) 
relates only to a portion of a Part 363 Annual Report or any other 
report or notice, the insured depository institution should file the 
other components of the report or notice within the prescribed filing 
period together with a cover letter that indicates which components of 
its Part 363 Annual Report or other report or notice are omitted. An 
institution may combine the written late filing notice and the cover 
letter into a single notice that is submitted together with the other 
components of the report or notice that are being timely filed.

[[Page 207]]

    24. Public Availability. Each institution's Part 363 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 Part 363 Annual Report to 
any person who requests it. The Part 363 Annual Report should remain 
available to the public until the Part 363 Annual Report for the next 
year is available. An institution may use its Part 363 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. [Reserved]
    26. Notices Concerning Accountants. With respect to any selection, 
change, or termination of an independent public accountant, an 
institution's management and audit committee should be familiar with the 
notice requirements in Sec.363.4(d) and guideline 20, and management 
should send a copy of any notice required under Sec.363.4(d) to the 
independent public accountant when it is filed with the FDIC. An insured 
depository institution that is a public company and files reports 
required under the Federal securities laws with its appropriate Federal 
banking agency, or is a subsidiary of a public company that files such 
reports with the SEC, may use its current report (e.g., SEC Form 8-K) 
concerning a change in accountant to satisfy the notice requirements of 
Sec.363.4(d) subject to the criterion of Sec.363.1(b)(1) regarding 
compliance with the audited financial statements requirement at the 
holding company level.

                     Audit Committees (Sec.363.5)

    27. Composition. The board of directors of each institution should 
determine whether each existing or potential audit committee member 
meets the requirements of section 36 and this part. To do so, the board 
of directors should maintain an approved set of written criteria for 
determining whether a director who is to serve on the audit committee is 
an outside director (as defined in Sec.363.5(a)(3)) and is independent 
of management. At least annually, the board of each institution should 
determine whether each existing or potential audit committee member is 
an outside director. In addition, at least annually, the board of an 
institution with $1 billion or more in total assets as of the beginning 
of its fiscal year should determine whether all existing and potential 
audit committee members are ``independent of management of the 
institution'' and the board of an institution with total assets of $500 
million or more but less than $1 billion as of the beginning of its 
fiscal year should determine whether the majority of all existing and 
potential audit committee members are ``independent of management of the 
institution.'' The minutes of the board of directors should contain the 
results of and the basis for its determinations with respect to each 
existing and potential audit committee member. 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. It is not possible 
to anticipate, or explicitly provide for, all circumstances that might 
signal potential conflicts of interest in, or that might bear on, an 
outside director's relationship to an insured depository institution and 
whether the outside director should be deemed ``independent of 
management.'' When assessing an outside director's relationship with an 
institution, the board of directors should consider the issue not merely 
from the standpoint of the director himself or herself, but also from 
the standpoint of persons or organizations with which the director has 
an affiliation. These relationships can include, but are not limited to, 
commercial, banking, consulting, charitable, and family relationships. 
To assist boards of directors in fulfilling their responsibility to 
determine whether existing and potential members of the audit committee 
are ``independent of management,'' paragraphs (a) through (d) of this 
guideline provide guidance for making this determination.
    (a) If an outside director, either directly or indirectly, owns or 
controls, or has owned or controlled within the preceding fiscal year, 
10 percent or more of any outstanding class of voting securities of the 
institution, the institution's board of directors should determine, and 
document its basis and rationale for such determination, whether such 
ownership of voting securities would interfere with the outside 
director's exercise of independent judgment in carrying out the 
responsibilities of an audit committee member, including the ability to 
evaluate objectively the propriety of management's accounting, internal 
control, and reporting policies and practices. Notwithstanding the 
criteria set forth in paragraphs (b), (c), and (d) of this guideline, if 
the board of directors determines that such ownership of voting 
securities would interfere with the outside director's exercise of 
independent judgment, the outside director will not be considered 
``independent of management.''
    (b) The following list sets forth additional criteria that, at a 
minimum, a board of directors should consider when determining whether 
an outside director is ``independent of management.'' The board of 
directors may conclude that additional criteria are also

[[Page 208]]

relevant to this determination in light of the particular circumstances 
of its institution. Accordingly, an outside director will not be 
considered ``independent of management'' if: (1) The director serves, or 
has served within the last three years, as a consultant, advisor, 
promoter, underwriter, legal counsel, or trustee of or to the 
institution or its affiliates.
    (2) The director has been, within the last three years, an employee 
of the institution or any of its affiliates or an immediate family 
member is, or has been within the last three years, an executive officer 
of the institution or any of its affiliates.
    (3) The director has participated in the preparation of the 
financial statements of the institution or any of its affiliates at any 
time during the last three years.
    (4) The director has received, or has an immediate family member who 
has received, during any twelve-month period within the last three 
years, more than $100,000 in direct and indirect compensation from the 
institution, its subsidiaries, and its affiliates for consulting, 
advisory, or other services other than director and committee fees and 
pension or other forms of deferred compensation for prior service 
(provided such compensation is not contingent in any way on continued 
service). Direct compensation also would not include compensation 
received by the director for former service as an interim chairman or 
interim chief executive officer.
    (5) The director or an immediate family member is a current partner 
of a firm that performs internal or external auditing services for the 
institution or any of its affiliates; the director is a current employee 
of such a firm; the director has an immediate family member who is a 
current employee of such a firm and who participates in the firm's 
audit, assurance, or tax compliance practice; or the director or an 
immediate family member was within the last three years (but no longer 
is) a partner or employee of such a firm and personally worked on the 
audit of the insured depository institution or any of its affiliates 
within that time.
    (6) The director or an immediate family member is, or has been 
within the last three years, employed as an executive officer of another 
entity where any of the present executive officers of the institution or 
any of its affiliates at the same time serves or served on that entity's 
compensation committee.
    (7) The director is a current employee, or an immediate family 
member is a current executive officer, of an entity that has made 
payments to, or received payments from, the institution or any of its 
affiliates for property or services in an amount which, in any of the 
last three fiscal years, exceeds the greater of $200 thousand, or 5 
percent of such entity's consolidated gross revenues. This would include 
payments made by the institution or any of its affiliates to not-for-
profit entities where the director is an executive officer or where an 
immediate family member of the director is an executive officer.
    (8) For purposes of paragraph (b) of this guideline:
    (i) An ``immediate family member'' includes a person's spouse, 
parents, children, siblings, mothers- and fathers-in-law, sons- and 
daughters-in-law, brothers- and sisters-in-law, and anyone (other than 
domestic employees) who shares such person's home.
    (ii) The term affiliate of, or a person affiliated with, a specified 
person, means a person or entity that directly, or indirectly through 
one or more intermediaries, controls, or is controlled by, or is under 
common control with, the person specified.
    (iii) The term indirect compensation for consulting, advisory, or 
other services includes the acceptance of a fee for such services by a 
director's immediate family member or by an organization in which the 
director is a partner or principal that provides accounting, consulting, 
legal, investment banking, or financial advisory services to the 
institution, any of its subsidiaries, or any of its affiliates.
    (iv) The terms direct and indirect compensation and payments do not 
include payments such as dividends arising solely from investments in 
the institution's equity securities, provided the same per share amounts 
are paid to all shareholders of that class; interest income from 
investments in the institution's deposit accounts and debt securities; 
loans from the institution that conform to all regulatory requirements 
applicable to such loans except that interest payments or other fees 
paid in association with such loans would be considered payments; and 
payments under non-discretionary charitable contribution matching 
programs.
    (c) An insured depository institution that is a public company and a 
listed issuer (as defined in Rule 10A-3 of the Securities Exchange Act 
of 1934 (Exchange Act)), or is a subsidiary of a public company that 
meets the criterion specified in Sec.363.1(b)(1) and is a listed 
issuer, may choose to use the definition of audit committee member 
independence set forth in the listing standards applicable to the public 
institution or its public company parent for purposes of determining 
whether an outside director is ``independent of management.''
    (d) All other insured depository institutions may choose to use the 
definition of audit committee member independence set forth in the 
listing standards of a national securities exchange that is registered 
with the SEC pursuant to section 6 of the Exchange Act or a national 
securities association that is registered with the SEC pursuant to 
section 15A(a) of the Exchange Act for

[[Page 209]]

purposes of determining whether an outside director is ``independent of 
management.''
    29. [Reserved]
    30. Holding Company Audit Committees. (a) When an insured depository 
institution satisfies the requirements for the holding company exception 
specified in Sec. Sec.363.1(b)(1) and (2), the audit committee 
requirement of this part may be satisfied by the audit committee of the 
top-tier or any mid-tier holding company. Members of the audit committee 
of the holding company should meet all the membership requirements 
applicable to the largest subsidiary depository institution subject to 
part 363 and should perform all the duties of the audit committee of a 
subsidiary institution subject to part 363, even if the holding company 
directors are not directors of the institution.
    (b) When an insured depository institution subsidiary with total 
assets of $1 billion or more as of the beginning of its fiscal year does 
not meet the requirements for the holding company exception specified in 
Sec. Sec.363.1(b)(1) and (2) or maintains its own separate audit 
committee to satisfy the requirements of this part, the members of the 
audit committee of the top-tier or any mid-tier holding company may 
serve on the audit committee of the subsidiary institution if they are 
otherwise independent of management of the subsidiary institution, and, 
if applicable, meet any other requirements for a large subsidiary 
institution covered by this part.
    (c) When an insured depository institution with total assets of $500 
million or more but less than $1 billion as of the beginning of its 
fiscal year does not meet the requirements for the holding company 
exception specified in Sec. Sec.363.1(b)(1) and (2) or maintains its 
own separate audit committee to satisfy the requirements of this part, 
the members of the audit committee of the top-tier or any mid-tier 
holding company may serve on the audit committee of the subsidiary 
institution provided a majority of the institution's audit committee 
members are independent of management of the subsidiary institution.
    (d) Officers and employees of a top-tier or any mid-tier holding 
company may not serve on the audit committee of a subsidiary institution 
subject to part 363.
    31. Duties. The audit committee should perform all duties determined 
by the institution's board of directors and it should maintain minutes 
and other relevant records of its meetings and decisions. The duties of 
the audit committee should be appropriate to the size of the institution 
and the complexity of its operations, and, at a minimum, should include 
the appointment, compensation, and oversight of the independent public 
accountant; reviewing with management and the independent public 
accountant the basis for their respective reports issued under 
Sec. Sec.363.2(a) and (b) and Sec. Sec.363.3(a) and (b); reviewing 
and satisfying itself as to the independent public accountant's 
compliance with the required qualifications for independent public 
accountants set forth in Sec. Sec.363.3(f) and (g) and guidelines 13 
through 16; ensuring that audit engagement letters comply with the 
provisions of Sec.363.5(c) before engaging an independent public 
accountant; being familiar with the notice requirements in Sec.
363.4(d) and guideline 20 regarding the selection, change, or 
termination of an independent public accountant; and ensuring that 
management sends a copy of any notice required under Sec.363.4(d) to 
the independent public accountant when it is filed with the FDIC. 
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 effectiveness of internal control over financial reporting, and 
the resolution of identified material weaknesses and significant 
deficiencies in internal control over financial reporting, including the 
prevention or detection of management override or compromise of the 
internal control system;
    (c) Reviewing with management the institution's compliance with the 
Designated Laws and Regulations identified in guideline 7A;
    (d) Discussing with management and the independent public accountant 
any significant disagreements between management and the independent 
public accountant; and
    (e) Overseeing the internal audit function.
    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. A person who has the attributes of 
an ``audit committee financial expert'' as set forth in the SEC's rules 
would also 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

[[Page 210]]

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. Transition Period for Forming and Restructuring Audit 
Committees.
    (a) When an insured depository institution's total assets as of the 
beginning of its fiscal year are $500 million or more for the first time 
and it thereby becomes subject to part 363, no regulatory action will be 
taken if the institution (1) develops and approves a set of written 
criteria for determining whether a director who is to serve on the audit 
committee is an outside director and is independent of management and 
(2) forms or restructures its audit committee to comply with Sec.
363.5(a)(2) by the end of that fiscal year.
    (b) When an insured depository institution's total assets as of the 
beginning of its fiscal year are $1 billion or more for the first time, 
no regulatory action will be taken if the institution forms or 
restructures its audit committee to comply with Sec.363.5(a)(1) by the 
end of that fiscal year, provided that the composition of its audit 
committee meets the requirements specified in Sec.363.5(a)(2) at the 
beginning of that fiscal year, if such requirements were applicable.
    (c) When an insured depository institution's total assets as of the 
beginning of its fiscal year are $3 billion or more for the first time, 
no regulatory action will be taken if the institution forms or 
restructures its audit committee to comply with Sec.363.5(b) by the 
end of that fiscal year, provided that the composition of its audit 
committee meets the requirements specified in Sec.363.5(a)(1) at the 
beginning of that fiscal year, if such requirements were applicable.

                                  Other

    36. Modifications of Guidelines. The FDIC's Board of Directors has 
delegated to the Director of the FDIC's Division of Supervision and 
Consumer Protection authority to make and publish in the Federal 
Register minor technical amendments to the Guidelines in this Appendix 
and the guidance and illustrative reports in Appendix B, in consultation 
with the other appropriate Federal banking agencies, to reflect the 
practical experience gained from implementation of this part. It 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 member      State non-        Savings
                                                                                       National banks       banks         member banks     associations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Insider Loans--Parts and/or Sections of Title 12 of the United States Code
--------------------------------------------------------------------------------------------------------------------------------------------------------
375a............................................  Loans to Executive Officers of             [radic]          [radic]              (A)              (A)
                                                   Banks.
375b............................................  Extensions of Credit to Executive          [radic]          [radic]              (A)              (A)
                                                   Officers, Directors, and
                                                   Principal Shareholders of Banks.
1468(b).........................................  Extensions of Credit to Executive   ...............  ...............  ...............         [radic]
                                                   Officers, Directors, and
                                                   Principal Shareholders.
1828(j)(2)......................................  Extensions of Credit to Officers,   ...............  ...............         [radic]
                                                   Directors, and Principal
                                                   Shareholders.
1828(j)(3)(B)...................................  Extensions of Credit to Officers,              (B)   ...............               (C)
                                                   Directors, and Principal
                                                   Shareholders.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Parts and/or Sections of Title 12 of the Code of Federal Regulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
31..............................................  Extensions of Credit to Insiders..         [radic]   ...............
32..............................................  Lending Limits....................         [radic]   ...............
215.............................................  Loans to Executive Officers,               [radic]          [radic]              (D)              (E)
                                                   Directors, and Principal
                                                   Shareholders of Member Banks.

[[Page 211]]

 
337.3...........................................  Limits on Extensions of Credit to   ...............  ...............         [radic]
                                                   Executive Officers, Directors,
                                                   and Principal Shareholders of
                                                   Insured Nonmember Banks.
390.338 (state savings associations)............  Loans by Savings Associations to    ...............  ...............  ...............         [radic]
                                                   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               [radic]          [radic]
                                                   Capital and Unearned Dividends.
60..............................................  Dividends and Surplus Fund........         [radic]          [radic]
1467a(f)........................................  Declaration of Dividend...........  ...............  ...............  ...............         [radic]
1831o(d)(1).....................................  Prompt Corrective Action--Capital          [radic]          [radic]          [radic]          [radic]
                                                   Distributions Restricted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Parts and/or Sections of Title 12 of the Code of Federal Regulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
5 Subpart E.....................................  Payment of Dividends..............         [radic]   ...............
6.6.............................................  Prompt Corrective Action--                 [radic]   ...............
                                                   Restrictions on Undercapitalized
                                                   Institutions.
208.5...........................................  Dividends and Other Distributions.  ...............         [radic]
208.45..........................................  Prompt Corrective Action--          ...............         [radic]
                                                   Restrictions on Undercapitalized
                                                   Institutions.
324.405.........................................  Prompt Corrective Action--          ...............  ...............         [radic]
                                                   Restrictions on Undercapitalized
                                                   Institutions.
390.342-.348 (state savings associations).......  Capital Distributions.............  ...............  ...............  ...............         [radic]
390.455 (state savings associations)............  Prompt Corrective Action--          ...............  ...............  ...............         [radic]
                                                   Restrictions on Undercapitalized
                                                   Institutions.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(A) Subsections (g) and (h) of section 22 of the Federal Reserve Act [12 U.S.C. 375a, 375b]
(B) Applies only to insured Federal branches of foreign banks.
(C) Applies only to insured State branches of foreign banks.
(D) See 12 CFR 337.3.
(E) See 12 CFR 390.338 (state savings associations).


[74 FR 35745, July 20, 2009, as amended at 78 FR 55596, Sept. 10, 2013; 
83 FR 17742, Apr. 24, 2018]



      Sec. Appendix B to Part 363--Illustrative Management Reports

                            Table of Contents

1. General
2. Reporting Scenarios for Institutions that are Holding Company 
          Subsidiaries
3. Illustrative Statements of Management's Responsibilities
4. Illustrative Reports on Management's Assessment of Compliance with 
          Designated Laws and Regulations
5. Illustrative Reports on Management's Assessment of Internal Control 
          Over Financial Reporting
6. Illustrative Management Report--Combined Statement of Management's 
          Responsibilities, Report on Management's Assessment of 
          Compliance With Designated Laws and Regulations, and Report on 
          Management's Assessment of Internal Control Over Financial 
          Reporting
7. Illustrative Cover Letter--Compliance by Holding Company Subsidiaries

    1. General. The reporting scenarios, illustrative management 
reports, and the cover letter (when complying at the holding company 
level) in Appendix B to part 363 are intended to assist managements of 
insured depository institutions in complying with the annual reporting 
requirements of Sec.363.2 and guideline 3, Compliance by Holding 
Company Subsidiaries, of Appendix A to part 363. However, use of the 
illustrative management reports and cover letter is not required. The 
managements of insured depository institutions are encouraged to tailor 
the wording of their management reports and cover letters

[[Page 212]]

to fit their particular circumstances, especially when reporting on 
material weaknesses in internal control over financial reporting or 
noncompliance with designated laws and regulations. Terms that are not 
explained in Appendix B have the meanings given them in part 363, the 
FDI Act, or professional accounting and auditing literature. 
Instructions to the preparer of the management reports are shown in 
brackets within the illustrative reports.
    2. Reporting Scenarios for Institutions that are Holding Company 
Subsidiaries. (a) Subject to the criteria specified in Sec.363.1(b), 
an insured depository institution that is a subsidiary of a holding 
company has flexibility in satisfying the reporting requirements of part 
363. When reporting at the holding company level, the management report, 
or the individual components thereof, should identify those subsidiary 
institutions that are subject to part 363 and the extent to which they 
are included in the scope of the management report or a component of the 
report. The following reporting scenarios reflect how an insured 
depository institution that meets the criteria set forth in Sec.
363.1(b) could satisfy the annual reporting requirements of Sec.363.2. 
Other reporting scenarios are possible.
    (i) An institution that is a subsidiary of a holding company may 
satisfy the requirements for audited financial statements; management's 
statement of responsibilities; management's assessment of the 
institution's compliance with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions; management's 
assessment of the effectiveness of internal control over financial 
reporting, if applicable; and the independent public accountant's 
attestation on management's assertion as to the effectiveness of 
internal control over financial reporting, if applicable, at the insured 
depository institution level.
    (ii) An institution that is a subsidiary of a holding company may 
satisfy the requirements for audited financial statements; management's 
statement of responsibilities; management's assessment of the 
institution's compliance with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions; management's 
assessment of the effectiveness of internal control over financial 
reporting, if applicable; and the independent public accountant's 
attestation on management's assertion as to the effectiveness of 
internal control over financial reporting, if applicable, at the holding 
company level.
    (iii) An institution that is a subsidiary of a holding company may 
satisfy the requirement for audited financial statements at the holding 
company level and may satisfy the requirements for management's 
statement of responsibilities; management's assessment of the 
institution's compliance with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions; management's 
assessment of the effectiveness of internal control over financial 
reporting, if applicable; and the independent public accountant's 
attestation on management's assertion as to the effectiveness of 
internal control over financial reporting, if applicable, at the insured 
depository institution level.
    (iv) An institution that is a subsidiary of a holding company may 
satisfy the requirements for audited financial statements; management's 
statement of responsibilities; and management's assessment of the 
institution's compliance with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions at the insured 
depository institution level and may satisfy the requirements for the 
assessment by management of the effectiveness of internal control over 
financial reporting, if applicable; and the independent public 
accountant's attestation on management's assertion as to the 
effectiveness of internal control over financial reporting, if 
applicable, at the holding company level.
    (b) For an institution with total assets of $1 billion or more as of 
the beginning of its fiscal year, the assessment by management of the 
effectiveness of internal control over financial reporting and the 
independent public accountant's attestation on management's assertion as 
to the effectiveness of internal control over financial reporting, if 
applicable, must both be performed at the same level, i.e., either at 
the insured depository institution level or at the holding company 
level.
    (c) Financial statements prepared for regulatory reporting purposes 
encompass the schedules equivalent to the basic financial statements in 
an institution's appropriate regulatory report, e.g., the bank 
Consolidated Reports of Condition and Income (Call Report) and the 
Thrift Financial Report (TFR). Guideline 4A in Appendix A to part 363 
identifies the schedules equivalent to the basic financial statements in 
the Call Report and TFR. When internal control assessments and 
attestations are performed at the holding company level, the FDIC 
believes that holding companies have flexibility in interpreting 
``financial reporting'' as it relates to ``regulatory reporting'' and 
has not objected to several reporting approaches employed by holding 
companies to cover ``regulatory reporting.'' Certain holding companies 
have had management's assessment and the accountant's attestation cover 
the schedules equivalent to the basic financial statements

[[Page 213]]

that are included in the appropriate regulatory report, e.g., Call 
Report and the TFR, of each subsidiary institution subject to part 363. 
Other holding companies have had management's assessment and the 
accountant's attestation cover the schedules equivalent to the basic 
financial statements that are included in the holding company's year-end 
regulatory report (FR Y-9C report) to the Federal Reserve Board.
    3. Illustrative Statements of Management's Responsibilities. The 
following illustrative statements of management's responsibilities 
satisfy the requirements of Sec.363.2(b)(1).
    (a) Statement Made at Insured Depository Institution Level

               Statement of Management's Responsibilities

    The management of ABC Depository Institution (the ``Institution'') 
is responsible for preparing the Institution's annual financial 
statements in accordance with generally accepted accounting principles; 
for establishing and maintaining an adequate internal control structure 
and procedures for financial reporting, including controls over the 
preparation of regulatory financial statements in accordance with the 
instructions for the [specify the regulatory report]; and for complying 
with the Federal laws and regulations pertaining to insider loans and 
the Federal and, if applicable, State laws and regulations pertaining to 
dividend restrictions.

                       ABC Depository Institution

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

               (b) Statement Made at Holding Company Level

               Statement of Management's Responsibilities

    The management of BCD Holding Company (the ``Company'') is 
responsible for preparing the Company's annual financial statements in 
accordance with generally accepted accounting principles; for 
establishing and maintaining an adequate internal control structure and 
procedures for financial reporting, including controls over the 
preparation of regulatory financial statements in accordance with the 
instructions for the [specify the regulatory report]; and for complying 
with the Federal laws and regulations pertaining to insider loans and 
the Federal and, if applicable, State laws and regulations pertaining to 
dividend restrictions. The following subsidiary institutions of the 
Company that are subject to Part 363 are included in this statement of 
management's responsibilities: [Identify the subsidiary institutions.]

                           BCD Holding Company

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

    4. Illustrative Reports on Management's Assessment of Compliance 
with Designated Laws and Regulations. The following illustrative reports 
on management's assessment of compliance with Designated Laws and 
Regulations satisfy the requirements of Sec.363.2(b)(2).

 (a) Statement Made at Insured Depository Institution Level--Compliance 
  With Designated Laws and Regulations Pertaining to Insider Loans and 
                          Dividend Restrictions

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of ABC Depository Institution (the ``Institution'') 
has assessed the Institution's compliance with the Federal laws and 
regulations pertaining to insider loans and the Federal and, if 
applicable, State laws and regulations pertaining to dividend 
restrictions during the fiscal year that ended on December 31, 20XX. 
Based upon its assessment, management has concluded that the Institution 
complied with the Federal laws and regulations pertaining to insider 
loans and the Federal and, if applicable, State laws and regulations 
pertaining to dividend restrictions during the fiscal year that ended on 
December 31, 20XX.

                       ABC Depository Institution

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

      (b) Statement Made at Insured Depository Institution Level--
 Noncompliance With Designated Laws and Regulations Pertaining to Both 
                 Insider Loans and Dividend Restrictions

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of ABC Depository Institution (the ``Institution'') 
has assessed the Institution's compliance with the Federal laws and 
regulations pertaining to insider loans and the Federal and, if 
applicable,

[[Page 214]]

State laws and regulations pertaining to dividend restrictions during 
the fiscal year that ended on December 31, 20XX. Based upon its 
assessment, management has determined that, because of the instance(s) 
of noncompliance noted below, the Institution did not comply with the 
Federal laws and regulations pertaining to insider loans and the Federal 
and, if applicable, State laws and regulations pertaining to dividend 
restrictions during the fiscal year that ended on December 31, 20XX.
    [Identify and describe the instance or instances of noncompliance 
with the Federal laws and regulations pertaining to insider loans and 
the Federal and, if applicable, State laws and regulations pertaining to 
dividend restrictions, including appropriate qualitative and 
quantitative information to describe the nature, type, and severity of 
the noncompliance and the dollar amounts of the insider loan(s) and 
dividend(s) involved.]

                       ABC Depository Institution

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

 (c) Statement Made at Insured Depository Institution Level--Compliance 
  With Designated Laws and Regulations Pertaining to Insider Loans and 
    Noncompliance With Designated Laws and Regulations Pertaining to 
                          Dividend Restrictions

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of ABC Depository Institution (the ``Institution'') 
has assessed the Institution's compliance with the Federal laws and 
regulations pertaining to insider loans and the Federal and, if 
applicable, State laws and regulations pertaining to dividend 
restrictions during the fiscal year that ended on December 31, 20XX. 
Based upon its assessment, management has concluded that the Institution 
complied with the Federal laws and regulations pertaining to insider 
loans during the fiscal year that ended on December 31, 20XX. Also, 
based upon its assessment, management has determined that, because of 
the instance(s) of noncompliance noted below, the Institution did not 
comply with the Federal and, if applicable, State laws and regulations 
pertaining to dividend restrictions during the fiscal year that ended on 
December 31, 20XX.
    [Identify and describe the instance or instances of noncompliance 
with the Federal and, if applicable, State laws and regulations 
pertaining to dividend restrictions, including appropriate qualitative 
and quantitative information to describe the nature, type, and severity 
of the noncompliance and the dollar amount(s) of the dividend(s) 
involved.]

                       ABC Depository Institution

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

      (d) Statement Made at Insured Depository Institution Level--
Noncompliance With Designated Laws and Regulations Pertaining to Insider 
Loans and Compliance With Designated Laws and Regulations Pertaining to 
                          Dividend Restrictions

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of ABC Depository Institution (the ``Institution'') 
has assessed the Institution's compliance with the Federal laws and 
regulations pertaining to insider loans and the Federal and, if 
applicable, State laws and regulations pertaining to dividend 
restrictions during the fiscal year that ended on December 31, 20XX. 
Based upon its assessment, management has determined that, because of 
the instance(s) of noncompliance noted below, the Institution did not 
comply with the Federal laws and regulations pertaining to insider loans 
during the fiscal year that ended on December 31, 20XX. Also, based upon 
its assessment, management has concluded that the Institution complied 
with the Federal and, if applicable, State laws and regulations 
pertaining to dividend restrictions during the fiscal year that ended on 
December 31, 20XX.
    [Identify and describe the instance or instances of noncompliance 
with the Federal laws and regulations pertaining to insider loans, 
including appropriate qualitative and quantitative information to 
describe the nature, type, and severity of the noncompliance and the 
dollar amount(s) of the insider loan(s) involved.]

                       ABC Depository Institution

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

[[Page 215]]

(e) Statement Made at Holding Company Level--Compliance With Designated 
     Laws and Regulations Pertaining to Insider Loans and Dividend 
                              Restrictions

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of BCD Holding Company (the ``Company'') has assessed 
the Company's compliance with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions during the 
fiscal year that ended on December 31, 20XX. Based upon its assessment, 
management has concluded that the Company complied with the Federal laws 
and regulations pertaining to insider loans and the Federal and, if 
applicable, State laws and regulations pertaining to dividend 
restrictions during the fiscal year that ended on December 31, 20XX. The 
following subsidiary institutions of the Company that are subject to 
Part 363 are included in this assessment of compliance with these 
designated laws and regulations: [Identify the subsidiary institutions.]

                           BCD Holding Company

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

    (f) Statement Made at Holding Company Level--Noncompliance With 
  Designated Laws and Regulations Pertaining to Both Insider Loans and 
                          Dividend Restrictions

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of BCD Holding Company (the ``Company'') has assessed 
the Company's compliance with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions during the 
fiscal year that ended on December 31, 20XX. The following subsidiary 
institutions of the Company that are subject to Part 363 are included in 
this assessment of compliance with these designated laws and 
regulations: [Identify the subsidiary institutions.]
    Based upon its assessment, management has determined that, because 
of the instance(s) of noncompliance noted below, the Company did not 
comply with the Federal laws and regulations pertaining to insider loans 
and the Federal and, if applicable, State laws and regulations 
pertaining to dividend restrictions during the fiscal year that ended on 
December 31, 20XX.
    [Identify and describe the instance or instances of noncompliance 
with the Federal laws and regulations pertaining to insider loans and 
the Federal and, if applicable, State laws and regulations pertaining to 
dividend restrictions, including appropriate qualitative and 
quantitative information to identify the subsidiary institutions of the 
Company that are subject to Part 363 that had instances of noncompliance 
and describe the nature, type, and severity of the noncompliance and the 
dollar amount(s) of the insider loan(s) and dividend(s) involved.]

                           BCD Holding Company

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

(g) Statement Made at Holding Company Level--Compliance With Designated 
Laws and Regulations Pertaining to Insider Loans and Noncompliance With 
   Designated Laws and Regulations Pertaining to Dividend Restrictions

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of BCD Holding Company (the ``Company'') has assessed 
the Company's compliance with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions during the 
fiscal year that ended on December 31, 20XX. The following subsidiary 
institutions of the Company that are subject to Part 363 are included in 
this assessment of compliance with these designated laws and 
regulations: [Identify the subsidiary institutions.]
    Based upon its assessment, management has concluded that the Company 
complied with the Federal laws and regulations pertaining to insider 
loans during the fiscal year that ended on December 31, 20XX. Also, 
based upon its assessment, management has determined that, because of 
the instance(s) of noncompliance noted below, the Company did not comply 
with the Federal and, if applicable, State laws and regulations 
pertaining to dividend restrictions during the fiscal year that ended on 
December 31, 20XX.
    [Identify and describe the instance or instances of noncompliance 
with the Federal and, if applicable, State laws and regulations 
pertaining to dividend restrictions, including appropriate qualitative 
and quantitative information to identify the subsidiary institutions of 
the Company that are subject to Part 363 that had instances of 
noncompliance and describe the nature, type, and severity of

[[Page 216]]

the noncompliance and the dollar amount(s) of the dividend(s) involved.]

                           BCD Holding Company

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

    (h) Statement Made at Holding Company Level--Noncompliance With 
    Designated Laws and Regulations Pertaining to Insider Loans and 
 Compliance With Designated Laws and Regulations Pertaining to Dividend 
                              Restrictions

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of BCD Holding Company (the ``Company'') has assessed 
the Company's compliance with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions during the 
fiscal year that ended on December 31, 20XX. The following subsidiary 
institutions of the Company that are subject to Part 363 are included in 
this assessment of compliance with these designated laws and 
regulations: [Identify the subsidiary institutions.]
    Based upon its assessment, management has determined that, because 
of the instance(s) of noncompliance noted below, the Company did not 
comply with the Federal laws and regulations pertaining to insider loans 
during the fiscal year that ended on December 31, 20XX. Also, based upon 
its assessment, management has concluded that the Company complied with 
the Federal and, if applicable, State laws and regulations pertaining to 
dividend restrictions during the fiscal year that ended on December 31, 
20XX.
    [Identify and describe the instance or instances of noncompliance 
with the Federal laws and regulations pertaining to insider loans, 
including appropriate qualitative and quantitative information to 
identify the subsidiary institutions of the Company that are subject to 
Part 363 that had instances of noncompliance and describe the nature, 
type, and severity of the noncompliance and the dollar amount(s) of the 
insider loan(s) involved.]

                           BCD Holding Company

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

    5. Illustrative Reports on Management's Assessment of Internal 
Control Over Financial Reporting. The following illustrative reports on 
management's assessment of internal control over financial reporting 
satisfy the requirements of Sec.363.2(b)(3).

(a) Statement Made at Insured Depository Institution Level--No Material 
                               Weaknesses

  Management's Assessment of Internal Control Over Financial Reporting

    ABC Depository Institution's (the ``Institution'') internal control 
over financial reporting is a process effected by those charged with 
governance, management, and other personnel, designed to provide 
reasonable assurance regarding the reliability of financial reporting 
and the preparation of reliable financial statements in accordance with 
accounting principles generally accepted in the United States of America 
and financial statements for regulatory reporting purposes, i.e., 
[specify the regulatory reports]. The Institution's internal control 
over financial reporting includes those policies and procedures that (1) 
pertain to the maintenance of records that, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the 
assets of the Institution; (2) provide reasonable assurance that 
transactions are recorded as necessary to permit preparation of 
financial statements in accordance with accounting principles generally 
accepted in the United States of America and financial statements for 
regulatory reporting purposes, and that receipts and expenditures of the 
Institution are being made only in accordance with authorizations of 
management and directors of the Institution; and (3) provide reasonable 
assurance regarding prevention, or timely detection and correction of 
unauthorized acquisition, use, or disposition of the Institution's 
assets that could have a material effect on the financial statements.
    Because of its inherent limitations, internal control over financial 
reporting may not prevent, or detect and correct misstatements. Also, 
projections of any evaluation of effectiveness to future periods are 
subject to the risk that controls may become inadequate because of 
changes in conditions, or that the degree of compliance with the 
policies and procedures may deteriorate.
    Management is responsible for establishing and maintaining effective 
internal control over financial reporting including controls over the 
preparation of regulatory financial statements. Management assessed the 
effectiveness of the Institution's internal control over financial 
reporting, including controls over the preparation of regulatory 
financial statements in accordance with the instructions for the 
[specify the regulatory report],

[[Page 217]]

as of December 31, 20XX, based on the framework set forth by the 
Committee of Sponsoring Organizations of the Treadway Commission in 
Internal Control--Integrated Framework. Based upon its assessment, 
management has concluded that, as of December 31, 20XX, the 
Institution's internal control over financial reporting, including 
controls over the preparation of regulatory financial statements in 
accordance with the instructions for the [specify the regulatory 
report], is effective based on the criteria established in Internal 
Control--Integrated Framework.
    Management's assessment of the effectiveness of internal control 
over financial reporting, including controls over the preparation of 
regulatory financial statements in accordance with the instructions for 
the [specify the regulatory report], as of December 31, 20XX, has been 
audited by [name of auditing firm], an independent public accounting 
firm, as stated in their report dated March XX, 20XY.

                       ABC Depository Institution

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

(b) Statement Made at Insured Depository Institution Level--One or More 
                           Material Weaknesses

  Management's Assessment of Internal Control Over Financial Reporting

    ABC Depository Institution's (the ``Institution'') internal control 
over financial reporting is a process effected by those charged with 
governance, management, and other personnel, designed to provide 
reasonable assurance regarding the reliability of financial reporting 
and the preparation of reliable financial statements in accordance with 
accounting principles generally accepted in the United States of America 
and financial statements for regulatory reporting purposes, i.e., 
[specify the regulatory reports]. The Institution's internal control 
over financial reporting includes those policies and procedures that (1) 
pertain to the maintenance of records that, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the 
assets of the Institution; (2) provide reasonable assurance that 
transactions are recorded as necessary to permit preparation of 
financial statements in accordance with accounting principles generally 
accepted in the United States of America and financial statements for 
regulatory reporting purposes, and that receipts and expenditures of the 
Institution are being made only in accordance with authorizations of 
management and directors of the Institution; and (3) provide reasonable 
assurance regarding prevention, or timely detection and correction of 
unauthorized acquisition, use, or disposition of the Institution's 
assets that could have a material effect on the financial statements.
    Because of its inherent limitations, internal control over financial 
reporting may not prevent, or detect and correct misstatements. Also, 
projections of any evaluation of effectiveness to future periods are 
subject to the risk that controls may become inadequate because of 
changes in conditions, or that the degree of compliance with the 
policies and procedures may deteriorate.
    Management is responsible for establishing and maintaining effective 
internal control over financial reporting including controls over the 
preparation of regulatory financial statements. Management assessed the 
effectiveness of the Institution's internal control over financial 
reporting, including controls over the preparation of regulatory 
financial statements in accordance with the instructions for the 
[specify the regulatory report], as of December 31, 20XX, based on the 
framework set forth by the Committee of Sponsoring Organizations of the 
Treadway Commission in Internal Control--Integrated Framework. Because 
of the material weakness (or weaknesses) noted below, management 
determined that the Institution's internal control over financial 
reporting, including controls over the preparation of regulatory 
financial statements in accordance with the instructions for the 
[specify the regulatory report], was not effective as of December 31, 
20XX.
    [Identify and describe the material weakness or weaknesses.]
    Management's assessment of the effectiveness of internal control 
over financial reporting, including controls over the preparation of 
regulatory financial statements in accordance with the instructions for 
the [specify the regulatory report], as of December 31, 20XX, has been 
audited by [name of auditing firm], an independent public accounting 
firm, as stated in their report dated March XX, 20XY.

                       ABC Depository Institution

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________


[[Page 218]]

________________________________________________________________________

   (c) Statement Made at Holding Company Level--No Material Weaknesses

  Management's Assessment of Internal Control Over Financial Reporting

    BCD Holding Company's (the ``Company'') internal control over 
financial reporting is a process designed and effected by those charged 
with governance, management, and other personnel, to provide reasonable 
assurance regarding the reliability of financial reporting and the 
preparation of reliable financial statements in accordance with 
accounting principles generally accepted in the United States of America 
and financial statements for regulatory reporting purposes, i.e., 
[specify the regulatory reports]. The Company's internal control over 
financial reporting includes those policies and procedures that (1) 
pertain to the maintenance of records that, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the 
assets of the Company; (2) provide reasonable assurance that 
transactions are recorded as necessary to permit preparation of 
financial statements in accordance with accounting principles generally 
accepted in the United States of America and financial statements for 
regulatory reporting purposes, and that receipts and expenditures of the 
Company are being made only in accordance with authorizations of 
management and directors of the Company; and (3) provide reasonable 
assurance regarding prevention, or timely detection and correction of 
unauthorized acquisition, use, or disposition of the Company's assets 
that could have a material effect on the financial statements.
    Because of its inherent limitations, internal control over financial 
reporting may not prevent, or detect and correct misstatements. Also, 
projections of any evaluation of effectiveness to future periods are 
subject to the risk that controls may become inadequate because of 
changes in conditions, or that the degree of compliance with the 
policies and procedures may deteriorate.
    Management is responsible for establishing and maintaining effective 
internal control over financial reporting including controls over the 
preparation of regulatory financial statements. Management assessed the 
effectiveness of the Company's internal control over financial 
reporting, including controls over the preparation of regulatory 
financial statements in accordance with the instructions for the 
[specify the regulatory report], as of December 31, 20XX, based on the 
framework set forth by the Committee of Sponsoring Organizations of the 
Treadway Commission in Internal Control--Integrated Framework. Based on 
that assessment, management concluded that, as of December 31, 20XX, the 
Company's internal control over financial reporting, including controls 
over the preparation of regulatory financial statements in accordance 
with the instructions for the [specify the regulatory report], is 
effective based on the criteria established in Internal Control--
Integrated Framework. The following subsidiary institutions of the 
Company that are subject to Part 363 are included in this assessment of 
the effectiveness of internal control over financial reporting: 
[Identify the subsidiary institutions.]
    Management's assessment of the effectiveness of internal control 
over financial reporting, including controls over the preparation of 
regulatory financial statements in accordance with the instructions for 
the [specify the regulatory report], as of December 31, 20XX, has been 
audited by [name of auditing firm], an independent public accounting 
firm, as stated in their report dated March XX, 20XY.

                           BCD Holding Company

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

   (d) Statement Made at Holding Company Level--One or More Material 
                               Weaknesses

  Management's Assessment of Internal Control Over Financial Reporting

    BCD Holding Company's (the ``Company'') internal control over 
financial reporting is a process effected by those charged with 
governance, management, and other personnel, designed to provide 
reasonable assurance regarding the reliability of financial reporting 
and the preparation of reliable financial statements in accordance with 
accounting principles generally accepted in the United States of America 
and financial statements for regulatory reporting purposes, i.e., 
[specify the regulatory reports]. The Company's internal control over 
financial reporting includes those policies and procedures that (1) 
pertain to the maintenance of records that, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the 
assets of the Company; (2) provide reasonable assurance that 
transactions are recorded as necessary to permit preparation of 
financial statements in accordance with accounting principles generally 
accepted in the United States of America and financial statements for 
regulatory reporting purposes, and that receipts and expenditures of the 
Company are being made only in accordance with authorizations of 
management and directors of the Company; and (3) provide reasonable 
assurance regarding prevention, or timely detection and correction of 
unauthorized acquisition, use, or disposition of

[[Page 219]]

the Company's assets that could have a material effect on the financial 
statements.
    Because of its inherent limitations, internal control over financial 
reporting may not prevent, or detect and correct misstatements. Also, 
projections of any evaluation of effectiveness to future periods are 
subject to the risk that controls may become inadequate because of 
changes in conditions, or that the degree of compliance with the 
policies and procedures may deteriorate.
    Management is responsible for establishing and maintaining effective 
internal control over financial reporting including controls over the 
preparation of regulatory financial statements. Management assessed the 
effectiveness of the Company's internal control over financial 
reporting, including controls over the preparation of regulatory 
financial statements in accordance with the instructions for the 
[specify the regulatory report], as of December 31, 20XX, based on the 
framework set forth by the Committee of Sponsoring Organizations of the 
Treadway Commission in Internal Control--Integrated Framework. Because 
of the material weakness (or weaknesses) noted below, management 
determined that the Company's internal control over financial reporting, 
including controls over the preparation of regulatory financial 
statements in accordance with the instructions for the [specify the 
regulatory report], was not effective as of December 31, 20XX. The 
following subsidiary institutions of the Company that are subject to 
Part 363 are included in this assessment of the effectiveness of 
internal control over financial reporting: [Identify the subsidiary 
institutions.]
    [Identify and describe the material weakness or weaknesses.]
    Management's assessment of the effectiveness of internal control 
over financial reporting, including controls over the preparation of 
regulatory financial statements in accordance with the instructions for 
the [specify the regulatory report], as of December 31, 20XX, has been 
audited by [name of auditing firm], an independent public accounting 
firm, as stated in their report dated March XX, 20XY.

                           BCD Holding Company

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

    6. Illustrative Management Report--Combined Statement of 
Management's Responsibilities, Report on Management's Assessment of 
Compliance With Designated Laws and Regulations, and Report on 
Management's Assessment of Internal Control Over Financial Reporting, if 
applicable. The following illustrative management reports satisfy the 
requirements of Sec. Sec.363.2(b)(1), (2), and (3).

  (a) Management Report Made at Insured Depository Institution Level--
 Compliance With Designated Laws and Regulations Pertaining to Insider 
 Loans and Dividend Restrictions and No Material Weaknesses in Internal 
                    Control Over Financial Reporting

                            Management Report

               Statement of Management's Responsibilities

    The management of ABC Depository Institution (the ``Institution'') 
is responsible for preparing the Institution's annual financial 
statements in accordance with generally accepted accounting principles; 
for establishing and maintaining an adequate internal control structure 
and procedures for financial reporting, including controls over the 
preparation of regulatory financial statements in accordance with the 
instructions for the [specify the regulatory report]; and for complying 
with the Federal laws and regulations pertaining to insider loans and 
the Federal and, if applicable, State laws and regulations pertaining to 
dividend restrictions.

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of the Institution has assessed the Institution's 
compliance with the Federal laws and regulations pertaining to insider 
loans and the Federal and, if applicable, State laws and regulations 
pertaining to dividend restrictions during the fiscal year that ended on 
December 31, 20XX. Based upon its assessment, management has concluded 
that the Institution complied with the Federal laws and regulations 
pertaining to insider loans and the Federal and, if applicable, State 
laws and regulations pertaining to dividend restrictions during the 
fiscal year that ended on December 31, 20XX.

  Management's Assessment of Internal Control Over Financial Reporting

    The Institution's internal control over financial reporting is a 
process effected by those charged with governance, management, and other 
personnel, designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of reliable 
financial statements in accordance with accounting principles generally 
accepted in the United States of America and financial statements for 
regulatory reporting purposes, i.e., [specify the regulatory reports]. 
The Institution's internal control over financial reporting includes 
those policies and procedures that (1) pertain

[[Page 220]]

to the maintenance of records that, in reasonable detail, accurately and 
fairly reflect the transactions and dispositions of the assets of the 
Institution; (2) provide reasonable assurance that transactions are 
recorded as necessary to permit preparation of financial statements in 
accordance with accounting principles generally accepted in the United 
States of America and financial statements for regulatory reporting 
purposes, and that receipts and expenditures of the Institution are 
being made only in accordance with authorizations of management and 
directors of the Institution; and (3) provide reasonable assurance 
regarding prevention, or timely detection and correction of unauthorized 
acquisition, use, or disposition of the Institution's assets that could 
have a material effect on the financial statements.
    Because of its inherent limitations, internal control over financial 
reporting may not prevent, or detect and correct misstatements. Also, 
projections of any evaluation of effectiveness to future periods are 
subject to the risk that controls may become inadequate because of 
changes in conditions, or that the degree of compliance with the 
policies and procedures may deteriorate.
    Management assessed the effectiveness of the Institution's internal 
control over financial reporting, including controls over the 
preparation of regulatory financial statements in accordance with the 
instructions for the [specify the regulatory report], as of December 31, 
20XX, based on the framework set forth by the Committee of Sponsoring 
Organizations of the Treadway Commission in Internal Control--Integrated 
Framework.
    Based upon its assessment, management has concluded that, as of 
December 31, 20XX, the Institution's internal control over financial 
reporting, including controls over the preparation of regulatory 
financial statements in accordance with the instructions for the 
[specify the regulatory report], is effective based on the criteria 
established in Internal Control--Integrated Framework.
    Management's assessment of the effectiveness of internal control 
over financial reporting, including controls over the preparation of 
regulatory financial statements in accordance with the instructions for 
the [specify the regulatory report], as of December 31, 20XX, has been 
audited by [name of auditing firm], an independent public accounting 
firm, as stated in their report dated March XX, 20XY.

                       ABC Depository Institution

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

  (b) Management Report Made at Holding Company Level--Compliance With 
Designated Laws and Regulations Pertaining to Insider Loans and Dividend 
    Restrictions and No Material Weaknesses in Internal Control Over 
                           Financial Reporting

                            Management Report

    [Instruction--The following illustrative introductory paragraph for 
the management report is applicable only if the same group of subsidiary 
institutions of the holding company that are subject to Part 363 are 
included in all three components of the management report required by 
Part 363: the statement of management's responsibilities, the report on 
management's assessment of compliance with the Designated Laws and 
Regulations pertaining to insider loans and dividend restrictions, and 
the report on management's assessment of internal control over financial 
reporting.]
    In this management report, the following subsidiary institutions of 
the BCD Holding Company (the ``Company'') that are subject to Part 363 
are included in the statement of management's responsibilities; the 
report on management's assessment of compliance with the Federal laws 
and regulations pertaining to insider loans and the Federal and, if 
applicable, State laws and regulations pertaining to dividend 
restrictions; and the report on management's assessment of internal 
control over financial reporting: [Identify the subsidiary 
institutions.]
    [Instruction--The following illustrative introductory paragraph for 
the management report is applicable if the same group of subsidiary 
institutions of the holding company that are subject to Part 363 are 
included in the statement of management's responsibilities and 
management's assessment of compliance with the Designated Laws and 
Regulations pertaining to insider loans and dividend restrictions, but 
only some of the subsidiary institutions in the group are included in 
management's assessment of internal control over financial reporting.]
    In this management report, the following subsidiary institutions of 
BCD Holding Company (the ``Company'') that are subject to Part 363 are 
included in the statement of management's responsibilities and the 
report on management's assessment of compliance with the Federal laws 
and regulations pertaining to insider loans and the Federal and, if 
applicable, State laws and regulations pertaining to dividend 
restrictions: [Identify the subsidiary institutions.] In addition, the 
following subsidiary institutions of the Company that are subject to 
Part 363 are included in the report on management's assessment of 
internal control over financial reporting: [Identify the subsidiary 
institutions.]

[[Page 221]]

               Statement of Management's Responsibilities

    The management of the Company is responsible for preparing the 
Company's annual financial statements in accordance with generally 
accepted accounting principles; for establishing and maintaining an 
adequate internal control structure and procedures for financial 
reporting, including controls over the preparation of regulatory 
financial statements in accordance with the instructions for the 
[specify the regulatory report]; and for complying with the Federal laws 
and regulations pertaining to insider loans and the Federal and, if 
applicable, State laws and regulations pertaining to dividend 
restrictions.

     Management's Assessment of Compliance With Designated Laws and 
                               Regulations

    The management of the Company has assessed the Company's compliance 
with the Federal laws and regulations pertaining to insider loans and 
the Federal and, if applicable, State laws and regulations pertaining to 
dividend restrictions during the fiscal year that ended on December 31, 
20XX. Based upon its assessment, management has concluded that the 
Company complied with the Federal laws and regulations pertaining to 
insider loans and the Federal and, if applicable, State laws and 
regulations pertaining to dividend restrictions during the fiscal year 
that ended on December 31, 20XX.

  Management's Assessment of Internal Control Over Financial Reporting

    The Company's internal control over financial reporting is a process 
effected by those charged with governance, management, and other 
personnel, designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of reliable 
financial statements in accordance with accounting principles generally 
accepted in the United States of America and financial statements for 
regulatory reporting purposes, i.e., [specify the regulatory reports]. 
The Company's internal control over financial reporting includes those 
policies and procedures that (1) pertain to the maintenance of records 
that, in reasonable detail, accurately and fairly reflect the 
transactions and dispositions of the assets of the Company; (2) provide 
reasonable assurance that transactions are recorded as necessary to 
permit preparation of financial statements in accordance with accounting 
principles generally accepted in the United States of America and 
financial statements for regulatory reporting purposes, and that 
receipts and expenditures of the Company are being made only in 
accordance with authorizations of management and directors of the 
Company; and (3) provide reasonable assurance regarding prevention, or 
timely detection and correction of unauthorized acquisition, use, or 
disposition of the Company's assets that could have a material effect on 
the financial statements.
    Because of its inherent limitations, internal control over financial 
reporting may not prevent, or detect and correct misstatements. Also, 
projections of any evaluation of effectiveness to future periods are 
subject to the risk that controls may become inadequate because of 
changes in conditions, or that the degree of compliance with the 
policies and procedures may deteriorate.
    Management assessed the effectiveness of the Company's internal 
control over financial reporting, including controls over the 
preparation of regulatory financial statements in accordance with the 
instructions for the [specify the regulatory report], as of December 31, 
20XX, based on the framework set forth by the Committee of Sponsoring 
Organizations of the Treadway Commission in Internal Control--Integrated 
Framework. Based upon its assessment, management has concluded that, as 
of December 31, 20XX, the Company's internal control over financial 
reporting, including controls over the preparation of regulatory 
financial statements in accordance with the instructions for the 
[specify the regulatory report], is effective based on the criteria 
established in Internal Control--Integrated Framework.
    Management's assessment of the effectiveness of internal control 
over financial reporting, including controls over the preparation of 
regulatory financial statements in accordance with the instructions for 
the [specify the regulatory report], as of December 31, 20XX, has been 
audited by [name of auditing firm], an independent public accounting 
firm, as stated in their report dated March XX, 20XY.

                           BCD Holding Company

________________________________________________________________________
John Doe, Chief Executive Officer

 Date:__________________________________________________________________

________________________________________________________________________
Jane Doe, Chief Financial Officer

 Date:__________________________________________________________________

    7. Illustrative Cover Letter--Compliance by Holding Company 
Subsidiaries. The following illustrative cover letter satisfies the 
requirements of guideline 3, Compliance by Holding Company Subsidiaries, 
of Appendix A to part 363.

To: (Appropriate FDIC Regional or Area Office) Division of Supervision 
          and Consumer Protection, FDIC, and (Appropriate District or 
          Regional Office of the Primary Federal Regulator(s), if not 
          the FDIC), and
    (Appropriate State Bank Supervisor(s), if applicable)

Dear [Insert addressees]:


[[Page 222]]


    BCD Holding Company (the ``Company'') is filing two copies of the 
Part 363 Annual Report for the fiscal year ended December 31, 20XX, on 
behalf of its insured depository institution subsidiaries listed in the 
chart below that are subject to Part 363. The Part 363 Annual Report 
contains audited comparative annual financial statements, the 
independent public accountant's report on the audited financial 
statements, management's statement of responsibilities, management's 
assessment of compliance with the Designated Laws and Regulations 
pertaining to insider loans and dividend restrictions, and [if 
applicable] management's assessment of and the independent public 
accountant's attestation report on internal control over financial 
reporting. The chart below also indicates the level (institution or 
holding company) at which the requirements of Part 363 are being 
satisfied for each listed insured depository institution subsidiary. [If 
applicable] The Company's other insured depository institution 
subsidiaries that are subject to Part 363, which comply with all of the 
Part 363 annual reporting requirements at the institution level, have 
filed [or will file] their Part 363 Annual Reports separately.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Management's
                                                                                         assessment of                             Independent auditor's
  Institutions subject to Part 363      Audited financial    Management's statement     compliance with     Management's internal     internal control
                                           statements          of responsibilities    designated laws and     control assessment     attestation report
                                                                                          regulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
ABC Depository Institution.........  Holding Company Level.  Holding Company Level.  Holding Company Level  Holding Company Level  Holding Company
                                                                                                                                    Level.
DEF Depository Institution.........  Holding Company Level.  Institution Level.....  Institution Level....  Institution Level....  Institution Level.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    If you have any questions regarding the annual report [or reports] 
of the Company's insured depository institution subsidiaries subject to 
Part 363 or if you need any further information, you may contact me at 
987-654-3210.

                           BCD Holding Company

________________________________________________________________________

 Date:__________________________________________________________________

[Insert officer's name and title.]



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
Appendix B to Part 364--Interagency Guidelines Establishing Information 
          Security Standards

    Authority: 12 U.S.C. 1818 and 1819 (Tenth), 1831p-1; 15 U.S.C. 
1681b, 1681s, 1681w, 6801(b), 6805(b)(1).

    Source: 80 FR 65907, Oct. 28, 2015, unless otherwise 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.

    (a) General standards. 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, to 
state-licensed insured branches of foreign banks, that are subject to 
the provisions of section 39 of the Federal Deposit Insurance Act, and 
to state savings associations (in aggregate, bank or banks and savings 
association or savings associations).
    (b) Interagency Guidelines Establishing Information Security 
Standards. The Interagency Guidelines Establishing Information Security 
Standards prescribed pursuant to section 39 of the Federal Deposit 
Insurance Act (12 U.S.C. 1831p-1), and sections 501 and 505(b) of the 
Gramm-Leach-Bliley Act (15 U.S.C. 6801, 6805(b)), and with respect to 
the proper disposal of consumer information requirements pursuant to 
section 628 of the Fair Credit Reporting Act (15 U.S.C. 1681w), as set 
forth in appendix B to this part, apply to all insured state nonmember 
banks,

[[Page 223]]

insured state licensed branches of foreign banks, any subsidiaries of 
such entities (except brokers, dealers, persons providing insurance, 
investment companies, and investment advisers), and to state savings 
associations. The interagency regulations and guidelines on identity 
theft detection, prevention, and mitigation prescribed pursuant to 
section 114 of the Fair and Accurate Credit Transactions Act of 2003, 15 
U.S.C. 1681m(e), are set forth in Sec. Sec.334.90, 334.91, and 
appendix J of part 334.



    Sec. Appendix A to Part 364--Interagency Guidelines Establishing 
                   Standards for Safety and Soundness

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 
guidelines 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.
    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 establish standards that specify when 
compensation is excessive.
    iv. If an agency determines that an institution fails to meet any 
standard established by guidelines 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\
    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 Fund.

                  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. 1831o) and part 324 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

[[Page 224]]

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(d).\3\
    5. Executive officer shall have the meaning described in 12 CFR 
215.2(e).\4\
    6. Principal shareholder shall have the meaning described in 12 CFR 
215.2(m).\5\

                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;
    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:

[[Page 225]]

    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 the services performed by an 
executive officer, employee, director, or principal shareholder, 
considering the following:
    1. The combined value of all cash and noncash 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 determine 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.

    \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).
    \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; and 
for the Federal Deposit Insurance Corporation, these regulations appear 
at 12 CFR Part 308, subpart R.
    \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''.
    \4\ See footnote 3 in section I.B.4. of this appendix.
    \5\ See footnote 3 in section I.B.4. of this appendix.

[80 FR 65907, Oct. 28, 2015, as amended at 83 FR 17742, Apr. 24, 2018]



    Sec. Appendix B to Part 364--Interagency Guidelines Establishing 
                     Information Security Standards

                            Table of Contents

I. Introduction
    A. Scope
    B. Preservation of Existing Authority
    C. Definitions
II. Standards for Safeguarding Customer Information
    A. Information Security Program
    B. Objectives

[[Page 226]]

III. Development and Implementation of Customer Information Security 
          Program
    A. Involve the Board of Directors
    B. Assess Risk
    C. Manage and Control Risk
    D. Oversee Service Provider Arrangements
    E. Adjust the Program
    F. Report to the Board
    G. Implement the Standards

                             I. Introduction

    The Interagency Guidelines Establishing Information Security 
Standards (Guidelines) set forth standards pursuant to section 39 of the 
Federal Deposit Insurance Act, 12 U.S.C. 1831p-1, and sections 501 and 
505(b), 15 U.S.C. 6801 and 6805(b), of the Gramm-Leach-Bliley Act. These 
Guidelines address standards for developing and implementing 
administrative, technical, and physical safeguards to protect the 
security, confidentiality, and integrity of customer information. These 
Guidelines also address standards with respect to the proper disposal of 
consumer information pursuant to sections 621 and 628 of the Fair Credit 
Reporting Act (15 U.S.C. 1681s and 1681w).
    A. Scope. The Guidelines apply to customer information maintained by 
or on behalf of, and to the disposal of consumer information by or on 
the behalf of, entities over which the Federal Deposit Insurance 
Corporation (FDIC) has authority. Such entities, referred to as 
``insured depository institution'' or ``institution'' are banks insured 
by the FDIC (other than members of the Federal Reserve System), state 
savings associations insured by the FDIC, insured state branches of 
foreign banks, and any subsidiaries of such entities (except brokers, 
dealers, persons providing insurance, investment companies, and 
investment advisers).
    B. Preservation of Existing Authority. Neither section 39 nor these 
Guidelines in any way limit the authority of the FDIC to address unsafe 
or unsound practices, violations of law, unsafe or unsound conditions, 
or other practices. The FDIC may take action under section 39 and these 
Guidelines independently of, in conjunction with, or in addition to, any 
other enforcement action available to the FDIC.
    C. Definitions. 1. Except as modified in the Guidelines, or unless 
the context otherwise requires, the terms used in these Guidelines have 
the same meanings as set forth in sections 3 and 39 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813 and 1831p-1).
    2. For purposes of the Guidelines, the following definitions apply:
    a. Board of directors, in the case of a branch or agency of a 
foreign bank, means the managing official in charge of the branch or 
agency.
    b. Consumer Information means any record about an individual, 
whether in paper, electronic, or other form, that is a consumer report 
or is derived from a consumer report and that is maintained or otherwise 
possessed by or on behalf of the institution for a business purpose. 
Consumer information also means a compilation of such records. The term 
does not include any record that does not personally identify an 
individual.
    i. Examples: (1) Consumer information includes:
    (A) A consumer report that an institution obtains;
    (B) information from a consumer report that the institution obtains 
from its affiliate after the consumer has been given a notice and has 
elected not to opt out of that sharing;
    (C) information from a consumer report that the institution obtains 
about an individual who applies for but does not receive a loan, 
including any loan sought by an individual for a business purpose;
    (D) information from a consumer report that the institution obtains 
about an individual who guarantees a loan (including a loan to a 
business entity); or
    (E) information from a consumer report that the institution obtains 
about an employee or prospective employee.
    (2) Consumer information does not include:
    (A) aggregate information, such as the mean score, derived from a 
group of consumer reports; or
    (B) blind data, such as payment history on accounts that are not 
personally identifiable, that may be used for developing credit scoring 
models or for other purposes.
    c. Consumer report has the same meaning as set forth in the Fair 
Credit Reporting Act, 15 U.S.C. 1681a(d).
    d. Customer means any customer of the institution as defined in 
Sec.332.3(h) of this chapter.
    e. Customer information means any record containing nonpublic 
personal information, as defined in Sec.332.3(n) of this chapter, 
about a customer, whether in paper, electronic, or other form, that is 
maintained by or on behalf of the institution.
    f. Customer information systems means any methods used to access, 
collect, store, use, transmit, protect, or dispose of customer 
information.
    g. Service provider means any person or entity that maintains, 
processes, or otherwise is permitted access to customer information or 
consumer information through its provision of services directly to the 
institution.

                 II. Standards for Information Security

    A. Information Security Program. Each insured depository institution 
shall implement a comprehensive written information security program 
that includes administrative, technical, and physical safeguards 
appropriate to the size and complexity of the institution and the nature 
and scope of its activities. While all parts of the institution are

[[Page 227]]

not required to implement a uniform set of policies, all elements of the 
information security program must be coordinated.
    B. Objectives. An institution's information security program shall 
be designed to:
    1. Ensure the security and confidentiality of customer information;
    2. Protect against any anticipated threats or hazards to the 
security or integrity of such information;
    3. Protect against unauthorized access to or use of such information 
that could result in substantial harm or inconvenience to any customer; 
and
    4. Ensure the proper disposal of customer information and consumer 
information.

   III. Development and Implementation of Information Security Program

    A. Involve the Board of Directors. The board of directors or an 
appropriate committee of the board of each insured depository 
institution shall:
    1. Approve the institution's written information security program; 
and
    2. Oversee the development, implementation, and maintenance of the 
institution's information security program, including assigning specific 
responsibility for its implementation and reviewing reports from 
management.
    B. Assess Risk.
    Each institution shall:
    1. Identify reasonably foreseeable internal and external threats 
that could result in unauthorized disclosure, misuse, alteration, or 
destruction of customer information or customer information systems.
    2. Assess the likelihood and potential damage of these threats, 
taking into consideration the sensitivity of customer information.
    3. Assess the sufficiency of policies, procedures, customer 
information systems, and other arrangements in place to control risks.
    C. Manage and Control Risk. Each institution shall:
    1. Design its information security program to control the identified 
risks, commensurate with the sensitivity of the information as well as 
the complexity and scope of the institution's activities. Each 
institution must consider whether the following security measures are 
appropriate for the institution and, if so, adopt those measures the 
institution concludes are appropriate:
    a. Access controls on customer information systems, including 
controls to authenticate and permit access only to authorized 
individuals and controls to prevent employees from providing customer 
information to unauthorized individuals who may seek to obtain this 
information through fraudulent means.
    b. Access restrictions at physical locations containing customer 
information, such as buildings, computer facilities, and records storage 
facilities to permit access only to authorized individuals;
    c. Encryption of electronic customer information, including while in 
transit or in storage on networks or systems to which unauthorized 
individuals may have access;
    d. Procedures designed to ensure that customer information system 
modifications are consistent with the institution's information security 
program;
    e. Dual control procedures, segregation of duties, and employee 
background checks for employees with responsibilities for or access to 
customer information;
    f. Monitoring systems and procedures to detect actual and attempted 
attacks on or intrusions into customer information systems;
    g. Response programs that specify actions to be taken when the 
institution suspects or detects that unauthorized individuals have 
gained access to customer information systems, including appropriate 
reports to regulatory and law enforcement agencies; and
    h. Measures to protect against destruction, loss, or damage of 
customer information due to potential environmental hazards, such as 
fire and water damage or technological failures.
    2. Train staff to implement the institution's information security 
program.
    3. Regularly test the key controls, systems and procedures of the 
information security program. The frequency and nature of such tests 
should be determined by the institution's risk assessment. Tests should 
be conducted or reviewed by independent third parties or staff 
independent of those that develop or maintain the security programs.
    4. Develop, implement, and maintain, as part of its information 
security program, appropriate measures to properly dispose of customer 
information and consumer information in accordance with each of the 
requirements of this paragraph III.
    D. Oversee Service Provider Arrangements. Each institution shall:
    1. Exercise appropriate due diligence in selecting its service 
providers;
    2. Require its service providers by contract to implement 
appropriate measures designed to meet the objectives of these 
Guidelines; and
    3. Where indicated by the institution's risk assessment, monitor its 
service providers to confirm that they have satisfied their obligations 
as required by paragraph D.2. As part of this monitoring, an institution 
should review audits, summaries of test results, or other equivalent 
evaluations of its service providers.
    E. Adjust the Program. Each institution shall monitor, evaluate, and 
adjust, as appropriate, the information security program

[[Page 228]]

in light of any relevant changes in technology, the sensitivity of its 
customer information, internal or external threats to information, and 
the institution's own changing business arrangements, such as mergers 
and acquisitions, alliances and joint ventures, outsourcing 
arrangements, and changes to customer information systems.
    F. Report to the Board. Each institution shall report to its board 
or an appropriate committee of the board at least annually. This report 
should describe the overall status of the information security program 
and the institution's compliance with these Guidelines. The report, 
which will vary depending upon the complexity of each institution's 
program should discuss material matters related to its program, 
addressing issues such as: Risk assessment; risk management and control 
decisions; service provider arrangements; results of testing; security 
breaches or violations, and management's responses; and recommendations 
for changes in the information security program.
    G. Implement the Standards. 1. Effective date. Each institution must 
implement an information security program pursuant to these Guidelines 
by July 1, 2001.
    2. Two-year grandfathering of agreements with service providers. 
Until July 1, 2003, a contract that an institution has entered into with 
a service provider to perform services for it or functions on its 
behalf, satisfies the provisions of paragraph III.D., even if the 
contract does not include a requirement that the servicer maintain the 
security and confidentiality of customer information as long as the 
institution entered into the contract on or before March 5, 2001.
    3. Effective date for measures relating to the disposal of consumer 
information. Each institution must satisfy these Guidelines with respect 
to the proper disposal of consumer information by July 1, 2005.
    4. Exception for existing agreements with service providers relating 
to the disposal of consumer information. Notwithstanding the requirement 
in paragraph III.G.3., an institution's contracts with its service 
providers that have access to consumer information and that may dispose 
of consumer information, entered into before July 1, 2005, must comply 
with the provisions of the Guidelines relating to the proper disposal of 
consumer information by July 1, 2006.


Supplement A to Appendix B to Part 364 Interagency Guidance on Response 
 Programs for Unauthorized Access to Customer Information and Customer 
                                 Notice

                              I. Background

    This Guidance \1\ interprets section 501(b) of the Gramm-Leach-
Bliley Act (GLBA) and the Interagency Guidelines Establishing 
Information Security Standards (the Security Guidelines) \2\ and 
describes response programs, including customer notification procedures, 
that a financial institution should develop and implement to address 
unauthorized access to or use of customer information that could result 
in substantial harm or inconvenience to a customer. The scope of, and 
definitions of terms used in, this Guidance are identical to those of 
the Security Guidelines. For example, the term ``customer information'' 
is the same term used in the Security Guidelines, and means any record 
containing nonpublic personal information about a customer, whether in 
paper, electronic, or other form, maintained by or on behalf of the 
institution.

                   A. Interagency Security Guidelines

    Section 501(b) of the GLBA required the Agencies to establish 
appropriate standards for financial institutions subject to their 
jurisdiction that include administrative, technical, and physical 
safeguards, to protect the security and confidentiality of customer 
information. Accordingly, the Agencies issued Security Guidelines 
requiring every financial institution to have an information security 
program designed to:
    1. Ensure the security and confidentiality of customer information;
    2. Protect against any anticipated threats or hazards to the 
security or integrity of such information; and
    3. Protect against unauthorized access to or use of such information 
that could result in substantial harm or inconvenience to any customer.

                     B. Risk Assessment and Controls

    1. The Security Guidelines direct every financial institution to 
assess the following risks, among others, when developing its 
information security program:
    a. Reasonably foreseeable internal and external threats that could 
result in unauthorized disclosure, misuse, alteration, or destruction of 
customer information or customer information systems;
    b. The likelihood and potential damage of threats, taking into 
consideration the sensitivity of customer information; and
    c. The sufficiency of policies, procedures, customer information 
systems, and other arrangements in place to control risks.\3\
    2. Following the assessment of these risks, the Security Guidelines 
require a financial institution to design a program to address the 
identified risks. The particular security measures an institution should 
adopt will depend upon the risks presented by the complexity and scope 
of its business. At a minimum, the financial institution is required to 
consider the specific security measures enumerated in the Security 
Guidelines,\4\ and

[[Page 229]]

adopt those that are appropriate for the institution, including:
    a. Access controls on customer information systems, including 
controls to authenticate and permit access only to authorized 
individuals and controls to prevent employees from providing customer 
information to unauthorized individuals who may seek to obtain this 
information through fraudulent means;
    b. Background checks for employees with responsibilities for access 
to customer information; and
    c. Response programs that specify actions to be taken when the 
financial institution suspects or detects that unauthorized individuals 
have gained access to customer information systems, including 
appropriate reports to regulatory and law enforcement agencies.\5\

                          C. Service Providers

    The Security Guidelines direct every financial institution to 
require its service providers by contract to implement appropriate 
measures designed to protect against unauthorized access to or use of 
customer information that could result in substantial harm or 
inconvenience to any customers.\6\

                          II. Response Program

    Millions of Americans, throughout the country, have been victims of 
identity theft.\7\ Identity thieves misuse personal information they 
obtain from a number of sources, including financial institutions, to 
perpetrate identity theft. Therefore, financial institutions should take 
preventative measures to safeguard customer information against attempts 
to gain unauthorized access to the information. For example, financial 
institutions should place access controls on customer information 
systems and conduct background checks for employees who are authorized 
to access customer information.\8\ However, every financial institution 
should also develop and implement a risk-based response program to 
address incidents of unauthorized access to customer information in 
customer information systems \9\ that occur nonetheless. A response 
program should be a key part of an institution's information security 
program.\10\ The program should be appropriate to the size and 
complexity of the institution and the nature and scope of its 
activities.
    In addition, each institution should be able to address incidents of 
unauthorized access to customer information in customer information 
systems maintained by its domestic and foreign service providers. 
Therefore, consistent with the obligations in the Guidelines that relate 
to these arrangements, and with existing guidance on this topic issued 
by the Agencies,\11\ an institution's contract with its service provider 
should require the service provider to take appropriate actions to 
address incidents of unauthorized access to the financial institution's 
customer information, including notification to the institution as soon 
as possible of any such incident, to enable the institution to 
expeditiously implement its response program.

                   A. Components of a Response Program

    1. At a minimum, an institution's response program should contain 
procedures for the following:
    a. Assessing the nature and scope of an incident, and identifying 
what customer information systems and types of customer information have 
been accessed or misused;
    b. Notifying its primary Federal regulator as soon as possible when 
the institution becomes aware of an incident involving unauthorized 
access to or use of sensitive customer information, as defined below;
    c. Consistent with the Agencies' Suspicious Activity Report 
(``SAR'') regulations,\12\ notifying appropriate law enforcement 
authorities, in addition to filing a timely SAR in situations involving 
Federal criminal violations requiring immediate attention, such as when 
a reportable violation is ongoing;
    d. Taking appropriate steps to contain and control the incident to 
prevent further unauthorized access to or use of customer information, 
for example, by monitoring, freezing, or closing affected accounts, 
while preserving records and other evidence; \13\ and
    e. Notifying customers when warranted.
    2. Where an incident of unauthorized access to customer information 
involves customer information systems maintained by an institution's 
service providers, it is the responsibility of the financial institution 
to notify the institution's customers and regulator. However, an 
institution may authorize or contract with its service provider to 
notify the institutions' customers or regulator on its behalf.

                          III. Customer Notice

    Financial institutions have an affirmative duty to protect their 
customers' information against unauthorized access or use. Notifying 
customers of a security incident involving the unauthorized access or 
use of the customer's information in accordance with the standard set 
forth below is a key part of that duty. Timely notification of customers 
is important to manage an institution's reputation risk. Effective 
notice also may reduce an institution's legal risk, assist in 
maintaining good customer relations, and enable the institution's 
customers to take steps to protect themselves against the consequences 
of identity theft. When customer notification is warranted, an 
institution may not forgo notifying its customers of an incident because 
the institution believes that it

[[Page 230]]

may be potentially embarrassed or inconvenienced by doing so.

                    A. Standard for Providing Notice

    When a financial institution becomes aware of an incident of 
unauthorized access to sensitive customer information, the institution 
should conduct a reasonable investigation to promptly determine the 
likelihood that the information has been or will be misused. If the 
institution determines that misuse of its information about a customer 
has occurred or is reasonably possible, it should notify the affected 
customer as soon as possible. Customer notice may be delayed if an 
appropriate law enforcement agency determines that notification will 
interfere with a criminal investigation and provides the institution 
with a written request for the delay. However, the institution should 
notify its customers as soon as notification will no longer interfere 
with the investigation.

                    1. Sensitive Customer Information

    Under the Guidelines, an institution must protect against 
unauthorized access to or use of customer information that could result 
in substantial harm or inconvenience to any customer. Substantial harm 
or inconvenience is most likely to result from improper access to 
sensitive customer information because this type of information is most 
likely to be misused, as in the commission of identity theft. For 
purposes of this Guidance, sensitive customer information means a 
customer's name, address, or telephone number, in conjunction with the 
customer's social security number, driver's license number, account 
number, credit or debit card number, or a personal identification number 
or password that would permit access to the customer's account. 
Sensitive customer information also includes any combination of 
components of customer information that would allow someone to log onto 
or access the customer's account, such as user name or password or 
password and account number.

                          2. Affected Customers

    If a financial institution, based upon its investigation, can 
determine from its logs or other data precisely which customers' 
information has been improperly accessed, it may limit notification to 
those customers with regard to whom the institution determines that 
misuse of their information has occurred or is reasonably possible. 
However, there may be situations where the institution determines that a 
group of files has been accessed improperly, but is unable to identify 
which specific customers' information has been accessed. If the 
circumstances of the unauthorized access lead the institution to 
determine that misuse of the information is reasonably possible, it 
should notify all customers in the group.

                      B. Content of Customer Notice

    1. Customer notice should be given in a clear and conspicuous 
manner. The notice should describe the incident in general terms and the 
type of customer information that was the subject of unauthorized access 
or use. It also should generally describe what the institution has done 
to protect the customers' information from further unauthorized access. 
In addition, it should include a telephone number that customers can 
call for further information and assistance.\14\ The notice also should 
remind customers of the need to remain vigilant over the next twelve to 
twenty-four months, and to promptly report incidents of suspected 
identify theft to the institution. The notice should include the 
following additional items, when appropriate:
    a. A recommendation that the customer review account statements and 
immediately report any suspicious activity to the institution;
    b. A description of fraud alerts and an explanation of how the 
customer may place a fraud alert in the customer's consumer reports to 
put the customer's creditors on notice that the customer may be a victim 
of fraud;
    c. A recommendation that the customer periodically obtain credit 
reports from each nationwide credit reporting agency and have 
information relating to fraudulent transactions deleted;
    d. An explanation of how the customer may obtain a credit report 
free of charge; and
    e. Information about the availability of the FTC's online guidance 
regarding steps a consumer can take to protect against identity theft. 
The notice should encourage the customer to report any incidents of 
identity theft to the FTC, and should provide the FTC's Web site address 
and toll-free telephone number that customers may use to obtain the 
identity theft guidance and report suspected incidents of identity 
theft.\15\
    2. The Agencies encourage financial institutions to notify the 
nationwide consumer reporting agencies prior to sending notices to a 
large number of customers that include contact information for the 
reporting agencies.

                     C. Delivery of Customer Notice

    Customer notice should be delivered in any manner designed to ensure 
that a customer can reasonably be expected to receive it. For example, 
the institution may choose to contact all customers affected by 
telephone or by mail, or by electronic mail for those customers for whom 
it has a valid email address

[[Page 231]]

and who have agreed to receive communications electronically.

    \1\ This Guidance was jointly issued by the Board of Governors of 
the Federal Reserve System (Board), the Federal Deposit Insurance 
Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), 
and the Office of Thrift Supervision (OTS). Pursuant to 12 U.S.C. 5412, 
the OTS is no longer a party to this Guidance.
    \2\ 12 CFR part 30, app. B (OCC); 12 CFR part 208, app. D-2 and part 
225, app. F (Board); and 12 CFR part 364, app. B (FDIC). The 
``Interagency Guidelines Establishing Information Security Standards'' 
were formerly known as ``The Interagency Guidelines Establishing 
Standards for Safeguarding Customer Information.''
    \3\ See Security Guidelines, III.B.
    \4\ See Security Guidelines, III.C.
    \5\ See Security Guidelines, III.C.
    \6\ See Security Guidelines, II.B, and III.D. Further, the Agencies 
note that, in addition to contractual obligations to a financial 
institution, a service provider may be required to implement its own 
comprehensive information security program in accordance with the 
Safeguards Rule promulgated by the Federal Trade Commission (FTC), 12 
CFR part 314.
    \7\ The FTC estimates that nearly 10 million Americans discovered 
they were victims of some form of identity theft in 2002. See The 
Federal Trade Commission. Identity Theft Survey Report (September 2003), 
available at http://www.ftc.gov/os/2003/09/synovatereport.pdf.
    \8\ Institutions should also conduct background checks of employees 
to ensure that the institution does not violate 12 U.S.C. 1829, which 
prohibits an institution from hiring an individual convicted of certain 
criminal offenses or who is subject to a prohibition order under 12 
U.S.C. 1818(e)(6).
    \9\ Under the Guidelines, an institution's customer information 
systems consist of all of the methods used to access, collect, store, 
use, transmit, protect, or dispose of customer information, including 
the systems maintained by its service providers. See Security 
Guidelines, I.C.2.d.
    \10\ See FFIEC Information Technology Examination Handbook, 
Information Security Booklet, Dec. 2002 available at http://
ithandbook.ffiec.gov/it-booklets/information-security.aspx. Federal 
Reserve SR 97-32, Sound Practice Guidance for Information Security for 
Networks, Dec. 4, 1997; OCC Bulletin 2000-14, ``Infrastructure Threats--
Intrusion Risks'' (May 15, 2000), for additional guidance on preventing, 
detecting, and responding to intrusions into financial institutions 
computer systems.
    \11\ See Federal Reserve SR Ltr. 13-19, Guidance on Managing 
Outsourcing Risk, Dec. 5, 2013; OCC Bulletin 2013-29, ``Third-Party 
Relationships--Risk Management Guidance,'' Oct. 30, 2013; and FDIC FIL 
44-08, Guidance for Managing Third Party Risk, June 6, 2008 and FIL 68-
99, Risk Assessment Tools and Practices for Information System Security, 
July 7, 1999.
    \12\ An institution's obligations to file a SAR is set out in the 
Agencies' SAR regulations and Agency guidance. See, for example, 12 CFR 
21.11 (national banks, Federal branches and agencies); 12 CFR 163.180 
(Federal savings associations); 12 CFR 208.62 (State member banks); 12 
CFR 211.5(k) (Edge and agreement corporations); 12 CFR 211.24(f) 
(uninsured State branches and agencies of foreign banks); 12 CFR 
225.4(f) (bank holding companies and their nonbank subsidiaries); and 12 
CFR part 353 (FDIC-supervised institutions). National banks must file 
SARs in connection with computer intrusions and other computer crimes. 
See OCC Bulletin 2000-14, ``Infrastructure Threats--Intrusion Risks'' 
(May 15, 2000); Advisory Letter 97-9, ``Reporting Computer Related 
Crimes'' (November 19, 1997) (general guidance still applicable though 
instructions for new SAR form published in 65 FR 1229, 1230 (January 7, 
2000)). See also Federal Reserve SR 01-11, Identity Theft and Pretext 
Calling, Apr. 26, 2001.
    \13\ See FFIEC Information Technology Examination Handbook, 
Information Security Booklet, Dec. 2002, pp. 68-74.
    \14\ The institution should, therefore, ensure that it has 
reasonable policies and procedures in place, including trained 
personnel, to respond appropriately to customer inquiries and requests 
for assistance.
    \15\ Currently, the FTC Web site for the ID Theft brochure and the 
FTC Hotline phone number are http://www.consumer.gov/idtheft and 1-877-
IDTHEFT. The institution may also refer customers to any materials 
developed pursuant to section 151(b) of the FACT Act (educational 
materials developed by the FTC to teach the public how to prevent 
identity theft).



PART 365_REAL ESTATE LENDING STANDARDS--Table of Contents



                 Subpart A_Real Estate Lending Standards

Sec.
365.1 Purpose and scope.
365.2 Real estate lending standards.

Appendix A to Subpart A of Part 365--Interagency Guidelines for Real 
          Estate Lending Policies

     Subpart B_Registration of Residential Mortgage Loan Originators

365.101 Authority, purpose, and scope.
365.102 Definitions.
365.103 Registration of mortgage loan originators.
365.104 Policies and procedures.

[[Page 232]]

365.105 Use of unique identifier.

Appendix A to Subpart B of Part 365--Examples of Mortgage Loan 
          Originator Activities

    Authority: 12 U.S.C. 1828(o) and 5101 et seq.

    Source: 57 FR 62896, 62900, Dec. 31, 1992, unless otherwise noted.



                 Subpart A_Real Estate Lending Standards



Sec.365.1  Purpose and scope.

    This subpart, 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.

[57 FR 62896, 62900, Dec. 31, 1992, as amended at 75 FR 44692, July 28, 
2010]



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.



  Sec. Appendix A to Subpart A of 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 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.
---------------------------------------------------------------------------

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

    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.

[[Page 233]]

     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:
     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;

[[Page 234]]

     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.

         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.
---------------------------------------------------------------------------

    \2\ For state non-member banks and state savings associations, 
``total capital'' refers to that term described in 12 CFR 324.2.
---------------------------------------------------------------------------

                          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:

[[Page 235]]

     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, 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:

[[Page 236]]

    (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 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. 
Redesignated at 75 FR 44692, July 28, 2010; 78 FR 55597, Sept. 10, 2013; 
83 FR 17743, Apr. 24, 2018]



     Subpart B_Registration of Residential Mortgage Loan Originators

    Source: 75 FR 44692, July 28, 2010, unless otherwise noted.



Sec.365.101  Authority, purpose, and scope.

    (a) Authority. This subpart is issued pursuant to the Secure and 
Fair Enforcement for Mortgage Licensing Act of 2008, title V of the 
Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-
289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.).
    (b) Purpose. This subpart implements the S.A.F.E. Act's Federal 
registration requirement for mortgage loan originators. The S.A.F.E. Act 
provides that the objectives of this registration include aggregating 
and improving the

[[Page 237]]

flow of information to and between regulators; providing increased 
accountability and tracking of mortgage loan originators; enhancing 
consumer protections; supporting anti-fraud measures; and providing 
consumers with easily accessible information at no charge regarding the 
employment history of, and publicly adjudicated disciplinary and 
enforcement actions against, mortgage loan originators.
    (c) Scope--(1) In general. This subpart applies to insured State 
nonmember banks (including State-licensed insured branches of foreign 
banks), their subsidiaries (except brokers, dealers, persons providing 
insurance, investment companies, and investment advisers) (collectively 
referred to in this subpart as insured State nonmember banks), and 
employees of such banks or subsidiaries who act as mortgage loan 
originators.
    (2) De minimis exception. (i) This subpart and the requirements of 
12 U.S.C. 5103(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any 
employee of an insured State nonmember bank who has never been 
registered or licensed through the Registry as a mortgage loan 
originator if during the past 12 months the employee acted as a mortgage 
loan originator for 5 or fewer residential mortgage loans.
    (ii) Prior to engaging in mortgage loan origination activity that 
exceeds the exception limit in paragraph (c)(2)(i) of this section, an 
insured State nonmember bank employee must register with the Registry 
pursuant to this subpart.
    (iii) Evasion. Insured State nonmember banks are prohibited from 
engaging in any act or practice to evade the limits of the de minimis 
exception set forth in paragraph (c)(2)(i) of this section.



Sec.365.102  Definitions.

    For purposes of this subpart, the following definitions apply:
    (a) Annual renewal period means November 1 through December 31 of 
each year.
    (b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------

    \1\ Appendix A of this subpart provides examples of activities that 
would, and would not, cause an employee to fall within this definition 
of mortgage loan originator.
---------------------------------------------------------------------------

    (i) Takes a residential mortgage loan application; and
    (ii) Offers or negotiates terms of a residential mortgage loan for 
compensation or gain.
    (2) The term mortgage loan originator does not include:
    (i) An individual who performs purely administrative or clerical 
tasks on behalf of an individual who is described in paragraph (b)(1) of 
this section;
    (ii) An individual who only performs real estate brokerage 
activities (as defined in 12 U.S.C. 5102(3)(D)) and is licensed or 
registered as a real estate broker in accordance with applicable State 
law, unless the individual is compensated by a lender, a mortgage 
broker, or other mortgage loan originator or by any agent of such 
lender, mortgage broker, or other mortgage loan originator, and meets 
the definition of mortgage loan originator in paragraph (b)(1) of this 
section; or
    (iii) An individual or entity solely involved in extensions of 
credit related to timeshare plans, as that term is defined in 11 U.S.C. 
101(53D).
    (3) Administrative or clerical tasks means the receipt, collection, 
and distribution of information common for the processing or 
underwriting of a loan in the residential mortgage industry and 
communication with a consumer to obtain information necessary for the 
processing or underwriting of a residential mortgage loan.
    (c) Nationwide Mortgage Licensing System and Registry or Registry 
means the system developed and maintained by the Conference of State 
Bank Supervisors and the American Association of Residential Mortgage 
Regulators for the State licensing and registration of State-licensed 
mortgage loan originators and the registration of mortgage loan 
originators pursuant to 12 U.S.C. 5107.
    (d) Registered mortgage loan originator or registrant means any 
individual who:
    (1) Meets the definition of mortgage loan originator and is an 
employee of an insured State nonmember bank; and
    (2) Is registered pursuant to this subpart with, and maintains a 
unique identifier through, the Registry.

[[Page 238]]

    (e) Residential mortgage loan means any loan primarily for personal, 
family, or household use that is secured by a mortgage, deed of trust, 
or other equivalent consensual security interest on a dwelling (as 
defined in section 103(v) of the Truth in Lending Act, 15 U.S.C. 
1602(v)) or residential real estate upon which is constructed or 
intended to be constructed a dwelling, and includes refinancings, 
reverse mortgages, home equity lines of credit and other first and 
additional lien loans that meet the qualifications listed in this 
definition.
    (f) Unique identifier means a number or other identifier that:
    (1) Permanently identifies a registered mortgage loan originator;
    (2) Is assigned by protocols established by the Nationwide Mortgage 
Licensing System and Registry, the Federal banking agencies, and the 
Farm Credit Administration to facilitate:
    (i) Electronic tracking of mortgage loan originators; and
    (ii) Uniform identification of, and public access to, the employment 
history of and the publicly adjudicated disciplinary and enforcement 
actions against mortgage loan originators; and
    (3) Must not be used for purposes other than those set forth under 
the S.A.F.E. Act.



Sec.365.103  Registration of mortgage loan originators.

    (a) Registration requirement--(1) Employee registration. Each 
employee of an insured State nonmember bank who acts as a mortgage loan 
originator must register with the Registry, obtain a unique identifier, 
and maintain this registration in accordance with the requirements of 
this subpart. Any such employee who is not in compliance with the 
registration and unique identifier requirements set forth in this 
subpart is in violation of the S.A.F.E. Act and this subpart.
    (2) Insured State nonmember bank requirement--(i) In general. An 
insured State nonmember bank that employs one or more individuals who 
act as a residential mortgage loan originator must require each such 
employee to register with the Registry, maintain this registration, and 
obtain a unique identifier in accordance with the requirements of this 
subpart.
    (ii) Prohibition. An insured State nonmember bank must not permit an 
employee of the bank who is subject to the registration requirements of 
this subpart to act as a mortgage loan originator for the bank unless 
such employee is registered with the Registry pursuant to this subpart.
    (3) Implementation period for initial registration. An employee of 
an insured State nonmember bank who is a mortgage loan originator must 
complete an initial registration with the Registry pursuant to this 
subpart within 180 days from the date that the FDIC provides in a public 
notice that the Registry is accepting registrations.
    (4) Employees previously registered or licensed through the 
Registry--(i) In general. If an employee of an insured State nonmember 
bank was registered or licensed through, and obtained a unique 
identifier from, the Registry and has maintained this registration or 
license before the employee becomes subject to this subpart at this 
bank, then the registration requirements of the S.A.F.E. Act and this 
subpart are deemed to be met, provided that:
    (A) The employment information in paragraphs (d)(1)(i)(C) and 
(d)(1)(ii) of this section is updated and the requirements of paragraph 
(d)(2) of this section are met;
    (B) New fingerprints of the employee are submitted to the Registry 
for a background check, as required by paragraph (d)(1)(ix) of this 
section, unless the employee has fingerprints on file with the Registry 
that are less than 3 years old;
    (C) The insured State nonmember bank information required in 
paragraphs (e)(1)(i) (to the extent the bank has not previously met 
these requirements) and (e)(2)(i) of this section is submitted to the 
Registry; and
    (D) The registration is maintained pursuant to paragraphs (b) and 
(e)(1)(ii) of this section, as of the date that the employee becomes 
subject to this subpart.
    (ii) Rule for certain acquisitions, mergers, or reorganizations. 
When registered or licensed mortgage loan originators become insured 
State nonmember bank employees as a result of an acquisition,

[[Page 239]]

merger, or reorganization, only the requirements of paragraphs 
(a)(4)(i)(A), (C), and (D) of this section must be met, and these 
requirements must be met within 60 days from the effective date of the 
acquisition, merger, or reorganization.
    (b) Maintaining registration. (1) A mortgage loan originator who is 
registered with the Registry pursuant to paragraph (a) of this section 
must:
    (i) Except as provided in paragraph (b)(3) of this section, renew 
the registration during the annual renewal period, confirming the 
responses set forth in paragraphs (d)(1)(i) through (viii) of this 
section remain accurate and complete, and updating this information, as 
appropriate; and
    (ii) Update the registration within 30 days of any of the following 
events:
    (A) A change in the name of the registrant;
    (B) The registrant ceases to be an employee of the insured State 
nonmember bank; or
    (C) The information required under paragraphs (d)(1)(iii) through 
(viii) of this section becomes inaccurate, incomplete, or out-of-date.
    (2) A registered mortgage loan originator must maintain his or her 
registration, unless the individual is no longer engaged in the activity 
of a mortgage loan originator.
    (3) The annual registration renewal requirement set forth in 
paragraph (b)(1) of this section does not apply to a registered mortgage 
loan originator who has completed his or her registration with the 
Registry pursuant to paragraph (a)(1) of this section less than 6 months 
prior to the end of the annual renewal period.
    (c) Effective dates--(1) Registration. A registration pursuant to 
paragraph (a)(1) of this section is effective on the date the Registry 
transmits notification to the registrant that the registrant is 
registered.
    (2) Renewals or updates. A renewal or update pursuant to paragraph 
(b) of this section is effective on the date the Registry transmits 
notification to the registrant that the registration has been renewed or 
updated.
    (d) Required employee information--(1) In general. For purposes of 
the registration required by this section, an insured State nonmember 
bank must require each employee who is a mortgage loan originator to 
submit to the Registry, or must submit on behalf of the employee, the 
following categories of information to the extent this information is 
collected by the Registry:
    (i) Identifying information, including the employee's:
    (A) Name and any other names used;
    (B) Home address and contact information;
    (C) Principal business location address and business contact 
information;
    (D) Social security number;
    (E) Gender; and
    (F) Date and place of birth;
    (ii) Financial services-related employment history for the 10 years 
prior to the date of registration or renewal, including the date the 
employee became an employee of the bank;
    (iii) Convictions of any criminal offense involving dishonesty, 
breach of trust, or money laundering against the employee or 
organizations controlled by the employee, or agreements to enter into a 
pretrial diversion or similar program in connection with the prosecution 
for such offense(s);
    (iv) Civil judicial actions against the employee in connection with 
financial services-related activities, dismissals with settlements, or 
judicial findings that the employee violated financial services-related 
statutes or regulations, except for actions dismissed without a 
settlement agreement;
    (v) Actions or orders by a State or Federal regulatory agency or 
foreign financial regulatory authority that:
    (A) Found the employee to have made a false statement or omission or 
been dishonest, unfair or unethical; to have been involved in a 
violation of a financial services-related regulation or statute; or to 
have been a cause of a financial services-related business having its 
authorization to do business denied, suspended, revoked, or restricted;
    (B) Are entered against the employee in connection with a financial 
services-related activity;
    (C) Denied, suspended, or revoked the employee's registration or 
license to engage in a financial services-related activity; disciplined 
the employee or

[[Page 240]]

otherwise by order prevented the employee from associating with a 
financial services-related business or restricted the employee's 
activities; or
    (D) Barred the employee from association with an entity or its 
officers regulated by the agency or authority or from engaging in a 
financial services-related business;
    (vi) Final orders issued by a State or Federal regulatory agency or 
foreign financial regulatory authority based on violations of any law or 
regulation that prohibits fraudulent, manipulative, or deceptive 
conduct;
    (vii) Revocation or suspension of the employee's authorization to 
act as an attorney, accountant, or State or Federal contractor;
    (viii) Customer-initiated financial services-related arbitration or 
civil action against the employee that required action, including 
settlements, or which resulted in a judgment; and
    (ix) Fingerprints of the employee, in digital form if practicable, 
and any appropriate identifying information for submission to the 
Federal Bureau of Investigation and any governmental agency or entity 
authorized to receive such information in connection with a State and 
national criminal history background check; however, fingerprints 
provided to the Registry that are less than 3 years old may be used to 
satisfy this requirement.
    (2) Employee authorizations and attestation. An employee registering 
as a mortgage loan originator or renewing or updating his or her 
registration under this subpart, and not the employing insured State 
nonmember bank or other employees of the insured State nonmember bank, 
must:
    (i) Authorize the Registry and the employing institution to obtain 
information related to sanctions or findings in any administrative, 
civil, or criminal action, to which the employee is a party, made by any 
governmental jurisdiction;
    (ii) Attest to the correctness of all information required by 
paragraph (d) of this section, whether submitted by the employee or on 
behalf of the employee by the employing bank; and
    (iii) Authorize the Registry to make available to the public 
information required by paragraphs (d)(1)(i)(A) and (C), and (d)(1)(ii) 
through (viii) of this section.
    (3) Submission of information. An insured State nonmember bank may 
identify one or more employees of the bank who may submit the 
information required by paragraph (d)(1) of this section to the Registry 
on behalf of the bank's employees provided that this individual, and any 
employee delegated such authority, does not act as a mortgage loan 
originator, consistent with paragraph (e)(1)(i)(F) of this section. In 
addition, an insured State nonmember bank may submit to the Registry 
some or all of the information required by paragraphs (d)(1) and (e)(2) 
of this section for multiple employees in bulk through batch processing 
in a format to be specified by the Registry, to the extent such batch 
processing is made available by the Registry.
    (e) Required bank information. An insured State nonmember bank must 
submit the following categories of information to the Registry:
    (1) Bank record. (i) In connection with the registration of one or 
more mortgage loan originators:
    (A) Name, main office address, and business contact information;
    (B) Internal Revenue Service Employer Tax Identification Number 
(EIN);
    (C) Research Statistics Supervision and Discount (RSSD) number, as 
issued by the Board of Governors of the Federal Reserve System;
    (D) Identification of its primary Federal regulator;
    (E) Name(s) and contact information of the individual(s) with 
authority to act as the bank's primary point of contact for the 
Registry;
    (F) Name(s) and contact information of the individual(s) with 
authority to enter the information required by paragraphs (d)(1) and (e) 
of this section to the Registry and who may delegate this authority to 
other individuals. For the purpose of providing information required by 
paragraph (e) of this section, this individual and their delegates must 
not act as mortgage loan originators unless the bank has 10 or fewer 
full time or equivalent employees and is not a subsidiary; and
    (G) If a subsidiary of an insured State nonmember bank, indication 
that it is

[[Page 241]]

a subsidiary and the RSSD number of the parent bank.
    (ii) Attestation. The individual(s) identified in paragraphs 
(e)(1)(i)(E) and (F) of this section must comply with Registry protocols 
to verify their identity and must attest that they have the authority to 
enter data on behalf of the insured State nonmember bank, that the 
information provided to the Registry pursuant to this paragraph (e) is 
correct, and that the insured State nonmember bank will keep the 
information required by this paragraph (e) current and will file 
accurate supplementary information on a timely basis.
    (iii) An insured State nonmember bank must update the information 
required by this paragraph (e) of this section within 30 days of the 
date that this information becomes inaccurate.
    (iv) An insured State nonmember bank must renew the information 
required by paragraph (e) of this section on an annual basis.
    (2) Employee information. In connection with the registration of 
each employee who acts as a mortgage loan originator:
    (i) After the information required by paragraph (d) of this section 
has been submitted to the Registry, confirmation that it employs the 
registrant; and
    (ii) Within 30 days of the date the registrant ceases to be an 
employee of the bank, notification that it no longer employs the 
registrant and the date the registrant ceased being an employee.



Sec.365.104  Policies and procedures.

    An insured State nonmember bank that employs one or more mortgage 
loan originators must adopt and follow written policies and procedures 
designed to assure compliance with this subpart. These policies and 
procedures must be appropriate to the nature, size, complexity, and 
scope of the mortgage lending activities of the bank, and apply only to 
those employees acting within the scope of their employment at the bank. 
At a minimum, these policies and procedures must:
    (a) Establish a process for identifying which employees of the bank 
are required to be registered mortgage loan originators;
    (b) Require that all employees of the insured State nonmember bank 
who are mortgage loan originators be informed of the registration 
requirements of the S.A.F.E. Act and this subpart and be instructed on 
how to comply with such requirements and procedures;
    (c) Establish procedures to comply with the unique identifier 
requirements in Sec.365.105;
    (d) Establish reasonable procedures for confirming the adequacy and 
accuracy of employee registrations, including updates and renewals, by 
comparisons with its own records;
    (e) Establish reasonable procedures and tracking systems for 
monitoring compliance with registration and renewal requirements and 
procedures;
    (f) Provide for independent testing for compliance with this subpart 
to be conducted at least annually by bank personnel or by an outside 
party;
    (g) Provide for appropriate action in the case of any employee who 
fails to comply with the registration requirements of the S.A.F.E. Act, 
this subpart, or the bank's related policies and procedures, including 
prohibiting such employees from acting as mortgage loan originators or 
other appropriate disciplinary actions;
    (h) Establish a process for reviewing employee criminal history 
background reports received pursuant to this subpart, taking appropriate 
action consistent with applicable Federal law, including section 19 of 
the Federal Deposit Insurance Act (12 U.S.C. 1829) and implementing 
regulations with respect to these reports, and maintaining records of 
these reports and actions taken with respect to applicable employees; 
and
    (i) Establish procedures designed to ensure that any third party 
with which the bank has arrangements related to mortgage loan 
origination has policies and procedures to comply with the S.A.F.E. Act, 
including appropriate licensing and/or registration of individuals 
acting as mortgage loan originators.



Sec.365.105  Use of unique identifier.

    (a) The insured State nonmember bank shall make the unique 
identifier(s) of its registered mortgage loan

[[Page 242]]

originator(s) available to consumers in a manner and method practicable 
to the institution.
    (b) A registered mortgage loan originator shall provide his or her 
unique identifier to a consumer:
    (1) Upon request;
    (2) Before acting as a mortgage loan originator; and
    (3) Through the originator's initial written communication with a 
consumer, if any, whether on paper or electronically.



  Sec. Appendix A to Subpart B of Part 365--Examples of Mortgage Loan 
                          Originator Activities

    This Appendix provides examples to aid in the understanding of 
activities that would cause an employee of an insured State nonmember 
bank to fall within or outside the definition of mortgage loan 
originator. The examples in this appendix are not all inclusive. They 
illustrate only the issue described and do not illustrate any other 
issues that may arise under this subpart. For purposes of the examples 
below, the term ``loan'' refers to a residential mortgage loan.
    (a) Taking a loan application. The following examples illustrate 
when an employee takes, or does not take, a loan application.
    (1) Taking an application includes: receiving information provided 
in connection with a request for a loan to be used to determine whether 
the consumer qualifies for a loan, even if the employee:
    (i) Has received the consumer's information indirectly in order to 
make an offer or negotiate a loan;
    (ii) Is not responsible for verifying information;
    (iii) Is inputting information into an online application or other 
automated system on behalf of the consumer; or
    (iv) Is not engaged in approval of the loan, including determining 
whether the consumer qualifies for the loan.
    (2) Taking an application does not include any of the following 
activities performed solely or in combination:
    (i) Contacting a consumer to verify the information in the loan 
application by obtaining documentation, such as tax returns or payroll 
receipts;
    (ii) Receiving a loan application through the mail and forwarding 
it, without review, to loan approval personnel;
    (iii) Assisting a consumer who is filling out an application by 
clarifying what type of information is necessary for the application or 
otherwise explaining the qualifications or criteria necessary to obtain 
a loan product;
    (iv) Describing the steps that a consumer would need to take to 
provide information to be used to determine whether the consumer 
qualifies for a loan or otherwise explaining the loan application 
process;
    (v) In response to an inquiry regarding a prequalified offer that a 
consumer has received from a bank, collecting only basic identifying 
information about the consumer and forwarding the consumer to a mortgage 
loan originator; or
    (vi) Receiving information in connection with a modification to the 
terms of an existing loan to a borrower as part of the bank's loss 
mitigation efforts when the borrower is reasonably likely to default.
    (b) Offering or negotiating terms of a loan. The following examples 
are designed to illustrate when an employee offers or negotiates terms 
of a loan, and conversely, what does not constitute offering or 
negotiating terms of a loan.
    (1) Offering or negotiating the terms of a loan includes:
    (i) Presenting a loan offer to a consumer for acceptance, either 
verbally or in writing, including, but not limited to, providing a 
disclosure of the loan terms after application under the Truth in 
Lending Act, even if:
    (A) Further verification of information is necessary;
    (B) The offer is conditional;
    (C) Other individuals must complete the loan process; or
    (D) Only the rate approved by the bank's loan approval mechanism 
function for a specific loan product is communicated without authority 
to negotiate the rate.
    (ii) Responding to a consumer's request for a lower rate or lower 
points on a pending loan application by presenting to the consumer a 
revised loan offer, either verbally or in writing, that includes a lower 
interest rate or lower points than the original offer.
    (2) Offering or negotiating terms of a loan does not include solely 
or in combination:
    (i) Providing general explanations or descriptions in response to 
consumer queries regarding qualification for a specific loan product, 
such as explaining loan terminology (i.e., debt-to-income ratio); 
lending policies (i.e., the loan-to-value ratio policy of the insured 
State nonmember bank); or product-related services;
    (ii) In response to a consumer's request, informing a consumer of 
the loan rates that are publicly available, such as on the insured State 
nonmember bank's Web site, for specific types of loan products without 
communicating to the consumer whether qualifications are met for that 
loan product;
    (iii) Collecting information about a consumer in order to provide 
the consumer with information on loan products for which the consumer 
generally may qualify, without presenting a specific loan offer to the 
consumer for acceptance, either verbally or in writing;

[[Page 243]]

    (iv) Arranging the loan closing or other aspects of the loan 
process, including communicating with a consumer about those 
arrangements, provided that communication with the consumer only 
verifies loan terms already offered or negotiated;
    (v) Providing a consumer with information unrelated to loan terms, 
such as the best days of the month for scheduling loan closings at the 
bank;
    (vi) Making an underwriting decision about whether the consumer 
qualifies for a loan;
    (vii) Explaining or describing the steps or process that a consumer 
would need to take in order to obtain a loan offer, including 
qualifications or criteria that would need to be met without providing 
guidance specific to that consumer's circumstances; or
    (viii) Communicating on behalf of a mortgage loan originator that a 
written offer, including disclosures provided pursuant to the Truth in 
Lending Act, has been sent to a consumer without providing any details 
of that offer.
    (c) Offering or negotiating a loan for compensation or gain. The 
following examples illustrate when an employee does or does not offer or 
negotiate terms of a loan ``for compensation or gain.''
    (1) Offering or negotiating terms of a loan for compensation or gain 
includes engaging in any of the activities in paragraph (b)(1) of this 
Appendix in the course of carrying out employment duties, even if the 
employee does not receive a referral fee or commission or other special 
compensation for the loan.
    (2) Offering or negotiating terms of a loan for compensation or gain 
does not include engaging in a seller-financed transaction for the 
employee's personal property that does not involve the insured State 
nonmember bank.



PART 366_MINIMUM STANDARDS OF INTEGRITY AND FITNESS FOR AN FDIC
CONTRACTOR--Table of Contents



Sec.
366.0 Definitions.
366.1 What is the purpose of this part?
366.2 What is the scope of this part?
366.3 Who cannot perform contractual services for the FDIC?
366.4 When is there a pattern or practice of defalcation?
366.5 What causes a substantial loss to a federal deposit insurance 
          fund?
366.6 How is my ownership or control determined?
366.7 Will the FDIC waive the prohibitions under Sec.366.3?
366.8 Who can grant a waiver of a prohibition or conflict of interest?
366.9 What other requirements could prevent me from performing 
          contractual services for the FDIC?
366.10 When would I have a conflict of interest?
366.11 Will the FDIC waive a conflict of interest?
366.12 What are the FDIC's minimum standards of ethical responsibility?
366.13 What is my obligation regarding confidential information?
366.14 What information must I provide the FDIC?
366.15 What advice or determinations will the FDIC provide me on the 
          applicability of this part?
366.16 When may I seek a reconsideration or review of an FDIC 
          determination?
366.17 What are the possible consequences for violating this part?

    Authority: Section 9 (Tenth) of the Federal Deposit Insurance Act 
(FDI Act), 12 U.S.C. 1819 (Tenth); sections 12(f)(3) and (4) of the FDI 
Act, 12 U.S.C. 1822(f)(3) and (4); and section 19 of Pub. L. 103-204, 
107 Stat. 2369.

    Source: 67 FR 69991, Nov. 20, 2002, unless otherwise noted.



Sec.366.0  Definitions.

    As used in this part:
    (a) The word person refers to an individual, corporation, 
partnership, or other entity with a legally independent existence.
    (b) The terms we, our, and us refer to the Federal Deposit Insurance 
Corporation (FDIC), except when acting as conservator or operator of a 
bridge bank.
    (c) The terms I, me, my, mine, you, and yourself refer to a person 
who submits an offer to perform or performs, directly or indirectly, 
contractual services or functions on our behalf.
    (d) The phrase insured depository institution refers to any bank or 
savings association whose deposits are insured by the FDIC.



Sec.366.1  What is the purpose of this part?

    This part establishes the minimum standards of integrity and fitness 
that contractors, subcontractors, and employees of contractors and 
subcontractors must meet if they perform any service or function on our 
behalf. This part includes regulations governing conflicts of interest, 
ethical responsibility, and use of confidential information in 
accordance with section 12(f)(3) of the FDI Act, 12 U.S.C. 1822(f)(3), 
and the prohibitions and the requirements

[[Page 244]]

for submission of information in accordance with section 12(f)(4) of the 
FDI Act, 12 U.S.C. 1822(f)(4).



Sec.366.2  What is the scope of this part?

    (a) This part applies to a person who submits an offer to perform or 
performs, directly or indirectly, a contractual service or function on 
our behalf.
    (b) This part does not apply to:
    (1) An FDIC employee for the purposes of title 18, United States 
Code; or
    (2) The FDIC when we operate an insured depository institution such 
as a bridge bank or conservatorship.



Sec.366.3  Who cannot perform contractual services for the FDIC?

    We will not enter into a contract with you to perform a service or 
function on our behalf, if you or any person that owns or controls you, 
or any entity you own or control:
    (a) Has a felony conviction;
    (b) Was removed from or is prohibited from participating in the 
affairs of an insured depository institution as a result of a federal 
banking agency final enforcement action;
    (c) Has a pattern or practice of defalcation; or
    (d) Is responsible for a substantial loss to the Deposit Insurance 
Fund (or any predecessor deposit insurance fund).

[67 FR 69991, Nov. 20, 2002, as amended at 71 FR 20527, Apr. 21, 2006]



Sec.366.4  When is there a pattern or practice of defalcation?

    (a) You have a pattern or practice of defalcation under Sec.
366.3(c) when you, any person that owns or controls you, or any entity 
you own or control has a legal responsibility for the payment on at 
least two obligations that are:
    (1) To one or more insured depository institutions;
    (2) More than 90 days delinquent in the payment of principal, 
interest, or a combination thereof; and
    (3) More than $50,000 each.
    (b) The following are examples of when you have or do not have a 
pattern or practice of defalcation. These examples are not inclusive.
    (1) You have five loans at insured depository institutions. Three of 
them are 90 days past due. Two of the three loans have outstanding 
balances of more than $50,000 each. You have a pattern or practice of 
defalcation.
    (2) You have five loans at insured depository institutions. Two of 
them are 90 days past due. One of the two is with ABC Bank for $170,000. 
The other one is with XYZ bank for $60,000. You have a pattern or 
practice of defalcation.
    (3) You have five loans at insured depository institutions. Three of 
them are 90 days past due. One of the three has an outstanding balance 
of more than $50,000. The other two have outstanding balances of less 
than $50,000. You do not have a pattern or practice of defalcation.
    (4) You have five loans at insured depository institutions. Three of 
them have outstanding balances of more than $50,000. Two of those three 
were 90 days past due but are now current. You do not have a pattern or 
practice of defalcation.



Sec.366.5  What causes a substantial loss to a federal deposit 
insurance fund?

    You cause a substantial loss to the Deposit Insurance Fund (or any 
predecessor deposit insurance fund) under Sec.366.3(d) when you, or 
any person that owns or controls you, or any entity you own or control 
has:
    (a) An obligation to us that is delinquent for 90 days or more and 
on which there is an outstanding balance of principal, interest, or a 
combination thereof of more than $50,000;
    (b) An unpaid final judgment in our favor that is in excess of 
$50,000, regardless of whether it becomes discharged in whole or in part 
in a bankruptcy proceeding;
    (c) A deficiency balance following foreclosure of collateral on an 
obligation owed to us that is in excess of $50,000, regardless of 
whether it becomes discharged in whole or in part in a bankruptcy 
proceeding; or
    (d) A loss to us that is in excess of $50,000 that we report on IRS 
Form 1099-C, Information Reporting for Discharge of Indebtedness.

[67 FR 69991, Nov. 20, 2002, as amended at 71 FR 20527, Apr. 21, 2006]

[[Page 245]]



Sec.366.6  How is my ownership or control determined?

    (a) Your ownership or control is determined on a case-by-case basis. 
Your ownership or control depends on the specific facts of your 
situation and the particular industry and legal entity involved. You 
must provide documentation to us to use in determining your ownership or 
control.
    (b) The interest of a spouse or other family member in the same 
organization is imputed to you in determining your ownership or control.
    (c) The following are examples of when your ownership or control may 
or may not exist. These examples are not inclusive.
    (1) You have control if you are the president or chief executive 
officer of an organization.
    (2) You have ownership or control if you are a partner in a small 
law firm. You might not have ownership or control if you are a partner 
in a large national law firm.
    (3) You have control if you are a general partner of a limited 
partnership. You have ownership or control if you have a limited 
partnership interest of 25 percent or more.
    (4) You have ownership or control if you have the:
    (i) Power to vote, directly or indirectly, 25% or more interest of 
any class of voting stock of a company;
    (ii) Ability to direct in any manner the election of a majority of a 
company's directors or trustees; or
    (iii) Ability to exercise a controlling influence over the company's 
management and policies.



Sec.366.7  Will the FDIC waive the prohibitions under Sec.366.3?

    We may waive the prohibitions for entities other than individuals 
for good cause shown at our discretion when our need to contract for 
your services outweighs all relevant factors. The statute does not allow 
us to waive the prohibitions for individuals.



Sec.366.8  Who can grant a waiver of a prohibition or conflict
of interest?

    The FDIC's Board of Directors delegates to the Chairman, or his 
designee, authority to issue waivers and implement procedures for part 
366.



Sec.366.9  What other requirements could prevent me from performing
contractual services for the FDIC?

    You must avoid a conflict of interest, be ethically responsible, and 
maintain confidential information as described in Sec. Sec.366.10 
through 366.13. You must also provide us with the information we require 
in Sec.366.14. Failure to meet these requirements may prevent you from 
contracting with us.



Sec.366.10  When would I have a conflict of interest?

    (a) You have a conflict of interest when you, any person that owns 
or controls you, or any entity you own or control:
    (1) Has a personal, business, or financial interest or relationship 
that relates to the services you perform under the contract;
    (2) Is a party to litigation against us, or represents a party that 
is;
    (3) Submits an offer to acquire an asset from us for which services 
were performed during the past three years, unless the contract allows 
for the acquisition; or
    (4) Engages in an activity that would cause us to question the 
integrity of the service you provided, are providing or offer to provide 
us, or impairs your independence.
    (b) The following are examples of a conflict of interest. These 
examples are not inclusive.
    (1) You submit an offer to perform property management services for 
us and you own or manage a competing property.
    (2) You audit a business under a contract with us and you or a 
partner in your firm has an ownership interest in that business.
    (3) You perform loan services on a pool of loans we are selling, and 
you submit a bid to purchase one or more of the loans in the pool.
    (4) You audit your own work or provide nonaudit services that are 
significant or material to the subject matter of the audit.

[[Page 246]]



Sec.366.11  Will the FDIC waive a conflict of interest?

    (a) We may waive a conflict of interest for good cause shown at our 
discretion when our need to contract for your services outweighs all 
relevant factors.
    (b) The following are examples of when we may grant you a waiver for 
a conflict of interest. These examples are not inclusive.
    (1) We may grant a waiver to an outside counsel who has a 
representational conflict. We will weigh all relevant facts and 
circumstances in making our determination.
    (2) We may grant a waiver to allow a contractor to acquire an asset 
from us who is providing or has provided services on that asset. We will 
consider whether granting the waiver will adversely affect the fairness 
of the sale, the type of services provided, and other facts and 
circumstances relevant to the sale in making our determination.



Sec.366.12  What are the FDIC's minimum standards of ethical 
responsibility?

    (a) You and any person who performs services for us must not provide 
preferential treatment to any person in your dealings with the public on 
our behalf.
    (b) You must ensure that any person you employ to perform services 
for us is informed about their responsibilities under this part.
    (c) You must disclose to us waste, fraud, abuse or corruption. 
Contact the Inspector General at 1-800-964-FDIC or [email protected].
    (d) You and any person who performs contract services to us must 
not:
    (1) Accept or solicit for yourself or others any favor, gift, or 
other item of monetary value from any person who you reasonably believe 
is seeking an official action from you on our behalf, or has an interest 
that the performance or nonperformance of your duties to us may 
substantially affect;
    (2) Use or allow the use of our property, except as specified in the 
contract;
    (3) Make an unauthorized promise or commitment on our behalf; or
    (4) Provide impermissible gifts or entertainment to an FDIC employee 
or other person providing services to us.
    (e) The following are examples of when you are engaging in unethical 
behavior. These examples are not inclusive.
    (1) Using government resources, including our Internet connection, 
to conduct any business that is unrelated to the performance of your 
contract with us.
    (2) Submitting false invoices or claims, or making misleading or 
false statements.
    (3) Committing us to forgive or restructure a debt or portion of a 
debt, unless we provide you with written authority to do so.



Sec.366.13  What is my obligation regarding confidential information?

    (a) Neither you nor any person who performs services on your behalf 
may use or disclose information obtained from us or a third party in 
connection with an FDIC contract, unless:
    (1) The contract allows or we authorize the use or disclosure;
    (2) The information is generally available to the general public; or
    (3) We make the information available to the general public.
    (b) The following are examples of when your use of confidential 
information is inappropriate. These examples are not inclusive.
    (1) Disclosing information about an asset, such as internal asset 
valuations, appraisals or environmental reports, except as part of 
authorized due diligence materials, to a prospective asset purchaser.
    (2) Disclosing a borrower's or guarantor's personal or financial 
information, such as a financial statement to an unauthorized party.



Sec.366.14  What information must I provide the FDIC?

    You must:
    (a) Certify in writing that you can perform services for us under 
Sec.366.3 and have no conflict of interest under Sec.366.10(a).
    (b) Submit a list and description of any instance during the 
preceding five years in which you, any person that owns or controls you, 
or any entity you own or control, defaulted on a material

[[Page 247]]

obligation to an insured depository institution. A default on a material 
obligation occurs when a loan or advance with an outstanding balance of 
more than $50,000 is or was delinquent for 90 days or more.
    (c) Notify us within 10 business days after you become aware that 
you, or any person you employ to perform services for us, are not in 
compliance with this part. Your notice must include a detailed 
description of the facts of the situation and how you intend to resolve 
the matter.
    (d) Agree in writing that you will employ only persons who meet the 
requirements of this part to perform services on our behalf.
    (e) Comply with any request from us for information.
    (f) Retain any information you prepare or rely upon regarding the 
provisions of this part for a period of three years following 
termination or expiration and final payment of the related contract for 
services whichever occurs last.



Sec.366.15  What advice or determinations will the FDIC provide me
on the applicability of this part?

    (a) We are available to you for consultation on those determinations 
you are responsible for making under this part, including those with 
respect to any person you employ or engage to perform services for us.
    (b) We will determine if this part prohibits you from performing 
services for us prior to contract award, after contract award, and 
during the performance of a contract.
    (c) We may determine what corrective action you must take.
    (d) We may grant you a waiver for good cause shown where provided 
for under this part.



Sec.366.16  When may I seek a reconsideration or review of an FDIC
determination?

    (a) You may seek reconsideration or review of our initial 
determination by sending a written request to the individual who issued 
you the initial decision.
    (b) You must provide new information or explain a change in 
circumstances for our reconsideration of an initial decision. The 
individual who issued you the initial decision may either make a new 
determination or refer your request to a higher authority for review.
    (c) You must provide an explanation of how you perceive that we 
misapplied this part that sets forth the legal or factual errors for our 
review of an initial decision.



Sec.366.17  What are the possible consequences for violating this
part?

    Depending on the circumstances, violations of this part may result 
in rescission or termination of a contract, as well as administrative, 
civil, or criminal sanctions.



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 248]]

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 249]]

    (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 
former Bank Insurance Fund (BIF), the former Savings Association 
Insurance Fund (SAIF) or the Deposit Insurance Fund, 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

[[Page 250]]

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 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 
former BIF, the former SAIF, the Deposit Insurance Fund , 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.

[61 FR 68560, Dec. 30, 1996, as amended at 71 FR 20527, Apr. 21, 2006]



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

[[Page 251]]

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 FDIC or their 
successors;
    (c) The contractor has demonstrated a pattern or practice of 
defalcation;
    (d) The contractor has caused a substantial loss to Deposit 
Insurance Fund (or any predecessor deposit insurance fund);
    (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.

[61 FR 68560, Dec. 30, 1996, as amended at 71 FR 20528, Apr. 21, 2006]



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

[[Page 252]]

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.



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.



Sec. Sec.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

[[Page 253]]

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:
    (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

[[Page 254]]

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, 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 
Sec. Sec.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

[[Page 255]]

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 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.

[[Page 256]]

    (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;
    (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

[[Page 257]]

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.



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

[[Page 258]]

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.
    (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

[[Page 259]]

million invested in securities in the aggregate in its portfolio and/or 
under management.



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:
    (1) Any branch of a State nonmember bank, and any insured branch of 
a foreign bank licensed by a State, that:
    (i) 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
    (ii) 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)(i) of this section; and
    (2) Any bank or branch of a bank controlled by an out-of-State bank 
holding company.
    (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;
    (3) With respect to a bank holding company, the State in which the 
total deposits of all banking subsidiaries of such company are the 
largest on the later of:
    (i) July 1, 1966; or
    (ii) The date on which the company becomes a bank holding company 
under the Bank Holding Company Act;
    (4) With respect to a foreign bank:
    (i) For purposes of determining whether a U.S. branch of a foreign 
bank is a covered interstate branch, the home State of the foreign bank 
as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 
347.202(j); and
    (ii) For purposes of determining whether a branch of a U.S. bank 
controlled by a foreign bank is a covered interstate branch, the State 
in which the total deposits of all banking subsidiaries of such foreign 
bank are the largest on the later of:
    (A) July 1, 1966; or
    (B) The date on which the foreign bank becomes a bank holding 
company under the Bank Holding Company Act.
    (d) Host State means a State in which a covered interstate branch is 
established or acquired.
    (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

[[Page 260]]

updated periodically by the appropriate Federal banking agencies and 
made available to the public.
    (f) Out-of-State bank holding company means, with respect to any 
State, a bank holding company whose home State is another State.
    (g) State means state as that term is defined in 12 U.S.C. 
1813(a)(3).
    (h) 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.

[62 FR 47737, Sept. 10, 1997, as amended at 67 FR 38848, June 6, 2002]



Sec.369.3  Loan-to-deposit ratio screen.

    (a) Application of screen. Beginning no earlier than one year after 
a covered interstate branch is acquired or established, 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 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.

[62 FR 47737, Sept. 10, 1997, as amended at 67 FR 38848, June 6, 2002]



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

[[Page 261]]

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.



PART 370_RECORDKEEPING FOR TIMELY DEPOSIT INSURANCE DETERMINATION
--Table of Contents



Sec.
370.1 Purpose and scope.
370.2 Definitions.
370.3 Information technology system requirements.
370.4 Recordkeeping requirements.
370.5 Actions required for certain deposit accounts with transactional 
          features.
370.6 Implementation.
370.7 Accelerated implementation.
370.8 Relief.
370.9 Communication with the FDIC.
370.10 Compliance.

Appendix A to Part 370--Ownership Right and Capacity Codes
Appendix B to Part 370--Output Files Structure

    Authority: 12 U.S.C. 1817(a)(9), 1819 (Tenth), 1821(f)(1), 1822(c), 
1823(c)(4).

    Source: 81 87759, Dec. 5, 2016, unless otherwise noted.



Sec.370.1  Purpose and scope.

    Unless otherwise provided in this part, each ``covered institution'' 
(defined in Sec.370.2(a)) is required to implement the information 
technology system and recordkeeping capabilities needed to calculate the 
amount of deposit insurance coverage available for each deposit account 
in the event of its failure. Doing so will improve the FDIC's ability to 
fulfill its statutory mandates to pay deposit insurance as soon as 
possible after a covered institution's failure and to resolve a covered 
institution at the least cost to the Deposit Insurance Fund.



Sec.370.2  Definitions.

    For purposes of this part:
    (a) Account holder means the person or entity who has opened a 
deposit account with a covered institution and with whom the covered 
institution has a direct legal and contractual relationship with respect 
to the deposit.
    (b) Brokered deposit has the same meaning as provided in 12 CFR 
337.6(a)(2).
    (c) Covered institution means an insured depository institution 
which, based on its Reports of Condition and Income filed with the 
appropriate federal banking agency, has 2 million or more deposit 
accounts during the two consecutive quarters preceding the effective 
date of this part or thereafter.
    (d) Compliance date means the date that is three years after the 
later of the effective date of this part or the date on which an insured 
depository institution becomes a covered institution.
    (e) Deposit has the same meaning as provided under section 3(l) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(l)).
    (f) Deposit account records has the same meaning as provided in 12 
CFR 330.1(e).
    (g) Ownership rights and capacities are set forth in 12 CFR part 
330.
    (h) Payment instrument means a check, draft, warrant, money order, 
traveler's check, electronic instrument, or other instrument, payment of 
funds, or monetary value (other than currency).
    (i) Standard maximum deposit insurance amount (or ``SMDIA'') has the 
same meaning as provided pursuant to section 11(a)(1)(E) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(a)(1)(E)) and 12 CFR 330.1(o).
    (j) Transactional features with respect to a deposit account means 
that the depositor or account holder can make transfers or withdrawals 
from the deposit account to make payments or transfers to third persons 
or others (including another account of the depositor or account holder 
at the same institution or at a different institution) by means of a 
negotiable or transferable instrument, payment order of withdrawal, 
check, draft, prepaid account access device, debit card, or other 
similar order made by the depositor and payable to third parties, or by 
means of a telephonic (including data transmission) agreement, order or 
instruction, or by means of an instruction made at an automated teller 
machine

[[Page 262]]

or similar terminal or unit. For purposes of this definition, 
``telephonic (including data transmission) agreement, order or 
instruction'' includes orders and instructions made by means of 
facsimile, computer, internet, handheld device, or other similar means.
    (k) Unique identifier means an alpha-numeric code associated with an 
individual or entity that is used consistently and continuously by a 
covered institution to monitor the covered institution's relationship 
with that individual or entity.



Sec.370.3  Information technology system requirements.

    (a) A covered institution must configure its information technology 
system to be capable of performing the functions set forth in paragraph 
(b) of this section within 24 hours after the appointment of the FDIC as 
receiver. To the extent that a covered institution does not maintain its 
deposit account records in the manner prescribed under Sec.370.4(a) 
but instead in the manner prescribed under Sec.370.4(b) or (c), the 
covered institution's information technology system must be able to 
perform the functions set forth in paragraph (b) of this section upon 
input by the FDIC of additional information collected from account 
holders after failure of the covered institution.
    (b) Each covered institution's information technology system must be 
capable of:
    (1) Accurately calculating the deposit insurance coverage for each 
deposit account in accordance with 12 CFR part 330;
    (2) Generating and retaining output records in the data format and 
layout specified in Appendix B;
    (3) Restricting access to some or all of the deposits in a deposit 
account until the FDIC has made its deposit insurance determination for 
that deposit account using the covered institution's information 
technology system; and
    (4) Debiting from each deposit account the amount that is uninsured 
as calculated pursuant to paragraph (b)(1) of this section.



Sec.370.4  Recordkeeping requirements.

    (a) General recordkeeping requirements. Except as otherwise provided 
in paragraphs (b) and (c) of this section, a covered institution must 
maintain in its deposit account records for each account the information 
necessary for its information technology system to meet the requirements 
set forth in Sec.370.3. The information must include:
    (1) The unique identifier of each
    (i) Account holder;
    (ii) Beneficial owner of a deposit, if the account holder is not the 
beneficial owner;
    (iii) Grantor and each beneficiary, if the deposit account is held 
in connection with an informal revocable trust that is insured pursuant 
to 12 CFR 330.10 (e.g., payable-on-death accounts, in-trust-for 
accounts, and Totten Trust accounts); and
    (iv) Grantor and each beneficiary, if the deposit account is held by 
the covered institution as the trustee of an irrevocable trust that is 
insured pursuant to 12 CFR 330.12.
    (2) The applicable ownership right and capacity code listed and 
described in Appendix A to this part.
    (b) Alternative recordkeeping requirements. As permitted under this 
paragraph, a covered institution may maintain in its deposit account 
records less information than is required under paragraph (a) of this 
section.
    (1) For each deposit account for which a covered institution's 
deposit account records disclose the existence of a relationship which 
might provide a basis for additional deposit insurance in accordance 
with 12 CFR 330.5 or 330.7 and for which the covered institution does 
not maintain information that would be needed for its information 
technology system to meet the requirements set forth in Sec.370.3, the 
covered institution must maintain, at a minimum, the following in its 
deposit account records:
    (i) The unique identifier of the account holder; and
    (ii) The corresponding ``pending reason'' code in data field 2 of 
the pending file format set forth in Appendix B (and need not maintain a 
``right and capacity'' code).
    (2) For each formal revocable trust account that is insured as 
described in

[[Page 263]]

12 CFR 330.10 and for each irrevocable trust account that is insured as 
described in 12 CFR 330.13, and for which the covered institution does 
not maintain the information that would be needed for its information 
technology system to meet the requirements set forth in Sec.370.3, the 
covered institution must, at a minimum, maintain in its deposit account 
records:
    (i) The unique identifier of the account holder;
    (ii) The unique identifier of the grantor if the deposit account has 
transactional features; and
    (iii) The corresponding ``pending reason'' code in data field 2 of 
the pending file format set forth in Appendix B (and need not maintain a 
``right and capacity'' code).
    (c) Recordkeeping requirements for official items. A covered 
institution must maintain in its deposit account records the information 
needed for its information technology system to meet the requirements 
set forth in Sec.370.3 with respect to accounts held in the name of 
the covered institution from which withdrawals are made to honor a 
payment instrument issued by the covered institution, such as a 
certified check, loan disbursement check, interest check, traveler's 
check, expense check, official check, cashier's check, money order, or 
any similar payment instrument that the FDIC identifies in guidance 
issued to covered institutions in connection with this part. To the 
extent that the covered institution does not have such information, it 
need only maintain in its deposit account records for those accounts the 
corresponding ``pending reason'' code in data field 2 of the pending 
file format set forth in Appendix B (and need not maintain ``right and 
capacity'' codes).



Sec.370.5  Actions required for certain deposit accounts with
transactional features.

    (a) For each deposit account with transactional features for which 
the covered institution maintains its deposit account records in 
accordance with Sec.370.4(b)(1), a covered institution must certify to 
the FDIC that the account holder will provide to the FDIC the 
information needed for the covered institution's information technology 
system to calculate deposit insurance coverage as set forth in Sec.
370.3(b) within 24 hours after the appointment of the FDIC as receiver. 
Such certification may be part of the annual certification of compliance 
required pursuant to Sec.370.10(a)(1).
    (b) Notwithstanding paragraph (a) of this section, a covered 
institution need not provide such certification with respect to:
    (1) Accounts maintained by a mortgage servicer, in a custodial or 
other fiduciary capacity, which are comprised of payments by mortgagors 
of principal, interest, taxes and insurance;
    (2) Accounts maintained by real estate brokers, real estate agents, 
or title companies in which funds from multiple clients are deposited 
and held for a short period of time in connection with a real estate 
transaction;
    (3) Accounts established by an attorney or law firm on behalf of 
clients, commonly known as an Interest on Lawyers Trust Accounts, or 
functionally equivalent accounts; and
    (4) Accounts held in connection with an employee benefit plan (as 
defined in 12 CFR 330.15(f)(2)).
    (c) The covered institution's failure to provide the certification 
required under paragraph (a) of this section shall be deemed not to 
constitute a violation of this part if the FDIC has granted the covered 
institution relief from that certification requirement.



Sec.370.6  Implementation.

    (a) A covered institution must satisfy the information technology 
system and recordkeeping requirements set forth in this part before the 
compliance date.
    (b) A covered institution may submit a request to the FDIC for an 
extension of its compliance date. The request shall state the amount of 
additional time needed to meet the requirements of this part, the 
reason(s) for which such additional time is needed, and the total number 
and dollar value of accounts for which deposit insurance coverage could 
not be calculated using the covered institution's information technology 
system were the covered institution to fail as of the date of the 
request. The FDIC's grant of a covered institution's request for 
extension may be conditional or time-limited.

[[Page 264]]



Sec.370.7  Accelerated implementation.

    (a) On a case-by-case basis, the FDIC may accelerate, upon notice, 
the implementation time frame for all or part of the requirements of 
this part for a covered institution that:
    (1) Has a composite rating of 3, 4, or 5 under the Uniform Financial 
Institution's Rating System (CAMELS rating), or in the case of an 
insured branch of a foreign bank, an equivalent rating;
    (2) Is undercapitalized, as defined under the prompt corrective 
action provisions of 12 CFR part 325; or
    (3) Is determined by the appropriate federal banking agency or the 
FDIC in consultation with the appropriate federal banking agency to be 
experiencing a significant deterioration of capital or significant 
funding difficulties or liquidity stress, notwithstanding the composite 
rating of the covered institution by its appropriate federal banking 
agency in its most recent report of examination.
    (b) In implementing this section, the FDIC must consult with the 
covered institution's appropriate federal banking agency and consider 
the complexity of the covered institution's deposit system and 
operations, extent of the covered institution's asset quality 
difficulties, volatility of the institution's funding sources, expected 
near-term changes in the covered institution's capital levels, and other 
relevant factors appropriate for the FDIC to consider in its role as 
insurer of the covered institution.



Sec.370.8  Relief.

    (a) Exemption. A covered institution may submit a request in the 
form of a letter to the FDIC for an exemption from this part if it 
demonstrates that it does not take deposits from any account holder 
which, when aggregated, would exceed the SMDIA for any owner of the 
funds on deposit and will not in the future.
    (b) Exception. A covered institution may submit a request in the 
form of a letter to the FDIC for exception from any specific aspect of 
the information technology system requirements, recordkeeping 
requirements, certification requirements, or reporting requirements set 
forth in this part if circumstances exist that would make it 
impracticable or overly burdensome to meet those requirements. In its 
request letter, the covered institution must demonstrate the need for 
exception, describe the impact of an exception on the ability to quickly 
and accurately calculate deposit insurance for the related deposit 
accounts, and state the number of, and the dollar value of deposits in, 
the related deposit accounts.
    (c) Release from this part. A covered institution may submit a 
request in the form of a letter to the FDIC for release from this part 
if, based on its Reports of Condition and Income filed with the 
appropriate federal banking agency, it has less than two million deposit 
accounts during any three consecutive quarters after becoming a covered 
institution.
    (d) Release from 12 CFR 360.9 requirements. A covered institution is 
released from the provisional hold and standard data format requirements 
of 12 CFR 360.9 upon submitting to the FDIC the compliance certification 
required under Sec.370.10(a).
    (e) FDIC approval of a request. The FDIC will consider all requests 
submitted in writing by a covered institution on a case-by-case basis in 
light of the objectives of this part, and the FDIC's grant of any 
request made by a covered institution pursuant to this section may be 
conditional or time-limited.



Sec.370.9  Communication with the FDIC.

    (a) Point of contact. Not later than ten business days after either 
the effective date of this part or becoming a covered institution, a 
covered institution must notify the FDIC of the person(s) responsible 
for implementing the recordkeeping and information technology system 
capabilities required by this part.
    (b) Address. Point-of-contact information, reports and requests made 
under this part shall be submitted in writing to: Office of the 
Director, Division of Resolutions and Receiverships, Federal Deposit 
Insurance Corporation, 550 17th Street NW., Washington, DC 20429-0002.



Sec.370.10  Compliance.

    (a) Certification and report. A covered institution shall submit to 
the FDIC a

[[Page 265]]

certification of compliance and a deposit insurance coverage summary 
report on or before the compliance date and annually thereafter.
    (1) The certification must:
    (i) Confirm that the covered institution has implemented and 
successfully tested its information technology system for compliance 
with this part during the preceding calendar year; and
    (ii) Be signed by the covered institution's chief executive officer 
or chief operating officer.
    (2) The deposit insurance coverage summary report must include:
    (i) A description of any material change to the covered 
institution's information technology system or deposit taking operations 
since the prior annual certification;
    (ii) The number of deposit accounts, number of different account 
holders, and dollar amount of deposits by ownership right and capacity 
code (as listed and described in Appendix A);
    (iii) The total number of fully-insured deposit accounts and the 
total dollar amount of deposits in all such accounts;
    (iv) The total number of deposit accounts with uninsured deposits 
and the total dollar amount of uninsured amounts in all of those 
accounts; and
    (v) By deposit account type, the total number of, and dollar amount 
of deposits in, deposit accounts for which the covered institution's 
information technology system cannot calculate deposit insurance 
coverage using information currently maintained in the covered 
institution's deposit account records.
    (3) If a covered institution experiences a significant change in its 
deposit taking operations, the FDIC may require that it submit a 
certification of compliance and a deposit insurance coverage summary 
report more frequently than annually.
    (b) FDIC Testing. (1) The FDIC will conduct periodic tests of a 
covered institution's compliance with this part. These tests will begin 
no sooner than the last day of the first calendar quarter following the 
compliance date and would occur no more frequently than on a three-year 
cycle thereafter, unless there is a material change to the covered 
institution's information technology system, deposit-taking operations, 
or financial condition.
    (2) A covered institution shall provide the appropriate assistance 
to the FDIC as the FDIC tests the covered institution's ability to 
satisfy the requirements set forth in this part.
    (c) Effect of pending requests. A covered institution that has 
submitted a request pursuant to Sec.370.6(b) or Sec.370.8(a) through 
(c) will not be considered to be in violation of this part as to the 
requirements that are the subject of the request while awaiting the 
FDIC's response to such request.



     Sec. Appendix A to Part 370--Ownership Right and Capacity Codes

    A covered institution must use the codes defined below when 
assigning ownership right and capacity codes.

------------------------------------------------------------------------
                   Code                       Illustrative description
------------------------------------------------------------------------
SGL.......................................  Single Account (12 CFR
                                             330.6): An account owned by
                                             one person with no
                                             testamentary or ``payable-
                                             on-death'' beneficiaries.
                                             It includes individual
                                             accounts, sole
                                             proprietorship accounts,
                                             single-name accounts
                                             containing community
                                             property funds, and
                                             accounts of a decedent and
                                             accounts held by executors
                                             or administrators of a
                                             decedent's estate.
JNT.......................................  Joint Account (12 CFR
                                             330.9): An account owned by
                                             two or more persons with no
                                             testamentary or ``payable-
                                             on-death'' beneficiaries
                                             (other than surviving co-
                                             owners). An account does
                                             not qualify as a joint
                                             account unless: (1) All co-
                                             owners are living persons;
                                             (2) each co-owner has
                                             personally signed a deposit
                                             account signature card
                                             (except that the signature
                                             requirement does not apply
                                             to certificates of deposit,
                                             to any deposit obligation
                                             evidenced by a negotiable
                                             instrument, or to any
                                             account maintained on
                                             behalf of the co-owners by
                                             an agent or custodian); and
                                             (3) each co-owner possesses
                                             withdrawal rights on the
                                             same basis.
REV.......................................  Revocable Trust Account (12
                                             CFR 330.10): An account
                                             owned by one or more
                                             persons that evidences an
                                             intention that, upon the
                                             death of the owner(s), the
                                             funds shall belong to one
                                             or more beneficiaries.
                                             There are two types of
                                             revocable trust accounts:
                                            (1) Payable-on-Death Account
                                             (Informal Revocable Trust
                                             Account): An account owned
                                             by one or more persons with
                                             one or more testamentary or
                                             ``payable-on-death''
                                             beneficiaries.
                                            (2) Revocable Living Trust
                                             Account (Formal Revocable
                                             Trust Account): An account
                                             in the name of a formal
                                             revocable ``living trust''
                                             with one or more grantors
                                             and one or more
                                             testamentary beneficiaries.

[[Page 266]]

 
IRR.......................................  Irrevocable Trust Account
                                             (12 CFR 330.13): An account
                                             in the name of an
                                             irrevocable trust (unless
                                             the trustee is an insured
                                             depository institution, in
                                             which case the applicable
                                             code is DIT.
CRA.......................................  Certain Other Retirement
                                             Accounts (12 CFR 330.14 (b)-
                                             (c)) to the extent that
                                             participants under such
                                             plan have the right to
                                             direct the investment of
                                             assets held in individual
                                             accounts maintained on
                                             their behalf by the plan,
                                             including an individual
                                             retirement account
                                             described in section 408(a)
                                             of the Internal Revenue
                                             Code (26 U.S.C. 408(a)), an
                                             account of a deferred
                                             compensation plan described
                                             in section 457 of the
                                             Internal Revenue Code (26
                                             U.S.C. 457), an account of
                                             an individual account plan
                                             as defined in section 3(34)
                                             of the Employee Retirement
                                             Income Security Act (29
                                             U.S.C. 1002), a plan
                                             described in section 401(d)
                                             of the Internal Revenue
                                             Code (26 U.S.C. 401(d)).
EBP.......................................  Employee Benefit Plan
                                             Account (12 CFR 330.14): An
                                             account of an employee
                                             benefit plan as defined in
                                             section 3(3) of the
                                             Employee Retirement Income
                                             Security Act (29 U.S.C.
                                             1002), including any plan
                                             described in section 401(d)
                                             of the Internal Revenue
                                             Code (26 U.S.C. 401(d)),
                                             but not including any
                                             account classified as a
                                             Certain Retirement Account.
BUS.......................................  Business/Organization
                                             Account (12 CFR 330.11): An
                                             account of an organization
                                             engaged in an `independent
                                             activity' (as defined in
                                             Sec. 330.1(g)), but not
                                             an account of a sole
                                             proprietorship.
                                            This category includes:
                                            a. Corporation Account: An
                                             account owned by a
                                             corporation.
                                            b. Partnership Account: An
                                             account owned by a
                                             partnership.
                                            c. Unincorporated
                                             Association Account: An
                                             account owned by an
                                             unincorporated association
                                             (i.e., an account owned by
                                             an association of two or
                                             more persons formed for
                                             some religious,
                                             educational, charitable,
                                             social, or other
                                             noncommercial purpose).
GOV1-GOV2-GOV3............................  Government Account (12 CFR
                                             330.15): An account of a
                                             governmental entity.
    GOV1..................................     All time and savings
                                                deposit accounts of the
                                                United States and all
                                                time and savings deposit
                                                accounts of a state,
                                                county, municipality, or
                                                political subdivision
                                                depositing 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).
    GOV2..................................     All demand deposit
                                                accounts of the United
                                                States and all demand
                                                deposit accounts of a
                                                state, county,
                                                municipality, or
                                                political subdivision
                                                depositing 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).
    GOV3..................................     All deposits, regardless
                                                of whether they are
                                                time, savings or demand
                                                deposit accounts of a
                                                state, county,
                                                municipality or
                                                political subdivision
                                                depositing funds in an
                                                insured depository
                                                institution outside of
                                                the state comprising the
                                                public unit or wherein
                                                the public unit is
                                                located.
MSA.......................................  Mortgage Servicing Account
                                             (12 CFR 330.7(d)): An
                                             account held by a mortgage
                                             servicer, funded by
                                             payments by mortgagors of
                                             principal and interest.
PBA.......................................  Public Bond Accounts (12 CFR
                                             330.15(c)): An account
                                             consisting of funds held by
                                             an officer, agent or
                                             employee of a public unit
                                             for the purpose of
                                             discharging a debt owed to
                                             the holders of notes or
                                             bonds issued by the public
                                             unit.
DIT.......................................  IDI as trustee of
                                             irrevocable trust accounts
                                             (12 CFR 330.12): ``Trust
                                             funds'' (as defined in Sec.
                                               330.1(q)) account held by
                                             an insured depository
                                             institution as trustee of
                                             an irrevocable trust.
ANC.......................................  Annuity Contract Accounts
                                             (12 CFR 330.8): 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.
BIA.......................................  Custodian accounts for
                                             American Indians (12 CFR
                                             330.7(e)): Funds deposited
                                             by the Bureau of Indian
                                             Affairs of the United
                                             States Department of the
                                             Interior (the ``BIA'') on
                                             behalf of American Indians
                                             pursuant to 25 U.S.C.
                                             162(a), or by any other
                                             disbursing agent of the
                                             United States on behalf of
                                             American Indians pursuant
                                             to similar authority, in an
                                             insured depository
                                             institution.
DOE.......................................  IDI Accounts under
                                             Department of Energy
                                             Program: Funds deposited by
                                             an insured depository
                                             institution pursuant to the
                                             Bank Deposit Financial
                                             Assistance Program of the
                                             Department of Energy.
------------------------------------------------------------------------



           Sec. Appendix B to Part 370--Output Files Structure

    The output files will include the data necessary for the FDIC to 
determine the deposit insurance coverage in a resolution. A covered 
institution must have the capability to prepare and maintain the files 
detailed below. These files must be prepared in successive iterations as 
the covered institution receives additional data from external sources 
necessary to complete any pending deposit insurance calculations. The 
unique identifier is required in all four files to link the customer 
information. All files are pipe delimited. Do not pad leading and 
trailing spacing or zeros for the data fields.

[[Page 267]]

[GRAPHIC] [TIFF OMITTED] TR05DE16.001

    Customer File. Customer File will be used by the FDIC to identify 
the customers. One record represents one unique customer.
    The data elements will include:

----------------------------------------------------------------------------------------------------------------
                Field name                           Description                           Format
----------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID..........................  This field is the unique        Variable Character.
                                            identifier that is the
                                            primary key for the depositor
                                            data record. It will be
                                            generated by the covered
                                            institution and there shall
                                            not be duplicates.
2. CS_Govt_ID............................  This field shall contain the    Variable Character.
                                            ID number that identifies the
                                            entity based on a government
                                            issued ID or corporate
                                            filling. Populate as follows:.
                                           --For a United States
                                            individual--Legal
                                            identification number (e.g.,
                                            SSN, TIN, Driver's License,
                                            or Passport Number).
                                           --For a foreign national
                                            individual--where a SSN or
                                            TIN does not exist, a foreign
                                            passport or other legal
                                            identification number (e.g.,
                                            Alien Card).
                                           --For a Non-Individual--the
                                            Tax identification Number
                                            (TIN), or other register
                                            entity number.
3. CS_Govt_ID_Type.......................  The valid customer              Character (3).
                                            identification types, are
                                            noted below:.
                                           --SSN--Social Security Number.
                                           --TIN--Tax Identification
                                            Number.
                                           --DL--Driver's License, issued
                                            by a State or Territory of
                                            the United States.
                                           --ML--Military ID.............
                                           --PPT--Valid Passport.........
                                           --AID--Alien Identification
                                            Card.
                                           --OTH--Other..................
4. CS_Type...............................  The customer type field         Character (3).
                                            indicates the type of entity
                                            the customer is at the
                                            covered institution. The
                                            valid values are:.
                                           --IND--Individual.............
                                           --BUS--Business...............
                                           --TRT--Trust..................
                                           --NFP--Non-Profit.............
                                           --GOV--Government.............
                                           --OTH--Other..................
5. CS_First_Name.........................  Customer first name. Use only   Variable Character.
                                            for the name of individuals
                                            and the primary contact for
                                            entity.
6. CS_Middle_Name........................  Customer middle name. Use only  Variable Character.
                                            for the name of individuals
                                            and the primary contact for
                                            entity.
7. CS_Last_Name..........................  Customer last name. Use only    Variable Character.
                                            for the name of individuals
                                            and the primary contact for
                                            entity.
8. CS_Name_Suffix........................  Customer suffix...............  Variable Character.
9. CS_Entity_Name........................  The registered name of the      Variable Character.
                                            entity. Do not use this field
                                            if the customer is an
                                            individual.
10. CS_Street_Add_Ln1....................  Street address line 1. The      Variable Character.
                                            current account statement
                                            mailing address of record.
11. CS_Street_Add_Ln2....................  Street address line 2. If       Variable Character.
                                            available, the second address
                                            line.
12. CS_Street_Add_Ln3....................  Street address line 3. If       Variable Character.
                                            available, the third address
                                            line.
13. CS_City..............................  The city associated with the    Variable Character.
                                            permanent legal address.
14. CS_State.............................  The state for United States     Variable Character.
                                            addresses or state/province/
                                            county for international
                                            addresses.
                                           --For United States addresses
                                            use a two-character state
                                            code (official United States
                                            Postal Service abbreviations)
                                            associated with the permanent
                                            legal address.
                                           --For international address
                                            follow that country state
                                            code.
15. CS_ZIP...............................  The Zip/Postal Code associated  Variable Character.
                                            with the customers' permanent
                                            legal address.
                                           --For United States zip codes,
                                            use the United States Postal
                                            Service ZIP+4 standard.

[[Page 268]]

 
                                           --For international zip codes
                                            follow that standard format
                                            of that country.
16. CS_Country...........................  The country associated with     Variable Character.
                                            the permanent legal address.
                                            Provide the country name or
                                            the standard International
                                            Organization for
                                            Standardization (ISO) country
                                            code.
17. CS_Telephone.........................  Customer telephone number. The  Variable Character.
                                            telephone number on record
                                            for the customer, including
                                            the country code if not
                                            within the United States.
18. CS_Email.............................  The email address on record     Variable Character.
                                            for the customer.
19. CS_Outstanding_Debt_Flag.............  This field indicates whether    Character (1).
                                            the customer has outstanding
                                            debt with covered
                                            institution. This field may
                                            be used by the FDIC to
                                            determine offsets. Enter
                                            ``Y'' if customer has
                                            outstanding debt with covered
                                            institutions, enter ``N''
                                            otherwise.
20. CS_Security_Pledge_Flag..............  This field shall only be used   Character (1).
                                            for Government customers.
                                            This field indicates whether
                                            the covered institution has
                                            pledged securities to the
                                            government entity, to cover
                                            any shortfall in deposit
                                            insurance. Enter ``Y'' if the
                                            government entity has
                                            outstanding security pledge
                                            with covered institutions,
                                            enter ``N'' otherwise.
----------------------------------------------------------------------------------------------------------------

    Account File. The Account File contains the deposit ownership rights 
and capacities information, allocated balances, insured amounts, and 
uninsured amounts. The balances are in U.S. dollars. The Account file is 
linked to the Customer File by the CS_Unique_ID.
    The data elements will include:

----------------------------------------------------------------------------------------------------------------
                Field name                           Description                           Format
----------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID..........................  This field is the unique        Variable Character.
                                            identifier that is the
                                            primary key for the depositor
                                            data record. It will be
                                            generated by the covered
                                            institution and there cannot
                                            be duplicates.
2. DP_Acct_Identifier....................  Deposit account identifier.     Variable Character.
                                            The primary field used to
                                            identify a deposit account.
                                           The account identifier may be
                                            composed of more than one
                                            physical data element to
                                            uniquely identify a deposit
                                            account..
3. DP_Right_Capacity.....................  Account ownership categories..  Character (4).
                                           --SGL--Single accounts........
                                           --JNT--Joint accounts.........
                                           --REV--Revocable trust
                                            accounts.
                                           --RR--Irrevocable trust
                                            accounts.
                                           --CRA--Certain retirement
                                            accounts.
                                           --EBP--Employee benefit plan
                                            accounts.
                                           --BUS--Business/Organization
                                            accounts.
                                           --GOV1, GOV2, GOV3--Government
                                            accounts (public unit
                                            accounts).
                                           --MSA--Mortgage servicing
                                            accounts for principal and
                                            interest payments.
                                           --DIT--Accounts held by a
                                            depository institution as the
                                            trustee of an irrevocable
                                            trust.
                                           --ANC--Annuity contract
                                            accounts.
                                           --PBA--Public bond accounts...
                                           --BIA--Custodian accounts for
                                            American Indians.
                                           --DOE--Accounts of an IDI
                                            pursuant to the Bank Deposit
                                            Financial Assistance Program
                                            of the Department of Energy.
4. DP_Prod_Cat...........................  Product category or             Character (3).
                                            classification.
                                           --DDA--Demand Deposit Accounts
                                           --NOW--Negotiable Order of
                                            Withdrawal.
                                           --MMA--Money Market Deposit
                                            Accounts.
                                           --SAV--Other savings accounts.
                                           --CDS--Time Deposit accounts
                                            and Certificate of Deposit
                                            accounts, including any
                                            accounts with specified
                                            maturity dates that may or
                                            may not be renewable..
5. DP_Allocated_Amt......................  The current balance in the      Decimal (14,2).
                                            account at the end of
                                            business on the effective
                                            date of the file, allocated
                                            to a specific owner in that
                                            insurance category.
                                           For JNT accounts, this is a
                                            calculated field that
                                            represents the allocated
                                            amount to each owner in JNT
                                            category..

[[Page 269]]

 
                                           For REV accounts, this is a
                                            calculated field that
                                            represents the allocated
                                            amount to each owner-
                                            beneficiary in REV category..
                                           For other accounts with only
                                            one owner, this is the
                                            account current balance..
                                           This balance shall not be
                                            reduced by float or holds.
                                            For CDs and time deposits,
                                            the balance shall reflect the
                                            principal balance plus any
                                            interest paid and available
                                            for withdrawal not already
                                            included in the principal (do
                                            not include accrued interest).
6. DP_Acc_Int............................  Accrued interest allocated      Decimal (14,2).
                                            similarly as data field 5
                                            DP_Allocated_Amt.
                                           The amount of interest that
                                            has been earned but not yet
                                            paid to the account as of the
                                            date of the file..
7. DP_Total_PI...........................  Total amount adding 5          Decimal (14,2).
                                            DP_Allocated_Amt and 6
                                            DP_Acc_Int.
8. DP_Hold_Amount........................  Hold amount on the account....  Decimal (14,2).
                                           The available balance of the
                                            account is reduced by the
                                            hold amount. It has no effect
                                            on current balance (ledger
                                            balance).
9. DP_Insured_Amount.....................  The insured amount of the       Decimal (14,2).
                                            account.
10. DP_Uninsured_Amount..................  The uninsured amount of the     Decimal (14,2).
                                            account.
11. DP_Prepaid_Account_Flag..............  This field indicates a prepaid  Character (1).
                                            account with covered
                                            institution. Enter ``Y'' if
                                            account is a prepaid account
                                            with covered institutions,
                                            enter ``N'' otherwise.
12. DP_PT_Account_Flag...................  This field indicates a pass-    Character (1).
                                            through account with covered
                                            institution. Enter ``Y'' if
                                            account is a pass-through
                                            with covered institutions,
                                            enter ``N'' otherwise.
13. DP_PT_Trans_Flag.....................  This field indicates whether    Character (1).
                                            the fiduciary account has sub-
                                            accounts that have
                                            transactional features. Enter
                                            ``Y'' if account has
                                            transactional features, enter
                                            ``N'' otherwise.
----------------------------------------------------------------------------------------------------------------

    Account Participant File. The Account Participant File will be used 
by the FDIC to identify account participants, to include the official 
custodian, beneficiary, bond holder, mortgagor, or employee benefit plan 
participant, for each account and account holder. One record represents 
one unique account participant. The Account Participant File is linked 
to the Account File by CS_Unique_ID and DP_Acct_Identifier.
    The data elements will include:

----------------------------------------------------------------------------------------------------------------
                Field name                            Description                           Format
----------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID...........................  This field is the unique         Variable Character.
                                             identifier that is the primary
                                             key for the depositor data
                                             record. It will be generated
                                             by the covered institution and
                                             there shall not be duplicates.
2. DP_Acct_Identifier.....................  Deposit account identifier. The  Variable Character.
                                             primary field used to identify
                                             a deposit account..
                                            The account identifier may be
                                             composed of more than one
                                             physical data element to
                                             uniquely identify a deposit
                                             account.
3. DP_Right_Capacity......................  Account ownership categories...  Character (4).
                                            --SGL--Single accounts.........
                                            --JNT--Joint accounts..........
                                            --REV--Revocable trust accounts
                                            --IRR--Irrevocable trust
                                             accounts.
                                            --CRA--Certain retirement
                                             accounts.
                                            --EBP--Employee benefit plan
                                             accounts.
                                            --BUS--Business/Organization
                                             accounts.
                                            --GOV1, GOV2, GOV3--Government
                                             accounts (public unit
                                             accounts).
                                            --MSA--Mortgage servicing
                                             accounts for principal and
                                             interest payments.
                                            --DIT--Accounts held by a
                                             depository institution as the
                                             trustee of an irrevocable
                                             trust.
                                            --ANC--Annuity contract
                                             accounts.
                                            --PBA--Public bond accounts....
                                            --BIA--Custodian accounts for
                                             American Indians.
                                            --DOE--Accounts of an IDI
                                             pursuant to the Bank Deposit
                                             Financial Assistance Program
                                             of the Department of Energy.
4. DP_Prod_Category.......................  Product category or              Character (3).
                                             classification.
                                            --DDA--Demand Deposit Accounts.

[[Page 270]]

 
                                            --NOW--Negotiable Order of
                                             Withdrawal.
                                            --MMA--Money Market Deposit
                                             Accounts.
                                            --SAV--Other savings accounts..
                                            --CDS--Time Deposit accounts
                                             and Certificate of Deposit
                                             accounts, including any
                                             accounts with specified
                                             maturity dates that may or may
                                             not be renewable.
5. AP_Allocated_Amount....................  Amount of funds attributable to  Decimal (14,2).
                                             the account participant as an
                                             account holder (e.g., Public
                                             account holder of a public
                                             bond account) or the amount of
                                             funds entitled to the
                                             beneficiary for the purpose of
                                             insurance determination (e.g.,
                                             Revocable Trust).
6. AP_Participant_ID......................  This field is the unique         Variable Character.
                                             identifier for the Account
                                             Participant. It will be
                                             generated by the covered
                                             institution and there shall
                                             not be duplicates. If the
                                             account participant is an
                                             existing bank customer this
                                             field is the same as
                                             CS_Unique_ID field.
7. AP_Govt_ID.............................  This field shall contain the ID  Variable Character.
                                             number that identifies the
                                             entity based on a government
                                             issued ID or corporate
                                             filling. Populate as follows:
                                            --For a United States
                                             individual--Legal
                                             identification number (e.g.,
                                             SSN, TIN, Driver's License, or
                                             Passport Number).
                                            --For a foreign national
                                             individual--where a SSN or TIN
                                             does not exist, a foreign
                                             passport or other legal
                                             identification number (e.g.,
                                             Alien Card).
                                            --For a Non-Individual--the Tax
                                             identification Number (TIN),
                                             or other register entity
                                             number.
8. AP_Govt_ID_Type........................  The valid customer               Character (3).
                                             identification types, are:.
                                            --SSN--Social Security Number..
                                            --TIN--Tax Identification
                                             Number.
                                            --DL--Driver's License, issued
                                             by a State or Territory of the
                                             United States.
                                            --ML--Military ID..............
                                            --PPT--Valid Passport..........
                                            --AID--Alien Identification
                                             Card.
                                            --OTH--Other...................
9. AP_First_Name..........................  Customer first name. Use only    Variable Character.
                                             for the name of individuals
                                             and the primary contact for
                                             entity.
10. AP_Middle_Name........................  Customer middle name. Use only   Variable Character.
                                             for the name of individuals
                                             and the primary contact for
                                             entity.
11. AP_Last_Name..........................  Customer last name. Use only     Variable Character.
                                             for the name of individuals
                                             and the primary contact for
                                             entity.
12. AP_Entity_Name........................  The registered name of the       Variable Character.
                                             entity. Do not use this field
                                             if the participant is an
                                             individual.
13. AP_Participant_Type...................  This field is used as the        Character (3).
                                             participant type identifier.
                                             The field will list the
                                             ``beneficial owner'' type:
                                            --OC--Official Custodian.......
                                            --BEN--Beneficiary.............
                                            --BHR--Bond Holder.............
                                            --MOR--Mortgagor...............
                                            --EPP--Employee Benefit Plan
                                             Participant.
----------------------------------------------------------------------------------------------------------------

    Pending File. The Pending File contains the information needed for 
the FDIC to contact the owner or agent requesting additional information 
to complete the deposit insurance calculation. Each record represents a 
deposit account.
    The data elements will include:

----------------------------------------------------------------------------------------------------------------
                Field name                            Description                           Format
----------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID...........................  This field is the unique         Variable Character.
                                             identifier that is the primary
                                             key for the depositor data
                                             record. It will be generated
                                             by the covered institution and
                                             there cannot be duplicates.
2. Pending_Reason.........................  Reason code for the account to   Character (5).
                                             be included in Pending file.
                                            For deposit account records
                                             maintained by the bank, use
                                             the following codes.
                                            --A--agency or custodian.......
                                            --B--beneficiary...............
                                            --OI--official item............
                                            --RAC--right and capacity code.
                                            For alternative recordkeeping
                                             requirements, use the
                                             following codes.
                                            --ARB--direct obligation
                                             brokered deposit.

[[Page 271]]

 
                                            --ARBN--non-direct obligation
                                             brokered deposit.
                                            --ARCRA--certain retirement
                                             accounts.
                                            --AREBP--employee benefit plan
                                             accounts.
                                            --ARM--mortgage servicing for
                                             principal and interest
                                             payments.
                                            --ARO--other deposits..........
                                            --ARTR--trust accounts.........
                                            The FDIC needs these codes to
                                             initiate the collection of
                                             needed information.
3. DP_Acct_Identifier.....................  Deposit account identifier. The  Variable Character.
                                             primary field used to identify
                                             a deposit account.
                                            The account identifier may be
                                             composed of more than one
                                             physical data element to
                                             uniquely identify a deposit
                                             account.
4. DP_Right_Capacity......................  Account ownership categories...  Character (4).
                                            --SGL--Single accounts.........
                                            --JNT--Joint accounts..........
                                            --REV--Revocable trust accounts
                                            --IRR--Irrevocable trust
                                             accounts.
                                            --CRA--Certain retirement
                                             accounts.
                                            --EBP--Employee benefit plan
                                             accounts.
                                            --BUS--Business/Organization
                                             accounts.
                                            --GOV1, GOV2, GOV3--Government
                                             accounts (public unit
                                             accounts).
                                            --MSA--Mortgage servicing
                                             accounts for principal and
                                             interest payments.
                                            --DIT--Accounts held by a
                                             depository institution as the
                                             trustee of an irrevocable
                                             trust.
                                            --ANC--Annuity contract
                                             accounts.
                                            --PBA--Public bond accounts....
                                            --BIA--Custodian accounts for
                                             American Indians.
                                            --DOE--Accounts of an IDI
                                             pursuant to the Bank Deposit
                                             Financial Assistance Program
                                             of the Department of Energy.
5. DP_Prod_Category.......................  Product category or              Character (3).
                                             classification.
                                            --DDA--Demand Deposit Accounts.
                                            --NOW--Negotiable Order of
                                             Withdrawal.
                                            --MMA--Money Market Deposit
                                             Accounts.
                                            --SAV--Other savings accounts..
                                            --CDS--Time Deposit accounts
                                             and Certificate of Deposit
                                             accounts, including any
                                             accounts with specified
                                             maturity dates that may or may
                                             not be renewable.
6. DP_Cur_Bal.............................  Current balance................  Decimal (14,2).
                                            The current balance in the
                                             account at the end of business
                                             on the effective date of the
                                             file.
                                            This balance shall not be
                                             reduced by float or holds. For
                                             CDs and time deposits, the
                                             balance shall reflect the
                                             principal balance plus any
                                             interest paid and available
                                             for withdrawal not already
                                             included in the principal (do
                                             not include accrued interest).
7. DP_Acc_Int.............................  Accrued interest...............  Decimal (14,2).
                                            The amount of interest that has
                                             been earned but not yet paid
                                             to the account as of the date
                                             of the file.
8. DP_Total_PI............................  Total of principal and accrued   Decimal (14,2).
                                             interest.
9. DP_Hold_Amount.........................  Hold amount on the account.....  Decimal (14,2).
                                            The available balance of the
                                             account is reduced by the hold
                                             amount. It has no impact on
                                             current balance (ledger
                                             balance).
10. DP_Prepaid_Account_Flag...............  This field indicates a prepaid   Character (1).
                                             account with covered
                                             institution. Enter ``Y'' if
                                             account is a prepaid account,
                                             enter ``N'' otherwise.
11. CS_Govt_ID............................  This field shall contain the ID  Variable Character.
                                             number that identifies the
                                             entity based on a government
                                             issued ID or corporate
                                             filling. Populate as follows:.
                                            --For a United States
                                             individual--Legal
                                             identification number (e.g.,
                                             SSN, TIN, Driver's License or
                                             Passport Number).
                                            --For a foreign national
                                             individual--where a SSN or TIN
                                             does not exist, a foreign
                                             passport or other legal
                                             identification number (e.g.,
                                             Alien Card).
                                            --For a Non-Individual--the Tax
                                             identification Number (TIN),
                                             or other register entity
                                             number.
12. CS_Govt_ID_Type.......................  The valid customer               Character (3).
                                             identification types:.
                                            --SSN--Social Security Number..
                                            --TIN--Tax Identification
                                             Number.

[[Page 272]]

 
                                            --DL--Driver's License, issued
                                             by a State or Territory of the
                                             United States.
                                            --ML--Military ID..............
                                            --PPT--Valid Passport..........
                                            --AID--Alien Identification
                                             Card.
                                            --OTH--Other...................
13. CS_First_Name.........................  Customer first name. Use only    Variable Character.
                                             for the name of individuals
                                             and the primary contact for
                                             entity.
14. CS_Middle_Name........................  Customer middle name. Use only   Variable Character.
                                             for the name of individuals
                                             and the primary contact for
                                             entity.
15. CS_Last_Name..........................  Customer last name. Use only     Variable Character.
                                             for the name of individuals
                                             and the primary contact for
                                             entity.
16. CS_Name_Suffix........................  Customer suffix................  Variable Character.
17. CS_Entity_Name........................  The registered name of the       Variable Character.
                                             entity. Do not use this field
                                             if the customer is an
                                             individual.
18. CS_Street_Add_Ln1.....................  Street address line 1..........  Variable Character.
                                            The current account statement
                                             mailing address of record.
19. CS_Street_Add_Ln2.....................  Street address line 2..........  Variable Character.
                                            If available, the second
                                             address line.
20. CS_Street_Add_Ln3.....................  Street address line 3..........  Variable Character.
                                            If available, the third address
                                             line.
21. CS_City...............................  The city associated with the     Variable Character.
                                             permanent legal address.
22. CS_State..............................  The state for United States      Variable Character.
                                             addresses or state/province/
                                             county for international
                                             addresses.
                                            --For United States addresses
                                             use a two-character state code
                                             (official United States Postal
                                             Service abbreviations)
                                             associated with the permanent
                                             legal address.
                                            --For international address
                                             follow that country state code.
23. CS_ZIP................................  The Zip/Postal Code associated   Variable Character.
                                             with the customers' permanent
                                             legal address.
                                            --For United States zip codes,
                                             use the United States Postal
                                             Service ZIP+4 standard.
                                            --For international zip codes
                                             follow the standard format of
                                             that country.
24. CS_Country............................  The country associated with the  Variable Character.
                                             permanent legal address.
                                             Provide the country name or
                                             the standard International
                                             Organization for
                                             Standardization (ISO) country
                                             code.
25. CS_Telephone..........................  Customer telephone number. The   Variable Character.
                                             telephone number on record for
                                             the customer, including the
                                             country code if not within the
                                             United States.
26. CS_Email..............................  The email address on record for  Variable Character.
                                             the customer.
27. CS_Outstanding_Debt_Flag..............  This field indicates whether     Character (1).
                                             the customer has outstanding
                                             debt with covered institution.
                                             This field may be used to
                                             determine offsets. Enter ``Y''
                                             if customer has outstanding
                                             debt with covered
                                             institutions, enter ``N''
                                             otherwise.
28. CS_Security_Pledge_Flag...............  This field indicates whether     Character (1).
                                             the CI has pledged securities
                                             to the government entity, to
                                             cover any shortfall in deposit
                                             insurance. Enter ``Y'' if the
                                             government entity has
                                             outstanding security pledge
                                             with covered institutions,
                                             enter ``N'' otherwise. This
                                             field shall only be used for
                                             Government customers.
29. DP_PT_Account_Flag....................  This field indicates a pass-     Character (1).
                                             through account with covered
                                             institution. Enter ``Y'' if
                                             account is a pass-through with
                                             covered institutions, enter
                                             ``N'' otherwise.
30. PT_Parent_Customer_ID.................  This field contains the unique   Variable Character.
                                             identifier of the parent
                                             customer ID who has the
                                             fiduciary responsibility at
                                             the covered institution.
31. DP_PT_Trans_Flag......................  This field indicates whether     Character (1).
                                             the fiduciary account has sub-
                                             accounts that have
                                             transactional features. Enter
                                             ``Y'' if account has
                                             transactional features, enter
                                             ``N'' otherwise.
----------------------------------------------------------------------------------------------------------------



PART 371_RECORDKEEPING REQUIREMENTS FOR QUALIFIED FINANCIAL CONTRACTS
--Table of Contents



Sec.
371.1 Scope, purpose, and compliance dates.
371.2 Definitions.
371.3 Maintenance of records.
371.4 Content of records.
371.5 Exemptions.
371.6 Transition for existing records entities.
371.7 Enforcement actions.

Appendix A to Part 371--File Structure for Qualified Financial Contract 
          (QFC) Records for Limited Scope Entities

[[Page 273]]

Appendix B to Part 371--File Structure for Qualified Financial Contract 
          Records for Full Scope Entities

    Authority: 12 U.S.C. 1819(a)(Tenth); 1820(g); 1821(e)(8)(D) and (H); 
1831g; 1831i; and 1831s.

    Source: 82 FR 35599, July 31, 2017, unless otherwise noted.



Sec.371.1  Scope, purpose, and compliance dates.

    (a) Scope. This part applies to each insured depository institution 
that qualifies as a ``records entity'' under the definition set forth in 
Sec.371.2(r).
    (b) Purpose. This part establishes recordkeeping requirements with 
respect to qualified financial contracts for insured depository 
institutions that are in a troubled condition.
    (c) Compliance dates. (1) Within 3 business days of becoming a 
records entity, the records entity shall provide to the FDIC, in 
writing, the name and contact information for the person at the records 
entity who is responsible for recordkeeping under this part and, unless 
not required to maintain files in electronic form pursuant to Sec.
371.4(d), a directory of the electronic files that will be used to 
maintain the information required to be kept by this part.
    (2) Except as provided in Sec.371.6:
    (i) A records entity, other than an accelerated records entity, 
shall comply with all applicable recordkeeping requirements of this part 
within 270 days after it becomes a records entity.
    (ii) An accelerated records entity shall comply with all applicable 
recordkeeping requirements of this part within 60 days after it becomes 
a records entity.
    (iii) Notwithstanding paragraphs (c)(2)(i) and (ii) of this section, 
a records entity that becomes an accelerated records entity after it 
became a records entity shall comply with all applicable recordkeeping 
requirements of this part within 60 days after it becomes an accelerated 
records entity or its original 270 day compliance period, whichever time 
period is shorter.
    (d) Extensions of time to comply. The FDIC may, in its discretion, 
grant one or more extensions of time for compliance with the 
recordkeeping requirements of this part.
    (1) Except as provided in paragraph (d)(2) of this section, no 
single extension for a records entity shall be for a period of more than 
120 days.
    (2) For a records entity that is an accelerated records entity at 
the time of a request for an extension, no single extension shall be for 
a period of more than 30 days.
    (3) A records entity may request an extension of time by submitting 
a written request to the FDIC at least 15 days prior to the deadline for 
its compliance with the recordkeeping requirements of this part. The 
written request for an extension must contain a statement of the reasons 
why the records entity cannot comply by the deadline for compliance, a 
project plan (including timeline) for achieving compliance, and a 
progress report describing the steps taken to achieve compliance.



Sec.371.2  Definitions.

    For purposes of this part:
    (a) Accelerated records entity means a records entity that:
    (1) Has a composite rating, as determined by its appropriate Federal 
banking agency in its most recent report of examination, of 4 or 5 under 
the Uniform Financial Institution Rating System, or in the case of an 
insured branch of a foreign bank, an equivalent rating; or
    (2) Is determined by the appropriate Federal banking agency or by 
the FDIC in consultation with the appropriate Federal banking agency to 
be experiencing a significant deterioration of capital or significant 
funding difficulties or liquidity stress, notwithstanding the composite 
rating of the institution by its appropriate Federal banking agency in 
its most recent report of examination.
    (b) Affiliate means any entity that controls, is controlled by, or 
is under common control with another entity.
    (c) Appropriate Federal banking agency means the agency or agencies 
designated under 12 U.S.C. 1813(q).
    (d) Business day means any day other than any Saturday, Sunday or 
any day on which either the New York Stock Exchange or the Federal 
Reserve Bank of New York is closed.
    (e) Control. An entity controls another entity if:

[[Page 274]]

    (1) The entity directly or indirectly or acting through one or more 
persons owns, controls, or has power to vote 25 per centum or more of 
any class of voting securities of the other entity;
    (2) The entity controls in any manner the election of a majority of 
the directors or trustees of the other entity; or
    (3) The Board of Governors of the Federal Reserve System has 
determined, after notice and opportunity for hearing in accordance with 
12 CFR 225.31, that the entity directly or indirectly exercises a 
controlling influence over the management or policies of the other 
entity.
    (f) Corporate group means an entity and all affiliates of that 
entity.
    (g) Counterparty means any natural person or entity (or separate 
non-U.S. branch of any entity) that is a party to a QFC with a records 
entity or, if the records entity is required or chooses to maintain the 
records specified in Sec.371.4(b), a reportable subsidiary of such 
records entity.
    (h) Effective date means October 1, 2017.
    (i) Full scope entity means a records entity that has total 
consolidated assets equal to or greater than $50 billion or that is a 
Part 148 affiliate.
    (j) Insured depository institution means any bank or savings 
association, as defined in 12 U.S.C. 1813, the deposits of which are 
insured by the FDIC.
    (k) Legal entity identifier or LEI for an entity means the global 
legal entity identifier maintained for such entity by a utility 
accredited by the Global LEI Foundation or by a utility endorsed by the 
Regulatory Oversight Committee. As used in this definition:
    (1) Regulatory Oversight Committee means the Regulatory Oversight 
Committee (of the Global LEI System), whose charter was set forth by the 
Finance Ministers and Central Bank Governors of the Group of Twenty and 
the Financial Stability Board, or any successor thereof; and
    (2) Global LEI Foundation means the not-for-profit organization 
organized under Swiss law by the Financial Stability Board in 2014, or 
any successor thereof.
    (l) Limited scope entity means a records entity that is not a full 
scope entity.
    (m) Parent entity with respect to an entity means an entity that 
controls that entity.
    (n) Part 148 means 31 CFR part 148.
    (o) Part 148 affiliate means a records entity that, on financial 
statements prepared in accordance with U.S. generally accepted 
accounting principles or other applicable accounting standards, 
consolidates, or is consolidated by or with (or is required to 
consolidate or be consolidated by or with), a member of a corporate 
group one or more members of which are required to maintain QFC records 
pursuant to Part 148.
    (p) Position means an individual transaction under a qualified 
financial contract and includes the rights and obligations of a person 
or entity as a party to an individual transaction under a qualified 
financial contract.
    (q) Qualified financial contract or QFC means any qualified 
financial contract as defined in 12 U.S.C. 1821(e)(8)(D), and any 
agreement or transaction that the FDIC determines by regulation, 
resolution, or order to be a QFC, including without limitation, any 
securities contract, commodity contract, forward contract, repurchase 
agreement, and swap agreement.
    (r) Records entity means any insured depository institution that has 
received written notice from the institution's appropriate Federal 
banking agency or the FDIC that it is in a troubled condition and 
written notice from the FDIC that it is subject to the recordkeeping 
requirements of this part.
    (s) Reportable subsidiary means any subsidiary of a records entity 
that is incorporated or organized under U.S. federal law or the laws of 
any State that is not:
    (1) A functionally regulated subsidiary as defined in 12 U.S.C. 
1844(c)(5);
    (2) A security-based swap dealer as defined in 15 U.S.C. 78c(a)(71); 
or
    (3) A major security-based swap participant as defined in 15 U.S.C. 
78c(a)(67).
    (t) State means any state, commonwealth, territory or possession of 
the United States, the District of Columbia, the Commonwealth of Puerto 
Rico, the Commonwealth of the Northern Mariana Islands, American Samoa,

[[Page 275]]

Guam or the United States Virgin Islands.
    (u) Subsidiary, with respect to another entity, means an entity that 
is, or is required to be, consolidated by such other entity on such 
other entity's financial statements prepared in accordance with U.S. 
generally accepted accounting principles or other applicable accounting 
standards.
    (v) Total consolidated assets means the total consolidated assets of 
a records entity and its consolidated subsidiaries as reported in the 
records entity's most recent year-end audited consolidated statement of 
financial condition filed with the appropriate Federal banking agency.
    (w) Troubled condition means an insured depository institution that:
    (1) Has a composite rating, as determined by its appropriate Federal 
banking agency in its most recent report of examination, of 3 (only for 
insured depository institutions with total consolidated assets of $10 
billion or greater), 4 or 5 under the Uniform Financial Institution 
Rating System, or in the case of an insured branch of a foreign bank, an 
equivalent rating;
    (2) Is subject to a proceeding initiated by the FDIC for termination 
or suspension of deposit insurance;
    (3) Is subject to a cease-and-desist order or written agreement 
issued by the appropriate Federal banking agency, as defined in 12 
U.S.C. 1813(q), that requires action to improve the financial condition 
of the insured depository institution or is subject to a proceeding 
initiated by the appropriate Federal banking agency which contemplates 
the issuance of an order that requires action to improve the financial 
condition of the insured depository institution, unless otherwise 
informed in writing by the appropriate Federal banking agency;
    (4) Is informed in writing by the insured depository institution's 
appropriate Federal banking agency that it is in troubled condition for 
purposes of 12 U.S.C. 1831i on the basis of the institution's most 
recent report of condition or report of examination, or other 
information available to the institution's appropriate Federal banking 
agency; or
    (5) Is determined by the appropriate Federal banking agency or the 
FDIC in consultation with the appropriate Federal banking agency to be 
experiencing a significant deterioration of capital or significant 
funding difficulties or liquidity stress, notwithstanding the composite 
rating of the institution by its appropriate Federal banking agency in 
its most recent report of examination.



Sec.371.3  Maintenance of records.

    (a) Form and availability. (1) Unless it is not required to maintain 
records in electronic form as provided in Sec.371.4(d), a records 
entity shall maintain the records described in Sec.371.4 in electronic 
form and shall be capable of producing such records electronically in 
the format set forth in the appendices of this part.
    (2) All such records shall be updated on a daily basis and shall be 
based upon values and information no less current than previous end-of-
day values and information.
    (3) Except as provided in Sec.371.4(d), a records entity shall 
compile the records described in Sec.371.4(a) or Sec.371.4(b) (as 
applicable) in a manner that permits aggregation and disaggregation of 
such records by counterparty. If the records are maintained pursuant to 
Sec.371.4(b), they must be compiled by the records entity on a 
consolidated basis for itself and its reportable subsidiaries in a 
manner that also permits aggregation and disaggregation of such records 
by the records entity and its reportable subsidiary.
    (4) Records maintained pursuant to Sec.371.4(b) by a records 
entity that is a Part 148 affiliate shall be compiled consistently, in 
all respects, with records compiled by its affiliate(s) pursuant to Part 
148.
    (5) A records entity shall maintain each set of daily records for a 
period of not less than five business days.
    (b) Change in point of contact. A records entity shall provide to 
the FDIC, in writing, any change to the name and contact information for 
the person at the records entity who is responsible for recordkeeping 
under this part within 3 business days of any change to such 
information.

[[Page 276]]

    (c) Access to records. A records entity shall be capable of 
providing the records specified in Sec.371.4 (based on the immediately 
preceding day's end-of-day values and information) to the FDIC no later 
than 7 a.m. (Eastern Time) each day. A records entity is required to 
make such records available to the FDIC following a written request by 
the FDIC for such records. Any such written request shall specify the 
date such records are to be made available (and the period of time 
covered by the request) and shall provide the records entity at least 8 
hours to respond to the request. If the request is made less than 8 
hours before such 7 a.m. deadline, the deadline shall be automatically 
extended to the time that is 8 hours following the time of the request.
    (d) Maintenance of records after a records entity is no longer in a 
troubled condition. A records entity shall continue to maintain the 
capacity to produce the records required under this part on a daily 
basis for a period of one year after the date that the appropriate 
Federal banking agency or the FDIC notifies the institution, in writing, 
that it is no longer in a troubled condition as defined in Sec.
371.2(w).
    (e) Maintenance of records after an acquisition of a records entity. 
If a records entity ceases to exist as an insured depository institution 
as a result of a merger or a similar transaction with an insured 
depository institution that is not in a troubled condition immediately 
following the transaction, the obligation to maintain records under this 
part on a daily basis will terminate when the records entity ceases to 
exist as a separately insured depository institution.



Sec.371.4  Content of records.

    (a) Limited scope entities. Except as provided in Sec.371.6, a 
limited scope entity must maintain (at the election of such records 
entity) either the records described in paragraph (b) of this section or 
the following records:
    (1) The position-level data listed in Table A-1 in Appendix A of 
this part with respect to each QFC to which it is a party, without 
duplication.
    (2) The counterparty-level data listed in Table A-2 in Appendix A of 
this part with respect to each QFC to which it is a party, without 
duplication.
    (3) The corporate organization master table in Appendix A of this 
part for the records entity and its affiliates.
    (4) The counterparty master table in Appendix A of this part with 
respect to each QFC to which it is a party, without duplication.
    (5) All documents that govern QFC transactions between the records 
entity and each counterparty, including, without limitation, master 
agreements and annexes, schedules, netting agreements, supplements, or 
other modifications with respect to the agreements, confirmations for 
each QFC position that has been confirmed and all trade acknowledgments 
for each QFC position that has not been confirmed, all credit support 
documents including, but not limited to, credit support annexes, 
guarantees, keep-well agreements, or net worth maintenance agreements 
that are relevant to one or more QFCs, and all assignment or novation 
documents, if applicable, including documents that confirm that all 
required consents, approvals, or other conditions precedent for such 
assignment or novation have been obtained or satisfied.
    (6) A list of vendors directly supporting the QFC-related activities 
of the records entity and the vendors' contact information.
    (b) Full scope entities. Except as provided in Sec.371.6, a full 
scope entity must maintain the following records:
    (1) The position-level data listed in Table A-1 in Appendix B of 
this part with respect to each QFC to which it or any of its reportable 
subsidiaries is a party, without duplication.
    (2) The counterparty-level data listed in Table A-2 in Appendix B of 
this part with respect to each QFC to which it or any of its reportable 
subsidiaries is a party, without duplication.
    (3) The legal agreements information listed in Table A-3 in Appendix 
B of this part with respect to each QFC to which it or any of its 
reportable subsidiaries is a party, without duplication.
    (4) The collateral detail data listed in Table A-4 in Appendix B of 
this part with respect to each QFC to which it or

[[Page 277]]

any of its reportable subsidiaries is a party, without duplication.
    (5) The corporate organization master table in Appendix B of this 
part for the records entity and its affiliates.
    (6) The counterparty master table in Appendix B of this part with 
respect to each QFC to which it or any of its reportable subsidiaries is 
a party, without duplication.
    (7) The booking location master table in Appendix B of this part for 
each booking location used with respect to each QFC to which it or any 
of its reportable subsidiaries is a party, without duplication.
    (8) The safekeeping agent master table in Appendix B of this part 
for each safekeeping agent used with respect to each QFC to which it or 
any of its reportable subsidiaries is a party, without duplication.
    (9) All documents that govern QFC transactions between the records 
entity (or any of its reportable subsidiaries) and each counterparty, 
including, without limitation, master agreements and annexes, schedules, 
netting agreements, supplements, or other modifications with respect to 
the agreements, confirmations for each QFC position that has been 
confirmed and all trade acknowledgments for each QFC position that has 
not been confirmed, all credit support documents including, but not 
limited to, credit support annexes, guarantees, keep-well agreements, or 
net worth maintenance agreements that are relevant to one or more QFCs, 
and all assignment or novation documents, if applicable, including 
documents that confirm that all required consents, approvals, or other 
conditions precedent for such assignment or novation have been obtained 
or satisfied.
    (10) A list of vendors directly supporting the QFC-related 
activities of the records entity and its reportable subsidiaries and the 
vendors' contact information.
    (c) Change in recordkeeping status. (1) A records entity that was a 
limited scope entity maintaining the records specified in paragraphs 
(a)(1) through (6) of this section and that subsequently becomes a full 
scope entity must maintain the records specified in paragraph (b) of 
this section within 270 days of becoming a full scope entity (or 60 days 
of becoming a full scope entity if it is an accelerated records entity). 
Until the records entity maintains the records required by paragraph (b) 
of this section it must continue to maintain the records required by 
paragraphs (a)(1) through (6) of this section.
    (2) A records entity that was a full scope entity maintaining the 
records specified in paragraph (b) of this section and that subsequently 
becomes a limited scope entity may continue to maintain the records 
specified in paragraph (b) of this section or, at its option, may 
maintain the records specified in paragraphs (a)(1) through (6) of this 
section, provided however, that such records entity shall continue to 
maintain the records specified in paragraph (b) of this section until it 
maintains the records specified in paragraphs (a)(1) through (6) of this 
section.
    (3) A records entity that changes from a limited scope entity to a 
full scope entity and at the time it becomes a full scope entity is not 
yet maintaining the records specified in paragraph (a) of this section 
or paragraph (b) of this section must satisfy the recordkeeping 
requirements of paragraph (b) of this section within 270 days of first 
becoming a records entity (or 60 days of first becoming a records entity 
if it is an accelerated records entity).
    (4) A records entity that changes from a full scope entity to a 
limited scope entity and at the time it becomes a limited scope entity 
is not yet maintaining the records specified in paragraph (b) of this 
section must satisfy the recordkeeping requirements of paragraph (a) of 
this section within 270 days of first becoming a record entity (or 60 
days of first becoming a record entity if it is an accelerated records 
entity).
    (d) Records entities with 50 or fewer QFC positions. Notwithstanding 
any other requirement of this part, if a records entity and, if it is a 
full scope entity, its reportable subsidiaries, have 50 or fewer open 
QFC positions in total (without duplication) on the date the institution 
becomes a records entity, the records required by this section are not 
required to be recorded and maintained in electronic form as would 
otherwise be required by this section, so

[[Page 278]]

long as all required records are capable of being updated on a daily 
basis. If at any time after it becomes a records entity, the institution 
and, if it is a full scope entity, its reportable subsidiaries, if 
applicable, have more than 50 open QFC positions in total (without 
duplication), it must record and maintain records in electronic form as 
required by this section within 270 days (or, if it is an accelerated 
records entity at that time, within 60 days). The records entity must 
provide to the FDIC, within 3 business days of reaching the 51-QFC 
threshold, a directory of the electronic files that will be used to 
maintain the information required to be kept by this section.



Sec.371.5  Exemptions.

    (a) Request. A records entity may request an exemption from one or 
more of the requirements of Sec.371.4 by submitting a written request 
to the Executive Secretary of the FDIC referring to this part. The 
written request for an exemption must:
    (1) Specify the requirement(s) under this part from which the 
records entity is requesting to be exempt and whether the exemption is 
sought to apply solely to the records entity or to one or more 
identified reportable subsidiaries of the records entity or to the 
records entity and one or more identified reportable subsidiaries;
    (2) Specify the reasons why it would be appropriate for the FDIC to 
grant the exemption;
    (3) Specify the reasons why granting the exemption will not impair 
or impede the FDIC's ability to fulfill its statutory obligations under 
12 U.S.C. 1821(e)(8), (9), or (10) or the FDIC's ability to obtain a 
comprehensive understanding of the QFC exposures of the records entity 
and its reportable subsidiaries; and
    (4) Include such additional information (if any) that the FDIC may 
require.
    (b) Determination. Following its evaluation of a request for 
exemption, the FDIC will determine, in its sole discretion, whether to 
grant or deny the request.



Sec.371.6  Transition for existing records entities.

    (a) Limited scope entities. Notwithstanding any other provision of 
this part, an insured depository institution that became a records 
entity prior to October 1, 2017, and constitutes a limited scope entity 
on October 1, 2017, shall continue to comply with this part as in effect 
immediately prior to October 1, 2017, or, if it elects to comply with 
this part as in effect on and after October 1, 2017, as so in effect, 
for so long as the entity remains a limited scope entity that has not 
ceased to be required to maintain the capacity to produce records 
pursuant to Sec.371.3(d).
    (b) Transition for full scope entities maintaining records on 
effective date. If an insured depository institution that constitutes a 
full scope entity on October 1, 2017, became a records entity prior to 
October 1, 2017, and is maintaining the records required by this part as 
in effect immediately prior to October 1, 2017, then:
    (1) Except as provided in paragraph (b)(2) of this section, such 
records entity shall comply with the recordkeeping requirements of this 
part within 270 days after October 1, 2017 (or no later than 60 days 
after October 1, 2017 if it is an accelerated records entity); and
    (2) If--
    (i) Such records entity is a Part 148 affiliate and, on October 1, 
2017, is not an accelerated records entity; and
    (ii) The compliance date for any other member of such record 
entity's corporate group to comply with Part 148 is set forth in 31 CFR 
148.1(d)(1)(i)(B),(C), or (D), as in effect on October 1, 2017, such 
records entity shall be permitted to delay compliance with the 
recordkeeping requirements of this part until the first date on which 
members of any corporate group of which such records entity is a member 
is required to comply with Part 148 pursuant to 31 CFR 
148.1(d)(1)(i)(B),(C), or (D), as in effect on October 1, 2017; 
provided, that if such records entity becomes an accelerated records 
entity, it shall comply with the recordkeeping requirements of this part 
no later than 60 days after it becomes an accelerated records entity; 
provided, that in the case of each of paragraphs (b)(1) and (2)

[[Page 279]]

of this section until such full scope entity maintains the records 
required by Sec.371.4, it continues to maintain the records required 
by this part as in effect immediately prior to October 1, 2017.
    (c) Transition for full scope entities not maintaining records on 
effective date. If an insured depository institution that constitutes a 
full scope entity on October 1, 2017, became a records entity prior to 
October 1, 2017, but is not maintaining the records required by this 
part as in effect immediately prior to October 1, 2017, such records 
entity shall comply with all recordkeeping requirements of this part 
within 270 days after the date that it first became a records entity (or 
no later than 60 days after it first became a records entity if it is an 
accelerated records entity).



Sec.371.7  Enforcement actions.

    Violating the terms or requirements set forth in this part 
constitutes a violation of a regulation and subjects the records entity 
to enforcement actions under Section 8 of the Federal Deposit Insurance 
Act (12 U.S.C. 1818).



  Sec. Appendix A to Part 371--File Structure for Qualified Financial 
            Contract (QFC) Records for Limited Scope Entities

                                                             Table A-1--Position-Level Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application               Definition              Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
A1.1..............................  As of date...........  2015-01-05...........  Provide data           YYYY-MM-DD...............
                                                                                   extraction date.
A1.2..............................  Records entity         999999999............  Provide LEI for        Varchar(50)..............  Validated against
                                     identifier.                                   records entity if                                 CO.2.
                                                                                   available.
                                                                                   Information needed
                                                                                   to review position-
                                                                                   level data by
                                                                                   records entity.
A1.3..............................  Position identifier..  20058953.............  Provide a position     Varchar(100).
                                                                                   identifier. Use the
                                                                                   unique transaction
                                                                                   identifier if
                                                                                   available.
                                                                                   Information needed
                                                                                   to readily track and
                                                                                   distinguish
                                                                                   positions.
A1.4..............................  Counterparty           888888888............  Provide a              Varchar(50)..............  Validated against
                                     identifier.                                   counterparty                                      CP.2.
                                                                                   identifier. Use LEI
                                                                                   if counterparty has
                                                                                   one. Information
                                                                                   needed to identify
                                                                                   counterparty by
                                                                                   reference to
                                                                                   Counterparty Master
                                                                                   Table.
A1.5..............................  Internal booking       New York, New York...  Provide office where   Varchar(50).
                                     location identifier.                          the position is
                                                                                   booked. Information
                                                                                   needed to determine
                                                                                   system on which the
                                                                                   trade is booked and
                                                                                   settled.
A1.6..............................  Unique booking unit    xxxxxx...............  Provide an identifier  Varchar(50).
                                     or desk identifier.                           for unit or desk at
                                                                                   which the position
                                                                                   is booked.
                                                                                   Information needed
                                                                                   to help determine
                                                                                   purpose of position.
A1.7..............................  Type of QFC..........  Credit, equity,        Provide type of QFC.   Varchar(100).
                                                            foreign exchange,      Use unique product
                                                            interest rate          identifier if
                                                            (including cross-      available.
                                                            currency), other       Information needed
                                                            commodity,             to determine the
                                                            securities             nature of the QFC.
                                                            repurchase
                                                            agreement,
                                                            securities lending,
                                                            loan repurchase
                                                            agreement, guarantee
                                                            or other third party
                                                            credit enhancement
                                                            of a QFC.

[[Page 280]]

 
A1.8..............................  Type of QFC covered    Credit, equity,        If QFC type is         Varchar(200).............  Only required if QFC
                                     by guarantee or        foreign exchange,      guarantee or other                                type (A1.7) is a
                                     other third party      interest rate          third party credit                                guarantee or other
                                     credit enhancement.    (including cross-      enhancement, provide                              third party credit
                                                            currency), other       type of QFC that is                               enhancement.
                                                            commodity,             covered by such
                                                            securities             guarantee or other
                                                            repurchase             third party credit
                                                            agreement,             enhancement. Use
                                                            securities lending,    unique product
                                                            or loan repurchase     identifier if
                                                            agreement.             available. If
                                                                                   multiple asset
                                                                                   classes are covered
                                                                                   by the guarantee or
                                                                                   credit enhancement,
                                                                                   enter the asset
                                                                                   classes separated by
                                                                                   comma. If all the
                                                                                   QFCs of the
                                                                                   underlying QFC
                                                                                   obligor identifier
                                                                                   are covered by the
                                                                                   guarantee or other
                                                                                   third party credit
                                                                                   enhancement, enter
                                                                                   ``All''.
A1.9..............................  Underlying QFC         888888888............  If QFC type is         Varchar(50)..............  Only required if QFC
                                     obligor identifier.                           guarantee or other                                asset type (A1.7)
                                                                                   third party credit                                is a guarantee or
                                                                                   enhancement, provide                              other third party
                                                                                   an identifier for                                 credit enhancement.
                                                                                   the QFC obligor                                   Validated against
                                                                                   whose obligation is                               CO.2 if affiliate
                                                                                   covered by the                                    or CP.2 if non-
                                                                                   guarantee or other                                affiliate.
                                                                                   third party credit
                                                                                   enhancement. Use LEI
                                                                                   if underlying QFC
                                                                                   obligor has one.
                                                                                   Complete the
                                                                                   counterparty master
                                                                                   table with respect
                                                                                   to a QFC obligor
                                                                                   that is a non-
                                                                                   affiliate.
A1.10.............................  Agreement identifier.  xxxxxxxxx............  Provide an identifier  Varchar(50).
                                                                                   for primary
                                                                                   governing
                                                                                   documentation, e.g.
                                                                                   the master agreement
                                                                                   or guarantee
                                                                                   agreement, as
                                                                                   applicable.
A1.11.............................  Netting agreement      xxxxxxxxx............  Provide an identifier  Varchar(50).
                                     identifier.                                   for netting
                                                                                   agreement. If this
                                                                                   agreement is the
                                                                                   same as provided in
                                                                                   A1.10, use same
                                                                                   identifier.
                                                                                   Information needed
                                                                                   to identify unique
                                                                                   netting sets.
A1.12.............................  Netting agreement      xxxxxxxxx............  Provide a netting      Varchar(50)..............  Validated against
                                     counterparty                                  agreement                                         CP.2
                                     identifier.                                   counterparty
                                                                                   identifier. Use same
                                                                                   identifier as
                                                                                   provided in A1.4 if
                                                                                   counterparty and
                                                                                   netting agreement
                                                                                   counterparty are the
                                                                                   same. Use LEI if
                                                                                   netting agreement
                                                                                   counterparty has
                                                                                   one. Information
                                                                                   needed to identify
                                                                                   unique netting sets.

[[Page 281]]

 
A1.13.............................  Trade date...........  2014-12-20...........  Provide trade or       YYYY-MM-DD.
                                                                                   other commitment
                                                                                   date for the QFC.
                                                                                   Information needed
                                                                                   to determine when
                                                                                   the entity's rights
                                                                                   and obligations
                                                                                   regarding the
                                                                                   position originated.
A1.14.............................  Termination date.....  2014-03-31...........  Provide date the QFC   YYYY-MM-DD.
                                                                                   terminates or is
                                                                                   expected to
                                                                                   terminate, expire,
                                                                                   mature, or when
                                                                                   final performance is
                                                                                   required.
                                                                                   Information needed
                                                                                   to determine when
                                                                                   the entity's rights
                                                                                   and obligations
                                                                                   regarding the
                                                                                   position are
                                                                                   expected to end.
A1.15.............................  Next call, put, or     2015-01-25...........  Provide next call,     YYYY-MM-DD.
                                     cancellation date.                            put, or cancellation
                                                                                   date.
A1.16.............................  Next payment date....  2015-01-25...........  Provide next payment   YYYY-MM-DD.
                                                                                   date.
A1.17.............................  Current market value   995000...............  In the case of a       Num (25,5).
                                     of the position in                            guarantee or other
                                     U.S. dollars.                                 third party credit
                                                                                   enhancements,
                                                                                   provide the current
                                                                                   mark-to-market
                                                                                   expected value of
                                                                                   the exposure.
                                                                                   Information needed
                                                                                   to determine the
                                                                                   current size of the
                                                                                   obligation/benefit
                                                                                   associated with the
                                                                                   QFC.
A1.18.............................  Notional or principal  1000000..............  Provide the notional   Num (25,5).
                                     amount of the                                 or principal amount,
                                     position In U.S.                              as applicable, in
                                     dollars.                                      U.S. dollars. In the
                                                                                   case of a guarantee
                                                                                   or other third party
                                                                                   credit enhancements,
                                                                                   provide the maximum
                                                                                   possible exposure.
                                                                                   Information needed
                                                                                   to help evaluate the
                                                                                   position.
A1.19.............................  Covered by third-      Y/N..................  Indicate whether QFC   Char(1)..................  Should be ``Y'' or
                                     party credit                                  is covered by a                                   ``N``
                                     enhancement                                   guarantee or other
                                     agreement (for the                            third-party credit
                                     benefit of the                                enhancement.
                                     records entity)?                              Information needed
                                                                                   to determine credit
                                                                                   enhancement.
A1.20.............................  Third-party credit     999999999............  If QFC is covered by   Varchar(50)..............  Required if A1.20 is
                                     enhancement provider                          a guarantee or other                              ``Y''. Validated
                                     identifier (for the                           third-party credit                                against CP.2
                                     benefit of the                                enhancement, provide
                                     records entity).                              an identifier for
                                                                                   provider. Use LEI if
                                                                                   available. Complete
                                                                                   the counterparty
                                                                                   master table with
                                                                                   respect to a
                                                                                   provider that is a
                                                                                   non-affiliate.

[[Page 282]]

 
A1.21.............................  Third-party credit     .....................  If QFC is covered by   Varchar(50)..............  Required if A1.20 is
                                     enhancement                                   a guarantee or other                              ``Y''.
                                     agreement identifier                          third-party credit
                                     (for the benefit of                           enhancement, provide
                                     the records entity).                          an identifier for
                                                                                   the agreement.
A1.22.............................  Related position of    3333333..............  Use this field to      Varchar(100).
                                     records entity.                               link any related
                                                                                   positions of the
                                                                                   records entity. All
                                                                                   positions that are
                                                                                   related to one
                                                                                   another should have
                                                                                   same designation in
                                                                                   this field.
A1.23.............................  Reference number for   9999999..............  Provide a unique       Varchar(500).
                                     any related loan.                             reference number for
                                                                                   any loan held by the
                                                                                   records entity or a
                                                                                   member of its
                                                                                   corporate group
                                                                                   related to the
                                                                                   position (with
                                                                                   multiple entries
                                                                                   delimited by commas).
A1.24.............................  Identifier of the      999999999............  For any loan recorded  Varchar(500).              ....................
                                     lender of the                                 in A1.23, provide
                                     related loan.                                 identifier for
                                                                                   records entity or
                                                                                   member of its
                                                                                   corporate group that
                                                                                   holds any related
                                                                                   loan. Use LEI if
                                                                                   entity has one.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        Table A-2--Counterparty Netting Set Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
A2.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD...............
A2.2..............................  Records entity         999999999............  Provide the LEI for    Varchar(50)..............  Validated against
                                     identifier.                                   the records entity                                CO.2.
                                                                                   if available.
A2.3..............................  Netting agreement      888888888............  Provide an identifier  Varchar(50)..............  Validated against
                                     counterparty                                  for the netting                                   CP.2.
                                     identifier.                                   agreement
                                                                                   counterparty. Use
                                                                                   LEI if counterparty
                                                                                   has one.
A2.4..............................  Netting agreement      xxxxxxxxx............  Provide an identifier  Varchar(50).
                                     identifier.                                   for the netting
                                                                                   agreement.
A2.5..............................  Underlying QFC         888888888............  Provide identifier     Varchar(50)..............  Validated against
                                     obligor identifier.                           for underlying QFC                                CO.2 or CP.2.
                                                                                   obligor if netting
                                                                                   agreement is
                                                                                   associated with a
                                                                                   guarantee or other
                                                                                   third party credit
                                                                                   enhancement. Use LEI
                                                                                   if available.
A2.6..............................  Covered by third-      Y/N..................  Indicate whether the   Char(1)..................  Should be ``Y'' or
                                     party credit                                  positions subject to                              ``N''.
                                     enhancement                                   the netting set
                                     agreement (for the                            agreement are
                                     benefit of the                                covered by a third-
                                     records entity)?.                             party credit
                                                                                   enhancement
                                                                                   agreement.

[[Page 283]]

 
A2.7..............................  Third-party credit     999999999............  Use LEI if available.  Varchar(50)..............  Required if A2.6 is
                                     enhancement provider                          Information needed                                ``Y''. Should be a
                                     identifier (for the                           to identity third-                                valid entry in the
                                     benefit of the                                party credit                                      Counterparty Master
                                     records entity).                              enhancement provider.                             Table. Validated
                                                                                                                                     against CP.2.
A2.8..............................  Third-party credit     4444444..............  .....................  Varchar(50)..............  Required if A2.6 is
                                     enhancement                                                                                     ``Y''.
                                     agreement identifier
                                     (for the benefit of
                                     the records entity).
A2.9..............................  Aggregate current      -1000000.............  Information needed to  Num (25,5)...............  Market value of all
                                     market value in U.S.                          help evaluate the                                 positions in A1 for
                                     dollars of all                                positions subject to                              the given netting
                                     positions under this                          the netting                                       agreement
                                     netting agreement.                            agreement.                                        identifier should
                                                                                                                                     be equal to this
                                                                                                                                     value. A2.9 = A2.10
                                                                                                                                     + A2.11.
A2.10.............................  Current market value   3000000..............  Information needed to  Num (25,5)...............  Market value of all
                                     in U.S. dollars of                            help evaluate the                                 positive positions
                                     all positive                                  positions subject to                              in A1 for the given
                                     positions, as                                 the netting                                       netting agreement
                                     aggregated under                              agreement.                                        identifier should
                                     this netting                                                                                    be equal to this
                                     agreement.                                                                                      value. A2.9 = A2.10
                                                                                                                                     + A2.11.
A2.11.............................  Current market value   -4000000.............  Information needed to  Num (25,5)...............  Market value of all
                                     in U.S. dollars of                            help evaluate the                                 negative positions
                                     all negative                                  positions subject to                              in A1 for the given
                                     positions, as                                 the netting                                       Netting Agreement
                                     aggregated under                              agreement.                                        Identifier should
                                     this netting                                                                                    be equal to this
                                     agreement.                                                                                      value. A2.9 = A2.10
                                                                                                                                     + A2.11.
A2.12.............................  Current market value   950000...............  Information needed to  Num (25,5).
                                     in U.S. dollars of                            determine the extent
                                     all collateral                                to which collateral
                                     posted by records                             has been provided by
                                     entity, as                                    records entity.
                                     aggregated under
                                     this netting
                                     agreement.
A2.13.............................  Current market value   50000................  Information needed to  Num (25,5).
                                     in U.S. dollars of                            determine the extent
                                     all collateral                                to which collateral
                                     posted by                                     has been provided by
                                     counterparty, as                              counterparty.
                                     aggregated under
                                     this netting
                                     agreement.

[[Page 284]]

 
A2.14.............................  Records entity         950,000..............  Provide records        Num (25,5)...............  Should be less than
                                     collateral--net.                              entity's collateral                               or equal to A2.15.
                                                                                   excess or deficiency
                                                                                   with respect to all
                                                                                   of its positions, as
                                                                                   determined under
                                                                                   each applicable
                                                                                   agreement, including
                                                                                   thresholds and
                                                                                   haircuts where
                                                                                   applicable.
A2.15.............................  Counterparty           950,000..............  Provide                Num (25,5)...............  Should be less than
                                     collateral--net.                              counterparty's                                    or equal to A2.16.
                                                                                   collateral excess or
                                                                                   deficiency with
                                                                                   respect to all of
                                                                                   its positions, as
                                                                                   determined under
                                                                                   each applicable
                                                                                   agreement, including
                                                                                   thresholds and
                                                                                   haircuts where
                                                                                   applicable.
A2.16.............................  Next margin payment    2015-11-05...........  Provide next margin    YYYY-MM-DD.
                                     date.                                         payment date for
                                                                                   position.
A2.17.............................  Next margin payment    150,000..............  Use positive value if  Num (25,5).                ....................
                                     amount in U.S.                                records entity is
                                     dollars.                                      due a payment and
                                                                                   use negative value
                                                                                   if records entity
                                                                                   has to make the
                                                                                   payment.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                          Corporate Organization Master Table *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD.
CO.2..............................  Entity identifier....  888888888............  Provide unique         Varchar(50)..............  Should be unique
                                                                                   identifier. Use LEI                               across all record
                                                                                   if available.                                     entities.
                                                                                   Information needed
                                                                                   to identify entity.
CO.3..............................  Has LEI been used for  Y/N..................  Specify whether the    Char(1)..................  Should be ``Y'' or
                                     entity identifier?                            entity identifier                                 ``N''.
                                                                                   provided is an LEI..
CO.4..............................  Legal name of entity.  John Doe & Co........  Provide legal name of  Varchar(200).
                                                                                   entity.
CO.5..............................  Immediate parent       77777777.............  Use LEI if available.  Varchar(50).
                                     entity identifier.                            Information needed
                                                                                   to complete org
                                                                                   structure.
CO.6..............................  Has LEI been used for  Y/N..................  Specify whether the    Char(1)..................  Should be ``Y'' or
                                     immediate parent                              immediate parent                                  ``N''.
                                     entity identifier?                            entity identifier
                                                                                   provided is an LEI.
CO.7..............................  Legal name of          John Doe & Co........  Information needed to  Varchar(200).
                                     immediate parent                              complete org
                                     entity.                                       structure.
CO.8..............................  Percentage ownership   100.00...............  Information needed to  Num (5,2).
                                     of immediate parent                           complete org
                                     entity in the entity.                         structure.
CO.9..............................  Entity type..........  Subsidiary, foreign    Information needed to  Varchar(50).
                                                            branch, foreign        complete org
                                                            division.              structure.
CO.10.............................  Domicile.............  New York, New York...  Enter as city, state   Varchar(50).
                                                                                   or city, foreign
                                                                                   country.
CO.11.............................  Jurisdiction under     New York.............  Enter as state or      Varchar(50).
                                     which incorporated                            foreign jurisdiction.
                                     or organized.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Foreign branches and divisions shall be separately identified to the extent they are identified in an entity's reports to its appropriate Federal
  banking agency.


[[Page 285]]


                                                                Counterparty Master Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
CP.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD.
CP.2..............................  Counterparty           888888888............  Use LEI if             Varchar(50).
                                     identifier.                                   counterparty has one.
                                                                                  The counterparty
                                                                                   identifier shall be
                                                                                   the global legal
                                                                                   entity identifier if
                                                                                   one has been issued
                                                                                   to the entity. If a
                                                                                   counterparty
                                                                                   transacts with the
                                                                                   records entity
                                                                                   through one or more
                                                                                   separate foreign
                                                                                   branches or
                                                                                   divisions and any
                                                                                   such branch or
                                                                                   division does not
                                                                                   have its own unique
                                                                                   global legal entity
                                                                                   identifier, the
                                                                                   records entity must
                                                                                   include additional
                                                                                   identifiers, as
                                                                                   appropriate to
                                                                                   enable the FDIC to
                                                                                   aggregate or
                                                                                   disaggregate the
                                                                                   data for each
                                                                                   counterparty and for
                                                                                   each entity with the
                                                                                   same ultimate parent
                                                                                   entity as the
                                                                                   counterparty.
CP.3..............................  Has LEI been used for  Y/N..................  Indicate whether the   Char(1)..................  Should be ``Y'' or
                                     counterparty                                  counterparty                                      ``N''.
                                     identifier?                                   identifier is an LEI.
CP.4..............................  Legal name of          John Doe & Co........  Information needed to  Varchar(200).
                                     counterparty.                                 identify and, if
                                                                                   necessary,
                                                                                   communicate with
                                                                                   counterparty.
CP.5..............................  Domicile.............  New York, New York...  Enter as city, state   Varchar(50).
                                                                                   or city, foreign
                                                                                   country.
CP.6..............................  Jurisdiction under     New York.............  Enter as state or      Varchar(50).
                                     which incorporated                            foreign jurisdiction.
                                     or organized.
CP.7..............................  Immediate parent       77777777.............  Provide an identifier  Varchar(50).
                                     entity identifier.                            for the parent
                                                                                   entity that directly
                                                                                   controls the
                                                                                   counterparty. Use
                                                                                   LEI if immediate
                                                                                   parent entity has
                                                                                   one.
CP.8..............................  Has LEI been used for  Y/N..................  Indicate whether the   Char(1)..................  Should be ``Y'' or
                                     immediate parent                              immediate parent                                  ``N''.
                                     entity identifier?                            entity identifier is
                                                                                   an LEI.
CP.9..............................  Legal name of          John Doe & Co........  Information needed to  Varchar(200).
                                     immediate parent                              identify and, if
                                     entity.                                       necessary,
                                                                                   communicate with
                                                                                   counterparty.
CP.10.............................  Ultimate parent        666666666............  Provide an identifier  Varchar(50).
                                     entity identifier.                            for the parent
                                                                                   entity that is a
                                                                                   member of the
                                                                                   corporate group of
                                                                                   the counterparty
                                                                                   that is not
                                                                                   controlled by
                                                                                   another entity.
                                                                                   Information needed
                                                                                   to identify
                                                                                   counterparty. Use
                                                                                   LEI if ultimate
                                                                                   parent entity has
                                                                                   one.

[[Page 286]]

 
CP.11.............................  Has LEI been used for  Y/N..................  Indicate whether the   Char(1)..................  Should be ``Y'' or
                                     ultimate parent                               ultimate parent                                   ``N''.
                                     entity identifier?                            entity identifier is
                                                                                   an LEI.
CP.12.............................  Legal name of          John Doe & Co........  Information needed to  Varchar(100).              ....................
                                     ultimate parent                               identify and, if
                                     entity.                                       necessary,
                                                                                   communicate with
                                                                                   counterparty.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                               Details of Formats
----------------------------------------------------------------------------------------------------------------
               Format                     Content in brief      Additional explanation           Examples
----------------------------------------------------------------------------------------------------------------
YYYY-MM-DD..........................  Date...................  YYYY = four digit date,   2015-11-12
                                                                MM = 2 digit month, DD
                                                                = 2 digit date
Num (25,5)..........................  Up to 25 numerical       Up to 20 numerical        1352.67
                                       characters including 5   characters before the    12345678901234567890
                                       decimals.                decimal point and up to  12345
                                                                5 numerical characters   0
                                                                after the decimal        -20000.25
                                                                point. The dot           -0.257
                                                                character is used to
                                                                separate decimals.
Char(3).............................  3 alphanumeric           The length is fixed at 3  USD
                                       characters.              alphanumeric characters. X1X
                                                                                         999
Varchar(25).........................  Up to 25 alphanumeric    The length is not fixed   asgaGEH3268EFdsagtTRCF5
                                       characters.              but limited at up to 25   43
                                                                alphanumeric characters.
----------------------------------------------------------------------------------------------------------------



  Sec. Appendix B to Part 371--File Structure for Qualified Financial 
                Contract Records for Full Scope Entities

    Pursuant to Sec.371.4(b), the records entity is required to 
provide the information required by this appendix B for itself and each 
of its reportable subsidiaries in a manner that can be disaggregated by 
legal entity. Accordingly, the reference to ``records entity'' in the 
tables of appendix B should be read as referring to each of the separate 
legal entities (i.e., the records entity and each reportable 
subsidiary).

                                                             Table A-1--Position-Level Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application               Definition              Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
A1.1..............................  As of date...........  2015-01-05...........  Provide data           YYYY-MM-DD.
                                                                                   extraction date.
A1.2..............................  Records entity         999999999............  Provide LEI for        Varchar(50)..............  Validated against
                                     identifier.                                   records entity.                                   CO.2.
                                                                                   Information needed
                                                                                   to review position-
                                                                                   level data by
                                                                                   records entity.
A1.3..............................  Position identifier..  20058953.............  Provide a position     Varchar(100).
                                                                                   identifier. Should
                                                                                   be used consistently
                                                                                   across all records
                                                                                   entities. Use the
                                                                                   unique transaction
                                                                                   identifier if
                                                                                   available.
                                                                                   Information needed
                                                                                   to readily track and
                                                                                   distinguish
                                                                                   positions.
A1.4..............................  Counterparty           888888888............  Provide a              Varchar(50)..............  Validated against
                                     identifier.                                   counterparty                                      CP.2.
                                                                                   identifier. Use LEI
                                                                                   if counterparty has
                                                                                   one. Should be used
                                                                                   consistently by all
                                                                                   records entities.
                                                                                   Information needed
                                                                                   to identify
                                                                                   counterparty by
                                                                                   reference to
                                                                                   Counterparty Master
                                                                                   Table.

[[Page 287]]

 
A1.5..............................  Internal booking       New York, New York...  Provide office where   Varchar(50)..............  Combination A1.2 +
                                     location identifier.                          the position is                                   A1.5 + A1.6 should
                                                                                   booked. Information                               have a
                                                                                   needed to determine                               corresponding
                                                                                   system on which the                               unique combination
                                                                                   trade is booked and                               BL.2 + BL.3 + BL.4
                                                                                   settled.                                          entry in Booking
                                                                                                                                     Location Master
                                                                                                                                     Table.
A1.6..............................  Unique booking unit    xxxxxx...............  Provide an identifier  Varchar(50)..............  Combination A1.2 +
                                     or desk identifier.                           for unit or desk at                               A1.5 + A1.6 should
                                                                                   which the position                                have a
                                                                                   is booked.                                        corresponding
                                                                                   Information needed                                unique combination
                                                                                   to help determine                                 BL.2 + BL.3 + BL.4
                                                                                   purpose of position.                              entry in Booking
                                                                                                                                     Location Master
                                                                                                                                     Table.
A1.7..............................  Type of QFC..........  Credit, equity,        Provide type of QFC.   Varchar(100).
                                                            foreign exchange,      Use unique product
                                                            interest rate          identifier if
                                                            (including cross-      available.
                                                            currency), other       Information needed
                                                            commodity,             to determine the
                                                            securities             nature of the QFC.
                                                            repurchase
                                                            agreement,
                                                            securities lending,
                                                            loan repurchase
                                                            agreement, guarantee
                                                            or other third party
                                                            credit enhancement
                                                            of a QFC.
A1.7.1............................  Type of QFC covered    Credit, equity,        If QFC type is         Varchar(500).............  Only required if QFC
                                     by guarantee or        foreign exchange,      guarantee or other                                type (A1.7) is a
                                     other third party      interest rate          third party credit                                guarantee or other
                                     credit enhancement.    (including cross-      enhancement, provide                              third party credit
                                                            currency), other       type of QFC that is                               enhancement.
                                                            commodity,             covered by such
                                                            securities             guarantee or other
                                                            repurchase             third party credit
                                                            agreement,             enhancement. Use
                                                            securities lending,    unique product
                                                            or loan repurchase     identifier if
                                                            agreement.             available. If
                                                                                   multiple asset
                                                                                   classes are covered
                                                                                   by the guarantee or
                                                                                   credit enhancement,
                                                                                   enter the asset
                                                                                   classes separated by
                                                                                   comma. If all the
                                                                                   QFCs of the
                                                                                   underlying QFC
                                                                                   obligor identifier
                                                                                   are covered by the
                                                                                   guarantee or other
                                                                                   third party credit
                                                                                   enhancement, enter
                                                                                   ``All.''.
A1.7.2............................  Underlying QFC         888888888............  If QFC type is         Varchar(50)..............  Only required if QFC
                                     obligor identifier.                           guarantee or other                                asset type (A1.7)
                                                                                   third party credit                                is a guarantee or
                                                                                   enhancement, provide                              other third party
                                                                                   an identifier for                                 credit enhancement.
                                                                                   the QFC obligor                                   Validated against
                                                                                   whose obligation is                               CO.2 if affiliate
                                                                                   covered by the                                    or CP.2 if non-
                                                                                   guarantee or other                                affiliate.
                                                                                   third party credit
                                                                                   enhancement. Use LEI
                                                                                   if underlying QFC
                                                                                   obligor has one.
                                                                                   Complete the
                                                                                   counterparty master
                                                                                   table with respect
                                                                                   to a QFC obligor
                                                                                   that is a non-
                                                                                   affiliate.

[[Page 288]]

 
A1.8..............................  Agreement identifier.  xxxxxxxxx............  Provide an identifier  Varchar(50)..............  Validated against
                                                                                   for the primary                                   A3.3.
                                                                                   governing
                                                                                   documentation, e.g.,
                                                                                   the master agreement
                                                                                   or guarantee
                                                                                   agreement, as
                                                                                   applicable.
A1.9..............................  Netting agreement      xxxxxxxxx............  Provide an identifier  Varchar(50)..............  Validated against
                                     identifier.                                   for netting                                       A3.3.
                                                                                   agreement. If this
                                                                                   agreement is the
                                                                                   same as provided in
                                                                                   A1.8, use same
                                                                                   identifier.
                                                                                   Information needed
                                                                                   to identify unique
                                                                                   netting sets.
A1.10.............................  Netting agreement      xxxxxxxxx............  Provide a netting      Varchar(50)..............  Validated against
                                     counterparty                                  agreement                                         CP.2.
                                     identifier.                                   counterparty
                                                                                   identifier. Use same
                                                                                   identifier as
                                                                                   provided in A1.4 if
                                                                                   counterparty and
                                                                                   netting agreement
                                                                                   counterparty are the
                                                                                   same. Use LEI if
                                                                                   netting agreement
                                                                                   counterparty has
                                                                                   one. Information
                                                                                   needed to identify
                                                                                   unique netting sets.
A1.11.............................  Trade date...........  2014-12-20...........  Provide trade or       YYYY-MM-DD.
                                                                                   other commitment
                                                                                   date for the QFC.
                                                                                   Information needed
                                                                                   to determine when
                                                                                   the entity's rights
                                                                                   and obligations
                                                                                   regarding the
                                                                                   position originated.
A1.12.............................  Termination date.....  2014-03-31...........  Provide date the QFC   YYYY-MM-DD.
                                                                                   terminates or is
                                                                                   expected to
                                                                                   terminate, expire,
                                                                                   mature, or when
                                                                                   final performance is
                                                                                   required.
                                                                                   Information needed
                                                                                   to determine when
                                                                                   the entity's rights
                                                                                   and obligations
                                                                                   regarding the
                                                                                   position are
                                                                                   expected to end.
A1.13.............................  Next call, put, or     2015-01-25...........  Provide next call,     YYYY-MM-DD.
                                     cancellation date.                            put, or cancellation
                                                                                   date.
A1.14.............................  Next payment date....  2015-01-25...........  Provide next payment   YYYY-MM-DD.
                                                                                   date.
A1.15.............................  Local Currency Of      USD..................  Provide currency in    Char(3).
                                     Position.                                     which QFC is
                                                                                   denominated. Use ISO
                                                                                   currency code.
A1.16.............................  Current market value   995000...............  Provide current        Num (25,5).
                                     of the position in                            market value of the
                                     local currency.                               position in local
                                                                                   currency. In the
                                                                                   case of a guarantee
                                                                                   or other third party
                                                                                   credit enhancements,
                                                                                   provide the current
                                                                                   mark-to-market
                                                                                   expected value of
                                                                                   the exposure.
                                                                                   Information needed
                                                                                   to determine the
                                                                                   current size of the
                                                                                   obligation or
                                                                                   benefit associated
                                                                                   with the QFC.

[[Page 289]]

 
A1.17.............................  Current market value   995000...............  In the case of a       Num (25,5).
                                     of the position in                            guarantee or other
                                     U.S. dollars.                                 third party credit
                                                                                   enhancements,
                                                                                   provide the current
                                                                                   mark-to-market
                                                                                   expected value of
                                                                                   the exposure.
                                                                                   Information needed
                                                                                   to determine the
                                                                                   current size of the
                                                                                   obligation/benefit
                                                                                   associated with the
                                                                                   QFC.
A1.18.............................  Asset Classification.  1....................  Provide fair value     Char(1).
                                                                                   asset classification
                                                                                   under GAAP, IFRS, or
                                                                                   other accounting
                                                                                   principles or
                                                                                   standards used by
                                                                                   records entity.
                                                                                   Provide ``1'' for
                                                                                   Level 1, ``2'' for
                                                                                   Level 2, or ``3''
                                                                                   for Level 3.
                                                                                   Information needed
                                                                                   to assess fair value
                                                                                   of the position.
A1.19.............................  Notional or principal  1000000..............  Provide the notional   Num (25,5).
                                     amount of the                                 or principal amount,
                                     position in local                             as applicable, in
                                     currency.                                     local currency. In
                                                                                   the case of a
                                                                                   guarantee or other
                                                                                   third party credit
                                                                                   enhancement, provide
                                                                                   the maximum possible
                                                                                   exposure.
                                                                                   Information needed
                                                                                   to help evaluate the
                                                                                   position.
A1.20.............................  Notional or principal  1000000..............  Provide the notional   Num (25,5).
                                     amount of the                                 or principal amount,
                                     position In U.S.                              as applicable, in
                                     dollars.                                      U.S. dollars. In the
                                                                                   case of a guarantee
                                                                                   or other third party
                                                                                   credit enhancements,
                                                                                   provide the maximum
                                                                                   possible exposure.
                                                                                   Information needed
                                                                                   to help evaluate the
                                                                                   position.
A1.21.............................  Covered by third-      Y/N..................  Indicate whether QFC   Char(1).                   Should be ``Y'' or
                                     party credit                                  is covered by a                                   ``N``.
                                     enhancement                                   guarantee or other
                                     agreement (for the                            third-party credit
                                     benefit of the                                enhancement.
                                     records entity)?                              Information needed
                                                                                   to determine credit
                                                                                   enhancement.
A1.21.1...........................  Third-party credit     999999999............  If QFC is covered by   Varchar(50)..............  Required if A1.21 is
                                     enhancement provider                          a guarantee or other                              ``Y''. Validated
                                     identifier (for the                           third-party credit                                against CP.2.
                                     benefit of the                                enhancement, provide
                                     records entity).                              an identifier for
                                                                                   provider. Use LEI if
                                                                                   available. Complete
                                                                                   the counterparty
                                                                                   master table with
                                                                                   respect to a
                                                                                   provider that is a
                                                                                   non-affiliate.

[[Page 290]]

 
A1.21.2...........................  Third-party credit     4444444..............  If QFC is covered by   Varchar(50)..............  Required if A1.21 is
                                     enhancement                                   a guarantee or other                              ``Y.'' Validated
                                     agreement identifier                          third-party credit                                against A3.3.
                                     (for the benefit of                           enhancement, provide
                                     the records entity).                          an identifier for
                                                                                   the agreement.
A1.21.3...........................  Covered by third-      Y/N..................  Indicate whether QFC   Char(1)..................  Should be ``Y'' or
                                     party credit                                  is covered by a                                   ``N``.
                                     enhancement                                   guarantee or other
                                     agreement (for the                            third-party credit
                                     benefit of the                                enhancement.
                                     counterparty)?                                Information needed
                                                                                   to determine credit
                                                                                   enhancement.
A1.21.4...........................  Third-party credit     999999999............  If QFC is covered by   Varchar(50)..............  Required if A1.21.3
                                     enhancement provider                          a guarantee or other                              is ``Y''. Validated
                                     identifier (for the                           third-party credit                                against CO.2 or
                                     benefit of the                                enhancement, provide                              CP.2.
                                     counterparty).                                an identifier for
                                                                                   provider. Use LEI if
                                                                                   available. Complete
                                                                                   the counterparty
                                                                                   master table with
                                                                                   respect to a
                                                                                   provider that is a
                                                                                   non-affiliate.
A1.21.5...........................  Third-party credit     4444444..............  If QFC is covered by   Varchar(50)..............  Required if A1.21.3
                                     enhancement                                   a guarantee or other                              is ``Y''. Validated
                                     agreement identifier                          third-party credit                                against A3.3.
                                     (for the benefit of                           enhancement, provide
                                     the counterparty).                            an identifier for
                                                                                   agreement.
A1.22.............................  Related position of    3333333..............  Use this field to      Varchar(100).
                                     records entity.                               link any related
                                                                                   positions of the
                                                                                   records entity. All
                                                                                   positions that are
                                                                                   related to one
                                                                                   another should have
                                                                                   same designation in
                                                                                   this field.
A1.23.............................  Reference number for   9999999..............  Provide a unique       Varchar(500).
                                     any related loan.                             reference number for
                                                                                   any loan held by the
                                                                                   records entity or a
                                                                                   member of its
                                                                                   corporate group
                                                                                   related to the
                                                                                   position (with
                                                                                   multiple entries
                                                                                   delimited by commas).
A1.24.............................  Identifier of the      999999999............  For any loan recorded  Varchar(500).              ....................
                                     lender of the                                 in A1.23, provide
                                     related loan.                                 identifier for
                                                                                   records entity or
                                                                                   member of its
                                                                                   corporate group that
                                                                                   holds any related
                                                                                   loan. Use LEI if
                                                                                   entity has one.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        Table A-2--Counterparty Netting Set Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
A2.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD...............

[[Page 291]]

 
A2.2..............................  Records entity         999999999............  Provide the LEI for    Varchar(50)..............  Validated against
                                     identifier.                                   the records entity.                               CO.2.
A2.3..............................  Netting agreement      888888888............  Provide an identifier  Varchar(50)..............  Validated against
                                     counterparty                                  for the netting                                   CP.2.
                                     identifier.                                   agreement
                                                                                   counterparty. Use
                                                                                   LEI if counterparty
                                                                                   has one.
A2.4..............................  Netting agreement      xxxxxxxxx............  Provide an identifier  Varchar(50)..............  Validated against
                                     identifier.                                   for the netting                                   A3.3.
                                                                                   agreement.
A2.4.1............................  Underlying QFC         888888888............  Provide identifier     Varchar(50)..............  Validated against
                                     obligor identifier.                           for underlying QFC                                CO.2 or CP.2.
                                                                                   obligor if netting
                                                                                   agreement is
                                                                                   associated with a
                                                                                   guarantee or other
                                                                                   third party credit
                                                                                   enhancement. Use LEI
                                                                                   if available.
A2.5..............................  Covered by third-      Y/N..................  Indicate whether the   Char(1)..................  Should be ``Y'' or
                                     party credit                                  positions subject to                              ``N''.
                                     enhancement                                   the netting set
                                     agreement (for the                            agreement are
                                     benefit of the                                covered by a third-
                                     records entity)?                              party credit
                                                                                   enhancement
                                                                                   agreement.
A2.5.1............................  Third-party credit     999999999............  Use LEI if available.  Varchar(50)..............  Required if A2.5 is
                                     enhancement provider                          Information needed                                ``Y''. Validated
                                     identifier (for the                           to identity third-                                against CP.2.
                                     benefit of the                                party credit
                                     records entity).                              enhancement provider.
A2.5.2............................  Third-party credit     4444444..............  .....................  Varchar(50)..............  Required if A2.5 is
                                     enhancement                                                                                     ``Y''. Validated
                                     agreement identifier                                                                            against A3.3.
                                     (for the benefit of
                                     the records entity).
A2.5.3............................  Covered by third-      Y/N..................  Information needed to  Char(1)..................  Should be ``Y'' or
                                     party credit                                  determine credit                                  ``N''.
                                     enhancement                                   enhancement.
                                     agreement (for the
                                     benefit of the
                                     counterparty)?
A2.5.4............................  Third-party credit     999999999............  Use LEI if available.  Varchar(50)..............  Required if A2.5.3
                                     enhancement provider                          Information needed                                is ``Y''. Should be
                                     identifier (for the                           to identity third-                                a valid entry in
                                     benefit of the                                party credit                                      the Counterparty
                                     counterparty).                                enhancement provider.                             Master Table.
                                                                                                                                     Validated against
                                                                                                                                     CP.2.
A2.5.5............................  Third-party credit     4444444..............  Information used to    Varchar(50)..............  Required if A2.5.3
                                     enhancement                                   determine guarantee                               is ``Y''. Validated
                                     agreement identifier                          or other third-party                              against A3.3.
                                     (for the benefit of                           credit enhancement.
                                     the counterparty).

[[Page 292]]

 
A2.6..............................  Aggregate current      -1000000.............  Information needed to  Num (25,5)...............  Market value of all
                                     market value in U.S.                          help evaluate the                                 positions in A1 for
                                     dollars of all                                positions subject to                              the given netting
                                     positions under this                          the netting                                       agreement
                                     netting agreement.                            agreement.                                        identifier should
                                                                                                                                     be equal to this
                                                                                                                                     value. A2.6 = A2.7
                                                                                                                                     + A2.8.
A2.7..............................  Current market value   3000000..............  Information needed to  Num (25,5)...............  Market value of all
                                     in U.S. dollars of                            help evaluate the                                 positive positions
                                     all positive                                  positions subject to                              in A1 for the given
                                     positions, as                                 the netting                                       netting agreement
                                     aggregated under                              agreement.                                        identifier should
                                     this netting                                                                                    be equal to this
                                     agreement.                                                                                      value. A2.6 = A2.7
                                                                                                                                     + A2.8.
A2.8..............................  Current market value   -4000000.............  Information needed to  Num (25,5)...............  Market value of all
                                     in U.S. dollars of                            help evaluate the                                 negative positions
                                     all negative                                  positions subject to                              in A1 for the given
                                     positions, as                                 the netting                                       Netting Agreement
                                     aggregated under                              agreement.                                        Identifier should
                                     this netting                                                                                    be equal to this
                                     agreement.                                                                                      value. A2.6 = A2.7
                                                                                                                                     + A2.8.
A2.9..............................  Current market value   950000...............  Information needed to  Num (25,5)...............  Market value of all
                                     in U.S. dollars of                            determine the extent                              collateral posted
                                     all collateral                                to which collateral                               by records entity
                                     posted by records                             has been provided by                              for the given
                                     entity, as                                    records entity.                                   netting agreement
                                     aggregated under                                                                                Identifier should
                                     this netting                                                                                    be equal to sum of
                                     agreement.                                                                                      all A4.9 for the
                                                                                                                                     same netting
                                                                                                                                     agreement
                                                                                                                                     identifier in A4.
A2.10.............................  Current market value   50000................  Information needed to  Num (25,5)...............  Market value of all
                                     in U.S. dollars of                            determine the extent                              collateral posted
                                     all collateral                                to which collateral                               by counterparty for
                                     posted by                                     has been provided by                              the given netting
                                     counterparty, as                              counterparty.                                     agreement
                                     aggregated under                                                                                identifier should
                                     this netting                                                                                    be equal to sum of
                                     agreement.                                                                                      all A4.9 for the
                                                                                                                                     same netting
                                                                                                                                     agreement
                                                                                                                                     identifier in A4.
A2.11.............................  Current market value   950,000..............  Information needed to  Num (25,5).
                                     in U.S. dollars of                            determine the extent
                                     all collateral                                to which collateral
                                     posted by records                             has been provided by
                                     entity that is                                records entity.
                                     subject to re-
                                     hypothecation, as
                                     aggregated under
                                     this netting
                                     agreement.

[[Page 293]]

 
A2.12.............................  Current market value   950,000..............  Information needed to  Num (25,5).
                                     in U.S. dollars of                            determine the extent
                                     all collateral                                to which collateral
                                     posted by                                     has been provided by
                                     counterparty that is                          records entity.
                                     subject to re-
                                     hypothecation, as
                                     aggregated under
                                     this netting
                                     agreement.
A2.13.............................  Records entity         950,000..............  Provide records        Num (25,5)...............  Should be less than
                                     collateral--net.                              entity's collateral                               or equal to A2.9.
                                                                                   excess or deficiency
                                                                                   with respect to all
                                                                                   of its positions, as
                                                                                   determined under
                                                                                   each applicable
                                                                                   agreement, including
                                                                                   thresholds and
                                                                                   haircuts where
                                                                                   applicable.
A2.14.............................  Counterparty           950,000..............  Provide                Num (25,5)...............  Should be less than
                                     collateral--net.                              counterparty's                                    or equal to A2.10.
                                                                                   collateral excess or
                                                                                   deficiency with
                                                                                   respect to all of
                                                                                   its positions, as
                                                                                   determined under
                                                                                   each applicable
                                                                                   agreement, including
                                                                                   thresholds and
                                                                                   haircuts where
                                                                                   applicable.
A2.15.............................  Next margin payment    2015-11-05...........  Provide next margin    YYYY-MM-DD.
                                     date.                                         payment date for
                                                                                   position.
A2.16.............................  Next margin payment    150,000..............  Use positive value if  Num (25,5).
                                     amount in U.S.                                records entity is
                                     dollars.                                      due a payment and
                                                                                   use negative value
                                                                                   if records entity
                                                                                   has to make the
                                                                                   payment.
A2.17.............................  Safekeeping agent      888888888............  Provide an identifier  Varchar(50)..............  Validated against
                                     identifier for                                for the records                                   SA.2.
                                     records entity.                               entity's safekeeping
                                                                                   agent, if any. Use
                                                                                   LEI if safekeeping
                                                                                   agent has one.
A2.18.............................  Safekeeping agent      888888888............  Provide an identifier  Varchar(50)..............  Validated against
                                     identifier for                                for the                                           SA.2.
                                     counterparty.                                 counterparty's
                                                                                   safekeeping agent,
                                                                                   if any. Use LEI if
                                                                                   safekeeping agent
                                                                                   has one.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                               Table A-3--Legal Agreements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
A3.1..............................  As of Date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD.
A3.2..............................  Records entity         999999999............  Provide LEI for        Varchar(50)..............  Validated against
                                     identifier.                                   records entity.                                   CO.2.
A3.3..............................  Agreement identifier.  xxxxxx...............  Provide identifier     Varchar(50).
                                                                                   for each master
                                                                                   agreement, governing
                                                                                   document, netting
                                                                                   agreement or third-
                                                                                   party credit
                                                                                   enhancement
                                                                                   agreement.

[[Page 294]]

 
A3.4..............................  Name of agreement or   ISDA Master 1992 or    Provide name of        Varchar(50).
                                     governing document.    Guarantee Agreement    agreement or
                                                            or Master Netting      governing document.
                                                            Agreement.
A3.5..............................  Agreement date.......  2010-01-25...........  Provide the date of    YYYY-MM-DD.
                                                                                   the agreement.
A3.6..............................  Agreement              888888888............  Use LEI if             Varchar(50)..............  Validated against
                                     counterparty                                  counterparty has                                  field CP.2.
                                     identifier.                                   one. Information
                                                                                   needed to identify
                                                                                   counterparty.
A3.6.1............................  Underlying QFC         888888888............  Provide underlying     Varchar(50)..............  Validated against
                                     obligor identifier.                           QFC obligor                                       CO.2 or CP.2.
                                                                                   identifier if
                                                                                   document identifier
                                                                                   is associated with a
                                                                                   guarantee or other
                                                                                   third party credit
                                                                                   enhancement. Use LEI
                                                                                   if underlying QFC
                                                                                   obligor has one.
A3.7..............................  Agreement governing    New York.............  Provide law governing  Varchar(50).
                                     law.                                          contract disputes.
A3.8..............................  Cross-default          Y/N..................  Specify whether        Char(1)..................  Should be ``Y'' or
                                     provision?.                                   agreement includes                                ``N''.
                                                                                   default or other
                                                                                   termination event
                                                                                   provisions that
                                                                                   reference an entity
                                                                                   not a party to the
                                                                                   agreement (``cross-
                                                                                   default Entity'').
                                                                                   Information needed
                                                                                   to determine
                                                                                   exposure to
                                                                                   affiliates or other
                                                                                   entities.
A3.9..............................  Identity of cross-     777777777............  Provide identity of    Varchar(500).............  Required if A3.8 is
                                     default entities.                             any cross-default                                 ``Y''. ID should be
                                                                                   entities referenced                               a valid entry in
                                                                                   in A3.8. Use LEI if                               Corporate Org
                                                                                   entity has one.                                   Master Table or
                                                                                   Information needed                                Counterparty Master
                                                                                   to determine                                      Table, if
                                                                                   exposure to other                                 applicable.
                                                                                   entities.                                         Multiple entries
                                                                                                                                     comma separated.
A3.10.............................  Covered by third-      Y/N..................  Information needed to  Char(1)..................  Should be ``Y'' or
                                     party credit                                  determine credit                                  ``N''.
                                     enhancement                                   enhancement.
                                     agreement (for the
                                     benefit of the
                                     records entity)?.
A3.11.............................  Third-party credit     999999999............  Use LEI if available.  Varchar(50)..............  Required if A3.10 is
                                     enhancement provider                          Information needed                                ``Y''. Should be a
                                     identifier (for the                           to identity Third-                                valid entry in the
                                     benefit of the                                Party Credit                                      Counterparty Master
                                     records entity).                              Enhancement Provider.                             Table. Validated
                                                                                                                                     against CP.2.

[[Page 295]]

 
A3.12.............................  Associated third-      33333333.............  Information needed to  Varchar(50)..............  Required if A3.10 is
                                     party credit                                  determine credit                                  ``Y''. Validated
                                     enhancement                                   enhancement.                                      against field A3.3.
                                     agreement document
                                     identifier (for the
                                     benefit of the
                                     records entity).
A3.12.1...........................  Covered by third-      Y/N..................  Information needed to  Char(1)..................  Should be ``Y'' or
                                     party credit                                  determine credit                                  ``N''.
                                     enhancement                                   enhancement.
                                     agreement (for the
                                     benefit of the
                                     counterparty)?.
A3.12.2...........................  Third-party credit     999999999............  Use LEI if available.  Varchar(50)..............  Required if A3.12.1
                                     enhancement provider                          Information needed                                is ``Y''. Should be
                                     identifier (for the                           to identity Third-                                a valid entry in
                                     benefit of the                                Party Credit                                      the Counterparty
                                     counterparty).                                Enhancement Provider.                             Master. Validated
                                                                                                                                     against CP.2.
A3.12.3...........................  Associated third-      33333333.............  Information needed to  Varchar(50)..............  Required if A3.12.1
                                     party credit                                  determine credit                                  is ``Y''. Validated
                                     enhancement                                   enhancement.                                      against field A3.3.
                                     agreement document
                                     identifier (for the
                                     benefit of the
                                     counterparty).
A3.13.............................  Counterparty contact   John Doe & Co........  Provide contact name   Varchar(200).
                                     information: name.                            for counterparty as
                                                                                   provided under
                                                                                   notice section of
                                                                                   agreement.
A3.14.............................  Counterparty contact   123 Main St, City,     Provide contact        Varchar(100).
                                     information: address.  State Zip code.        address for
                                                                                   counterparty as
                                                                                   provided under
                                                                                   notice section of
                                                                                   agreement.
A3.15.............................  Counterparty contact   1-999-999-9999.......  Provide contact phone  Varchar(50).
                                     information: phone.                           number for
                                                                                   counterparty as
                                                                                   provided under
                                                                                   notice section of
                                                                                   agreement.
A3.16.............................  Counterparty's         [email protected].....  Provide contact email  Varchar(100).              ....................
                                     contact information:                          address for
                                     email address.                                counterparty as
                                                                                   provided under
                                                                                   notice section of
                                                                                   agreement.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                            Table A-4--Collateral Detail Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
A4.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD...............
A4.2..............................  Records entity         999999999............  Provide LEI for        Varchar(50)..............  Validated against
                                     identifier.                                   records entity.                                   CO.2.

[[Page 296]]

 
A4.3..............................  Collateral posted/     P/N..................  Enter ``P'' if         Char(1).
                                     collateral received                           collateral has been
                                     flag.                                         posted by the
                                                                                   records entity.
                                                                                   Enter ``R'' for
                                                                                   collateral received
                                                                                   by Records Entity.
A4.4..............................  Counterparty           888888888............  Provide identifier     Varchar(50)..............  Validated against
                                     identifier.                                   for counterparty.                                 CP.2.
                                                                                   Use LEI if
                                                                                   counterparty has one.
A4.5..............................  Netting agreement      xxxxxxxxx............  Provide identifier     Varchar(50)..............  Validated against
                                     identifier.                                   for applicable                                    field A3.3.
                                                                                   netting agreement.
A4.6..............................  Unique collateral      CUSIP/ISIN...........  Provide identifier to  Varchar(50).
                                     item identifier.                              reference individual
                                                                                   collateral posted.
A4.7..............................  Original face amount   1500000..............  Information needed to  Num (25,5).
                                     of collateral item                            evaluate collateral
                                     in local currency.                            sufficiency and
                                                                                   marketability.
A4.8..............................  Local currency of      USD..................  Use ISO currency code  Char(3).
                                     collateral item.
A4.9..............................  Market value amount    850000...............  Information needed to  Num (25,5)...............  Market value of all
                                     of collateral item                            evaluate collateral                               collateral posted
                                     in U.S. dollars.                              sufficiency and                                   by Records Entity
                                                                                   marketability and to                              or Counterparty
                                                                                   permit aggregation                                A2.9 or A2.10 for
                                                                                   across currencies.                                the given netting
                                                                                                                                     agreement
                                                                                                                                     identifier should
                                                                                                                                     be equal to sum of
                                                                                                                                     all A4.9 for the
                                                                                                                                     same netting
                                                                                                                                     agreement
                                                                                                                                     identifier in A4.
A4.10.............................  Description of         U.S. Treasury Strip,   Information needed to  Varchar(200).
                                     collateral item.       maturity 2020/6/30.    evaluate collateral
                                                                                   sufficiency and
                                                                                   marketability.
A4.11.............................  Asset classification.  1....................  Provide fair value     Char(1)..................  Should be ``1'' or
                                                                                   asset classification                              ``2'' or ``3''.
                                                                                   for the collateral
                                                                                   item under GAAP,
                                                                                   IFRS, or other
                                                                                   accounting
                                                                                   principles or
                                                                                   standards used by
                                                                                   records entity.
                                                                                   Provide ``1'' for
                                                                                   Level 1, ``2'' for
                                                                                   Level 2, or ``3''
                                                                                   for Level 3.
A4.12.............................  Collateral or          Y/N..................  Specify whether the    Char(1)..................  Should be ``Y'' or
                                     portfolio                                     specific item of                                  ``N''.
                                     segregation status.                           collateral or the
                                                                                   related collateral
                                                                                   portfolio is
                                                                                   segregated from
                                                                                   assets of the
                                                                                   safekeeping agent.
A4.13.............................  Collateral location..  ABC broker-dealer (in  Provide location of    Varchar(200).
                                                            safekeeping account    collateral posted.
                                                            of counterparty).
A4.14.............................  Collateral             New York, New York...  Provide jurisdiction   Varchar(50).
                                     jurisdiction.                                 of location of
                                                                                   collateral posted.
A4.15.............................  Is collateral re-      Y/N..................  Information needed to  Char(1)..................  Should be ``Y'' or
                                     hypothecation                                 evaluate exposure of                              ``N''.
                                     allowed?.                                     the records entity
                                                                                   to the counterparty
                                                                                   or vice-versa for re-
                                                                                   hypothecated
                                                                                   collateral.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 297]]


                                                          Corporate Organization Master Table *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD.
CO.2..............................  Entity identifier....  888888888............  Provide unique         Varchar(50)..............  Should be unique
                                                                                   identifier. Use LEI                               across all records
                                                                                   if available.                                     entities.
                                                                                   Information needed
                                                                                   to identify entity.
CO.3..............................  Has LEI been used for  Y/N..................  Specify whether the    Char(1)..................  Should be ``Y'' or
                                     entity identifier?.                           entity identifier                                 ``N''.
                                                                                   provided is an LEI.
CO.4..............................  Legal name of entity.  John Doe & Co........  Provide legal name of  Varchar(200).
                                                                                   entity.
CO.5..............................  Immediate parent       77777777.............  Use LEI if available.  Varchar(50).
                                     entity identifier.                            Information needed
                                                                                   to complete org
                                                                                   structure.
CO.6..............................  Has LEI been used for  Y/N..................  Specify whether the    Char(1)..................  Should be ``Y'' or
                                     immediate parent                              immediate parent                                  ``N''.
                                     entity identifier?                            entity identifier
                                                                                   provided is an LEI.
CO.7..............................  Legal name of          John Doe & Co........  Information needed to  Varchar(200).
                                     immediate parent                              complete org
                                     entity.                                       structure.
CO.8..............................  Percentage ownership   100.00...............  Information needed to  Num (5,2).
                                     of immediate parent                           complete org
                                     entity in the entity.                         structure.
CO.9..............................  Entity type..........  Subsidiary, foreign    Information needed to  Varchar(50).
                                                            branch, foreign        complete org
                                                            division.              structure.
CO.10.............................  Domicile.............  New York, New York...  Enter as city, state   Varchar(50).
                                                                                   or city, foreign
                                                                                   country.
CO.11.............................  Jurisdiction under     New York.............  Enter as state or      Varchar(50).
                                     which incorporated                            foreign jurisdiction.
                                     or organized.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Foreign branches and divisions shall be separately identified to the extent they are identified in an entity's reports to its appropriate Federal
  banking agency.


                                                                Counterparty Master Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
CP.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD.

[[Page 298]]

 
CP.2..............................  Counterparty           888888888............  Use LEI if             Varchar(50).
                                     identifier.                                   counterparty has
                                                                                   one. Should be used
                                                                                   consistently across
                                                                                   all records entities
                                                                                   within a corporate
                                                                                   group. The
                                                                                   counterparty
                                                                                   identifier shall be
                                                                                   the global legal
                                                                                   entity identifier if
                                                                                   one has been issued
                                                                                   to the entity. If a
                                                                                   counterparty
                                                                                   transacts with the
                                                                                   records entity
                                                                                   through one or more
                                                                                   separate foreign
                                                                                   branches or
                                                                                   divisions and any
                                                                                   such branch or
                                                                                   division does not
                                                                                   have its own unique
                                                                                   global legal entity
                                                                                   identifier, the
                                                                                   records entity must
                                                                                   include additional
                                                                                   identifiers, as
                                                                                   appropriate to
                                                                                   enable the FDIC to
                                                                                   aggregate or
                                                                                   disaggregate the
                                                                                   data for each
                                                                                   counterparty and for
                                                                                   each entity with the
                                                                                   same ultimate parent
                                                                                   entity as the
                                                                                   counterparty.
CP.3..............................  Has LEI been used for  Y/N..................  Indicate whether the   Char(1)..................  Should be ``Y'' or
                                     counterparty                                  counterparty                                      ``N''.
                                     identifier?.                                  identifier is an LEI.
CP.4..............................  Legal name of          John Doe & Co........  Information needed to  Varchar(200).
                                     counterparty.                                 identify and, if
                                                                                   necessary,
                                                                                   communicate with
                                                                                   counterparty.
CP.5..............................  Domicile.............  New York, New York...  Enter as city, state   Varchar(50).
                                                                                   or city, foreign
                                                                                   country.
CP.6..............................  Jurisdiction under     New York.............  Enter as state or      Varchar(50).
                                     which incorporated                            foreign jurisdiction.
                                     or organized.
CP.7..............................  Immediate parent       77777777.............  Provide an identifier  Varchar(50).
                                     entity identifier.                            for the parent
                                                                                   entity that directly
                                                                                   controls the
                                                                                   counterparty. Use
                                                                                   LEI if immediate
                                                                                   parent entity has
                                                                                   one.
CP.8..............................  Has LEI been used for  Y/N..................  Indicate whether the   Char(1)..................  Should be ``Y'' or
                                     immediate parent                              immediate parent                                  ``N''.
                                     entity identifier?                            entity identifier is
                                                                                   an LEI.
CP.9..............................  Legal name of          John Doe & Co........  Information needed to  Varchar(200).
                                     immediate parent                              identify and, if
                                     entity.                                       necessary,
                                                                                   communicate with
                                                                                   counterparty.
CP.10.............................  Ultimate parent        666666666............  Provide an identifier  Varchar(50).
                                     entity identifier.                            for the parent
                                                                                   entity that is a
                                                                                   member of the
                                                                                   corporate group of
                                                                                   the counterparty
                                                                                   that is not
                                                                                   controlled by
                                                                                   another entity.
                                                                                   Information needed
                                                                                   to identify
                                                                                   counterparty. Use
                                                                                   LEI if ultimate
                                                                                   parent entity has
                                                                                   one.

[[Page 299]]

 
CP.11.............................  Has LEI been used for  Y/N..................  Indicate whether the   Char(1)..................  Should be ``Y'' or
                                     ultimate parent                               ultimate parent                                   ``N''.
                                     entity identifier?.                           entity identifier is
                                                                                   an LEI.
CP.12.............................  Legal name of          John Doe & Co........  Information needed to  Varchar(100).              ....................
                                     ultimate parent                               identify and, if
                                     entity.                                       necessary,
                                                                                   communicate with
                                                                                   Counterparty.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                              Booking Location Master Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
BL.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD.
BL.2..............................  Records entity         999999999............  Provide LEI..........  Varchar(50)..............  Should be a valid
                                     identifier.                                                                                     entry in the
                                                                                                                                     Corporate Org
                                                                                                                                     Master Table.
BL.3..............................  Internal booking       New York, New York...  Provide office where   Varchar(50).
                                     location identifier.                          the position is
                                                                                   booked. Information
                                                                                   needed to determine
                                                                                   the headquarters or
                                                                                   branch where the
                                                                                   position is booked,
                                                                                   including the system
                                                                                   on which the trade
                                                                                   is booked, as well
                                                                                   as the system on
                                                                                   which the trade is
                                                                                   settled.
BL.4..............................  Unique booking unit    xxxxxx...............  Provide unit or desk   Varchar(50).
                                     or desk identifier.                           at which the
                                                                                   position is booked.
                                                                                   Information needed
                                                                                   to help determine
                                                                                   purpose of position.
BL.5..............................  Unique booking unit    North American         Additional             Varchar(50).
                                     or desk description.   trading desk.          information to help
                                                                                   determine purpose of
                                                                                   position.
BL.6..............................  Booking unit or desk   1-999-999-9999.......  Information needed to  Varchar(50).
                                     contact--phone.                               communicate with the
                                                                                   booking unit or desk.
BL.7..............................  Booking unit or desk   [email protected]........  Information needed to  Varchar(100).              ....................
                                     contact--email.                               communicate with the
                                                                                   booking unit or desk.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                             Safekeeping Agent Master Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Instructions and data
                                            Field                 Example              application                  Def                  Validation
--------------------------------------------------------------------------------------------------------------------------------------------------------
SA.1..............................  As of date...........  2015-01-05...........  Data extraction date.  YYYY-MM-DD.
SA.2..............................  Safekeeping agent      888888888............  Provide an identifier  Varchar(50).
                                     identifier.                                   for the safekeeping
                                                                                   agent. Use LEI if
                                                                                   safekeeping agent
                                                                                   has one.
SA.3..............................  Legal name of          John Doe & Co........  Information needed to  Varchar(200).
                                     safekeeping agent.                            identify and, if
                                                                                   necessary,
                                                                                   communicate with the
                                                                                   safekeeping agent.
SA.4..............................  Point of contact--     John Doe.............  Information needed to  Varchar(200).
                                     name.                                         identify and, if
                                                                                   necessary,
                                                                                   communicate with the
                                                                                   safekeeping agent.

[[Page 300]]

 
SA.5..............................  Point of contact--     123 Main St, City,     Information needed to  Varchar(100).
                                     address.               State Zip Code.        identify and, if
                                                                                   necessary,
                                                                                   communicate with the
                                                                                   safekeeping agent.
SA.6..............................  Point of contact--     1-999-999-9999.......  Information needed to  Varchar(50).
                                     phone.                                        identify and, if
                                                                                   necessary,
                                                                                   communicate with the
                                                                                   safekeeping agent.
SA.7..............................  Point of contact--     [email protected].....  Information needed to  Varchar(100).              ....................
                                     email.                                        identify and, if
                                                                                   necessary,
                                                                                   communicate with the
                                                                                   safekeeping agent.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                               Details of Formats
----------------------------------------------------------------------------------------------------------------
               Format                     Content in brief      Additional explanation           Examples
----------------------------------------------------------------------------------------------------------------
YYYY-MM-DD..........................  Date...................  YYYY = four digit date,   2015-11-12
                                                                MM = 2 digit month, DD
                                                                = 2 digit date
Num (25,5)..........................  Up to 25 numerical       Up to 20 numerical        1352.67
                                       characters including 5   characters before the    12345678901234567890.12
                                       decimals.                decimal point and up to   345
                                                                5 numerical characters   0
                                                                after the decimal        -20000.25
                                                                point. The dot           -0.257
                                                                character is used to
                                                                separate decimals.
Char(3).............................  3 alphanumeric           The length is fixed at 3  USD
                                       characters.              alphanumeric characters. X1X
                                                                                         999
Varchar(25).........................  Up to 25 alphanumeric    The length is not fixed   asgaGEH3268EFdsagtTRCF5
                                       characters.              but limited at up to 25   43
                                                                alphanumeric characters.
----------------------------------------------------------------------------------------------------------------



PART 373_CREDIT RISK RETENTION--Table of Contents



           Subpart A_Authority, Purpose, Scope and Definitions

Sec.
373.1 Purpose and scope.
373.2 Definitions.

                     Subpart B_Credit Risk Retention

373.3 Base risk retention requirement.
373.4 Standard risk retention.
373.5 Revolving pool securitizations.
373.6 Eligible ABCP conduits.
373.7 Commercial mortgage-backed securities.
373.8 Federal National Mortgage Association and Federal Home Loan 
          Mortgage Corporation ABS.
373.9 Open market CLOs.
373.10 Qualified tender option bonds.

                  Subpart C_Transfer of Risk Retention

373.11 Allocation of risk retention to an originator.
373.12 Hedging, transfer and financing prohibitions.

                   Subpart D_Exceptions and Exemptions

373.13 Exemption for qualified residential mortgages.
373.14 Definitions applicable to qualifying commercial loans, commercial 
          real estate loans, and automobile loans.
373.15 Qualifying commercial loans, commercial real estate loans, and 
          automobile loans.
373.16 Underwriting standards for qualifying commercial loans.
373.17 Underwriting standards for qualifying CRE loans.
373.18 Underwriting standards for qualifying automobile loans.
373.19 General exemptions.
373.20 Safe harbor for certain foreign-related transactions.
373.21 Additional exemptions.
373.22 Periodic review of the QRM definition, exempted three-to-four 
          unit residential mortgage loans, and community-focused 
          residential mortgage exemption.

    Authority: 12 U.S.C. 1811 et seq. and 3103 et seq., and 15 U.S.C. 
78o-11.

    Source: 79 FR 77740, Dec. 24, 2014, unless otherwise noted.

[[Page 301]]



           Subpart A_Authority, Purpose, Scope and Definitions



Sec.373.1  Purpose and scope.

    (a) Authority. (1) In general. This part is issued by the Federal 
Deposit Insurance Corporation (FDIC) under section 15G of the Securities 
Exchange Act of 1934, as amended (Exchange Act) (15 U.S.C. 78o-11), as 
well as the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) and 
the International Banking Act of 1978, as amended (12 U.S.C. 3101 et 
seq.).
    (2) Nothing in this part shall be read to limit the authority of the 
FDIC to take action under provisions of law other than 15 U.S.C. 78o-11, 
including to address unsafe or unsound practices or conditions, or 
violations of law or regulation under section 8 of the Federal Deposit 
Insurance Act (12 U.S.C. 1818).
    (b) Purpose. This part requires securitizers to retain an economic 
interest in a portion of the credit risk for any asset that the 
securitizer, through the issuance of an asset-backed security, 
transfers, sells, or conveys to a third party in a transaction within 
the scope of section 15G of the Exchange Act. This part specifies the 
permissible types, forms, and amounts of credit risk retention, and it 
establishes certain exemptions for securitizations collateralized by 
assets that meet specified underwriting standards or that otherwise 
qualify for an exemption.
    (c) Scope. This part applies to any securitizer that is:
    (1) A state nonmember bank (as defined in 12 U.S.C. 1813(e)(2));
    (2) An insured state branch of a foreign bank (as defined in 12 CFR 
347.202);
    (3) A state savings association (as defined in 12 U.S.C. 
1813(b)(3)); or
    (4) Any subsidiary of an entity described in paragraph (c)(1), (2), 
or (3) of this section.

[79 FR 77740, Dec. 24, 2014]



Sec.373.2  Definitions.

    For purposes of this part, the following definitions apply:
    ABS interest means:
    (1) Any type of interest or obligation issued by an issuing entity, 
whether or not in certificated form, including a security, obligation, 
beneficial interest or residual interest (other than an uncertificated 
regular interest in a REMIC that is held by another REMIC, where both 
REMICs are part of the same structure and a single REMIC in that 
structure issues ABS interests to investors, or a non-economic residual 
interest issued by a REMIC), payments on which are primarily dependent 
on the cash flows of the collateral owned or held by the issuing entity; 
and
    (2) Does not include common or preferred stock, limited liability 
interests, partnership interests, trust certificates, or similar 
interests that:
    (i) Are issued primarily to evidence ownership of the issuing 
entity; and
    (ii) The payments, if any, on which are not primarily dependent on 
the cash flows of the collateral held by the issuing entity; and
    (3) Does not include the right to receive payments for services 
provided by the holder of such right, including servicing, trustee 
services and custodial services.
    Affiliate of, or a person affiliated with, a specified person means 
a person that directly, or indirectly through one or more 
intermediaries, controls, or is controlled by, or is under common 
control with, the person specified.
    Appropriate Federal banking agency has the same meaning as in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
    Asset means a self-liquidating financial asset (including but not 
limited to a loan, lease, mortgage, or receivable).
    Asset-backed security has the same meaning as in section 3(a)(79) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(79)).
    Collateral means, with respect to any issuance of ABS interests, the 
assets that provide the cash flow and the servicing assets that support 
such cash flow for the ABS interests irrespective of the legal structure 
of issuance, including security interests in assets or other property of 
the issuing entity, fractional undivided property interests in the 
assets or other property of the issuing entity, or any other property 
interest in or rights to cash flow from such assets and related 
servicing assets. Assets or other property

[[Page 302]]

collateralize an issuance of ABS interests if the assets or property 
serve as collateral for such issuance.
    Commercial real estate loan has the same meaning as in Sec.373.14.
    Commission means the Securities and Exchange Commission.
    Control including the terms ``controlling,'' ``controlled by'' and 
``under common control with'':
    (1) Means the possession, direct or indirect, of the power to direct 
or cause the direction of the management and policies of a person, 
whether through the ownership of voting securities, by contract, or 
otherwise.
    (2) Without limiting the foregoing, a person shall be considered to 
control another person if the first person:
    (i) Owns, controls or holds with power to vote 25 percent or more of 
any class of voting securities of the other person; or
    (ii) Controls in any manner the election of a majority of the 
directors, trustees or persons performing similar functions of the other 
person.
    Credit risk means:
    (1) The risk of loss that could result from the failure of the 
borrower in the case of a securitized asset, or the issuing entity in 
the case of an ABS interest in the issuing entity, to make required 
payments of principal or interest on the asset or ABS interest on a 
timely basis;
    (2) The risk of loss that could result from bankruptcy, insolvency, 
or a similar proceeding with respect to the borrower or issuing entity, 
as appropriate; or
    (3) The effect that significant changes in the underlying credit 
quality of the asset or ABS interest may have on the market value of the 
asset or ABS interest.
    Creditor has the same meaning as in 15 U.S.C. 1602(g).
    Depositor means:
    (1) The person that receives or purchases and transfers or sells the 
securitized assets to the issuing entity;
    (2) The sponsor, in the case of a securitization transaction where 
there is not an intermediate transfer of the assets from the sponsor to 
the issuing entity; or
    (3) The person that receives or purchases and transfers or sells the 
securitized assets to the issuing entity in the case of a securitization 
transaction where the person transferring or selling the securitized 
assets directly to the issuing entity is itself a trust.
    Eligible horizontal residual interest means, with respect to any 
securitization transaction, an ABS interest in the issuing entity:
    (1) That is an interest in a single class or multiple classes in the 
issuing entity, provided that each interest meets, individually or in 
the aggregate, all of the requirements of this definition;
    (2) With respect to which, on any payment date or allocation date on 
which the issuing entity has insufficient funds to satisfy its 
obligation to pay all contractual interest or principal due, any 
resulting shortfall will reduce amounts payable to the eligible 
horizontal residual interest prior to any reduction in the amounts 
payable to any other ABS interest, whether through loss allocation, 
operation of the priority of payments, or any other governing 
contractual provision (until the amount of such ABS interest is reduced 
to zero); and
    (3) That, with the exception of any non-economic REMIC residual 
interest, has the most subordinated claim to payments of both principal 
and interest by the issuing entity.
    Eligible horizontal cash reserve account means an account meeting 
the requirements of Sec.373.4(b).
    Eligible vertical interest means, with respect to any securitization 
transaction, a single vertical security or an interest in each class of 
ABS interests in the issuing entity issued as part of the securitization 
transaction that constitutes the same proportion of each such class.
    Federal banking agencies means the Office of the Comptroller of the 
Currency, the Board of Governors of the Federal Reserve System, and the 
Federal Deposit Insurance Corporation.
    GAAP means generally accepted accounting principles as used in the 
United States.
    Issuing entity means, with respect to a securitization transaction, 
the trust or other entity:
    (1) That owns or holds the pool of assets to be securitized; and

[[Page 303]]

    (2) In whose name the asset-backed securities are issued.
    Majority-owned affiliate of a person means an entity (other than the 
issuing entity) that, directly or indirectly, majority controls, is 
majority controlled by or is under common majority control with, such 
person. For purposes of this definition, majority control means 
ownership of more than 50 percent of the equity of an entity, or 
ownership of any other controlling financial interest in the entity, as 
determined under GAAP.
    Originator means a person who:
    (1) Through an extension of credit or otherwise, creates an asset 
that collateralizes an asset-backed security; and
    (2) Sells the asset directly or indirectly to a securitizer or 
issuing entity.
    REMIC has the same meaning as in 26 U.S.C. 860D.
    Residential mortgage means:
    (1) A transaction that is a covered transaction as defined in Sec.
1026.43(b) of Regulation Z (12 CFR 1026.43(b)(1));
    (2) Any transaction that is exempt from the definition of ``covered 
transaction'' under Sec.1026.43(a) of Regulation Z (12 CFR 
1026.43(a)); and
    (3) Any other loan secured by a residential structure that contains 
one to four units, whether or not that structure is attached to real 
property, including an individual condominium or cooperative unit and, 
if used as a residence, a mobile home or trailer.
    Retaining sponsor means, with respect to a securitization 
transaction, the sponsor that has retained or caused to be retained an 
economic interest in the credit risk of the securitized assets pursuant 
to subpart B of this part.
    Securitization transaction means a transaction involving the offer 
and sale of asset-backed securities by an issuing entity.
    Securitized asset means an asset that:
    (1) Is transferred, sold, or conveyed to an issuing entity; and
    (2) Collateralizes the ABS interests issued by the issuing entity.
    Securitizer means, with respect to a securitization transaction, 
either:
    (1) The depositor of the asset-backed securities (if the depositor 
is not the sponsor); or
    (2) The sponsor of the asset-backed securities.
    Servicer means any person responsible for the management or 
collection of the securitized assets or making allocations or 
distributions to holders of the ABS interests, but does not include a 
trustee for the issuing entity or the asset-backed securities that makes 
allocations or distributions to holders of the ABS interests if the 
trustee receives such allocations or distributions from a servicer and 
the trustee does not otherwise perform the functions of a servicer.
    Servicing assets means rights or other assets designed to assure the 
servicing or timely distribution of proceeds to ABS interest holders and 
rights or other assets that are related or incidental to purchasing or 
otherwise acquiring and holding the issuing entity's securitized assets. 
Servicing assets include amounts received by the issuing entity as 
proceeds of securitized assets, including proceeds of rights or other 
assets, whether as remittances by obligors or as other recoveries.
    Single vertical security means, with respect to any securitization 
transaction, an ABS interest entitling the sponsor to a specified 
percentage of the amounts paid on each class of ABS interests in the 
issuing entity (other than such single vertical security).
    Sponsor means a person who organizes and initiates a securitization 
transaction by selling or transferring assets, either directly or 
indirectly, including through an affiliate, to the issuing entity.
    State has the same meaning as in Section 3(a)(16) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(16)).
    United States or U.S. means the United States of America, including 
its territories and possessions, any State of the United States, and the 
District of Columbia.
    Wholly-owned affiliate means a person (other than an issuing entity) 
that, directly or indirectly, wholly controls, is wholly controlled by, 
or is wholly under common control with, another person. For purposes of 
this definition, ``wholly controls'' means ownership of 100 percent of 
the equity of an entity.

[[Page 304]]



                     Subpart B_Credit Risk Retention



Sec.373.3  Base risk retention requirement.

    (a) Base risk retention requirement. Except as otherwise provided in 
this part, the sponsor of a securitization transaction (or majority-
owned affiliate of the sponsor) shall retain an economic interest in the 
credit risk of the securitized assets in accordance with any one of 
Sec. Sec.373.4 through 373.10. Credit risk in securitized assets 
required to be retained and held by any person for purposes of 
compliance with this part, whether a sponsor, an originator, an 
originator-seller, or a third-party purchaser, except as otherwise 
provided in this part, may be acquired and held by any of such person's 
majority-owned affiliates (other than an issuing entity).
    (b) Multiple sponsors. If there is more than one sponsor of a 
securitization transaction, it shall be the responsibility of each 
sponsor to ensure that at least one of the sponsors of the 
securitization transaction (or at least one of their majority-owned or 
wholly-owned affiliates, as applicable) retains an economic interest in 
the credit risk of the securitized assets in accordance with any one of 
Sec. Sec.373.4, 373.5, 373.8, 373.9, or 373.10.



Sec.373.4  Standard risk retention.

    (a) General requirement. Except as provided in Sec. Sec.373.5 
through 373.10, the sponsor of a securitization transaction must retain 
an eligible vertical interest or eligible horizontal residual interest, 
or any combination thereof, in accordance with the requirements of this 
section.
    (1) If the sponsor retains only an eligible vertical interest as its 
required risk retention, the sponsor must retain an eligible vertical 
interest in a percentage of not less than 5 percent.
    (2) If the sponsor retains only an eligible horizontal residual 
interest as its required risk retention, the amount of the interest must 
equal at least 5 percent of the fair value of all ABS interests in the 
issuing entity issued as a part of the securitization transaction, 
determined using a fair value measurement framework under GAAP.
    (3) If the sponsor retains both an eligible vertical interest and an 
eligible horizontal residual interest as its required risk retention, 
the percentage of the fair value of the eligible horizontal residual 
interest and the percentage of the eligible vertical interest must equal 
at least five.
    (4) The percentage of the eligible vertical interest, eligible 
horizontal residual interest, or combination thereof retained by the 
sponsor must be determined as of the closing date of the securitization 
transaction.
    (b) Option to hold base amount in eligible horizontal cash reserve 
account. In lieu of retaining all or any part of an eligible horizontal 
residual interest under paragraph (a) of this section, the sponsor may, 
at closing of the securitization transaction, cause to be established 
and funded, in cash, an eligible horizontal cash reserve account in the 
amount equal to the fair value of such eligible horizontal residual 
interest or part thereof, provided that the account meets all of the 
following conditions:
    (1) The account is held by the trustee (or person performing similar 
functions) in the name and for the benefit of the issuing entity;
    (2) Amounts in the account are invested only in cash and cash 
equivalents; and
    (3) Until all ABS interests in the issuing entity are paid in full, 
or the issuing entity is dissolved:
    (i) Amounts in the account shall be released only to:
    (A) Satisfy payments on ABS interests in the issuing entity on any 
payment date on which the issuing entity has insufficient funds from any 
source to satisfy an amount due on any ABS interest; or
    (B) Pay critical expenses of the trust unrelated to credit risk on 
any payment date on which the issuing entity has insufficient funds from 
any source to pay such expenses and:
    (1) Such expenses, in the absence of available funds in the eligible 
horizontal cash reserve account, would be paid prior to any payments to 
holders of ABS interests; and
    (2) Such payments are made to parties that are not affiliated with 
the sponsor; and

[[Page 305]]

    (ii) Interest (or other earnings) on investments made in accordance 
with paragraph (b)(2) of this section may be released once received by 
the account.
    (c) Disclosures. A sponsor relying on this section shall provide, or 
cause to be provided, to potential investors, under the caption ``Credit 
Risk Retention'', a reasonable period of time prior to the sale of the 
asset-backed securities in the securitization transaction the following 
disclosures in written form and within the time frames set forth in this 
paragraph (c):
    (1) Horizontal interest. With respect to any eligible horizontal 
residual interest held under paragraph (a) of this section, a sponsor 
must disclose:
    (i) A reasonable period of time prior to the sale of an asset-backed 
security issued in the same offering of ABS interests,
    (A) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS interests are issued, as applicable)) of the eligible horizontal 
residual interest that the sponsor expects to retain at the closing of 
the securitization transaction. If the specific prices, sizes, or rates 
of interest of each tranche of the securitization are not available, the 
sponsor must disclose a range of fair values (expressed as a percentage 
of the fair value of all of the ABS interests issued in the 
securitization transaction and dollar amount (or corresponding amount in 
the foreign currency in which the ABS interests are issued, as 
applicable)) of the eligible horizontal residual interest that the 
sponsor expects to retain at the close of the securitization transaction 
based on a range of bona fide estimates or specified prices, sizes, or 
rates of interest of each tranche of the securitization. A sponsor 
disclosing a range of fair values based on a range of bona fide 
estimates or specified prices, sizes or rates of interest of each 
tranche of the securitization must also disclose the method by which it 
determined any range of prices, tranche sizes, or rates of interest.
    (B) A description of the material terms of the eligible horizontal 
residual interest to be retained by the sponsor;
    (C) A description of the valuation methodology used to calculate the 
fair values or range of fair values of all classes of ABS interests, 
including any portion of the eligible horizontal residual interest 
retained by the sponsor;
    (D) All key inputs and assumptions or a comprehensive description of 
such key inputs and assumptions that were used in measuring the 
estimated total fair value or range of fair values of all classes of ABS 
interests, including the eligible horizontal residual interest to be 
retained by the sponsor.
    (E) To the extent applicable to the valuation methodology used, the 
disclosure required in paragraph (c)(1)(i)(D) of this section shall 
include, but should not be limited to, quantitative information about 
each of the following:
    (1) Discount rates;
    (2) Loss given default (recovery);
    (3) Prepayment rates;
    (4) Default rates;
    (5) Lag time between default and recovery; and
    (6) The basis of forward interest rates used.
    (F) The disclosure required in paragraphs (c)(1)(i)(C) and (D) of 
this section shall include, at a minimum, descriptions of all inputs and 
assumptions that either could have a material impact on the fair value 
calculation or would be material to a prospective investor's ability to 
evaluate the sponsor's fair value calculations. To the extent the 
disclosure required in this paragraph (c)(1) includes a description of a 
curve or curves, the description shall include a description of the 
methodology that was used to derive each curve and a description of any 
aspects or features of each curve that could materially impact the fair 
value calculation or the ability of a prospective investor to evaluate 
the sponsor's fair value calculation. To the extent a sponsor uses 
information about the securitized assets in its calculation of fair 
value, such information shall not be as of a date more than 60 days 
prior to the date of first use with investors; provided that for a 
subsequent issuance of ABS interests by the same issuing entity with the 
same sponsor for which

[[Page 306]]

the securitization transaction distributes amounts to investors on a 
quarterly or less frequent basis, such information shall not be as of a 
date more than 135 days prior to the date of first use with investors; 
provided further, that the balance or value (in accordance with the 
transaction documents) of the securitized assets may be increased or 
decreased to reflect anticipated additions or removals of assets the 
sponsor makes or expects to make between the cut-off date or similar 
date for establishing the composition of the asset pool collateralizing 
such asset-backed security and the closing date of the securitization.
    (G) A summary description of the reference data set or other 
historical information used to develop the key inputs and assumptions 
referenced in paragraph (c)(1)(i)(D) of this section, including loss 
given default and default rates;
    (ii) A reasonable time after the closing of the securitization 
transaction:
    (A) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS are issued, as applicable)) of the eligible horizontal residual 
interest the sponsor retained at the closing of the securitization 
transaction, based on actual sale prices and finalized tranche sizes;
    (B) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS are issued, as applicable)) of the eligible horizontal residual 
interest that the sponsor is required to retain under this section; and
    (C) To the extent the valuation methodology or any of the key inputs 
and assumptions that were used in calculating the fair value or range of 
fair values disclosed prior to sale and required under paragraph 
(c)(1)(i) of this section materially differs from the methodology or key 
inputs and assumptions used to calculate the fair value at the time of 
closing, descriptions of those material differences.
    (iii) If the sponsor retains risk through the funding of an eligible 
horizontal cash reserve account:
    (A) The amount to be placed (or that is placed) by the sponsor in 
the eligible horizontal cash reserve account at closing, and the fair 
value (expressed as a percentage of the fair value of all of the ABS 
interests issued in the securitization transaction and dollar amount (or 
corresponding amount in the foreign currency in which the ABS interests 
are issued, as applicable)) of the eligible horizontal residual interest 
that the sponsor is required to fund through the eligible horizontal 
cash reserve account in order for such account, together with other 
retained interests, to satisfy the sponsor's risk retention requirement;
    (B) A description of the material terms of the eligible horizontal 
cash reserve account; and
    (C) The disclosures required in paragraphs (c)(1)(i) and (ii) of 
this section.
    (2) Vertical interest. With respect to any eligible vertical 
interest retained under paragraph (a) of this section, the sponsor must 
disclose:
    (i) A reasonable period of time prior to the sale of an asset-backed 
security issued in the same offering of ABS interests,
    (A) The form of the eligible vertical interest;
    (B) The percentage that the sponsor is required to retain as a 
vertical interest under this section; and
    (C) A description of the material terms of the vertical interest and 
the amount that the sponsor expects to retain at the closing of the 
securitization transaction.
    (ii) A reasonable time after the closing of the securitization 
transaction, the amount of the vertical interest the sponsor retained at 
closing, if that amount is materially different from the amount 
disclosed under paragraph (c)(2)(i) of this section.
    (d) Record maintenance. A sponsor must retain the certifications and 
disclosures required in paragraphs (a) and (c) of this section in its 
records and must provide the disclosure upon request to the Commission 
and its appropriate Federal banking agency, if any, until three years 
after all ABS interests are no longer outstanding.

[[Page 307]]



Sec.373.5  Revolving pool securitizations.

    (a) Definitions. For purposes of this section, the following 
definitions apply:
    Revolving pool securitization means an issuing entity that is 
established to issue on multiple issuance dates more than one series, 
class, subclass, or tranche of asset-backed securities that are 
collateralized by a common pool of securitized assets that will change 
in composition over time, and that does not monetize excess interest and 
fees from its securitized assets.
    Seller's interest means an ABS interest or ABS interests:
    (1) Collateralized by the securitized assets and servicing assets 
owned or held by the issuing entity, other than the following that are 
not considered a component of seller's interest:
    (i) Servicing assets that have been allocated as collateral only for 
a specific series in connection with administering the revolving pool 
securitization, such as a principal accumulation or interest reserve 
account; and
    (ii) Assets that are not eligible under the terms of the 
securitization transaction to be included when determining whether the 
revolving pool securitization holds aggregate securitized assets in 
specified proportions to aggregate outstanding investor ABS interests 
issued; and
    (2) That is pari passu with each series of investor ABS interests 
issued, or partially or fully subordinated to one or more series in 
identical or varying amounts, with respect to the allocation of all 
distributions and losses with respect to the securitized assets prior to 
early amortization of the revolving securitization (as specified in the 
securitization transaction documents); and
    (3) That adjusts for fluctuations in the outstanding principal 
balance of the securitized assets in the pool.
    (b) General requirement. A sponsor satisfies the risk retention 
requirements of Sec.373.3 with respect to a securitization transaction 
for which the issuing entity is a revolving pool securitization if the 
sponsor maintains a seller's interest of not less than 5 percent of the 
aggregate unpaid principal balance of all outstanding investor ABS 
interests in the issuing entity.
    (c) Measuring the seller's interest. In measuring the seller's 
interest for purposes of meeting the requirements of paragraph (b) of 
this section:
    (1) The unpaid principal balance of the securitized assets for the 
numerator of the 5 percent ratio shall not include assets of the types 
excluded from the definition of seller's interest in paragraph (a) of 
this section;
    (2) The aggregate unpaid principal balance of outstanding investor 
ABS interests in the denominator of the 5 percent ratio may be reduced 
by the amount of funds held in a segregated principal accumulation 
account for the repayment of outstanding investor ABS interests, if:
    (i) The terms of the securitization transaction documents prevent 
funds in the principal accumulation account from being applied for any 
purpose other than the repayment of the unpaid principal of outstanding 
investor ABS interests; and
    (ii) Funds in that account are invested only in the types of assets 
in which funds held in an eligible horizontal cash reserve account 
pursuant to Sec.373.4 are permitted to be invested;
    (3) If the terms of the securitization transaction documents set 
minimum required seller's interest as a proportion of the unpaid 
principal balance of outstanding investor ABS interests for one or more 
series issued, rather than as a proportion of the aggregate outstanding 
investor ABS interests in all outstanding series combined, the 
percentage of the seller's interest for each such series must, when 
combined with the percentage of any minimum seller's interest set by 
reference to the aggregate outstanding investor ABS interests, equal at 
least 5 percent;
    (4) The 5 percent test must be determined and satisfied at the 
closing of each issuance of ABS interests to investors by the issuing 
entity, and
    (i) At least monthly at a seller's interest measurement date 
specified under the securitization transaction documents, until no ABS 
interest in the issuing entity is held by any person not a wholly-owned 
affiliate of the sponsor; or

[[Page 308]]

    (ii) If the revolving pool securitization fails to meet the 5 
percent test as of any date described in paragraph (c)(4)(i) of this 
section, and the securitization transaction documents specify a cure 
period, the 5 percent test must be determined and satisfied within the 
earlier of the cure period, or one month after the date described in 
paragraph (c)(4)(i).
    (d) Measuring outstanding investor ABS interests. In measuring the 
amount of outstanding investor ABS interests for purposes of this 
section, ABS interests held for the life of such ABS interests by the 
sponsor or its wholly-owned affiliates may be excluded.
    (e) Holding and retention of the seller's interest; legacy trusts. 
(1) Notwithstanding Sec.373.12(a), the seller's interest, and any 
offsetting horizontal retention interest retained pursuant to paragraph 
(g) of this section, must be retained by the sponsor or by one or more 
wholly-owned affiliates of the sponsor, including one or more depositors 
of the revolving pool securitization.
    (2) If one revolving pool securitization issues collateral 
certificates representing a beneficial interest in all or a portion of 
the securitized assets held by that securitization to another revolving 
pool securitization, which in turn issues ABS interests for which the 
collateral certificates are all or a portion of the securitized assets, 
a sponsor may satisfy the requirements of paragraphs (b) and (c) of this 
section by retaining the seller's interest for the assets represented by 
the collateral certificates through either of the revolving pool 
securitizations, so long as both revolving pool securitizations are 
retained at the direction of the same sponsor or its wholly-owned 
affiliates.
    (3) If the sponsor retains the seller's interest associated with the 
collateral certificates at the level of the revolving pool 
securitization that issues those collateral certificates, the proportion 
of the seller's interest required by paragraph (b) of this section 
retained at that level must equal the proportion that the principal 
balance of the securitized assets represented by the collateral 
certificates bears to the principal balance of the securitized assets in 
the revolving pool securitization that issues the ABS interests, as of 
each measurement date required by paragraph (c) of this section.
    (f) Offset for pool-level excess funding account. The 5 percent 
seller's interest required on each measurement date by paragraph (c) of 
this section may be reduced on a dollar-for-dollar basis by the balance, 
as of such date, of an excess funding account in the form of a 
segregated account that:
    (1) Is funded in the event of a failure to meet the minimum seller's 
interest requirements or other requirement to maintain a minimum balance 
of securitized assets under the securitization transaction documents by 
distributions otherwise payable to the holder of the seller's interest;
    (2) Is invested only in the types of assets in which funds held in a 
horizontal cash reserve account pursuant to Sec.373.4 are permitted to 
be invested; and
    (3) In the event of an early amortization, makes payments of amounts 
held in the account to holders of investor ABS interests in the same 
manner as payments to holders of investor ABS interests of amounts 
received on securitized assets.
    (g) Combined seller's interests and horizontal interest retention. 
The 5 percent seller's interest required on each measurement date by 
paragraph (c) of this section may be reduced to a percentage lower than 
5 percent to the extent that, for all series of investor ABS interests 
issued after the applicable effective date of this Sec.373.5, the 
sponsor, or notwithstanding Sec.373.12(a) a wholly-owned affiliate of 
the sponsor, retains, at a minimum, a corresponding percentage of the 
fair value of ABS interests issued in each series, in the form of one or 
more of the horizontal residual interests meeting the requirements of 
paragraphs (h) or (i).
    (h) Residual ABS interests in excess interest and fees. The sponsor 
may take the offset described in paragraph (g) of this section for a 
residual ABS interest in excess interest and fees, whether certificated 
or uncertificated, in a single or multiple classes, subclasses, or 
tranches, that meets, individually or in the aggregate, the requirements 
of this paragraph (h);

[[Page 309]]

    (1) Each series of the revolving pool securitization distinguishes 
between the series' share of the interest and fee cash flows and the 
series' share of the principal repayment cash flows from the securitized 
assets collateralizing the revolving pool securitization, which may 
according to the terms of the securitization transaction documents, 
include not only the series' ratable share of such cash flows but also 
excess cash flows available from other series;
    (2) The residual ABS interest's claim to any part of the series' 
share of the interest and fee cash flows for any interest payment period 
is subordinated to all accrued and payable interest due on the payment 
date to more senior ABS interests in the series for that period, and 
further reduced by the series' share of losses, including defaults on 
principal of the securitized assets collateralizing the revolving pool 
securitization (whether incurred in that period or carried over from 
prior periods) to the extent that such payments would have been included 
in amounts payable to more senior interests in the series;
    (3) The revolving pool securitization continues to revolve, with one 
or more series, classes, subclasses, or tranches of asset-backed 
securities that are collateralized by a common pool of assets that 
change in composition over time; and
    (4) For purposes of taking the offset described in paragraph (g) of 
this section, the sponsor determines the fair value of the residual ABS 
interest in excess interest and fees, and the fair value of the series 
of outstanding investor ABS interests to which it is subordinated and 
supports using the fair value measurement framework under GAAP, as of:
    (i) The closing of the securitization transaction issuing the 
supported ABS interests; and
    (ii) The seller's interest measurement dates described in paragraph 
(c)(4) of this section, except that for these periodic determinations 
the sponsor must update the fair value of the residual ABS interest in 
excess interest and fees for the numerator of the percentage ratio, but 
may at the sponsor's option continue to use the fair values determined 
in (h)(4)(i) for the outstanding investor ABS interests in the 
denominator.
    (i) Offsetting eligible horizontal residual interest. The sponsor 
may take the offset described in paragraph (g) of this section for ABS 
interests that would meet the definition of eligible horizontal residual 
interests in Sec.373.2 but for the sponsor's simultaneous holding of 
subordinated seller's interests, residual ABS interests in excess 
interests and fees, or a combination of the two, if:
    (1) The sponsor complies with all requirements of paragraphs (b) 
through (e) of this section for its holdings of subordinated seller's 
interest, and paragraph (h) for its holdings of residual ABS interests 
in excess interests and fees, as applicable;
    (2) For purposes of taking the offset described in paragraph (g) of 
this section, the sponsor determines the fair value of the eligible 
horizontal residual interest as a percentage of the fair value of the 
outstanding investor ABS interests in the series supported by the 
eligible horizontal residual interest, determined using the fair value 
measurement framework under GAAP:
    (i) As of the closing of the securitization transaction issuing the 
supported ABS interests; and
    (ii) Without including in the numerator of the percentage ratio any 
fair value based on:
    (A) The subordinated seller's interest or residual ABS interest in 
excess interest and fees;
    (B) the interest payable to the sponsor on the eligible horizontal 
residual interest, if the sponsor is including the value of residual ABS 
interest in excess interest and fees pursuant to paragraph (h) of this 
section in taking the offset in paragraph (g) of this section; and,
    (C) the principal payable to the sponsor on the eligible horizontal 
residual interest, if the sponsor is including the value of the seller's 
interest pursuant to paragraphs (b) through (f) of this section and 
distributions on that seller's interest are available to reduce charge-
offs that would otherwise be allocated to reduce principal payable to 
the offset eligible horizontal residual interest.

[[Page 310]]

    (j) Specified dates. A sponsor using data about the revolving pool 
securitization's collateral, or ABS interests previously issued, to 
determine the closing-date percentage of a seller's interest, residual 
ABS interest in excess interest and fees, or eligible horizontal 
residual interest pursuant to this Sec.373.5 may use such data 
prepared as of specified dates if:
    (1) The sponsor describes the specified dates in the disclosures 
required by paragraph (k) of this section; and
    (2) The dates are no more than 60 days prior to the date of first 
use with investors of disclosures required for the interest by paragraph 
(k) of this section, or for revolving pool securitizations that make 
distributions to investors on a quarterly or less frequent basis, no 
more than 135 days prior to the date of first use with investors of such 
disclosures.
    (k) Disclosure and record maintenance. (1) Disclosure. A sponsor 
relying on this section shall provide, or cause to be provided, to 
potential investors, under the caption ``Credit Risk Retention'' the 
following disclosure in written form and within the time frames set 
forth in this paragraph (k):
    (i) A reasonable period of time prior to the sale of an asset-backed 
security, a description of the material terms of the seller's interest, 
and the percentage of the seller's interest that the sponsor expects to 
retain at the closing of the securitization transaction, measured in 
accordance with the requirements of this Sec.373.5, as a percentage of 
the aggregate unpaid principal balance of all outstanding investor ABS 
interests issued, or as a percentage of the aggregate unpaid principal 
balance of outstanding investor ABS interests for one or more series 
issued, as required by the terms of the securitization transaction;
    (ii) A reasonable time after the closing of the securitization 
transaction, the amount of seller's interest the sponsor retained at 
closing, if that amount is materially different from the amount 
disclosed under paragraph (k)(1)(i) of this section; and
    (iii) A description of the material terms of any horizontal residual 
interests offsetting the seller's interest in accordance with paragraphs 
(g), (h), and (i) of this section; and
    (iv) Disclosure of the fair value of those horizontal residual 
interests retained by the sponsor for the series being offered to 
investors and described in the disclosures, as a percentage of the fair 
value of the outstanding investor ABS interests issued, described in the 
same manner and within the same timeframes required for disclosure of 
the fair values of eligible horizontal residual interests specified in 
Sec.373.4(c).
    (2) Adjusted data. Disclosures required by this paragraph (k) to be 
made a reasonable period of time prior to the sale of an asset-backed 
security of the amount of seller's interest, residual ABS interest in 
excess interest and fees, or eligible horizontal residual interest may 
include adjustments to the amount of securitized assets for additions or 
removals the sponsor expects to make before the closing date and 
adjustments to the amount of outstanding investor ABS interests for 
expected increases and decreases of those interests under the control of 
the sponsor.
    (3) Record maintenance. A sponsor must retain the disclosures 
required in paragraph (k)(1) of this section in its records and must 
provide the disclosure upon request to the Commission and its 
appropriate Federal banking agency, if any, until three years after all 
ABS interests are no longer outstanding.
    (l) Early amortization of all outstanding series. A sponsor that 
organizes a revolving pool securitization that relies on this Sec.
373.5 to satisfy the risk retention requirements of Sec.373.3, does 
not violate the requirements of this part if its seller's interest falls 
below the level required by Sec.373. 5 after the revolving pool 
securitization commences early amortization, pursuant to the terms of 
the securitization transaction documents, of all series of outstanding 
investor ABS interests, if:
    (1) The sponsor was in full compliance with the requirements of this 
section on all measurement dates specified in paragraph (c) of this 
section prior to the commencement of early amortization;
    (2) The terms of the seller's interest continue to make it pari 
passu with or

[[Page 311]]

subordinate in identical or varying amounts to each series of 
outstanding investor ABS interests issued with respect to the allocation 
of all distributions and losses with respect to the securitized assets;
    (3) The terms of any horizontal interest relied upon by the sponsor 
pursuant to paragraph (g) to offset the minimum seller's interest amount 
continue to require the interests to absorb losses in accordance with 
the terms of paragraph (h) or (i) of this section, as applicable; and
    (4) The revolving pool securitization issues no additional ABS 
interests after early amortization is initiated to any person not a 
wholly-owned affiliate of the sponsor, either at the time of issuance or 
during the amortization period.



Sec.373.6  Eligible ABCP conduits.

    (a) Definitions. For purposes of this section, the following 
additional definitions apply:
    100 percent liquidity coverage means an amount equal to the 
outstanding balance of all ABCP issued by the conduit plus any accrued 
and unpaid interest without regard to the performance of the ABS 
interests held by the ABCP conduit and without regard to any credit 
enhancement.
    ABCP means asset-backed commercial paper that has a maturity at the 
time of issuance not exceeding 397 days, exclusive of days of grace, or 
any renewal thereof the maturity of which is likewise limited.
    ABCP conduit means an issuing entity with respect to ABCP.
    Eligible ABCP conduit means an ABCP conduit, provided that:
    (1) The ABCP conduit is bankruptcy remote or otherwise isolated for 
insolvency purposes from the sponsor of the ABCP conduit and from any 
intermediate SPV;
    (2) The ABS interests acquired by the ABCP conduit are:
    (i) ABS interests collateralized solely by assets originated by an 
originator-seller and by servicing assets;
    (ii) Special units of beneficial interest (or similar ABS interests) 
in a trust or special purpose vehicle that retains legal title to leased 
property underlying leases originated by an originator-seller that were 
transferred to an intermediate SPV in connection with a securitization 
collateralized solely by such leases and by servicing assets;
    (iii) ABS interests in a revolving pool securitization 
collateralized solely by assets originated by an originator-seller and 
by servicing assets; or
    (iv) ABS interests described in paragraph (2)(i), (ii), or (iii) of 
this definition that are collateralized, in whole or in part, by assets 
acquired by an originator-seller in a business combination that 
qualifies for business combination accounting under GAAP, and, if 
collateralized in part, the remainder of such assets are assets 
described in paragraph (2)(i), (ii), or (iii) of this definition; and
    (v) Acquired by the ABCP conduit in an initial issuance by or on 
behalf of an intermediate SPV:
    (A) Directly from the intermediate SPV,
    (B) From an underwriter of the ABS interests issued by the 
intermediate SPV, or
    (C) From another person who acquired the ABS interests directly from 
the intermediate SPV;
    (3) The ABCP conduit is collateralized solely by ABS interests 
acquired from intermediate SPVs as described in paragraph (2) of this 
definition and servicing assets; and
    (4) A regulated liquidity provider has entered into a legally 
binding commitment to provide 100 percent liquidity coverage (in the 
form of a lending facility, an asset purchase agreement, a repurchase 
agreement, or other similar arrangement) to all the ABCP issued by the 
ABCP conduit by lending to, purchasing ABCP issued by, or purchasing 
assets from, the ABCP conduit in the event that funds are required to 
repay maturing ABCP issued by the ABCP conduit. With respect to the 100 
percent liquidity coverage, in the event that the ABCP conduit is unable 
for any reason to repay maturing ABCP issued by the issuing entity, the 
liquidity provider shall be obligated to pay an amount equal to any 
shortfall, and the total amount that may be due pursuant to the 100 
percent liquidity coverage shall be equal to 100 percent of the amount 
of the ABCP outstanding at any time plus accrued and unpaid

[[Page 312]]

interest (amounts due pursuant to the required liquidity coverage may 
not be subject to credit performance of the ABS interests held by the 
ABCP conduit or reduced by the amount of credit support provided to the 
ABCP conduit and liquidity support that only funds performing loans or 
receivables or performing ABS interests does not meet the requirements 
of this section).
    Intermediate SPV means a special purpose vehicle that:
    (1) (i) Is a direct or indirect wholly-owned affiliate of the 
originator-seller; or
    (ii) Has nominal equity owned by a trust or corporate service 
provider that specializes in providing independent ownership of special 
purpose vehicles, and such trust or corporate service provider is not 
affiliated with any other transaction parties;
    (2) Is bankruptcy remote or otherwise isolated for insolvency 
purposes from the eligible ABCP conduit and from each originator-seller 
and each majority-owned affiliate in each case that, directly or 
indirectly, sells or transfers assets to such intermediate SPV;
    (3) Acquires assets from the originator-seller that are originated 
by the originator-seller or acquired by the originator-seller in the 
acquisition of a business that qualifies for business combination 
accounting under GAAP or acquires ABS interests issued by another 
intermediate SPV of the originator-seller that are collateralized solely 
by such assets; and
    (4) Issues ABS interests collateralized solely by such assets, as 
applicable.
    Originator-seller means an entity that originates assets and sells 
or transfers those assets, directly or through a majority-owned 
affiliate, to an intermediate SPV, and includes (except for the purposes 
of identifying the sponsorship and affiliation of an intermediate SPV 
pursuant to this Sec.373.6) any affiliate of the originator-seller 
that, directly or indirectly, majority controls, is majority controlled 
by or is under common majority control with, the originator-seller. For 
purposes of this definition, majority control means ownership of more 
than 50 percent of the equity of an entity, or ownership of any other 
controlling financial interest in the entity, as determined under GAAP.
    Regulated liquidity provider means:
    (1) A depository institution (as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813));
    (2) A bank holding company (as defined in 12 U.S.C. 1841), or a 
subsidiary thereof;
    (3) A savings and loan holding company (as defined in 12 U.S.C. 
1467a), provided all or substantially all of the holding company's 
activities are permissible for a financial holding company under 12 
U.S.C. 1843(k), or a subsidiary thereof; or
    (4) A foreign bank whose home country supervisor (as defined in 
Sec.211.21 of the Federal Reserve Board's Regulation K (12 CFR 
211.21)) has adopted capital standards consistent with the Capital 
Accord of the Basel Committee on Banking Supervision, as amended, and 
that is subject to such standards, or a subsidiary thereof.
    (b) In general. An ABCP conduit sponsor satisfies the risk retention 
requirement of Sec.373.3 with respect to the issuance of ABCP by an 
eligible ABCP conduit in a securitization transaction if, for each ABS 
interest the ABCP conduit acquires from an intermediate SPV:
    (1) An originator-seller of the intermediate SPV retains an economic 
interest in the credit risk of the assets collateralizing the ABS 
interest acquired by the eligible ABCP conduit in the amount and manner 
required under Sec.373.4 or Sec.373.5; and
    (2) The ABCP conduit sponsor:
    (i) Approves each originator-seller permitted to sell or transfer 
assets, directly or indirectly, to an intermediate SPV from which an 
eligible ABCP conduit acquires ABS interests;
    (ii) Approves each intermediate SPV from which an eligible ABCP 
conduit is permitted to acquire ABS interests;
    (iii) Establishes criteria governing the ABS interests, and the 
securitized assets underlying the ABS interests, acquired by the ABCP 
conduit;
    (iv) Administers the ABCP conduit by monitoring the ABS interests 
acquired by the ABCP conduit and the assets supporting those ABS 
interests,

[[Page 313]]

arranging for debt placement, compiling monthly reports, and ensuring 
compliance with the ABCP conduit documents and with the ABCP conduit's 
credit and investment policy; and
    (v) Maintains and adheres to policies and procedures for ensuring 
that the requirements in this paragraph (b) of this section have been 
met.
    (c) Originator-seller compliance with risk retention. The use of the 
risk retention option provided in this section by an ABCP conduit 
sponsor does not relieve the originator-seller that sponsors ABS 
interests acquired by an eligible ABCP conduit from such originator-
seller's obligation to comply with its own risk retention obligations 
under this part.
    (d) Disclosures--(1) Periodic disclosures to investors. An ABCP 
conduit sponsor relying upon this section shall provide, or cause to be 
provided, to each purchaser of ABCP, before or contemporaneously with 
the first sale of ABCP to such purchaser and at least monthly 
thereafter, to each holder of commercial paper issued by the ABCP 
conduit, in writing, each of the following items of information, which 
shall be as of a date not more than 60 days prior to date of first use 
with investors:
    (i) The name and form of organization of the regulated liquidity 
provider that provides liquidity coverage to the eligible ABCP conduit, 
including a description of the material terms of such liquidity 
coverage, and notice of any failure to fund.
    (ii) With respect to each ABS interest held by the ABCP conduit:
    (A) The asset class or brief description of the underlying 
securitized assets;
    (B) The standard industrial category code (SIC Code) for the 
originator-seller that will retain (or has retained) pursuant to this 
section an interest in the securitization transaction; and
    (C) A description of the percentage amount of risk retention 
pursuant to the rule by the originator-seller, and whether it is in the 
form of an eligible horizontal residual interest, vertical interest, or 
revolving pool securitization seller's interest, as applicable.
    (2) Disclosures to regulators regarding originator-sellers. An ABCP 
conduit sponsor relying upon this section shall provide, or cause to be 
provided, upon request, to the Commission and its appropriate Federal 
banking agency, if any, in writing, all of the information required to 
be provided to investors in paragraph (d)(1) of this section, and the 
name and form of organization of each originator-seller that will retain 
(or has retained) pursuant to this section an interest in the 
securitization transaction.
    (e) Sale or transfer of ABS interests between eligible ABCP 
conduits. At any time, an eligible ABCP conduit that acquired an ABS 
interest in accordance with the requirements set forth in this section 
may transfer, and another eligible ABCP conduit may acquire, such ABS 
interest, if the following conditions are satisfied:
    (1) The sponsors of both eligible ABCP conduits are in compliance 
with this section; and
    (2) The same regulated liquidity provider has entered into one or 
more legally binding commitments to provide 100 percent liquidity 
coverage to all the ABCP issued by both eligible ABCP conduits.
    (f) Duty to comply. (1) The ABCP conduit sponsor shall be 
responsible for compliance with this section.
    (2) An ABCP conduit sponsor relying on this section:
    (i) Shall maintain and adhere to policies and procedures that are 
reasonably designed to monitor compliance by each originator-seller 
which is satisfying a risk retention obligation in respect of ABS 
interests acquired by an eligible ABCP conduit with the requirements of 
paragraph (b)(1) of this section; and
    (ii) In the event that the ABCP conduit sponsor determines that an 
originator-seller no longer complies with the requirements of paragraph 
(b)(1) of this section, shall:
    (A) Promptly notify the holders of the ABCP, and upon request, the 
Commission and its appropriate Federal banking agency, if any, in 
writing of:
    (1) The name and form of organization of any originator-seller that 
fails to retain risk in accordance with paragraph (b)(1) of this section 
and the

[[Page 314]]

amount of ABS interests issued by an intermediate SPV of such 
originator-seller and held by the ABCP conduit;
    (2) The name and form of organization of any originator-seller that 
hedges, directly or indirectly through an intermediate SPV, its risk 
retention in violation of paragraph (b)(1) of this section and the 
amount of ABS interests issued by an intermediate SPV of such 
originator-seller and held by the ABCP conduit; and
    (3) Any remedial actions taken by the ABCP conduit sponsor or other 
party with respect to such ABS interests; and
    (B) Take other appropriate steps pursuant to the requirements of 
paragraphs (b)(2)(iv) and (v) of this section which may include, as 
appropriate, curing any breach of the requirements in this section, or 
removing from the eligible ABCP conduit any ABS interest that does not 
comply with the requirements in this section.



Sec.373.7  Commercial mortgage-backed securities.

    (a) Definitions. For purposes of this section, the following 
definition shall apply:
    Special servicer means, with respect to any securitization of 
commercial real estate loans, any servicer that, upon the occurrence of 
one or more specified conditions in the servicing agreement, has the 
right to service one or more assets in the transaction.
    (b) Third-party purchaser. A sponsor may satisfy some or all of its 
risk retention requirements under Sec.373.3 with respect to a 
securitization transaction if a third party (or any majority-owned 
affiliate thereof) purchases and holds for its own account an eligible 
horizontal residual interest in the issuing entity in the same form, 
amount, and manner as would be held by the sponsor under Sec.373.4 and 
all of the following conditions are met:
    (1) Number of third-party purchasers. At any time, there are no more 
than two third-party purchasers of an eligible horizontal residual 
interest. If there are two third-party purchasers, each third-party 
purchaser's interest must be pari passu with the other third-party 
purchaser's interest.
    (2) Composition of collateral. The securitization transaction is 
collateralized solely by commercial real estate loans and servicing 
assets.
    (3) Source of funds. (i) Each third-party purchaser pays for the 
eligible horizontal residual interest in cash at the closing of the 
securitization transaction.
    (ii) No third-party purchaser obtains financing, directly or 
indirectly, for the purchase of such interest from any other person that 
is a party to, or an affiliate of a party to, the securitization 
transaction (including, but not limited to, the sponsor, depositor, or 
servicer other than a special servicer affiliated with the third-party 
purchaser), other than a person that is a party to the transaction 
solely by reason of being an investor.
    (4) Third-party review. Each third-party purchaser conducts an 
independent review of the credit risk of each securitized asset prior to 
the sale of the asset-backed securities in the securitization 
transaction that includes, at a minimum, a review of the underwriting 
standards, collateral, and expected cash flows of each commercial real 
estate loan that is collateral for the asset-backed securities.
    (5) Affiliation and control rights. (i) Except as provided in 
paragraph (b)(5)(ii) of this section, no third-party purchaser is 
affiliated with any party to the securitization transaction (including, 
but not limited to, the sponsor, depositor, or servicer) other than 
investors in the securitization transaction.
    (ii) Notwithstanding paragraph (b)(5)(i) of this section, a third-
party purchaser may be affiliated with:
    (A) The special servicer for the securitization transaction; or
    (B) One or more originators of the securitized assets, as long as 
the assets originated by the affiliated originator or originators 
collectively comprise less than 10 percent of the unpaid principal 
balance of the securitized assets included in the securitization 
transaction at the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction.

[[Page 315]]

    (6) Operating Advisor. The underlying securitization transaction 
documents shall provide for the following:
    (i) The appointment of an operating advisor (the Operating Advisor) 
that:
    (A) Is not affiliated with other parties to the securitization 
transaction;
    (B) Does not directly or indirectly have any financial interest in 
the securitization transaction other than in fees from its role as 
Operating Advisor; and
    (C) Is required to act in the best interest of, and for the benefit 
of, investors as a collective whole;
    (ii) Standards with respect to the Operating Advisor's experience, 
expertise and financial strength to fulfill its duties and 
responsibilities under the applicable transaction documents over the 
life of the securitization transaction;
    (iii) The terms of the Operating Advisor's compensation with respect 
to the securitization transaction;
    (iv) When the eligible horizontal residual interest has been reduced 
by principal payments, realized losses, and appraisal reduction amounts 
(which reduction amounts are determined in accordance with the 
applicable transaction documents) to a principal balance of 25 percent 
or less of its initial principal balance, the special servicer for the 
securitized assets must consult with the Operating Advisor in connection 
with, and prior to, any material decision in connection with its 
servicing of the securitized assets, including, without limitation:
    (A) Any material modification of, or waiver with respect to, any 
provision of a loan agreement (including a mortgage, deed of trust, or 
other security agreement);
    (B) Foreclosure upon or comparable conversion of the ownership of a 
property; or
    (C) Any acquisition of a property.
    (v) The Operating Advisor shall have adequate and timely access to 
information and reports necessary to fulfill its duties under the 
transaction documents, including all reports made available to holders 
of ABS interests and third-party purchasers, and shall be responsible 
for:
    (A) Reviewing the actions of the special servicer;
    (B) Reviewing all reports provided by the special servicer to the 
issuing entity or any holder of ABS interests;
    (C) Reviewing for accuracy and consistency with the transaction 
documents calculations made by the special servicer; and
    (D) Issuing a report to investors (including any third-party 
purchasers) and the issuing entity on a periodic basis concerning:
    (1) Whether the Operating Advisor believes, in its sole discretion 
exercised in good faith, that the special servicer is operating in 
compliance with any standard required of the special servicer in the 
applicable transaction documents; and
    (2) Which, if any, standards the Operating Advisor believes, in its 
sole discretion exercised in good faith, the special servicer has failed 
to comply.
    (vi)(A) The Operating Advisor shall have the authority to recommend 
that the special servicer be replaced by a successor special servicer if 
the Operating Advisor determines, in its sole discretion exercised in 
good faith, that:
    (1) The special servicer has failed to comply with a standard 
required of the special servicer in the applicable transaction 
documents; and
    (2) Such replacement would be in the best interest of the investors 
as a collective whole; and
    (B) If a recommendation described in paragraph (b)(6)(vi)(A) of this 
section is made, the special servicer shall be replaced upon the 
affirmative vote of a majority of the outstanding principal balance of 
all ABS interests voting on the matter, with a minimum of a quorum of 
ABS interests voting on the matter. For purposes of such vote, the 
applicable transaction documents shall specify the quorum and may not 
specify a quorum of more than the holders of 20 percent of the 
outstanding principal balance of all ABS interests in the issuing 
entity, with such quorum including at least three ABS interest holders 
that are not affiliated with each other.
    (7) Disclosures. The sponsor provides, or causes to be provided, to 
potential investors a reasonable period of time prior to the sale of the 
asset-backed securities as part of the securitization transaction and, 
upon request, to the

[[Page 316]]

Commission and its appropriate Federal banking agency, if any, the 
following disclosure in written form under the caption ``Credit Risk 
Retention'':
    (i) The name and form of organization of each initial third-party 
purchaser that acquired an eligible horizontal residual interest at the 
closing of a securitization transaction;
    (ii) A description of each initial third-party purchaser's 
experience in investing in commercial mortgage-backed securities;
    (iii) Any other information regarding each initial third-party 
purchaser or each initial third-party purchaser's retention of the 
eligible horizontal residual interest that is material to investors in 
light of the circumstances of the particular securitization transaction;
    (iv) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS interests are issued, as applicable)) of the eligible horizontal 
residual interest that will be retained (or was retained) by each 
initial third-party purchaser, as well as the amount of the purchase 
price paid by each initial third-party purchaser for such interest;
    (v) The fair value (expressed as a percentage of the fair value of 
all of the ABS interests issued in the securitization transaction and 
dollar amount (or corresponding amount in the foreign currency in which 
the ABS interests are issued, as applicable)) of the eligible horizontal 
residual interest in the securitization transaction that the sponsor 
would have retained pursuant to Sec.373.4 if the sponsor had relied on 
retaining an eligible horizontal residual interest in that section to 
meet the requirements of Sec.373.3 with respect to the transaction;
    (vi) A description of the material terms of the eligible horizontal 
residual interest retained by each initial third-party purchaser, 
including the same information as is required to be disclosed by 
sponsors retaining horizontal interests pursuant to Sec.373.4;
    (vii) The material terms of the applicable transaction documents 
with respect to the Operating Advisor, including without limitation:
    (A) The name and form of organization of the Operating Advisor;
    (B) A description of any material conflict of interest or material 
potential conflict of interest between the Operating Advisor and any 
other party to the transaction;
    (C) The standards required by paragraph (b)(6)(ii) of this section 
and a description of how the Operating Advisor satisfies each of the 
standards; and
    (D) The terms of the Operating Advisor's compensation under 
paragraph (b)(6)(iii) of this section; and
    (viii) The representations and warranties concerning the securitized 
assets, a schedule of any securitized assets that are determined not to 
comply with such representations and warranties, and what factors were 
used to make the determination that such securitized assets should be 
included in the pool notwithstanding that the securitized assets did not 
comply with such representations and warranties, such as compensating 
factors or a determination that the exceptions were not material.
    (8) Hedging, transfer and pledging--(i) General rule. Except as set 
forth in paragraph (b)(8)(ii) of this section, each third-party 
purchaser and its affiliates must comply with the hedging and other 
restrictions in Sec.373.12 as if it were the retaining sponsor with 
respect to the securitization transaction and had acquired the eligible 
horizontal residual interest pursuant to Sec.373.4; provided that, the 
hedging and other restrictions in Sec.373.12 shall not apply on or 
after the date that each CRE loan (as defined in Sec.373.14) that 
serves as collateral for outstanding ABS interests has been defeased. 
For purposes of this section, a loan is deemed to be defeased if:
    (A) cash or cash equivalents of the types permitted for an eligible 
horizontal cash reserve account pursuant to Sec.373.4 whose maturity 
corresponds to the remaining debt service obligations, have been pledged 
to the issuing entity as collateral for the loan and are in such amounts 
and payable at such times as necessary to timely generate cash 
sufficient to make all remaining

[[Page 317]]

debt service payments due on such loan; and
    (B) the issuing entity has an obligation to release its lien on the 
loan.
    (ii) Exceptions--(A) Transfer by initial third-party purchaser or 
sponsor. An initial third-party purchaser that acquired an eligible 
horizontal residual interest at the closing of a securitization 
transaction in accordance with this section, or a sponsor that acquired 
an eligible horizontal residual interest at the closing of a 
securitization transaction in accordance with this section, may, on or 
after the date that is five years after the date of the closing of the 
securitization transaction, transfer that interest to a subsequent 
third-party purchaser that complies with paragraph (b)(8)(ii)(C) of this 
section. The initial third-party purchaser shall provide the sponsor 
with complete identifying information for the subsequent third-party 
purchaser.
    (B) Transfer by subsequent third-party purchaser. At any time, a 
subsequent third-party purchaser that acquired an eligible horizontal 
residual interest pursuant to this section may transfer its interest to 
a different third-party purchaser that complies with paragraph 
(b)(8)(ii)(C) of this section. The transferring third-party purchaser 
shall provide the sponsor with complete identifying information for the 
acquiring third-party purchaser.
    (C) Requirements applicable to subsequent third-party purchasers. A 
subsequent third-party purchaser is subject to all of the requirements 
of paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section 
applicable to third-party purchasers, provided that obligations under 
paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section that 
apply to initial third-party purchasers at or before the time of closing 
of the securitization transaction shall apply to successor third-party 
purchasers at or before the time of the transfer of the eligible 
horizontal residual interest to the successor third-party purchaser.
    (c) Duty to comply. (1) The retaining sponsor shall be responsible 
for compliance with this section by itself and for compliance by each 
initial or subsequent third-party purchaser that acquired an eligible 
horizontal residual interest in the securitization transaction.
    (2) A sponsor relying on this section:
    (i) Shall maintain and adhere to policies and procedures to monitor 
each third-party purchaser's compliance with the requirements of 
paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section; and
    (ii) In the event that the sponsor determines that a third-party 
purchaser no longer complies with one or more of the requirements of 
paragraphs (b)(1), (b)(3) through (5), or (b)(8) of this section, shall 
promptly notify, or cause to be notified, the holders of the ABS 
interests issued in the securitization transaction of such noncompliance 
by such third-party purchaser.



Sec.373.8  Federal National Mortgage Association and Federal Home Loan
Mortgage Corporation ABS.

    (a) In general. A sponsor satisfies its risk retention requirement 
under this part if the sponsor fully guarantees the timely payment of 
principal and interest on all ABS interests issued by the issuing entity 
in the securitization transaction and is:
    (1) The Federal National Mortgage Association or the Federal Home 
Loan Mortgage Corporation operating under the conservatorship or 
receivership of the Federal Housing Finance Agency pursuant to section 
1367 of the Federal Housing Enterprises Financial Safety and Soundness 
Act of 1992 (12 U.S.C. 4617) with capital support from the United 
States; or
    (2) Any limited-life regulated entity succeeding to the charter of 
either the Federal National Mortgage Association or the Federal Home 
Loan Mortgage Corporation pursuant to section 1367(i) of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4617(i)), provided that the entity is operating with capital 
support from the United States.
    (b) Certain provisions not applicable. The provisions of Sec.
373.12(b), (c), and (d) shall not apply to a sponsor described in 
paragraph (a)(1) or (2) of this section, its affiliates, or the issuing 
entity

[[Page 318]]

with respect to a securitization transaction for which the sponsor has 
retained credit risk in accordance with the requirements of this 
section.
    (c) Disclosure. A sponsor relying on this section shall provide to 
investors, in written form under the caption ``Credit Risk Retention'' 
and, upon request, to the Federal Housing Finance Agency and the 
Commission, a description of the manner in which it has met the credit 
risk retention requirements of this part.



Sec.373.9  Open market CLOs.

    (a) Definitions. For purposes of this section, the following 
definitions shall apply:
    CLO means a special purpose entity that:
    (i) Issues debt and equity interests, and
    (ii) Whose assets consist primarily of loans that are securitized 
assets and servicing assets.
    CLO-eligible loan tranche means a term loan of a syndicated facility 
that meets the criteria set forth in paragraph (c) of this section.
    CLO manager means an entity that manages a CLO, which entity is 
registered as an investment adviser under the Investment Advisers Act of 
1940, as amended (15 U.S.C. 80b-1 et seq.), or is an affiliate of such a 
registered investment adviser and itself is managed by such registered 
investment adviser.
    Commercial borrower means an obligor under a corporate credit 
obligation (including a loan).
    Initial loan syndication transaction means a transaction in which a 
loan is syndicated to a group of lenders.
    Lead arranger means, with respect to a CLO-eligible loan tranche, an 
institution that:
    (i) Is active in the origination, structuring and syndication of 
commercial loan transactions (as defined in Sec.373.14) and has played 
a primary role in the structuring, underwriting and distribution on the 
primary market of the CLO-eligible loan tranche.
    (ii) Has taken an allocation of the funded portion of the syndicated 
credit facility under the terms of the transaction that includes the 
CLO-eligible loan tranche of at least 20 percent of the aggregate 
principal balance at origination, and no other member (or members 
affiliated with each other) of the syndication group that funded at 
origination has taken a greater allocation; and
    (iii) Is identified in the applicable agreement governing the CLO-
eligible loan tranche; represents therein to the holders of the CLO-
eligible loan tranche and to any holders of participation interests in 
such CLO-eligible loan tranche that such lead arranger satisfies the 
requirements of paragraph (i) of this definition and, at the time of 
initial funding of the CLO-eligible tranche, will satisfy the 
requirements of paragraph (ii) of this definition; further represents 
therein (solely for the purpose of assisting such holders to determine 
the eligibility of such CLO-eligible loan tranche to be held by an open 
market CLO) that in the reasonable judgment of such lead arranger, the 
terms of such CLO-eligible loan tranche are consistent with the 
requirements of paragraphs (c)(2) and (3) of this section; and covenants 
therein to such holders that such lead arranger will fulfill the 
requirements of paragraph (c)(1) of this section.
    Open market CLO means a CLO:
    (i) Whose assets consist of senior, secured syndicated loans 
acquired by such CLO directly from the sellers thereof in open market 
transactions and of servicing assets,
    (ii) That is managed by a CLO manager, and
    (iii) That holds less than 50 percent of its assets, by aggregate 
outstanding principal amount, in loans syndicated by lead arrangers that 
are affiliates of the CLO or the CLO manager or originated by 
originators that are affiliates of the CLO or the CLO manager.
    Open market transaction means:
    (i) Either an initial loan syndication transaction or a secondary 
market transaction in which a seller offers senior, secured syndicated 
loans to prospective purchasers in the loan market on market terms on an 
arm's length basis, which prospective purchasers include, but are not 
limited to, entities that are not affiliated with the seller, or
    (ii) A reverse inquiry from a prospective purchaser of a senior, 
secured syndicated loan through a dealer in the

[[Page 319]]

loan market to purchase a senior, secured syndicated loan to be sourced 
by the dealer in the loan market.
    Secondary market transaction means a purchase of a senior, secured 
syndicated loan not in connection with an initial loan syndication 
transaction but in the secondary market.
    Senior, secured syndicated loan means a loan made to a commercial 
borrower that:
    (i) Is not subordinate in right of payment to any other obligation 
for borrowed money of the commercial borrower,
    (ii) Is secured by a valid first priority security interest or lien 
in or on specified collateral securing the commercial borrower's 
obligations under the loan, and
    (iii) The value of the collateral subject to such first priority 
security interest or lien, together with other attributes of the obligor 
(including, without limitation, its general financial condition, ability 
to generate cash flow available for debt service and other demands for 
that cash flow), is adequate (in the commercially reasonable judgment of 
the CLO manager exercised at the time of investment) to repay the loan 
and to repay all other indebtedness of equal seniority secured by such 
first priority security interest or lien in or on the same collateral, 
and the CLO manager certifies, on or prior to each date that it acquires 
a loan constituting part of a new CLO-eligible tranche, that it has 
policies and procedures to evaluate the likelihood of repayment of loans 
acquired by the CLO and it has followed such policies and procedures in 
evaluating each CLO-eligible loan tranche.
    (b) In general. A sponsor satisfies the risk retention requirements 
of Sec.373.3 with respect to an open market CLO transaction if:
    (1) The open market CLO does not acquire or hold any assets other 
than CLO-eligible loan tranches that meet the requirements of paragraph 
(c) of this section and servicing assets;
    (2) The governing documents of such open market CLO require that, at 
all times, the assets of the open market CLO consist of senior, secured 
syndicated loans that are CLO-eligible loan tranches and servicing 
assets;
    (3) The open market CLO does not invest in ABS interests or in 
credit derivatives other than hedging transactions that are servicing 
assets to hedge risks of the open market CLO;
    (4) All purchases of CLO-eligible loan tranches and other assets by 
the open market CLO issuing entity or through a warehouse facility used 
to accumulate the loans prior to the issuance of the CLO's ABS interests 
are made in open market transactions on an arms-length basis;
    (5) The CLO manager of the open market CLO is not entitled to 
receive any management fee or gain on sale at the time the open market 
CLO issues its ABS interests.
    (c) CLO-eligible loan tranche. To qualify as a CLO-eligible loan 
tranche, a term loan of a syndicated credit facility to a commercial 
borrower must have the following features:
    (1) A minimum of 5 percent of the face amount of the CLO-eligible 
loan tranche is retained by the lead arranger thereof until the earliest 
of the repayment, maturity, involuntary and unscheduled acceleration, 
payment default, or bankruptcy default of such CLO-eligible loan 
tranche, provided that such lead arranger complies with limitations on 
hedging, transferring and pledging in Sec.373.12 with respect to the 
interest retained by the lead arranger.
    (2) Lender voting rights within the credit agreement and any 
intercreditor or other applicable agreements governing such CLO-eligible 
loan tranche are defined so as to give holders of the CLO-eligible loan 
tranche consent rights with respect to, at minimum, any material waivers 
and amendments of such applicable documents, including but not limited 
to, adverse changes to the calculation or payments of amounts due to the 
holders of the CLO-eligible tranche, alterations to pro rata provisions, 
changes to voting provisions, and waivers of conditions precedent; and
    (3) The pro rata provisions, voting provisions, and similar 
provisions applicable to the security associated with such CLO-eligible 
loan tranches under the CLO credit agreement and any intercreditor or 
other applicable agreements governing such CLO-eligible

[[Page 320]]

loan tranches are not materially less advantageous to the holder(s) of 
such CLO-eligible tranche than the terms of other tranches of comparable 
seniority in the broader syndicated credit facility.
    (d) Disclosures. A sponsor relying on this section shall provide, or 
cause to be provided, to potential investors a reasonable period of time 
prior to the sale of the asset-backed securities in the securitization 
transaction and at least annually with respect to the information 
required by paragraph (d)(1) of this section and, upon request, to the 
Commission and its appropriate Federal banking agency, if any, the 
following disclosure in written form under the caption ``Credit Risk 
Retention'':
    (1) Open market CLOs. A complete list of every asset held by an open 
market CLO (or before the CLO's closing, in a warehouse facility in 
anticipation of transfer into the CLO at closing), including the 
following information:
    (i) The full legal name, Standard Industrial Classification (SIC) 
category code, and legal entity identifier (LEI) issued by a utility 
endorsed or otherwise governed by the Global LEI Regulatory Oversight 
Committee or the Global LEI Foundation (if an LEI has been obtained by 
the obligor) of the obligor of the loan or asset;
    (ii) The full name of the specific loan tranche held by the CLO;
    (iii) The face amount of the entire loan tranche held by the CLO, 
and the face amount of the portion thereof held by the CLO;
    (iv) The price at which the loan tranche was acquired by the CLO; 
and
    (v) For each loan tranche, the full legal name of the lead arranger 
subject to the sales and hedging restrictions of Sec.373.12; and
    (2) CLO manager. The full legal name and form of organization of the 
CLO manager.



Sec.373.10  Qualified tender option bonds.

    (a) Definitions. For purposes of this section, the following 
definitions shall apply:
    Municipal security or municipal securities shall have the same 
meaning as the term ``municipal securities'' in Section 3(a)(29) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(29)) and any rules 
promulgated pursuant to such section.
    Qualified tender option bond entity means an issuing entity with 
respect to tender option bonds for which each of the following applies:
    (i) Such entity is collateralized solely by servicing assets and by 
municipal securities that have the same municipal issuer and the same 
underlying obligor or source of payment (determined without regard to 
any third-party credit enhancement), and such municipal securities are 
not subject to substitution.
    (ii) Such entity issues no securities other than:
    (A) A single class of tender option bonds with a preferred variable 
return payable out of capital that meets the requirements of paragraph 
(b) of this section, and
    (B) One or more residual equity interests that, in the aggregate, 
are entitled to all remaining income of the issuing entity.
    (C) The types of securities referred to in paragraphs (ii)(A) and 
(B) of this definition must constitute asset-backed securities.
    (iii) The municipal securities held as assets by such entity are 
issued in compliance with Section 103 of the Internal Revenue Code of 
1986, as amended (the ``IRS Code'', 26 U.S.C. 103), such that the 
interest payments made on those securities are excludable from the gross 
income of the owners under Section 103 of the IRS Code.
    (iv) The terms of all of the securities issued by the entity are 
structured so that all holders of such securities who are eligible to 
exclude interest received on such securities will be able to exclude 
that interest from gross income pursuant to Section 103 of the IRS Code 
or as ``exempt-interest dividends'' pursuant to Section 852(b)(5) of the 
IRS Code (26 U.S.C. 852(b)(5)) in the case of regulated investment 
companies under the Investment Company Act of 1940, as amended.
    (v) Such entity has a legally binding commitment from a regulated 
liquidity provider as defined in Sec.373.6(a), to provide a 100 
percent guarantee or liquidity coverage with respect to all of the

[[Page 321]]

issuing entity's outstanding tender option bonds.
    (vi) Such entity qualifies for monthly closing elections pursuant to 
IRS Revenue Procedure 2003-84, as amended or supplemented from time to 
time.
    Tender option bond means a security which has features which entitle 
the holders to tender such bonds to the issuing entity for purchase at 
any time upon no more than 397 days' notice, for a purchase price equal 
to the approximate amortized cost of the security, plus accrued 
interest, if any, at the time of tender.
    (b) Risk retention options. Notwithstanding anything in this 
section, the sponsor with respect to an issuance of tender option bonds 
may retain an eligible vertical interest or eligible horizontal residual 
interest, or any combination thereof, in accordance with the 
requirements of Sec.373.4. In order to satisfy its risk retention 
requirements under this section, the sponsor with respect to an issuance 
of tender option bonds by a qualified tender option bond entity may 
retain:
    (1) An eligible vertical interest or an eligible horizontal residual 
interest, or any combination thereof, in accordance with the 
requirements of Sec.373.4; or
    (2) An interest that meets the requirements set forth in paragraph 
(c) of this section; or
    (3) A municipal security that meets the requirements set forth in 
paragraph (d) of this section; or
    (4) Any combination of interests and securities described in 
paragraphs (b)(1) through (b)(3) of this section such that the sum of 
the percentages held in each form equals at least five.
    (c) Tender option termination event. The sponsor with respect to an 
issuance of tender option bonds by a qualified tender option bond entity 
may retain an interest that upon issuance meets the requirements of an 
eligible horizontal residual interest but that upon the occurrence of a 
``tender option termination event'' as defined in Section 4.01(5) of IRS 
Revenue Procedure 2003-84, as amended or supplemented from time to time 
will meet the requirements of an eligible vertical interest.
    (d) Retention of a municipal security outside of the qualified 
tender option bond entity. The sponsor with respect to an issuance of 
tender option bonds by a qualified tender option bond entity may satisfy 
its risk retention requirements under this Section by holding municipal 
securities from the same issuance of municipal securities deposited in 
the qualified tender option bond entity, the face value of which 
retained municipal securities is equal to 5 percent of the face value of 
the municipal securities deposited in the qualified tender option bond 
entity.
    (e) Disclosures. The sponsor shall provide, or cause to be provided, 
to potential investors a reasonable period of time prior to the sale of 
the asset-backed securities as part of the securitization transaction 
and, upon request, to the Commission and its appropriate Federal banking 
agency, if any, the following disclosure in written form under the 
caption ``Credit Risk Retention'':
    (1) The name and form of organization of the qualified tender option 
bond entity;
    (2) A description of the form and subordination features of such 
retained interest in accordance with the disclosure obligations in Sec.
373.4(c);
    (3) To the extent any portion of the retained interest is claimed by 
the sponsor as an eligible horizontal residual interest (including any 
interest held in compliance with Sec.373.10(c)), the fair value of 
that interest (expressed as a percentage of the fair value of all of the 
ABS interests issued in the securitization transaction and as a dollar 
amount);
    (4) To the extent any portion of the retained interest is claimed by 
the sponsor as an eligible vertical interest (including any interest 
held in compliance with Sec.373.10(c)), the percentage of ABS 
interests issued represented by the eligible vertical interest; and
    (5) To the extent any portion of the retained interest claimed by 
the sponsor is a municipal security held outside of the qualified tender 
option bond entity, the name and form of organization of the qualified 
tender option bond entity, the identity of the issuer of the municipal 
securities, the face value of the municipal securities deposited into 
the qualified tender option bond entity,

[[Page 322]]

and the face value of the municipal securities retained by the sponsor 
or its majority-owned affiliates and subject to the transfer and hedging 
prohibition.
    (f) Prohibitions on Hedging and Transfer. The prohibitions on 
transfer and hedging set forth in Sec.373.12, apply to any interests 
or municipal securities retained by the sponsor with respect to an 
issuance of tender option bonds by a qualified tender option bond entity 
pursuant to of this section.



                  Subpart C_Transfer of Risk Retention



Sec.373.11  Allocation of risk retention to an originator.

    (a) In general. A sponsor choosing to retain an eligible vertical 
interest or an eligible horizontal residual interest (including an 
eligible horizontal cash reserve account), or combination thereof under 
Sec.373.4, with respect to a securitization transaction may offset the 
amount of its risk retention requirements under Sec.373.4 by the 
amount of the eligible interests, respectively, acquired by an 
originator of one or more of the securitized assets if:
    (1) At the closing of the securitization transaction:
    (i) The originator acquires the eligible interest from the sponsor 
and retains such interest in the same manner and proportion (as between 
horizontal and vertical interests) as the sponsor under Sec.373.4, as 
such interest was held prior to the acquisition by the originator;
    (ii) The ratio of the percentage of eligible interests acquired and 
retained by the originator to the percentage of eligible interests 
otherwise required to be retained by the sponsor pursuant to Sec.
373.4, does not exceed the ratio of:
    (A) The unpaid principal balance of all the securitized assets 
originated by the originator; to
    (B) The unpaid principal balance of all the securitized assets in 
the securitization transaction;
    (iii) The originator acquires and retains at least 20 percent of the 
aggregate risk retention amount otherwise required to be retained by the 
sponsor pursuant to Sec.373.4; and
    (iv) The originator purchases the eligible interests from the 
sponsor at a price that is equal, on a dollar-for-dollar basis, to the 
amount by which the sponsor's required risk retention is reduced in 
accordance with this section, by payment to the sponsor in the form of:
    (A) Cash; or
    (B) A reduction in the price received by the originator from the 
sponsor or depositor for the assets sold by the originator to the 
sponsor or depositor for inclusion in the pool of securitized assets.
    (2) Disclosures. In addition to the disclosures required pursuant to 
Sec.373.4(c), the sponsor provides, or causes to be provided, to 
potential investors a reasonable period of time prior to the sale of the 
asset-backed securities as part of the securitization transaction and, 
upon request, to the Commission and its appropriate Federal banking 
agency, if any, in written form under the caption ``Credit Risk 
Retention'', the name and form of organization of any originator that 
will acquire and retain (or has acquired and retained) an interest in 
the transaction pursuant to this section, including a description of the 
form and amount (expressed as a percentage and dollar amount (or 
corresponding amount in the foreign currency in which the ABS interests 
are issued, as applicable)) and nature (e.g., senior or subordinated) of 
the interest, as well as the method of payment for such interest under 
paragraph (a)(1)(iv) of this section.
    (3) Hedging, transferring and pledging. The originator and each of 
its affiliates complies with the hedging and other restrictions in Sec.
373.12 with respect to the interests retained by the originator pursuant 
to this section as if it were the retaining sponsor and was required to 
retain the interest under subpart B of this part.
    (b) Duty to comply. (1) The retaining sponsor shall be responsible 
for compliance with this section.
    (2) A retaining sponsor relying on this section:
    (i) Shall maintain and adhere to policies and procedures that are 
reasonably designed to monitor the compliance by

[[Page 323]]

each originator that is allocated a portion of the sponsor's risk 
retention obligations with the requirements in paragraphs (a)(1) and (3) 
of this section; and
    (ii) In the event the sponsor determines that any such originator no 
longer complies with any of the requirements in paragraphs (a)(1) and 
(3) of this section, shall promptly notify, or cause to be notified, the 
holders of the ABS interests issued in the securitization transaction of 
such noncompliance by such originator.



Sec.373.12  Hedging, transfer and financing prohibitions.

    (a) Transfer. Except as permitted by Sec.373.7(b)(8), and subject 
to Sec.373.5, a retaining sponsor may not sell or otherwise transfer 
any interest or assets that the sponsor is required to retain pursuant 
to subpart B of this part to any person other than an entity that is and 
remains a majority-owned affiliate of the sponsor and each such 
majority-owned affiliate shall be subject to the same restrictions.
    (b) Prohibited hedging by sponsor and affiliates. A retaining 
sponsor and its affiliates may not purchase or sell a security, or other 
financial instrument, or enter into an agreement, derivative or other 
position, with any other person if:
    (1) Payments on the security or other financial instrument or under 
the agreement, derivative, or position are materially related to the 
credit risk of one or more particular ABS interests that the retaining 
sponsor (or any of its majority-owned affiliates) is required to retain 
with respect to a securitization transaction pursuant to subpart B of 
this part or one or more of the particular securitized assets that 
collateralize the asset-backed securities issued in the securitization 
transaction; and
    (2) The security, instrument, agreement, derivative, or position in 
any way reduces or limits the financial exposure of the sponsor (or any 
of its majority-owned affiliates) to the credit risk of one or more of 
the particular ABS interests that the retaining sponsor (or any of its 
majority-owned affiliates) is required to retain with respect to a 
securitization transaction pursuant to subpart B of this part or one or 
more of the particular securitized assets that collateralize the asset-
backed securities issued in the securitization transaction.
    (c) Prohibited hedging by issuing entity. The issuing entity in a 
securitization transaction may not purchase or sell a security or other 
financial instrument, or enter into an agreement, derivative or 
position, with any other person if:
    (1) Payments on the security or other financial instrument or under 
the agreement, derivative or position are materially related to the 
credit risk of one or more particular ABS interests that the retaining 
sponsor for the transaction (or any of its majority-owned affiliates) is 
required to retain with respect to the securitization transaction 
pursuant to subpart B of this part; and
    (2) The security, instrument, agreement, derivative, or position in 
any way reduces or limits the financial exposure of the retaining 
sponsor (or any of its majority-owned affiliates) to the credit risk of 
one or more of the particular ABS interests that the sponsor (or any of 
its majority-owned affiliates) is required to retain pursuant to subpart 
B of this part.
    (d) Permitted hedging activities. The following activities shall not 
be considered prohibited hedging activities under paragraph (b) or (c) 
of this section:
    (1) Hedging the interest rate risk (which does not include the 
specific interest rate risk, known as spread risk, associated with the 
ABS interest that is otherwise considered part of the credit risk) or 
foreign exchange risk arising from one or more of the particular ABS 
interests required to be retained by the sponsor (or any of its 
majority-owned affiliates) under subpart B of this part or one or more 
of the particular securitized assets that underlie the asset-backed 
securities issued in the securitization transaction; or
    (2) Purchasing or selling a security or other financial instrument 
or entering into an agreement, derivative, or other position with any 
third party where payments on the security or other financial instrument 
or under the agreement, derivative, or position are based,

[[Page 324]]

directly or indirectly, on an index of instruments that includes asset-
backed securities if:
    (i) Any class of ABS interests in the issuing entity that were 
issued in connection with the securitization transaction and that are 
included in the index represents no more than 10 percent of the dollar-
weighted average (or corresponding weighted average in the currency in 
which the ABS interests are issued, as applicable) of all instruments 
included in the index; and
    (ii) All classes of ABS interests in all issuing entities that were 
issued in connection with any securitization transaction in which the 
sponsor (or any of its majority-owned affiliates) is required to retain 
an interest pursuant to subpart B of this part and that are included in 
the index represent, in the aggregate, no more than 20 percent of the 
dollar-weighted average (or corresponding weighted average in the 
currency in which the ABS interests are issued, as applicable) of all 
instruments included in the index.
    (e) Prohibited non-recourse financing. Neither a retaining sponsor 
nor any of its affiliates may pledge as collateral for any obligation 
(including a loan, repurchase agreement, or other financing transaction) 
any ABS interest that the sponsor is required to retain with respect to 
a securitization transaction pursuant to subpart B of this part unless 
such obligation is with full recourse to the sponsor or affiliate, 
respectively.
    (f) Duration of the hedging and transfer restrictions--(1) General 
rule. Except as provided in paragraph (f)(2) of this section, the 
prohibitions on sale and hedging pursuant to paragraphs (a) and (b) of 
this section shall expire on or after the date that is the latest of:
    (i) The date on which the total unpaid principal balance (if 
applicable) of the securitized assets that collateralize the 
securitization transaction has been reduced to 33 percent of the total 
unpaid principal balance of the securitized assets as of the cut-off 
date or similar date for establishing the composition of the securitized 
assets collateralizing the asset-backed securities issued pursuant to 
the securitization transaction;
    (ii) The date on which the total unpaid principal obligations under 
the ABS interests issued in the securitization transaction has been 
reduced to 33 percent of the total unpaid principal obligations of the 
ABS interests at closing of the securitization transaction; or
    (iii) Two years after the date of the closing of the securitization 
transaction.
    (2) Securitizations of residential mortgages. (i) If all of the 
assets that collateralize a securitization transaction subject to risk 
retention under this part are residential mortgages, the prohibitions on 
sale and hedging pursuant to paragraphs (a) and (b) of this section 
shall expire on or after the date that is the later of:
    (A) Five years after the date of the closing of the securitization 
transaction; or
    (B) The date on which the total unpaid principal balance of the 
residential mortgages that collateralize the securitization transaction 
has been reduced to 25 percent of the total unpaid principal balance of 
such residential mortgages at the cut-off date or similar date for 
establishing the composition of the securitized assets collateralizing 
the asset-backed securities issued pursuant to the securitization 
transaction.
    (ii) Notwithstanding paragraph (f)(2)(i) of this section, the 
prohibitions on sale and hedging pursuant to paragraphs (a) and (b) of 
this section shall expire with respect to the sponsor of a 
securitization transaction described in paragraph (f)(2)(i) of this 
section on or after the date that is seven years after the date of the 
closing of the securitization transaction.
    (3) Conservatorship or receivership of sponsor. A conservator or 
receiver of the sponsor (or any other person holding risk retention 
pursuant to this part) of a securitization transaction is permitted to 
sell or hedge any economic interest in the securitization transaction if 
the conservator or receiver has been appointed pursuant to any provision 
of federal or State law (or regulation promulgated thereunder) that 
provides for the appointment of the Federal Deposit Insurance 
Corporation, or an agency or instrumentality

[[Page 325]]

of the United States or of a State as conservator or receiver, including 
without limitation any of the following authorities:
    (i) 12 U.S.C. 1811;
    (ii) 12 U.S.C. 1787;
    (iii) 12 U.S.C. 4617; or
    (iv) 12 U.S.C. 5382.
    (4) Revolving pool securitizations. The provisions of paragraphs 
(f)(1) and (2) are not available to sponsors of revolving pool 
securitizations with respect to the forms of risk retention specified in 
Sec.373.5.



                   Subpart D_Exceptions and Exemptions



Sec.373.13  Exemption for qualified residential mortgages.

    (a) Definitions. For purposes of this section, the following 
definitions shall apply:
    Currently performing means the borrower in the mortgage transaction 
is not currently thirty (30) days or more past due, in whole or in part, 
on the mortgage transaction.
    Qualified residential mortgage means a ``qualified mortgage'' as 
defined in section 129C of the Truth in Lending Act (15 U.S.C.1639c) and 
regulations issued thereunder, as amended from time to time.
    (b) Exemption. A sponsor shall be exempt from the risk retention 
requirements in subpart B of this part with respect to any 
securitization transaction, if:
    (1) All of the assets that collateralize the asset-backed securities 
are qualified residential mortgages or servicing assets;
    (2) None of the assets that collateralize the asset-backed 
securities are asset-backed securities;
    (3) As of the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction, each 
qualified residential mortgage collateralizing the asset-backed 
securities is currently performing; and
    (4)(i) The depositor with respect to the securitization transaction 
certifies that it has evaluated the effectiveness of its internal 
supervisory controls with respect to the process for ensuring that all 
assets that collateralize the asset-backed security are qualified 
residential mortgages or servicing assets and has concluded that its 
internal supervisory controls are effective; and
    (ii) The evaluation of the effectiveness of the depositor's internal 
supervisory controls must be performed, for each issuance of an asset-
backed security in reliance on this section, as of a date within 60 days 
of the cut-off date or similar date for establishing the composition of 
the asset pool collateralizing such asset-backed security; and
    (iii) The sponsor provides, or causes to be provided, a copy of the 
certification described in paragraph (b)(4)(i) of this section to 
potential investors a reasonable period of time prior to the sale of 
asset-backed securities in the issuing entity, and, upon request, to the 
Commission and its appropriate Federal banking agency, if any.
    (c) Repurchase of loans subsequently determined to be non-qualified 
after closing. A sponsor that has relied on the exemption provided in 
paragraph (b) of this section with respect to a securitization 
transaction shall not lose such exemption with respect to such 
transaction if, after closing of the securitization transaction, it is 
determined that one or more of the residential mortgage loans 
collateralizing the asset-backed securities does not meet all of the 
criteria to be a qualified residential mortgage provided that:
    (1) The depositor complied with the certification requirement set 
forth in paragraph (b)(4) of this section;
    (2) The sponsor repurchases the loan(s) from the issuing entity at a 
price at least equal to the remaining aggregate unpaid principal balance 
and accrued interest on the loan(s) no later than 90 days after the 
determination that the loans do not satisfy the requirements to be a 
qualified residential mortgage; and
    (3) The sponsor promptly notifies, or causes to be notified, the 
holders of the asset-backed securities issued in the securitization 
transaction of any loan(s) included in such securitization transaction 
that is (or are) required to be repurchased by the sponsor pursuant

[[Page 326]]

to paragraph (c)(2) of this section, including the amount of such 
repurchased loan(s) and the cause for such repurchase.



Sec.373.14  Definitions applicable to qualifying commercial loans, 
qualifying commercial real estate loans, and qualifying automobile
loans.

    The following definitions apply for purposes of Sec. Sec.373.15 
through 373.18:
    Appraisal Standards Board means the board of the Appraisal 
Foundation that develops, interprets, and amends the Uniform Standards 
of Professional Appraisal Practice (USPAP), establishing generally 
accepted standards for the appraisal profession.
    Automobile loan:
    (1) Means any loan to an individual to finance the purchase of, and 
that is secured by a first lien on, a passenger car or other passenger 
vehicle, such as a minivan, van, sport-utility vehicle, pickup truck, or 
similar light truck for personal, family, or household use; and
    (2) Does not include any:
    (i) Loan to finance fleet sales;
    (ii) Personal cash loan secured by a previously purchased 
automobile;
    (iii) Loan to finance the purchase of a commercial vehicle or farm 
equipment that is not used for personal, family, or household purposes;
    (iv) Lease financing;
    (v) Loan to finance the purchase of a vehicle with a salvage title; 
or
    (vi) Loan to finance the purchase of a vehicle intended to be used 
for scrap or parts.
    Combined loan-to-value (CLTV) ratio means, at the time of 
origination, the sum of the principal balance of a first-lien mortgage 
loan on the property, plus the principal balance of any junior-lien 
mortgage loan that, to the creditor's knowledge, would exist at the 
closing of the transaction and that is secured by the same property, 
divided by:
    (1) For acquisition funding, the lesser of the purchase price or the 
estimated market value of the real property based on an appraisal that 
meets the requirements set forth in Sec.373.17(a)(2)(ii); or
    (2) For refinancing, the estimated market value of the real property 
based on an appraisal that meets the requirements set forth in Sec.
373.17(a)(2)(ii).
    Commercial loan means a secured or unsecured loan to a company or an 
individual for business purposes, other than any:
    (1) Loan to purchase or refinance a one-to-four family residential 
property;
    (2) Commercial real estate loan.
    Commercial real estate (CRE) loan means:
    (1) A loan secured by a property with five or more single family 
units, or by nonfarm nonresidential real property, the primary source 
(50 percent or more) of repayment for which is expected to be:
    (i) The proceeds of the sale, refinancing, or permanent financing of 
the property; or
    (ii) Rental income associated with the property;
    (2) Loans secured by improved land if the obligor owns the fee 
interest in the land and the land is leased to a third party who owns 
all improvements on the land, and the improvements are nonresidential or 
residential with five or more single family units; and
    (3) Does not include:
    (i) A land development and construction loan (including 1- to 4-
family residential or commercial construction loans);
    (ii) Any other land loan; or
    (iii) An unsecured loan to a developer.
    Debt service coverage (DSC) ratio means:
    (1) For qualifying leased CRE loans, qualifying multi-family loans, 
and other CRE loans:
    (i) The annual NOI less the annual replacement reserve of the CRE 
property at the time of origination of the CRE loan(s) divided by
    (ii) The sum of the borrower's annual payments for principal and 
interest (calculated at the fully-indexed rate) on any debt obligation.
    (2) For commercial loans:
    (i) The borrower's EBITDA as of the most recently completed fiscal 
year divided by
    (ii) The sum of the borrower's annual payments for principal and 
interest on all debt obligations.

[[Page 327]]

    Debt to income (DTI) ratio means the borrower's total debt, 
including the monthly amount due on the automobile loan, divided by the 
borrower's monthly income.
    Earnings before interest, taxes, depreciation, and amortization 
(EBITDA) means the annual income of a business before expenses for 
interest, taxes, depreciation and amortization are deducted, as 
determined in accordance with GAAP.
    Environmental risk assessment means a process for determining 
whether a property is contaminated or exposed to any condition or 
substance that could result in contamination that has an adverse effect 
on the market value of the property or the realization of the collateral 
value.
    First lien means a lien or encumbrance on property that has priority 
over all other liens or encumbrances on the property.
    Junior lien means a lien or encumbrance on property that is lower in 
priority relative to other liens or encumbrances on the property.
    Leverage ratio means the borrower's total debt divided by the 
borrower's EBITDA.
    Loan-to-value (LTV) ratio means, at the time of origination, the 
principal balance of a first-lien mortgage loan on the property divided 
by:
    (1) For acquisition funding, the lesser of the purchase price or the 
estimated market value of the real property based on an appraisal that 
meets the requirements set forth in Sec.373.17(a)(2)(ii); or
    (2) For refinancing, the estimated market value of the real property 
based on an appraisal that meets the requirements set forth in Sec.
373.17(a)(2)(ii).
    Model year means the year determined by the manufacturer and 
reflected on the vehicle's Motor Vehicle Title as part of the vehicle 
description.
    Net operating income (NOI) refers to the income a CRE property 
generates for the owner after all expenses have been deducted for 
federal income tax purposes, except for depreciation, debt service 
expenses, and federal and state income taxes, and excluding any unusual 
and nonrecurring items of income.
    Operating affiliate means an affiliate of a borrower that is a 
lessor or similar party with respect to the commercial real estate 
securing the loan.
    Payments-in-kind means payments of accrued interest that are not 
paid in cash when due, and instead are paid by increasing the principal 
balance of the loan or by providing equity in the borrowing company.
    Purchase money security interest means a security interest in 
property that secures the obligation of the obligor incurred as all or 
part of the price of the property.
    Purchase price means the amount paid by the borrower for the vehicle 
net of any incentive payments or manufacturer cash rebates.
    Qualified tenant means:
    (1) A tenant with a lease who has satisfied all obligations with 
respect to the property in a timely manner; or
    (2) A tenant who originally had a lease that subsequently expired 
and currently is leasing the property on a month-to-month basis, has 
occupied the property for at least three years prior to the date of 
origination, and has satisfied all obligations with respect to the 
property in a timely manner.
    Qualifying leased CRE loan means a CRE loan secured by commercial 
nonfarm real property, other than a multi-family property or a hotel, 
inn, or similar property:
    (1) That is occupied by one or more qualified tenants pursuant to a 
lease agreement with a term of no less than one (1) month; and
    (2) Where no more than 20 percent of the aggregate gross revenue of 
the property is payable from one or more tenants who:
    (i) Are subject to a lease that will terminate within six months 
following the date of origination; or
    (ii) Are not qualified tenants.
    Qualifying multi-family loan means a CRE loan secured by any 
residential property (excluding a hotel, motel, inn, hospital, nursing 
home, or other similar facility where dwellings are not leased to 
residents):
    (1) That consists of five or more dwelling units (including 
apartment buildings, condominiums, cooperatives

[[Page 328]]

and other similar structures) primarily for residential use; and
    (2) Where at least 75 percent of the NOI is derived from residential 
rents and tenant amenities (including income from parking garages, 
health or swim clubs, and dry cleaning), and not from other commercial 
uses.
    Rental income means:
    (1) Income derived from a lease or other occupancy agreement between 
the borrower or an operating affiliate of the borrower and a party which 
is not an affiliate of the borrower for the use of real property or 
improvements serving as collateral for the applicable loan; and
    (2) Other income derived from hotel, motel, dormitory, nursing home, 
assisted living, mini-storage warehouse or similar properties that are 
used primarily by parties that are not affiliates or employees of the 
borrower or its affiliates.
    Replacement reserve means the monthly capital replacement or 
maintenance amount based on the property type, age, construction and 
condition of the property that is adequate to maintain the physical 
condition and NOI of the property.
    Salvage title means a form of vehicle title branding, which notes 
that the vehicle has been severely damaged and/or deemed a total loss 
and uneconomical to repair by an insurance company that paid a claim on 
the vehicle.
    Total debt, with respect to a borrower, means:
    (1) In the case of an automobile loan, the sum of:
    (i) All monthly housing payments (rent- or mortgage-related, 
including property taxes, insurance and home owners association fees); 
and
    (ii) Any of the following that is dependent upon the borrower's 
income for payment:
    (A) Monthly payments on other debt and lease obligations, such as 
credit card loans or installment loans, including the monthly amount due 
on the automobile loan;
    (B) Estimated monthly amortizing payments for any term debt, debts 
with other than monthly payments and debts not in repayment (such as 
deferred student loans, interest-only loans); and
    (C) Any required monthly alimony, child support or court-ordered 
payments; and
    (2) In the case of a commercial loan, the outstanding balance of all 
long-term debt (obligations that have a remaining maturity of more than 
one year) and the current portion of all debt that matures in one year 
or less.
    Total liabilities ratio means the borrower's total liabilities 
divided by the sum of the borrower's total liabilities and equity, less 
the borrower's intangible assets, with each component determined in 
accordance with GAAP.
    Trade-in allowance means the amount a vehicle purchaser is given as 
a credit at the purchase of a vehicle for the fair exchange of the 
borrower's existing vehicle to compensate the dealer for some portion of 
the vehicle purchase price, not to exceed the highest trade-in value of 
the existing vehicle, as determined by a nationally recognized 
automobile pricing agency and based on the manufacturer, year, model, 
features, mileage, and condition of the vehicle, less the payoff balance 
of any outstanding debt collateralized by the existing vehicle.
    Uniform Standards of Professional Appraisal Practice (USPAP) means 
generally accepted standards for professional appraisal practice issued 
by the Appraisal Standards Board of the Appraisal Foundation.



Sec.373.15  Qualifying commercial loans, commercial real estate
loans, and automobile loans.

    (a) General exception for qualifying assets. Commercial loans, 
commercial real estate loans, and automobile loans that are securitized 
through a securitization transaction shall be subject to a 0 percent 
risk retention requirement under subpart B, provided that the following 
conditions are met:
    (1) The assets meet the underwriting standards set forth in 
Sec. Sec.373.16 (qualifying commercial loans), 373.17 (qualifying CRE 
loans), or 373.18 (qualifying automobile loans) of this part, as 
applicable;
    (2) The securitization transaction is collateralized solely by loans 
of the same asset class and by servicing assets;

[[Page 329]]

    (3) The securitization transaction does not permit reinvestment 
periods; and
    (4) The sponsor provides, or causes to be provided, to potential 
investors a reasonable period of time prior to the sale of asset-backed 
securities of the issuing entity, and, upon request, to the Commission, 
and to its appropriate Federal banking agency, if any, in written form 
under the caption ``Credit Risk Retention'', a description of the manner 
in which the sponsor determined the aggregate risk retention requirement 
for the securitization transaction after including qualifying commercial 
loans, qualifying CRE loans, or qualifying automobile loans with 0 
percent risk retention.
    (b) Risk retention requirement. For any securitization transaction 
described in paragraph (a) of this section, the percentage of risk 
retention required under Sec.373.3(a) is reduced by the percentage 
evidenced by the ratio of the unpaid principal balance of the qualifying 
commercial loans, qualifying CRE loans, or qualifying automobile loans 
(as applicable) to the total unpaid principal balance of commercial 
loans, CRE loans, or automobile loans (as applicable) that are included 
in the pool of assets collateralizing the asset-backed securities issued 
pursuant to the securitization transaction (the qualifying asset ratio); 
provided that:
    (1) The qualifying asset ratio is measured as of the cut-off date or 
similar date for establishing the composition of the securitized assets 
collateralizing the asset-backed securities issued pursuant to the 
securitization transaction;
    (2) If the qualifying asset ratio would exceed 50 percent, the 
qualifying asset ratio shall be deemed to be 50 percent; and
    (3) The disclosure required by paragraph (a)(4) of this section also 
includes descriptions of the qualifying commercial loans, qualifying CRE 
loans, and qualifying automobile loans (qualifying assets) and 
descriptions of the assets that are not qualifying assets, and the 
material differences between the group of qualifying assets and the 
group of assets that are not qualifying assets with respect to the 
composition of each group's loan balances, loan terms, interest rates, 
borrower credit information, and characteristics of any loan collateral.
    (c) Exception for securitizations of qualifying assets only. 
Notwithstanding other provisions of this section, the risk retention 
requirements of subpart B of this part shall not apply to securitization 
transactions where the transaction is collateralized solely by servicing 
assets and either qualifying commercial loans, qualifying CRE loans, or 
qualifying automobile loans.
    (d) Record maintenance. A sponsor must retain the disclosures 
required in paragraphs (a) and (b) of this section and the 
certifications required in Sec. Sec.373.16(a)(8), 373.17(a)(10), and 
373.18(a)(8), as applicable, in its records until three years after all 
ABS interests issued in the securitization are no longer outstanding. 
The sponsor must provide the disclosures and certifications upon request 
to the Commission and the sponsor's appropriate Federal banking agency, 
if any.



Sec.373.16  Underwriting standards for qualifying commercial loans.

    (a) Underwriting, product and other standards. (1) Prior to 
origination of the commercial loan, the originator:
    (i) Verified and documented the financial condition of the borrower:
    (A) As of the end of the borrower's two most recently completed 
fiscal years; and
    (B) During the period, if any, since the end of its most recently 
completed fiscal year;
    (ii) Conducted an analysis of the borrower's ability to service its 
overall debt obligations during the next two years, based on reasonable 
projections;
    (iii) Determined that, based on the previous two years' actual 
performance, the borrower had:
    (A) A total liabilities ratio of 50 percent or less;
    (B) A leverage ratio of 3.0 or less; and
    (C) A DSC ratio of 1.5 or greater;
    (iv) Determined that, based on the two years of projections, which 
include the new debt obligation, following the closing date of the loan, 
the borrower will have:
    (A) A total liabilities ratio of 50 percent or less;
    (B) A leverage ratio of 3.0 or less; and
    (C) A DSC ratio of 1.5 or greater.

[[Page 330]]

    (2) Prior to, upon or promptly following the inception of the loan, 
the originator:
    (i) If the loan is originated on a secured basis, obtains a 
perfected security interest (by filing, title notation or otherwise) or, 
in the case of real property, a recorded lien, on all of the property 
pledged to collateralize the loan; and
    (ii) If the loan documents indicate the purpose of the loan is to 
finance the purchase of tangible or intangible property, or to refinance 
such a loan, obtains a first lien on the property.
    (3) The loan documentation for the commercial loan includes 
covenants that:
    (i) Require the borrower to provide to the servicer of the 
commercial loan the borrower's financial statements and supporting 
schedules on an ongoing basis, but not less frequently than quarterly;
    (ii) Prohibit the borrower from retaining or entering into a debt 
arrangement that permits payments-in-kind;
    (iii) Impose limits on:
    (A) The creation or existence of any other security interest or lien 
with respect to any of the borrower's property that serves as collateral 
for the loan;
    (B) The transfer of any of the borrower's assets that serve as 
collateral for the loan; and
    (C) Any change to the name, location or organizational structure of 
the borrower, or any other party that pledges collateral for the loan;
    (iv) Require the borrower and any other party that pledges 
collateral for the loan to:
    (A) Maintain insurance that protects against loss on the collateral 
for the commercial loan at least up to the amount of the loan, and that 
names the originator or any subsequent holder of the loan as an 
additional insured or loss payee;
    (B) Pay taxes, charges, fees, and claims, where non-payment might 
give rise to a lien on any collateral;
    (C) Take any action required to perfect or protect the security 
interest and first lien (as applicable) of the originator or any 
subsequent holder of the loan in any collateral for the commercial loan 
or the priority thereof, and to defend any collateral against claims 
adverse to the lender's interest;
    (D) Permit the originator or any subsequent holder of the loan, and 
the servicer of the loan, to inspect any collateral for the commercial 
loan and the books and records of the borrower; and
    (E) Maintain the physical condition of any collateral for the 
commercial loan.
    (4) Loan payments required under the loan agreement are:
    (i) Based on level monthly payments of principal and interest (at 
the fully indexed rate) that fully amortize the debt over a term that 
does not exceed five years from the date of origination; and
    (ii) To be made no less frequently than quarterly over a term that 
does not exceed five years.
    (5) The primary source of repayment for the loan is revenue from the 
business operations of the borrower.
    (6) The loan was funded within the six (6) months prior to the cut-
off date or similar date for establishing the composition of the 
securitized assets collateralizing the asset-backed securities issued 
pursuant to the securitization transaction.
    (7) At the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction, all 
payments due on the loan are contractually current.
    (8)(i) The depositor of the asset-backed security certifies that it 
has evaluated the effectiveness of its internal supervisory controls 
with respect to the process for ensuring that all qualifying commercial 
loans that collateralize the asset-backed security and that reduce the 
sponsor's risk retention requirement under Sec.373.15 meet all of the 
requirements set forth in paragraphs (a)(1) through (7) of this section 
and has concluded that its internal supervisory controls are effective;
    (ii) The evaluation of the effectiveness of the depositor's internal 
supervisory controls referenced in paragraph (a)(8)(i) of this section 
shall be performed, for each issuance of an asset-backed security, as of 
a date within 60 days of the cut-off date or similar date

[[Page 331]]

for establishing the composition of the asset pool collateralizing such 
asset-backed security; and
    (iii) The sponsor provides, or causes to be provided, a copy of the 
certification described in paragraph (a)(8)(i) of this section to 
potential investors a reasonable period of time prior to the sale of 
asset-backed securities in the issuing entity, and, upon request, to its 
appropriate Federal banking agency, if any.
    (b) Cure or buy-back requirement. If a sponsor has relied on the 
exception provided in Sec.373.15 with respect to a qualifying 
commercial loan and it is subsequently determined that the loan did not 
meet all of the requirements set forth in paragraphs (a)(1) through (7) 
of this section, the sponsor shall not lose the benefit of the exception 
with respect to the commercial loan if the depositor complied with the 
certification requirement set forth in paragraph (a)(8) of this section 
and:
    (1) The failure of the loan to meet any of the requirements set 
forth in paragraphs (a)(1) through (7) of this section is not material; 
or
    (2) No later than 90 days after the determination that the loan does 
not meet one or more of the requirements of paragraphs (a)(1) through 
(7) of this section, the sponsor:
    (i) Effectuates cure, establishing conformity of the loan to the 
unmet requirements as of the date of cure; or
    (ii) Repurchases the loan(s) from the issuing entity at a price at 
least equal to the remaining principal balance and accrued interest on 
the loan(s) as of the date of repurchase.
    (3) If the sponsor cures or repurchases pursuant to paragraph (b)(2) 
of this section, the sponsor must promptly notify, or cause to be 
notified, the holders of the asset-backed securities issued in the 
securitization transaction of any loan(s) included in such 
securitization transaction that is required to be cured or repurchased 
by the sponsor pursuant to paragraph (b)(2) of this section, including 
the principal amount of such loan(s) and the cause for such cure or 
repurchase.



Sec.373.17  Underwriting standards for qualifying CRE loans.

    (a) Underwriting, product and other standards. (1) The CRE loan must 
be secured by the following:
    (i) An enforceable first lien, documented and recorded appropriately 
pursuant to applicable law, on the commercial real estate and 
improvements;
    (ii)(A) An assignment of:
    (1) Leases and rents and other occupancy agreements related to the 
commercial real estate or improvements or the operation thereof for 
which the borrower or an operating affiliate is a lessor or similar 
party and all payments under such leases and occupancy agreements; and
    (2) All franchise, license and concession agreements related to the 
commercial real estate or improvements or the operation thereof for 
which the borrower or an operating affiliate is a lessor, licensor, 
concession granter or similar party and all payments under such other 
agreements, whether the assignments described in this paragraph 
(a)(1)(ii)(A)(2) are absolute or are stated to be made to the extent 
permitted by the agreements governing the applicable franchise, license 
or concession agreements;
    (B) An assignment of all other payments due to the borrower or due 
to any operating affiliate in connection with the operation of the 
property described in paragraph (a)(1)(i) of this section; and
    (C) The right to enforce the agreements described in paragraph 
(a)(1)(ii)(A) of this section and the agreements under which payments 
under paragraph (a)(1)(ii)(B) of this section are due against, and 
collect amounts due from, each lessee, occupant or other obligor whose 
payments were assigned pursuant to paragraphs (a)(1)(ii)(A) or (B) of 
this section upon a breach by the borrower of any of the terms of, or 
the occurrence of any other event of default (however denominated) 
under, the loan documents relating to such CRE loan; and
    (iii) A security interest:
    (A) In all interests of the borrower and any applicable operating 
affiliate in all tangible and intangible personal property of any kind, 
in or used in the

[[Page 332]]

operation of or in connection with, pertaining to, arising from, or 
constituting, any of the collateral described in paragraphs (a)(1)(i) or 
(ii) of this section; and
    (B) In the form of a perfected security interest if the security 
interest in such property can be perfected by the filing of a financing 
statement, fixture filing, or similar document pursuant to the law 
governing the perfection of such security interest;
    (2) Prior to origination of the CRE loan, the originator:
    (i) Verified and documented the current financial condition of the 
borrower and each operating affiliate;
    (ii) Obtained a written appraisal of the real property securing the 
loan that:
    (A) Had an effective date not more than six months prior to the 
origination date of the loan by a competent and appropriately State-
certified or State-licensed appraiser;
    (B) Conforms to generally accepted appraisal standards as evidenced 
by the USPAP and the appraisal requirements \1\ of the Federal banking 
agencies; and
---------------------------------------------------------------------------

    \1\ 12 CFR part 34, subpart C (OCC); 12 CFR part 208, subpart E, and 
12 CFR part 225, subpart G (Board); and 12 CFR part 323 (FDIC).
---------------------------------------------------------------------------

    (C) Provides an ``as is'' opinion of the market value of the real 
property, which includes an income approach; \2\
---------------------------------------------------------------------------

    \2\ See USPAP, Standard 1.
---------------------------------------------------------------------------

    (iii) Qualified the borrower for the CRE loan based on a monthly 
payment amount derived from level monthly payments consisting of both 
principal and interest (at the fully-indexed rate) over the term of the 
loan, not exceeding 25 years, or 30 years for a qualifying multi-family 
property;
    (iv) Conducted an environmental risk assessment to gain 
environmental information about the property securing the loan and took 
appropriate steps to mitigate any environmental liability determined to 
exist based on this assessment;
    (v) Conducted an analysis of the borrower's ability to service its 
overall debt obligations during the next two years, based on reasonable 
projections (including operating income projections for the property);
    (vi)(A) Determined that based on the two years' actual performance 
immediately preceding the origination of the loan, the borrower would 
have had:
    (1) A DSC ratio of 1.5 or greater, if the loan is a qualifying 
leased CRE loan, net of any income derived from a tenant(s) who is not a 
qualified tenant(s);
    (2) A DSC ratio of 1.25 or greater, if the loan is a qualifying 
multi-family property loan; or
    (3) A DSC ratio of 1.7 or greater, if the loan is any other type of 
CRE loan;
    (B) If the borrower did not own the property for any part of the 
last two years prior to origination, the calculation of the DSC ratio, 
for purposes of paragraph (a)(2)(vi)(A) of this section, shall include 
the property's operating income for any portion of the two-year period 
during which the borrower did not own the property;
    (vii) Determined that, based on two years of projections, which 
include the new debt obligation, following the origination date of the 
loan, the borrower will have:
    (A) A DSC ratio of 1.5 or greater, if the loan is a qualifying 
leased CRE loan, net of any income derived from a tenant(s) who is not a 
qualified tenant(s);
    (B) A DSC ratio of 1.25 or greater, if the loan is a qualifying 
multi-family property loan; or
    (C) A DSC ratio of 1.7 or greater, if the loan is any other type of 
CRE loan.
    (3) The loan documentation for the CRE loan includes covenants that:
    (i) Require the borrower to provide the borrower's financial 
statements and supporting schedules to the servicer on an ongoing basis, 
but not less frequently than quarterly, including information on 
existing, maturing and new leasing or rent-roll activity for the 
property securing the loan, as appropriate; and
    (ii) Impose prohibitions on:
    (A) The creation or existence of any other security interest with 
respect to the collateral for the CRE loan described in paragraphs 
(a)(1)(i) and (a)(1)(ii)(A) of this section, except as provided in 
paragraph (a)(4) of this section;
    (B) The transfer of any collateral for the CRE loan described in 
paragraph

[[Page 333]]

(a)(1)(i) or (a)(1)(ii)(A) of this section or of any other collateral 
consisting of fixtures, furniture, furnishings, machinery or equipment 
other than any such fixture, furniture, furnishings, machinery or 
equipment that is obsolete or surplus; and
    (C) Any change to the name, location or organizational structure of 
any borrower, operating affiliate or other pledgor unless such borrower, 
operating affiliate or other pledgor shall have given the holder of the 
loan at least 30 days advance notice and, pursuant to applicable law 
governing perfection and priority, the holder of the loan is able to 
take all steps necessary to continue its perfection and priority during 
such 30-day period.
    (iii) Require each borrower and each operating affiliate to:
    (A) Maintain insurance that protects against loss on collateral for 
the CRE loan described in paragraph (a)(1)(i) of this section for an 
amount no less than the replacement cost of the property improvements, 
and names the originator or any subsequent holder of the loan as an 
additional insured or lender loss payee;
    (B) Pay taxes, charges, fees, and claims, where non-payment might 
give rise to a lien on collateral for the CRE loan described in 
paragraphs (a)(1)(i) and (ii) of this section;
    (C) Take any action required to:
    (1) Protect the security interest and the enforceability and 
priority thereof in the collateral described in paragraphs (a)(1)(i) and 
(a)(1)(ii)(A) of this section and defend such collateral against claims 
adverse to the originator's or any subsequent holder's interest; and
    (2) Perfect the security interest of the originator or any 
subsequent holder of the loan in any other collateral for the CRE loan 
to the extent that such security interest is required by this section to 
be perfected;
    (D) Permit the originator or any subsequent holder of the loan, and 
the servicer, to inspect any collateral for the CRE loan and the books 
and records of the borrower or other party relating to any collateral 
for the CRE loan;
    (E) Maintain the physical condition of collateral for the CRE loan 
described in paragraph (a)(1)(i) of this section;
    (F) Comply with all environmental, zoning, building code, licensing 
and other laws, regulations, agreements, covenants, use restrictions, 
and proffers applicable to collateral for the CRE loan described in 
paragraph (a)(1)(i) of this section;
    (G) Comply with leases, franchise agreements, condominium 
declarations, and other documents and agreements relating to the 
operation of collateral for the CRE loan described in paragraph 
(a)(1)(i) of this section, and to not modify any material terms and 
conditions of such agreements over the term of the loan without the 
consent of the originator or any subsequent holder of the loan, or the 
servicer; and
    (H) Not materially alter collateral for the CRE loan described in 
paragraph (a)(1)(i) of this section without the consent of the 
originator or any subsequent holder of the loan, or the servicer.
    (4) The loan documentation for the CRE loan prohibits the borrower 
and each operating affiliate from obtaining a loan secured by a junior 
lien on collateral for the CRE loan described in paragraph (a)(1)(i) or 
(a)(1)(ii)(A) of this section, unless:
    (i) The sum of the principal amount of such junior lien loan, plus 
the principal amount of all other loans secured by collateral described 
in paragraph (a)(1)(i) or (a)(1)(ii)(A) of this section, does not exceed 
the applicable CLTV ratio in paragraph (a)(5) of this section, based on 
the appraisal at origination of such junior lien loan; or
    (ii) Such loan is a purchase money obligation that financed the 
acquisition of machinery or equipment and the borrower or operating 
affiliate (as applicable) pledges such machinery and equipment as 
additional collateral for the CRE loan.
    (5) At origination, the applicable loan-to-value ratios for the loan 
are:
    (i) LTV less than or equal to 65 percent and CLTV less than or equal 
to 70 percent; or
    (ii) LTV less than or equal to 60 percent and CLTV less than or 
equal to 65 percent, if an appraisal used to meet

[[Page 334]]

the requirements set forth in paragraph (a)(2)(ii) of this section used 
a direct capitalization rate, and that rate is less than or equal to the 
sum of:
    (A) The 10-year swap rate, as reported in the Federal Reserve's H.15 
Report (or any successor report) as of the date concurrent with the 
effective date of such appraisal; and
    (B) 300 basis points.
    (iii) If the appraisal required under paragraph (a)(2)(ii) of this 
section included a direct capitalization method using an overall 
capitalization rate, that rate must be disclosed to potential investors 
in the securitization.
    (6) All loan payments required to be made under the loan agreement 
are:
    (i) Based on level monthly payments of principal and interest (at 
the fully indexed rate) to fully amortize the debt over a term that does 
not exceed 25 years, or 30 years for a qualifying multifamily loan; and
    (ii) To be made no less frequently than monthly over a term of at 
least ten years.
    (7) Under the terms of the loan agreement:
    (i) Any maturity of the note occurs no earlier than ten years 
following the date of origination;
    (ii) The borrower is not permitted to defer repayment of principal 
or payment of interest; and
    (iii) The interest rate on the loan is:
    (A) A fixed interest rate;
    (B) An adjustable interest rate and the borrower, prior to or 
concurrently with origination of the CRE loan, obtained a derivative 
that effectively results in a fixed interest rate; or
    (C) An adjustable interest rate and the borrower, prior to or 
concurrently with origination of the CRE loan, obtained a derivative 
that established a cap on the interest rate for the term of the loan, 
and the loan meets the underwriting criteria in paragraphs (a)(2)(vi) 
and (vii) of this section using the maximum interest rate allowable 
under the interest rate cap.
    (8) The originator does not establish an interest reserve at 
origination to fund all or part of a payment on the loan.
    (9) At the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction, all 
payments due on the loan are contractually current.
    (10)(i) The depositor of the asset-backed security certifies that it 
has evaluated the effectiveness of its internal supervisory controls 
with respect to the process for ensuring that all qualifying CRE loans 
that collateralize the asset-backed security and that reduce the 
sponsor's risk retention requirement under Sec.373.15 meet all of the 
requirements set forth in paragraphs (a)(1) through (9) of this section 
and has concluded that its internal supervisory controls are effective;
    (ii) The evaluation of the effectiveness of the depositor's internal 
supervisory controls referenced in paragraph (a)(10)(i) of this section 
shall be performed, for each issuance of an asset-backed security, as of 
a date within 60 days of the cut-off date or similar date for 
establishing the composition of the asset pool collateralizing such 
asset-backed security;
    (iii) The sponsor provides, or causes to be provided, a copy of the 
certification described in paragraph (a)(10)(i) of this section to 
potential investors a reasonable period of time prior to the sale of 
asset-backed securities in the issuing entity, and, upon request, to its 
appropriate Federal banking agency, if any; and
    (11) Within two weeks of the closing of the CRE loan by its 
originator or, if sooner, prior to the transfer of such CRE loan to the 
issuing entity, the originator shall have obtained a UCC lien search 
from the jurisdiction of organization of the borrower and each operating 
affiliate, that does not report, as of the time that the security 
interest of the originator in the property described in paragraph 
(a)(1)(iii) of this section was perfected, other higher priority liens 
of record on any property described in paragraph (a)(1)(iii) of this 
section, other than purchase money security interests.
    (b) Cure or buy-back requirement. If a sponsor has relied on the 
exception provided in Sec.373.15 with respect to a qualifying CRE loan 
and it is subsequently determined that the CRE loan did not meet all of 
the requirements set forth in paragraphs (a)(1) through

[[Page 335]]

(9) and (a)(11) of this section, the sponsor shall not lose the benefit 
of the exception with respect to the CRE loan if the depositor complied 
with the certification requirement set forth in paragraph (a)(10) of 
this section, and:
    (1) The failure of the loan to meet any of the requirements set 
forth in paragraphs (a)(1) through (9) and (a)(11) of this section is 
not material; or;
    (2) No later than 90 days after the determination that the loan does 
not meet one or more of the requirements of paragraphs (a)(1) through 
(9) or (a)(11) of this section, the sponsor:
    (i) Effectuates cure, restoring conformity of the loan to the unmet 
requirements as of the date of cure; or
    (ii) Repurchases the loan(s) from the issuing entity at a price at 
least equal to the remaining principal balance and accrued interest on 
the loan(s) as of the date of repurchase.
    (3) If the sponsor cures or repurchases pursuant to paragraph (b)(2) 
of this section, the sponsor must promptly notify, or cause to be 
notified, the holders of the asset-backed securities issued in the 
securitization transaction of any loan(s) included in such 
securitization transaction that is required to be cured or repurchased 
by the sponsor pursuant to paragraph (b)(2) of this section, including 
the principal amount of such repurchased loan(s) and the cause for such 
cure or repurchase.



Sec.373.18  Underwriting standards for qualifying automobile loans.

    (a) Underwriting, product and other standards. (1) Prior to 
origination of the automobile loan, the originator:
    (i) Verified and documented that within 30 days of the date of 
origination:
    (A) The borrower was not currently 30 days or more past due, in 
whole or in part, on any debt obligation;
    (B) Within the previous 24 months, the borrower has not been 60 days 
or more past due, in whole or in part, on any debt obligation;
    (C) Within the previous 36 months, the borrower has not:
    (1) Been a debtor in a proceeding commenced under Chapter 7 
(Liquidation), Chapter 11 (Reorganization), Chapter 12 (Family Farmer or 
Family Fisherman plan), or Chapter 13 (Individual Debt Adjustment) of 
the U.S. Bankruptcy Code; or
    (2) Been the subject of any federal or State judicial judgment for 
the collection of any unpaid debt;
    (D) Within the previous 36 months, no one-to-four family property 
owned by the borrower has been the subject of any foreclosure, deed in 
lieu of foreclosure, or short sale; or
    (E) Within the previous 36 months, the borrower has not had any 
personal property repossessed;
    (ii) Determined and documented that the borrower has at least 24 
months of credit history; and
    (iii) Determined and documented that, upon the origination of the 
loan, the borrower's DTI ratio is less than or equal to 36 percent.
    (A) For the purpose of making the determination under paragraph 
(a)(1)(iii) of this section, the originator must:
    (1) Verify and document all income of the borrower that the 
originator includes in the borrower's effective monthly income (using 
payroll stubs, tax returns, profit and loss statements, or other similar 
documentation); and
    (2) On or after the date of the borrower's written application and 
prior to origination, obtain a credit report regarding the borrower from 
a consumer reporting agency that compiles and maintain files on 
consumers on a nationwide basis (within the meaning of 15 U.S.C. 
1681a(p)) and verify that all outstanding debts reported in the 
borrower's credit report are incorporated into the calculation of the 
borrower's DTI ratio under paragraph (a)(1)(iii) of this section;
    (2) An originator will be deemed to have met the requirements of 
paragraph (a)(1)(i) of this section if:
    (i) The originator, no more than 30 days before the closing of the 
loan, obtains a credit report regarding the borrower from a consumer 
reporting agency that compiles and maintains files on consumers on a 
nationwide basis (within the meaning of 15 U.S.C. 1681a(p));
    (ii) Based on the information in such credit report, the borrower 
meets all of the requirements of paragraph (a)(1)(i) of this section, 
and no information in a credit report subsequently obtained by the 
originator before the closing of the

[[Page 336]]

loan contains contrary information; and
    (iii) The originator obtains electronic or hard copies of the credit 
report.
    (3) At closing of the automobile loan, the borrower makes a down 
payment from the borrower's personal funds and trade-in allowance, if 
any, that is at least equal to the sum of:
    (i) The full cost of the vehicle title, tax, and registration fees;
    (ii) Any dealer-imposed fees;
    (iii) The full cost of any additional warranties, insurance or other 
products purchased in connection with the purchase of the vehicle; and
    (iv) 10 percent of the vehicle purchase price.
    (4) The originator records a first lien securing the loan on the 
purchased vehicle in accordance with State law.
    (5) The terms of the loan agreement provide a maturity date for the 
loan that does not exceed the lesser of:
    (i) Six years from the date of origination; or
    (ii) 10 years minus the difference between the current model year 
and the vehicle's model year.
    (6) The terms of the loan agreement:
    (i) Specify a fixed rate of interest for the life of the loan;
    (ii) Provide for a level monthly payment amount that fully amortizes 
the amount financed over the loan term;
    (iii) Do not permit the borrower to defer repayment of principal or 
payment of interest; and
    (iv) Require the borrower to make the first payment on the 
automobile loan within 45 days of the loan's contract date.
    (7) At the cut-off date or similar date for establishing the 
composition of the securitized assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction, all 
payments due on the loan are contractually current; and
    (8)(i) The depositor of the asset-backed security certifies that it 
has evaluated the effectiveness of its internal supervisory controls 
with respect to the process for ensuring that all qualifying automobile 
loans that collateralize the asset-backed security and that reduce the 
sponsor's risk retention requirement under Sec.373.15 meet all of the 
requirements set forth in paragraphs (a)(1) through (7) of this section 
and has concluded that its internal supervisory controls are effective;
    (ii) The evaluation of the effectiveness of the depositor's internal 
supervisory controls referenced in paragraph (a)(8)(i) of this section 
shall be performed, for each issuance of an asset-backed security, as of 
a date within 60 days of the cut-off date or similar date for 
establishing the composition of the asset pool collateralizing such 
asset-backed security; and
    (iii) The sponsor provides, or causes to be provided, a copy of the 
certification described in paragraph (a)(8)(i) of this section to 
potential investors a reasonable period of time prior to the sale of 
asset-backed securities in the issuing entity, and, upon request, to its 
appropriate Federal banking agency, if any.
    (b) Cure or buy-back requirement. If a sponsor has relied on the 
exception provided in Sec.373.15 with respect to a qualifying 
automobile loan and it is subsequently determined that the loan did not 
meet all of the requirements set forth in paragraphs (a)(1) through (7) 
of this section, the sponsor shall not lose the benefit of the exception 
with respect to the automobile loan if the depositor complied with the 
certification requirement set forth in paragraph (a)(8) of this section, 
and:
    (1) The failure of the loan to meet any of the requirements set 
forth in paragraphs (a)(1) through (7) of this section is not material; 
or
    (2) No later than ninety (90) days after the determination that the 
loan does not meet one or more of the requirements of paragraphs (a)(1) 
through (7) of this section, the sponsor:
    (i) Effectuates cure, establishing conformity of the loan to the 
unmet requirements as of the date of cure; or
    (ii) Repurchases the loan(s) from the issuing entity at a price at 
least equal to the remaining principal balance and accrued interest on 
the loan(s) as of the date of repurchase.
    (3) If the sponsor cures or repurchases pursuant to paragraph (b)(2) 
of this section, the sponsor must promptly notify, or cause to be 
notified, the holders of the asset-backed securities issued in the 
securitization transaction

[[Page 337]]

of any loan(s) included in such securitization transaction that is 
required to be cured or repurchased by the sponsor pursuant to paragraph 
(b)(2) of this section, including the principal amount of such loan(s) 
and the cause for such cure or repurchase.



Sec.373.19  General exemptions.

    (a) Definitions. For purposes of this section, the following 
definitions shall apply:
    Community-focused residential mortgage means a residential mortgage 
exempt from the definition of ``covered transaction'' under Sec.
1026.43(a)(3)(iv) and (v) of the CFPB's Regulation Z (12 CFR 
1026.43(a)).
    First pay class means a class of ABS interests for which all 
interests in the class are entitled to the same priority of payment and 
that, at the time of closing of the transaction, is entitled to 
repayments of principal and payments of interest prior to or pro-rata 
with all other classes of securities collateralized by the same pool of 
first-lien residential mortgages, until such class has no principal or 
notional balance remaining.
    Inverse floater means an ABS interest issued as part of a 
securitization transaction for which interest or other income is payable 
to the holder based on a rate or formula that varies inversely to a 
reference rate of interest.
    Qualifying three-to-four unit residential mortgage loan means a 
mortgage loan that is:
    (i) Secured by a dwelling (as defined in 12 CFR 1026.2(a)(19)) that 
is owner occupied and contains three-to-four housing units;
    (ii) Is deemed to be for business purposes for purposes of 
Regulation Z under 12 CFR part 1026, Supplement I, paragraph 3(a)(5)(i); 
and
    (iii) Otherwise meets all of the requirements to qualify as a 
qualified mortgage under Sec.1026.43(e) and (f) of Regulation Z (12 
CFR 1026.43(e) and (f)) as if the loan were a covered transaction under 
that section.
    (b) This part shall not apply to:
    (1) U.S. Government-backed securitizations. Any securitization 
transaction that:
    (i) Is collateralized solely by residential, multifamily, or health 
care facility mortgage loan assets that are insured or guaranteed (in 
whole or in part) as to the payment of principal and interest by the 
United States or an agency of the United States, and servicing assets; 
or
    (ii) Involves the issuance of asset-backed securities that:
    (A) Are insured or guaranteed as to the payment of principal and 
interest by the United States or an agency of the United States; and
    (B) Are collateralized solely by residential, multifamily, or health 
care facility mortgage loan assets or interests in such assets, and 
servicing assets.
    (2) Certain agricultural loan securitizations. Any securitization 
transaction that is collateralized solely by loans or other assets made, 
insured, guaranteed, or purchased by any institution that is subject to 
the supervision of the Farm Credit Administration, including the Federal 
Agricultural Mortgage Corporation, and servicing assets;
    (3) State and municipal securitizations. Any asset-backed security 
that is a security issued or guaranteed by any State, or by any 
political subdivision of a State, or by any public instrumentality of a 
State that is exempt from the registration requirements of the 
Securities Act of 1933 by reason of section 3(a)(2) of that Act (15 
U.S.C. 77c(a)(2)); and
    (4) Qualified scholarship funding bonds. Any asset-backed security 
that meets the definition of a qualified scholarship funding bond, as 
set forth in section 150(d)(2) of the Internal Revenue Code of 1986 (26 
U.S.C. 150(d)(2)).
    (5) Pass-through resecuritizations. Any securitization transaction 
that:
    (i) Is collateralized solely by servicing assets, and by asset-
backed securities:
    (A) For which credit risk was retained as required under subpart B 
of this part; or
    (B) That were exempted from the credit risk retention requirements 
of this part pursuant to subpart D of this part;
    (ii) Is structured so that it involves the issuance of only a single 
class of ABS interests; and

[[Page 338]]

    (iii) Provides for the pass-through of all principal and interest 
payments received on the underlying asset-backed securities (net of 
expenses of the issuing entity) to the holders of such class.
    (6) First-pay-class securitizations. Any securitization transaction 
that:
    (i) Is collateralized solely by servicing assets, and by first-pay 
classes of asset-backed securities collateralized by first-lien 
residential mortgages on properties located in any state:
    (A) For which credit risk was retained as required under subpart B 
of this part; or
    (B) That were exempted from the credit risk retention requirements 
of this part pursuant to subpart D of this part;
    (ii) Does not provide for any ABS interest issued in the 
securitization transaction to share in realized principal losses other 
than pro rata with all other ABS interests issued in the securitization 
transaction based on the current unpaid principal balance of such ABS 
interests at the time the loss is realized;
    (iii) Is structured to reallocate prepayment risk;
    (iv) Does not reallocate credit risk (other than as a consequence of 
reallocation of prepayment risk); and
    (v) Does not include any inverse floater or similarly structured ABS 
interest.
    (7) Seasoned loans. (i) Any securitization transaction that is 
collateralized solely by servicing assets, and by seasoned loans that 
meet the following requirements:
    (A) The loans have not been modified since origination; and
    (B) None of the loans have been delinquent for 30 days or more.
    (ii) For purposes of this paragraph, a seasoned loan means:
    (A) With respect to asset-backed securities collateralized by 
residential mortgages, a loan that has been outstanding and performing 
for the longer of:
    (1) A period of five years; or
    (2) Until the outstanding principal balance of the loan has been 
reduced to 25 percent of the original principal balance.
    (3) Notwithstanding paragraphs (b)(7)(ii)(A)(1) and (2) of this 
section, any residential mortgage loan that has been outstanding and 
performing for a period of at least seven years shall be deemed a 
seasoned loan.
    (B) With respect to all other classes of asset-backed securities, a 
loan that has been outstanding and performing for the longer of:
    (1) A period of at least two years; or
    (2) Until the outstanding principal balance of the loan has been 
reduced to 33 percent of the original principal balance.
    (8) Certain public utility securitizations. (i) Any securitization 
transaction where the asset-back securities issued in the transaction 
are secured by the intangible property right to collect charges for the 
recovery of specified costs and such other assets, if any, of an issuing 
entity that is wholly owned, directly or indirectly, by an investor 
owned utility company that is subject to the regulatory authority of a 
State public utility commission or other appropriate State agency.
    (ii) For purposes of this paragraph:
    (A) Specified cost means any cost identified by a State legislature 
as appropriate for recovery through securitization pursuant to specified 
cost recovery legislation; and
    (B) Specified cost recovery legislation means legislation enacted by 
a State that:
    (1) Authorizes the investor owned utility company to apply for, and 
authorizes the public utility commission or other appropriate State 
agency to issue, a financing order determining the amount of specified 
costs the utility will be allowed to recover;
    (2) Provides that pursuant to a financing order, the utility 
acquires an intangible property right to charge, collect, and receive 
amounts necessary to provide for the full recovery of the specified 
costs determined to be recoverable, and assures that the charges are 
non-bypassable and will be paid by customers within the utility's 
historic service territory who receive utility goods or services through 
the utility's transmission and distribution system, even if those 
customers elect to purchase these goods or services from a third party; 
and

[[Page 339]]

    (3) Guarantees that neither the State nor any of its agencies has 
the authority to rescind or amend the financing order, to revise the 
amount of specified costs, or in any way to reduce or impair the value 
of the intangible property right, except as may be contemplated by 
periodic adjustments authorized by the specified cost recovery 
legislation.
    (c) Exemption for securitizations of assets issued, insured or 
guaranteed by the United States. This part shall not apply to any 
securitization transaction if the asset-backed securities issued in the 
transaction are:
    (1) Collateralized solely by obligations issued by the United States 
or an agency of the United States and servicing assets;
    (2) Collateralized solely by assets that are fully insured or 
guaranteed as to the payment of principal and interest by the United 
States or an agency of the United States (other than those referred to 
in paragraph (b)(1)(i) of this section) and servicing assets; or
    (3) Fully guaranteed as to the timely payment of principal and 
interest by the United States or any agency of the United States;
    (d) Federal Deposit Insurance Corporation securitizations. This part 
shall not apply to any securitization transaction that is sponsored by 
the Federal Deposit Insurance Corporation acting as conservator or 
receiver under any provision of the Federal Deposit Insurance Act or of 
Title II of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act.
    (e) Reduced requirement for certain student loan securitizations. 
The 5 percent risk retention requirement set forth in Sec.373.4 shall 
be modified as follows:
    (1) With respect to a securitization transaction that is 
collateralized solely by student loans made under the Federal Family 
Education Loan Program (``FFELP loans'') that are guaranteed as to 100 
percent of defaulted principal and accrued interest, and servicing 
assets, the risk retention requirement shall be 0 percent;
    (2) With respect to a securitization transaction that is 
collateralized solely by FFELP loans that are guaranteed as to at least 
98 percent but less than 100 percent of defaulted principal and accrued 
interest, and servicing assets, the risk retention requirement shall be 
2 percent; and
    (3) With respect to any other securitization transaction that is 
collateralized solely by FFELP loans, and servicing assets, the risk 
retention requirement shall be 3 percent.
    (f) Community-focused lending securitizations. (1) This part shall 
not apply to any securitization transaction if the asset-backed 
securities issued in the transaction are collateralized solely by 
community-focused residential mortgages and servicing assets.
    (2) For any securitization transaction that includes both community-
focused residential mortgages and residential mortgages that are not 
exempt from risk retention under this part, the percent of risk 
retention required under Sec.373.4(a) is reduced by the ratio of the 
unpaid principal balance of the community-focused residential mortgages 
to the total unpaid principal balance of residential mortgages that are 
included in the pool of assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction (the 
community-focused residential mortgage asset ratio); provided that:
    (i) The community-focused residential mortgage asset ratio is 
measured as of the cut-off date or similar date for establishing the 
composition of the pool assets collateralizing the asset-backed 
securities issued pursuant to the securitization transaction; and
    (ii) If the community-focused residential mortgage asset ratio would 
exceed 50 percent, the community-focused residential mortgage asset 
ratio shall be deemed to be 50 percent.
    (g) Exemptions for securitizations of certain three-to-four unit 
mortgage loans. A sponsor shall be exempt from the risk retention 
requirements in subpart B of this part with respect to any 
securitization transaction if:
    (1)(i) The asset-backed securities issued in the transaction are 
collateralized solely by qualifying three-to-four unit residential 
mortgage loans and servicing assets; or
    (ii) The asset-backed securities issued in the transaction are 
collateralized solely by qualifying three-to-four unit residential 
mortgage loans, qualified residential mortgages

[[Page 340]]

as defined in Sec.373.13, and servicing assets.
    (2) The depositor with respect to the securitization provides the 
certifications set forth in Sec.373.13(b)(4) with respect to the 
process for ensuring that all assets that collateralize the asset-backed 
securities issued in the transaction are qualifying three-to-four unit 
residential mortgage loans, qualified residential mortgages, or 
servicing assets; and
    (3) The sponsor of the securitization complies with the repurchase 
requirements in Sec.373.13(c) with respect to a loan if, after 
closing, it is determined that the loan does not meet all of the 
criteria to be either a qualified residential mortgage or a qualifying 
three-to-four unit residential mortgage loan, as appropriate.
    (h) Rule of construction. Securitization transactions involving the 
issuance of asset-backed securities that are either issued, insured, or 
guaranteed by, or are collateralized by obligations issued by, or loans 
that are issued, insured, or guaranteed by, the Federal National 
Mortgage Association, the Federal Home Loan Mortgage Corporation, or a 
Federal home loan bank shall not on that basis qualify for exemption 
under this part.



Sec.373.20  Safe harbor for certain foreign-related transactions.

    (a) Definitions. For purposes of this section, the following 
definition shall apply:
    U.S. person means:
    (i) Any of the following:
    (A) Any natural person resident in the United States;
    (B) Any partnership, corporation, limited liability company, or 
other organization or entity organized or incorporated under the laws of 
any State or of the United States;
    (C) Any estate of which any executor or administrator is a U.S. 
person (as defined under any other clause of this definition);
    (D) Any trust of which any trustee is a U.S. person (as defined 
under any other clause of this definition);
    (E) Any agency or branch of a foreign entity located in the United 
States;
    (F) Any non-discretionary account or similar account (other than an 
estate or trust) held by a dealer or other fiduciary for the benefit or 
account of a U.S. person (as defined under any other clause of this 
definition);
    (G) Any discretionary account or similar account (other than an 
estate or trust) held by a dealer or other fiduciary organized, 
incorporated, or (if an individual) resident in the United States; and
    (H) Any partnership, corporation, limited liability company, or 
other organization or entity if:
    (1) Organized or incorporated under the laws of any foreign 
jurisdiction; and
    (2) Formed by a U.S. person (as defined under any other clause of 
this definition) principally for the purpose of investing in securities 
not registered under the Act; and
    (ii) ``U.S. person(s)'' does not include:
    (A) Any discretionary account or similar account (other than an 
estate or trust) held for the benefit or account of a person not 
constituting a U.S. person (as defined in paragraph (i) of this section) 
by a dealer or other professional fiduciary organized, incorporated, or 
(if an individual) resident in the United States;
    (B) Any estate of which any professional fiduciary acting as 
executor or administrator is a U.S. person (as defined in paragraph (i) 
of this section) if:
    (1) An executor or administrator of the estate who is not a U.S. 
person (as defined in paragraph (i) of this section) has sole or shared 
investment discretion with respect to the assets of the estate; and
    (2) The estate is governed by foreign law;
    (C) Any trust of which any professional fiduciary acting as trustee 
is a U.S. person (as defined in paragraph (i) of this section), if a 
trustee who is not a U.S. person (as defined in paragraph (i) of this 
section) has sole or shared investment discretion with respect to the 
trust assets, and no beneficiary of the trust (and no settlor if the 
trust is revocable) is a U.S. person (as defined in paragraph (i) of 
this section);
    (D) An employee benefit plan established and administered in 
accordance with the law of a country other than

[[Page 341]]

the United States and customary practices and documentation of such 
country;
    (E) Any agency or branch of a U.S. person (as defined in paragraph 
(i) of this section) located outside the United States if:
    (1) The agency or branch operates for valid business reasons; and
    (2) The agency or branch is engaged in the business of insurance or 
banking and is subject to substantive insurance or banking regulation, 
respectively, in the jurisdiction where located;
    (F) The International Monetary Fund, the International Bank for 
Reconstruction and Development, the Inter-American Development Bank, the 
Asian Development Bank, the African Development Bank, the United 
Nations, and their agencies, affiliates and pension plans, and any other 
similar international organizations, their agencies, affiliates and 
pension plans.
    (b) In general. This part shall not apply to a securitization 
transaction if all the following conditions are met:
    (1) The securitization transaction is not required to be and is not 
registered under the Securities Act of 1933 (15 U.S.C. 77a et seq.);
    (2) No more than 10 percent of the dollar value (or equivalent 
amount in the currency in which the ABS interests are issued, as 
applicable) of all classes of ABS interests in the securitization 
transaction are sold or transferred to U.S. persons or for the account 
or benefit of U.S. persons;
    (3) Neither the sponsor of the securitization transaction nor the 
issuing entity is:
    (i) Chartered, incorporated, or organized under the laws of the 
United States or any State;
    (ii) An unincorporated branch or office (wherever located) of an 
entity chartered, incorporated, or organized under the laws of the 
United States or any State; or
    (iii) An unincorporated branch or office located in the United 
States or any State of an entity that is chartered, incorporated, or 
organized under the laws of a jurisdiction other than the United States 
or any State; and
    (4) If the sponsor or issuing entity is chartered, incorporated, or 
organized under the laws of a jurisdiction other than the United States 
or any State, no more than 25 percent (as determined based on unpaid 
principal balance) of the assets that collateralize the ABS interests 
sold in the securitization transaction were acquired by the sponsor or 
issuing entity, directly or indirectly, from:
    (i) A majority-owned affiliate of the sponsor or issuing entity that 
is chartered, incorporated, or organized under the laws of the United 
States or any State; or
    (ii) An unincorporated branch or office of the sponsor or issuing 
entity that is located in the United States or any State.
    (c) Evasions prohibited. In view of the objective of these rules and 
the policies underlying Section 15G of the Exchange Act, the safe harbor 
described in paragraph (b) of this section is not available with respect 
to any transaction or series of transactions that, although in technical 
compliance with paragraphs (a) and (b) of this section, is part of a 
plan or scheme to evade the requirements of section 15G and this part. 
In such cases, compliance with section 15G and this part is required.



Sec.373.21  Additional exemptions.

    (a) Securitization transactions. The federal agencies with 
rulewriting authority under section 15G(b) of the Exchange Act (15 
U.S.C. 78o-11(b)) with respect to the type of assets involved may 
jointly provide a total or partial exemption of any securitization 
transaction as such agencies determine may be appropriate in the public 
interest and for the protection of investors.
    (b) Exceptions, exemptions, and adjustments. The Federal banking 
agencies and the Commission, in consultation with the Federal Housing 
Finance Agency and the Department of Housing and Urban Development, may 
jointly adopt or issue exemptions, exceptions or adjustments to the 
requirements of this part, including exemptions, exceptions or 
adjustments for classes of institutions or assets in accordance with 
section 15G(e) of the Exchange Act (15 U.S.C. 78o-11(e)).

[[Page 342]]



Sec.373.22  Periodic review of the QRM definition, exempted three
-to-four unit residential mortgage loans, and community-focused
residential mortgage exemption
          

    (a) The Federal banking agencies and the Commission, in consultation 
with the Federal Housing Finance Agency and the Department of Housing 
and Urban Development, shall commence a review of the definition of 
qualified residential mortgage in Sec.373.13, a review of the 
community-focused residential mortgage exemption in Sec.373.19(f), and 
a review of the exemption for qualifying three-to-four unit residential 
mortgage loans in Sec.373.19(g):
    (1) No later than four years after the effective date of the rule 
(as it relates to securitizers and originators of asset-backed 
securities collateralized by residential mortgages), five years 
following the completion of such initial review, and every five years 
thereafter; and
    (2) At any time, upon the request of any Federal banking agency, the 
Commission, the Federal Housing Finance Agency or the Department of 
Housing and Urban Development, specifying the reason for such request, 
including as a result of any amendment to the definition of qualified 
mortgage or changes in the residential housing market.
    (b) The Federal banking agencies, the Commission, the Federal 
Housing Finance Agency and the Department of Housing and Urban 
Development shall publish in the Federal Register notice of the 
commencement of a review and, in the case of a review commenced under 
paragraph (a)(2) of this section, the reason an agency is requesting 
such review. After completion of any review, but no later than six 
months after the publication of the notice announcing the review, unless 
extended by the agencies, the agencies shall jointly publish a notice 
disclosing the determination of their review. If the agencies determine 
to amend the definition of qualified residential mortgage, the agencies 
shall complete any required rulemaking within 12 months of publication 
in the Federal Register of such notice disclosing the determination of 
their review, unless extended by the agencies.



PART 380_ORDERLY LIQUIDATION AUTHORITY--Table of Contents



             Subpart A_General and Miscellaneous Provisions

Sec.
380.1 Definitions.
380.2 [Reserved]
380.3 Treatment of personal service agreements.
380.4 [Reserved]
380.5 Treatment of covered financial companies that are subsidiaries of 
          insurance companies.
380.6 Limitation on liens on assets of covered financial companies that 
          are insurance companies or covered subsidiaries of insurance 
          companies.
380.7 Recoupment of compensation from senior executives and directors.
380.8 Predominantly engaged in activities that are financial or 
          incidental thereto.
380.9 Treatment of fraudulent and preferential transfers.
380.10 Maximum obligation limitation.
380.11 Treatment of mutual insurance holding companies.
380.12 Enforcement of subsidiary and affiliate contracts by the FDIC as 
          receiver of a covered financial company.
380.13 Restrictions on sale of assets of a covered financial company by 
          the Federal Deposit Insurance Corporation.
380.14 Record retention requirements.
380.15-380.19 [Reserved]

                          Subpart B_Priorities

380.20 [Reserved]
380.21 Priorities.
380.22 Administrative expenses of the receiver.
380.23 Amounts owed to the United States.
380.24 Priority of claims arising out ofloss of setoff rights.
380.25 Post-insolvency interest.
380.26 Effect of transfer of assets and obligations to a bridge 
          financial company.
380.27 Treatment of similarly situated claimants.
380.28-380.29 [Reserved]

          Subpart C_Receivership Administrative Claims Process

380.30 Receivership administrative claims process.
380.31 Scope.
380.32 Claims bar date.
380.33 Notice requirements.
380.34 Procedures for filing claim.
380.35 Determination of claims.
380.36 Decision period.
380.37 Notification of determination.
380.38 Procedures for seeking judicial determination of disallowed 
          claim.

[[Page 343]]

380.39 Contingent claims.
380.40-380.49 [Reserved]
380.50 Determination of secured claims.
380.51 Consent to certain actions.
380.52 Adequate protection.
380.53 Repudiation of secured contract.

    Authority: 12 U.S.C. 5389; 12 U.S.C. 5390(s)(3); 12 U.S.C. 
5390(b)(1)(C); 12 U.S.C. 5390(a)(7)(D); 12 U.S.C. 5381(b); 12 U.S.C. 
5390(r); 12 U.S.C. 5390(a)(16)(D).

    Source: 76 FR 4215, Jan. 25, 2011, unless otherwise noted.



             Subpart A_General and Miscellaneous Provisions



Sec.380.1  Definitions.

    For purposes of this part, the following terms are defined as 
follows:
    Affiliate. The term ``affiliate'' means any company that controls, 
is controlled by, or is under common control with another company at the 
time of, or immediately prior to, the appointment of receiver of the 
covered financial company.
    Allowed claim. The term ``allowed claim'' means a claim against the 
covered financial company or receiver that is allowed by the Corporation 
as receiver or upon which a final non-appealable judgment has been 
entered in favor of a claimant against a receivership by a court with 
jurisdiction to adjudicate the claim.
    Board of Governors. The term ``Board of Governors'' means the Board 
of Governors of the Federal Reserve System.
    Bridge financial company. The term ``bridge financial company'' 
means a new financial company organized by the Corporation in accordance 
with 12 U.S.C. 5390(h) for the purpose of resolving a covered financial 
company.
    Business day. The term ``business day'' means any day other than any 
Saturday, Sunday or any day on which either the New York Stock Exchange 
or the Federal Reserve Bank of New York is closed.
    Claim. The term ``claim'' means any right to payment from either the 
covered financial company or the Corporation as receiver, whether or not 
such right is reduced to judgment, liquidated, unliquidated, fixed, 
contingent, matured, unmatured, disputed, undisputed, legal, equitable, 
secured, or unsecured.
    Compensation. The term ``compensation'' means any direct or indirect 
financial remuneration received from the covered financial company, 
including, but not limited to, salary; bonuses; incentives; benefits; 
severance pay; deferred compensation; golden parachute benefits; 
benefits derived from an employment contract, or other compensation or 
benefit arrangement; perquisites; stock option plans; post-employment 
benefits; profits realized from a sale of securities in the covered 
financial company; or any cash or non-cash payments or benefits granted 
to or for the benefit of the senior executive or director.
    Control. The term ``control'', when used in the definitions of 
``affiliate'' and ``subsidiary'', has the meaning given to such term 
under 12 U.S.C. 1841(a)(2)(A) and (B) as such law, or any successor, may 
be in effect at the date of the appointment of the receiver, together 
with any regulations promulgated thereunder then in effect.
    Corporation. The term ``Corporation'' means the Federal Deposit 
Insurance Corporation.
    Covered financial company. The term ``covered financial company'' 
means (a) a financial company for which a determination has been made 
under 12 U.S.C. 5383(b) and (b) does not include an insured depository 
institution.
    Covered subsidiary. The term ``covered subsidiary'' means a 
subsidiary of a covered financial company other than:
    (1) An insured depository institution;
    (2) An insurance company; or
    (3) A covered broker or dealer.
    Creditor. The term ``creditor'' means a person asserting a claim.
    Director. The term ``director'' means a member of the board of 
directors of a company or of a board or committee performing a similar 
function to a board of directors with authority to vote on matters 
before the board or committee.
    Dodd-Frank Act. The term ``Dodd-Frank Act'' shall mean the Dodd-
Frank Wall Street Reform and Consumer Protection Act, Public Law 111-
203, 12 U.S.C. 5301 et seq. (2010).
    Employee benefit plan. The term ``employee benefit plan'' has the 
meaning set forth in the Employee Retirement Income Security Act, 29 
U.S.C. 1002(3).

[[Page 344]]

    Insurance company. The term ``insurance company'' means any entity 
that is:
    (1) Engaged in the business of insurance,
    (2) Subject to regulation by a State insurance regulator, and
    (3) Covered by a State law that is designed to specifically deal 
with the rehabilitation, liquidation or insolvency of an insurance 
company.
    Intermediate insurance stock holding company. The term 
``intermediate insurance stock holding company'' means a corporation 
organized either at the time of, or at any time after, the organization 
of the mutual insurance holding company that:
    (1) Is a subsidiary of a mutual insurance holding company;
    (2) Holds a majority of the issued and outstanding voting stock of 
the converted mutual insurance company created at the time of formation 
of the mutual insurance holding company; and
    (3) Holds, as its largest United States subsidiary (as measured by 
total assets as of the end of the previous calendar quarter), an 
insurance company.
    Mutual insurance company. The term ``mutual insurance company'' 
means an insurance company organized under the laws of a State that 
provides for the formation of such an entity as a non-stock mutual 
corporation in which the surplus and voting rights are vested in the 
policyholders.
    Mutual insurance holding company. The term ``mutual insurance 
holding company'' means a corporation that:
    (1) Is lawfully organized under state law authorizing its formation 
in connection with the reorganization of a mutual insurance company that 
converts the mutual insurance company to a stock insurance company, 
and--
    (2) Holds either:
    (i) A majority of the issued and outstanding voting stock of the 
intermediate insurance stock holding company, if any, or
    (ii) If there is no intermediate insurance stock holding company, a 
majority of the issued and outstanding voting stock of the converted 
mutual insurance company.
    Senior executive. The term ``senior executive'' means any person who 
participates or has authority to participate (other than in the capacity 
of a director) in major policymaking functions of the company, whether 
or not: The person has an official title; the title designates the 
officer an assistant; or the person is serving without salary or other 
compensation. The chairman of the board, the president, every vice 
president, the secretary, and the treasurer or chief financial officer, 
general partner and manager of a company are considered senior 
executives, unless the person is excluded, by resolution of the board of 
directors, the bylaws, the operating agreement or the partnership 
agreement of the company, from participation (other than in the capacity 
of a director) in major policymaking functions of the company, and the 
person does not actually participate therein.
    Subsidiary. The term ``subsidiary'' means any company which is 
controlled by another company at the time of, or immediately prior to, 
the appointment of receiver of the covered financial company.

[76 FR 41639, July 15, 2011, as amended at 77 FR 25353, Apr. 30, 2012; 
77 FR 63214, Oct. 16, 2012]



Sec.380.2  [Reserved]



Sec.380.3  Treatment of personal service agreements.

    (a) For the purposes of this section, the term ``personal service 
agreement'' means a written agreement between an employee and a covered 
financial company or a bridge financial company setting forth the terms 
of employment. This term also includes an agreement between any group or 
class of employees and a covered financial company, or a bridge 
financial company, including, without limitation, a collective 
bargaining agreement.
    (b)(1) If before repudiation or disaffirmance of a personal service 
agreement, the Corporation as receiver of a covered financial company, 
or a bridge financial company accepts performance of services rendered 
under such agreement, then:
    (i) The terms and conditions of such agreement shall apply to the 
performance of such services; and

[[Page 345]]

    (ii) Any payments for the services accepted by the Corporation as 
receiver shall be treated as an administrative expense of the receiver.
    (2) If a bridge financial company accepts performance of services 
rendered under such agreement, then the terms and conditions of such 
agreement shall apply to the performance of such services.
    (c) No party acquiring a covered financial company or any 
operational unit, subsidiary or assets thereof from the Corporation as 
receiver or from any bridge financial company shall be bound by a 
personal service agreement unless the acquiring party expressly assumes 
the personal service agreement.
    (d) The acceptance by the Corporation as receiver for a covered 
financial company, or by any bridge financial company or the Corporation 
as receiver for a bridge financial company of services subject to a 
personal service agreement shall not limit or impair the authority of 
the receiver to disaffirm or repudiate any personal service agreement in 
the manner provided for the disaffirmance or repudiation of any 
agreement under 12 U.S.C. 5390(c).
    (e) Paragraph (b) of this section shall not apply to any personal 
service agreement with any senior executive or director of the covered 
financial company or covered subsidiary, nor shall it in any way limit 
or impair the ability of the receiver to recover compensation from any 
senior executive or director of a covered financial company under 12 
U.S.C. 5390 and the regulations promulgated thereunder.

[76 FR 41640, July 15, 2011]



Sec.380.4  [Reserved]



Sec.380.5  Treatment of covered financial companies that are
subsidiaries of insurance companies.

    The Corporation as receiver shall distribute the value realized from 
the liquidation, transfer, sale or other disposition of the direct or 
indirect subsidiaries of an insurance company, that are not themselves 
insurance companies, solely in accordance with the order of priorities 
set forth in 12 U.S.C. 5390(b)(1) and the regulations promulgated 
thereunder.

[76 FR 41640, July 15, 2011]



Sec.380.6  Limitation on liens on assets of covered financial
companies that are insurance companies or covered subsidiaries 
of insurance companies.

    (a) In the event that the Corporation makes funds available to a 
covered financial company that is an insurance company or to any covered 
subsidiary of an insurance company, or enters into any other transaction 
with respect to such covered entity under 12 U.S.C. 5384(d), the 
Corporation will exercise its right to take liens on any or all assets 
of the covered entities receiving such funds to secure repayment of any 
such transactions only when the Corporation, in its sole discretion, 
determines that:
    (1) Taking such lien is necessary for the orderly liquidation of the 
entity; and
    (2) Taking such lien will not either unduly impede or delay the 
liquidation or rehabilitation of such insurance company, or the recovery 
by its policyholders.
    (b) This section shall not be construed to restrict or impair the 
ability of the Corporation to take a lien on any or all of the assets of 
any covered financial company or covered subsidiary in order to secure 
financing provided by the Corporation or the receiver in connection with 
the sale or transfer of the covered financial company or covered 
subsidiary or any or all of the assets of such covered entity.

[76 FR 41640, July 15, 2011]



Sec.380.7  Recoupment of compensation from senior executives
and directors.

    (a) Substantially responsible. The Corporation, as receiver of a 
covered financial company, may file an action to recover from any 
current or former senior executive or director substantially responsible 
for the failed condition of the covered financial company any 
compensation received during the 2-year period preceding the date on 
which the Corporation was appointed as the receiver of the covered 
financial company, except that, in the case of

[[Page 346]]

fraud, no time limit shall apply. A senior executive or director shall 
be deemed to be substantially responsible for the failed condition of a 
covered financial company that is placed into receivership under the 
orderly liquidation authority of the Dodd-Frank Act if he or she:
    (1) Failed to conduct his or her responsibilities with the degree of 
skill and care an ordinarily prudent person in a like position would 
exercise under similar circumstances, and
    (2) As a result, individually or collectively, caused a loss to the 
covered financial company that materially contributed to the failure of 
the covered financial company under the facts and circumstances.
    (b) Presumptions. The following presumptions shall apply for 
purposes of assessing whether a senior executive or director is 
substantially responsible for the failed condition of a covered 
financial company:
    (1) It shall be presumed that a senior executive or director is 
substantially responsible for the failed condition of a covered 
financial company that is placed into receivership under the orderly 
liquidation authority of the Dodd-Frank Act under any of the following 
circumstances:
    (i) The senior executive or director served as the chairman of the 
board of directors, chief executive officer, president, chief financial 
officer, or in any other similar role regardless of his or her title if 
in this role he or she had responsibility for the strategic, 
policymaking, or company-wide operational decisions of the covered 
financial company prior to the date that it was placed into receivership 
under the orderly liquidation authority of the Dodd-Frank Act;
    (ii) The senior executive or director is adjudged liable by a court 
or tribunal of competent jurisdiction for having breached his or her 
duty of loyalty to the covered financial company;
    (iii) The senior executive was removed from the management of the 
covered financial company under 12 U.S.C. 5386(4); or
    (iv) The director was removed from the board of directors of the 
covered financial company under 12 U.S.C. 5386(5).
    (2) The presumption under paragraph (b)(1)(i) of this section may be 
rebutted by evidence that the senior executive or director conducted his 
or her responsibilities with the degree of skill and care an ordinarily 
prudent person in a like position would exercise under similar 
circumstances. The presumptions under paragraphs (b)(1)(ii), (b)(1)(iii) 
and (b)(1)(iv) of this section may be rebutted by evidence that the 
senior executive or director did not cause a loss to the covered 
financial company that materially contributed to the failure of the 
covered financial company under the facts and circumstances.
    (3) The presumptions do not apply to:
    (i) A senior executive hired by the covered financial company during 
the two years prior to the Corporation's appointment as receiver to 
assist in preventing further deterioration of the financial condition of 
the covered financial company; or
    (ii) A director who joined the board of directors of the covered 
financial company during the two years prior to the Corporation's 
appointment as receiver under an agreement or resolution to assist in 
preventing further deterioration of the financial condition of the 
covered financial company.
    (4) Notwithstanding that the presumption does not apply under 
paragraphs (b)(3)(i) and (ii) of this section, the Corporation as 
receiver still may pursue recoupment of compensation from a senior 
executive or director in paragraphs (b)(3)(i) or (ii) if they are 
substantially responsible for the failed condition of the covered 
financial company.
    (c) Savings Clause. Nothing in this section shall limit or impair 
any rights of the Corporation as receiver under other applicable law, 
including any rights under title II of the Dodd-Frank Act to pursue any 
other claims or causes of action it may have against senior executives 
and directors of the covered financial company for losses they cause to 
the covered financial company in the same or separate actions.

[76 FR 41640, July 15, 2011]

[[Page 347]]



Sec.380.8  Predominantly engaged in activities that are financial
or incidental thereto.

    (a) For purposes of sections 201(a)(11) and 201(b) of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act \1\ (``Dodd-Frank Act'') 
and this part, a company is predominantly engaged in activities that the 
Board of Governors of the Federal Reserve System (``Board of 
Governors'') has determined are financial in nature or incidental 
thereto for purposes of section 4(k) of the Bank Holding Company Act of 
1956 (``BHC Act'') (12 U.S.C. 1843(k)), if:
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 5381(a)(11) and (b).
---------------------------------------------------------------------------

    (1) At least 85 percent of the total consolidated revenues of such 
company (determined in accordance with applicable accounting standards) 
for either of its two most recently completed fiscal years were derived, 
directly or indirectly, from financial activities, or
    (2) Based upon all of the relevant facts and circumstances, the 
consolidated revenues of the company from financial activities 
constitute 85 percent or more of the total consolidated revenues of the 
company.
    (b) For purposes of paragraph (a) of this section, the following 
definitions apply:
    (1) The term ``applicable accounting standards'' means the 
accounting standards utilized by the company in the ordinary course of 
business in preparing its consolidated financial statements, provided 
that those standards are:
    (i) U.S. generally accepted accounting principles,
    (ii) International Financial Reporting Standards, or
    (iii) Such other accounting standards that are determined to be 
appropriate on a case-by-case basis.
    (2) The terms ``broker'' and ``dealer'' have the same meanings as in 
section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c).
    (3) The term ``financial activity'' means:
    (i) Lending, exchanging, transferring, investing for others, or 
safeguarding money or securities.
    (ii) Insuring, guaranteeing, or indemnifying against loss, harm, 
damage, illness, disability, or death, or providing and issuing 
annuities, and acting as principal, agent, or broker for purposes of the 
foregoing, in any state.
    (iii) Providing financial, investment, or economic advisory 
services, including advising an investment company (as defined in 
section 3 of the Investment Company Act of 1940).
    (iv) Issuing or selling instruments representing interests in pools 
of assets permissible for a bank to hold directly.
    (v) Underwriting, dealing in, or making a market in securities.
    (vi) Engaging in any activity that the Board of Governors has 
determined to be so closely related to banking or managing or 
controlling banks as to be a proper incident thereto, which include--
    (A) Extending credit and servicing loans. Making, acquiring, 
brokering, or servicing loans or other extensions of credit (including 
factoring, issuing letters of credit and accepting drafts) for the 
company's account or for the account of others.
    (B) Activities related to extending credit. Any activity usual in 
connection with making, acquiring, brokering or servicing loans or other 
extensions of credit, including the following activities--
    (1) Real estate and personal property appraising. Performing 
appraisals of real estate and tangible and intangible personal property, 
including securities.
    (2) Arranging commercial real estate equity financing. Acting as 
intermediary for the financing of commercial or industrial income-
producing real estate by arranging for the transfer of the title, 
control, and risk of such a real estate project to one or more 
investors.
    (3) Check-guaranty services. Authorizing a subscribing merchant to 
accept personal checks tendered by the merchant's customers in payment 
for goods and services, and purchasing from the merchant validly 
authorized checks that are subsequently dishonored.
    (4) Collection agency services. Collecting overdue accounts 
receivable, either retail or commercial.
    (5) Credit bureau services. Maintaining information related to the 
credit history of consumers and providing the

[[Page 348]]

information to a credit grantor who is considering a borrower's 
application for credit or who has extended credit to the borrower.
    (6) Asset management, servicing, and collection activities. Engaging 
under contract with a third party in asset management, servicing, and 
collection \2\ of assets of a type that an insured depository 
institution may originate and own.
---------------------------------------------------------------------------

    \2\ Asset management services include acting as agent in the 
liquidation or sale of loans and collateral for loans, including real 
estate and other assets acquired through foreclosure or in satisfaction 
of debts previously contracted.
---------------------------------------------------------------------------

    (7) Acquiring debt in default. Acquiring debt that is in default at 
the time of acquisition.
    (8) Real estate settlement servicing. Providing real estate 
settlement services.\3\
---------------------------------------------------------------------------

    \3\ For purposes of this section, real estate settlement services do 
not include providing title insurance as principal, agent, or broker.
---------------------------------------------------------------------------

    (C) Leasing personal or real property. Leasing personal or real 
property or acting as agent, broker, or adviser in leasing such property 
if--
    (1) The lease is on a nonoperating basis; \4\
---------------------------------------------------------------------------

    \4\ The requirement that the lease is on a nonoperating basis means 
that the company does not, directly or indirectly, engage in operating, 
servicing, maintaining, or repairing leased property during the lease 
term. For purposes of the leasing of automobiles, the requirement that 
the lease is on a nonoperating basis means that the company does not, 
directly or indirectly: (1) Provide servicing, repair, or maintenance of 
the leased vehicle during the lease term; (2) purchase parts and 
accessories in bulk or for an individual vehicle after the lessee has 
taken delivery of the vehicle; (3) provide the loan of an automobile 
during servicing of the leased vehicle; (4) purchase insurance for the 
lessee; or (5) provide for the renewal of the vehicle's license merely 
as a service to the lessee where the lessee could renew the license 
without authorization from the lessor.
---------------------------------------------------------------------------

    (2) The initial term of the lease is at least 90 days; and
    (3) In the case of leases involving real property:
    (i) At the inception of the initial lease, the effect of the 
transaction will yield a return that will compensate the lessor for not 
less than the lessor's full investment in the property plus the 
estimated total cost of financing the property over the term of the 
lease from rental payments, estimated tax benefits, and the estimated 
residual value of the property at the expiration of the initial lease; 
and
    (ii) The estimated residual value of property for purposes of 
paragraph (b)(2)(vi)(C)(3)(i) of this section shall not exceed 25 
percent of the acquisition cost of the property to the lessor.
    (D) Operating nonbank depository institutions--(1) Industrial 
banking. Owning, controlling, or operating an industrial bank, Morris 
Plan bank, or industrial loan company that is not a bank for purposes of 
the BHC Act.
    (2) Operating savings associations. Owning, controlling, or 
operating a savings association.
    (E) Trust company functions. Performing functions or activities that 
may be performed by a trust company (including activities of a 
fiduciary, agency, or custodial nature), in the manner authorized by 
federal or state law that is not a bank for purposes of section 2(c) of 
the BHC Act.
    (F) Financial and investment advisory activities. Acting as 
investment or financial advisor to any person, including (without, in 
any way, limiting the foregoing):
    (1) Serving as investment adviser (as defined in section 2(a)(20) of 
the Investment Company Act of 1940, 15 U.S.C. 80a-2(a)(20)), to an 
investment company registered under that act, including sponsoring, 
organizing, and managing a closed-end investment company;
    (2) Furnishing general economic information and advice, general 
economic statistical forecasting services, and industry studies;
    (3) Providing advice in connection with mergers, acquisitions, 
divestitures, investments, joint ventures, leveraged buyouts, 
recapitalizations, capital structurings, financing transactions and 
similar transactions, and conducting financial feasibility studies; \5\
---------------------------------------------------------------------------

    \5\ Feasibility studies do not include assisting management with the 
planning or marketing for a given project or providing general 
operational or management advice.
---------------------------------------------------------------------------

    (4) Providing information, statistical forecasting, and advice with 
respect to any transaction in foreign exchange,

[[Page 349]]

swaps, and similar transactions, commodities, and any forward contract, 
option, future, option on a future, and similar instruments;
    (5) Providing educational courses, and instructional materials to 
consumers on individual financial management matters; and
    (6) Providing tax-planning and tax-preparation services to any 
person.
    (G) Agency transactional services for customer investments--(1) 
Securities brokerage. Providing securities brokerage services (including 
securities clearing and/or securities execution services on an 
exchange), whether alone or in combination with investment advisory 
services, and incidental activities (including related securities credit 
activities and custodial services).
    (2) Riskless principal transactions. Buying and selling in the 
secondary market all types of securities on the order of customers as a 
``riskless principal'' to the extent of engaging in a transaction in 
which the company, after receiving an order to buy (or sell) a security 
from a customer, purchases (or sells) the security for its own account 
to offset a contemporaneous sale to (or purchase from) the customer.
    (3) Private placement services. Acting as agent for the private 
placement of securities in accordance with the requirements of the 
Securities Act of 1933 (``1933 Act'') and the rules of the Securities 
and Exchange Commission.
    (4) Futures commission merchant. Acting as a futures commission 
merchant (``FCM'') for unaffiliated persons in the execution, clearance, 
or execution and clearance of any futures contract and option on a 
futures contract.
    (5) Other transactional services. Providing to customers as agent 
transactional services with respect to swaps and similar transactions, 
any transaction described in paragraph (b)(2)(vi)(H) of this section, 
any transaction that is permissible for a state member bank, and any 
other transaction involving a forward contract, option, futures, option 
on a futures or similar contract (whether traded on an exchange or not) 
relating to a commodity that is traded on an exchange.
    (H) Investment transactions as principal--(1) Underwriting and 
dealing in government obligations and money market instruments. 
Underwriting and dealing in obligations of the United States, general 
obligations of states and their political subdivisions, and other 
obligations that state member banks of the Federal Reserve System may be 
authorized to underwrite and deal in under 12 U.S.C. 24 and 335, 
including banker's acceptances and certificates of deposit.
    (2) Investing and trading activities. Engaging as principal in:
    (i) Foreign exchange;
    (ii) Forward contracts, options, futures, options on futures, swaps, 
and similar contracts, whether traded on exchanges or not, based on any 
rate, price, financial asset (including gold, silver, platinum, 
palladium, copper, or any other metal), nonfinancial asset, or group of 
assets, other than a bank- ineligible security,\6\ if: a state member 
bank is authorized to invest in the asset underlying the contract; the 
contract requires cash settlement; the contract allows for assignment, 
termination, or offset prior to delivery or expiration, and the company 
makes every reasonable effort to avoid taking or making delivery of the 
asset underlying the contract, or receives and instantaneously transfers 
title to the underlying asset, by operation of contract and without 
taking or making physical delivery of the asset; or the contract does 
not allow for assignment, termination, or offset prior to delivery or 
expiration and is based on an asset for which futures contracts or 
options on futures contracts have been approved for trading on a U.S. 
contract market by the Commodity Futures Trading Commission, and the 
company makes every reasonable effort to avoid taking or making delivery 
of the asset underlying the contract, or receives and instantaneously 
transfers title to the underlying asset, by operation of contract and 
without taking or making physical delivery of the asset.
---------------------------------------------------------------------------

    \6\ A bank-ineligible security is any security that a state member 
bank is not permitted to underwrite or deal in under 12 U.S.C. 24 and 
335.
---------------------------------------------------------------------------

    (iii) Forward contracts, options,\7\ futures, options on futures, 
swaps, and

[[Page 350]]

similar contracts, whether traded on exchanges or not, based on an index 
of a rate, a price, or the value of any financial asset, nonfinancial 
asset, or group of assets, if the contract requires cash settlement.
---------------------------------------------------------------------------

    \7\ This reference does not include acting as a dealer in options 
based on indices of bank-ineligible securities when the options are 
traded on securities exchanges. These options are securities for 
purposes of the federal securities laws and bank-ineligible securities 
for purposes of section 20 of the Glass-Steagall Act, 12 U.S.C. 337. 
Similarly, this reference does not include acting as a dealer in any 
other instrument that is a bank-ineligible security for purposes of 
section 20. Bank holding companies that deal in these instruments must 
do so in accordance with the Board of Governor's orders on dealing in 
bank-ineligible securities.
---------------------------------------------------------------------------

    (3) Buying and selling bullion, and related activities. Buying, 
selling and storing bars, rounds, bullion, and coins of gold, silver, 
platinum, palladium, copper, and any other metal for the company's own 
account and the account of others, and providing incidental services 
such as arranging for storage, safe custody, assaying, and shipment.
    (I) Management consulting and counseling activities--(1) Management 
consulting. Providing management consulting advice: \8\
---------------------------------------------------------------------------

    \8\ In performing this activity, companies are not authorized to 
perform tasks or operations or provide services to client institutions 
either on a daily or continuing basis, except as necessary to instruct 
the client institution on how to perform such services for itself. See 
also the Board of Governors' interpretation of bank management 
consulting advice (12 CFR 225.131).
---------------------------------------------------------------------------

    (i) On any matter to unaffiliated depository institutions, including 
commercial banks, savings and loan associations, savings banks, credit 
unions, industrial banks, Morris Plan banks, cooperative banks, 
industrial loan companies, trust companies, and branches or agencies of 
foreign banks;
    (ii) On any financial, economic, accounting, or audit matter to any 
other company.
    (2) Revenues derived from a company's management consulting 
activities under this paragraph (b)(3)(vi) will not be considered to be 
financial if the company:
    (i) Owns or controls, directly or indirectly, more than 5 percent of 
the voting securities of the client institution; or
    (ii) Allows a management official, as defined in 12 CFR 212.2(h), of 
the company or any of its affiliates to serve as a management official 
of the client institution, except where such interlocking relationship 
is permitted pursuant to an exemption permitted by the Board of 
Governors.
    (3) Up to 30 percent of a nonbank company's revenues related to 
management consulting services provided to customers not described in 
paragraph (b)(3)(vi)(I)(1)(i) or regarding matters not described in 
paragraph (b)(3)(vi)(I)(1)(ii) of this section will be included in the 
company's financial revenues.
    (4) Employee benefits consulting services. Providing consulting 
services to employee benefit, compensation and insurance plans, 
including designing plans, assisting in the implementation of plans, 
providing administrative services to plans, and developing employee 
communication programs for plans.
    (5) Career counseling services. Providing career counseling services 
to:
    (i) A financial organization \9\ and individuals currently employed 
by, or recently displaced from, a financial organization;
---------------------------------------------------------------------------

    \9\ Financial organization refers to insured depository institution 
holding companies and their subsidiaries, other than nonbanking 
affiliates of diversified savings and loan holding companies that engage 
in activities not permissible under section 4(c)(8) of the BHC Act (12 
U.S.C. 1842(c)(8)).
---------------------------------------------------------------------------

    (ii) Individuals who are seeking employment at a financial 
organization; and
    (iii) Individuals who are currently employed in or who seek 
positions in the finance, accounting, and audit departments of any 
company.
    (J) Support services--(1) Courier services. Providing courier 
services for:
    (i) Checks, commercial papers, documents, and written instruments 
(excluding currency or bearer-type negotiable instruments) that are 
exchanged among banks and financial institutions; and
    (ii) Audit and accounting media of a banking or financial nature and 
other

[[Page 351]]

business records and documents used in processing such media.\10\
---------------------------------------------------------------------------

    \10\ See also the Board of Governors' interpretation on courier 
activities (12 CFR 225.129), which sets forth conditions for company 
entry into the activity.
---------------------------------------------------------------------------

    (2) Printing and selling MICR-encoded items. Printing and selling 
checks and related documents, including corporate image checks, cash 
tickets, voucher checks, deposit slips, savings withdrawal packages, and 
other forms that require Magnetic Ink Character Recognition (MICR) 
encoding.
    (K) Insurance agency and underwriting--(1) Credit insurance. Acting 
as principal, agent, or broker for insurance (including home mortgage 
redemption insurance) that is:
    (i) Directly related to an extension of credit by the company or any 
of its subsidiaries; and
    (ii) Limited to ensuring the repayment of the outstanding balance 
due on the extension of credit \11\ in the event of the death, 
disability, or involuntary unemployment of the debtor.
---------------------------------------------------------------------------

    \11\ Extension of credit includes direct loans to borrowers, loans 
purchased from other lenders, and leases of real or personal property so 
long as the leases are nonoperating and full-payout leases that meet the 
requirements of paragraph (b)(2)(vi)(C) of this section.
---------------------------------------------------------------------------

    (2) Finance company subsidiary. Acting as agent or broker for 
insurance directly related to an extension of credit by a finance 
company \12\ that is a subsidiary of a company, if:
---------------------------------------------------------------------------

    \12\ Finance company includes all non-deposit-taking financial 
institutions that engage in a significant degree of consumer lending 
(excluding lending secured by first mortgages) and all financial 
institutions specifically defined by individual states as finance 
companies and that engage in a significant degree of consumer lending.
---------------------------------------------------------------------------

    (i) The insurance is limited to ensuring repayment of the 
outstanding balance on such extension of credit in the event of loss or 
damage to any property used as collateral for the extension of credit; 
and
    (ii) The extension of credit is not more than $10,000, or $25,000 if 
it is to finance the purchase of a residential manufactured home \13\ 
and the credit is secured by the home; and
---------------------------------------------------------------------------

    \13\ These limitations increase at the end of each calendar year, 
beginning with 1982, by the percentage increase in the Consumer Price 
Index for Urban Wage Earners and Clerical Workers published by the 
Bureau of Labor Statistics.
---------------------------------------------------------------------------

    (iii) The applicant commits to notify borrowers in writing that: 
they are not required to purchase such insurance from the applicant; 
such insurance does not insure any interest of the borrower in the 
collateral; and the applicant will accept more comprehensive property 
insurance in place of such single-interest insurance.
    (3) Insurance in small towns. Engaging in any insurance agency 
activity in a place where the company or a subsidiary has a lending 
office and that:
    (i) Has a population not exceeding 5,000 (as shown in the preceding 
decennial census); or
    (ii) Has inadequate insurance agency facilities, as determined by 
the Board of Governors, after notice and opportunity for hearing.
    (4) Insurance-agency activities conducted on May 1, 1982. Engaging 
in any specific insurance-agency activity \14\ if the company, or 
subsidiary conducting the specific activity, conducted such activity on 
May 1, 1982, or received approval from the Board of Governors to conduct 
such activity on or before May 1, 1982.\15\ Revenues derived from a 
company's specific insurance agency activity under this clause will be 
considered financial only if the company:
---------------------------------------------------------------------------

    \14\ Nothing contained in this provision precludes a subsidiary that 
is authorized to engage in a specific insurance-agency activity under 
this clause from continuing to engage in the particular activity after 
merger with an affiliate, if the merger is for legitimate business 
purposes.
    \15\ For the purposes of this paragraph, activities engaged in on 
May 1, 1982, include activities carried on subsequently as the result of 
an application to engage in such activities pending before the Board of 
Governors on May 1, 1982, and approved subsequently by the Board of 
Governors or as the result of the acquisition by such company pursuant 
to a binding written contract entered into on or before May 1, 1982, of 
another company engaged in such activities at the time of the 
acquisition.
---------------------------------------------------------------------------

    (i) Engages in such specific insurance agency activity only at 
locations: in the state in which the company has its principal place of 
business (as defined in 12 U.S.C. 1842(d)); in any state or states 
immediately adjacent to such state; and in any state in which the

[[Page 352]]

specific insurance-agency activity was conducted (or was approved to be 
conducted) by such company or subsidiary thereof or by any other 
subsidiary of such company on May 1, 1982; and
    (ii) Provides other insurance coverages that may become available 
after May 1, 1982, so long as those coverages insure against the types 
of risks as (or are otherwise functionally equivalent to) coverages sold 
or approved to be sold on May 1, 1982, by the company or subsidiary.
    (5) Supervision of retail insurance agents. Supervising on behalf of 
insurance underwriters the activities of retail insurance agents who 
sell:
    (i) Fidelity insurance and property and casualty insurance on the 
real and personal property used in the operations of the company or its 
subsidiaries; and
    (ii) Group insurance that protects the employees of the company or 
its subsidiaries.
    (6) Small companies. Engaging in any insurance-agency activity if 
the company has total consolidated assets of $50 million or less. 
Revenues derived from a company's insurance-agency activities under this 
paragraph will be considered financial only if the company does not 
engage in the sale of life insurance or annuities except as provided in 
paragraphs (b)(3)(vi)(K)(1) and (3) of this section, and does not 
continue to engage in insurance-agency activities pursuant to this 
provision more than 90 days after the end of the quarterly reporting 
period in which total assets of the company and its subsidiaries exceed 
$50 million.
    (7) Insurance-agency activities conducted before 1971. Engaging in 
any insurance-agency activity performed at any location in the United 
States directly or indirectly by a company that was engaged in 
insurance-agency activities prior to January 1, 1971, as a consequence 
of approval by the Board of Governors prior to January 1, 1971.
    (L) Community development activities --(1) Financing and investment 
activities. Making equity and debt investments in corporations or 
projects designed primarily to promote community welfare, such as the 
economic rehabilitation and development of low-income areas by providing 
housing, services, or jobs for residents.
    (2) Advisory activities. Providing advisory and related services for 
programs designed primarily to promote community welfare.
    (M) Money orders, savings bonds, and traveler's checks. The issuance 
and sale at retail of money orders and similar consumer-type payment 
instruments; the sale of U.S. savings bonds; and the issuance and sale 
of traveler's checks.
    (N) Data processing.
    (1) Providing data processing, data storage and data transmission 
services, facilities (including data processing, data storage and data 
transmission hardware, software, documentation, or operating personnel), 
databases, advice, and access to such services, facilities, or databases 
by any technological means, if the data to be processed, stored or 
furnished are financial, banking or economic.
    (2) Up to 30 percent of a nonbank company's revenues related to 
providing general purpose hardware in connection with providing data 
processing products or services described in (b)(2)(vi)(N)(1) of this 
section will be included in the company's financial revenues.
    (O) Administrative services. Providing administrative and other 
services to mutual funds.
    (P) Securities exchange. Owning shares of a securities exchange.
    (Q) Certification authority. Acting as a certification authority for 
digital signatures and authenticating the identity of persons conducting 
financial and nonfinancial transactions.
    (R) Employment histories. Providing employment histories to third 
parties for use in making credit decisions and to depository 
institutions and their affiliates for use in the ordinary course of 
business.
    (S) Check cashing and wire transmission. Check cashing and wire 
transmission services.
    (T) Services offered in connection with banking services. In 
connection with offering banking services, providing notary public 
services, selling postage stamps and postage-paid envelopes, providing 
vehicle registration

[[Page 353]]

services, and selling public transportation tickets and tokens.
    (U) Real estate title abstracting.
    (vii) Engaging, in the United States, in any activity that a bank 
holding company may engage in outside of the United States; and the 
Board has determined, under regulations prescribed or interpretations 
issued pursuant to section 4(c)(13) of the BHC Act of 1956 (12 U.S.C. 
1843(c)(13)) to be usual in connection with the transaction of banking 
or other financial operations abroad. Those activities include--
    (A) Providing management consulting services, including to any 
person with respect to nonfinancial matters, so long as the management 
consulting services are advisory and do not allow the company to control 
the person to which the services are provided.
    (B) Operating a travel agency in connection with financial services.
    (C) Organizing, sponsoring, and managing a mutual fund.
    (D) Commercial banking and other banking activities.
    (viii) (A) Acting as a finder in bringing together one or more 
buyers and sellers of any product or service for transactions that the 
parties themselves negotiate and consummate, including providing any or 
all of the following services through any means--
    (1) Identifying potential parties, making inquiries as to interest, 
introducing, and referring potential parties to each other, and 
arranging contacts between and meetings of interested parties;
    (2) Conveying between interested parties expressions of interest, 
bids, offers, orders and confirmations relating to a transaction; and
    (3) Transmitting information conveying products and services to 
potential parties in connection with the activities described paragraphs 
(b)(3)(viii)(A)(1) and (2) of this section.
    (B) The following are examples of finder services when done in 
accordance with paragraphs (b)(3)(viii)(C)-(D) of this section. These 
examples are not exclusive.
    (1) Hosting an electronic marketplace on the company's Internet Web 
site by providing hypertext or similar links to the Web sites of third 
party buyers or sellers.
    (2) Hosting on the company's servers the Internet Web site of--
    (i) A buyer (or seller) that provides information concerning the 
buyer (or seller) and the products or services it seeks to buy (or sell) 
and allows sellers (or buyers) to submit expressions of interest, bids, 
offers, orders and confirmations relating to such products or services; 
or
    (ii) A government or government agency that provides the information 
concerning the services or benefits made available by government or 
government agency, assists persons in completing applications to receive 
such services or benefits from the government or agency, and allows 
persons to transmit their applications for services or benefits to the 
government or agency.
    (3) Operating an Internet Web site that allows multiple buyers and 
sellers to exchange information concerning the products and services 
that they are willing to purchase or sell, locate potential 
counterparties for transactions, aggregate orders for goods or services 
with those made by other parties, and enter into transactions between 
themselves.
    (4) Operating a telephone call center that provides permissible 
finder services.
    (C) To be a finder service for purposes of this section, the company 
providing the service must comply with the following limitations.
    (1) A company providing the service may act only as an intermediary 
between a buyer and a seller.
    (2) A company providing the service may not bind any buyer or seller 
to the terms of a specific transaction or negotiate the terms of a 
specific transaction on behalf of a buyer or seller, except that the 
company may--
    (i) Arrange for buyers to receive preferred terms from sellers so 
long as the terms are not negotiated as part of any individual 
transaction, are provided generally to customers or broad categories of 
customers, and are made available by the seller (and not by the 
company); and
    (ii) Establish rules of general applicability governing the use and 
operation

[[Page 354]]

of the finder service, including rules that govern the submission of 
bids and offers by buyers and sellers that use the finder service and 
the circumstances under which the finder service will match bids and 
offers submitted by buyers and sellers, and govern the manner in which 
buyers and sellers may bind themselves to the terms of a specific 
transaction.
    (3) Services provided by a company will not be considered finder 
services if the company providing the service--
    (i) Takes title to or acquires or holds an ownership interest in any 
product or service offered or sold through the finder service;
    (ii) Provides distribution services for physical products or 
services offered or sold through the finder service;
    (iii) Owns or operates any real or personal property that is used 
for the purpose of manufacturing, storing, transporting, or assembling 
physical products offered or sold by third parties; or
    (iv) Owns or operates any real or personal property that serves as a 
physical location for the physical purchase, sale or distribution of 
products or services offered or sold by third parties.
    (D) Services provided by a company will not be considered finder 
services if the company providing such services engages in any activity 
that would require the company to register or obtain a license as a real 
estate agent or broker under applicable law.
    (E) To be a finder service for purposes of this section, a company 
providing the service must distinguish the products and services offered 
by the company from those offered by a third party through the finder 
service.
    (ix) Directly, or indirectly acquiring or controlling, whether as 
principal, on behalf of one or more entities, or otherwise, shares, 
assets, or ownership interests (including debt or equity securities, 
partnership interests, trust certificates, or other instruments 
representing ownership) of a company or other entity, whether or not 
constituting control of such company or entity, engaged in any activity 
not financial in nature as defined in this section if:
    (A) Such shares, assets, or ownership interests are acquired and 
held as part of a bona fide underwriting or merchant or investment 
banking activity, including investment activities engaged in for the 
purpose of appreciation and ultimate resale or disposition of the 
investment;
    (B) Such shares, assets, or ownership interests are held for a 
period of time to enable the sale or disposition thereof on a reasonable 
basis consistent with the financial viability of the activities 
described in paragraph (b)(3)(ix)(A) of this section; and
    (C) During the period such shares, assets, or ownership interests 
are held, the company does not routinely manage or operate such company 
or entity except as may be necessary or required to obtain a reasonable 
return on investment upon resale or disposition.
    (x) Directly or indirectly acquiring or controlling, whether as 
principal, on behalf of one or more entities, or otherwise, shares, 
assets, or ownership interests (including debt or equity securities, 
partnership interests, trust certificates or other instruments 
representing ownership) of a company or other entity, whether or not 
constituting control of such company or entity engaged in any activity 
not financial in nature as defined in this section if--
    (A) Such shares, assets, or ownership interests are acquired and 
held by an insurance company that is predominantly engaged in 
underwriting life, accident and health, or property and casualty 
insurance (other than credit-related insurance) or providing and issuing 
annuities;
    (B) Such shares, assets, or ownership interests represent an 
investment made in the ordinary course of business of such insurance 
company in accordance with relevant State law governing such 
investments; and
    (C) During the period such shares, assets, or ownership interests 
are held, the company does not routinely manage or operate such company 
except as may be necessary or required to obtain a reasonable return on 
investment.
    (xi) Lending, exchanging, transferring, investing for others, or 
safeguarding financial assets other than money or securities.
    (xii) Providing any device or other instrumentality for transferring 
money or other financial assets.

[[Page 355]]

    (xiii) Arranging, effecting, or facilitating financial transactions 
for the account of third parties.
    (xiv) Ownership or control of one or more depository institutions.
    (4) The term ``recommending agencies'' means:
    (i) The Board of Governors and the Securities and Exchange 
Commission in consultation with the FDIC, for a company;
    (A) That is a broker or a dealer; or
    (B) Whose largest U.S. subsidiary is a broker or a dealer;
    (ii) The Board of Governors and the Director of the Federal 
Insurance Office in consultation with the FDIC, for a company that is an 
``insurance company'', or whose largest U.S. subsidiary is an insurance 
company, as that term is defined in section 201(a)(13) of the Dodd-Frank 
Act; \16\ and
---------------------------------------------------------------------------

    \16\ 12 U.S.C. 5381(a)(13).
---------------------------------------------------------------------------

    (iii) The Board of Governors and the FDIC, for any other company.
    (5) The term ``total consolidated revenues'' means the total gross 
revenues of the company and all entities subject to consolidation by the 
company for a fiscal year.
    (c) Effect of other authority. Any activity described in paragraph 
(b)(2) of this section is considered financial in nature or incidental 
thereto for purposes of this section regardless of whether--
    (1) A bank holding company (including a financial holding company or 
a foreign bank) may be authorized to engage in the activity, or own or 
control shares of a company engaged in such activity, under any other 
provisions of the BHC Act or other Federal law including, but not 
limited to, section 4(a)(2), section 4(c)(5), section 4(c)(6), section 
4(c)(7), section 4(c)(9), or section 4(c)(13) of the BHC Act (12 U.S.C. 
1843(a)(2), (c)(5), (c)(6), (c)(7), (c)(9), or (c)(13)) and the Board of 
Governors' implementing regulations; or
    (2) Other provisions of Federal or state law or regulations 
prohibit, restrict, or otherwise place conditions on the conduct of the 
activity by a bank holding company (including a financial holding 
company or foreign bank) or bank holding companies generally.
    (d) Rule of construction. Revenues derived from an investment by the 
company in an entity whose financial statements are not consolidated 
with those of the company will be treated as revenues derived from 
financial activities, unless such treatment is not appropriate based on 
information that the recommending agencies or the Secretary, have at the 
time a written recommendation or determination is made under section 203 
of the Dodd-Frank Act.

[78 FR 34731, June 10, 2013]



Sec.380.9  Treatment of fraudulent and preferential transfers.

    (a) Coverage. This section shall apply to all receiverships in which 
the FDIC is appointed as receiver under 12 U.S.C. 5382(a) or 
5390(a)(1)(E) of a covered financial company or a covered subsidiary, 
respectively, as defined in 12 U.S.C. 5381(a)(8) and (9).
    (b) Avoidance standard for transfer of property. (1) In applying 12 
U.S.C. 5390(a)(11)(H)(i)(II) to a transfer of property for purposes of 
12 U.S.C. 5390(a)(11)(A), the Corporation, as receiver of a covered 
financial company or a covered subsidiary, which is thereafter deemed to 
be a covered financial company pursuant to 12 U.S.C. 5390(a)(1)(E)(ii), 
shall determine whether the transfer has been perfected such that a bona 
fide purchaser from such covered financial company or such covered 
subsidiary, as applicable, against whom applicable law permits such 
transfer to be perfected cannot acquire an interest in the property 
transferred that is superior to the interest in such property of the 
transferee.
    (2) In applying 12 U.S.C. 5390(a)(11)(H)(i)(II) to a transfer of 
real property, other than fixtures, but including the interest of a 
seller or purchaser under a contract for the sale of real property, for 
purposes of 12 U.S.C. 5390(a)(11)(B), the Corporation, as receiver of a 
covered financial company or a covered subsidiary, which is thereafter 
deemed to be a covered financial company pursuant to 12 U.S.C. 
5390(a)(1)(E)(ii), shall determine whether the transfer has been 
perfected such that a bona fide purchaser from such covered financial 
company or such covered subsidiary, as applicable, against

[[Page 356]]

whom applicable law permits such transfer to be perfected cannot acquire 
an interest in the property transferred that is superior to the interest 
in such property of the transferee. For purposes of this section, the 
term fixture shall be interpreted in accordance with U.S. Federal 
bankruptcy law.
    (3) In applying 12 U.S.C. 5390(a)(11)(H)(i)(II) to a transfer of a 
fixture or property, other than real property, for purposes of 12 U.S.C. 
5390(a)(11)(B), the Corporation, as receiver of a covered financial 
company or a covered subsidiary which is thereafter deemed to be a 
covered financial company pursuant to 12 U.S.C. 5390(a)(1)(E)(ii), shall 
determine whether the transfer has been perfected such that a creditor 
on a simple contract cannot acquire a judicial lien that is superior to 
the interest of the transferee, and the standard of whether the transfer 
is perfected such that a bona fide purchaser cannot acquire an interest 
in the property transferred that is superior to the interest in such 
property of the transferee of such property shall not apply to any such 
transfer under this paragraph (b)(3).
    (c) Grace period for perfection. In determining when a transfer 
occurs for purposes of 12 U.S.C. 5390(a)(11)(B), the Corporation, as 
receiver of a covered financial company or a covered subsidiary, which 
is thereafter deemed to be a covered financial company pursuant to 12 
U.S.C. 5390(a)(1)(E)(ii), shall apply the following standard:
    (1) Except as provided in paragraph (c)(2) of this section, a 
transfer shall be deemed to have been made
    (i) At the time such transfer takes effect between the transferor 
and the transferee, if such transfer is perfected at, or within 30 days 
after, such time, except as provided in paragraph (c)(1)(ii) of this 
section;
    (ii) At the time such transfer takes effect between the transferor 
and the transferee, with respect to a transfer of an interest of the 
transferor in property that creates a security interest in property 
acquired by the transferor:
    (A) To the extent such security interest secures new value that was:
    (1) Given at or after the signing of a security agreement that 
contains a description of such property as collateral;
    (2) Given by or on behalf of the secured party under such agreement;
    (3) Given to enable the transferor to acquire such property; and
    (4) In fact used by the transferor to acquire such property; and
    (B) That is perfected on or before 30 days after the transferor 
receives possession of such property;
    (iii) At the time such transfer is perfected, if such transfer is 
perfected after the 30-day period described in paragraph (c)(1)(i) or 
(ii) of this section, as applicable; or
    (iv) Immediately before the appointment of the Corporation as 
receiver of a covered financial company or a covered subsidiary which is 
thereafter deemed to be a covered financial company pursuant to 12 
U.S.C. 5390(a)(1)(E)(ii), if such transfer is not perfected at the later 
of--
    (A) The earlier of
    (1) The date of the filing, if any, of a petition by or against the 
transferor under title 11 of the United States Code; and
    (2) The date of the appointment of the Corporation as receiver of 
such covered financial company or such covered subsidiary; or
    (B) Thirty days after such transfer takes effect between the 
transferor and the transferee.
    (2) For the purposes of this paragraph (c), a transfer is not made 
until the covered financial company or a covered subsidiary, which is 
thereafter deemed to be a covered financial company pursuant to 12 
U.S.C. 5390(a)(1)(E)(ii), has acquired rights in the property 
transferred.
    (d) Limitations. The provisions of this section do not act to waive, 
relinquish, limit or otherwise affect any rights or powers of the 
Corporation in any capacity, whether pursuant to applicable law or any 
agreement or contract.

[76 FR 41641, July 15, 2011]



Sec.380.10  Maximum obligation limitation.

    (a) General rule. The FDIC shall not, in connection with the orderly 
liquidation of a covered financial company, issue or incur any 
obligation, if, after issuing or incurring the obligation, the aggregate 
amount of such obligations

[[Page 357]]

outstanding for each covered financial company would exceed--
    (1) An amount that is equal to 10 percent of the total consolidated 
assets of the covered financial company, based on the most recent 
financial statement available, during the 30-day period immediately 
following the date of appointment of the FDIC as receiver (or a shorter 
time period if the FDIC has calculated the amount described under 
paragraph (a)(2) of this section); and
    (2) The amount that is equal to 90 percent of the fair value of the 
total consolidated assets of each covered financial company that are 
available for repayment, after the time period described in paragraph 
(a)(1) of this section.
    (b) Definitions: For purposes of paragraph (a) of this section:
    (1) The term ``fair value'' means the expected total aggregate value 
of each asset, or group of assets that are managed within a portfolio, 
of a covered financial company on a consolidated basis if such asset, or 
group of assets, was sold or otherwise disposed of in an orderly 
transaction.
    (2) The term ``most recent financial statement available'' means a 
covered financial company's:
    (i) Most recent financial statement filed with the Securities and 
Exchange Commission or any other regulatory body;
    (ii) Most recent financial statement audited by an independent CPA 
firm; or
    (iii) Other available financial statements. The FDIC and the 
Treasury will jointly determine the most pertinent of the above 
financial statements, taking into consideration the timeliness and 
reliability of the statements being considered.
    (3) The term ``obligation'' means, with respect to any covered 
financial company:
    (i) Any guarantee issued by the FDIC on behalf of the covered 
financial company;
    (ii) Any amount borrowed pursuant to section 210(n)(5)(A) of the 
Dodd-Frank Act; and
    (iii) Any other obligation with respect to the covered financial 
company for which the FDIC has a direct or contingent liability to pay 
any amount.
    (4) The term ``total consolidated assets of each covered financial 
company that are available for repayment'' means the difference between:
    (i) The total assets of the covered financial company on a 
consolidated basis that are available for liquidation during the 
operation of the receivership; and
    (ii) To the extent included in (b)(4)(i) of this section, all assets 
that are separated from, or made unavailable to, the covered financial 
company by a statutory or regulatory barrier that prevents the covered 
financial company from possessing or selling assets and using the 
proceeds from the sale of such assets.

[77 FR 37557, June 22, 2012]



Sec.380.11  Treatment of mutual insurance holding companies.

    A mutual insurance holding company shall be treated as an insurance 
company for the purpose of section 203(e) of the Dodd-Frank Act, 12 
U.S.C. 5383(e); provided that--
    (a) The company is subject to the insurance laws of the state of its 
domicile, including, specifically and without limitation, a statutory 
regime for the rehabilitation or liquidation of insurance companies that 
are in default or in danger of default;
    (b) The company is not subject to bankruptcy proceedings under title 
11 of the United States Code;
    (c) The largest United States subsidiary of the company (as measured 
by total assets as of the end of the previous calendar quarter) is an 
insurance company or an intermediate insurance stock holding company; 
and
    (d) The assets and investments of the company are limited to the 
securities of an intermediate insurance stock holding company, the 
securities of the converted mutual insurance company and other assets 
and securities of the type authorized for holding and investment by an 
insurance company domiciled in its state of incorporation.

[77 FR 25353, Apr. 30, 2012]

[[Page 358]]



Sec.380.12  Enforcement of subsidiary and affiliate contracts by the
FDIC as receiver of a covered financial company.

    (a) General. (1) Contracts of subsidiaries or affiliates of a 
covered financial company that are linked to or supported by the covered 
financial company shall remain in full force and effect notwithstanding 
any specified financial condition clause contained in such contract and 
no counterparty shall be entitled to terminate, accelerate, liquidate or 
exercise any other remedy arising solely by reason of such specified 
financial condition clause. The Corporation as receiver for the covered 
financial company shall have the power to enforce such contracts 
according to their terms.
    (2) Notwithstanding paragraph (a)(1) of this section, if the 
obligations under such contract are supported by the covered financial 
company then such contract shall be enforceable only if--
    (i) Any such support together with all related assets and 
liabilities are transferred to and assumed by a qualified transferee not 
later than 5 p.m. (eastern time) on the business day following the date 
of appointment of the Corporation as receiver for the covered financial 
company; or
    (ii) If and to the extent paragraph (a)(2)(i) of this section is not 
satisfied, the Corporation as receiver otherwise provides adequate 
protection to the counterparties to such contracts with respect to the 
covered financial company's support of the obligations or liabilities of 
the subsidiary or affiliate and provides notice consistent with the 
requirements of paragraph (d) of this section not later than 5 p.m. 
(eastern time) on the business day following the date of appointment of 
the Corporation as receiver.
    (3) The Corporation as receiver of a subsidiary of a covered 
financial company (including a failed insured depository institution 
that is a subsidiary of a covered financial company) may enforce any 
contract that is enforceable by the Corporation as receiver for a 
covered financial company under paragraphs (a)(1) and (2) of this 
section.
    (b) Definitions. For purposes of this part, the following terms 
shall have the meanings set forth below:
    (1) A contract is ``linked'' to a covered financial company if it 
contains a specified financial condition clause that specifies the 
covered financial company.
    (2)(i) A ``specified financial condition clause'' means any 
provision of any contract (whether expressly stated in the contract or 
incorporated by reference to any other contract, agreement or document) 
that permits a contract counterparty to terminate, accelerate, liquidate 
or exercise any other remedy under any contract to which the subsidiary 
or affiliate is a party or to obtain possession or exercise control over 
any property of the subsidiary or affiliate or affect any contractual 
rights of the subsidiary or affiliate directly or indirectly based upon 
or by reason of
    (A) A change in the financial condition or the insolvency of a 
specified company that is a covered financial company;
    (B) The appointment of the FDIC as receiver for the specified 
company or any actions incidental thereto including, without limitation, 
the filing of a petition seeking judicial action with respect to the 
appointment of the Corporation as receiver for the specified company or 
the issuance of recommendations or determinations of systemic risk;
    (C) The exercise of rights or powers by the Corporation as receiver 
for the specified company, including, without limitation, the 
appointment of the Securities Investor Protection Corporation (SIPC) as 
trustee in the case of a specified company that is a covered broker-
dealer and the exercise by SIPC of all of its rights and powers as 
trustee;
    (D) The transfer of assets or liabilities to a bridge financial 
company or other qualified transferee;
    (E) Any actions taken by the FDIC as receiver for the specified 
company to effectuate the liquidation of the specified company;
    (F) Any actions taken by or on behalf of the bridge financial 
company to operate and terminate the bridge financial company including 
the dissolution, conversion, merger or termination of a bridge financial 
company or actions incidental or related thereto; or

[[Page 359]]

    (G) The transfer of assets or interests in a transferee bridge 
financial company or its successor in full or partial satisfaction of 
creditors' claims against the covered financial company.
    (ii) Without limiting the general language of paragraphs (b)(1) and 
(2) of this section, a specified financial condition clause includes a 
``walkaway clause'' as defined in 12 U.S.C. 5390(c)(8)(F)(iii) or any 
regulations promulgated thereunder.
    (3) The term ``support'' means undertaking any of the following for 
the purpose of supporting the contractual obligations of a subsidiary or 
affiliate of a covered financial company for the benefit of a 
counterparty to a linked contract--
    (i) To guarantee, indemnify, undertake to make any loan or advance 
to or on behalf of the subsidiary or affiliate;
    (ii) To undertake to make capital contributions to the subsidiary or 
affiliate; or
    (iii) To be contractually obligated to provide any other financial 
assistance to the subsidiary or affiliate.
    (4) The term ``related assets and liabilities'' means--
    (i) Any assets of the covered financial company that directly serve 
as collateral for the covered financial company's support (including a 
perfected security interest therein or equivalent under applicable law);
    (ii) Any rights of offset or setoff or netting arrangements that 
directly arise out of or directly relate to the covered financial 
company's support of the obligations or liabilities of its subsidiary or 
affiliate; and
    (iii) Any liabilities of the covered financial company that directly 
arise out of or directly relate to its support of the obligations or 
liabilities of the subsidiary or affiliate.
    (5) A ``qualified transferee'' means any bridge financial company or 
any third party (other than a third party for which a conservator, 
receiver, trustee in bankruptcy, or other legal custodian has been 
appointed, or which is otherwise the subject of a bankruptcy or 
insolvency proceeding).
    (6) A ``successor'' of a bridge financial company means
    (i) A company into which the bridge financial company is converted 
by way of incorporation under the laws of a State of the United States; 
or
    (ii) The surviving company of a merger or consolidation of the 
bridge financial company with another company (whether before or after 
the conversion (if any) of the bridge financial company).
    (c) Adequate protection. The Corporation as receiver for a covered 
financial company may provide adequate protection with respect to a 
covered financial company's support of the obligations and liabilities 
of a subsidiary or an affiliate pursuant to paragraph (a)(2)(ii) of this 
section by any of the following means:
    (1) Making a cash payment or periodic cash payments to the 
counterparties of the contract to the extent that the failure to cause 
the assignment and assumption of the covered financial company's support 
and related assets and liabilities causes a loss to the counterparties;
    (2) Providing to the counterparties a guaranty, issued by the 
Corporation as receiver for the covered financial company, of the 
obligations of the subsidiary or affiliate of the covered financial 
company under the contract; or
    (3) Providing relief that will result in the realization by the 
counterparty of the indubitable equivalent of the covered financial 
company's support of such obligations or liabilities.
    (d) Notice of transfer of support or provision of adequate 
protection. If the Corporation as receiver for a covered financial 
company transfers any support and related assets and liabilities of the 
covered financial company in accordance with paragraph (a)(2)(i) of this 
section or provides adequate protection in accordance with paragraph 
(a)(2)(ii) of this section, it shall promptly take steps to notify 
contract counterparties of such transfer or provision of adequate 
protection. Notice shall be given in a manner reasonably calculated to 
provide notification in a timely manner, including, but not limited to, 
notice posted on the Web site of the Corporation, the covered financial 
company or the subsidiary or affiliate, notice via electronic media, or 
notice by publication. Neither the failure to provide actual notice to 
any party nor the lack of actual knowledge on the part of

[[Page 360]]

any party shall affect the authority of the Corporation to enforce any 
contract or exercise any rights or powers under this section.

[77 FR 63214, Oct. 16, 2012]



Sec.380.13  Restrictions on sale of assets of a covered financial 
company by the Federal Deposit Insurance Corporation.

    (a) Purpose and applicability. (1) Purpose. The purpose of this 
section is to prohibit individuals or entities that profited or engaged 
in wrongdoing at the expense of a covered financial company or an 
insured depository institution, or seriously mismanaged a covered 
financial company or an insured depository institution, from buying 
assets of a covered financial company from the FDIC.
    (2) Applicability. (i) The restrictions of this section apply to the 
sale of assets of a covered financial company by the FDIC as receiver or 
in its corporate capacity.
    (ii) The restrictions in this section apply to the sale of assets of 
a bridge financial company if:
    (A) The sale is not in the ordinary course of business of the bridge 
financial company, and
    (B) The approval or non-objection of the FDIC is required in 
connection with the sale according to the charter, articles of 
association, bylaws or other documents or instruments establishing the 
governance of the bridge financial company and the authorities of its 
board of directors and executive officers.
    (iii) In the case of a sale of securities backed by a pool of assets 
that may include assets of a covered financial company by a trust or 
other entity, this section applies only to the sale of assets by the 
FDIC to an underwriter in an initial offering, and not to any other 
purchaser of the securities.
    (iv) The restrictions of this section do not apply to a sale of a 
security or a group or index of securities, a commodity, or any 
qualified financial contract that customarily is traded through a 
financial intermediary, as defined in paragraph (b) of this section, 
where the seller cannot control selection of the purchaser and the sale 
is consummated through that customary practice.
    (v) The restrictions of this section do not apply to a judicial sale 
or a trustee's sale of property that secures an obligation to the FDIC 
where the sale is not conducted or controlled by the FDIC.
    (vi) The restrictions of this section do not apply to the sale or 
transfer of an asset if such sale or transfer resolves or settles, or is 
part of the resolution or settlement of, one (1) or more claims or 
obligations that have been, or could have been, asserted by the FDIC 
against the person with whom the FDIC is settling regardless of the 
amount of such claims or obligations.
    (3) The FDIC retains the authority to establish other policies 
restricting asset sales. Neither 12 U.S.C. 5390(r) nor this section in 
any way limits the authority of the FDIC to establish policies 
prohibiting the sale of assets to prospective purchasers who have 
injured the respective covered financial company, or to other 
prospective purchasers, such as certain employees or contractors of the 
FDIC, or individuals who are not in compliance with the terms of any 
debt or duty owed to the FDIC in any of its capacities. Any such 
policies may be independent of, in conjunction with, or in addition to 
the restrictions set forth in this part.
    (b) Definitions. Many of the terms used in this section are defined 
in the Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 
U.S.C. 5301, et seq. Additionally, for the purposes of this section, the 
following terms are defined:
    (1) Associated person. An ``associated person'' of an individual or 
entity means:
    (i) With respect to an individual:
    (A) The individual's spouse or dependent child or any member of his 
or her immediate household;
    (B) A partnership of which the individual is or was a general or 
limited partner or a limited liability company of which the individual 
is or was a member; or
    (C) A corporation of which the individual is or was an officer or 
director;
    (ii) With respect to a partnership, a managing or general partner of 
the

[[Page 361]]

partnership or with respect to a limited liability company, a manager; 
or
    (iii) With respect to any entity, an individual or entity who, 
acting individually or in concert with one or more individuals or 
entities, owns or controls 25 percent or more of the entity.
    (2) Default. The term ``default'' means any failure to comply with 
the terms of an obligation to such an extent that:
    (i) A judgment has been rendered in favor of the FDIC or a covered 
financial company; or
    (ii) In the case of a secured obligation, the lien on property 
securing such obligation has been foreclosed.
    (3) Financial intermediary. The term ``financial intermediary'' 
means any broker, dealer, bank, underwriter, exchange, clearing agency 
registered with the SEC under section 17A of the Securities Exchange Act 
of 1934, transfer agent (as defined in section 3(a)(25) of the 
Securities Exchange Act of 1934), central counterparty or any other 
entity whose role is to facilitate a transaction by, as a riskless 
intermediary, purchasing a security or qualified financial contract from 
one counterparty and then selling it to another.
    (4) Obligation. The term ``obligation'' means any debt or duty to 
pay money owed to the FDIC or a covered financial company, including any 
guarantee of any such debt or duty.
    (5) Person. The term ``person'' means an individual, or an entity 
with a legally independent existence, including: A trustee; the 
beneficiary of at least a 25 percent share of the proceeds of a trust; a 
partnership; a limited liability company; a corporation; an association; 
or other organization or society.
    (6) Substantial loss. The term ``substantial loss'' means:
    (i) An obligation that is delinquent for ninety (90) or more days 
and on which there remains an outstanding balance of more than $50,000;
    (ii) An unpaid final judgment in excess of $50,000 regardless of 
whether it becomes forgiven in whole or in part in a bankruptcy 
proceeding;
    (iii) A deficiency balance following a foreclosure of collateral in 
excess of $50,000, regardless of whether it becomes forgiven in whole or 
in part in a bankruptcy proceeding; or
    (iv) Any loss in excess of $50,000 evidenced by an IRS Form 1099-C 
(Information Reporting for Cancellation of Debt).
    (c) Restrictions on the sale of assets. (1) A person may not acquire 
any assets of a covered financial company from the FDIC if, prior to the 
appointment of the FDIC as receiver for the covered financial company, 
the person or its associated person:
    (i) Has participated as an officer or director of a covered 
financial company or of an affiliate of a covered financial company in a 
material way in one or more transactions that caused a substantial loss 
to a covered financial company;
    (ii) Has been removed from, or prohibited from participating in the 
affairs of, a financial company pursuant to any final enforcement action 
by its primary financial regulatory agency;
    (iii) Has demonstrated a pattern or practice of defalcation 
regarding obligations to a covered financial company;
    (iv) Has been convicted of committing or conspiring to commit any 
offense under 18 U.S.C. 215, 656, 657, 1005, 1006, 1007, 1008, 1014, 
1032, 1341, 1343 or 1344 affecting any covered financial company and 
there has been a default with respect to one or more obligations owed by 
that person or its associated person; or
    (v) Would be prohibited from purchasing the assets of a failed 
insured depository institution from the FDIC under 12 U.S.C. 1821(p) or 
its implementing regulation at 12 CFR part 340.
    (2) For purposes of paragraph (c)(1) of this section, a person has 
participated in a ``material way in a transaction that caused a 
substantial loss to a covered financial company'' if, in connection with 
a substantial loss to the covered financial company, the person has been 
found in a final determination by a court or administrative tribunal, or 
is alleged in a judicial or administrative action brought by a primary 
financial regulatory agency or by any component of the government of the 
United States or of any state:
    (i) To have violated any law, regulation, or order issued by a 
federal or

[[Page 362]]

state regulatory agency, or breached or defaulted on a written agreement 
with a federal or state regulatory agency, or breached a written 
agreement with a covered financial company; or
    (ii) To have breached a fiduciary duty owed to a covered financial 
company.
    (3) For purposes of paragraph (c)(1) of this section, a person or 
its associated person has demonstrated a ``pattern or practice of 
defalcation'' regarding obligations to a covered financial company if 
the person or associated person has:
    (i) Engaged in more than one transaction that created an obligation 
on the part of such person or its associated person with intent to cause 
a loss to any financial company or with reckless disregard for whether 
such transactions would cause a loss to any such financial company; and
    (ii) The transactions, in the aggregate, caused a substantial loss 
to one or more covered financial companies.
    (d) Restrictions when FDIC provides seller financing. A person may 
not borrow money or accept credit from the FDIC in connection with the 
purchase of any assets from the FDIC or any covered financial company 
if:
    (1) There has been a default with respect to one or more obligations 
totaling in excess of $1,000,000 owed by that person or its associated 
person; and
    (2) The person or its associated person made any fraudulent 
misrepresentations in connection with any such obligation(s).
    (e) No obligation to provide seller financing. The FDIC still has 
the right to make an independent determination, based upon all relevant 
facts of a person's financial condition and history, of that person's 
eligibility to receive any loan or extension of credit from the FDIC, 
even if the person is not in any way disqualified from purchasing assets 
from the FDIC under the restrictions set forth in this section.
    (f) Purchaser eligibility certificate required. (1) Before any 
person may purchase any asset from the FDIC that person must certify, 
under penalty of perjury, that none of the restrictions contained in 
this section applies to the purchase. The person must also certify that 
neither the identity nor form of the person, nor any aspect of the 
contemplated transaction, has been created or altered with the intent, 
in whole or in part, to allow an individual or entity who otherwise 
would be ineligible to purchase assets from the FDIC to benefit directly 
or indirectly from the proposed transaction. The FDIC may establish the 
form of the certification and may change the form from time to time.
    (2) Notwithstanding paragraph (f)(1) of this section, and unless the 
Director of the FDIC's Division of Resolutions and Receiverships, or 
designee, in his or her discretion so requires, a certification need not 
be provided by:
    (i) A state or political subdivision of a state;
    (ii) A federal agency or instrumentality such as the Government 
National Mortgage Association;
    (iii) A federally-regulated, government-sponsored enterprise such as 
Federal National Mortgage Association or Federal Home Loan Mortgage 
Corporation; or
    (iv) A bridge financial company.

[79 FR 20766, Apr. 14, 2014]



Sec.380.14  Record retention requirements.

    (a) Scope. 12 U.S.C. 5390(a)(16)(D) requires that the Corporation 
establish retention schedules for the maintenance of certain documents 
and records of a covered financial company for which the Corporation has 
been appointed receiver and certain documents and records generated by 
the Corporation as receiver for a covered financial company in 
connection with the exercise of its authorities under Title II of the 
Dodd-Frank Act, 12 U.S.C. 5381 through 5397. This section addresses 
retention of those two categories of documents and records.
    (b) Definitions. For the purposes of this section, the following 
terms shall have the following meanings:
    (1) Documentary material. The term documentary material means any 
reasonably accessible document, book, paper, map, photograph, 
microfiche, microfilm, or writing regardless of physical form or 
characteristics and includes any computer or electronically-created data 
or file.
    (2) Inherited record. The term inherited record means documentary 
material of a covered financial company, provided

[[Page 363]]

that such documentary material existed on the date of the appointment of 
the Corporation as receiver for such covered financial company and was 
generated or maintained by the covered financial company in the course 
of, and necessary to, the transaction of its business. The determination 
of whether documentary material was generated or maintained by the 
covered financial company in the course of, and necessary to, the 
transaction of its business shall be based on an analysis of the 
following factors;
    (i) Whether such documentary material was generated or maintained in 
accordance with the covered financial company's own practices and 
procedures (including the document retention policies of the covered 
financial company) or pursuant to standards established by the covered 
financial company's regulators;
    (ii) Whether such documentary material is necessary for the 
Corporation to carry out its obligations as receiver for the covered 
financial company; and
    (iii) Whether there is a present or reasonably foreseeable 
evidentiary need for such documentary material by the Corporation as 
receiver for the covered financial company or the public.
    (3) Receivership record. The term receivership record means 
documentary material generated or maintained by the Corporation in 
accordance with the policies and procedures of the Corporation 
(including the document retention policies of the Corporation) that 
relates to the Corporation's appointment as receiver for a covered 
financial company or the exercise of its authorities as receiver for the 
covered financial company under 12 U.S.C. 5381 through 5397.
    (c) Inherited records.--(1) Retention schedule for inherited 
records. The Corporation shall retain any inherited record of a covered 
financial company that was created fewer than ten years before the date 
of the appointment of the Corporation as receiver for the covered 
financial company for a period of no less than six years from the date 
of such appointment, provided however that an inherited record shall be 
retained indefinitely so long as it is:
    (i) Subject to a litigation hold imposed by the Corporation;
    (ii) Subject to a Congressional subpoena or relates to an ongoing 
investigation by Congress, the United States Government Accountability 
Office, or the Corporation's Inspector General; or
    (iii) An inherited record that the Corporation has determined is 
necessary for a present or reasonably foreseeable future evidentiary 
need of the Corporation or the public.
    (2) Examples. Examples of inherited records include, without 
limitation: Correspondence; tax forms, accounting forms, and related 
work papers; internal audits; inventories; board of directors or 
committee meeting minutes; personnel files and employee benefits 
information; general ledger and financial reports; financial data; 
litigation files; loan documents including records relating to 
intercompany debt; contracts and agreements to which the covered 
financial company was a party; customer accounts and transactions; 
qualified financial contracts and related information; and reports or 
other records of subsidiaries or affiliates of the covered financial 
company that were provided to the covered financial company.
    (3) Transfer of an inherited record to an acquirer of assets or 
liabilities of a covered financial company. If the Corporation transfers 
an inherited record of a covered financial company to a third party 
(including a bridge financial company) in connection with the 
acquisition of assets or liabilities of the covered financial company by 
such third party, the record retention requirements of 12 U.S.C. 
5390(a)(16)(D) and paragraph (c)(1) of this section shall be satisfied 
if the third party agrees, in writing, that:
    (i) It will maintain the inherited record for at least six years 
from the date of the appointment of the Corporation as receiver for the 
covered financial company unless otherwise notified in writing by the 
Corporation; and
    (ii) Prior to destruction of such inherited record it will provide 
the Corporation with notice and the opportunity to cause the inherited 
record to be returned to the Corporation.
    (d) Receivership records--(1) Retention schedule for receivership 
records. (i) A receivership record shall be retained indefinitely to the 
extent that there is a

[[Page 364]]

present or reasonably foreseeable future evidentiary or historical need 
for such receivership record.
    (ii) A receivership record that is subject to a litigation hold 
imposed by the Corporation, is subject to a Congressional subpoena, or 
relates to an ongoing investigation by Congress, the United States 
Government Accountability Office, or the Corporation's Office of 
Inspector General shall be retained pursuant to the conditions of such 
hold, subpoena, or investigation.
    (iii) In no event shall a receivership record be retained by the 
Corporation for a period of less than six years following the 
termination of the receivership to which it relates.
    (2) Not included in receivership records. Receivership records do 
not include inherited records.
    (3) Examples. Examples of receivership records include, without 
limitation: Correspondence; tax forms, accounting forms and related work 
papers; inventories; contracts and other information relating to the 
management and disposition of the assets of the covered financial 
company; documentary material relating to the appointment of the 
Corporation as receiver; administrative records and other information 
relating to administrative proceedings; pleadings and similar documents 
in civil litigation, criminal restitution, forfeiture litigation, and 
all other litigation matters in which the Corporation as receiver is a 
party; the charter and formation documents of a bridge financial 
company; contracts, other documents, and information relating to the 
role of the Corporation as receiver in overseeing the operations of the 
bridge financial company; reports or other records of the bridge 
financial company and its subsidiaries or affiliates that were provided 
to the Corporation as receiver; and documentary material relating to the 
administration, determination, and payment of claims by the Corporation 
as receiver.
    (e) General provisions. With respect to any documentary material 
described in paragraphs (c) and (d) of this section, the following 
applies:
    (1) Impact on discoverability, admissibility, or release; compliance 
with court orders. The Corporation's determination that documentary 
material must be maintained pursuant to 12 U.S.C. 5390(a)(16)(D) and 
this section shall not bear on the discoverability or admissibility of 
such documentary material in any court, tribunal, or other adjudicative 
proceeding nor on whether such documentary material is subject to 
release under the Freedom of Information Act, 5 U.S.C. 552, the Privacy 
Act of 1974, 5 U.S.C. 552a, or any other law. The Corporation shall 
comply with any applicable court order concerning mandatory retention or 
destruction of any documentary material subject to this section.
    (2) Exclusions. Documentary material is not an inherited record nor 
a receivership record and is not subject to the record retention 
requirements of section 12 U.S.C. 5390(a)(16)(D) and this section if it 
is:
    (i) A duplicate copy of retained documentary material, reference 
material, a draft of a document that is superseded by later drafts or 
revisions, documentary material provided to the Corporation by other 
parties in concluded litigation for which all appeals have expired, 
transitory information including routine system messages and system-
generated log files, notes and other material of a personal nature, or 
other documentary material not routinely maintained under the standard 
record retention policies and procedures of the Corporation;
    (ii) Documentary material generated or maintained by a bridge 
financial company, or by a subsidiary or affiliate of a covered 
financial company, that was not provided to the covered financial 
company or to the Corporation as receiver; or
    (iii) Non-publicly available confidential supervisory information or 
operating or condition reports prepared by, on behalf of, or at the 
requirement of any agency responsible for the regulation or supervision 
of financial companies or their subsidiaries.
    (f) Policies and procedures. The Corporation may establish policies 
and procedures with respect to the retention of inherited records and 
receivership records that are consistent with this section.

[81 FR 41417, June 27, 2016]

[[Page 365]]



Sec. Sec.380.15-380.19  [Reserved]



                          Subpart B_Priorities

    Source: 76 FR 41642, July 15, 2011, unless otherwise noted.



Sec.380.20  [Reserved]



Sec.380.21  Priorities.

    (a) The unsecured amount of allowed claims shall be paid in the 
following order of priority:
    (1) Repayment of debt incurred by or credit obtained by the 
Corporation as receiver for a covered financial company, provided that 
the receiver has determined that it is otherwise unable to obtain 
unsecured credit for the covered financial company from commercial 
sources.
    (2) Administrative expenses of the receiver, as defined in Sec.
380.22, other than those described in paragraph (a)(1) of this section.
    (3) Any amounts owed to the United States, as defined in Sec.
380.23 (which is not an obligation described in paragraphs (a)(1) or (2) 
of this section).
    (4) Wages, salaries, or commissions, including vacation, severance, 
and sick leave pay earned by an individual (other than an individual 
described in paragraph (a)(9) of this section), but only to the extent 
of $11,725 for each individual (as adjusted for inflation in accordance 
with paragraph (b) of this section) earned within 180 days before the 
date of appointment of the receiver.
    (5) Contributions owed to employee benefit plans arising from 
services rendered within 180 days before the date of appointment of the 
receiver, to the extent of the number of employees covered by each such 
plan multiplied by $11,725 (as adjusted for inflation in accordance with 
paragraph (b) of this section); less the sum of (i) the aggregate amount 
paid to such employees under paragraph (a)(4) of this section, plus (ii) 
the aggregate amount paid by the Corporation as receiver on behalf of 
such employees to any other employee benefit plan.
    (6) Any amounts due to creditors who have an allowed claim for loss 
of setoff rights as described in Sec.380.24.
    (7) Any other general or senior liability of the covered financial 
company (which is not a liability described under paragraphs (a)(8), (9) 
or (11) of this section).
    (8) Any obligation subordinated to general creditors (which is not 
an obligation described under paragraphs (a)(9) or (11) of this 
section).
    (9) Any wages, salaries, or commissions, including vacation, 
severance, and sick leave pay earned, that is owed to senior executives 
and directors of the covered financial company.
    (10) Post-insolvency interest in accordance with Sec.380.25, 
provided that interest shall be paid on allowed claims in the order of 
priority of the claims set forth in paragraphs (a)(1) through (9) of 
this section.
    (11) Any amount remaining shall be distributed to shareholders, 
members, general partners, limited partners, or other persons with 
interests in the equity of the covered financial company arising as a 
result of their status as shareholders, members, general partners, 
limited partners, or other persons with interests in the equity of the 
covered financial company, in proportion to their relative equity 
interests.
    (b) All payments under paragraphs (a)(4) and (a)(5) of this section 
shall be adjusted for inflation in the same manner that claims under 11 
U.S.C. 507(a)(1)(4) are adjusted for inflation by the Judicial 
Conference of the United States pursuant to 11 U.S.C. 104.
    (c) All unsecured claims of any category 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 
particular category or priority of claims in full, then distributions to 
creditors in such category or priority shall be made pro rata. A 
subordination agreement is enforceable with respect to the priority of 
payment of allowed claims within any creditor class or among creditor 
classes to the extent that such agreement is enforceable under 
applicable non-insolvency law.

[[Page 366]]



Sec.380.22  Administrative expenses of the receiver.

    (a) The term ``administrative expenses of the receiver'' includes 
those actual and necessary pre- and post-failure costs and expenses 
incurred by the Corporation in connection with its role as receiver in 
liquidating the covered financial company; together with any obligations 
that the receiver for the covered financial company determines to be 
necessary and appropriate to facilitate the smooth and orderly 
liquidation of the covered financial company. Administrative expenses of 
the Corporation as receiver for a covered financial company include:
    (1) Contractual rent pursuant to an existing lease or rental 
agreement accruing from the date of the appointment of the Corporation 
as receiver until the later of
    (i) The date a notice of the dissaffirmance or repudiation of such 
lease or rental agreement is mailed, or
    (ii) The date such disaffirmance or repudiation becomes effective; 
provided that the lesser of such lease is not in default or breach of 
the terms of the lease.
    (2) Amounts owed pursuant to the terms of a contract for services 
performed and accepted by the receiver after the date of appointment of 
the receiver up to the date the receiver repudiates, terminates, cancels 
or otherwise discontinues such contract or notifies the counterparty 
that it no longer accepts performance of such services;
    (3) Amounts owed under the terms of a contract or agreement executed 
in writing and entered into by the Corporation as receiver for the 
covered financial company after the date of appointment, or any contract 
or agreement entered into by the covered financial company before the 
date of appointment of the receiver that has been expressly approved in 
writing by the receiver after the date of appointment; and
    (4) Expenses of the Inspector General of the Corporation incurred in 
carrying out its responsibilities under 12 U.S.C. 5391(d).
    (b) Obligations to repay any extension of credit obtained by the 
Corporation as receiver through enforcement of any contract to extend 
credit to the covered financial company that was in existence prior to 
appointment of the receiver pursuant to 12 U.S.C. 5390(c)(13)(D) shall 
be treated as administrative expenses of the receiver. Other unsecured 
credit extended to the receivership shall be treated as administrative 
expenses except with respect to debt incurred by, or credit obtained by, 
the Corporation as receiver for a covered financial company as described 
in Sec.380.21(a)(1).



Sec.380.23  Amounts owed to the United States.

    (a) The term ``amounts owed to the United States'' as used in Sec.
380.21(a)(3) includes all unsecured amounts owed to the United States, 
other than expenses included in the definition of administrative 
expenses of the receiver under Sec.380.22 that are related to funds 
provided for the orderly liquidation of a covered financial company, 
funds provided to avoid or mitigate adverse effects on the financial 
stability of the United States or unsecured amounts owed to the U.S. 
Treasury on account of tax liabilities of the covered financial company, 
without regard for whether such amounts are included as debt or capital 
on the books and records of the covered financial company. Such amounts 
shall include obligations incurred before and after the appointment of 
the Corporation as receiver. Without limitation, ``amounts owed to the 
United States'' include all of the following, which all shall have equal 
priority under Sec.380.21(a)(3):
    (1) Unsecured amounts owed to the Corporation for any extension of 
credit by the Corporation, including any amounts made available under 12 
U.S.C. 5384(d);
    (2) Unsecured amounts owed to the U.S. Treasury on account of 
unsecured tax liabilities of the covered financial company;
    (3) Unsecured amounts paid or payable by the Corporation pursuant to 
its guarantee of any debt issued by the covered financial company under 
the Temporary Liquidity Guaranty Program, 12 CFR part 370, any widely 
available debt guarantee program authorized under 12 U.S.C. 5612, or any 
other debt or obligation of any kind or

[[Page 367]]

nature that is guaranteed by the Corporation;
    (4) The unsecured amount of any debt owed to a Federal reserve bank 
including loans made through programs or facilities authorized under the 
Federal Reserve Act, 12 U.S.C. 221 et seq.; and
    (5) Any unsecured amount expressly designated in writing in a form 
acceptable to the Corporation by the appropriate United States 
department, agency or instrumentality that shall specify the particular 
debt, obligation or amount to be included as an ``amount owed to the 
United States'' for the purpose of this rule at the time of such 
advance, guaranty or other transaction.
    (b) Other than those amounts included in paragraph (a) of this 
section, unsecured amounts owed to a department, agency or 
instrumentality of the United States that are obligations incurred in 
the ordinary course of the business of the covered financial company 
prior to the appointment of the receiver generally will not be in the 
class of claims designated as ``amounts owed to the United States'' 
under section 380.21(a)(3), including, but not limited to:
    (1) Unsecured amounts owed to government sponsored entities 
including, without limitation, the Federal Home Loan Mortgage 
Corporation and the Federal National Mortgage Corporation;
    (2) Unsecured amounts owed to Federal Home Loan Banks; and
    (3) Unsecured amounts owed as satisfaction of filing, registration 
or permit fees due to any government department, agency or 
instrumentality.
    (c) The United States may, in its sole discretion, consent to 
subordinate the repayment of any amount owed to the United States to any 
other obligation of the covered financial company provided that such 
consent is provided in writing in a form acceptable to the Corporation 
by the appropriate department, agency or instrumentality and shall 
specify the particular debt, obligation or other amount to be 
subordinated including the amount thereof and shall reference this 
paragraph (c) or 12 U.S.C. 5390(b)(1); and provided further that 
unsecured claims of the United States shall, at a minimum, have a higher 
priority than liabilities of the covered financial company that count as 
regulatory capital on the books and records of the covered financial 
company.



Sec.380.24  Priority of claims arising out of loss of setoff rights.

    (a) Notwithstanding any right of any creditor to offset a mutual 
debt owed by such creditor to any covered financial company that arose 
before the date of appointment of the receiver against a claim by such 
creditor against the covered financial company, the Corporation as 
receiver may sell or transfer any assets of the covered financial 
company to a bridge financial company or to a third party free and clear 
of any such rights of setoff.
    (b) If the Corporation as receiver sells or transfers any asset free 
and clear of the setoff rights of any party, such party shall have a 
claim against the receiver in the amount of the value of such setoff 
established as of the date of the sale or transfer of such assets, 
provided that the setoff rights meet all of the criteria established 
under 12 U.S.C. 3590(a)(12).
    (c) Any allowed claim pursuant to 12 U.S.C. 5390(a)(12) shall be 
paid prior to any other general or senior liability of the covered 
financial company described in section 380.21(a)(7). In the event that 
the setoff amount is less than the amount of the allowed claim, the 
balance of the allowed claim shall be paid at the otherwise applicable 
level of priority for such category of claim under Sec.380.21.
    (d) Nothing in this section shall modify in any way the treatment of 
qualified financial contracts under title II of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act.



Sec.380.25  Post-insolvency interest.

    (a) Date of accrual. Post-insolvency interest shall be paid at the 
post-insolvency interest rate calculated on the principal amount of an 
allowed claim from the later of (i) the date of the appointment of the 
Corporation as receiver for the covered financial company; or (ii) in 
the case of a claim arising or becoming fixed and certain after the date 
of the appointment of the receiver, the date such claim arises or 
becomes fixed and certain.

[[Page 368]]

    (b) Interest rate. Post-insolvency interest rate shall equal, for 
any calendar quarter, the coupon equivalent yield of the average 
discount rate set on the three-month U.S. Treasury bill at the last 
auction held by the United States Treasury Department during the 
preceding calendar quarter. Post-insolvency interest shall be computed 
quarterly and shall be computed using a simple interest method of 
calculation.
    (c) Principal amount. The principal amount of an allowed claim shall 
be the full allowed claim amount, including any interest that may have 
accrued to the extent such interest is included in the allowed claim.
    (d) Post-insolvency interest distributions. (1) Post-insolvency 
interest shall only be distributed following satisfaction of the 
principal amount of all creditor claims set forth in Sec.380.21(a)(1) 
through 380.21(a)(9) and prior to any distribution pursuant to Sec.
380.21(a)(11).
    (2) Post-insolvency interest distributions shall be made at such 
time as the Corporation as receiver determines that such distributions 
are appropriate and only to the extent of funds available in the 
receivership estate. Post-insolvency interest shall be calculated on the 
outstanding principal amount of an allowed claim, as reduced from time 
to time by any interim distributions on account of such claim by the 
receiver.



Sec.380.26  Effect of transfer of assets and obligations to a bridge
financial company.

    (a) The purchase of any asset or assumption of any asset or 
liability of a covered financial company by a bridge financial company, 
through the express agreement of such bridge financial company, 
constitutes assumption of any contract or agreement giving rise to such 
asset or liability. Such contracts or agreements, together with any 
contract the bridge financial company may through its express agreement 
enter into with any other party, shall become the obligation of the 
bridge financial company from and after the effective date of the 
purchase, assumption or agreement, and the bridge financial company 
shall have the right and obligation to observe, perform and enforce 
their terms and provisions. In the event that the Corporation shall act 
as receiver of the bridge financial company any allowed claim arising 
out of any breach of such contract or agreement by the bridge financial 
company shall be paid as an administrative expense of the receiver of 
the bridge financial company.
    (b) In the event that the Corporation as receiver of a bridge 
financial company shall act to dissolve the bridge financial company, it 
shall wind up the affairs of the bridge financial company in conformity 
with the laws, rules and regulations relating to the liquidation of 
covered financial companies, including the laws, rules and regulations 
governing priorities of claims, subject however to the authority of the 
Corporation to authorize the bridge financial company to obtain 
unsecured credit or issue unsecured debt with priority over any or all 
of the other unsecured obligations of the bridge financial company, 
provided that unsecured debt is not otherwise generally available to the 
bridge financial company.
    (c) Upon the final dissolution or termination of the bridge 
financial company whether following a merger or consolidation, a stock 
sale, a sale of assets, or dissolution and liquidation at the end of the 
term of existence of such bridge financial company, any proceeds that 
remain after payment of all administrative expenses of the bridge 
financial company and all other claims against such bridge financial 
company will be distributed to the receiver for the related covered 
financial company.



Sec.380.27  Treatment of similarly situated claimants.

    (a) For the purposes of this section, the term ``long-term senior 
debt'' means senior debt issued by the covered financial company to 
bondholders or other creditors that has a term of more than 360 days. It 
does not include partially funded, revolving or other open lines of 
credit that are necessary to continuing operations essential to the 
receivership or any bridge financial company, nor to any contracts to 
extend credit enforced by the receiver under 12 U.S.C. 5390(c)(13)(D).
    (b) In applying any provision of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act permitting

[[Page 369]]

the Corporation as receiver to exercise its discretion, upon appropriate 
determination, to make payments or credit amounts, pursuant to 12 U.S.C. 
5390(b)(4), (d)(4), or (h)(5)(E) to or for some creditors but not others 
similarly situated at the same level of payment priority, the receiver 
shall not exercise such authority in a manner that would result in the 
following recovering more than the amount established and due under 12 
U.S.C. 5390(b)(1), or other priorities of payment specified by law:
    (1) Holders of long-term senior debt who have a claim entitled to 
priority of payment at the level set out under 12 U.S.C. 5390(b)(1)(E);
    (2) Holders of subordinated debt who have a claim entitled to 
priority of payment at the level set out under 12 U.S.C. 5390(b)(1)(F);
    (3) Shareholders, members, general partners, limited partners, or 
other persons who have a claim entitled to priority of payment at the 
level set out under 12 U.S.C. 5390 (b)(1)(H); or
    (4) Other holders of claims entitled to priority of payment at the 
level set out under 12 U.S.C. 5390(b)(1)(E) unless the Corporation, 
through the affirmative vote of a majority the members of the Board of 
Directors then serving, and in its sole discretion, specifically 
determines that additional payments or credit amounts to such holders 
are necessary and meet all of the requirements under 12 U.S.C. 
5390(b)(4), (d)(4), or (h)(5)(E), as applicable. The authority of the 
Board to make the foregoing determination cannot be delegated.



Sec. Sec.380.28-380.29  [Reserved]



          Subpart C_Receivership Administrative Claims Process

    Source: 76 FR 41644, July 15, 2011, unless otherwise noted.



Sec.380.30  Receivership administrative claims process.

    The Corporation as receiver of a covered financial company shall 
determine claims against the covered financial company and the receiver 
of the covered financial company in accordance with the procedures set 
forth in 12 U.S.C. 5390(a)(2)-(5) and the regulations promulgated by the 
Corporation.



Sec.380.31  Scope.

    Nothing in this subpart C shall apply to any liability or obligation 
of a bridge financial company or its assets or liabilities, or to any 
extension of credit from a Federal reserve bank or the Corporation to a 
covered financial company.



Sec.380.32  Claims bar date.

    Upon its appointment as receiver for a covered financial company, 
the Corporation as receiver shall establish a claims bar date by which 
date creditors of the covered financial company shall present their 
claims, together with proof, to the receiver. The claims bar date shall 
be not less than 90 days after the date on which the notice to creditors 
to file claims is first published under Sec.380.33(a).



Sec.380.33  Notice requirements.

    (a) Notice by publication. Promptly after its appointment as 
receiver for a covered financial company, the Corporation as receiver 
shall publish a notice to the creditors of the covered financial company 
to file their claims with the receiver no later than the claims bar 
date. The Corporation as receiver shall republish such notice 1 month 
and 2 months, respectively, after the date the notice is first 
published. The notice to creditors shall be published in one or more 
newspapers of general circulation where the covered financial company 
has its principal place or places of business. In addition to such 
publication in a newspaper, the Corporation as receiver may post the 
notice on the FDIC's Web site at www.fdic.gov.
    (b) Notice by mailing. At the time of the first publication of the 
notice to creditors, the Corporation as receiver shall mail a notice to 
present claims no later than the claims bar date to any creditor shown 
in the books and records of the covered financial company. Such notice 
shall be sent to the last known address of the creditor appearing in the 
books and records or appearing in any claim found in the records of the 
covered financial company.
    (c) Notice by electronic media. After publishing and mailing notice 
as required by paragraphs (a) and (b) of this

[[Page 370]]

section, the Corporation as receiver may communicate by electronic media 
with any claimant who expressly agrees to such form of communication.
    (d) Discovered claimants. Upon discovery of the name and address of 
a claimant not appearing in the books and records of the covered 
financial company, the Corporation as receiver shall, not later than 30 
days after the discovery of such name and address, mail a notice to such 
claimant to file a claim no later than the claims bar date. Any claimant 
not appearing on the books and records that is discovered before the 
claims bar date shall be required to file a claim before the claims bar 
date, subject to the exception of Sec.380.35(b)(2). If a claimant not 
appearing on the books and records is discovered after the claims bar 
date, the Corporation as receiver shall notify the claimant to file a 
claim by a date not later than 90 days from the date appearing on the 
notice that is mailed to such creditor. Any claim filed after such date 
shall be disallowed, and such disallowance shall be final.



Sec.380.34  Procedures for filing claim.

    (a) In general. The Corporation as receiver shall provide, in a 
reasonably practicable manner, instructions for filing a claim, 
including by the following means:
    (1) Providing contact information in the publication notice;
    (2) Including in the mailed notice a proof of claim form that has 
filing instructions; or
    (3) Posting filing instructions on the Corporation's public Web site 
at www.fdic.gov.
    (b) When claim is deemed filed. A claim that is mailed to the 
receiver in accordance with the instructions established under paragraph 
(a) of this section shall be deemed to be filed as of the date of 
postmark. A claim that is sent to the receiver by electronic media or 
fax in accordance with the instructions established under paragraph (a) 
shall be deemed to be filed as of the date of transmission by the 
claimant.
    (c) Class claimants. If a claimant is a member of a class for 
purposes of a class action lawsuit, whether or not the class has been 
certified by a court, each claimant must file its claim with the 
Corporation as receiver separately.
    (d) Indenture trustee. A trustee appointed under an indenture or 
other applicable trust document related to investments or other 
financial activities may file a claim on behalf of the persons who 
appointed the trustee.
    (e) Legal effect of filing. (1) Pursuant to 12 U.S.C. 
5390(a)(3)(E)(i), the filing of a claim with the receiver shall 
constitute a commencement of an action for purposes of any applicable 
statute of limitations.
    (2) No prejudice to continuation of action. Pursuant to 12 U.S.C. 
5390(a)(3)(E)(ii) and subject to 12 U.S.C. 5390(a)(8), the filing of a 
claim with the receiver shall not prejudice any right of the claimant to 
continue, after the receiver's determination of the claim, any action 
which was filed before the date of appointment of the receiver for the 
covered financial company.



Sec.380.35  Determination of claims.

    (a) In general. The Corporation as receiver shall allow any claim 
received by the receiver on or before the claims bar date if such claim 
is proved to the satisfaction of the receiver. Except as provided in 12 
U.S.C. 5390(a)(3)(D)(iii), the Corporation as receiver may disallow any 
portion of any claim by a creditor or claim of a security, preference, 
setoff, or priority which is not proved to the satisfaction of the 
receiver.
    (b) Disallowance of claims filed after the claims bar date. (1) 
Except as otherwise provided in this section, any claim filed after the 
claims bar date shall be disallowed, and such disallowance shall be 
final, as provided by 12 U.S.C. 5390(a)(3)(C)(i).
    (2) Certain exceptions. Paragraph (b)(1) of this section shall not 
apply with respect to any claim filed by a claimant after the claims bar 
date and such claim shall be considered by the receiver if:
    (i) The claimant did not receive notice of the appointment of the 
receiver in time to file such claim before the claims bar date, or the 
claim is based upon an act or omission of the Corporation as receiver 
that occurs after the claims bar date has passed, and

[[Page 371]]

    (ii) The claim is filed in time to permit payment. A claim is 
``filed in time to permit payment'' when it is filed before a final 
distribution is made by the receiver.



Sec.380.36  Decision period.

    (a) In general. Prior to the 180th day after the date on which a 
claim against a covered financial company or the Corporation as receiver 
is filed with the receiver, the receiver shall notify the claimant 
whether it allows or disallows the claim.
    (b) Extension of time. The 180-day period described in paragraph (a) 
of this section may be extended by a written agreement between the 
claimant and the Corporation as receiver executed not later than 180 
days after the date on which the claim against the covered financial 
company or the receiver is filed with the receiver. If an extension is 
agreed to, the Corporation as receiver shall notify the claimant whether 
it allows or disallows the claim prior to the end of the extended claims 
determination period.



Sec.380.37  Notification of determination.

    (a) In general. The Corporation as receiver shall notify the 
claimant by mail of the decision to allow or disallow the claim. Notice 
shall be mailed to the address of the claimant as it last appears on the 
books, records, or both of the covered financial company; in the claim 
filed by the claimant with the Corporation as receiver; or in documents 
submitted in the proof of the claim. If the claimant has filed the claim 
electronically, the receiver may notify the claimant of the 
determination by electronic means.
    (b) Contents of notice of disallowance. If the Corporation as 
receiver disallows a claim, the notice to the claimant shall contain a 
statement of each reason for the disallowance, and the procedures 
required to file or continue an action in court.
    (c) Failure to notify deemed to be disallowance. If the Corporation 
as receiver does not notify the claimant before the end of the 180-day 
claims determination period, or before the end of any extended claims 
determination period, the claim shall be deemed to be disallowed, and 
the claimant may file or continue an action in court pursuant to 12 
U.S.C. 5390(a)(4)(A).



Sec.380.38  Procedures for seeking judicial determination of 
disallowed claim.

    (a) In general. In order to seek a judicial determination of a claim 
that has been disallowed, in whole or in part, by the Corporation as 
receiver, the claimant, pursuant to 12 U.S.C. 5390(a)(4)(A), may either:
    (1) File suit on such claim in the district or territorial court of 
the United States for the district within which the principal place of 
business of the covered financial company is located; or
    (2) Continue an action commenced before the date of appointment of 
the receiver, in the court in which the action was pending.
    (b) Timing. Pursuant to 12 U.S.C. 5390(a)(4)(B), a claimant who 
seeks a judicial determination of a claim disallowed by the Corporation 
as receiver must file suit on such claim before the end of the 60-day 
period beginning on the earlier of:
    (1) The date of any notice of disallowance of such claim;
    (2) The end of the 180-day claims determination period; or
    (3) If the claims determination period was extended with respect to 
such claim under Sec.380.36(b), the end of such extended claims 
determination period.
    (c) Statute of limitations. Pursuant to 12 U.S.C. 5390(a)(4)(C), if 
any claimant fails to file suit on such claim (or to continue an action 
on such claim commenced before the date of appointment of the 
Corporation as receiver) prior to the end of the 60-day period described 
in 12 U.S.C. 5390(a)(4)(B), the claim shall be deemed to be disallowed 
(other than any portion of such claim which was allowed by the receiver) 
as of the end of such period, such disallowance shall be final, and the 
claimant shall have no further rights or remedies with respect to such 
claim.
    (d) Jurisdiction. Pursuant to 12 U.S.C. 5390(a)(9)(D), unless the 
claimant has first exhausted its administrative remedies by obtaining a 
determination from the receiver regarding a claim filed with the 
receiver, no court shall have jurisdiction over:

[[Page 372]]

    (1) Any claim or action for payment from, or any action seeking a 
determination of rights with respect to, the assets of any covered 
financial company for which the Corporation has been appointed receiver, 
including any assets which the Corporation may acquire from itself as 
such receiver; or
    (2) Any claim relating to any act or omission of such covered 
financial company or the Corporation as receiver.



Sec.380.39  Contingent claims.

    (a) The Corporation as receiver shall not disallow a claim based on 
an obligation of the covered financial company solely because the 
obligation is contingent. To the extent the obligation is contingent, 
the receiver shall estimate the value of the claim, as such value is 
measured based upon the likelihood that such contingent obligation would 
become fixed and the probable magnitude thereof.
    (b) If the receiver repudiates a contingent obligation of a covered 
financial company consisting of a guarantee, letter of credit, loan 
commitment, or similar credit obligation, the actual direct compensatory 
damages for repudiation shall be no less than the estimated value of the 
claim as of the date the Corporation was appointed receiver of the 
covered financial company, as such value is measured based upon the 
likelihood that such contingent claim would become fixed and the 
probable magnitude thereof.
    (c) The Corporation as receiver shall estimate the value of a claim 
under paragraphs (a) or (b) of this section no later than 180 days after 
the claim is filed, unless such period is extended by a written 
agreement between the claimant and the receiver.
    (d) Except for a contingent claim that becomes absolute and fixed 
prior to the receiver's determination of the estimated value, such 
estimated value of a contingent claim shall be recognized as the allowed 
amount of the claim for purposes of distribution.
    (e) The estimated value of a contingent claim shall constitute the 
receiver's determination of the claim for purposes of Sec.380.38(d) 
and 12 U.S.C. 5390(a)(9)(D).



Sec. Sec.380.40-380.49  [Reserved]



Sec.380.50  Determination of secured claims.

    (a) In the case of a claim against a covered financial company that 
is secured by any property of the covered financial company, the 
Corporation as receiver shall determine the amount of the claim, whether 
the claimant's security interest is legally enforceable and perfected, 
the priority of the claimant's security interest, and the fair market 
value of the property that is subject to the security interest. The 
Corporation as receiver may treat the portion of the claim which exceeds 
an amount equal to the fair market value of such property as an 
unsecured claim.
    (b) The fair market value of any property of a covered financial 
company that secures a claim shall be determined in light of the purpose 
of the valuation and of the proposed disposition or use of such property 
and at the time of such proposed disposition or use.
    (c) The Corporation as receiver may recover from any property of a 
covered financial company that secures a claim the reasonable and 
necessary costs and expenses of preserving or disposing of such property 
to the extent of any benefit to the claimant, including the payment of 
all ad valorem property taxes with respect to such property.
    (d) To the extent that a claim is secured by property of a covered 
financial company and the value of such property, after any recovery 
under paragraph (c) of this section, is greater than the amount of such 
claim, there shall be allowed to the claimant a secured claim for 
interest on such claim and any reasonable fees, costs, or charges 
provided for under the agreement or State statute under which the claim 
arose to the extent of the value of such property.



Sec.380.51  Consent to certain actions.

    (a) In general. Any claimant alleging a legally valid and 
enforceable or perfected security interest in property of a covered 
financial company or control of any legally valid and enforceable 
security entitlement in respect of any asset held by the covered 
financial company for which the Corporation has

[[Page 373]]

been appointed receiver may seek the consent of the receiver for relief 
from the provisions of 12 U.S.C. 5390(c)(13)(C).
    (b) Contents of request. A request for consent of the Corporation as 
receiver for relief from the provisions of 12 U.S.C. 5390(c)(13)(C) 
shall be in writing and contain the following information:
    (1) The amount of the claim, with supporting documentation;
    (2) A description of the property that secures the claim, with 
supporting documentation of the claimant's interest in the property;
    (3) The value of the property, as established by an appraisal or 
other supporting documentation; and
    (4) The proposed disposition of the property by the claimant, 
including the expected date of such disposition.
    (c) Determination by receiver. The Corporation as receiver shall 
grant its consent to a request for relief from the provisions of 12 
U.S.C. 5390(c)(13)(C) if it determines that the claimant has a legally 
valid and enforceable or perfected security interest or other lien 
against the property of a covered financial company and the receiver 
will not use, sell, or lease the property. If the Corporation as 
receiver determines that it will use, sell, or lease such property and 
that adequate protection is necessary and appropriate, the receiver may 
provide adequate protection instead of granting consent.
    (d) Consent deemed granted. If the Corporation as receiver has not 
notified the claimant of the determination whether to grant or withhold 
consent under this section within 30 days after a request for consent 
has been submitted, consent shall be deemed to be granted.
    (e) Expiration by operation of law. Notwithstanding any 
determination by the Corporation as receiver to withhold consent under 
this section, the prohibitions described in 12 U.S.C. 5390(c)(13)(C)(i) 
are no longer applicable 90 days after the appointment of the receiver.
    (f) Limitations. Any consent granted by the Corporation as receiver 
under this section shall not act to waive or relinquish any rights 
granted to the Corporation in any capacity, pursuant to any other 
applicable law or any agreement or contract, and shall not be construed 
as waiving, limiting or otherwise affecting the rights or powers of the 
Corporation as receiver to take any action or to exercise any power not 
specifically mentioned, including but not limited to any rights, powers 
or remedies of the receiver regarding transfers taken in contemplation 
of the covered financial company's insolvency or with the intent to 
hinder, delay or defraud the covered financial company or the creditors 
of such company, or that is a fraudulent transfer under applicable law.
    (g) Exceptions. (1) This section shall not apply in the case of a 
contract that is repudiated or disaffirmed by the Corporation as 
receiver.
    (2) This section shall not apply to a director or officer liability 
insurance contract, a financial institution bond, the rights of parties 
to certain qualified financial contracts pursuant to 12 U.S.C. 
5390(c)(8), the rights of parties to netting contracts pursuant to 12 
U.S.C. 4401 et seq., or any extension of credit from any Federal reserve 
bank or the Corporation to any covered financial company or any security 
interest in the assets of a covered financial company securing any such 
extension of credit.



Sec.380.52  Adequate protection.

    (a) If the Corporation as receiver determines that it will use, 
sell, or lease or grant a security interest or other lien against 
property of the covered financial company that is subject to a security 
interest of a claimant, the receiver shall provide adequate protection 
by any of the following means:
    (1) Making a cash payment or periodic cash payments to the claimant 
to the extent that the sale, use, or lease of the property or the grant 
of a security interest or other lien against the property by the 
Corporation as receiver results in a decrease in the value of such 
claimant's security interest in the property;
    (2) Providing to the claimant an additional or replacement lien to 
the extent that the sale, use, or lease of the

[[Page 374]]

property or the grant of a security interest against the property by the 
Corporation as receiver results in a decrease in the value of the 
claimant's security interest in the property; or
    (3) Providing any other relief that will result in the realization 
by the claimant of the indubitable equivalent of the claimant's security 
interest in the property.
    (b) Adequate protection of the claimant's security interest will be 
presumed if the value of the property is not depreciating or is 
sufficiently greater than the amount of the claim so that the claimant's 
security interest is not impaired.



Sec.380.53  Repudiation of secured contract.

    To the extent that a contract to which a covered financial company 
is a party is secured by property of the covered financial company, the 
repudiation of the contract by the Corporation as receiver shall not be 
construed as permitting the avoidance of any legally enforceable and 
perfected security interest in the property, and the security interest 
shall secure any claim for repudiation damages.



PART 381_RESOLUTION PLANS--Table of Contents



Sec.
381.1 Authority and scope.
381.2 Definitions.
381.3 Resolution plan required.
381.4 Informational content of a resolution plan.
381.5 Review of resolution plans; resubmission of deficient resolution 
          plans.
381.6 Failure to cure deficiencies on resubmission of a resolution plan.
381.7 Consultation.
381.8 No limiting effect or private right of action; confidentiality of 
          resolution plans.
381.9 Enforcement.

    Authority: 12 U.S.C. 5365(d).

    Source: 76 FR 67334, Nov. 1, 2011, unless otherwise noted.



Sec.381.1  Authority and scope.

    (a) Authority. This part is issued pursuant to section 165(d)(8) of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-
Frank Act) (Pub. L. 111-203, 124 Stat. 1376, 1426-1427), 12 U.S.C. 
5365(d)(8), which requires the Board of Governors of the Federal Reserve 
System (Board) and the Federal Deposit Insurance Corporation 
(Corporation) to jointly issue rules implementing the provisions of 
section 165(d) of the Dodd-Frank Act.
    (b) Scope. This part applies to each covered company and establishes 
rules and requirements regarding the submission and content of a 
resolution plan, as well as procedures for review by the Board and 
Corporation of a resolution plan.



Sec.381.2  Definitions.

    For purposes of this part:
    (a) Bankruptcy Code means title 11 of the United States Code.
    (b) Company means a corporation, partnership, limited liability 
company, depository institution, business trust, special purpose entity, 
association, or similar organization, but does not include any 
organization, the majority of the voting securities of which are owned 
by the United States.
    (c) Control. A company controls another company when the first 
company, directly or indirectly, owns, or holds with power to vote, 25 
percent or more of any class of the second company's outstanding voting 
securities.
    (d) Core business lines means those business lines of the covered 
company, including associated operations, services, functions and 
support, that, in the view of the covered company, upon failure would 
result in a material loss of revenue, profit, or franchise value.
    (e) Council means the Financial Stability Oversight Council 
established by section 111 of the Dodd-Frank Act (12 U.S.C. 5321).
    (f) Covered company-- (1) In general. A ``covered company'' means:
    (i) Any nonbank financial company supervised by the Board;
    (ii) Any bank holding company, as that term is defined in section 2 
of the Bank Holding Company Act, as amended (12 U.S.C. 1841), and the 
Board's Regulation Y (12 CFR part 225), that has $50 billion or more in 
total consolidated assets, as determined based on the average of the 
company's four most recent Consolidated Financial Statements for Bank 
Holding Companies as reported on the Federal Reserve's Form FR Y-9C 
(``FR Y-9C''); and

[[Page 375]]

    (iii) Any foreign bank or company that is a bank holding company or 
is treated as a bank holding company under section 8(a) of the 
International Banking Act of 1978 (12 U.S.C. 3106(a)), and that has $50 
billion or more in total consolidated assets, as determined based on the 
foreign bank's or company's most recent annual or, as applicable, the 
average of the four most recent quarterly Capital and Asset Reports for 
Foreign Banking Organizations as reported on the Federal Reserve's Form 
FR Y-7Q (``FR Y-7Q'').
    (2) Once a covered company meets the requirements described in 
paragraph (f)(1)(ii) or (iii) of this section, the company shall remain 
a covered company for purposes of this part unless and until the company 
has less than $45 billion in total consolidated assets, as determined 
based on the--
    (i) Average total consolidated assets as reported on the company's 
four most recent FR Y-9Cs, in the case of a covered company described in 
paragraph (f)(1)(ii) of this section; or
    (ii) Total consolidated assets as reported on the company's most 
recent annual FR Y-7Q, or, as applicable, average total consolidated 
assets as reported on the company's four most recent quarterly FR Y-7Qs, 
in the case of a covered company described in paragraph (f)(1)(iii) of 
this section.Nothing in this paragraph (f)(2) shall preclude a company 
from becoming a covered company pursuant to paragraph (f)(1) of this 
section.
    (3) Multi-tiered holding company. In a multi-tiered holding company 
structure, covered company means the top-tier of the multi-tiered 
holding company only.
    (4) Asset threshold for bank holding companies and foreign banking 
organizations. The Board may, pursuant to a recommendation of the 
Council, raise any asset threshold specified in paragraph (f)(1)(ii) or 
(iii) of this section.
    (5) Exclusion. A bridge financial company chartered pursuant to 12 
U.S.C. 5390(h) shall not be deemed to be a covered company hereunder.
    (g) Critical operations means those operations of the covered 
company, including associated services, functions and support, the 
failure or discontinuance of which, in the view of the covered company 
or as jointly directed by the Board and the Corporation, would pose a 
threat to the financial stability of the United States.
    (h) Depository institution has the same meaning as in section 
3(c)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(1)) and 
includes a state-licensed uninsured branch, agency, or commercial 
lending subsidiary of a foreign bank.
    (i) Foreign banking organization means--
    (1) A foreign bank, as defined in section 1(b)(7) of the 
International Banking Act of 1978 (12 U.S.C. 3101(7)), that:
    (i) Operates a branch, agency, or commercial lending company 
subsidiary in the United States;
    (ii) Controls a bank in the United States; or
    (iii) Controls an Edge corporation acquired after March 5, 1987; and
    (2) Any company of which the foreign bank is a subsidiary.
    (j) Foreign-based company means any covered company that is not 
incorporated or organized under the laws of the United States.
    (k) Functionally regulated subsidiary has the same meaning as in 
section 5(c)(5) of the Bank Holding Company Act, as amended (12 U.S.C. 
1844(c)(5)).
    (l) Material entity means a subsidiary or foreign office of the 
covered company that is significant to the activities of a critical 
operation or core business line (as defined in this part).
    (m) Material financial distress with regard to a covered company 
means that:
    (1) The covered company has incurred, or is likely to incur, losses 
that will deplete all or substantially all of its capital, and there is 
no reasonable prospect for the company to avoid such depletion;
    (2) The assets of the covered company are, or are likely to be, less 
than its obligations to creditors and others; or
    (3) The covered company is, or is likely to be, unable to pay its 
obligations (other than those subject to a bona fide dispute) in the 
normal course of business.
    (n) Nonbank financial company supervised by the Board means a 
nonbank financial company or other company that the Council has 
determined under section 113 of the Dodd-Frank Act (12

[[Page 376]]

U.S.C. 5323) shall be supervised by the Board and for which such 
determination is still in effect.
    (o) Rapid and orderly resolution means a reorganization or 
liquidation of the covered company (or, in the case of a covered company 
that is incorporated or organized in a jurisdiction other than the 
United States, the subsidiaries and operations of such foreign company 
that are domiciled in the United States) under the Bankruptcy Code that 
can be accomplished within a reasonable period of time and in a manner 
that substantially mitigates the risk that the failure of the covered 
company would have serious adverse effects on financial stability in the 
United States.
    (p) Subsidiary means a company that is controlled by another 
company, and an indirect subsidiary is a company that is controlled by a 
subsidiary of a company.
    (q) United States means the United States and includes any state of 
the United States, the District of Columbia, any territory of the United 
States, Puerto Rico, Guam, American Samoa, and the Virgin Islands.



Sec.381.3  Resolution plan required.

    (a) Initial and annual resolution plans required. (1) Each covered 
company shall submit its initial resolution plan to the Board and the 
Corporation on or before the date set forth below (``Initial Submission 
Date''):
    (i) July 1, 2012, with respect to any covered company that, as of 
the effective date of this part, had $250 billion or more in total 
nonbank assets (or, in the case of a covered company that is a foreign-
based company, in total U.S. nonbank assets);
    (ii) July 1, 2013, with respect to any covered company that is not 
described in paragraph (a)(1)(i) of this section, and that, as of the 
effective date of this part had $100 billion or more in total nonbank 
assets (or, in the case of a covered company that is a foreign-based 
company, in total U.S. nonbank assets); and
    (iii) December 31, 2013, with respect to any other covered company 
that is a covered company as of the effective date of this part but that 
is not described in paragraph (a)(1)(i) or (ii) of this section.
    (2) A company that becomes a covered company after the effective 
date of this part shall submit its initial resolution plan no later than 
the next July 1 following the date the company becomes a covered 
company, provided such date occurs no earlier than 270 days after the 
date on which the company became a covered company.
    (3) After filing its initial resolution plan pursuant to paragraph 
(a)(1) or (2) of this section, each covered company shall annually 
submit a resolution plan to the Board and the Corporation on or before 
each anniversary date of its Initial Submission Date.
    (4) Notwithstanding anything to the contrary in this paragraph (a), 
the Board and Corporation may jointly determine that a covered company 
shall file its initial or annual resolution plan by a date other than as 
provided in this paragraph (a). The Board and the Corporation shall 
provide a covered company with written notice of a determination under 
this paragraph (a)(4) no later than 180 days prior to the date on which 
the Board and Corporation jointly determined to require the covered 
company to submit its resolution plan.
    (b) Authority to require interim updates and notice of material 
events--(1)In general. The Board and the Corporation may jointly require 
that a covered company file an update to a resolution plan submitted 
under paragraph (a) of this section, within a reasonable amount of time, 
as jointly determined by the Board and Corporation. The Board and the 
Corporation shall make a request pursuant to this paragraph (b)(1) in 
writing, and shall specify the portions or aspects of the resolution 
plan the covered company shall update.
    (2) Notice of material events. Each covered company shall provide 
the Board and the Corporation with a notice no later than 45 days after 
any event, occurrence, change in conditions or circumstances, or other 
change that results in, or could reasonably be foreseen to have, a 
material effect on the resolution plan of the covered company. Such 
notice should describe the event, occurrence or change and explain why 
the event, occurrence or

[[Page 377]]

change may require changes to the resolution plan. The covered company 
shall address any event, occurrence or change with respect to which it 
has provided notice pursuant to this paragraph (b)(2) in the following 
resolution plan submitted by the covered company.
    (3) Exception. A covered company shall not be required to file a 
notice under paragraph (b)(2) of this section if the date on which the 
covered company would be required to submit the notice under paragraph 
(b)(2) would be within 90 days prior to the date on which the covered 
company is required to file an annual resolution plan under paragraph 
(a) of this section.
    (c) Authority to require more frequent submissions or extend time 
period. The Board and Corporation may jointly:
    (1) Require that a covered company submit a resolution plan more 
frequently than required pursuant to paragraph (a) of this section; and
    (2) Extend the time period that a covered company has to submit a 
resolution plan or a notice following material events under paragraphs 
(a) and (b) of this section.
    (d) Access to information. In order to allow evaluation of the 
resolution plan, each covered company must provide the Board and the 
Corporation such information and access to personnel of the covered 
company as the Board and the Corporation jointly determine during the 
period for reviewing the resolution plan is necessary to assess the 
credibility of the resolution plan and the ability of the covered 
company to implement the resolution plan. The Board and the Corporation 
will rely to the fullest extent possible on examinations conducted by or 
on behalf of the appropriate Federal banking agency for the relevant 
company.
    (e) Board of directors approval of resolution plan. Prior to 
submission of a resolution plan under paragraph (a) of this section, the 
resolution plan of a covered company shall be approved by:
    (1) The board of directors of the covered company and noted in the 
minutes; or
    (2) In the case of a foreign-based covered company only, a delegee 
acting under the express authority of the board of directors of the 
covered company to approve the resolution plan.
    (f) Resolution plans provided to the Council.--The Board shall make 
the resolution plans and updates submitted by the covered company 
pursuant to this section available to the Council upon request.



Sec.381.4  Informational content of a resolution plan.

    (a) In general (1) Domestic covered companies. Except as otherwise 
provided in paragraph (a)(3) of this section, the resolution plan of a 
covered company that is organized or incorporated in the United States 
shall include the information specified in paragraphs (b) through (i) of 
this section with respect to the subsidiaries and operations that are 
domiciled in the United States as well as the foreign subsidiaries, 
offices, and operations of the covered company.
    (2) Foreign-based covered companies Except as otherwise provided in 
paragraph (a)(3) of the section, the resolution plan of a covered 
company that is organized or incorporated in a jurisdiction other than 
the United States (other than a bank holding company) or that is a 
foreign banking organization shall include:
    (i) The information specified in paragraphs (b) through (i) of this 
section with respect to the subsidiaries, branches and agencies, and 
critical operations and core business lines, as applicable, that are 
domiciled in the United States or conducted in whole or material part in 
the United States. With respect to the information specified in 
paragraph (g) of this section, the resolution plan of a foreign-based 
covered company shall also identify, describe in detail, and map to 
legal entity the interconnections and interdependencies among the U.S. 
subsidiaries, branches and agencies, and critical operations and core 
business lines of the foreign-based covered company and any foreign-
based affiliate; and
    (ii) A detailed explanation of how resolution planning for the 
subsidiaries, branches and agencies, and critical operations and core 
business lines of the foreign-based covered company that are domiciled 
in the United States or conducted in whole or material part in the 
United States is integrated into

[[Page 378]]

the foreign-based covered company's overall resolution or other 
contingency planning process.
    (3) Tailored resolution plan (i) Eligible covered company. Paragraph 
(a)(3)(ii) of this section applies to any covered company that as of 
December 31 of the calendar year prior to the date its resolution plan 
is required to be submitted under this part--
    (A) Has less than $100 billion in total nonbank assets (or, in the 
case of a covered company that is a foreign-based company, in total U.S. 
nonbank assets); and
    (B) The total insured depository institution assets of which 
comprise 85 percent or more of the covered company's total consolidated 
assets (or, in the case of a covered company that is a foreign-based 
company, the assets of the U.S. insured depository institution 
operations, branches, and agencies of which comprise 85 percent or more 
of such covered company's U.S. total consolidated assets).
    (ii) Tailored resolution plan elements. A covered company described 
in paragraph (a)(3)(i) of this section may file a resolution plan that 
is limited to the following items--
    (A) An executive summary, as specified in paragraph (b) of this 
section;
    (B) The information specified in paragraphs (c) through (f) and 
paragraph (h) of this section, but only with respect to the covered 
company and its nonbanking material entities and operations;
    (C) The information specified in paragraphs (g) and (i) of this 
section with respect to the covered company and all of its insured 
depository institutions (or, in the case of a covered company that is a 
foreign-based company, the U.S. insured depository institutions, 
branches, and agencies) and nonbank material entities and operations. 
The interconnections and interdependencies identified pursuant to (g) of 
this section shall be included in the analysis provided pursuant to 
paragraph (c) of this section.
    (iii) Notice. A covered company that meets the requirements of 
paragraph (a)(3)(i) of this section and that intends to submit a 
resolution plan pursuant to this paragraph (a)(3), shall provide the 
Board and Corporation with written notice of such intent and its 
eligibility under paragraph (a)(3)(i) no later than 270 days prior to 
the date on which the covered company is required to submit its 
resolution plan. Within 90 of receiving such notice, the Board and 
Corporation may jointly determine that the covered company must submit a 
resolution plan that meets some or all of the requirements as set forth 
in paragraph (a)(1) or (2) of this section, as applicable.
    (4) Required and prohibited assumptions. In preparing its plan for 
rapid and orderly resolution in the event of material financial distress 
or failure required by this part, a covered company shall:
    (i) Take into account that such material financial distress or 
failure of the covered company may occur under the baseline, adverse and 
severely adverse economic conditions provided to the covered company by 
the Board pursuant to 12 U.S.C. 5365(i)(1)(B); provided, however, a 
covered company may submit its initial resolution plan assuming the 
baseline conditions only, or, if a baseline scenario is not then 
available, a reasonable substitute developed by the covered company; and
    (ii) Not rely on the provision of extraordinary support by the 
United States or any other government to the covered company or its 
subsidiaries to prevent the failure of the covered company.
    (b) Executive summary. Each resolution plan of a covered company 
shall include an executive summary describing:
    (1) The key elements of the covered company's strategic plan for 
rapid and orderly resolution in the event of material financial distress 
at or failure of the covered company.
    (2) Material changes to the covered company's resolution plan from 
the company's most recently filed resolution plan (including any notices 
following a material event or updates to the resolution plan).
    (3) Any actions taken by the covered company since filing of the 
previous resolution plan to improve the effectiveness of the covered 
company's resolution plan or remediate or otherwise mitigate any 
material weaknesses or

[[Page 379]]

impediments to effective and timely execution of the resolution plan.
    (c) Strategic analysis. Each resolution plan shall include a 
strategic analysis describing the covered company's plan for rapid and 
orderly resolution in the event of material financial distress or 
failure of the covered company. Such analysis shall--
    (1) Include detailed descriptions of the--
    (i) Key assumptions and supporting analysis underlying the covered 
company's resolution plan, including any assumptions made concerning the 
economic or financial conditions that would be present at the time the 
covered company sought to implement such plan;
    (ii) Range of specific actions to be taken by the covered company to 
facilitate a rapid and orderly resolution of the covered company, its 
material entities, and its critical operations and core business lines 
in the event of material financial distress or failure of the covered 
company;
    (iii) Funding, liquidity and capital needs of, and resources 
available to, the covered company and its material entities, which shall 
be mapped to its critical operations and core business lines, in the 
ordinary course of business and in the event of material financial 
distress at or failure of the covered company;
    (iv) Covered company's strategy for maintaining operations of, and 
funding for, the covered company and its material entities, which shall 
be mapped to its critical operations and core business lines;
    (v) Covered company's strategy in the event of a failure or 
discontinuation of a material entity, core business line or critical 
operation, and the actions that will be taken by the covered company to 
prevent or mitigate any adverse effects of such failure or 
discontinuation on the financial stability of the United States; 
provided, however, if any such material entity is subject to an 
insolvency regime other than the Bankruptcy Code, a covered company may 
exclude that entity from its strategic analysis unless that entity 
either has $50 billion or more in total assets or conducts a critical 
operation; and
    (vi) Covered company's strategy for ensuring that any insured 
depository institution subsidiary of the covered company will be 
adequately protected from risks arising from the activities of any 
nonbank subsidiaries of the covered company (other than those that are 
subsidiaries of an insured depository institution);
    (2) Identify the time period(s) the covered company expects would be 
needed for the covered company to successfully execute each material 
aspect and step of the covered company's plan;
    (3) Identify and describe any potential material weaknesses or 
impediments to effective and timely execution of the covered company's 
plan;
    (4) Discuss the actions and steps the covered company has taken or 
proposes to take to remediate or otherwise mitigate the weaknesses or 
impediments identified by the covered company, including a timeline for 
the remedial or other mitigatory action; and
    (5) Provide a detailed description of the processes the covered 
company employs for:
    (i) Determining the current market values and marketability of the 
core business lines, critical operations, and material asset holdings of 
the covered company;
    (ii) Assessing the feasibility of the covered company's plans 
(including timeframes) for executing any sales, divestitures, 
restructurings, recapitalizations, or other similar actions contemplated 
in the covered company's resolution plan; and
    (iii) Assessing the impact of any sales, divestitures, 
restructurings, recapitalizations, or other similar actions on the 
value, funding, and operations of the covered company, its material 
entities, critical operations and core business lines.
    (d) Corporate governance relating to resolution planning. Each 
resolution plan shall:
    (1) Include a detailed description of:
    (i) How resolution planning is integrated into the corporate 
governance structure and processes of the covered company;

[[Page 380]]

    (ii) The covered company's policies, procedures, and internal 
controls governing preparation and approval of the covered company's 
resolution plan;
    (iii) The identity and position of the senior management official(s) 
of the covered company that is primarily responsible for overseeing the 
development, maintenance, implementation, and filing of the covered 
company's resolution plan and for the covered company's compliance with 
this part; and
    (iv) The nature, extent, and frequency of reporting to senior 
executive officers and the board of directors of the covered company 
regarding the development, maintenance, and implementation of the 
covered company's resolution plan;
    (2) Describe the nature, extent, and results of any contingency 
planning or similar exercise conducted by the covered company since the 
date of the covered company's most recently filed resolution plan to 
assess the viability of or improve the resolution plan of the covered 
company; and
    (3) Identify and describe the relevant risk measures used by the 
covered company to report credit risk exposures both internally to its 
senior management and board of directors, as well as any relevant risk 
measures reported externally to investors or to the covered company's 
appropriate Federal regulator.
    (e) Organizational structure and related information. Each 
resolution plan shall--
    (1) Provide a detailed description of the covered company's 
organizational structure, including:
    (i) A hierarchical list of all material entities within the covered 
company's organization (including legal entities that directly or 
indirectly hold such material entities) that:
    (A) Identifies the direct holder and the percentage of voting and 
nonvoting equity of each legal entity and foreign office listed; and
    (B) The location, jurisdiction of incorporation, licensing, and key 
management associated with each material legal entity and foreign office 
identified;
    (ii) A mapping of the covered company's critical operations and core 
business lines, including material asset holdings and liabilities 
related to such critical operations and core business lines, to material 
entities;
    (2) Provide an unconsolidated balance sheet for the covered company 
and a consolidating schedule for all material entities that are subject 
to consolidation by the covered company;
    (3) Include a description of the material components of the 
liabilities of the covered company, its material entities, critical 
operations and core business lines that, at a minimum, separately 
identifies types and amounts of the short-term and long-term 
liabilities, the secured and unsecured liabilities, and subordinated 
liabilities;
    (4) Identify and describe the processes used by the covered company 
to:
    (i) Determine to whom the covered company has pledged collateral;
    (ii) Identify the person or entity that holds such collateral; and
    (iii) Identify the jurisdiction in which the collateral is located, 
and, if different, the jurisdiction in which the security interest in 
the collateral is enforceable against the covered company;
    (5) Describe any material off-balance sheet exposures (including 
guarantees and contractual obligations) of the covered company and its 
material entities, including a mapping to its critical operations and 
core business lines;
    (6) Describe the practices of the covered company, its material 
entities and its core business lines related to the booking of trading 
and derivatives activities;
    (7) Identify material hedges of the covered company, its material 
entities, and its core business lines related to trading and derivative 
activities, including a mapping to legal entity;
    (8) Describe the hedging strategies of the covered company;
    (9) Describe the process undertaken by the covered company to 
establish exposure limits;
    (10) Identify the major counterparties of the covered company and 
describe the interconnections, interdependencies and relationships with 
such major counterparties;
    (11) Analyze whether the failure of each major counterparty would 
likely have an adverse impact on or result in

[[Page 381]]

the material financial distress or failure of the covered company; and
    (12) Identify each trading, payment, clearing, or settlement system 
of which the covered company, directly or indirectly, is a member and on 
which the covered company conducts a material number or value amount of 
trades or transactions. Map membership in each such system to the 
covered company's material entities, critical operations and core 
business lines.
    (f) Management information systems. (1) Each resolution plan shall 
include--
    (i) A detailed inventory and description of the key management 
information systems and applications, including systems and applications 
for risk management, accounting, and financial and regulatory reporting, 
used by the covered company and its material entities. The description 
of each system or application provided shall identify the legal owner or 
licensor, the use or function of the system or application, service 
level agreements related thereto, any software and system licenses, and 
any intellectual property associated therewith;
    (ii) A mapping of the key management information systems and 
applications to the material entities, critical operations and core 
business lines of the covered company that use or rely on such systems 
and applications;
    (iii) An identification of the scope, content, and frequency of the 
key internal reports that senior management of the covered company, its 
material entities, critical operations and core business lines use to 
monitor the financial health, risks, and operation of the covered 
company, its material entities, critical operations and core business 
lines; and
    (iv) A description of the process for the appropriate supervisory or 
regulatory agencies to access the management information systems and 
applications identified in paragraph (f) of this section; and
    (v) A description and analysis of--
    (A) The capabilities of the covered company's management information 
systems to collect, maintain, and report, in a timely manner to 
management of the covered company, and to the Board, the information and 
data underlying the resolution plan; and
    (B) Any deficiencies, gaps or weaknesses in such capabilities, and a 
description of the actions the covered company intends to take to 
promptly address such deficiencies, gaps, or weaknesses, and the time 
frame for implementing such actions.
    (2) The Board will use its examination authority to review the 
demonstrated capabilities of each covered company to satisfy the 
requirements of paragraph (f)(1)(v) of this section. The Board will 
share with the Corporation information regarding the capabilities of the 
covered company to collect, maintain, and report in a timely manner 
information and data underlying the resolution plan.
    (g) Interconnections and interdependencies. To the extent not 
elsewhere provided, identify and map to the material entities the 
interconnections and interdependencies among the covered company and its 
material entities, and among the critical operations and core business 
lines of the covered company that, if disrupted, would materially affect 
the funding or operations of the covered company, its material entities, 
or its critical operations or core business lines. Such interconnections 
and interdependencies may include:
    (1) Common or shared personnel, facilities, or systems (including 
information technology platforms, management information systems, risk 
management systems, and accounting and recordkeeping systems);
    (2) Capital, funding, or liquidity arrangements;
    (3) Existing or contingent credit exposures;
    (4) Cross-guarantee arrangements, cross-collateral arrangements, 
cross-default provisions, and cross-affiliate netting agreements;
    (5) Risk transfers; and
    (6) Service level agreements.
    (h) Supervisory and regulatory information. Each resolution plan 
shall--
    (1) Identify any:
    (i) Federal, state, or foreign agency or authority (other than a 
Federal banking agency) with supervisory authority or responsibility for 
ensuring the safety and soundness of the covered company, its material 
entities, critical operations and core business lines; and

[[Page 382]]

    (ii) Other Federal, state, or foreign agency or authority (other 
than a Federal banking agency) with significant supervisory or 
regulatory authority over the covered company, and its material entities 
and critical operations and core business lines.
    (2) Identify any foreign agency or authority responsible for 
resolving a foreign-based material entity and critical operations or 
core business lines of the covered company; and
    (3) Include contact information for each agency identified in 
paragraphs (h)(1) and (2) of this section.
    (i) Contact information. Each resolution plan shall identify a 
senior management official at the covered company responsible for 
serving as a point of contact regarding the resolution plan of the 
covered company, and include contact information (including phone 
number, email address, and physical address) for a senior management 
official of the material entities of the covered company.
    (j) Inclusion of previously submitted resolution plan informational 
elements by reference. An annual submission of or update to a resolution 
plan submitted by a covered company may include by reference 
informational elements (but not strategic analysis or executive summary 
elements) from a resolution plan previously submitted by the covered 
company to the Board and the Corporation, provided that:
    (1) The resolution plan seeking to include informational elements by 
reference clearly indicates:
    (i) The informational element the covered company is including by 
reference; and
    (ii) Which of the covered company's previously submitted resolution 
plan(s) originally contained the information the covered company is 
including by reference; and
    (2) The covered company certifies that the information the covered 
company is including by reference remains accurate.
    (k) Exemptions. The Board and the Corporation may jointly exempt a 
covered company from one or more of the requirements of this section.



Sec.381.5  Review of resolution plans; resubmission of deficient
resolution plans.

    (a) Acceptance of submission and review. (1) The Board and 
Corporation shall review a resolution plan submitted under section this 
subpart within 60 days.
    (2) If the Board and Corporation jointly determine within the time 
described in paragraph (a)(1) of this section that a resolution plan is 
informationally incomplete or that substantial additional information is 
necessary to facilitate review of the resolution plan:
    (i) The Board and Corporation shall jointly inform the covered 
company in writing of the area(s) in which the resolution plan is 
informationally incomplete or with respect to which additional 
information is required; and
    (ii) The covered company shall resubmit an informationally complete 
resolution plan or such additional information as jointly requested to 
facilitate review of the resolution plan no later than 30 days after 
receiving the notice described in paragraph (a)(2)(i) of this section, 
or such other time period as the Board and Corporation may jointly 
determine.
    (b) Joint determination regarding deficient resolution plans. If the 
Board and Corporation jointly determine that the resolution plan of a 
covered company submitted under Sec.381.3(a) is not credible or would 
not facilitate an orderly resolution of the covered company under the 
Bankruptcy Code, the Board and Corporation shall jointly notify the 
covered company in writing of such determination. Any joint notice 
provided under this paragraph shall identify the aspects of the 
resolution plan that the Board and Corporation jointly determined to be 
deficient.
    (c) Resubmission of a resolution plan. Within 90 days of receiving a 
notice of deficiencies issued pursuant to paragraph (b) of this section, 
or such shorter or longer period as the Board and Corporation may 
jointly determine, a covered company shall submit a revised resolution 
plan to the Board and Corporation that addresses the deficiencies 
jointly identified by the Board and Corporation, and that discusses in 
detail:

[[Page 383]]

    (1) The revisions made by the covered company to address the 
deficiencies jointly identified by the Board and the Corporation;
    (2) Any changes to the covered company's business operations and 
corporate structure that the covered company proposes to undertake to 
facilitate implementation of the revised resolution plan (including a 
timeline for the execution of such planned changes); and
    (3) Why the covered company believes that the revised resolution 
plan is credible and would result in an orderly resolution of the 
covered company under the Bankruptcy Code.
    (d) Extensions of time. Upon their own initiative or a written 
request by a covered company, the Board and Corporation may jointly 
extend any time period under this section. Each extension request shall 
be supported by a written statement of the covered company describing 
the basis and justification for the request.



Sec.381.6  Failure to cure deficiencies on resubmission of
a resolution plan.

    (a) In general. The Board and Corporation may jointly determine that 
a covered company or any subsidiary of a covered company shall be 
subject to more stringent capital, leverage, or liquidity requirements, 
or restrictions on the growth, activities, or operations of the covered 
company or the subsidiary if:
    (1) The covered company fails to submit a revised resolution plan 
under Sec.381.5(c) within the required time period; or
    (2) The Board and the Corporation jointly determine that a revised 
resolution plan submitted under Sec.381.5(c) does not adequately 
remedy the deficiencies jointly identified by the Board and the 
Corporation under Sec.381.5(b).
    (b) Duration of requirements or restrictions.--Any requirements or 
restrictions imposed on a covered company or a subsidiary thereof 
pursuant to paragraph (a) of this section shall cease to apply to the 
covered company or subsidiary, respectively, on the date that the Board 
and the Corporation jointly determine the covered company has submitted 
a revised resolution plan that adequately remedies the deficiencies 
jointly identified by the Board and the Corporation under Sec.
381.5(b).
    (c) Divestiture. The Board and Corporation, in consultation with the 
Council, may jointly, by order, direct the covered company to divest 
such assets or operations as are jointly identified by the Board and 
Corporation if:
    (1) The Board and Corporation have jointly determined that the 
covered company or a subsidiary thereof shall be subject to requirements 
or restrictions pursuant to paragraph (a) of this section; and
    (2) The covered company has failed, within the 2-year period 
beginning on the date on which the determination to impose such 
requirements or restrictions under paragraph (a) of this section was 
made, to submit a revised resolution plan that adequately remedies the 
deficiencies jointly identified by the Board and the Corporation under 
Sec.381.5(b); and
    (3) The Board and Corporation jointly determine that the divestiture 
of such assets or operations is necessary to facilitate an orderly 
resolution of the covered company under the Bankruptcy Code in the event 
the company was to fail.



Sec.381.7  Consultation.

    Prior to issuing any notice of deficiencies under Sec.381.5(b), 
determining to impose requirements or restrictions under Sec.381.6(a), 
or issuing a divestiture order pursuant to Sec.381.6(c) with respect 
to a covered company that is likely to have a significant impact on a 
functionally regulated subsidiary or a depository institution subsidiary 
of the covered company, the Board--
    (a) Shall consult with each Council member that primarily supervises 
any such subsidiary; and
    (b) May consult with any other Federal, state, or foreign supervisor 
as the Board considers appropriate.



Sec.381.8  No limiting effect or private right of action; confidentiality of resolution plans.

    (a) No limiting effect on bankruptcy or other resolution 
proceedings. A resolution plan submitted pursuant to this part shall not 
have any binding effect on:

[[Page 384]]

    (1) A court or trustee in a proceeding commenced under the 
Bankruptcy Code;
    (2) A receiver appointed under title II of the Dodd-Frank Act (12 
U.S.C. 5381 et seq.);
    (3) A bridge financial company chartered pursuant to 12 U.S.C. 
5390(h); or
    (4) Any other authority that is authorized or required to resolve a 
covered company (including any subsidiary or affiliate thereof) under 
any other provision of Federal, state, or foreign law.
    (b) No private right of action. Nothing in this part creates or is 
intended to create a private right of action based on a resolution plan 
prepared or submitted under this part or based on any action taken by 
the Board or the Corporation with respect to any resolution plan 
submitted under this part.
    (c) Form of resolution plans. Each resolution plan of a covered 
company shall be divided into a public section and a confidential 
section. Each covered company shall segregate and separately identify 
the public section from the confidential section. The public section 
shall consist of an executive summary of the resolution plan that 
describes the business of the covered company and includes, to the 
extent material to an understanding of the covered company:
    (1) The names of material entities;
    (2) A description of core business lines;
    (3) Consolidated or segment financial information regarding assets, 
liabilities, capital and major funding sources;
    (4) A description of derivative activities and hedging activities;
    (5) A list of memberships in material payment, clearing and 
settlement systems;
    (6) A description of foreign operations;
    (7) The identities of material supervisory authorities;
    (8) The identities of the principal officers;
    (9) A description of the corporate governance structure and 
processes related to resolution planning;
    (10) A description of material management information systems; and
    (11) A description, at a high level, of the covered company's 
resolution strategy, covering such items as the range of potential 
purchasers of the covered company, its material entities and core 
business lines.
    (d) Confidential treatment of resolution plans. (1) The 
confidentiality of resolution plans and related materials shall be 
determined in accordance with applicable exemptions under the Freedom of 
Information Act (5 U.S.C. 552(b)) and the Board's Rules Regarding 
Availability of Information (12 CFR part 261), and the Corporation's 
Disclosure of Information Rules (12 CFR part 309).
    (2) Any covered company submitting a resolution plan or related 
materials pursuant to this part that desires confidential treatment of 
the information under 5 U.S.C. 552(b)(4), the Board's Rules Regarding 
Availability of Information (12 CFR part 261), and the Corporation's 
Disclosure of Information Rules (12 CFR part 309) may file a request for 
confidential treatment in accordance with those rules.
    (3) To the extent permitted by law, information comprising the 
Confidential Section of a resolution plan will be treated as 
confidential.
    (4) To the extent permitted by law, the submission of any nonpublic 
data or information under this part shall not constitute a waiver of, or 
otherwise affect, any privilege arising under Federal or state law 
(including the rules of any Federal or state court) to which the data or 
information is otherwise subject. Privileges that apply to resolution 
plans and related materials are protected pursuant to Section 18(x) of 
the FDI Act, 12 U.S.C. 1828(x).



Sec.381.9  Enforcement.

    The Board and Corporation may jointly enforce an order jointly 
issued by the Board and Corporation under Sec.3816(a) or 381.6(c) of 
this part. The Board, in consultation with the Corporation, may take any 
action to address any violation of this part by a covered company under 
section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818).

[[Page 385]]



PART 382_RESTRICTIONS ON QUALIFIED FINANCIAL CONTRACTS--
Table of Contents



Sec.
382.1 Definitions.
382.2 Applicability.
382.3 U.S. Special resolution regimes.
382.4 Insolvency proceedings.
382.5 Approval of enhanced creditor protection conditions.
382.6 [Reserved]
382.7 Exclusion of certain QFCs.

    Authority: 12 U.S.C. 1816, 1818, 1819, 1820(g) 1828, 1828(m), 1831n, 
1831o,1831p-l, 1831(u), 1831w.

    Source: 82 FR 50262, Oct. 30, 2017, unless otherwise noted.



Sec.382.1  Definitions.

    Affiliate has the same meaning as in section 12 U.S.C. 1813(w).
    Central counterparty (CCP) has the same meaning as in Sec.324.2 of 
this chapter.
    Chapter 11 proceeding means a proceeding under Chapter 11 of Title 
11, United States Code (11 U.S.C. 1101-74).
    Consolidated affiliate means an affiliate of another company that:
    (1) Either consolidates the other company, or is consolidated by the 
other company, on financial statements prepared in accordance with U.S. 
Generally Accepted Accounting Principles, the International Financial 
Reporting Standards, or other similar standards;
    (2) Is, along with the other company, consolidated with a third 
company on a financial statement prepared in accordance with principles 
or standards referenced in paragraph (1) of this definition; or
    (3) For a company that is not subject to principles or standards 
referenced in paragraph (1), if consolidation as described in paragraph 
(1) or (2) of this definition would have occurred if such principles or 
standards had applied.
    Control has the same meaning as in section 3(w) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(w)).
    Covered bank means a covered bank as defined by the Office of the 
Comptroller of the Currency in 12 CFR part 47.
    Covered entity means a covered entity as defined by the Federal 
Reserve Board in 12 CFR 252.82.
    Covered QFC means a QFC as defined in Sec.382.2 of this part.
    Credit enhancement means a QFC of the type set forth in sections 
210(c)(8)(D)(ii)(XII), (iii)(X), (iv)(V), (v)(VI), or (vi)(VI) of Title 
II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 
U.S.C. 5390(c)(8)(D)(ii)(XII), (iii)(X), (iv)(V), (v)(VI), or (vi)(VI)) 
or a credit enhancement that the Federal Deposit Insurance Corporation 
determines is a QFC pursuant to section 210(c)(8)(D)(i) of Title II of 
the act (12 U.S.C. 5390(c)(8)(D)(i)).
    Default right means:
    (1) With respect to a QFC, any
    (i) Right of a party, whether contractual or otherwise (including, 
without limitation, rights incorporated by reference to any other 
contract, agreement, or document, and rights afforded by statute, civil 
code, regulation, and common law), to liquidate, terminate, cancel, 
rescind, or accelerate such agreement or transactions thereunder, set 
off or net amounts owing in respect thereto (except rights related to 
same-day payment netting), exercise remedies in respect of collateral or 
other credit support or property related thereto (including the purchase 
and sale of property), demand payment or delivery thereunder or in 
respect thereof (other than a right or operation of a contractual 
provision arising solely from a change in the value of collateral or 
margin or a change in the amount of an economic exposure), suspend, 
delay, or defer payment or performance thereunder, or modify the 
obligations of a party thereunder, or any similar rights; and
    (ii) Right or contractual provision that alters the amount of 
collateral or margin that must be provided with respect to an exposure 
thereunder, including by altering any initial amount, threshold amount, 
variation margin, minimum transfer amount, the margin value of 
collateral, or any similar amount, that entitles a party to demand the 
return of any collateral or margin transferred by it to the other party 
or a custodian or that modifies a transferee's right to reuse collateral 
or margin (if such right previously existed), or any similar rights, in 
each case, other than a right or operation of

[[Page 386]]

a contractual provision arising solely from a change in the value of 
collateral or margin or a change in the amount of an economic exposure;
    (2) With respect to Sec.382.4, does not include any right under a 
contract that allows a party to terminate the contract on demand or at 
its option at a specified time, or from time to time, without the need 
to show cause.
    FDI Act proceeding means a proceeding in which the Federal Deposit 
Insurance Corporation is appointed as conservator or receiver under 
section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821).
    FDI Act stay period means, in connection with an FDI Act proceeding, 
the period of time during which a party to a QFC with a party that is 
subject to an FDI Act proceeding may not exercise any right that the 
party that is not subject to an FDI Act proceeding has to terminate, 
liquidate, or net such QFC, in accordance with section 11(e) of the 
Federal Deposit Insurance Act (12 U.S.C. 1821(e)) and any implementing 
regulations.
    Financial counterparty means a person that is:
    (1)(i) A bank holding company or an affiliate thereof; a savings and 
loan holding company as defined in section 10(n) of the Home Owners' 
Loan Act (12 U.S.C. 1467a(n)); a U.S. intermediate holding company that 
is established or designated for purposes of compliance with 12 CFR 
252.153; or a nonbank financial institution supervised by the Board of 
Governors of the Federal Reserve System under Title I of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (12 U.S.C. 5323);
    (ii) A depository institution as defined, in section 3(c) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(c)); an organization that 
is organized under the laws of a foreign country and that engages 
directly in the business of banking outside the United States; a Federal 
credit union or State credit union as defined in section 2 of the 
Federal Credit Union Act (12 U.S.C. 1752(1) and (6)); an institution 
that functions solely in a trust or fiduciary capacity as described in 
section 2(c)(2)(D) of the Bank Holding Company Act (12 U.S.C. 1841 
(c)(2)(D)); an industrial loan company, an industrial bank, or other 
similar institution described in section 2(c)(2)(H) of the Bank Holding 
Company Act (12 U.S.C. 1841(c)(2)(H));
    (iii) An entity that is State-licensed or registered as;
    (A) A credit or lending entity, including a finance company; money 
lender; installment lender; consumer lender or lending company; mortgage 
lender, broker, or bank; motor vehicle title pledge lender; payday or 
deferred deposit lender; premium finance company; commercial finance or 
lending company; or commercial mortgage company; except entities 
registered or licensed solely on account of financing the entity's 
direct sales of goods or services to customers;
    (B) A money services business, including a check casher; money 
transmitter; currency dealer or exchange; or money order or traveler's 
check issuer;
    (iv) A regulated entity as defined in section 1303(20) of the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 
as amended (12 U.S.C. 4502(20)) or any entity for which the Federal 
Housing Finance Agency or its successor is the primary Federal 
regulator;
    (v) Any institution chartered in accordance with the Farm Credit Act 
of 1971, as amended, 12 U.S.C. 2001 et seq. that is regulated by the 
Farm Credit Administration;
    (vi) Any entity registered with the Commodity Futures Trading 
Commission as a swap dealer or major swap participant pursuant to the 
Commodity Exchange Act of 1936 (7 U.S.C. 1 et seq.), or an entity that 
is registered with the U.S. Securities and Exchange Commission as a 
security-based swap dealer or a major security-based swap participant 
pursuant to the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.);
    (vii) A securities holding company within the meaning specified in 
section 618 of the Dodd-Frank Wall Street Reform and Consumer Protection 
act (12 U.S.C. 1850a); a broker or dealer as defined in sections 3(a)(4) 
and 3(a)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(45); an investment adviser as defined in section 202(a) of the 
Investment Advisers Act of 1940 (15

[[Page 387]]

U.S.C. 80b-2(a)); an investment company registered with the U.S. 
Securities and Exchange Commission under the Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.); or a company that has elected to be 
regulated as a business development company pursuant to section 54(a) of 
the Investment Company Act of 1940 (15 U.S.C. 80a-53(a));
    (viii) A private fund as defined in section 202(a) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2(a)); an entity that would be an 
investment company under section 3 of the Investment Company Act of 1940 
(15 U.S.C. 80a-3) but for section 3(c)(5)(C); or an entity that is 
deemed not to be an investment company under section 3 of the Investment 
Company Act of 1940 pursuant to Investment Company Act Rule 3a-7 (17 CFR 
270.3a-7) of the U.S. Securities and Exchange Commission;
    (ix) A commodity pool, a commodity pool operator, or a commodity 
trading advisor as defined, respectively, in section 1a(10), 1a(11), and 
1a(12) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(10), 1a(11), 
and 1a(12)); a floor broker, a floor trader, or introducing broker as 
defined, respectively, in 1a(22), 1a(23) and 1a(31) of the Commodity 
Exchange Act of 1936 (7 U.S.C. 1a(22), 1a(23), and 1a(31)); or a futures 
commission merchant as defined in 1a(28) of the Commodity Exchange Act 
of 1936 (7 U.S.C. 1a(28));
    (x) An employee benefit plan as defined in paragraphs (3) and (32) 
of section 3 of the Employee Retirement Income and Security Act of 1974 
(29 U.S.C. 1002);
    (xi) An entity that is organized as an insurance company, primarily 
engaged in writing insurance or reinsuring risks underwritten by 
insurance companies, or is subject to supervision as such by a State 
insurance regulator or foreign insurance regulator; or
    (xii) An entity that would be a financial counterparty described in 
paragraphs (1)(i) through (xi) of this definition, if the entity were 
organized under the laws of the United States or any State thereof.
    (2) The term ``financial counterparty'' does not include any 
counterparty that is:
    (i) A sovereign entity;
    (ii) A multilateral development bank; or
    (iii) The Bank for International Settlements.
    Financial market utility (FMU) means any person, regardless of the 
jurisdiction in which the person is located or organized, that manages 
or operates a multilateral system for the purpose of transferring, 
clearing, or settling payments, securities, or other financial 
transactions among financial institutions or between financial 
institutions and the person, but does not include:
    (1) Designated contract markets, registered futures associations, 
swap data repositories, and swap execution facilities registered under 
the Commodity Exchange Act (7 U.S.C. 1 et seq.), or national securities 
exchanges, national securities associations, alternative trading 
systems, security-based swap data repositories, and swap execution 
facilities registered under the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.), solely by reason of their providing facilities for 
comparison of data respecting the terms of settlement of securities or 
futures transactions effected on such exchange or by means of any 
electronic system operated or controlled by such entities, provided that 
the exclusions in this clause apply only with respect to the activities 
that require the entity to be so registered; or
    (2) Any broker, dealer, transfer agent, or investment company, or 
any futures commission merchant, introducing broker, commodity trading 
advisor, or commodity pool operator, solely by reason of functions 
performed by such institution as part of brokerage, dealing, transfer 
agency, or investment company activities, or solely by reason of acting 
on behalf of a FMU or a participant therein in connection with the 
furnishing by the FMU of services to its participants or the use of 
services of the FMU by its participants, provided that services 
performed by such institution do not constitute critical risk management 
or processing functions of the FMU.
    Investment advisory contract means any contract or agreement whereby 
a person agrees to act as investment adviser to or to manage any 
investment or trading account of another person.

[[Page 388]]

    Master agreement means a QFC of the type set forth in sections 
210(c)(8)(D)(ii)(XI), (iii)(IX), (iv)(IV), (v)(V), or (vi)(V) of Title 
II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 
U.S.C. 5390(c)(8)(D)(ii)(XI), (iii)(IX), (iv)(IV), (v)(V), or (vi)(V)) 
or a master agreement that the Federal Deposit Insurance Corporation 
determines is a QFC pursuant to section 210(c)(8)(D)(i) of Title II of 
the act (12 U.S.C. 5390(c)(8)(D)(i)).
    Person has the same meaning as in 12 CFR 225.2.
    Qualified financial contract (QFC) has the same meaning as in 
section 210(c)(8)(D) of Title II of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5390(c)(8)(D)).
    Retail customer or counterparty has the same meaning as in Sec.
329.3 of this chapter.
    Small financial institution means a company that:
    (1) Is organized as a bank, as defined in section 3(a) of the 
Federal Deposit Insurance Act, the deposits of which are insured by the 
Federal Deposit Insurance Corporation; a savings association, as defined 
in section 3(b) of the Federal Deposit Insurance Act, the deposits of 
which are insured by the Federal Deposit Insurance Corporation; a farm 
credit system institution chartered under the Farm Credit Act of 1971; 
or an insured Federal credit union or State-chartered credit union under 
the Federal Credit Union Act; and
    (2) Has total assets of $10,000,000,000 or less on the last day of 
the company's most recent fiscal year.
    State means any State, commonwealth, territory, or possession of the 
United States, the District of Columbia, the Commonwealth of Puerto 
Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, 
Guam, or the United States Virgin Islands.
    Subsidiary of a covered FSI means any subsidiary of a covered FSI as 
defined in 12 U.S.C. 1813(w).
    U.S. agency has the same meaning as the term ``agency'' in 12 U.S.C. 
3101.
    U.S. branch has the same meaning as the term ``branch'' in 12 U.S.C. 
3101.
    U.S. special resolution regimes means the Federal Deposit Insurance 
Act (12 U.S.C. 1811-1835a) and regulations promulgated thereunder and 
Title II of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act (12 U.S.C. 5381-5394) and regulations promulgated thereunder.

[82 FR 50261, 50267, Oct. 30, 2017; 82 FR 61443, Dec. 28, 2017]



Sec.382.2  Applicability.

    (a) General requirement. A covered FSI must ensure that each covered 
QFC conforms to the requirements of Sec. Sec.382.3 and 382.4 of this 
part.
    (b) Covered FSI. For purposes of this part a covered FSI means
    (1) Any State savings association or State non-member bank (as 
defined in the Federal Deposit Insurance Act, 12 U.S.C. 1813(e)(2)) that 
is a direct or indirect subsidiary of:
    (i) A global systemically important bank holding company that has 
been designated pursuant to Sec.252.82(a)(1) of the Federal Reserve 
Board's Regulation YY (12 CFR 252.82); or
    (ii) A global systemically important foreign banking organization 
that has been designated pursuant to subpart I of 12 CFR part 252 (FRB 
Regulation YY), and
    (2) Any subsidiary of a covered FSI other than:
    (i) A subsidiary that is owned in satisfaction of debt previously 
contracted in good faith;
    (ii) A portfolio concern that is a small business investment 
company, as defined in section 103(3) of the Small Business Investment 
Act of 1958 (15 U.S.C. 662), or that has received from the Small 
Business Administration notice to proceed to qualify for a license as a 
Small Business Investment Company, which notice or license has not been 
revoked; or
    (iii) A subsidiary designed to promote the public welfare, of the 
type permitted under paragraph (11) of section 5136 of the Revised 
Statutes of the United States (12 U.S.C. 24), including the welfare of 
low- to moderate-income communities or families (such as providing 
housing, services, or jobs).
    (c) Covered QFCs. For purposes of this part, a covered QFC is:

[[Page 389]]

    (1) With respect to a covered FSI that is a covered FSI on January 
1, 2018, an in-scope QFC that the covered FSI:
    (i) Enters, executes, or otherwise becomes a party to on or after 
January 1, 2019; or
    (ii) Entered, executed, or otherwise became a party to before 
January 1, 2019, if the covered FSI or any affiliate that is a covered 
entity, covered bank, or covered FSI also enters, executes, or otherwise 
becomes a party to a QFC with the same person or a consolidated 
affiliate of the same person on or after January 1, 2019.
    (2) With respect to a covered FSI that becomes a covered FSI after 
January 1, 2018, an in-scope QFC that the covered FSI:
    (i) Enters, executes, or otherwise becomes a party to on or after 
the later of the date the covered FSI first becomes a covered FSI and 
January 1, 2019; or
    (ii) Entered, executed, or otherwise became a party to before the 
date identified in paragraph (c)(2)(i) of this section with respect to 
the covered FSI, if the covered FSI or any affiliate that is a covered 
entity, covered bank or covered FSI also enters, executes, or otherwise 
becomes a party to a QFC with the same person or consolidated affiliate 
of the same person on or after the date identified in paragraph 
(c)(2)(i) of this section with respect to the covered FSI.
    (d) In-scope QFCs. An in-scope QFC is a QFC that explicitly:
    (1) Restricts the transfer of a QFC (or any interest or obligation 
in or under, or any property securing, the QFC) from a covered FSI; or
    (2) Provides one or more default rights with respect to a QFC that 
may be exercised against a covered FSI.
    (e) Rules of construction. For purposes of this part,
    (1) A covered FSI does not become a party to a QFC solely by acting 
as agent with respect to the QFC; and
    (2) The exercise of a default right with respect to a covered QFC 
includes the automatic or deemed exercise of the default right pursuant 
to the terms of the QFC or other arrangement.
    (f) Initial applicability of requirements for covered QFCs. (1) With 
respect to each of its covered QFCs, a covered FSI that is a covered FSI 
on January 1, 2018 must conform the covered QFC to the requirements of 
this part by:
    (i) January 1, 2019, if each party to the covered QFC is a covered 
entity, covered bank, or covered FSI.
    (ii) July 1, 2019, if each party to the covered QFC (other than the 
covered FSI) is a financial counterparty that is not a covered entity, 
covered bank or covered FSI; or
    (iii) January 1, 2020, if a party to the covered QFC (other than the 
covered FSI) is not described in paragraph (f)(1)(i) or (ii) of this 
section or if, notwithstanding paragraph (f)(1)(ii), a party to the 
covered QFC (other than the covered FSI) is a small financial 
institution.
    (2) With respect to each of its covered QFCs, a covered FSI that is 
not a covered FSI on January 1, 2018 must conform the covered QFC to the 
requirements of this part by:
    (i) The first day of the calendar quarter immediately following 1 
year after the date the covered FSI first becomes a covered FSI if each 
party to the covered QFC is a covered entity, covered bank, or covered 
FSI;
    (ii) The first day of the calendar quarter immediately following 18 
months from the date the covered FSI first becomes a covered FSI if each 
party to the covered QFC (other than the covered FSI) is a financial 
counterparty that is not a covered entity, covered bank or covered FSI; 
or
    (iii) The first day of the calendar quarter immediately following 2 
years from the date the covered FSI first becomes a covered FSI if a 
party to the covered QFC (other than the covered FSI) is not described 
in paragraph (f)(2)(i) or (ii) of this section or if, notwithstanding 
paragraph (f)(2)(ii), a party to the covered QFC (other than the covered 
FSI) is a small financial institution.
    (g) Rights of receiver unaffected. Nothing in this part shall in any 
manner limit or modify the rights and powers of the FDIC as receiver 
under the Federal Deposit Insurance Act or Title II of the Dodd-Frank 
Act, including, without limitation, the rights of the receiver to 
enforce provisions of the Federal Deposit Insurance Act or Title II of 
the Dodd-Frank Act that limit the

[[Page 390]]

enforceability of certain contractual provisions.

[82 FR 50261, Oct. 30, 2017; 82 FR 61443, Dec. 28, 2017]



Sec.382.3  U.S. special resolution regimes.

    (a) Covered QFCs not required to be conformed. (1) Notwithstanding 
Sec.382.2 of this part, a covered FSI is not required to conform a 
covered QFC to the requirements of this section if:
    (i) The covered QFC designates, in the manner described in paragraph 
(a)(2) of this section, the U.S. special resolution regimes as part of 
the law governing the QFC; and
    (ii) Each party to the covered QFC, other than the covered FSI, is
    (A) An individual that is domiciled in the United States, including 
any State;
    (B) A company that is incorporated in or organized under the laws of 
the United States or any State;
    (C) A company the principal place of business of which is located in 
the United States, including any State; or
    (D) A U.S. branch or U.S. agency.
    (2) A covered QFC designates the U.S. special resolution regimes as 
part of the law governing the QFC if the covered QFC:
    (i) Explicitly provides that the covered QFC is governed by the laws 
of the United States or a State of the United States; and
    (ii) Does not explicitly provide that one or both of the U.S. 
special resolution regimes, or a broader set of laws that includes a 
U.S. special resolution regime, is excluded from the laws governing the 
covered QFC.
    (b) Provisions required. A covered QFC must explicitly provide that:
    (1) In the event the covered FSI becomes subject to a proceeding 
under a U.S. special resolution regime, the transfer of the covered QFC 
(and any interest and obligation in or under, and any property securing, 
the covered QFC) from the covered FSI will be effective to the same 
extent as the transfer would be effective under the U.S. special 
resolution regime if the covered QFC (and any interest and obligation in 
or under, and any property securing, the covered QFC) were governed by 
the laws of the United States or a State of the United States; and
    (2) In the event the covered FSI or an affiliate of the covered FSI 
becomes subject to a proceeding under a U.S. special resolution regime, 
default rights with respect to the covered QFC that may be exercised 
against the covered FSI are permitted to be exercised to no greater 
extent than the default rights could be exercised under the U.S. special 
resolution regime if the covered QFC were governed by the laws of the 
United States or a State of the United States.
    (c) Relevance of creditor protection provisions. The requirements of 
this section apply notwithstanding Sec.382.4(d), (f), and (h) of this 
part.



Sec.382.4  Insolvency proceedings.

    This section does not apply to proceedings under Title II of the 
Dodd-Frank Act.
    (a) Covered QFCs not required to be conformed. Notwithstanding Sec.
382.2 of this part, a covered FSI is not required to conform a covered 
QFC to the requirements of this section if the covered QFC:
    (1) Does not explicitly provide any default right with respect to 
the covered QFC that is related, directly or indirectly, to an affiliate 
of the direct party becoming subject to a receivership, insolvency, 
liquidation, resolution, or similar proceeding; and
    (2) Does not explicitly prohibit the transfer of a covered affiliate 
credit enhancement, any interest or obligation in or under the covered 
affiliate credit enhancement, or any property securing the covered 
affiliate credit enhancement to a transferee upon or following an 
affiliate of the direct party becoming subject to a receivership, 
insolvency, liquidation, resolution, or similar proceeding or would 
prohibit such a transfer only if the transfer would result in the 
supported party being the beneficiary of the credit enhancement in 
violation of any law applicable to the supported party.
    (b) General prohibitions. (1) A covered QFC may not permit the 
exercise of any default right with respect to the covered QFC that is 
related, directly or indirectly, to an affiliate of the direct party 
becoming subject to a receivership, insolvency, liquidation, resolution, 
or similar proceeding.

[[Page 391]]

    (2) A covered QFC may not prohibit the transfer of a covered 
affiliate credit enhancement, any interest or obligation in or under the 
covered affiliate credit enhancement, or any property securing the 
covered affiliate credit enhancement to a transferee upon or following 
an affiliate of the direct party becoming subject to a receivership, 
insolvency, liquidation, resolution, or similar proceeding unless the 
transfer would result in the supported party being the beneficiary of 
the credit enhancement in violation of any law applicable to the 
supported party.
    (c) Definitions relevant to the general prohibitions--(1) Direct 
party. Direct party means a covered entity, covered bank, or covered FSI 
that is a party to the direct QFC.
    (2) Direct QFC. Direct QFC means a QFC that is not a credit 
enhancement, provided that, for a QFC that is a master agreement that 
includes an affiliate credit enhancement as a supplement to the master 
agreement, the direct QFC does not include the affiliate credit 
enhancement.
    (3) Affiliate credit enhancement. Affiliate credit enhancement means 
a credit enhancement that is provided by an affiliate of a party to the 
direct QFC that the credit enhancement supports.
    (d) General creditor protections. Notwithstanding paragraph (b) of 
this section, a covered direct QFC and covered affiliate credit 
enhancement that supports the covered direct QFC may permit the exercise 
of a default right with respect to the covered QFC that arises as a 
result of
    (1) The direct party becoming subject to a receivership, insolvency, 
liquidation, resolution, or similar proceeding;
    (2) The direct party not satisfying a payment or delivery obligation 
pursuant to the covered QFC or another contract between the same parties 
that gives rise to a default right in the covered QFC; or
    (3) The covered affiliate support provider or transferee not 
satisfying a payment or delivery obligation pursuant to a covered 
affiliate credit enhancement that supports the covered direct QFC.
    (e) Definitions relevant to the general creditor protections--(1) 
Covered direct QFC. Covered direct QFC means a direct QFC to which a 
covered entity, covered bank, or covered FSI is a party.
    (2) Covered affiliate credit enhancement. Covered affiliate credit 
enhancement means an affiliate credit enhancement in which a covered 
entity, covered bank, or covered FSI is the obligor of the credit 
enhancement.
    (3) Covered affiliate support provider. Covered affiliate support 
provider means, with respect to a covered affiliate credit enhancement, 
the affiliate of the direct party that is obligated under the covered 
affiliate credit enhancement and is not a transferee.
    (4) Supported party. Supported party means, with respect to a 
covered affiliate credit enhancement and the direct QFC that the covered 
affiliate credit enhancement supports, a party that is a beneficiary of 
the covered affiliate support provider's obligation(s) under the covered 
affiliate credit enhancement.
    (f) Additional creditor protections for supported QFCs. 
Notwithstanding paragraph (b) of this section, with respect to a covered 
direct QFC that is supported by a covered affiliate credit enhancement, 
the covered direct QFC and the covered affiliate credit enhancement may 
permit the exercise of a default right after the stay period that is 
related, directly or indirectly, to the covered affiliate support 
provider becoming subject to a receivership, insolvency, liquidation, 
resolution, or similar proceeding if:
    (1) The covered affiliate support provider that remains obligated 
under the covered affiliate credit enhancement becomes subject to a 
receivership, insolvency, liquidation, resolution, or similar proceeding 
other than a Chapter 11 proceeding;
    (2) Subject to paragraph (h) of this section, the transferee, if 
any, becomes subject to a receivership, insolvency, liquidation, 
resolution, or similar proceeding;
    (3) The covered affiliate support provider does not remain, and a 
transferee does not become, obligated to the same, or substantially 
similar, extent as the covered affiliate support provider was obligated 
immediately prior

[[Page 392]]

to entering the receivership, insolvency, liquidation, resolution, or 
similar proceeding with respect to:
    (i) The covered affiliate credit enhancement;
    (ii) All other covered affiliate credit enhancements provided by the 
covered affiliate support provider in support of other covered direct 
QFCs between the direct party and the supported party under the covered 
affiliate credit enhancement referenced in paragraph (f)(3)(i) of this 
section; and
    (iii) All covered affiliate credit enhancements provided by the 
covered affiliate support provider in support of covered direct QFCs 
between the direct party and affiliates of the supported party 
referenced in paragraph (f)(3)(ii) of this section; or
    (4) In the case of a transfer of the covered affiliate credit 
enhancement to a transferee,
    (i) All of the ownership interests of the direct party directly or 
indirectly held by the covered affiliate support provider are not 
transferred to the transferee; or
    (ii) Reasonable assurance has not been provided that all or 
substantially all of the assets of the covered affiliate support 
provider (or net proceeds therefrom), excluding any assets reserved for 
the payment of costs and expenses of administration in the receivership, 
insolvency, liquidation, resolution, or similar proceeding, will be 
transferred or sold to the transferee in a timely manner.
    (g) Definitions relevant to the additional creditor protections for 
supported QFCs--(1) Stay period. Stay period means, with respect to a 
receivership, insolvency, liquidation, resolution, or similar 
proceeding, the period of time beginning on the commencement of the 
proceeding and ending at the later of 5 p.m. (EST) on the business day 
following the date of the commencement of the proceeding and 48 hours 
after the commencement of the proceeding.
    (2) Business day. Business day means a day on which commercial banks 
in the jurisdiction the proceeding is commenced are open for general 
business (including dealings in foreign exchange and foreign currency 
deposits).
    (3) Transferee. Transferee means a person to whom a covered 
affiliate credit enhancement is transferred upon the covered affiliate 
support provider entering a receivership, insolvency, liquidation, 
resolution, or similar proceeding or thereafter as part of the 
resolution, restructuring, or reorganization involving the covered 
affiliate support provider.
    (h) Creditor protections related to FDI Act proceedings. 
Notwithstanding paragraphs (d) and (f) of this section, which are 
inapplicable to FDI Act proceedings, and notwithstanding paragraph (b) 
of this section, with respect to a covered direct QFC that is supported 
by a covered affiliate credit enhancement, the covered direct QFC and 
the covered affiliate credit enhancement may permit the exercise of a 
default right that is related, directly or indirectly, to the covered 
affiliate support provider becoming subject to FDI Act proceedings only 
in the following circumstances:
    (1) After the FDI Act stay period, if the covered affiliate credit 
enhancement is not transferred pursuant to 12 U.S.C. 1821(e)(9)-(10) and 
any regulations promulgated thereunder; or
    (2) During the FDI Act stay period, if the default right may only be 
exercised so as to permit the supported party under the covered 
affiliate credit enhancement to suspend performance with respect to the 
supported party's obligations under the covered direct QFC to the same 
extent as the supported party would be entitled to do if the covered 
direct QFC were with the covered affiliate support provider and were 
treated in the same manner as the covered affiliate credit enhancement.
    (i) Prohibited terminations. A covered QFC must require, after an 
affiliate of the direct party has become subject to a receivership, 
insolvency, liquidation, resolution, or similar proceeding,
    (1) The party seeking to exercise a default right to bear the burden 
of proof that the exercise is permitted under the covered QFC; and
    (2) Clear and convincing evidence or a similar or higher burden of 
proof to exercise a default right.



Sec.382.5  Approval of enhanced creditor protection conditions.

    (a) Protocol compliance. (1) Unless the FDIC determines otherwise 
based on

[[Page 393]]

the specific facts and circumstances, a covered QFC is deemed to comply 
with this part if it is amended by the universal protocol or the U.S. 
protocol.
    (2) A covered QFC will be deemed to be amended by the universal 
protocol for purposes of paragraph (a)(1) of this section 
notwithstanding the covered QFC being amended by one or more Country 
Annexes, as the term is defined in the universal protocol.
    (3) For purposes of paragraphs (a)(1) and (2) of this section:
    (i) The universal protocol means the ISDA 2015 Universal Resolution 
Stay Protocol, including the Securities Financing Transaction Annex and 
Other Agreements Annex, published by the International Swaps and 
Derivatives Association, Inc., as of May 3, 2016, and minor or technical 
amendments thereto;
    (ii) The U.S. protocol means a protocol that is the same as the 
universal protocol other than as provided in paragraphs (a)(3)(ii)(A) 
through (F) of this section.
    (A) The provisions of Section 1 of the attachment to the universal 
protocol may be limited in their application to covered entities, 
covered banks, and covered FSIs and may be limited with respect to 
resolutions under the Identified Regimes, as those regimes are 
identified by the universal protocol;
    (B) The provisions of Section 2 of the attachment to the universal 
protocol may be limited in their application to covered entities, 
covered banks, and covered FSIs;
    (C) The provisions of Section 4(b)(i)(A) of the attachment to the 
universal protocol must not apply with respect to U.S. special 
resolution regimes;
    (D) The provisions of Section 4(b) of the attachment to the 
universal protocol may only be effective to the extent that the covered 
QFCs affected by an adherent's election thereunder would continue to 
meet the requirements of this part;
    (E) The provisions of Section 2(k) of the attachment to the 
universal protocol must not apply; and
    (F) The U.S. protocol may include minor and technical differences 
from the universal protocol and differences necessary to conform the 
U.S. protocol to the differences described in paragraphs (a)(3)(ii)(A) 
through (E) of this section.
    (iii) Amended by the universal protocol or the U.S. protocol, with 
respect to covered QFCs between adherents to the protocol, includes 
amendments through incorporation of the terms of the protocol (by 
reference or otherwise) into the covered QFC; and
    (iv) The attachment to the universal protocol means the attachment 
that the universal protocol identifies as ``ATTACHMENT to the ISDA 2015 
UNIVERSAL RESOLUTION STAY PROTOCOL.''
    (b) Proposal of enhanced creditor protection conditions. (1) A 
covered FSI may request that the FDIC approve as compliant with the 
requirements of Sec. Sec.382.3 and 382.4 proposed provisions of one or 
more forms of covered QFCs, or proposed amendments to one or more forms 
of covered QFCs, with enhanced creditor protection conditions.
    (2) Enhanced creditor protection conditions means a set of limited 
exemptions to the requirements of Sec.382.4(b) of this part that is 
different than that of Sec.382.4(d), (f), and (h).
    (3) A covered FSI making a request under paragraph (b)(1) of this 
section must provide
    (i) An analysis of the proposal that addresses each consideration in 
paragraph (d) of this section;
    (ii) A written legal opinion verifying that proposed provisions or 
amendments would be valid and enforceable under applicable law of the 
relevant jurisdictions, including, in the case of proposed amendments, 
the validity and enforceability of the proposal to amend the covered 
QFCs; and
    (iii) Any other relevant information that the FDIC requests.
    (c) FDIC approval. The FDIC may approve, subject to any conditions 
or commitments the FDIC may set, a proposal by a covered FSI under 
paragraph (b) of this section if the proposal, as compared to a covered 
QFC that contains only the limited exemptions in Sec.382.4(d), (f), 
and (h) or that is amended as provided under paragraph (a) of this 
section, would promote the safety and

[[Page 394]]

soundness of covered FSIs by mitigating the potential destabilizing 
effects of the resolution of a global significantly important banking 
entity that is an affiliate of the covered FSI to at least the same 
extent.
    (d) Considerations. In reviewing a proposal under this section, the 
FDIC may consider all facts and circumstances related to the proposal, 
including:
    (1) Whether, and the extent to which, the proposal would reduce the 
resiliency of such covered FSIs during distress or increase the impact 
on U.S. financial stability were one or more of the covered FSIs to 
fail;
    (2) Whether, and the extent to which, the proposal would materially 
decrease the ability of a covered FSI, or an affiliate of a covered FSI, 
to be resolved in a rapid and orderly manner in the event of the 
financial distress or failure of the entity that is required to submit a 
resolution plan;
    (3) Whether, and the extent to which, the set of conditions or the 
mechanism in which they are applied facilitates, on an industry-wide 
basis, contractual modifications to remove impediments to resolution and 
increase market certainty, transparency, and equitable treatment with 
respect to the default rights of non-defaulting parties to a covered 
QFC;
    (4) Whether, and the extent to which, the proposal applies to 
existing and future transactions;
    (5) Whether, and the extent to which, the proposal would apply to 
multiple forms of QFCs or multiple covered FSIs;
    (6) Whether the proposal would permit a party to a covered QFC that 
is within the scope of the proposal to adhere to the proposal with 
respect to only one or a subset of covered FSIs;
    (7) With respect to a supported party, the degree of assurance the 
proposal provides to the supported party that the material payment and 
delivery obligations of the covered affiliate credit enhancement and the 
covered direct QFC it supports will continue to be performed after the 
covered affiliate support provider enters a receivership, insolvency, 
liquidation, resolution, or similar proceeding;
    (8) The presence, nature, and extent of any provisions that require 
a covered affiliate support provider or transferee to meet conditions 
other than material payment or delivery obligations to its creditors;
    (9) The extent to which the supported party's overall credit risk to 
the direct party may increase if the enhanced creditor protection 
conditions are not met and the likelihood that the supported party's 
credit risk to the direct party would decrease or remain the same if the 
enhanced creditor protection conditions are met; and
    (10) Whether the proposal provides the counterparty with additional 
default rights or other rights.



Sec.382.6  [Reserved]



Sec.382.7  Exclusion of certain QFCs.

    (a) Exclusion of QFCs with FMUs. Notwithstanding Sec.382.2 of this 
part, a covered FSI is not required to conform to the requirements of 
this part a covered QFC to which:
    (1) A CCP is party; or
    (2) Each party (other than the covered FSI) is an FMU.
    (b) Exclusion of certain covered entity and covered bank QFCs. If a 
covered QFC is also a covered QFC under part 252 or part 47 of this 
title that an affiliate of the covered FSI is also required to conform 
pursuant to part 252 or part 47 and the covered FSI is:
    (1) The affiliate credit enhancement provider with respect to the 
covered QFC, then the covered FSI is required to conform the credit 
enhancement to the requirements of this part but is not required to 
conform the direct QFC to the requirements of this part; or
    (2) The direct party to which the covered entity or covered bank is 
the affiliate credit enhancement provider, then the covered FSI is 
required to conform the direct QFC to the requirements of this part but 
is not required to conform the credit enhancement to the requirements of 
this part.
    (c) Exclusion of certain contracts. Notwithstanding Sec.382.2 of 
this part, a covered FSI is not required to conform the following types 
of contracts or agreements to the requirements of this part:
    (1) An investment advisory contract that:
    (i) Is with a retail customer or counterparty;

[[Page 395]]

    (ii) Does not explicitly restrict the transfer of the contract (or 
any QFC entered into pursuant thereto or governed thereby, or any 
interest or obligation in or under, or any property securing, any such 
QFC or the contract) from the covered FSI except as necessary to comply 
with section 205(a)(2) of the Investment Advisers Act of 1940 (15 U.S.C. 
80b-5(a)(2)); and
    (iii) Does not explicitly provide a default right with respect to 
the contract or any QFC entered pursuant thereto or governed thereby.
    (2) A warrant that:
    (i) Evidences a right to subscribe to or otherwise acquire a 
security of the covered FSI or an affiliate of the covered FSI; and
    (ii) Was issued prior to January 1, 2018.
    (d) Exemption by order. The FDIC may exempt by order one or more 
covered FSI(s) from conforming one or more contracts or types of 
contracts to one or more of the requirements of this part after 
considering:
    (1) The potential impact of the exemption on the ability of the 
covered FSI(s), or affiliates of the covered FSI(s), to be resolved in a 
rapid and orderly manner in the event of the financial distress or 
failure of the entity that is required to submit a resolution plan;
    (2) The burden the exemption would relieve; and
    (3) Any other factor the FDIC deems relevant.



PART 390_REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT SUPERVISION
--Table of Contents



Subparts A-E [Reserved]

               Subpart F_Application Processing Procedures

Sec.
390.100 What does this subpart do?
390.101 Do the same procedures apply to all applications under this 
          subpart?
390.102 How does the FDIC compute time periods under this subpart?
390.103 Must I meet with the FDIC before I file my application?
390.104 What information must I include in my draft business plan?
390.105 What type of application must I file?
390.106 What information must I provide with my application?
390.107 May I keep portions of my application confidential?
390.108 Where do I file my application?
390.109 What is the filing date of my application?
390.110 How do I amend or supplement my application?
390.111 Who must publish a public notice of an application?
390.112 What information must I include in my public notice?
390.113 When must I publish the public notice?
390.114 Where must I publish the public notice?
390.115 What language must I use in my publication?
390.116 Comment procedures.
390.117 Who may submit a written comment?
390.118 What information should a comment include?
390.119 Where are comments filed?
390.120 How long is the comment period?
390.121 Meeting procedures.
390.122 When will the FDIC conduct a meeting on an application?
390.123 What procedures govern the conduct of the meeting?
390.124 Will the FDIC approve or disapprove an application at a meeting?
390.125 Will a meeting affect application processing time frames?
390.126 If I file a notice under expedited treatment, when may I engage 
          in the proposed activities?
390.127 What will the FDIC do after I file my application?
390.128 If the FDIC requests additional information to complete my 
          application, how will it process my application?
390.129 Will the FDIC conduct an eligibility examination?
390.130 What may the FDIC require me to do after my application is 
          deemed complete?
390.131 Will the FDIC require me to publish a new public notice?
390.132 May the FDIC suspend processing of my application?
390.133 How long is the FDIC review period?
390.134 How will I know if my application has been approved?
390.135 What will happen if the FDIC does not approve or disapprove my 
          application within two calendar years after the filing date?

                Subpart G_Nondiscrimination Requirements

390.140 Definitions.
390.141 Supplementary guidelines.
390.142 Nondiscrimination in lending and other services.

[[Page 396]]

390.143 Nondiscriminatory appraisal and underwriting.
390.144 Nondiscrimination in applications.
390.145 Nondiscriminatory advertising.
390.146 Equal Housing Lender Poster.
390.147 Loan application register.
390.148 Nondiscrimination in employment.
390.149 Complaints.
390.150 Guidelines relating to nondiscrimination in lending.

Subparts H-L [Reserved]

                           Subpart M_Deposits

390.230 What does this subpart do?
390.231 What records should I maintain on deposit activities?

Subpart N [Reserved]

                   Subpart O_Subordinate Organizations

390.250 What does this subpart cover?
390.251 Definitions.
390.252 How must separate corporate identities be maintained?
390.253 What notices are required to establish or acquire a new 
          subsidiary or engage in new activities through an existing 
          subsidiary?
390.254 How may a subsidiary of a State savings association issue 
          securities?
390.255 How may a State savings association exercise its salvage power 
          in connection with a service corporation or lower-tier 
          entities?

                    Subpart P_Lending and Investment

390.260 General.
390.261 [Reserved]
390.262 Definitions.
390.263 [Reserved]
390.264 Real estate lending standards; purpose and scope.
390.265 Real estate lending standards.
390.266 [Reserved]
390.267 Letters of credit and other independent undertakings to pay 
          against documents.
390.268 Investment in State housing corporations.
390.269 Prohibition on loan procurement fees.
390.270 Asset classification.
390.271 Records for lending transactions.
390.272 Re-evaluation of real estate owned.

   Subpart Q_Definitions for Regulations Affecting All State Savings 
                              Associations

390.280 When do the definitions in this subpart apply?
390.281 Account.
390.282 Accountholder.
390.283 Affiliate.
390.284 Affiliated person.
390.285 Audit period.
390.286 Certificate account.
390.287 Consumer credit.
390.288 Controlling person.
390.289 Corporation.
390.290 Demand accounts.
390.291 Director.
390.292 Financial institution.
390.293 Immediate family.
390.294 Land loan.
390.295 Low-rent housing.
390.296 Money Market Deposit Accounts.
390.297 Negotiable Order of Withdrawal Accounts.
390.298 Nonresidential construction loan.
390.299 Nonwithdrawable account.
390.300 Note account.
390.301 [Reserved]
390.302 Officer.
390.303 Parent company; subsidiary.
390.304 Political subdivision.
390.305 Principal office.
390.306 Public unit.
390.307 Savings account.
390.308 State savings association.
390.309 Security.
390.310 Service corporation.
390.311 State.
390.312 Subordinated debt security.
390.313 Tax and loan account.
390.314 United States Treasury General Account.
390.315 United States Treasury Time Deposit Open Account.
390.316 With recourse.

                Subpart R_Regulatory Reporting Standards

390.320 Regulatory reporting requirements.
390.321 Regulatory reports.
390.322 Audit of State savings associations.

             Subpart S_State Savings Associations_Operations

390.330 Chartering documents.
390.331 Securities: Statement of non-insurance.
390.332 Merger, consolidation, purchase or sale of assets, or assumption 
          of liabilities.
390.333 Advertising.
390.334 Directors, officers, and employees.
390.335 Tying restriction exception.
390.336 Employment contracts.
390.337 Transactions with affiliates.
390.338 Loans by State savings associations to their executive officers, 
          directors and principal shareholders.
390.339 Pension plans.
390.340 Offers and sales of securities at an office of a State savings 
          association.
390.341 Inclusion of subordinated debt securities and mandatorily 
          redeemable preferred stock as supplementary capital.
390.342 Capital distributions by State savings associations.

[[Page 397]]

390.343 What is a capital distribution?
390.344 Definitions applicable to capital distributions.
390.345 Must I file with the FDIC?
390.346 How do I file with the FDIC?
390.347 May I combine my notice or application with other notices or 
          applications?
390.348 Will the FDIC permit my capital distribution?
390.349 Management and financial policies.
390.350 Examinations and audits; appraisals; establishment and 
          maintenance of records.
390.352 Financial derivatives.
390.353 Interest-rate-risk-management procedures.
390.354 Procedures for monitoring Bank Secrecy Act (BSA) compliance.
390.355 Suspicious Activity Reports and other reports and statements.
390.356 Bonds for directors, officers, employees, and agents; form of 
          and amount of bonds.
390.357 Bonds for agents.
390.358 Conflicts of interest.
390.359 Corporate opportunity.
390.360 Change of director or senior executive officer.
390.361 Applicable definitions.
390.362 Who must give prior notice?
390.363 What procedures govern the filing of my notice?
390.364 What information must I include in my notice?
390.365 What procedures govern the FDIC's review of my notice for 
          completeness?
390.366 What standards and procedures will govern the FDIC review of the 
          substance of my notice?
390.367 When may a proposed director or senior executive officer begin 
          service?
390.368 When will the FDIC waive the prior notice requirement?

                    Subpart T_Accounting Requirements

390.380 Form and content of financial statements.
390.381 Definitions.
390.382 Qualification of public accountant.
390.383 Condensed financial information [Parent only].
390.384 Financial statements for conversions, SEC filings, and offering 
          circulars.

Subparts U-V [Reserved]

                     Subpart W_Securities Offerings

390.410 Definitions.
390.411 Offering circular requirement.
390.412 Exemptions.
390.413 Non-public offering.
390.414 Filing and signature requirements.
390.415 Effective date.
390.416 Form, content, and accounting.
390.417 Use of the offering circular.
390.418 Escrow requirement.
390.419 Unsafe or unsound practices.
390.420 Withdrawal or abandonment.
390.421 Securities sale report.
390.422 Public disclosure and confidential treatment.
390.423 Waiver.
390.424 Requests for interpretive advice or waiver.
390.425 Delayed or continuous offering and sale of securities.
390.426 Sales of securities at an office of a State savings association.
390.427 Current and periodic reports.
390.428 Approval of the security.
390.429 Form for securities sale report.
390.430 Filing of copies of offering circulars in certain exempt 
          offerings.

Subpart X [Reserved]

                   Subpart Y_Prompt Corrective Action

390.450-390.455 [Reserved]
390.456 Directives to take prompt corrective action.
390.457 Procedures for reclassifying a State savings association based 
          on criteria other than capital.
390.458 Order to dismiss a director or senior executive officer.
390.459 Enforcement of directives.

Subpart Z [Reserved]

    Authority: 12 U.S.C. 1819.

    Source: 76 FR 47655, Aug. 5, 2011, unless otherwise noted.

Subparts A--E [Reserved]



               Subpart F_Application Processing Procedures



Sec.390.100  What does this subpart do?

    (a) This subpart explains the FDIC's procedures for processing 
applications, notices, or filings (applications) under parts 390 and 391 
for State savings associations. Except as provided in paragraph (b) of 
this section, Sec. Sec.390.103 through 390.110 and Sec. Sec.390.126 
through 390.135 apply whenever an FDIC regulation requires any person 
(you) to file an application with the FDIC. Sections 390.111 through 
390.125, however, only apply when a FDIC regulation incorporates the 
procedures in those sections or where otherwise required by the FDIC.
    (b) This subpart does not apply to any of the following:

[[Page 398]]

    (1) An application related to a transaction under section 13(c) or 
(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1823(c) or (k).
    (2) A request for reconsideration, modification, or appeal of a 
final FDIC action.
    (3) A request related to litigation, an enforcement proceeding, a 
supervisory directive or supervisory agreement. Such requests include a 
request seeking approval under, modification of, or termination of an 
order issued under subparts C or D, a supervisory agreement, a 
supervisory directive, a consent merger agreement or a document 
negotiated in settlement of an enforcement matter or other litigation, 
unless an applicable FDIC regulation specifically requires an 
application under this subpart.
    (4) An application filed under a FDIC regulation that prescribes 
other application processing procedures and time frames for the approval 
of applications.
    (c) If a FDIC regulation for a specific type of application 
prescribes some application processing procedures, or time frames, the 
FDIC will apply this subpart to the extent necessary to process the 
application. For example, if a FDIC regulation for a specific type of 
application does not identify time periods for the processing of an 
application, the time periods in this subpart apply.



Sec.390.101  Do the same procedures apply to all applications under
this subpart?

    The FDIC processes applications for State savings associations under 
this subpart using two procedures, expedited treatment and standard 
treatment. To determine which treatment applies, you may use the 
following chart:

------------------------------------------------------------------------
                                             Then the FDIC will process
                 If . . .                   your application under . . .
------------------------------------------------------------------------
(a) The applicable regulation does not      Standard treatment.
 specifically state that expedited
 treatment is available.
(b) You are not a State savings             Standard treatment.
 association.
(c) Your composite rating is 3, 4, or 5.    Standard treatment.
 The composite rating is the composite
 numeric rating that the FDIC or the other
 federal banking regulator assigned to you
 under the Uniform Financial Institutions
 Rating System or under a comparable
 rating system. The composite rating
 refers to the rating assigned and
 provided to you, in writing, as a result
 of the most recent examination.
(d) Your Community Reinvestment Act (CRA)   Standard treatment.
 rating is Needs to Improve or Substantial
 Noncompliance. The CRA rating is the
 Community Reinvestment Act performance
 rating that the FDIC or the other federal
 banking regulator assigned and provided
 to you, in writing, as a result of the
 most recent compliance examination. See,
 for example, 12 CFR 195.28.
(e) Your compliance rating is 3, 4, or 5.   Standard treatment.
 The compliance rating is the numeric
 rating that the FDIC or the other federal
 banking regulator assigned to you under
 the FDIC compliance rating system, or a
 comparable rating system used by the
 other federal banking regulator. The
 compliance rating refers to the rating
 assigned and provided to you, in writing,
 as a result of the most recent compliance
 examination.
(f) You fail any one of your capital        Standard treatment.
 requirements under 12 CFR part 324.
(g) The FDIC has notified you that you are  Standard treatment.
 an association in troubled condition.
(h) Neither the FDIC nor any other federal  Standard treatment.
 banking regulator has assigned you a
 composite rating, a CRA rating or a
 compliance rating.
(i) You do not meet any of the criteria     Expedited treatment.
 listed in paragraphs (a) through (h) of
 this section.
------------------------------------------------------------------------


[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17743, Apr. 24, 2018]



Sec.390.102  How does the FDIC compute time periods under this 
subpart?

    In computing time periods under this subpart, the FDIC does not 
include the day of the act or event that commences the time period. When 
the last day of a time period is a Saturday, Sunday, or Federal holiday, 
the time period runs until the end of the next day that is not a 
Saturday, Sunday, or Federal holiday.



Sec.390.103  Must I meet with the FDIC before I file my application?

    (a) Chart. To determine whether you must attend a pre-filing meeting 
before you file an application, please consult the following chart:

[[Page 399]]



------------------------------------------------------------------------
      If you file . . .                        Then . . .
------------------------------------------------------------------------
An application to acquire      The FDIC may require you to meet with the
 control of a State savings     FDIC before filing your application and
 association.                   may require you to submit a draft
                                business plan or other relevant
                                information before this meeting.
------------------------------------------------------------------------

    (b) Contacting the appropriate FDIC region. (1) You must contact the 
appropriate FDIC region a reasonable time before you file an application 
described in paragraph (a) of this section. Unless paragraph (a) already 
requires a pre-filing meeting or a draft business plan, the appropriate 
FDIC region will determine whether it will require a pre-filing meeting, 
and whether you must submit a business plan or other relevant 
information before the meeting. The appropriate FDIC region will also 
establish a schedule for any meeting and the submission of any 
information.
    (2) All other applicants are encouraged to contact the appropriate 
FDIC region to determine whether a pre-filing meeting or the submission 
of a draft business plan or other relevant information would expedite 
the application review process.



Sec.390.104  What information must I include in my draft business
plan?

    If you are required to submit a draft business plan under Sec.
309.103, your plan must:
    (a) Clearly and completely describe the State savings association's 
projected operations and activities;
    (b) Describe the risks associated with the transaction and the 
impact of this transaction on any existing activities and operations of 
the State savings association, including financial projections for a 
minimum of three years;
    (c) Identify the majority of the proposed board of directors and the 
key senior executive officers (as defined in Sec.390.361) of the State 
savings association and demonstrate that these individuals have the 
expertise to prudently manage the activities and operations described in 
the savings association's draft business plan; and
    (d) Demonstrate how applicable requirements regarding serving the 
credit and lending needs in the market areas served by the State savings 
association will be met.



Sec.390.105  What type of application must I file?

    (a) Expedited treatment. If you are eligible for expedited treatment 
under Sec.390.101, you may file your application in the form of a 
notice that includes all information required by the applicable 
substantive regulation. If the FDIC has designated a form for your 
notice, you must file that form. Your notice is an application for the 
purposes of all statutory and regulatory references to ``applications.''
    (b) Standard treatment. If you are subject to standard treatment 
under Sec.390.101, you must file your application following all 
applicable substantive regulations and guidelines governing the filing 
of applications. If the FDIC has a designated form for your application, 
you must file that form.
    (c) Waiver requests. If you want the FDIC to waive a requirement 
that you provide certain information with the notice or application, you 
must include a written waiver request:
    (1) Describing the requirement to be waived and
    (2) Explaining why the information is not needed to enable the FDIC 
to evaluate your notice or application under applicable standards.



Sec.390.106  What information must I provide with my application?

    (a) Required information. You may obtain information about required 
certifications, other regulations and guidelines affecting particular 
notices and applications, appropriate forms, and instructions from the 
appropriate FDIC region.
    (b) Captions and exhibits. You must caption the original application 
and required copies with the type of filing, and must include all 
exhibits and other pertinent documents with the original application and 
all required copies. You are not required to include original signatures 
on copies if you include a copy of the signed signature page or

[[Page 400]]

the copy otherwise indicates that the original was signed.



Sec.390.107  May I keep portions of my application confidential?

    (a) Confidentiality. The FDIC makes submissions under this subpart 
available to the public, but may keep portions of your application 
confidential based on the rules in this section.
    (b) Confidentiality request. (1) You may request the FDIC to keep 
portions of your application confidential. You must submit your request 
in writing with your application and must explain in detail how your 
request is consistent with the standards under the Freedom of 
Information Act (5 U.S.C. 552) and part 309 of this chapter. For 
example, you should explain how you will be substantially harmed by 
public disclosure of the information. You must separately bind and mark 
the portions of the application you consider confidential and the 
portions you consider non-confidential.
    (2) The FDIC will not treat as confidential the portion of your 
application describing how you plan to meet your Community Reinvestment 
Act (CRA) objectives. The FDIC will make information in your CRA plan, 
including any information incorporated by reference from other parts of 
your application, available to the public upon request.
    (c) FDIC determination on confidentiality. The FDIC will determine 
whether information that you designate as confidential may be withheld 
from the public under the Freedom of Information Act (5 U.S.C. 552) and 
part 309 of this chapter. The FDIC will advise you before it makes 
information you designate as confidential available to the public.



Sec.390.108  Where do I file my application?

    (a) Appropriate FDIC region. (1) You must file the original 
application and the number of copies indicated on the applicable form 
with the appropriate FDIC region. The appropriate FDIC region addresses 
are listed in paragraph (a)(2) of this section. If the form does not 
indicate the number of copies you must file or if FDIC has not 
prescribed a form for your application, you must file the original 
application and two copies.
    (2) The addresses of appropriate FDIC region and the states covered 
by each office are:

------------------------------------------------------------------------
           Region                Office address         States served
------------------------------------------------------------------------
New York....................  350 Fifth Avenue,     Connecticut,
                               Suite 1200, New       Delaware, District
                               York, NY 10118.       of Columbia, Maine,
                                                     Maryland,
                                                     Massachusetts, New
                                                     Hampshire, New
                                                     Jersey, New York,
                                                     Pennsylvania,
                                                     Puerto Rico, Rhode
                                                     Island, Vermont,
                                                     Virgin Islands.
Atlanta.....................  10 Tenth Street,      Alabama, Florida,
                               NE., Suite 800,       Georgia, North
                               Atlanta, GA 30309-    Carolina, South
                               3906.                 Carolina, Virginia,
                                                     West Virginia.
Chicago.....................  300 South Riverside   Illinois, Indiana,
                               Plaza, Suite 1700,    Kentucky, Ohio,
                               Chicago, Illinois     Michigan,
                               60606.                Wisconsin.
Kansas......................  1100 Walnut St.,      Iowa, Kansas,
                               Suite 2100, Kansas    Minnesota,
                               City, MO 64106.       Missouri, Nebraska,
                                                     North Dakota, South
                                                     Dakota.
Dallas......................  1601 Bryan Street,    Arkansas, Colorado,
                               Dallas, TX 75201.     Louisiana,
                                                     Mississippi, New
                                                     Mexico, Oklahoma,
                                                     Tennessee, Texas.
San Francisco...............  25 Jessie Street at   Alaska, Arizona,
                               Ecker Square, Suite   California, Guam,
                               2300, San             Hawaii, Idaho,
                               Francisco, CA 94105-  Montana, Nevada,
                               2780.                 Northern Mariana
                                                     Islands, Oregon,
                                                     Utah, Washington,
                                                     Wyoming.
------------------------------------------------------------------------

    (b) Additional filings with FDIC headquarters. (1) In addition to 
filing in the appropriate FDIC region, if your application involves a 
significant issue of law or policy or if an applicable regulation or 
form directs you to file with FDIC Headquarters, you must also file 
copies of your application with the Risk Management and Applications 
Section at FDIC headquarters, 550 17th Street, NW., Washington, DC 
20429. You must file the number of copies indicated on the applicable 
form. If the form does not indicate the number of copies you must file 
or if FDIC has not prescribed a form for your application, you must file 
three copies.
    (2)(i) You may request a list of applications involving significant 
issues of

[[Page 401]]

law or policy by contacting appropriate FDIC region.
    (ii) The FDIC reserves the right to identify significant issues of 
law or policy in a particular application. The FDIC will advise you, in 
writing, if it makes this determination.



Sec.390.109  What is the filing date of my application?

    (a) Your application's filing date is the date that you complete all 
of the following requirements.
    (1) You attend a pre-filing meeting and submit a draft business plan 
or relevant information, if the FDIC requires you to do so under Sec.
390.103.
    (2) You file your application and all required copies with the FDIC, 
as described under Sec.390.108.
    (i) If you are required to file with an appropriate FDIC region and 
with the FDIC headquarters, you have not filed with the FDIC until you 
file with both offices.
    (ii) You have not filed with the appropriate FDIC region or the FDIC 
headquarters until you file the application and the required number of 
copies with that office.
    (iii) If you file after the close of business established by 
appropriate FDIC region or the FDIC headquarters, you have filed with 
that office on the next business day.
    (3) [Reserved]
    (b) The FDIC may notify you that it has adjusted your application 
filing date if you fail to meet any applicable publication requirements.
    (c) If, after you properly file your application with the 
appropriate FDIC region, the FDIC determines that a significant issue of 
law or policy exists under Sec.390.108(b)(2)(ii), the filing date of 
your application is the day you filed with the appropriate FDIC region. 
The 30-day review period under Sec.390.126 or Sec.390.127 will 
restart in its entirety when the appropriate FDIC region forwards the 
appropriate number of copies of your application to the FDIC 
headquarters.



Sec.390.110  How do I amend or supplement my application?

    To amend or supplement your application, you must file the amendment 
or supplemental information at the appropriate FDIC region along with 
the number of copies required under Sec.390.108. Your amendment or 
supplemental information also must meet the caption and exhibit 
requirements at Sec.390.106(b).



Sec.390.111  Who must publish a public notice of an application?

    Sections 390.111 through 390.115 apply whenever a FDIC regulation 
requires an applicant (``you'') to follow the public notice procedures 
in this subpart.



Sec.390.112  What information must I include in my public notice?

    Your public notice must include the following:
    (a) Your name and address.
    (b) The type of application.
    (c) The name of the depository institution(s) that is the subject 
matter of the application.
    (d) A statement indicating that the public may submit comments to 
the appropriate FDIC region.
    (e) The address of the appropriate FDIC region where the public may 
submit comments.
    (f) The date that the comment period closes.
    (g) A statement indicating that the nonconfidential portions of the 
application are on file in the appropriate FDIC region, and are 
available for public inspection during regular business hours.
    (h) Any other information that the FDIC requires you to publish. You 
may find the format for various publication notices in the appendix to 
the FDIC application processing handbook.



Sec.390.113  When must I publish the public notice?

    You must publish a public notice of the application no earlier than 
seven days before and no later than the date of filing of the 
application.



Sec.390.114  Where must I publish the public notice?

    You must publish the notice in a newspaper having a general 
circulation in the communities indicated in the following chart:

[[Page 402]]



------------------------------------------------------------------------
                                   You must publish in the following
      If you file . . .                    communities . . .
------------------------------------------------------------------------
(a) Bank Merger Act            The community in which your home office
 application under              is located.
 390.332(a), or an
 application for a mutual to
 stock conversion under 12
 CFR part 192.
(b) A change of control        The community in which the home office of
 notice under part 391,         the State savings association whose
 subpart E.                     stock is to be acquired is located and,
                                if applicable, the community in which
                                the home office of the acquiror's
                                largest subsidiary State savings
                                association is located.
------------------------------------------------------------------------



Sec.390.115  What language must I use in my publication?

    (a) English. You must publish the notice in a newspaper printed in 
the English language.
    (b) Other than English. If the FDIC determines that the primary 
language of a significant number of adult residents of the community is 
a language other than English, the FDIC may require that you 
simultaneously publish additional notice(s) in the community in the 
appropriate language(s).



Sec.390.116  Comment procedures.

    Sections 390.116 though 390.120 contain the procedures governing the 
submission of public comments on certain types of applications or 
notices (``applications'') pending before the FDIC. It applies whenever 
a regulation incorporates the procedures in Sec. Sec.390.116 through 
390.120, or where otherwise required by the FDIC.



Sec.390.117  Who may submit a written comment?

    Any person may submit a written comment supporting or opposing an 
application.



Sec.390.118  What information should a comment include?

    (a) A comment should recite relevant facts, including any 
demographic, economic, or financial data, supporting the commenter's 
position. A comment opposing an application should also:
    (1) Address at least one of the reasons why the FDIC may deny the 
application under the relevant statute or regulation;
    (2) Recite any relevant facts and supporting data addressing these 
reasons; and
    (3) Address how the approval of the application could harm the 
commenter or any community.
    (b) A commenter must include any request for a meeting under Sec.
390.122 in its comment. The commenter must describe the nature of the 
issues or facts to be discussed and the reasons why written submissions 
are insufficient to adequately address these facts or issues.



Sec.390.119  Where are comments filed?

    A commenter must file with the appropriate FDIC region (See table at 
Sec.390.108(a)(2)). The commenter must simultaneously send a copy of 
the comment to the applicant.



Sec.390.120  How long is the comment period?

    (a) General. Except as provided in paragraph (b) of this section, a 
commenter must file a written comment with the FDIC within 30 calendar 
days after the date of publication of the initial public notice.
    (b) Late-filed comments. The FDIC may consider late-filed comments 
if the FDIC determines that the comment will assist in the disposition 
of the application.



Sec.390.121  Meeting procedures.

    Sections 390.121 through 390.125 contain meeting procedures. They 
apply whenever a regulation incorporates the procedures in Sec. Sec.
390.121 through 390.125, or when otherwise required by the FDIC.



Sec.390.122  When will the FDIC conduct a meeting on an application?

    (a) The FDIC will grant a meeting request or conduct a meeting on 
its own initiative, if it finds that written submissions are 
insufficient to address facts or issues raised in an application, or 
otherwise determines that a meeting will benefit the decision-making 
process. The FDIC may limit the issues considered at the meeting to 
issues

[[Page 403]]

that the FDIC decides are relevant or material.
    (b) The FDIC will inform the applicant and all commenters requesting 
a meeting of its decision to grant or deny a meeting request, or of its 
decision to conduct a meeting on its own initiative.
    (c) If the FDIC decides to conduct a meeting, the FDIC will invite 
the applicant and any commenters requesting a meeting and raising an 
issue that FDIC intends to consider at the meeting. The FDIC may also 
invite other interested persons to attend. The FDIC will inform the 
participants of the date, time, location, issues to be considered, and 
format for the meeting a reasonable time before the meeting.



Sec.390.123  What procedures govern the conduct of the meeting?

    (a) The FDIC may conduct meetings in any format including, but not 
limited to, a telephone conference, a face-to-face meeting, or a more 
formal meeting.
    (b) The Administrative Procedure Act (5 U.S.C. 551 et seq.), the 
Federal Rules of Evidence (28 U.S.C. Appendix), the Federal Rules of 
Civil Procedure (28 U.S.C. Rule 1 et seq.) and the FDIC Rules of 
Practice and Procedure in Adjudicatory Proceedings (subpart C) do not 
apply to meetings under this section.



Sec.390.124  Will FDIC approve or disapprove an application 
at a meeting?

    The FDIC will not approve or deny an application at a meeting under 
Sec. Sec.390.121 through 390.125.



Sec.390.125  Will a meeting affect application processing time
frames?

    If the FDIC decides to conduct a meeting, it may suspend applicable 
application processing time frames, including the time frames for 
deeming an application complete and the applicable approval time frames 
in Sec. Sec.390.126 through 390.135. If the FDIC suspends applicable 
application processing time frames, the time period will resume when the 
FDIC determines that a record has been developed that sufficiently 
supports a determination on the issues considered at the meeting.



Sec.390.126  If I file a notice under expedited treatment, when may
I engage in the proposed activities?

    If you are eligible for expedited treatment and you have 
appropriately filed your notice with the FDIC, you may engage in the 
proposed activities upon the expiration of 30 days after the filing date 
of your notice, unless the FDIC takes one of the following actions 
before the expiration of that time period:
    (a) The FDIC notifies you in writing that you must file additional 
information supplementing your notice. If you are required to file 
additional information, you may engage in the proposed activities upon 
the expiration of 30 calendar days after the date you file the 
additional information, unless the FDIC takes one of the actions 
described in paragraphs (b) through (d) of this section before the 
expiration of that time period;
    (b) The FDIC notifies you in writing that your notice is subject to 
standard treatment under Sec. Sec.390.126 through 390.135. The FDIC 
will subject your notice to standard treatment if it raises a 
supervisory concern, raises a significant issue of law or policy, or 
requires significant additional information;
    (c) The FDIC notifies you in writing that it is suspending the 
applicable time frames under Sec.390.125; or
    (d) The FDIC notifies you that it disapproves your notice.



Sec.390.127  What will the FDIC do after I file my application?

    (a) FDIC action. Within 30 calendar days after the filing date of 
your application, the FDIC will take one of the following actions:

------------------------------------------------------------------------
           If the FDIC . . .                        Then . . .
------------------------------------------------------------------------
(1) Notifies you, in writing, that your  The applicable review period
 application is complete * * *.           will begin on the date that
                                          the FDIC deems your
                                          application complete.
(2) Notifies you, in writing, that you   You must submit the required
 must submit addition information to      additional information under
 complete your application * * *.         Sec. 390.128.
(3) Notifies you, in writing, that your  The FDIC will not process your
 application is materially deficient *    application.
 * *.

[[Page 404]]

 
(4) Takes no action * * *..............  Your application is deemed
                                          complete. The applicable
                                          review period will begin on
                                          the day the 30-day time period
                                          expires.
------------------------------------------------------------------------

    (b) Waiver requests. If your application includes a request for 
waiver of an information requirement under Sec.390.105(b), and the 
FDIC has not notified you that you must submit additional information 
under paragraph (a)(2) of this section, your request for waiver is 
granted.



Sec.390.128  If the FDIC requests additional information to complete
my application, how will it process my application?

    (a) You may use the following chart to determine the procedure that 
applies to your submission of additional information under Sec.
390.127(a)(1):

------------------------------------------------------------------------
 If, within 30 calendar days
  after the date of FDIC's    Then, FDIC may . . .
   request for additional                                 And . . .
      information . . .
------------------------------------------------------------------------
(1) You file a response to    (i) Notify you in     The applicable
 all information requests *    writing within 15     review period will
 * *.                          days after the        begin on the date
                               filing date of your   that the FDIC deems
                               response that your    your application
                               application is        complete.
                               complete * * *
                               applicable to all
                               response that your
                               application is
                               complete * * *.
                              (ii) Notify you in    You must respond to
                               writing within 15     the additional
                               calendar days after   information request
                               the filing date of    within the time
                               your response that    period required by
                               you must submit       the FDIC. The FDIC
                               additional            will review your
                               information           response under the
                               regarding matters     procedures
                               derived from or       described in this
                               prompted by           section.
                               information already
                               furnished or any
                               additional
                               information
                               necessary to
                               resolve the issues
                               presented in your
                               application * * *.
                              (iii) Notify you in   The FDIC will not
                               writing within 15     process your
                               calendar days after   application.
                               the filing date of
                               your response that
                               your application is
                               materially
                               deficient * * *.
                              (iv) Take no action   Your application is
                               within 15 calendar    deemed complete.
                               days after the        The applicable
                               filing date of your   review period will
                               response * * *.       begin on the day
                                                     that the 15-day
                                                     time period
                                                     expires.
(2) You request an extension  (i) Grant an          You must fully
 of time to file additional    extension, in         respond within the
 information * * *.            writing, specifying   extended time
                               the number of days    period specified by
                               for the extension *   the FDIC. The FDIC
                               * *.                  will review your
                                                     response under the
                                                     procedures
                                                     described under
                                                     this section.
                              (ii) Notify you in    The FDIC will not
                               writing that your     process your
                               extension request     application
                               is disapproved * *    further. You may
                               *.                    resubmit the
                                                     application for
                                                     processing as a new
                                                     filing under the
                                                     applicable
                                                     regulation.
(3) You fail to respond       (i) Notify you in     The FDIC will not
 completely * * *.             writing that your     process your
                               application is        application
                               deemed withdrawn *    further. You may
                               * *.                  resubmit the
                                                     application for
                                                     processing as a new
                                                     filing under the
                                                     applicable
                                                     regulation.
                              (ii) Notify you, in   You must fully
                               writing, that your    respond within the
                               response is           extended time
                               incomplete and        period specified by
                               extend the response   the FDIC. The FDIC
                               period, specifying    will review your
                               the number of days    response under the
                               for the respond       procedures
                               extension * * *.      described under
                                                     this section.
------------------------------------------------------------------------

    (b) The FDIC may extend the 15-day period referenced in paragraph 
(a)(1) of this section by up to 15 calendar days, if the FDIC requires 
the additional time to review your response. The FDIC will notify you 
that it has extended the period before the end of the initial 15-day 
period and will briefly explain why the extension is necessary.
    (c) If your response filed under paragraph (a)(1) of this section 
includes a request for a waiver of an informational requirement, your 
request for a waiver is granted if the FDIC fails to act on it within 15 
calendar days after the filing of your response, unless the FDIC extends 
the review period under paragraph (b) of this section. If the FDIC 
extends the review period under paragraph (b), your request is granted 
if the FDIC fails to act on it by the end of the extended review period.

[[Page 405]]



Sec.390.129  Will the FDIC conduct an eligibility examination?

    (a) Eligibility examination. The FDIC may notify you at any time 
before it deems your application complete that it will conduct an 
eligibility examination. If the FDIC decides to conduct an eligibility 
examination, it will not deem your application complete until it 
concludes the examination.
    (b) Additional information. The FDIC may, as a result of the 
eligibility examination, notify you that you must submit additional 
information to complete your application. If so, you must respond to the 
additional information request within the time period required by the 
FDIC. The FDIC will review your response under the procedures described 
in Sec.390.128.



Sec.390.130  What may the FDIC require me to do after my application
is deemed complete?

    After your application is deemed complete, but before the end of the 
applicable review period,
    (a) The FDIC may require you to provide additional information if 
the information is necessary to resolve or clarify the issues presented 
by your application.
    (b) The FDIC may determine that a major issue of law or a change in 
circumstances arose after you filed your application, and that the issue 
or changed circumstances will substantially effect your application. If 
the FDIC identifies such an issue or changed circumstances, it may:
    (1) Notify you, in writing, that your application is now incomplete 
and require you to submit additional information to complete the 
application under the procedures described at Sec.390.128; and
    (2) Require you to publish a new public notice of your application 
under Sec.390.131.



Sec.390.131  Will the FDIC require me to publish a new public notice?

    (a) If your application was subject to a publication requirement, 
the FDIC may require you to publish a new public notice of your 
application if:
    (1) You submitted a revision to the application, you submitted new 
or additional information, or a major issue of law or a change in 
circumstances arose after the filing of your application; and
    (2) The FDIC determines that additional comment on these matters is 
appropriate because of the significance of the new information or 
circumstances.
    (b) The FDIC will notify you in writing if you must publish a new 
public notice of your revised application.
    (c) If you are required to publish a new public notice of your 
revised application, you must notify the FDIC after you publish the new 
public notice.



Sec.390.132  May the FDIC suspend processing of my application?

    (a) Suspension. The FDIC may, at any time, indefinitely suspend 
processing of your application if:
    (1) The FDIC, another governmental entity, or a self-regulatory 
trade or professional organization initiates an investigation, 
examination, or administrative proceeding that is relevant to the FDIC's 
evaluation of your application;
    (2) You request the suspension or there are other extraordinary 
circumstances that have a significant impact on the processing of your 
application.
    (b) Notice. The FDIC will promptly notify you, in writing, if it 
suspends your application.



Sec.390.133  How long is the FDIC review period?

    (a) General. The applicable FDIC review period is 60 calendar days 
after the date that your application is deemed complete, unless an 
applicable FDIC regulation specifies a different review period.
    (b) Multiple applications. If you submit more than one application 
in connection with a proposed action or if two or more applicants submit 
related applications, the applicable review period for all applications 
is the review period for the application with the longest review period, 
subject to statutory review periods.
    (c) Extensions. (1) The FDIC may extend the review period for up to 
30 calendar days beyond the period described in paragraph (a) or (b) of 
this section. The FDIC must notify you in writing of the extension and 
the duration of the

[[Page 406]]

extension. The FDIC must issue the written extension before the end of 
the review period.
    (2) The FDIC may also extend the review period as needed until it 
acts on the application, if the application presents a significant issue 
of law or policy that requires additional time to resolve. The FDIC must 
notify you in writing of the extension and the general reasons for the 
extension. The FDIC must issue the written extension before the end of 
the review period, including any extension of that period under 
paragraph (c)(1) of this section.



Sec.390.134  How will I know if my application has been approved?

    (a) FDIC approval or denial. (1) The FDIC will approve or deny your 
application before the expiration of the applicable review period, 
including any extensions of the review period.
    (2) The FDIC will promptly notify you in writing of its decision to 
approve or deny your application.
    (b) No FDIC action. If the FDIC fails to act under paragraph (a)(1) 
of this section, your application is approved.



Sec.390.135  What will happen if the FDIC does not approve
or disapprove my application within two calendar years after
the filing date?

    (a) Withdrawal. If the FDIC has not approved or denied your pending 
application within two calendar years after the filing date under Sec.
390.109, the FDIC will notify you, in writing, that your application is 
deemed withdrawn unless the FDIC determines that you are actively 
pursuing a final FDIC determination on your application. You are not 
actively pursuing a final FDIC determination if you have failed to 
timely take an action required under this part, including filing 
required additional information, or the FDIC has suspended processing of 
your application under Sec.390.132 based on circumstances that are, in 
whole or in part, within your control and you have failed to take 
reasonable steps to resolve these circumstances.
    (b) [Reserved]



                Subpart G_Nondiscrimination Requirements



Sec.390.140  Definitions.

    As used in this subpart--
    Application. For purposes of this part, an application for a loan or 
other service is as defined in Regulation C, 12 CFR 203.2(b).
    Dwelling. The term ``dwelling'' means a residential structure 
(whether or not it is attached to real property) located in a state of 
the United States of America, the District of Colombia, or the 
Commonwealth of Puerto Rico. The term includes an individual condominium 
unit, cooperative unit, or mobile or manufactured home.
    State savings association. The term ``State savings association'' 
means any State savings association as defined in 12 U.S.C. 1813(b).



Sec.390.141  Supplementary guidelines.

    The FDIC's policy statement found at 12 CFR 390.150 supplements this 
subpart and should be read together with this subpart. Refer also to the 
HUD Fair Housing regulations at 24 CFR parts 100 et seq., Federal 
Reserve Regulation B at 12 CFR part 202, and Federal Reserve Regulation 
C at 12 CFR part 203.



Sec.390.142  Nondiscrimination in lending and other services.

    (a) No State savings association may deny a loan or other service, 
or discriminate in the purchase of loans or securities or discriminate 
in fixing the amount, interest rate, duration, application procedures, 
collection or enforcement procedures, or other terms or conditions of 
such loan or other service on the basis of the age or location of the 
dwelling, or on the basis of the race, color, religion, sex, handicap, 
familial status (having one or more children under the age of 18), 
marital status, age (provided the person has the capacity to contract) 
or national origin of:
    (1) An applicant or joint applicant;
    (2) Any person associated with an applicant or joint applicant 
regarding such loan or other service, or with the purposes of such loan 
or other service;
    (3) The present or prospective owners, lessees, tenants, or 
occupants of

[[Page 407]]

the dwelling(s) for which such loan or other service is to be made or 
given;
    (4) The present or prospective owners, lessees, tenants, or 
occupants of other dwellings in the vicinity of the dwelling(s) for 
which such loan or other service is to be made or given.
    (b) A State savings association shall consider without prejudice the 
combined income of joint applicants for a loan or other service.
    (c) No State savings association may discriminate against an 
applicant for a loan or other service on any prohibited basis (as 
defined in 12 CFR 202.2(z) and 24 CFR part 100).



Sec.390.143  Nondiscriminatory appraisal and underwriting.

    (a) Appraisal. No State savings association may use or rely upon an 
appraisal of a dwelling which the State savings association knows, or 
reasonably should know, is discriminatory on the basis of the age or 
location of the dwelling, or is discriminatory per se or in effect under 
the Fair Housing Act of 1968 or the Equal Credit Opportunity Act.
    (b) Underwriting. Each State savings association shall have clearly 
written, non-discriminatory loan underwriting standards, available to 
the public upon request, at each of its offices. Each association shall, 
at least annually, review its standards, and business practices 
implementing them, to ensure equal opportunity in lending.



Sec.390.144  Nondiscrimination in applications.

    (a) No State savings association may discourage, or refuse to allow, 
receive, or consider, any application, request, or inquiry regarding a 
loan or other service, or discriminate in imposing conditions upon, or 
in processing, any such application, request, or inquiry on the basis of 
the age or location of the dwelling, or on the basis of the race, color, 
religion, sex, handicap, familial status (having one or more children 
under the age of 18), marital status, age (provided the person has the 
capacity to contract), national origin, or other characteristics 
prohibited from consideration in Sec.390.142(c), of the prospective 
borrower or other person, who:
    (1) Makes application for any such loan or other service;
    (2) Requests forms or papers to be used to make application for any 
such loan or other service; or
    (3) Inquires about the availability of such loan or other service.
    (b) A State savings association shall inform each inquirer of his or 
her right to file a written loan application, and to receive a copy of 
the association's underwriting standards.



Sec.390.145  Nondiscriminatory advertising.

    No State savings association may directly or indirectly engage in 
any form of advertising that implies or suggests a policy of 
discrimination or exclusion in violation of title VIII of the Civil 
Rights Acts of 1968, the Equal Credit Opportunity Act, or this subpart. 
Advertisements for any loan for the purpose of purchasing, constructing, 
improving, repairing, or maintaining a dwelling or any loan secured by a 
dwelling shall include a facsimile of the following logotype and legend:
[GRAPHIC] [TIFF OMITTED] TR05AU11.000


[[Page 408]]





Sec.390.146  Equal Housing Lender Poster.

    (a) Each State savings association shall post and maintain one or 
more Equal Housing Lender Posters, the text of which is prescribed in 
paragraph (b) of this section, in the lobby of each of its offices in a 
prominent place or places readily apparent to all persons seeking loans. 
The poster shall be at least 11 by 14 inches in size, and the text shall 
be easily legible. It is recommended that savings associations post a 
Spanish language version of the poster in offices serving areas with a 
substantial Spanish-speaking population.
    (b) The text of the Equal Housing Lender Poster shall be as follows:
    [GRAPHIC] [TIFF OMITTED] TR05AU11.001
    
    We Do Business In Accordance With Federal Fair Lending Laws.
    UNDER THE FEDERAL FAIR HOUSING ACT, IT IS ILLEGAL, ON THE BASIS OF 
RACE, COLOR, NATIONAL ORIGIN, RELIGION, SEX, HANDICAP, OR FAMILIAL 
STATUS (HAVING CHILDREN UNDER THE AGE OF 18) TO:
    [ ] Deny a loan for the purpose of purchasing, constructing, 
improving, repairing or maintaining a dwelling or to deny any loan 
secured by a dwelling; or
    [ ] Discriminate in fixing the amount, interest rate, duration, 
application procedures, or other terms or conditions of such a loan or 
in appraising property.
    IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU SHOULD:
    SEND A COMPLAINT TO:
    Assistant Secretary for Fair Housing and Equal Opportunity, 
Department of Housing and Urban Development, Washington, DC 20410.
    For processing under the Federal Fair Housing Act
    AND TO:
    Federal Deposit Insurance Corporation, Consumer Response Center, 
1100 Walnut St, Box 11, Kansas City, MO 64106
    For processing under FDIC Regulations.
    UNDER THE EQUAL CREDIT OPPORTUNITY ACT, IT IS ILLEGAL TO 
DISCRIMINATE IN ANY CREDIT TRANSACTION:
    [ ] On the basis of race, color, national origin, religion, sex, 
marital status, or age;
    [ ] Because income is from public assistance; or
    [ ] Because a right has been exercised under the Consumer Credit 
Protection Act.
    IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU SHOULD SEND 
A COMPLAINT TO:
    Federal Deposit Insurance Corporation, Consumer Response Center, 
1100 Walnut St, Box 11, Kansas City, MO 64106



Sec.390.147  Loan application register.

    State savings associations and other lenders required to file Home 
Mortgage Disclosure Act Loan Application Registers with the FDIC in 
accordance with 12 CFR part 203 must enter the reason for denial, using 
the codes provided in 12 CFR part 203, with respect to all loan denials.



Sec.390.148  Nondiscrimination in employment.

    (a) No State savings association shall, because of an individual's 
race, color, religion, sex, or national origin:
    (1) Fail or refuse to hire such individual;
    (2) Discharge such individual;
    (3) Otherwise discriminate against such individual with respect to 
such individual's compensation, promotion, or the terms, conditions, or 
privileges of such individual's employment; or
    (4) Discriminate in admission to, or employment in, any program of 
apprenticeship, training, or retraining, including on-the-job training.

[[Page 409]]

    (b) No State savings association shall limit, segregate, or classify 
its employees in any way which would deprive or tend to deprive any 
individual of employment opportunities or otherwise adversely affect 
such individual's status as an employee because of such individual's 
race, color, religion, sex, or national origin.
    (c) No State savings association shall discriminate against any 
employee or applicant for employment because such employee or applicant 
has opposed any employment practice made unlawful by Federal, State, or 
local law or regulation or because he has in good faith made a charge of 
such practice or testified, assisted, or participated in any manner in 
an investigation, proceeding, or hearing of such practice by any 
lawfully constituted authority.
    (d) No State savings association shall print or publish or cause to 
be printed or published any notice or advertisement relating to 
employment by such savings association indicating any preference, 
limitation, specification, or discrimination based on race, color, 
religion, sex, or national origin.
    (e) This regulation shall not apply in any case in which the Federal 
Equal Employment Opportunities law is made inapplicable by the 
provisions of section 2000e-1 or sections 2000e-2 (e) through (j) of 
title 42, United States Code.
    (f) Any violation of the following laws or regulations by a State 
savings association shall be deemed to be a violation of this subpart:
    (1) The Equal Employment Opportunity Act, as amended, 42 U.S.C. 
2000e-2000h-2, and Equal Employment Opportunity Commission (EEOC) 
regulations at 29 CFR part 1600;
    (2) The Age Discrimination in Employment Act, 29 U.S.C. 621-633, and 
EEOC and Department of Labor regulations;
    (3) Department of the Treasury regulations at 31 CFR part 12 and 
Office of Federal Contract Compliance Programs (OFCCP) regulations at 41 
CFR part 60;
    (4) The Veterans Employment and Readjustment Act of 1972, 38 U.S.C. 
2011-2012, and the Vietnam Era Veterans Readjustment Adjustment 
Assistance Act of 1974, 38 U.S.C. 2021-2026;
    (5) The Rehabilitation Act of 1973, 29 U.S.C. 701 et al.; and
    (6) The Immigration and Nationality Act, 8 U.S.C. 1324b, and INS 
regulations at 8 CFR part 274a.



Sec.390.149  Complaints.

    Complaints regarding discrimination in lending by a State savings 
association shall be referred to the Assistant Secretary for Fair 
Housing and Equal Opportunity, U.S. Department of Housing and Urban 
Development, Washington, DC 20410 for processing under the Fair Housing 
Act, and to the Director, Division of Depositor and Consumer Protection, 
Federal Deposit Insurance Corporation, 550 17th Street, NW., Washington, 
DC 20249 for processing under FDIC regulations. Complaints regarding 
discrimination in employment by a State savings association should be 
referred to the Equal Employment Opportunity Commission, Washington, DC 
20506 and a copy, for information only, sent to the Director, Division 
of Depositor and Consumer Protection, Federal Deposit Insurance 
Corporation, 550 17th Street, NW., Washington, DC 20249.



Sec.390.150  Guidelines relating to nondiscrimination in lending.

    (a) General. Fair housing and equal opportunity in home financing is 
a policy of the United States established by Federal statutes and 
Presidential orders and proclamations. In furtherance of the Federal 
civil rights laws and the economical home financing purposes of the 
statutes administered by the FDIC, the FDIC has adopted, in this 
subpart, nondiscrimination regulations that, among other things, 
prohibit arbitrary refusals to consider loan applications on the basis 
of the age or location of a dwelling, and prohibit discrimination based 
on race, color, religion, sex, handicap, familial status (having one or 
more children under the age of 18), marital status, age (provided the 
person has the capacity to contract), or national origin in fixing the 
amount, interest rate, duration, application procedures, collection or 
enforcement procedures, or other terms or conditions of housing related 
loans. Such discrimination is also prohibited in the purchase of loans 
and securities. This

[[Page 410]]

section provides supplementary guidelines to aid savings associations in 
developing and implementing nondiscriminatory lending policies. Each 
State savings association should reexamine its underwriting standards at 
least annually in order to ensure equal opportunity.
    (b) Loan underwriting standards. The basic purpose of the FDIC's 
nondiscrimination regulations is to require that every applicant be 
given an equal opportunity to obtain a loan. Each loan applicant's 
creditworthiness should be evaluated on an individual basis without 
reference to presumed characteristics of a group. The use of lending 
standards which have no economic basis and which are discriminatory in 
effect is a violation of law even in the absence of an actual intent to 
discriminate. However, a standard which has a discriminatory effect is 
not necessarily improper if its use achieves a genuine business need 
which cannot be achieved by means which are not discriminatory in effect 
or less discriminatory in effect.
    (c) Discriminatory practices-- (1) Discrimination on the basis of 
sex or marital status. The Civil Rights Act of 1968 and the National 
Housing Act prohibit discrimination in lending on the basis of sex. The 
Equal Credit Opportunity Act, in addition to this prohibition, forbids 
discrimination on the basis of marital status. Refusing to lend to, 
requiring higher standards of creditworthiness of, or imposing different 
requirements on, members of one sex or individuals of one marital 
status, is discrimination based on sex or marital status. Loan 
underwriting decisions must be based on an applicant's credit history 
and present and reasonably foreseeable economic prospects, rather than 
on the basis of assumptions regarding comparative differences in 
creditworthiness between married and unmarried individuals, or between 
men and women.
    (2) Discrimination on the basis of language. Requiring fluency in 
the English language as a prerequisite for obtaining a loan may be a 
discriminatory practice based on national origin.
    (3) Income of husbands and wives. A practice of discounting all or 
part of either spouse's income where spouses apply jointly is a 
violation of section 527 of the National Housing Act. As with other 
income, when spouses apply jointly for a loan, the determination as to 
whether a spouse's income qualifies for credit purposes should depend 
upon a reasonable evaluation of his or her past, present, and reasonably 
foreseeable economic circumstances. Information relating to child-
bearing intentions of a couple or an individual may not be requested.
    (4) Supplementary income. Lending standards which consider as 
effective only the non-overtime income of the primary wage-earner may 
result in discrimination because they do not take account of variations 
in employment patterns among individuals and families. The FDIC favors 
loan underwriting which reasonably evaluates the credit worthiness of 
each applicant based on a realistic appraisal of his or her own past, 
present, and foreseeable economic circumstances. The determination as to 
whether primary income or additional income qualifies as effective for 
credit purposes should depend upon whether such income may reasonably be 
expected to continue through the early period of the mortgage risk. 
Automatically discounting other income from bonuses, overtime, or part-
time employment, will cause some applicants to be denied financing 
without a realistic analysis of their credit worthiness. Since 
statistics show that minority group members and low- and moderate-income 
families rely more often on such supplemental income, the practice may 
be racially discriminatory in effect, as well as artificially 
restrictive of opportunities for home financing.
    (5) Applicant's prior history. Loan decisions should be based upon a 
realistic evaluation of all pertinent factors respecting an individual's 
creditworthiness, without giving undue weight to any one factor. The 
State savings association should, among other things, take into 
consideration that:
    (i) In some instances, past credit difficulties may have resulted 
from discriminatory practices;
    (ii) A policy favoring applicants who previously owned homes may 
perpetuate prior discrimination;

[[Page 411]]

    (iii) A current, stable earnings record may be the most reliable 
indicator of credit-worthiness, and entitled to more weight than factors 
such as educational level attained;
    (iv) Job or residential changes may indicate upward mobility; and
    (v) Preferring applicants who have done business with the lender can 
perpetuate previous discriminatory policies.
    (6) Income level or racial composition of area. Refusing to lend or 
lending on less favorable terms in particular areas because of their 
racial composition is unlawful. Refusing to lend, or offering less 
favorable terms (such as interest rate, downpayment, or maturity) to 
applicants because of the income level in an area can discriminate 
against minority group persons.
    (7) Age and location factors. Sections 390.142-390.144 prohibit loan 
denials based upon the age or location of a dwelling. These restrictions 
are intended to prohibit use of unfounded or unsubstantiated assumptions 
regarding the effect upon loan risk of the age of a dwelling or the 
physical or economic characteristics of an area. Loan decisions should 
be based on the present market value of the property offered as security 
(including consideration of specific improvements to be made by the 
borrower) and the likelihood that the property will retain an adequate 
value over the term of the loan. Specific factors which may negatively 
affect its short-range future value (up to 3-5 years) should be clearly 
documented. Factors which in some cases may cause the market value of a 
property to decline are recent zoning changes or a significant number of 
abandoned homes in the immediate vicinity of the property. However, not 
all zoning changes will cause a decline in property values, and 
proximity to abandoned buildings may not affect the market value of a 
property because of rehabilitation programs or affirmative lending 
programs, or because the cause of abandonment is unrelated to high risk. 
Proper underwriting considerations include the condition and utility of 
the improvements, and various physical factors such as street 
conditions, amenities such as parks and recreation areas, availability 
of public utilities and municipal services, and exposure to flooding and 
land faults. However, arbitrary decisions based on age or location are 
prohibited, since many older, soundly constructed homes provide housing 
opportunities which may be precluded by an arbitrary lending policy.
    (8) Fair Housing Act (title VIII, Civil Rights Act of 1968, as 
amended). State savings associations, must comply with all regulations 
promulgated by the Department of Housing and Urban Development to 
implement the Fair Housing Act, found at 24 CFR part 100 et seq., except 
that they shall use the Equal Housing Lender logo and poster prescribed 
by FDIC regulations at Sec. Sec.390.145 and 390.146 rather than the 
Equal Housing Opportunity logo and poster required by 24 CFR parts 109 
and 110.
    (d) Marketing practices. State savings associations should review 
their advertising and marketing practices to ensure that their services 
are available without discrimination to the community they serve. 
Discrimination in lending is not limited to loan decisions and 
underwriting standards; a State savings association does not meet its 
obligations to the community or implement its equal lending 
responsibility if its marketing practices and business relationships 
with developers and real estate brokers improperly restrict its 
clientele to segments of the community. A review of marketing practices 
could begin with an examination of an association's loan portfolio and 
applications to ascertain whether, in view of the demographic 
characteristics and credit demands of the community in which the 
institution is located, it is adequately serving the community on a 
nondiscriminatory basis. The FDIC will systematically review marketing 
practices where evidence of discrimination in lending is discovered.

Subparts H-L [Reserved]



                           Subpart M_Deposits



Sec.390.230  What does this subpart do?

    This subpart applies to the deposit activities of State savings 
associations.

[[Page 412]]



Sec.390.231  What records should I maintain on deposit activities?

    All State savings associations (``you'') should establish and 
maintain deposit documentation practices and records that demonstrate 
that you appropriately administer and monitor deposit-related 
activities. Your records should adequately evidence ownership, balances, 
and all transactions involving each account. You may maintain records on 
deposit activities in any format that is consistent with standard 
business practices.

Subpart N [Reserved]



                   Subpart O_Subordinate Organizations



Sec.390.250  What does this subpart cover?

    (a) The FDIC is issuing this subpart O pursuant to its general 
rulemaking and supervisory authority under the Federal Deposit Insurance 
Act, 12 U.S.C. 1811 et seq., and its specific authority under section 
18(m) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(m). This 
subpart applies to subordinate organizations of State savings 
associations. The FDIC may, at any time, limit a State savings 
association's investment in any of these entities, or may limit or 
refuse to permit any activities of any of these entities for 
supervisory, legal, or safety and soundness reasons.
    (b) Notices under this subpart are applications for purposes of 
statutory and regulatory references to ``applications.'' Any conditions 
that the FDIC imposes in approving any application are enforceable as a 
condition imposed in writing by the FDIC in connection with the granting 
of a request by a State savings association within the meaning of 12 
U.S.C. 1818(b) or 1818(i).



Sec.390.251  Definitions.

    For purposes of this subpart:
    Control has the same meaning as in part 391, subpart E.
    GAAP-consolidated subsidiary means an entity in which a State 
savings association has a direct or indirect ownership interest and 
whose assets are consolidated with those of the savings association for 
purposes of reporting under Generally Accepted Accounting Principles 
(GAAP). Generally, these are entities in which a State savings 
association has a majority ownership interest.
    Lower-tier entity includes any company in which a subsidiary has a 
direct or indirect ownership interest.
    Ownership interest means any equity interest in a business 
organization, including stock, limited or general partnership interests, 
or shares in a limited liability company.
    Subordinate organization means any corporation, partnership, 
business trust, association, joint venture, pool, syndicate, or other 
similar business organization in which a State savings association has a 
direct or indirect ownership interest, unless that ownership interest 
qualifies as a pass-through investment and is so designated by the 
investing State savings association.
    Subsidiary means any subordinate organization directly or indirectly 
controlled by a State savings association.



Sec.390.252  How must separate corporate identities be maintained?

    (a) Each State savings association and subordinate organization 
thereof must be operated in a manner that demonstrates to the public 
that each maintains a separate corporate existence. Each must operate so 
that:
    (1) Their respective business transactions, accounts, and records 
are not intermingled;
    (2) Each observes the formalities of their separate corporate 
procedures;
    (3) Each is adequately financed as a separate unit in light of 
normal obligations reasonably foreseeable in a business of its size and 
character;
    (4) Each is held out to the public as a separate enterprise; and
    (5) Unless the parent State savings association has guaranteed a 
loan to the subordinate organization, all borrowings by the subordinate 
organization indicate that the parent is not liable.
    (b) The FDIC regulations that apply both to State savings 
associations and subordinate organizations shall not be construed as 
requiring a State savings association and its subordinate organizations 
to operate as a single entity.

[[Page 413]]



Sec.390.253  What notices are required to establish or acquire a new 
subsidiary or engage in new activities through an existing subsidiary?

    When required by section 18(m) of the Federal Deposit Insurance Act, 
a State savings association (``you'') must file a notice (``Notice'') 
with the FDIC before establishing or acquiring a subsidiary or engaging 
in new activities in a subsidiary. The Notice must contain all of the 
information the required under 12 CFR 362.15. If the FDIC notifies you 
within 30 days that the Notice presents supervisory concerns, or raises 
significant issues of law or policy, you must apply for and receive the 
FDIC's prior written approval before establishing or acquiring the 
subsidiary or engaging in new activities in the subsidiary.



Sec.390.254  How may a subsidiary of a State savings association issue securities?

    (a) A subsidiary may issue, either directly or through a third party 
intermediary, any securities that its parent State savings association 
(``you'') may issue. The subsidiary must not state or imply that the 
securities it issues are covered by federal deposit insurance. A 
subsidiary may not issue any security the payment, maturity, or 
redemption of which may be accelerated upon the condition that you are 
insolvent or have been placed into receivership.
    (b) You must file a notice with the FDIC in accordance with Sec.
390.253 at least 30 days before your first issuance of any securities 
through an existing subsidiary or in conjunction with establishing or 
acquiring a new subsidiary. If the FDIC notifies you within 30 days that 
the notice presents supervisory concerns or raises significant issues of 
law or policy, you must receive the FDIC's prior written approval before 
issuing securities through your subsidiary.
    (c) For as long as any securities are outstanding, you must maintain 
all records generated through each securities issuance in the ordinary 
course of business, including a copy of any prospectus, offering 
circular, or similar document concerning such issuance, and make such 
records available for examination by the FDIC. Such records must 
include, but are not limited to:
    (1) The amount of your assets or liabilities (including any 
guarantees you make with respect to the securities issuance) that have 
been transferred or made available to the subsidiary; the percentage 
that such amount represents of the current book value of your assets on 
an unconsolidated basis; and the current book value of all such assets 
of the subsidiary;
    (2) The terms of any guarantee(s) issued by you or any third party;
    (3) A description of the securities the subsidiary issued;
    (4) The net proceeds from the issuance of securities (or the pro 
rata portion of the net proceeds from securities issued through a 
jointly owned subsidiary); the gross proceeds of the securities 
issuance; and the market value of assets collateralizing the securities 
issuance (any assets of the subsidiary, including any guarantees of its 
securities issuance you have made);
    (5) The interest or dividend rates and yields, or the range thereof, 
and the frequency of payments on the subsidiary's securities;
    (6) The minimum denomination of the subsidiary's securities; and
    (7) Where the subsidiary marketed or intends to market the 
securities.



Sec.390.255  How may a State savings association exercise its salvage
power in connection with a service corporation or lower-tier entities?

    (a) In accordance with this section, a State savings association 
(``you'') may exercise your salvage power to make a contribution or a 
loan (including a guarantee of a loan made by any other person) to a 
lower-tier entity (``salvage investment'') that exceeds the maximum 
amount otherwise permitted under law or regulation. You must notify the 
FDIC at least 30 days before making such a salvage investment. This 
notice must demonstrate that:
    (1) The salvage investment protects your interest in the lower-tier 
entity;
    (2) The salvage investment is consistent with safety and soundness; 
and
    (3) You considered alternatives to the salvage investment and 
determined that such alternatives would not adequately satisfy 
paragraphs (a)(1) and (2) of this section.

[[Page 414]]

    (b) If the FDIC notifies you within 30 days that the Notice presents 
supervisory concerns, or raises significant issues of law or policy, you 
must apply for and receive the FDIC's prior written approval before 
making a salvage investment.
    (c) If your lower-tier entity is a GAAP-consolidated subsidiary, 
your salvage investment under this section will be considered an 
investment in a subsidiary for purposes of subpart Z.



                    Subpart P_Lending and Investment



Sec.390.260  General.

    (a) Authority and scope. This subpart is being issued by the FDIC 
under its general rulemaking and supervisory authority under the Federal 
Deposit Insurance Act (FDIA), 12 U.S.C. 1811 et seq. Sections 390.264, 
390.265, and 390.267 through 390.272 contain safety-and-soundness based 
lending and investment provisions applicable to State savings 
associations.
    (b) General lending standards. Each State savings association is 
expected to conduct its lending and investment activities prudently. 
Each State savings association should use lending and investment 
standards that are consistent with safety and soundness, ensure adequate 
portfolio diversification and are appropriate for the size and condition 
of the institution, the nature and scope of its operations, and 
conditions in its lending market. Each State savings association should 
adequately monitor the condition of its portfolio and the adequacy of 
any collateral securing its loans.



Sec.390.261  [Reserved]



Sec.390.262  Definitions.

    For purposes of this subpart:
    Consumer loans include loans for personal, family, or household 
purposes and loans reasonably incident thereto, and may be made as 
either open-end or closed-end consumer credit (as defined at 12 CFR 
226.2(a)(10) and (20)). Consumer loans do not include credit extended in 
connection with credit card loans, bona fide overdraft loans, and other 
loans that the State savings association has designated as made under 
investment or lending authority other than section 5(c)(2)(D) of the 
HOLA.
    Credit card is any card, plate, coupon book, or other single credit 
device that may be used from time to time to obtain credit.
    Credit card account is a credit account established in conjunction 
with the issuance of, or the extension of credit through, a credit card. 
This term includes loans made to consolidate credit card debt, including 
credit card debt held by other lenders, and participation certificates, 
securities and similar instruments secured by credit card receivables.
    Home loans include any loans made on the security of a home 
(including a dwelling unit in a multi-family residential property such 
as a condominium or a cooperative), combinations of homes and business 
property (i.e., a home used in part for business), farm residences, and 
combinations of farm residences and commercial farm real estate.
    Loan commitment includes a loan in process, a letter of credit, or 
any other commitment to extend credit.
    Real estate loan is a loan for which the State savings association 
substantially relies upon a security interest in real estate given by 
the borrower as a condition of making the loan. A loan is made on the 
security of real estate if:
    (1) The security property is real estate pursuant to the law of the 
state in which the property is located;
    (2) The security interest of the State savings association may be 
enforced as a real estate mortgage or its equivalent pursuant to the law 
of the state in which the property is located;
    (3) The security property is capable of separate appraisal; and
    (4) With regard to a security property that is a leasehold or other 
interest for a period of years, the term of the interest extends, or is 
subject to extension or renewal at the option of the State savings 
association for a term of at least five years following the maturity of 
the loan.
    Small business includes a small business concern or entity as 
defined by section 3(a) of the Small Business Act, 15 U.S.C. 632(a), and 
implemented by the regulations of the Small Business Administration at 
13 CFR part 121.

[[Page 415]]

    Small business loans and loans to small businesses include any loan 
to a small business as defined in this section; or a loan that does not 
exceed $2 million (including a group of loans to one borrower) and is 
for commercial, corporate, business, or agricultural purposes.



Sec.390.263  [Reserved]



Sec.390.264  Real estate lending standards; purpose and scope.

    This section, and Sec.390.265, issued pursuant to section 18(o) of 
the Federal Deposit Insurance Act, (12 U.S.C. 1828(o)), prescribe 
standards for real estate lending to be used by State savings 
associations and all their includable subsidiaries, as defined in part 
324 of this chapter, over which the State savings associations exercise 
control, in adopting internal real estate lending policies.

[83 FR 17743, Apr. 24, 2018]



Sec.390.265  Real estate lending standards.

    (a) Each State savings association 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 State savings association'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 State savings 
association's real estate portfolio; and
    (iv) Documentation, approval, and reporting requirements to monitor 
compliance with the State savings association's real estate lending 
policies.
    (c) Each State savings association 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 banking 
agencies.

   Appendix to Sec.390.265--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.\1\ 
These guidelines are intended to assist institutions 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.
---------------------------------------------------------------------------

    \1\ The agencies have adopted a uniform rule on real estate lending. 
See 12 CFR part 365 and Sec. Sec.390.264-390.265 (FDIC); 12 CFR part 
208, subpart C (FRB); and 12 CFR part 34, subpart D (OCC).
---------------------------------------------------------------------------

    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).

[[Page 416]]

     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 State 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:
     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;

[[Page 417]]

    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,\2\ and other nonresidential......          80
  1- to 4-family residential................................          85
Improved property...........................................          85
Owner-occupied 1- to 4-family and home equity...............       (\3\)
------------------------------------------------------------------------


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

    \2\ Multifamily construction includes condominiums and cooperatives.
    \3\ 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.

         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 institutions' 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.\4\ 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

[[Page 418]]

scrutiny as the total of such loans approaches these levels.
---------------------------------------------------------------------------

    \4\ For the state member banks, the term ``total capital'' is 
defined at 12 CFR 217.2. For insured state non-member banks, the term 
``total capital'' is defined at 12 CFR 324.2. For national banks, the 
term ``total capital'' is defined at 12 CFR 3.2. For state savings 
associations, the term ``total capital'' is defined at 12 CFR 324.2.
---------------------------------------------------------------------------

    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.

                          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, 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.

[[Page 419]]

     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 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).

[76 FR 47655, Aug. 5, 2011, as amended at 78 FR 55597, Sept. 30, 2013; 
83 FR 17743, Apr. 24, 2018]

[[Page 420]]



Sec.390.266  [Reserved]



Sec.390.267  Letters of credit and other independent undertakings 
to pay against documents.

    (a) General authority. A State savings association may issue and 
commit to issue letters of credit within the scope of applicable laws or 
rules of practice recognized by law. It may also issue other independent 
undertakings within the scope of such laws or rules of practice 
recognized by law, that have been approved by the FDIC (approved 
undertaking).\1\ Under such letters of credit and approved undertakings, 
the State savings association's obligation to honor depends upon the 
presentation of specified documents and not upon nondocumentary 
conditions or resolution of questions of fact or law at issue between 
the account party and the beneficiary. A State savings association may 
also confirm or otherwise undertake to honor or purchase specified 
documents upon their presentation under another person's independent 
undertaking within the scope of such laws or rules.
---------------------------------------------------------------------------

    \1\ Samples of laws or rules of practice applicable to letters of 
credit and other independent undertakings include, but are not limited 
to: the applicable version of Article 5 of the Uniform Commercial Code 
(UCC) (1962, as amended 1990) or revised Article 5 of the UCC (as 
amended 1995) (available from West Publishing Co., 1/800/328-4880); the 
Uniform Customs and Practice for Documentary Credits (International 
Chamber of Commerce (ICC) Publication No. 500) (available from ICC 
Publishing, Inc., 212/206-1150; the United Nations Convention on 
Independent Guarantees and Standby Letters of Credit (adopted by the 
U.N. General Assembly in 1995 and signed by the U.S. in 1997) (available 
from the U.N. Commission on International Trade Law, 212/963-5353); and 
the Uniform Rules for Bank-to-Bank Reimbursements Under Documentary 
Credits (ICC Publication No. 525) (available from ICC Publishing, Inc., 
212/206-1150).
---------------------------------------------------------------------------

    (b) Safety and soundness considerations--(1) Terms. As a matter of 
safe and sound banking practice, State savings associations that issue 
letters of credit or approved undertakings should not be exposed to 
undue risk. At a minimum, State savings associations should consider the 
following:
    (i) The independent character of the letter of credit or approved 
undertaking should be apparent from its terms (such as terms that 
subject it to laws or rules providing for its independent character);
    (ii) The letter of credit or approved undertaking should be limited 
in amount;
    (iii) The letter of credit or approved undertaking should:
    (A) Be limited in duration; or
    (B) Permit the State savings association to terminate the letter of 
credit or approved undertaking, either on a periodic basis (consistent 
with the State savings association's ability to make any necessary 
credit assessments) or at will upon either notice or payment to the 
beneficiary; or
    (C) Entitle the State savings association to cash collateral from 
the account party on demand (with a right to accelerate the customer's 
obligations, as appropriate); and
    (iv) The State savings association either should be fully 
collateralized or have a post-honor right of reimbursement from its 
customer or from another issuer of a letter of credit or an independent 
undertaking. Alternatively, if the State savings association's 
undertaking is to purchase documents of title, securities, or other 
valuable documents, it should obtain a first priority right to realize 
on the documents if the State savings association is not otherwise to be 
reimbursed.
    (2) Additional considerations in special circumstances. Certain 
letters of credit and approved undertakings require particular 
protections against credit, operational, and market risk:
    (i) In the event that the undertaking is to honor by delivery of an 
item of value other than money, the State savings association should 
ensure that market fluctuations that affect the value of the item will 
not cause the State savings association to assume undue market risk;
    (ii) In the event that the undertaking provides for automatic 
renewal, the terms for renewal should allow the State savings 
association to make any necessary credit assessment prior to renewal;
    (iii) In the event that a State savings association issues an 
undertaking for

[[Page 421]]

its own account, the underlying transaction for which it is issued must 
be within the State savings association's authority and comply with any 
safety and soundness requirements applicable to that transaction.
    (3) Operational expertise. The State savings association should 
possess operational expertise that is commensurate with the 
sophistication of its letter of credit or independent undertaking 
activities.
    (4) Documentation. The State savings association must accurately 
reflect its letters of credit or approved undertakings in its records, 
including any acceptance or deferred payment or other absolute 
obligation arising out of its contingent undertaking.



Sec.390.268  Investment in State housing corporations.

    (a) Any State savings association to the extent it has legal 
authority to do so, may make investments in, commitments to invest in, 
loans to, or commitments to lend to any state housing corporation; 
provided, that such obligations or loans are secured directly, or 
indirectly through a fiduciary, by a first lien on improved real estate 
which is insured under the National Housing Act, as amended, and that in 
the event of default, the holder of such obligations or loans has the 
right directly, or indirectly through a fiduciary, to subject to the 
satisfaction of such obligations or loans the real estate described in 
the first lien, or the insurance proceeds.
    (b) Any State savings association that is adequately capitalized 
may, to the extent it has legal authority to do so, invest in 
obligations (including loans) of, or issued by, any state housing 
corporation incorporated in the state in which such State savings 
association has its home or a branch office; provided (except with 
respect to loans), that:
    (1) The obligations are rated in one of the four highest grades as 
shown by the most recently published rating made of such obligations by 
a nationally recognized rating service; or
    (2) The obligations, if not rated, are approved by the FDIC. The 
aggregate outstanding direct investment in obligations under paragraph 
(b) of this section shall not exceed the amount of the State savings 
association's total capital.
    (c) Each state housing corporation in which a State savings 
association invests under the authority of paragraph (b) of this section 
shall agree, before accepting any such investment (including any loan or 
loan commitment), to make available at any time to the FDIC such 
information as the FDIC may consider to be necessary to ensure that 
investments are properly made under this section.



Sec.390.269  Prohibition on loan procurement fees.

    If you are a director, officer, or other natural person having the 
power to direct the management or policies of a State savings 
association, you must not receive, directly or indirectly, any 
commission, fee, or other compensation in connection with the 
procurement of any loan made by the State savings association or a 
subsidiary of the State savings association.



Sec.390.270  Asset classification.

    (a)(1) Each State savings association must evaluate and classify its 
assets on a regular basis in a manner consistent with, or reconcilable 
to, the asset classification system used by the FDIC.
    (2) In connection with the examination of a State savings 
association or its affiliates, the FDIC examiners may identify problem 
assets and classify them, if appropriate. The association must recognize 
such examiner classifications in its subsequent reports to the FDIC.
    (b) Based on the evaluation and classification of its assets, each 
State savings association shall establish adequate valuation allowances 
or charge-offs, as appropriate, consistent with generally accepted 
accounting principles and the practices of the federal banking agencies.



Sec.390.271  Records for lending transactions.

    In establishing and maintaining its records pursuant to Sec.
390.350, each State savings association should establish and maintain 
loan documentation practices that:

[[Page 422]]

    (a) Ensure that the institution can make an informed lending 
decision and can assess risk on an ongoing basis;
    (b) Identify the purpose and all sources of repayment for each loan, 
and assess the ability of the borrower(s) and any guarantor(s) to repay 
the indebtedness in a timely manner;
    (c) Ensure that any claims against a borrower, guarantor, security 
holders, and collateral are legally enforceable;
    (d) Demonstrate appropriate administration and monitoring of its 
loans; and
    (e) Take into account the size and complexity of its loans.



Sec.390.272  Re-evaluation of real estate owned.

    A State savings association shall appraise each parcel of real 
estate owned at the earlier of in-substance foreclosure or at the time 
of the State savings association's acquisition of such property, and at 
such times thereafter as dictated by prudent management policy; such 
appraisals shall be consistent with the requirements of subpart X of 
this part. The appropriate regional director or his or her designee may 
require subsequent appraisals if, in his or her discretion, such 
subsequent appraisal is necessary under the particular circumstances. 
The foregoing requirement shall not apply to any parcel of real estate 
that is sold and reacquired less than 12 months subsequent to the most 
recent appraisal made pursuant to this subpart. A dated, signed copy of 
each report of appraisal made pursuant to any provisions of this subpart 
shall be retained in the State savings association's records.



   Subpart Q_Definitions for Regulations Affecting All State Savings 
                              Associations



Sec.390.280  When do the definitions in this subpart apply?

    The definitions in this subpart apply throughout parts 390 and 391, 
unless another definition is specifically provided.



Sec.390.281  Account.

    The term account means any savings account, demand account, 
certificate account, tax and loan account, note account, United States 
Treasury general account or United States Treasury time deposit-open 
account, whether in the form of a deposit or a share, held by an 
accountholder in a State savings association.



Sec.390.282  Accountholder.

    The term accountholder means the holder of an account or accounts in 
a State savings association insured by the Deposit Insurance Fund. The 
term does not include the holder of any subordinated debt security or 
any mortgage-backed bond issued by the State savings association.



Sec.390.283  Affiliate.

    The term affiliate of a State savings association, unless otherwise 
defined, means any corporation, business trust, association, or other 
similar organization:
    (a) Of which a State savings association, directly or indirectly, 
owns or controls either a majority of the voting shares or more than 50 
per centum of the number of shares voted for the election of its 
directors, trustees, or other persons exercising similar functions at 
the preceding election, or controls in any manner the election of a 
majority of its directors, trustees, or other persons exercising similar 
functions; or
    (b) Of which control is held, directly or indirectly through stock 
ownership or in any other manner, by the shareholders of a State savings 
association who own or control either a majority of the shares of such 
State savings association or more than 50 per centum of the number of 
shares voted for the election of directors of such State savings 
association at the preceding election, or by trustees for the benefit of 
the shareholders of any such State savings association; or
    (c) Of which a majority of its directors, trustees, or other persons 
exercising similar functions are directors of any one State savings 
association.



Sec.390.284  Affiliated person.

    The term affiliated person of a State savings association means the 
following:

[[Page 423]]

    (a) A director, officer, or controlling person of such association;
    (b) A spouse of a director, officer, or controlling person of such 
association;
    (c) A member of the immediate family of a director, officer, or 
controlling person of such association, who has the same home as such 
person or who is a director or officer of any subsidiary of such 
association or of any holding company affiliate of such association;
    (d) Any corporation or organization (other than the State savings 
association or a corporation or organization through which the State 
savings association operates) of which a director, officer or the 
controlling person of such association:
    (1) Is chief executive officer, chief financial officer, or a person 
performing similar functions;
    (2) Is a general partner;
    (3) Is a limited partner who, directly or indirectly either alone or 
with his or her spouse and the members of his or her immediate family 
who are also affiliated persons of the association, owns an interest of 
10 percent or more in the partnership (based on the value of his or her 
contribution) or who, directly or indirectly with other directors, 
officers, and controlling persons of such association and their spouses 
and their immediate family members who are also affiliated persons of 
the association, owns an interest of 25 percent or more in the 
partnership; or
    (4) Directly or indirectly either alone or with his or her spouse 
and the members of his or her immediate family who are also affiliated 
persons of the association, owns or controls 10 percent or more of any 
class of equity securities or owns or controls, with other directors, 
officers, and controlling persons of such association and their spouses 
and their immediate family members who are also affiliated persons of 
the association, 25 percent or more of any class of equity securities; 
and
    (5) Any trust or other estate in which a director, officer, or 
controlling person of such association or the spouse of such person has 
a substantial beneficial interest or as to which such person or his or 
her spouse serves as trustee or in a similar fiduciary capacity.



Sec.390.285  Audit period.

    The audit period of a State savings association means the twelve 
month period (or other period in the case of a change in audit period) 
covered by the annual audit conducted to satisfy Sec.390.350.



Sec.390.286  Certificate account.

    The term certificate account means a savings account evidenced by a 
certificate that must be held for a fixed or minimum term.



Sec.390.287  Consumer credit.

    The term consumer credit means credit extended to a natural person 
for personal, family, or household purposes, including loans secured by 
liens on real estate and chattel liens secured by mobile homes and 
leases of personal property to consumers that may be considered the 
functional equivalent of loans on personal security: Provided, the State 
savings association relies substantially upon other factors, such as the 
general credit standing of the borrower, guaranties, or security other 
than the real estate or mobile home, as the primary security for the 
loan. Appropriate evidence to demonstrate justification for such 
reliance should be retained in a State savings association's files. 
Among the types of credit included within this term are consumer loans; 
educational loans; unsecured loans for real property alteration, repair 
or improvement, or for the equipping of real property; loans in the 
nature of overdraft protection; and credit extended in connection with 
credit cards.



Sec.390.288  Controlling person.

    The term controlling person of a State savings association means any 
person or entity which, either directly or indirectly, or acting in 
concert with one or more other persons or entities, owns, controls, or 
holds with power to vote, or holds proxies representing, ten percent or 
more of the voting shares or rights of such State savings association; 
or controls in any manner the election or appointment of a majority of 
the directors of such State savings association. However, a director of 
a State savings association will not be

[[Page 424]]

deemed to be a controlling person of such State savings association 
based upon his or her voting, or acting in concert with other directors 
in voting, proxies:
    (a) Obtained in connection with an annual solicitation of proxies, 
or
    (b) Obtained from savings account holders and borrowers if such 
proxies are voted as directed by a majority vote of the entire board of 
directors of such association, or of a committee of such directors if 
such committee's composition and authority are controlled by a majority 
vote of the entire board and if its authority is revocable by such a 
majority.



Sec.390.289  Corporation.

    The terms Corporation and FDIC mean the Federal Deposit Insurance 
Corporation.



Sec.390.290  Demand accounts.

    The term demand accounts means non-interest-bearing demand deposits 
that are subject to check or to withdrawal or transfer on negotiable or 
transferable order to the State savings association and that are 
permitted to be issued by statute, regulation, or otherwise and are 
payable on demand.



Sec.390.291  Director.

    The term director means any director, trustee, or other person 
performing similar functions with respect to any organization whether 
incorporated or unincorporated. Such term does not include an advisory 
director, honorary director, director emeritus, or similar person, 
unless the person is otherwise performing functions similar to those of 
a director.



Sec.390.292  Financial institution.

    The term financial institution has the same meaning as the term 
depository institution set forth in 12 U.S.C. 1813(c)(1).



Sec.390.293  Immediate family.

    The term immediate family of any natural person means the following 
(whether by the full or half blood or by adoption):
    (a) Such person's spouse, father, mother, children, brothers, 
sisters, and grandchildren;
    (b) The father, mother, brothers, and sisters of such person's 
spouse; and
    (c) The spouse of a child, brother, or sister of such person.



Sec.390.294  Land loan.

    The term land loan means a loan:
    (a) Secured by real estate upon which all facilities and 
improvements have been completely installed, as required by local 
regulations and practices, so that it is entirely prepared for the 
erection of structures;
    (b) To finance the purchase of land and the accomplishment of all 
improvements required to convert it to developed building lots; or
    (c) Secured by land upon which there is no structure.



Sec.390.295  Low-rent housing.

    The term low-rent housing means real estate which is, or which is 
being constructed, remodeled, rehabilitated, modernized, or renovated to 
be, the subject of an annual contributions contract for low-rent housing 
under the provisions of the United States Housing Act of 1937, as 
amended.



Sec.390.296  Money Market Deposit Accounts.

    (a) Money Market Deposit Accounts (MMDAs) offered by State savings 
associations in accordance with applicable state law are savings 
accounts on which interest may be paid if issued subject to the 
following limitations:
    (1) The State savings association shall reserve the right to require 
at least seven days' notice prior to withdrawal or transfer of any funds 
in the account; and
    (2)(i) The depositor is authorized by the State savings association 
to make no more than six transfers per calendar month or statement cycle 
(or similar period) of at least four weeks by means of preauthorized, 
automatic, telephonic, or data transmission agreement, order, or 
instruction to another account of the depositor at the same State 
savings association to the State savings association itself, or to a 
third party.
    (ii) State savings associations may permit holders of MMDAs to make 
unlimited transfers for the purpose of repaying loans (except overdraft 
loans on

[[Page 425]]

the depositor's demand account) and associated expenses at the same 
State savings association (as originator or servicer), to make unlimited 
transfers of funds from this account to another account of the same 
depositor at the same State savings association or to make unlimited 
payments directly to the depositor from the account when such transfers 
or payments are made by mail, messenger, automated teller machine, or in 
person, or when such payments are made by telephone (via check mailed to 
the depositor).
    (3) In order to ensure that no more than the number of transfers 
specified in paragraph (a)(2)(i) of this section are made, a State 
savings association must either:
    (i) Prevent transfers of funds in excess of the limitations; or
    (ii) Adopt procedures to monitor those transfers on an after-the-
fact basis and contact customers who exceed the limits on more than an 
occasional basis. For customers who continue to violate those limits 
after being contacted by the depository State savings association the 
depository State savings association must either place funds in another 
account that the depositor is eligible to maintain or take away the 
account's transfer and draft capacities.
    (iii) Insured State savings associations at their option, may use on 
a consistent basis either the date on a check or the date it is paid in 
determining whether the transfer limitations within the specified 
interval are exceeded.
    (b) State savings associations may offer MMDAs to any depositor not 
inconsistent with applicable state law.



Sec.390.297  Negotiable Order of Withdrawal Accounts.

    (a) Negotiable Order of Withdrawal (NOW) accounts are savings 
accounts authorized by 12 U.S.C. 1832 on which the State savings 
association reserves the right to require at least seven days' notice 
prior to withdrawal or transfer of any funds in the account.
    (b) For purposes of 12 U.S.C. 1832:
    (1) An organization shall be deemed ``operated primarily for 
religious, philanthropic, charitable, educational, or other similar 
purposes and * * * not * * * for profit'' if it is described in sections 
501(c)(3) through (13), 501(c)(19), or 528 of the Internal Revenue Code; 
and
    (2) The funds of a sole proprietorship or unincorporated business 
owned by a husband and wife shall be deemed beneficially owned by ``one 
or more individuals.''



Sec.390.298  Nonresidential construction loan.

    The term nonresidential construction loan means a loan for 
construction of other than one or more dwelling units.



Sec.390.299  Nonwithdrawable account.

    The term nonwithdrawable account means an account which by the terms 
of the contract of the accountholder with the State savings association 
or by provisions of state law cannot be paid to the accountholder until 
all liabilities, including other classes of share liability of the State 
savings association have been fully liquidated and paid upon the winding 
up of the State savings association is referred to as a nonwithdrawable 
account.



Sec.390.300  Note account.

    The term note account means a note, subject to the right of 
immediate call, evidencing funds held by depositories electing the note 
option under applicable United States Treasury Department regulations. 
Note accounts are not savings accounts or savings deposits.



Sec.390.301  [Reserved]



Sec.390.302  Officer.

    The term Officer means the president, any vice-president (but not an 
assistant vice-president, second vice-president, or other vice president 
having authority similar to an assistant or second vice-president), the 
secretary, the treasurer, the comptroller, and any other person 
performing similar functions with respect to any organization whether 
incorporated or unincorporated. The term officer also includes the 
chairman of the board of directors if the chairman is authorized by the 
charter or by-laws of the organization to participate in its operating 
management or if the chairman in fact participates in such management.

[[Page 426]]



Sec.390.303  Parent company; subsidiary.

    The term parent company means any company which directly or 
indirectly controls any other company or companies. The term subsidiary 
means any company which is owned or controlled directly or indirectly by 
a person, and includes a subsidiary owned in whole or in part by a State 
savings association, or a subsidiary of that subsidiary.



Sec.390.304  Political subdivision.

    The term political subdivision includes any subdivision of a public 
unit, any principal department of such public unit:
    (a) The creation of which subdivision or department has been 
expressly authorized by state statute,
    (b) To which some functions of government have been delegated by 
state statute, and
    (c) To which funds have been allocated by statute or ordinance for 
its exclusive use and control. It also 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. Excluded from the term are 
subordinate or nonautonomous divisions, agencies or boards within 
principal departments.



Sec.390.305  Principal office.

    The term principal office means the home office of a State savings 
association established as such in conformity with the laws under which 
the State savings association is organized.



Sec.390.306  Public unit.

    The term public unit means the United States, any state of the 
United States, the District of Columbia, any territory of the United 
States, Puerto Rico, the Virgin Islands, any county, any municipality or 
any political subdivision thereof.



Sec.390.307  Savings account.

    The term savings account means any withdrawable account, except a 
demand account as defined in Sec.390.290, a tax and loan account, a 
note account, a United States Treasury general account, or a United 
States Treasury time deposit-open account.



Sec.390.308  State savings association.

    The term State savings association means a State savings association 
as defined in section 3 of the Federal Deposit Insurance Act, the 
deposits of which are insured by the Corporation. It includes a building 
and loan, savings and loan, or homestead association, or a cooperative 
bank (other than a cooperative bank which is a State bank as defined in 
section 3(a)(2) of the Federal Deposit Insurance Act) organized and 
operating according to the laws of the State in which it is chartered or 
organized, or a corporation (other than a bank as defined in section 
3(a)(1) of the Federal Deposit Insurance Act) that the Board of 
Directors of the Federal Deposit Insurance Corporation determine to be 
operating substantially in the same manner as a State savings 
association.



Sec.390.309  Security.

    The term security means any non-withdrawable account, note, stock, 
treasury stock, bond, debenture, evidence of indebtedness, certificate 
of interest or participation in any profit-sharing agreement, 
collateral-trust certificate, preorganization certificate or 
subscription, transferable share, investment contract, voting-trust 
certificate, or, in general, any interest or instrument commonly known 
as a security, or any certificate of interest or participation in, 
temporary or interim certificate for, receipt for, guarantee of, or 
warrant or right to subscribe to or purchase, any of the foregoing, 
except that a security shall not include an account or deposit insured 
by the Federal Deposit Insurance Corporation.



Sec.390.310  Service corporation.

    The term service corporation means any corporation, the majority of 
the capital stock of which is owned by one or more savings associations 
and which engages, directly or indirectly, in any activities similar to 
activities which may be engaged in by a service corporation in which a 
Federal savings association may invest.

[[Page 427]]



Sec.390.311  State.

    The term State means a State, the District of Columbia, Guam, Puerto 
Rico, and the Virgin Islands of the United States.



Sec.390.312  Subordinated debt security.

    The term subordinated debt security means any unsecured note, 
debenture, or other debt security issued by a State savings association 
and subordinated on liquidation to all claims having the same priority 
as account holders or any higher priority.



Sec.390.313  Tax and loan account.

    The term tax and loan account means an account, the balance of which 
is subject to the right of immediate withdrawal, established for receipt 
of payments of Federal taxes and certain United States obligations. Such 
accounts are not savings accounts or savings deposits.



Sec.390.314  United States Treasury General Account.

    The term United States Treasury General Account means an account 
maintained in the name of the United States Treasury the balance of 
which is subject to the right of immediate withdrawal, except in the 
case of the closure of the member, and in which a zero balance may be 
maintained. Such accounts are not savings accounts or savings deposits.



Sec.390.315  United States Treasury Time Deposit Open Account.

    The term United States Treasury Time Deposit Open Account means a 
non-interest-bearing account maintained in the name of the United States 
Treasury which may not be withdrawn prior to the expiration of 30 days' 
written notice from the United States Treasury, or such other period of 
notice as the Treasury may require. Such accounts are not savings 
accounts or savings deposits.



Sec.390.316  With recourse.

    (a) The term with recourse means, in connection with the sale of a 
loan or a participation interest in a loan, an agreement or arrangement 
under which the purchaser is to be entitled to receive from the seller a 
sum of money or thing of value, whether tangible or intangible 
(including any substitution), upon default in payment of any loan 
involved or any part thereof or to withhold or to have withheld from the 
seller a sum of money or anything of value by way of security against 
default. The recourse liability resulting from a sale with recourse 
shall be the total book value of any loan sold with recourse less:
    (1) The amount of any insurance or guarantee against loss in the 
event of default provided by a third party,
    (2) The amount of any loss to be borne by the purchaser in the event 
of default, and
    (3) The amount of any loss resulting from a recourse obligation 
entered on the books and records of the State savings association.
    (b) The term with recourse does not include loans or interests 
therein where the agreement of sale provides for the State savings 
association directly or indirectly
    (1) To hold or retain a subordinate interest in a specified 
percentage of the loans or interests; or
    (2) To guarantee against loss up to a specified percentage of the 
loans or interests, which specified percentage shall not exceed ten 
percent of the outstanding balance of the loans or interests at the time 
of sale: Provided, that the State savings association designates 
adequate reserves for the subordinate interest or guarantee.
    (c) This definition does not apply for purposes of determining the 
capital adequacy requirements under part 324 of this chapter.

[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17743, Apr. 24, 2018]



                Subpart R_Regulatory Reporting Standards



Sec.390.320  Regulatory reporting requirements.

    (a) Authority and scope. This subpart is issued by the FDIC pursuant 
to 12 U.S.C. sections 1831m; 1831n(a)(2); 1831p-1;1464(v)(1). It applies 
to all State savings associations regulated by the FDIC.
    (b) Records and reports--general--(1) Records. Each State savings 
association

[[Page 428]]

and its affiliates shall maintain accurate and complete records of all 
business transactions. Such records shall support and be readily 
reconcilable to any regulatory reports submitted to the FDIC and 
financial reports prepared in accordance with GAAP. The records shall be 
maintained in the United States and be readily accessible for 
examination and other supervisory purposes within 5 business days upon 
request by the FDIC, at a location acceptable to the FDIC.
    (2) Reports. For purposes of examination by and regulatory reports 
to the FDIC and compliance with this section, all State savings 
associations shall use such forms and follow such regulatory reporting 
requirements as the FDIC may require by regulation or otherwise.



Sec.390.321  Regulatory reports.

    (a) Definition and scope. This section applies to all regulatory 
reports, as defined herein. A regulatory report is any report that the 
FDIC prepares, or is submitted to, or is used by the FDIC, to determine 
compliance with its rules and regulations, and to evaluate the safe and 
sound condition and operation of State savings associations. Regulatory 
reports are regulatory documents, not accounting documents.
    (b) Regulatory reporting requirements--(1) General. The instructions 
to regulatory reports are referred to as ``regulatory reporting 
requirements.'' Regulatory reporting requirements include, but are not 
limited to, the accounting instructions, guidance contained in FDIC 
regulations, financial institution letters, manuals, bulletins, 
examination handbooks, and safe and sound practices. Regulatory 
reporting requirements are not limited to the minimum requirements under 
generally accepted accounting principles (GAAP) because of the special 
supervisory, regulatory, and economic policy needs served by such 
reports. Regulatory reporting by State savings associations that 
purports to comply with GAAP shall incorporate the GAAP that best 
reflects the underlying economic substance of the transaction at issue. 
Regulatory reporting requirements shall, at a minimum:
    (i) Incorporate GAAP whenever GAAP is the referenced accounting 
instruction for regulatory reports to the Federal banking agencies;
    (ii) Incorporate safe and sound practices contained in FDIC 
regulations, financial institution letters, bulletins, examination 
handbooks, manuals, and instructions to regulatory reports; and
    (iii) Incorporate additional safety and soundness requirements more 
stringent than GAAP, as the FDIC may prescribe.
    (2) Exceptions. Regulatory reporting requirements that are not 
consistent with GAAP, if any, are not required to be reflected in the 
audited financial statements, including financial statements contained 
in securities filings submitted to the FDIC pursuant to the Securities 
Exchange Act of 1934 or subpart W and 12 CFR part 192.
    (3) Compliance. When the FDIC determines that a State savings 
association's regulatory reports did not conform to regulatory reporting 
requirements in previous reporting periods, the association shall 
correct its regulatory reports in accordance with the directions of the 
FDIC.

[76 FR 47655, Aug. 5, 2011, as amended at 79 FR 63502, Oct. 24, 2014]



Sec.390.322  Audit of State savings associations.

    (a) General. The FDIC may require, at any time, an independent audit 
of the financial statements of, or the application of procedures agreed 
upon by the FDIC to a State savings association, by qualified 
independent public accountants when needed for any safety and soundness 
reason identified by the FDIC.
    (b) Audits required for safety and soundness purposes. The FDIC 
requires an independent audit for safety and soundness purposes:
    (1) If a State savings association has received a composite rating 
of 3, 4 or 5, as defined at Sec.390.101(c).
    (2) [Reserved]
    (c) Procedures. (1) When the FDIC requires an independent audit 
because such an audit is needed for safety and soundness purposes, the 
FDIC shall determine whether the audit was conducted and filed in a 
manner satisfactory to the FDIC.

[[Page 429]]

    (2) The FDIC may waive the independent audit requirement described 
at paragraph (b)(1) of this section, if the FDIC determines that an 
audit would not provide further information on safety and soundness 
issues relevant to the examination rating.
    (3) When the FDIC requires the application of procedures agreed upon 
by the FDIC for safety and soundness purposes, the FDIC shall identify 
the procedures to be performed. The FDIC shall also determine whether 
the agreed upon procedures were conducted and filed in a manner 
satisfactory to the FDIC.
    (d) Qualifications for independent public accountants. The audit 
shall be conducted by an independent public accountant who:
    (1) Is registered or licensed to practice as a public accountant, 
and is in good standing, under the laws of the state or other political 
subdivision of the United States in which the State savings 
association's or holding company's principal office is located;
    (2) Agrees in the engagement letter to provide the FDIC with access 
to and copies of any work papers, policies, and procedures relating to 
the services performed;
    (3)(i) Is in compliance with the American Institute of Certified 
Public Accountants' (AICPA) Code of Professional Conduct; and
    (ii) Meets the independence requirements and interpretations of the 
Securities and Exchange Commission and its staff; and
    (4) Has received, or is enrolled in, a peer review program that 
meets guidelines acceptable to the FDIC.
    (e) Voluntary audits. When a State savings association obtains an 
independent audit voluntarily, it must be performed by an independent 
public accountant who satisfies the requirements of paragraphs (d)(1), 
(2), and (3)(i) of this section.



             Subpart S_State Savings Associations_Operations



Sec.390.330  Chartering documents.

    (a) Submission for approval. Any de novo State savings association 
prior to commencing operations shall file its charter and bylaws with 
the FDIC for approval, together with a certification that such charter 
and bylaws are permissible under all applicable laws, rules and 
regulations.
    (b) Availability of chartering documents. Each State savings 
association shall cause a true copy of its charter and bylaws and all 
amendments thereto to be available to accountholders at all times in 
each office of the State savings association, and shall upon request 
deliver to any accountholders a copy of such charter and bylaws or 
amendments thereto.



Sec.390.331  Securities: Statement of non-insurance.

    Every security issued by a State savings association must include in 
its provisions a clear statement that the security is not insured by the 
Federal Deposit Insurance Corporation.



Sec.390.332  Merger, consolidation, purchase or sale of assets,
or assumption of liabilities.

    (a) No State savings association may, without application to and 
approval by the FDIC:
    (1) Combine with any insured depository institution, if the 
acquiring or resulting institution is to be a State savings association; 
or
    (2) Assume liability to pay any deposit made in, any insured 
depository institution.
    (b)(1) No State savings association may, without notifying the FDIC, 
as provided in paragraph (h)(1) of this section:
    (i) Combine with another insured depository institution where a 
State savings association is not the resulting institution; or
    (ii) In the case of a State savings association that meets the 
conditions for expedited treatment under Sec.390.101, convert, 
directly or indirectly, to a national or state bank.
    (2) A State savings association that does not meet the conditions 
for expedited treatment under Sec.390.101 may not, directly or 
indirectly, convert to a national or state bank without prior 
application to and approval of FDIC, as provided in paragraph (h)(2)(ii) 
of this section.
    (c) No State savings association may make any transfer (excluding 
transfers

[[Page 430]]

subject to paragraphs (a) or (b) of this section) without notice or 
application to the FDIC, as provided in paragraph (h)(2) of this 
section. For purposes of this paragraph, the term ``transfer'' means 
purchases or sales of assets or liabilities in bulk not made in the 
ordinary course of business including, but not limited to, transfers of 
assets or savings account liabilities, purchases of assets, and 
assumptions of deposit accounts or other liabilities, and combinations 
with a depository institution other than an insured depository 
institution.
    (d)(1) In determining whether to confer approval for a transaction 
under paragraphs (a), (b)(2), or (c) of this section, the FDIC shall 
take into account the following:
    (i) The capital level of any resulting State savings association;
    (ii) The financial and managerial resources of the constituent 
institutions;
    (iii) The future prospects of the constituent institutions;
    (iv) The convenience and needs of the communities to be served;
    (v) The conformity of the transaction to applicable law, regulation, 
and supervisory policies;
    (vi) Factors relating to the fairness of and disclosure concerning 
the transaction, including, but not limited to:
    (A) Equitable treatment. The transaction should be equitable to all 
concerned--savings account holders, borrowers, creditors and 
stockholders (if any) of each State savings association--giving proper 
recognition of and protection to their respective legal rights and 
interests. The transaction will be closely reviewed for fairness where 
the transaction does not appear to be the result of arms' length 
bargaining or, in the case of a stock State savings association, where 
controlling stockholders are receiving different consideration from 
other stockholders. No finder's or similar fee should be paid to any 
officer, director, or controlling person of a State savings association 
which is a party to the transaction.
    (B) Full disclosure. The filing should make full disclosure of all 
written or oral agreements or understandings by which any person or 
company will receive, directly or indirectly, any money, property, 
service, release of pledges made, or other thing of value, whether 
tangible or intangible, in connection with the transaction.
    (C) Compensation to officers. Compensation, including deferred 
compensation, to officers, directors and controlling persons of the 
disappearing State savings association by the resulting institution or 
an affiliate thereof should not be in excess of a reasonable amount, and 
should be commensurate with their duties and responsibilities. The 
filing should fully justify the compensation to be paid to such persons. 
The transaction will be particularly scrutinized where any of such 
persons is to receive a material increase in compensation above that 
paid by the disappearing State savings association prior to the 
commencement of negotiations regarding the proposed transaction. An 
increase in compensation in excess of the greater of 15% or $10,000 
gives rise to presumptions of unreasonableness and sale of control. In 
the case of such an increase, evidence sufficient to rebut such 
presumptions should be submitted.
    (D) Advisory boards. Advisory board members should be elected for a 
term not exceeding one year. No advisory board fees should be paid to 
salaried officers or employees of the resulting State savings 
association. The filing should describe and justify the duties and 
responsibilities and any compensation paid to any advisory board of the 
resulting State savings association that consists of officers, directors 
or controlling persons of the disappearing institution, particularly if 
the disappearing institution experienced significant supervisory 
problems prior to the transaction. No advisory board fees should exceed 
the director fees paid by the resulting State savings association. 
Advisory board fees that are in excess of 115 percent of the director 
fees paid by the disappearing State savings association prior to 
commencement of negotiations regarding the transaction give rise to 
presumptions of unreasonableness and sale of control unless sufficient 
evidence to rebut such presumptions is submitted. Rebuttal evidence is 
not required if:

[[Page 431]]

    (1) The advisory board fees do not exceed the fee that advisory 
board members of the resulting institution receive for each monthly 
meeting attended or $150, whichever is greater; or
    (2) The advisory board fees do not exceed $100 per meeting attended 
for disappearing State savings associations with assets greater than 
$10,000,000 or $50 per meeting attended for disappearing State savings 
associations with assets of $10,000,000 or less, based on a schedule of 
12 meetings per year.
    (E) The accounting and tax treatment of the transaction; and
    (F) Fees paid and professional services rendered in connection with 
the transaction.
    (2) In conferring approval of a transaction under paragraph (a) of 
this section, the FDIC also will consider the competitive impact of the 
transaction, including whether:
    (i) The transaction would result in a monopoly, or would be in 
furtherance of any monopoly or conspiracy to monopolize or to attempt to 
monopolize the State savings association business in any part of the 
United States; or
    (ii) The effect of the transaction on any section of the country may 
be substantially to lessen competition, or tend to create a monopoly, or 
in any other manner would be in restraint of trade, unless the FDIC 
finds that the anticompetitive effects of the proposed transaction are 
clearly outweighed in the public interest by the probable effect of the 
transaction in meeting the convenience and needs of the communities to 
be served.
    (3) Applications and notices filed under this section shall be upon 
forms prescribed by the FDIC.
    (4) Applications filed under paragraph (a) of this section must be 
processed in accordance with the time frames set forth in Sec. Sec.
390.127 through 390.135, provided that the period for review may be 
extended only if the FDIC determines that the applicant has failed to 
furnish all requested information or that the information submitted is 
substantially inaccurate, in which case the review period may be 
extended for up to 30 days.
    (e)(1) The following procedures apply to applications described in 
paragraph (a) of this section, unless the FDIC finds that it must act 
immediately to prevent the probable default of one of the depository 
institutions involved:
    (i) The applicant must publish a public notice of the application in 
accordance with the procedures in Sec. Sec.390.111 through 390.115. In 
addition to the initial publication, the applicant must also publish on 
a weekly basis during the public comment period.
    (ii) Commenters may submit comments on an application in accordance 
with the procedures in Sec. Sec.390.116 through 390.120. The public 
comment period is 30 calendar days after the date of publication of the 
initial public notice. However, if the FDIC has advised the Attorney 
General that an emergency exists requiring expeditious action, the 
public comment period is 10 calendar days after the date of publication 
of the initial public notice.
    (iii) The FDIC may arrange a meeting in accordance with the 
procedures in Sec. Sec.390.121 through 390.125.
    (iv) The FDIC will request the Attorney General, the Office of the 
Comptroller of the Currency, and the Board of Governors of the Federal 
Reserve System to provide reports on the competitive impacts involved in 
the transaction.
    (v) The FDIC will immediately notify the Attorney General of the 
approval of the transaction. The applicant may not consummate the 
transaction before the date established under 12 U.S.C. 1828(c)(6).
    (2) For applications described in Sec.390.332, certain State 
savings associations described below must provide affected 
accountholders with a notice of a proposed account transfer and an 
option of retaining the account in the transferring State savings 
association. The notice must allow affected accountholders at least 30 
days to consider whether to retain their accounts in the transferring 
State savings association. The following State savings associations must 
provide the notices:
    (i) A State savings association transferring account liabilities to 
an institution the accounts of which are not insured by the Deposit 
Insurance Fund or the National Credit Union Share Insurance Fund; and

[[Page 432]]

    (ii) Any mutual State savings association transferring account 
liabilities to a stock form depository institution.
    (f) Automatic approvals by the FDIC. Applications filed pursuant to 
paragraph (a) of this section shall be deemed to be approved 
automatically by the FDIC 30 calendar days after the FDIC sends written 
notice to the applicant that the application is complete, unless:
    (1) The acquiring State savings association does not meet the 
criteria for expedited treatment under Sec.390.101;
    (2) The FDIC recommends the imposition of non-standard conditions 
prior to approving the application;
    (3) The FDIC suspends the applicable processing time frames under 
Sec.390.125;
    (4) The FDIC raises objections to the transaction;
    (5) The resulting State savings association would be one of the 3 
largest depository institutions competing in the relevant geographic 
area where before the transaction there were 5 or fewer depository 
institutions, the resulting State savings association would have 25 
percent or more of the total deposits held by depository institutions in 
the relevant geographic area, and the share of total deposits would have 
increased by 5 percent or more;
    (6) The resulting State savings association would be one of the 2 
largest depository institutions competing in the relevant geographic 
area where before the transaction there were 6 to 11 depository 
institutions the resulting State savings association would have 30 
percent or more of the total deposits held by depositing institutions in 
the relevant geographic area, and the share of total deposits would have 
increased by 10 percent or more;
    (7) The resulting State savings association would be one of the 2 
largest depository institutions competing in the relevant geographic 
area where before the transaction there were 12 or more depository 
institutions, the resulting State savings association would have 35 
percent or more of the total deposits held by the depository 
institutions in the relevant geographic area, and the share of total 
deposits would have increased by 15 percent or more;
    (8) The Herfindahl-Hirschman Index (HHI) in the relevant geographic 
area was more than 1800 before the transaction, and the increase in the 
HHI used by the transaction would be 50 or more;
    (9) In a transaction involving potential competition, the FDIC 
determines that the acquiring State savings association is one of three 
or fewer potential entrants into the relevant geographic area;
    (10) The acquiring State savings association has assets of $1 
billion or more and proposes to acquire assets of $1 billion or more;
    (11) The State savings association that will be the resulting State 
savings association in the transaction has a composite Community 
Reinvestment Act rating of less than satisfactory, or is otherwise 
seriously deficient with respect to the FDIC's nondiscrimination 
regulations and the deficiencies have not been resolved to the 
satisfaction of the FDIC;
    (12) The transaction involves any supervisory or assistance 
agreement with the FDIC;
    (13) The transaction is part of a conversion under 12 CFR part 192;
    (14) The transaction raises a significant issue of law or policy; or
    (15) The transaction is opposed by any constituent institution or 
contested by a competing acquiror.
    (g) Definitions. (1) The terms used in this subpart shall have the 
same meaning as set forth in 12 CFR 152.13(b).
    (2) Insured depository institution. Insured depository institution 
has the same meaning as defined in section 3(c)(2) of the Federal 
Deposit Insurance Act.
    (3) With regard to paragraph (f) of this section, the term relevant 
geographic area is used as a substitute for relevant geographic market, 
which means the area within which the competitive effects of a merger or 
other combination may be evaluated. The relevant geographic area shall 
be delineated as a county or similar political subdivision, an area 
smaller than a county, or an aggregation of counties within which the 
merging or combining insured depository institutions compete. In 
addition, the FDIC may consider commuting patterns, newspaper and other 
advertising activities, or other factors as the FDIC deems relevant.

[[Page 433]]

    (h) Special requirements and procedures for transactions under 
paragraphs (b) and (c) of this section--(1)(i) Certain transactions with 
no surviving State savings association. The FDIC must be notified of any 
transaction under paragraph (b)(1) of this section. Such notification 
must be submitted to the appropriate FDIC region, as defined in Sec.
303.2 of this chapter, at least 30 days prior to the effective date of 
the transaction, but not later than the date on which an application 
relating to the proposed transaction is filed with the primary regulator 
of the resulting institution; the FDIC may, upon request or on its own 
initiative, shorten the 30-day prior notification requirement. 
Notifications under this paragraph must demonstrate compliance with 
applicable stockholder or accountholder approval requirements. Where the 
State savings association submitting the notification maintains a 
liquidation account established pursuant to 12 CFR part 192, the 
notification must state that the resulting institution will assume such 
liquidation account.
    (ii) The notification may be in the form of either a letter 
describing the material features of the transaction or a copy of a 
filing made with another Federal or state regulatory agency seeking 
approval from that agency for the transaction under the Bank Merger Act 
or other applicable statute. If the action contemplated by the 
notification is not completed within one year after the FDIC's receipt 
of the notification, a new notification must be submitted to the FDIC.
    (2) Other transfer transactions--(i) Expedited treatment. A notice 
in conformity with Sec.390.105(a) may be submitted to the appropriate 
FDIC region, as defined in Sec.303.2 of this chapter, under Sec.
390.108 for any transaction under paragraph (c) of this section, 
provided all constituent State savings associations meet the conditions 
for expedited treatment under Sec.390.101. Notices submitted under 
this paragraph must be deemed approved automatically by the FDIC 30 days 
after receipt, unless the FDIC advises the applicant in writing prior to 
the expiration of such period that the proposed transaction may not be 
consummated without the FDIC's approval of an application under 
paragraphs (h)(2)(ii) or (h)(2)(iii) of this section.
    (ii) Standard treatment. An application in conformity with Sec.
390.105(b) and paragraph (d) of this section must be submitted to the 
appropriate FDIC region, as defined in Sec.303.2 of this chapter, 
under Sec.390.108 by each State savings association participating in a 
transaction under paragraph (b)(2) or (c) of this section, where any 
constituent State savings association does not meet the conditions for 
expedited treatment under Sec.390.101. Applications under this 
paragraph must be processed in accordance with Sec. Sec.390.103 
through 390.110 and Sec. Sec.390.126 through 390.135.



Sec.390.333  Advertising.

    No State savings association shall use advertising (which includes 
print or broadcast media, displays or signs, stationery, and all other 
promotional materials), or make any representation which is inaccurate 
in any particular or which in any way misrepresents its services, 
contracts, investments, or financial condition.



Sec.390.334  Directors, officers, and employees.

    (a) Directors--(1) Requirements. The composition of the board of 
directors of a State savings association must be in accordance with the 
following requirements:
    (i) A majority of the directors must not be salaried officers or 
employees of the State savings association or of any subsidiary or 
(except in the case of a State savings association having 80% or more of 
any class of voting shares owned by a holding company) any holding 
company affiliate thereof.
    (ii) Not more than two of the directors may be members of the same 
immediate family.
    (iii) Not more than one director may be an attorney with a 
particular law firm.
    (2) Prospective application. In the case of an association whose 
board of directors does not conform with any requirement set forth in 
paragraph (a)(1) of this section as of October 5, 1983, this paragraph 
(a) shall not prohibit the uninterrupted service, including re-election 
and re-appointment, of any

[[Page 434]]

person serving on the board of directors at that date.
    (b) [Reserved]



Sec.390.335  Tying restriction exception.

    For applicable rules, see the regulations issued by the Board of 
Governors of the Federal Reserve System.



Sec.390.336  Employment contracts.

    (a) General. A State savings association may enter into an 
employment contract with its officers and other employees only in 
accordance with the requirements of this section. All employment 
contracts shall be in writing and shall be approved specifically by a 
State savings association's board of directors. A State savings 
association shall not enter into an employment contract with any of its 
officers or other employees if such contract would constitute an unsafe 
or unsound practice. The making of such an employment contract would be 
an unsafe or unsound practice if such contract could lead to material 
financial loss or damage to the State savings association or could 
interfere materially with the exercise by the members of its board of 
directors of their duty or discretion provided by law, charter, bylaw or 
regulation as to the employment or termination of employment of an 
officer or employee of the State savings association. This may occur, 
depending upon the circumstances of the case, where an employment 
contract provides for an excessive term.
    (b) Required provisions. Each employment contract shall provide 
that:
    (1) The State savings association's board of directors may terminate 
the officer or employee's employment at any time, but any termination by 
the State savings association's board of directors other than 
termination for cause, shall not prejudice the officer or employee's 
right to compensation or other benefits under the contract. The officer 
or employee shall have no right to receive compensation or other 
benefits for any period after termination for cause. Termination for 
cause shall include termination because of the officer or employee's 
personal dishonesty, incompetence, willful misconduct, breach of 
fiduciary duty involving personal profit, intentional failure to perform 
stated duties, willful violation of any law, rule, or regulation (other 
than traffic violations or similar offenses) or final cease-and-desist 
order, or material breach of any provision of the contract.
    (2) If the officer or employee is suspended and/or temporarily 
prohibited from participating in the conduct of the State savings 
association's affairs by a notice served under section 8(e)(3) or (g)(1) 
of Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)), the 
State savings association's obligations under the contract shall be 
suspended as of the date of service unless stayed by appropriate 
proceedings. If the charges in the notice are dismissed, the State 
savings association may in its discretion:
    (i) Pay the officer or employee all or part of the compensation 
withheld while its contract obligations were suspended; and
    (ii) Reinstate (in whole or in part) any of its obligations which 
were suspended.
    (3) If the officer or employee is removed and/or permanently 
prohibited from participating in the conduct of the State savings 
association's affairs by an order issued under section 8 (e)(4) or 
(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(4) or 
(g)(1)), all obligations of the State savings association under the 
contract shall terminate as of the effective date of the order, but 
vested rights of the contracting parties shall not be affected.
    (4) If the State savings association is in default (as defined in 
section 3(x)(1) of the Federal Deposit Insurance Act), all obligations 
under the contract shall terminate as of the date of default, but this 
paragraph (b)(4) shall not affect any vested rights of the contracting 
parties: Provided, that this paragraph (b)(4) need not be included in an 
employment contract if prior written approval is secured from the FDIC.
    (5)(i) All obligations under the contract shall be terminated, 
except to the extent determined that continuation of the contract is 
necessary of the continued operation of the State savings association
    (A) By the FDIC, at the time the FDIC enters into an agreement to 
provide assistance to or on behalf of the

[[Page 435]]

State savings association under the authority contained in 13(c) of the 
Federal Deposit Insurance Act; or
    (B) By the FDIC, at the time the FDIC approves a supervisory merger 
to resolve problems related to operation of the State savings 
association or when the State savings association is determined by the 
FDIC to be in an unsafe or unsound condition.
    (ii) Any rights of the parties that have already vested, however, 
shall not be affected by such action.



Sec.390.337  Transactions with affiliates.

    For applicable rules, see the regulations issued by the Board of 
Governors of the Federal Reserve System.



Sec.390.338  Loans by State savings associations to their executive
officers, directors, and principal shareholders.

    For applicable rules, see the regulations issued by the Board of 
Governors of the Federal Reserve System.



Sec.390.339  Pension plans.

    (a) General. No State savings association shall sponsor an employee 
pension plan which, because of unreasonable costs or any other reason, 
could lead to material financial loss or damage to the sponsor. For 
purposes of this section, an employee pension plan is defined in section 
3(2) of the Employee Retirement Income Security Act of 1974, as amended. 
The prospective obligation or liability of a plan sponsor to each plan 
participant shall be stated in or determinable from the plan, and, for a 
defined benefit plan, shall also be based upon an actuarial estimate of 
future experience under the plan.
    (b) Funding. Actuarial cost methods permitted under the Employee 
Retirement Income Security Act of 1974 and the Internal Revenue Code of 
1954, as amended, shall be used to determine plan funding.
    (c) Plan amendment. A plan may be amended to provide reasonable 
annual cost-of-living increases to retired participants: Provided, That
    (1) Any such increase shall be for a period and amount determined by 
the sponsor's board of directors, but in no event shall it exceed the 
annual increase in the Consumer Price Index published by the Bureau of 
Labor Statistics; and
    (2) No increase shall be granted unless:
    (i) Anticipated charges to net income for future periods have first 
been found by such board of directors to be reasonable and are 
documented by appropriate resolution and supporting analysis; and
    (ii) The increase will not reduce the State savings association's 
regulatory capital below its regulatory capital requirement.
    (d) Termination. The plan shall permit the sponsor's board of 
directors and its successors to terminate such plan. Notice of intent to 
terminate shall be filed with the FDIC at least 60 days prior to the 
proposed termination date.
    (e) Records. Each State savings association maintaining a plan not 
subject to recordkeeping and reporting requirements of the Employee 
Retirement Income Security Act of 1974, and the Internal Revenue Code of 
1954, as amended, shall establish and maintain records containing the 
following:
    (1) Plan description;
    (2) Schedule of participants and beneficiaries;
    (3) Schedule of participants and beneficiaries' rights and 
obligations;
    (4) Plan's financial statements; and
    (5) Except for defined contribution plans, an opinion signed by an 
enrolled actuary (as defined by the Employee Retirement Income Security 
Act of 1974) affirming that actuarial assumptions in the aggregate are 
reasonable, take into account the plan's experience and expectations, 
and represent the actuary's best estimate of the plan's projected 
experiences.



Sec.390.340  Offers and sales of securities at an office of a State
savings association.

    (a) A State saving association may not offer or sell debt or equity 
securities issued by the State savings association or an affiliate of 
the State savings association at an office of the State savings 
association; except that equity securities issued by the State savings 
association or an affiliate in connection with the State savings 
association's conversion from the mutual

[[Page 436]]

to stock form of organization in a conversion approved pursuant to 12 
CFR part 192 may be offered and sold at the State savings association's 
offices: Provided, That:
    (1) The FDIC does not object on supervisory grounds that the offer 
and sale of the securities at the offices of the State savings 
association;
    (2) No commissions, bonuses, or comparable payments are paid to any 
employee of the State savings association or its affiliates or to any 
other person in connection with the sale of securities at an office of a 
State savings association; except that compensation and commissions 
consistent with industry norms may be paid to securities personnel of 
registered broker-dealers;
    (3) No offers or sales are made by tellers or at the teller counter, 
or by comparable persons at comparable locations;
    (4) Sales activity is conducted in a segregated or separately 
identifiable area of the State savings association's offices apart from 
the area accessible to the general public for the purposes of making or 
withdrawing deposits;
    (5) Offers and sales are made only by regular, full-time employees 
of the State savings association or by securities personnel who are 
subject to supervision by a registered broker-dealer;
    (6) An acknowledgment, in the form set forth in paragraph (c) of 
this section, is signed by any customer to whom the security is sold in 
the State savings association's offices prior to the sale of any such 
securities;
    (7) A legend that the security is not a deposit or account and is 
not federally insured or guaranteed appears conspicuously on the 
security and in all offering documents and advertisements for the 
securities; the legend must state in bold or other prominent type at 
least as large as other textual type in the document that ``This 
security is not a deposit or account and is not federally insured or 
guaranteed''; and
    (8) The State savings association will be in compliance with its 
current capital requirements upon completion of the conversion stock 
offering.
    (b) Securities sales practices, advertisements, and other sales 
literature used in connection with offers and sales of securities by 
State savings associations shall be subject to Sec.390.419.
    (c) Offers and sales of securities of a State savings association or 
its affiliates in any office of the State savings association must use a 
one-page, unambiguous, certification in substantially the following 
form:

                          FORM OF CERTIFICATION

    I ACKNOWLEDGE THAT THIS SECURITY IS NOT A DEPOSIT OR ACCOUNT AND IS 
NOT FEDERALLY INSURED, AND IS NOT GUARANTEED BY [insert name of State 
savings association] OR BY THE FEDERAL GOVERNMENT.
    If anyone asserts that this security is federally insured or 
guaranteed, or is as safe as an insured deposit, I should call the 
FDIC's appropriate regional director [insert name and telephone number 
with area code of the appropriate regional director, as defined in 
section 303.2 of this chapter].
    I further certify that, before purchasing the [description of 
security being offered] of [name of issuer, name of State savings 
association and affiliation to issuer (if different)], I received an 
offering circular.
    The offering circular that I received contains disclosure concerning 
the nature of the security being offered and describes the risks 
involved in the investment, including:
    [List briefly the principal risks involved and cross reference 
certain specified pages of the offering circular where a more complete 
description of the risks is made.]
 Signature:_____________________________________________________________

 Date:__________________________________________________________________

    (d) For purposes of this section, an ``office'' of a State savings 
association means any premises used by the State savings association 
that are identified to the public through advertising or signage using 
the State savings association's name, trade name, or logo.



Sec.390.341  Inclusion of subordinated debt securities and mandatorily
redeemable preferred stock as supplementary capital.

    (a) Scope. A State savings association must comply with this section 
in order to include subordinated debt securities or mandatorily 
redeemable preferred stock (``covered securities'') in supplementary 
capital (tier 2 capital) under part 324 of this chapter. If a State 
savings association does not include covered securities in supplementary 
capital, it is not required to comply with this section.

[[Page 437]]

    (b) Application and notice procedures. (1) A State savings 
association must file an application or notice under Sec. Sec.390.103 
through 390.110 seeking FDIC approval of, or non-objection to, the 
inclusion of covered securities in supplementary capital. The State 
savings association may file its application or notice before or after 
it issues covered securities, but may not include covered securities in 
supplementary capital until the FDIC approves the application or does 
not object to the notice.
    (2) A State savings association must also comply with the securities 
offering rules at subpart W by filing an offering circular for a 
proposed issuance of covered securities, unless the offering qualifies 
for an exemption under that subpart.
    (c) Securities requirements. To be included in supplementary 
capital, covered securities must meet the following requirements:
    (1) Form. (i) Each certificate evidencing a covered security must:
    (A) Bear the following legend on its face, in bold type: ``This 
security is not a savings account or deposit and it is not insured by 
the United States or any agency or fund of the United States;''
    (B) State that the security is subordinated on liquidation, as to 
principal, interest, and premium, to all claims against the State 
savings association that have the same priority as savings accounts or a 
higher priority;
    (C) State that the security is not secured by the State savings 
association's assets or the assets of any affiliate of the State savings 
association. For purposes of this subpart, the term affiliate means any 
person or company which controls, is controlled by, or is under common 
control with such State savings association.
    (D) State that the security is not eligible collateral for a loan by 
the State savings association;
    (E) State the prohibition on the payment of dividends or interest at 
12 U.S.C. 1828(b) and, in the case of subordinated debt securities, 
state the prohibition on the payment of principal and interest at 12 
U.S.C. 1831o(h);
    (F) For subordinated debt securities, state or refer to a document 
stating the terms under which the State savings association may prepay 
the obligation; and
    (G) State or refer to a document stating that the State savings 
association must obtain FDIC approval before the voluntarily prepayment 
of principal on subordinated debt securities, the acceleration of 
payment of principal on subordinated debt securities, or the voluntarily 
redemption of mandatorily redeemable preferred stock (other than 
scheduled redemptions), if the State savings association is 
undercapitalized, significantly undercapitalized, or critically 
undercapitalized as described in subpart H of part 324 of this chapter, 
fails to meet the regulatory capital requirements in part 324, or would 
fail to meet any of these standards following the payment.
    (ii) A State savings association must include such additional 
statements as the FDIC may prescribe for certificates, purchase 
agreements, indentures, and other related documents.
    (2) Maturity requirements. Covered securities must have an original 
weighted average maturity or original weighted average period to 
required redemption of at least five years.
    (3) Mandatory prepayment. Subordinated debt securities and related 
documents may not provide events of default or contain other provisions 
that could result in a mandatory prepayment of principal, other than 
events of default that:
    (i) Arise from the State savings association's failure to make 
timely payment of interest or principal;
    (ii) Arise from its failure to comply with reasonable financial, 
operating, and maintenance covenants of a type that are customarily 
included in indentures for publicly offered debt securities; or
    (iii) Relate to bankruptcy, insolvency, receivership, or similar 
events.
    (4) Indenture. (i) Except as provided in paragraph (c)(4)(ii) of 
this section, a State savings association must use an indenture for 
subordinated debt securities. If the aggregate amount of subordinated 
debt securities publicly offered (excluding sales in a non-public 
offering as defined in Sec.390.413 and sold in any consecutive 12-
month or 36-month period exceeds $5,000,000 or $10,000,000 respectively 
(or such lesser amount

[[Page 438]]

that the Securities and Exchange Commission shall establish by rule or 
regulation under 15 U.S.C. 77ddd), the indenture must provide for the 
appointment of a trustee other than the State savings association or an 
affiliate of the State savings association (as defined at Sec.390.283) 
and for collective enforcement of the security holders' rights and 
remedies.
    (ii) A State savings association is not required to use an indenture 
if the subordinated debt securities are sold only to accredited 
investors, as that term is defined in 15 U.S.C. 77d(6). A State savings 
association must have an indenture that meets the requirements of 
paragraph (c)(4)(i) of this section in place before any debt securities 
for which an exemption from the indenture requirement is claimed, are 
transferred to any non-accredited investor. If a State savings 
association relies on this exemption from the indenture requirement, it 
must place a legend on the debt securities indicating that an indenture 
must be in place before the debt securities are transferred to any non-
accredited investor.
    (d) FDIC review. (1) The FDIC will review notices and applications 
under Sec. Sec.390.126 through 390.135.
    (2) In reviewing notices and applications under this section, the 
FDIC will consider whether:
    (i) The issuance of the covered securities is authorized under 
applicable laws and regulations and is consistent with the State savings 
association's charter and bylaws.
    (ii) The State savings association is at least adequately 
capitalized under subpart H of part 324 of this chapter and meets the 
regulatory capital requirements in part 324.
    (iii) The State savings association is or will be able to service 
the covered securities.
    (iv) The covered securities are consistent with the requirements of 
this section.
    (v) The covered securities and related transactions sufficiently 
transfer risk from the Deposit Insurance Fund.
    (vi) The FDIC has no objection to the issuance based on the State 
savings association's overall policies, condition, and operations.
    (3) The FDIC approval or non-objection is conditioned upon no 
material changes to the information disclosed in the application or 
notice submitted to the FDIC. The FDIC may impose such additional 
requirements or conditions as it may deem necessary to protect 
purchasers, the State savings association, or the Deposit Insurance 
Fund.
    (e) Amendments. If a State savings association amends the covered 
securities or related documents following the completion of the FDIC's 
review, it must obtain the FDIC's approval or non-objection under this 
section before it may include the amended securities in supplementary 
capital.
    (f) Sale of covered securities. The State savings association must 
complete the sale of covered securities within one year after the FDIC's 
approval or non-objection under this section. A State savings 
association may request an extension of the offering period by filing a 
written request with the FDIC. The State savings association must 
demonstrate good cause for the extension and file the request at least 
30 days before the expiration of the offering period or any extension of 
the offering period.
    (g) Reports. A State savings association must file the following 
information with the FDIC within 30 days after the State savings 
association completes the sale of covered securities includable as 
supplementary capital. If the State savings association filed its 
application or notice following the completion of the sale, it must 
submit this information with its application or notice:
    (1) A written report indicating the number of purchasers, the total 
dollar amount of securities sold, the net proceeds received by the State 
savings association from the issuance, and the amount of covered 
securities, net of all expenses, to be included as supplementary 
capital;
    (2) Three copies of an executed form of the securities and a copy of 
any related documents governing the issuance or administration of the 
securities; and
    (3) A certification by the appropriate executive officer indicating 
that the State savings association complied

[[Page 439]]

with all applicable laws and regulations in connection with the 
offering, issuance, and sale of the securities.

[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17743, Apr. 24, 2018]



Sec.390.342  Capital distributions by State savings associations.

    Sections 390.342 through 390.348 apply to all capital distributions 
by a State savings association (``you'').



Sec.390.343  What is a capital distribution?

    A capital distribution is:
    (a) A distribution of cash or other property to your owners made on 
account of their ownership, but excludes:
    (1) Any dividend consisting only of your shares or rights to 
purchase your shares; or
    (2) If you are a mutual State savings association, any payment that 
you are required to make under the terms of a deposit instrument and any 
other amount paid on deposits that the FDIC determines is not a 
distribution for the purposes of this section;
    (b) Your payment to repurchase, redeem, retire or otherwise acquire 
any of your shares or other ownership interests, any payment to 
repurchase, redeem, retire, or otherwise acquire debt instruments 
included in your total capital under part 324 of this chapter, and any 
extension of credit to finance an affiliate's acquisition of your shares 
or interests;
    (c) Any direct or indirect payment of cash or other property to 
owners or affiliates made in connection with a corporate restructuring. 
This includes your payment of cash or property to shareholders of 
another savings association or to shareholders of its holding company to 
acquire ownership in that savings association, other than by a 
distribution of shares;
    (d) Any other distribution charged against your capital accounts if 
you would not be well capitalized, as set forth in subpart H of part 324 
of this chapter, following the distribution; and
    (e) Any transaction that the FDIC determines, by order or 
regulation, to be in substance a distribution of capital.

[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17743, Apr. 24, 2018]



Sec.390.344  Definitions applicable to capital distributions.

    The following definitions apply to sections 390.342 through 390.348:
    Affiliate means an affiliate, as defined in regulations governing 
transactions with affiliates as issued by the Board of Governors of the 
Federal Reserve System.
    Capital means total capital, as computed under part 324 of this 
chapter.
    Net income means your net income computed in accordance with 
generally accepted accounting principles.
    Retained net income means your net income for a specified period 
less total capital distributions declared in that period.
    Shares means common and preferred stock, and any options, warrants, 
or other rights for the acquisition of such stock. The term ``share'' 
also includes convertible securities upon their conversion into common 
or preferred stock. The term does not include convertible debt 
securities prior to their conversion into common or preferred stock or 
other securities that are not equity securities at the time of a capital 
distribution.

[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17743, Apr. 24, 2018]



Sec.390.345  Must I file with the FDIC?

    Whether and what you must file with the FDIC depends on whether you 
and your proposed capital distribution fall within certain criteria.
    (a) Application required.

------------------------------------------------------------------------
                     If:                               Then you:
------------------------------------------------------------------------
(1) You are not eligible for expedited         Must file an application
 treatment under Sec. 390.101.                with the FDIC.
(2) The total amount of all of your capital    Must file an application
 distributions (including the proposed          with the FDIC.
 capital distribution) for the applicable
 calendar year exceeds your net income for
 that year to date plus your retained net
 income for the preceding two years.

[[Page 440]]

 
(3) You would not be at least adequately       Must file an application
 capitalized, as set forth in subpart H of      with the FDIC.
 part 324 of this chapter, following the
 distribution.
(4) Your proposed capital distribution would   Must file an application
 violate a prohibition contained in any         with the FDIC.
 applicable statute, regulation, or agreement
 between you and the FDIC, or violate a
 condition imposed on you in an FDIC-approved
 application or notice.
------------------------------------------------------------------------

    (b) Notice required.

------------------------------------------------------------------------
      If you are not required to file an
   application under paragraph (a) of this             Then you:
                section, but:
------------------------------------------------------------------------
(1) You would not be well capitalized, as set  Must file a notice with
 forth under subpart H of part 324 of this      the FDIC.
 chapter, following the distribution.
(2) Your proposed capital distribution would   Must file a notice with
 reduce the amount of or retire any part of     the FDIC.
 your common or preferred stock or retire any
 part of debt instruments such as notes or
 debentures included in capital under subpart
 H of part 324 of this chapter (other than
 regular payments required under a debt
 instrument approved under subpart H of part
 324 of this chapter).
------------------------------------------------------------------------

    (c) No prior notice required.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
If neither you nor your proposed capital       Then you do not need to
 distribution meet any of the criteria listed   file a notice or an
 in paragraphs (a) and (b) of this section.     application with the
                                                FDIC before making a
                                                capital distribution.
------------------------------------------------------------------------


[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17743, Apr. 24, 2018]



Sec.390.346  How do I file with the FDIC?

    (a) Contents. Your notice or application must:
    (1) Be in narrative form.
    (2) Include all relevant information concerning the proposed capital 
distribution, including the amount, timing, and type of distribution.
    (3) Demonstrate compliance with Sec.390.348.
    (b) Schedules. Your notice or application may include a schedule 
proposing capital distributions over a specified period, not to exceed 
12 months.
    (c) Timing. You must file your notice or application at least 30 
days before the proposed declaration of dividend or approval of the 
proposed capital distribution by your board of directors.



Sec.390.347  May I combine my notice or application with other
notices or applications?

    You may combine the notice or application required under Sec.
390.345 with any other notice or application, if the capital 
distribution is a part of, or is proposed in connection with, another 
transaction requiring a notice or application under Parts 390 and 391. 
If you submit a combined filing, you must:
    (a) State that the related notice or application is intended to 
serve as a notice or application under Sec. Sec.390.342 through 
390.348; and
    (b) Submit the notice or application in a timely manner.



Sec.390.348  Will the FDIC permit my capital distribution?

    The FDIC will review your notice or application under the review 
procedures in Sec. Sec.390.126 through 390.135. The FDIC may 
disapprove your notice or deny your application filed under Sec.
390.345 in whole or in part, if the FDIC makes any of the following 
determinations.
    (a) You will be undercapitalized, significantly undercapitalized, or 
critically undercapitalized as set forth in subpart H of part 324 of 
this chapter, following the capital distribution. If so, the FDIC will 
determine if your capital distribution is permitted under 12 U.S.C. 
1831o(d)(1)(B).
    (b) Your proposed capital distribution raises safety or soundness 
concerns.
    (c) Your proposed capital distribution violates a prohibition 
contained in any statute, regulation, agreement between

[[Page 441]]

you and the FDIC or a condition imposed on you in an FDIC-approved 
application or notice. If so, the FDIC will determine whether it may 
permit your capital distribution notwithstanding the prohibition or 
condition.

[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17743, Apr. 24, 2018]



Sec.390.349  Management and financial policies.

    (a)(1) For the protection of depositors and other State savings 
associations, each State savings association must be well managed and 
operate safely and soundly. Each also must pursue financial policies 
that are safe and consistent with economical home financing and the 
purposes of State savings associations.
    (2) As part of meeting its requirements under paragraph (a)(1) of 
this section, each State savings association must maintain sufficient 
liquidity to ensure its safe and sound operation.
    (b) Compensation to officers, directors, and employees of each State 
savings association shall not be in excess of that which is reasonable 
and commensurate with their duties and responsibilities. Former 
officers, directors, and employees of State savings association who 
regularly perform services therefor under consulting contracts are 
employees thereof for purposes of this paragraph (b).



Sec.390.350  Examinations and audits; appraisals; establishment
and maintenance of records.

    (a) Examinations and audits. Each State savings association and 
affiliate thereof shall be examined periodically, and may be examined at 
any time, by the FDIC, with appraisals when deemed advisable, in 
accordance with general policies from time to time established by the 
FDIC.
    (b) Appraisals. (1) Unless otherwise ordered by the FDIC, appraisal 
of real estate by the FDIC in connection with any examination or audit 
of a State savings association or its affiliate shall be made by an 
appraiser, or by appraisers, selected by the appropriate FDIC region, as 
that term is defined in Sec.303.2 of this chapter, in which such State 
savings association is located. The cost of such appraisal shall 
promptly be paid by such State savings association or its affiliate 
direct to such appraiser or appraisers upon receipt by the State savings 
association or its affiliate of a statement of such cost as approved by 
the appropriate regional director. A copy of the report of each 
appraisal made by the FDIC pursuant to any of the foregoing provisions 
of this section shall be furnished to the State savings association or 
its affiliate, as appropriate within a reasonable time, not to exceed 90 
days, following the completion of such appraisals and the filing of a 
report thereof by the appraiser, or appraisers, with the appropriate 
FDIC office.
    (2) The FDIC may obtain at any time, at its expense, such appraisals 
of any of the assets, including the security therefor, of a State 
savings association or its affiliate as the FDIC deems appropriate.
    (c) Establishment and maintenance of records. To enable the FDIC to 
examine State savings associations and affiliates and audit State 
savings associations and its affiliates, pursuant to the provisions of 
paragraph (a) of this section, each State savings association, and its 
affiliate shall establish and maintain such accounting and other records 
as will provide an accurate and complete record of all business it 
transacts. This includes, without limitation, establishing and 
maintaining such other records as are required by statute or any other 
regulation to which the State savings association and its affiliate is 
subject. The documents, files, and other material or property comprising 
said records shall at all times be available for such examination and 
audit wherever any of said records, documents, files, material, or 
property may be.
    (d) Change in location of records. A State savings association shall 
not transfer the location of any of its general accounting or control 
records, or the maintenance thereof, from its home office to a branch or 
service office, or from a branch or service office to its home office or 
to another branch or service office unless prior to the date of transfer 
its board of directors has:
    (1) By resolution authorized the transfer or maintenance and;

[[Page 442]]

    (2) Sent a certified copy of the resolution to the appropriate 
regional director for the region in which the principal office of the 
State savings association is located.
    (e) Use of data processing services for maintenance of records. A 
State savings association which determines to maintain any of its 
records by means of data processing services shall so notify the 
appropriate regional director for the region in which the principal 
office of such State savings association is located, in writing, at 
least 90 days prior to the date on which such maintenance of records 
will begin. Such notification shall include identification of the 
records to be maintained by data processing services and a statement as 
to the location at which such records will be maintained. Any contract, 
agreement, or arrangement made by a State savings association pursuant 
to which data processing services are to be performed for such State 
savings association shall be in writing and shall expressly provide that 
the records to be maintained by such services shall at all times be 
available for examination and audit.



Sec.390.352  Financial derivatives.

    (a) What is a financial derivative? A financial derivative is a 
financial contract whose value depends on the value of one or more 
underlying assets, indices, or reference rates. The most common types of 
financial derivatives are futures, forward commitments, options, and 
swaps. A mortgage derivative security, such as a collateralized mortgage 
obligation or a real estate mortgage investment conduit, is not a 
financial derivative under this section.
    (b) May I engage in transactions involving financial derivatives? 
(1) [Reserved]
    (2) If you are a State savings association, you may engage in a 
transaction involving a financial derivative if your charter or 
applicable State law authorizes you to engage in such transactions, the 
transaction is safe and sound, and you otherwise meet the requirements 
in this section.
    (3) In general, if you engage in a transaction involving a financial 
derivative, you should do so to reduce your risk exposure.
    (c) What are my board of directors' responsibilities with respect to 
financial derivatives? (1) Your board of directors is responsible for 
effective oversight of financial derivatives activities.
    (2) Before you may engage in any transaction involving a financial 
derivative, your board of directors must establish written policies and 
procedures governing authorized financial derivatives. Your board of 
directors should review Thrift Bulletin 13a, ``Management of Interest 
Rate Risk, Investment Securities, and Derivatives Activities,'' and 
other applicable agency guidance on establishing a sound risk management 
program.
    (3) Your board of directors must periodically review:
    (i) Compliance with the policies and procedures established under 
paragraph (c)(2) of this section; and
    (ii) The adequacy of these policies and procedures to ensure that 
they continue to be appropriate to the nature and scope of your 
operations and existing market conditions.
    (4) Your board of directors must ensure that management establishes 
an adequate system of internal controls for transactions involving 
financial derivatives.
    (d) What are management's responsibilities with respect to financial 
derivatives? (1) Management is responsible for daily oversight and 
management of financial derivatives activities. Management must 
implement the policies and procedures established by the board of 
directors and must establish a system of internal controls. This system 
of internal controls should, at a minimum, provide for periodic 
reporting to the board of directors and management, segregation of 
duties, and internal review procedures.
    (2) Management must ensure that financial derivatives activities are 
conducted in a safe and sound manner and should review Thrift Bulletin 
13a, ``Management of Interest Rate Risk, Investment Securities, and 
Derivatives Activities,'' and other applicable agency guidance on 
implementing a sound risk management program.
    (e) What records must I keep on financial derivative transactions? 
You must maintain records adequate to demonstrate compliance with this 
section

[[Page 443]]

and with your board of directors' policies and procedures on financial 
derivatives.



Sec.390.353  Interest-rate-risk-management procedures.

    State savings associations shall take the following actions:
    (a) The board of directors or a committee thereof shall review the 
State savings association's interest-rate-risk exposure and devise a 
policy for the State savings association's management of that risk.
    (b) The board of directors shall formerly adopt a policy for the 
management of interest-rate risk. The management of the State savings 
association shall establish guidelines and procedures to ensure that the 
board's policy is successfully implemented.
    (c) The management of the State savings association shall 
periodically report to the board of directors regarding implementation 
of the State savings association's policy for interest-rate-risk 
management and shall make that information available upon request to the 
FDIC.
    (d) The State savings association's board of directors shall review 
the results of operations at least quarterly and shall make such 
adjustments as it considers necessary and appropriate to the policy for 
interest-rate-risk management, including adjustments to the authorized 
acceptable level of interest-rate risk.



Sec.390.354  Procedures for monitoring Bank Secrecy Act (BSA)
compliance.

    (a) Purpose. The purpose of this regulation is to require State 
savings associations (as defined by Sec.390.308 to establish and 
maintain procedures reasonably designed to assure and monitor compliance 
with the requirements of subchapter II of chapter 53 of title 31, United 
States Code, and the implementing regulations promulgated thereunder by 
the U.S. Department of Treasury, 31 CFR part 103.
    (b) Establishment of a BSA compliance program--(1) Program 
requirement. Each State savings association shall develop and provide 
for the continued administration of a program reasonably designed to 
assure and monitor compliance with the recordkeeping and reporting 
requirements set forth in subchapter II of chapter 53 of title 31, 
United States Code and the implementing regulations issued by the 
Department of the Treasury at 31 CFR part 103. The compliance program 
must be written, approved by the State savings association's board of 
directors, and reflected in the minutes of the State savings 
association.
    (2) Customer identification program. Each State savings association 
is subject to the requirements of 31 U.S.C. 5318(l) and the implementing 
regulation promulgated at 31 CFR 103.121, which require a customer 
identification program to be implemented as part of the BSA compliance 
program required under this section.
    (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 a savings association's in-house personnel or by an outside party;
    (3) Designate individual(s) responsible for coordinating and 
monitoring day-to-day compliance; and
    (4) Provide training for appropriate personnel.



Sec.390.355  Suspicious Activity Reports and other reports 
and statements.

    (a) Periodic reports. Each State savings association shall make such 
periodic or other reports of its affairs in such manner and on such 
forms as the FDIC may prescribe. The FDIC may provide that reports filed 
by State savings associations to meet the requirements of other 
regulations also satisfy requirements imposed under this section.
    (b) False or misleading statements or omissions. No State savings 
association or director, officer, agent, employee, affiliated person, or 
other person participating in the conduct of the affairs of such State 
savings association nor any person filing or seeking approval of any 
application shall knowingly:
    (1) Make any written or oral statement to the FDIC or to an agent, 
representative or employee of the FDIC that is false or misleading with 
respect

[[Page 444]]

to any material fact or omits to state a material fact concerning any 
matter within the jurisdiction of the FDIC; or
    (2) Make any such statement or omission to a person or organization 
auditing a State savings association or otherwise preparing or reviewing 
its financial statements concerning the accounts, assets, management 
condition, ownership, safety, or soundness, or other affairs of the 
State savings association.
    (c) Notifications of loss and reports of increase in deductible 
amount of bond. A State savings association maintaining bond coverage as 
required by Sec.390.356 shall promptly notify its bond company and 
file a proof of loss under the procedures provided by its bond, 
concerning any covered losses greater than twice the deductible amount.
    (d) Suspicious Activity Reports--(1) Purpose and scope. This 
paragraph (d) ensures that State savings associations and service 
corporations file a Suspicious Activity Report when they detect a known 
or suspected violation of Federal law or a suspicious transaction 
related to a money laundering activity or a violation of the Bank 
Secrecy Act.
    (2) Definitions. For the purposes of this paragraph (d):
    (i) FinCEN means the Financial Crimes Enforcement Network of the 
Department of the Treasury.
    (ii) Institution-affiliated party means any institution-affiliated 
party as that term is defined in sections 3(u) and 8(b)(9) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(u) and 1818(b)(9)).
    (iii) SAR means a Suspicious Activity Report on the form prescribed 
by the FDIC.
    (3) SARs required. A State savings association shall file a SAR with 
the appropriate Federal law enforcement agencies and the Department of 
the Treasury in accordance with the form's instructions, by sending a 
completed SAR to FinCEN in the following circumstances:
    (i) Insider abuse involving any amount. Whenever the State savings 
association detects any known or suspected Federal criminal violation, 
or pattern of criminal violations, committed or attempted against the 
State savings association or involving a transaction or transactions 
conducted through the State savings association where the State savings 
association believes that it was either an actual or potential victim of 
a criminal violation, or series of criminal violations, or that it was 
used to facilitate a criminal transaction, and it has a substantial 
basis for identifying one of its directors, officers, employees, agents 
or other institution-affiliated parties as having committed or aided in 
the commission of a criminal act, regardless of the amount involved in 
the violation.
    (ii) Violations aggregating $5,000 or more where a suspect can be 
identified. Whenever the State savings association detects any known or 
suspected Federal criminal violation, or pattern of criminal violations, 
committed or attempted against the State savings association involving a 
transaction or transactions conducted through the State savings 
association and involving or aggregating $5,000 or more in funds or 
other assets, where the State savings association believes that it was 
either an actual or potential victim of a criminal violation or series 
of criminal violations, or that it was used to facilitate a criminal 
transaction, and it 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 drivers' 
license or social security numbers, addresses and telephone numbers, 
must be reported.
    (iii) Violations aggregating $25,000 or more regardless of potential 
suspects. Whenever the State savings association detects any known or 
suspected Federal criminal violation, or pattern of criminal violations, 
committed or attempted against the State savings association involving a 
transaction or transactions conducted through the State savings 
association and involving or aggregating $25,000 or more in funds or 
other assets, where the State savings association believes that it was 
either an actual or potential victim of a criminal violation or series 
of criminal violations, or that it was used to facilitate a criminal 
transaction, even though there is no substantial basis for

[[Page 445]]

identifying a possible suspect or group of suspects.
    (iv) 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 (d)(3)(iv) 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 State savings association involving or aggregating $5,000 
or more in funds or other assets, if the State savings association 
knows, suspects, or has reason to suspect that:
    (A) 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 law or regulation or to avoid 
any transaction reporting requirement under Federal law;
    (B) The transaction is designed to evade any regulations promulgated 
under the Bank Secrecy Act; or
    (C) The transaction has no business or apparent lawful purpose or is 
not the sort in which the particular customer would normally be expected 
to engage, and the institution knows of no reasonable explanation for 
the transaction after examining the available facts, including the 
background and possible purpose of the transaction.
    (4) [Reserved]
    (5) Time for reporting. A State savings association is required to 
file a SAR no later than 30 calendar days after the date of initial 
detection of facts that may constitute a basis for filing a SAR. If no 
suspect was identified on the date of detection of the incident 
requiring the filing, a State savings association may delay filing a SAR 
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. In situations involving 
violations requiring immediate attention, such as when a reportable 
violation is ongoing, the State savings association shall immediately 
notify, by telephone, an appropriate law enforcement authority and the 
FDIC in addition to filing a timely SAR.
    (6) Reports to state and local authorities. A State savings 
association is encouraged to file a copy of the SAR with state and local 
law enforcement agencies where appropriate.
    (7) Exception. A State savings association need not file a SAR for a 
robbery or burglary committed or attempted that is reported to 
appropriate law enforcement authorities.
    (8) Retention of records. A State savings association shall maintain 
a copy of any SAR filed and the original or business record equivalent 
of any supporting documentation for a period of five years from the date 
of the filing of the SAR. Supporting documentation shall be identified 
and maintained by the State savings association as such, and shall be 
deemed to have been filed with the SAR. A State savings association 
shall make all supporting documentation available to appropriate law 
enforcement agencies upon request.
    (9) Notification to board of directors--(i) Generally. Whenever a 
State savings association files a SAR pursuant to this paragraph (d), 
the management of the State savings association shall promptly notify 
its board of directors, or a committee of directors or executive 
officers designated by the board of directors to receive notice.
    (ii) Suspect is a director or executive officer. If the State 
savings association files a SAR pursuant to this paragraph (d) and the 
suspect is a director or executive officer, the State savings 
association may not notify the suspect, pursuant to 31 U.S.C. 
5318(g)(2), but shall notify all directors who are not suspects.
    (10) Compliance. Failure to file a SAR in accordance with this 
section and the instructions may subject the State savings association, 
its directors, officers, employees, agents, or other institution-
affiliated parties to supervisory action.

[[Page 446]]

    (11) Obtaining SARs. A State savings association may obtain SARs and 
the instructions from the appropriate FDIC region as defined in Sec.
303.2 of this chapter.
    (12) Confidentiality of SARs. SARs are confidential. Any institution 
or person subpoenaed or otherwise requested to disclose a SAR or the 
information contained in a SAR shall decline to produce the SAR or to 
provide any information that would disclose that a SAR has been prepared 
or filed, citing this paragraph (d), applicable law (e.g., 31 U.S.C. 
5318(g)), or both, and shall notify the FDIC.
    (13) Safe harbor. The safe harbor provision of 31 U.S.C. 5318(g), 
which exempts any financial institution 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, covers 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 paragraph (d), or are filed on a voluntary basis.
    (e) Adjustable-rate mortgage indices--(1) Reporting obligation. Upon 
the request of a Federal Home Loan Bank, all State savings associations 
within the jurisdiction of that Federal Home Loan Bank shall report the 
data items set forth in paragraph (e)(2) of this section for the Federal 
Home Loan Bank to use in calculating and publishing an adjustable-rate 
mortgage index.
    (2) Data to be reported. For purposes of paragraph (e)(1) of this 
section, the term ``data items'' means the data items previously 
collected from the monthly Thrift Financial Report or Consolidated 
Reports of Condition or Income (``Call Report''), as applicable, and 
such data items as may be altered, amended, or substituted by the 
requesting Federal Home Loan Bank.
    (3) Applicable indices. For the purpose of this reporting 
requirement, the term ``adjustable-rate mortgage index'' means any of 
the adjustable-rate mortgage indices calculated and published by a 
Federal Home Loan Bank or the Federal Home Loan Bank Board on or before 
August 9, 1989.



Sec.390.356  Bonds for directors, officers, employees, and agents;
form of and amount of bonds.

    (a) Each State savings association shall maintain fidelity bond 
coverage. The bond shall cover each director, officer, employee, and 
agent who has control over or access to cash, securities, or other 
property of the State savings association.
    (b) The amount of coverage to be required for each State savings 
association shall be determined by the association's management, based 
on its assessment of the level that would be safe and sound in view of 
the association's potential exposure to risk; provided, such 
determination shall be subject to approval by the association's board of 
directors.
    (c) Each State savings association may maintain bond coverage in 
addition to that provided by the insurance underwriter industry's 
standard forms, through the use of endorsements, riders, or other forms 
of supplemental coverage, if, in the judgment of the State savings 
association's board of directors, additional coverage is warranted.
    (d) The board of directors of each State savings association shall 
formally approve the State savings association's bond coverage. In 
deciding whether to approve the bond coverage, the board shall review 
the adequacy of the standard coverage and the need for supplemental 
coverage. Documentation of the board's approval shall be included as a 
part of the minutes of the meeting at which the board approves coverage. 
Additionally, the board of directors shall review the State savings 
association's bond coverage at least annually to assess the continuing 
adequacy of coverage.



Sec.390.357  Bonds for agents.

    In lieu of the bond provided in Sec.390.356 in the case of agents 
appointed by a State savings association, a fidelity bond may be 
provided in an amount at least twice the average monthly collections of 
such agents, provided such

[[Page 447]]

agents shall be required to make settlement with the State savings 
association at least monthly, and provided such bond is approved by the 
board of directors of the State savings association. No bond need be 
obtained for any agent that is a financial institution insured by the 
FDIC.



Sec.390.358  Conflicts of interest.

    If you are a director, officer, or employee of a State savings 
association, or have the power to direct its management or policies, or 
otherwise owe a fiduciary duty to a State savings association:
    (a) You must not advance your own personal or business interests, or 
those of others with whom you have a personal or business relationship, 
at the expense of the State savings association; and
    (b) You must, if you have an interest in a matter or transaction 
before the board of directors:
    (1) Disclose to the board all material nonprivileged information 
relevant to the board's decision on the matter or transaction, 
including:
    (i) The existence, nature and extent of your interests; and
    (ii) The facts known to you as to the matter or transaction under 
consideration;
    (2) Refrain from participating in the board's discussion of the 
matter or transaction; and
    (3) Recuse yourself from voting on the matter or transaction (if you 
are a director).



Sec.390.359  Corporate opportunity.

    (a) If you are a director or officer of a State savings association, 
or have the power to direct its management or policies, or otherwise owe 
a fiduciary duty to a State savings association, you must not take 
advantage of corporate opportunities belonging to the State savings 
association.
    (b) A corporate opportunity belongs to a State savings association 
if:
    (1) The opportunity is within the corporate powers of the State 
savings association or a subsidiary of the State savings association; 
and
    (2) The opportunity is of present or potential practical advantage 
to the State savings association, either directly or through its 
subsidiary.
    (c) The FDIC will not deem you to have taken advantage of a 
corporate opportunity belonging to the State savings association if a 
disinterested and independent majority of the State savings 
association's board of directors, after receiving a full and fair 
presentation of the matter, rejected the opportunity as a matter of 
sound business judgment.



Sec.390.360  Change of director or senior executive officer.

    Sections 390.360 through 390.368 implement 12 U.S.C. 1831i, which 
requires certain State savings associations to notify the FDIC before 
appointing or employing directors and senior executive officers.



Sec.390.361  Applicable definitions.

    The following definitions apply to Sec. Sec.390.360 through 
390.368:
    Director means an individual who serves on the board of directors of 
a State savings association. This term does not include an advisory 
director who:
    (1) Is not elected by the shareholders;
    (2) Is not authorized to vote on any matters before the board of 
directors or any committee of the board of directors;
    (3) Provides only general policy advice to the board of directors or 
any committee of the board of directors; and
    (4) Has not been identified by the FDIC in writing as an individual 
who performs the functions of a director, or who exercises significant 
influence over, or participates in, major policymaking decisions of the 
board of directors.
    Senior executive officer means an individual who holds the title or 
performs the function of one or more of the following positions (without 
regard to title, salary, or compensation): president, chief executive 
officer, chief operating officer, chief financial officer, chief lending 
officer, or chief investment officer. Senior executive officer also 
includes any other person identified by the FDIC in writing as an 
individual who exercises significant influence over, or participates in, 
major

[[Page 448]]

policymaking decisions, whether or not hired as an employee.
    Troubled condition means:
    (1) A State savings association that has a composite rating of 4 or 
5, as composite rating is defined in Sec.390.101(c).
    (2) [Reserved]
    (3) A State savings association that is subject to a capital 
directive, a cease-and-desist order, a consent order, a formal written 
agreement, or a prompt corrective action directive relating to the 
safety and soundness or financial viability of the State savings 
association, unless otherwise informed in writing by the FDIC; or
    (4) A State savings association that is informed in writing by the 
FDIC that it is in troubled condition based on information available to 
the FDIC.



Sec.390.362  Who must give prior notice?

    (a) State savings association. Except as provided under Sec.
390.368, you must notify the FDIC at least 30 days before adding or 
replacing any member of your board of directors, employing any person as 
a senior executive officer, or changing the responsibilities of any 
senior executive officer so that the person would assume a different 
senior executive position if:
    (1) You are a State savings association and at least one of the 
following circumstances apply:
    (i) You do not comply with all minimum capital requirements under 
part 324 of this chapter;
    (ii) You are in troubled condition; or
    (iii) The FDIC has notified you, in connection with its review of a 
capital restoration plan required under section 38 of the Federal 
Deposit Insurance Act or subpart H of part 324 of this chapter or 
otherwise, that a notice is required under Sec. Sec.390.360 through 
390.368; or
    (2) [Reserved]
    (b) Notice by individual. If you are an individual seeking election 
to the board of directors of a State savings association described in 
paragraph (a) of this section, and have not been nominated by 
management, you must either provide the prior notice required under 
paragraph (a) of this section or follow the process under Sec.
390.368(b).

[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17743, Apr. 24, 2018]



Sec.390.363  What procedures govern the filing of my notice?

    The procedures found in Sec. Sec.390.103 through 390.110 govern 
the filing of your notice under Sec.390.362.



Sec.390.364  What information must I include in my notice?

    (a) Content requirements. Your notice must include:
    (1) The information required under 12 U.S.C. 1817(j)(6)(A), and the 
information prescribed in the Interagency Notice of Change in Director 
or Senior Executive Officer and the Interagency Biographical and 
Financial Report which are available from the appropriate FDIC regions 
as defined in Sec.303.2 of this chapter;
    (2) Legible fingerprints of the proposed director or senior 
executive officer. You are not required to file fingerprints if, within 
three years prior to the date of submission of the notice, the proposed 
director or senior executive officer provided legible fingerprints as 
part of a notice filed with the FDIC under 12 U.S.C. 1831i; and
    (3) Such other information required by the FDIC.
    (b) Modification of content requirements. The FDIC may require or 
accept other information in place of the content requirements in 
paragraph (a) of this section.



Sec.390.365  What procedures govern the FDIC's review of my notice
for completeness?

    The FDIC will first review your notice to determine whether it is 
complete.
    (a) If your notice is complete, the FDIC will notify you in writing 
of the date that the FDIC received the complete notice.
    (b) If your notice is not complete, the FDIC will notify you in 
writing what additional information you need to submit, why we need the 
information, and when you must submit it. You must, within the specified 
time period, provide additional information or request that the FDIC 
suspend processing of the notice. If you fail to act within the 
specified time period, the FDIC may treat the notice as withdrawn or may 
review the application based on the information provided.

[[Page 449]]



Sec.390.366  What standards and procedures will govern the FDIC
review of the substance of my notice?

    The FDIC will disapprove a notice if, pursuant to the standard set 
forth in 12 U.S.C. 1831i(e), the FDIC finds that the competence, 
experience, character, or integrity of the proposed FDIC or senior 
executive officer indicates that it would not be in the best interests 
of the depositors of the State savings association or of the public to 
permit the individual to be employed by, or associated with, the State 
savings association. If the FDIC disapproves a notice, it will issue a 
written notice that explains why the FDIC disapproved the notice. The 
FDIC will send the notice to the State savings association and the 
individual.



Sec.390.367  When may a proposed director or senior executive officer
begin service?

    (a) A proposed director or senior executive officer may begin 
service 30 days after the date the FDIC receives all required 
information, unless:
    (1) The FDIC notifies you that it has disapproved the notice; or
    (2) The FDIC extends the 30-day period for an additional period not 
to exceed 60 days. If the FDIC extends the 30-day period, it will notify 
you in writing that the period has been extended, and will state the 
reason for the extension. The proposed director or senior executive 
officer may begin service upon expiration of the extended period, unless 
the FDIC notifies you that it has disapproved the notice during the 
extended period.
    (b) Notwithstanding paragraph (a) of this section, a proposed or 
senior executive officer may begin service after the FDIC notifies you, 
in writing, of its intention not to disapprove the notice.



Sec.390.368  When will the FDIC waive the prior notice requirement?

    (a) Waiver request. (1) An individual may serve as a director or 
senior executive officer before filing a notice as described in 
Sec. Sec.390.360 through 390.368 if the FDIC issues a written finding 
that:
    (i) Delay would threaten the safety or soundness of the State 
savings association;
    (ii) Delay would not be in the public interest; or
    (iii) Other extraordinary circumstances exist that justify waiver of 
prior notice.
    (2) If the FDIC grants a waiver, you must file a notice as described 
in Sec. Sec.390.360-390.368 within the time period specified by the 
FDIC.
    (b) Automatic waiver. An individual may serve as a director before 
filing a notice as described in Sec. Sec.390.360 through 390.368, if 
the individual was not nominated by management and the individual 
submits a notice as described in Sec. Sec.390.360 through 390.368 
within seven days after election as a director.
    (c) Subsequent FDIC action. The FDIC may disapprove a notice within 
30 days after the FDIC issues a waiver under paragraph (a) of this 
section or within 30 days after the election of an individual who has 
filed a notice and is serving pursuant to an automatic waiver under 
paragraph (b) of this section.



                    Subpart T_Accounting Requirements



Sec.390.380  Form and content of financial statements.

    (a) This section states the requirements as to form and content of 
financial statements included by a State savings association in the 
following documents. However, the FDIC's regulations governing the 
applicable documents specify the actual financial statements that are to 
be included in that document.
    (1) Any proxy statement or offering circular required to be used in 
connection with a conversion under 12 CFR part 192.
    (2) Any offering circular or nonpublic offering materials required 
to be used in connection with an offer or sale of securities under 
subpart W.
    (b) Except as otherwise provided by the FDIC by rule, regulation, or 
order made specifically applicable to financial statements governed by 
this section, financial statements shall:
    (1) Be prepared and presented in accordance with generally accepted 
accounting principles;
    (2) Comply with Sec.390.384;
    (3) Consistent with the provisions of this subpart, comply with 
articles 1, 2,

[[Page 450]]

3, 4, 10, and 11 of Regulation S-X adopted by the Securities and 
Exchange Commission (17 CFR 210.l through 210.4, 210.10, and 210.11).
    (4) Be audited, when required, by an independent auditor in 
accordance with the standards imposed by the American Institute of 
Certified Public Accountants.
    (c) The term ``financial statements'' includes all notes to the 
statements and related schedules.

[76 FR 47655, Aug. 5, 2011, as amended at 79 FR 63502, Oct. 24, 2014]



Sec.390.381  Definitions.

    (See also 17 CFR 210.1-02.)
    (a) Registrant. The term ``registrant'' means an applicant, a State 
savings association, or any other person required to prepare financial 
statements in accordance with this subpart.
    (b) Significant subsidiary. The term ``significant subsidiary'' 
means a subsidiary, including its subsidiaries, which meets any of the 
following conditions:
    (1) The State savings association's and its other subsidiaries' 
investments in and advances to the subsidiary exceed 10 percent of the 
total assets of the association and its subsidiaries consolidated as of 
the end of the most recently completed fiscal year (for purposes of 
determining whether financial statements of a business acquired or to be 
acquired in a business combination accounted for as a pooling of 
interests are required pursuant to 17 CFR 210.3-05, this condition is 
also met when the number of common shares exchanged by the State savings 
association exceeds 10 percent of its total common shares outstanding at 
the date the combination is initiated); or
    (2) The State savings association's and its other subsidiaries' 
proportionate share of the total assets (after intercompany 
eliminations) of the subsidiary exceeds 10 percent of the total assets 
of the State savings association and its subsidiaries consolidated as of 
the end of the most recently completed fiscal year; or
    (3) The State savings association's and its other subsidiaries' 
equity in the income from continuing operations before income taxes, 
extraordinary items, and cumulative effect of a change in accounting 
principle of the subsidiary exceeds 10 percent of such income of the 
State savings association and its subsidiaries consolidated for the most 
recently completed fiscal year.
    (4) Computational note: For purposes of making the prescribed income 
test the following guidance should be applied:
    (i) When a loss has been incurred by either the parent or its 
consolidated subsidiaries or the tested subsidiary, but not both, the 
equity in the income or loss of the tested subsidiary should be excluded 
from the income of the State savings association and its subsidiaries 
consolidated for purposes of the computation.
    (ii) If income of the State savings association and its subsidiaries 
consolidated for the most recent fiscal year is at least 10 percent 
lower than the average of the income for the last five fiscal years, 
such average income should be substituted for purposes of the 
computation. Any loss years should be omitted for purposes of computing 
average income.



Sec.390.382  Qualification of public accountant. 
(See also 17 CFR 210.2-01.)

    The term ``qualified public accountant'' means a certified public 
accountant or licensed public accountant certified or licensed by a 
regulatory authority of a State or other political subdivision of the 
United States who is in good standing as such under the laws of the 
jurisdiction where the home office of the registrant to be audited is 
located. Any person or firm who is suspended from practice before the 
Securities and Exchange Commission or other governmental agency is not a 
``qualified public accountant'' for purposes of this section.



Sec.390.383  Condensed financial information [Parent only].

    (a) The information prescribed by Schedule III required by section 
IV of the appendix to Sec.390.384 shall be presented in a note to the 
financial statements when the restricted net assets (17 CFR 210.4-
08(e)(3)) of consolidated subsidiaries exceed 25 percent of consolidated 
net assets as of the end of the most recently completed fiscal year.

[[Page 451]]

The investment in and indebtedness of and to State savings association 
subsidiaries shall be stated separately in the condensed balance sheet 
from amounts for other subsidiaries; and the amount of cash dividends 
paid to the parent State savings association for each of the last three 
years by the State savings association subsidiaries shall be stated 
separately in the condensed income statement from amounts for other 
subsidiaries.
    (b) For purposes of the above test, restricted net assets of 
consolidated subsidiaries shall mean that amount of the State savings 
association's proportionate share of net assets of consolidated 
subsidiaries (after intercompany eliminations) which as of the end of 
the most recent year may not be transferred to the parent company by 
subsidiaries in the form of loans, advances, or cash dividends without 
the consent of a third party (i.e., lender, regulatory agency, foreign 
government, etc.).
    (c) Where restrictions on the amount of funds which may be loaned or 
advanced differ from the amount restricted as to transfer in the form of 
cash dividends, the amount least restrictive to the subsidiary shall be 
used. Redeemable preferred stocks (See item I (22) in the appendix to 
Sec.390.384) and minority interest (See item I (21) in the appendix to 
Sec.390.384) shall be deducted in computing net assets for purposes of 
this test.



Sec.390.384  Financial statements for conversions, SEC filings,
and offering circulars.

    This section and its appendix pertain to the form and content of 
financial statements included as part of:
    (a) A conversion application under 12 CFR part 192 including 
financial statements in proxy statements and offering circulars,
    (b) A filing under the Securities Exchange Act of 1934, 15 U.S.C. 
78a et seq., and
    (c) Any offering circular required to be used in connection with the 
issuance of mutual capital certificates under 12 CFR 163.74 and debt 
securities under Sec.390.341.

      Appendix to Sec.390.384--Financial Statement Presentation.

    This appendix specifies the various line items which should appear 
on the face of the financial statements governed by Sec.390.384 and 
additional disclosures which should be included with the financial 
statements in related notes.

                            I. Balance Sheet

    Balance sheets shall comply with the following provisions:

                                 Assets

    1. Cash and amounts due from depository institutions. (a) The 
amounts in this caption should include noninterest-bearing deposits with 
depository institutions.
    (b) State in a note the amount and terms of any deposits in 
depository institutions held as compensating balances against long- or 
short-term borrowing arrangements. This disclosure should include the 
provisions of any restrictions as to withdrawal or usage. Restrictions 
may include legally restricted deposits held as compensating balances 
against short-term borrowing arrangements, contracts entered into with 
others, or company statements of intention with regard to particular 
deposits; however, time deposits and short-term certificates of deposits 
are not generally included in legally restricted deposits. In cases 
where compensating balance arrangements exist but are not agreements 
which legally restrict the use of cash amounts shown on the balance 
sheet, describe in the notes to the financial statements these 
arrangements and the amount involved, if determinable, for the most 
recent audited balance sheet required and for any subsequent unaudited 
balance sheet required. Compensating balances that are maintained under 
an agreement to ensure future credit availability shall be disclosed in 
the notes to the financial statements along with the amount and terms of 
the agreement.
    (c) Checks outstanding in excess of an applicant's book balance in a 
demand deposit account shall be shown as a liability.
    2. Interest-bearing deposits in other banks.
    3. Federal funds sold and securities purchased under resale 
agreements or similar arrangements. These amounts should be presented, 
i.e., gross and not netted against Federal funds purchased and 
securities sold under agreement to repurchase, as reported in caption 
15.
    4. Trading account assets. Include securities considered to be held 
for trading purposes.
    5. Other short-term investments.
    6. Investment securities. (a) Include securities considered to be 
held for investment purposes. Disclose the aggregate book value of 
investment securities as the line item on the balance sheet; and also 
show on the face

[[Page 452]]

of the balance sheet the aggregate market value at the balance sheet 
date. The aggregate amounts should include securities pledged, loaned, 
or sold under repurchase agreements and similar arrangements. Borrowed 
securities and securities purchased under resale agreements or similar 
arrangements should be excluded.
    (b) Disclose in a note the carrying value and market value of 
securities of (i) the U.S. Treasury and other U.S. Government agencies 
and corporations; (ii) states of the U.S. and political subdivisions 
thereof; and (iii) other securities.
    7. Assets held for sale. Investments in assets considered to be held 
for sale purposes should be reported separately in the statement of 
financial condition.
    8. Loans. (a) Disclose separately: (i) Total loans (including 
financing type leases), (ii) allowance for loan losses, (iii) unearned 
income on installment loans, (iv) discount on loans purchased, and (v) 
loans in process.
    (b) State on the balance sheet or in a note the amount of loans in 
each of the following categories: (i) Real estate mortgage; (ii) real 
estate construction; (iii) installment; and (iv) commercial, financial, 
and agricultural.
    (c)(i) Include under the real estate mortgage category loans payable 
in monthly, quarterly, or other periodic installments and secured by 
developed income property and/or personal residences.
    (ii) Include under the real estate construction category loans 
secured by real estate which are made for the purpose of financing 
construction of real estate and land development projects.
    (iii) Include under the installment category loans to individuals 
generally repayable in monthly installments. This category shall 
include, but not be limited to, credit card and related activities, 
individual automobile loans, other installment loans, mobile home loans, 
and residential repair and modernization loans.
    (iv) Include under the commercial, financial, and agricultural 
category all loans not included in another category. This category shall 
include, but not be limited to, loans to real estate investment trusts, 
mortgage companies, banks, and other financial institutions; loans for 
carrying securities; and loans for agricultural purposes. Do not include 
loans secured primarily by developed real estate.
    (d) State separately any other loan category regardless of relative 
size if necessary to reflect any unusual risk concentration.
    (e) Unearned income on installment loans shall be shown and deducted 
separately from total loans.
    (f) Unamortized discounts on purchased loans shall be deducted 
separately from total loans.
    (g) Loans in process shall be deducted separately from total loans.
    (h) A series of categories other than those specified in item (b) of 
paragraph 8. may be used to present details of loans if considered a 
more appropriate presentation. The categories specified in item (b) of 
paragraph 8. should be considered the minimum categories that may be 
presented.
    (i) For each period for which an income statement is presented, 
disclose in a note the total dollar amount of loans being serviced by 
the State savings association for the benefit of others.
    (j)(i)(A) As of each balance sheet date, disclose in a note the 
aggregate dollar amount of loans (exclusive of loans to any such persons 
which in the aggregate do not exceed $60,000 during the last year) made 
by the State savings association or any of its subsidiaries to 
directors, executive officers, or principal holders of equity securities 
(17 CFR 210.1-02) of the State savings association or any of its 
significant subsidiaries (17 CFR 210.1-02) or to any associate of such 
persons. For the latest fiscal year, an analysis of activity with 
respect to such aggregate loans to related parties should be provided. 
The analysis should include at the beginning of the period new loans, 
repayments, and other changes. (Other changes, if significant, should be 
explained.)
    (B) This disclosure need not be furnished when the aggregate amount 
of such loans at the balance sheet date (or with respect to the latest 
fiscal year, the maximum amount outstanding during the period) does not 
exceed 5 percent of stockholders' equity at the balance sheet date.
    (ii) If a significant portion of the aggregate amount of loans 
outstanding at the end of the fiscal year disclosed pursuant to item 
(i)(A) of this paragraph (j) relates to nonaccrual, past due, 
restructured, and potential problem loans (see Securities and Exchange 
Commission's Securities Act Industry Guide 3, section III.C.), so state 
and disclose the aggregate amount of such loans along with such other 
information necessary to an understanding of the effects of the 
transactions on the financial statements.
    (iii) Notwithstanding the aggregate disclosure called for by 
paragraph (j)(i) of this balance sheet caption 8, if any loans were not 
made in the ordinary course of business during any period for which an 
income statement is required to be filed, provide an appropriate 
description of each such loan (see 17 CFR 210.9-03.7(e)(3)).
    (iv) For purposes only of Balance Sheet item 8(j), the following 
definitions shall apply:
    (A) Associate used to indicate a relationship with any person means 
(1) any corporation, venture, or organization of which such person is a 
general partner or is, directly or indirectly, the beneficial owner of 
10 percent or more of any class of equity securities; (2) any trust or 
other estate in which such person

[[Page 453]]

has a substantial beneficial interest or for which such person serves as 
trustee or in a similar capacity; and (3) any member of the immediate 
family of any of the foregoing persons.
    (B) Executive officer means the president, any vice president in 
charge of a principal business unit, division, or function (such as 
loans, investments, operations, administration, or finance), and any 
other officer or person who performs similar policy-making functions.
    (C) Immediate family with regard to a person means such person's 
spouse, parents, children, siblings, mother- and father-in-law, sons- 
and daughters-in-law, and brothers- and sisters-in-law.
    (D) Ordinary course of business with regard to loans means those 
loans which were made on substantially the same terms, including 
interest rate and collateral, as those prevailing at the same time for 
comparable transactions with unrelated persons and did not involve more 
than the normal risk of collectibility or present other unfavorable 
features.
    (k) For each period for which an income statement is presented, 
furnish in a note a statement of changes in the allowance for loan 
losses, showing balances at beginning and end of the period, provision 
charged to income, recoveries of amounts previously charged off, and 
losses charged to the allowance.
    9. Premises and equipment.
    10. Real estate owned. State, parenthetically or otherwise:
    (a) The amount of real estate owned by class as described in item 
(b) of paragraph 10. and the basis for determining that amount; and
    (b) A description of each class of real estate owned (i) acquired by 
foreclosure or by deed in lieu of foreclosure, (ii) in judgment and 
subject to redemption, or (iii) acquired for development or resale. Show 
separately any accumulated depreciation or valuation allowances. 
Disclose the policies regarding, and amounts of, capitalized costs, 
including interest.
    11. Investment in joint ventures. In a note, present summarized 
aggregate financial statements for investments in real estate or other 
joint ventures which individually (a) are 20 percent or more owned by 
the State savings association or any of its subsidiaries, or (b) have 
liabilities (including contingent liabilities) to the parent exceeding 
10 percent of the parent's regulatory capital. If an allowance for real 
estate losses subsequent to acquisition is maintained, the amount shall 
be disclosed, deducted from the other real estate owned, and a statement 
of changes in the allowance showing balances at beginning and end of 
period should be included. Provision charged to income and losses 
charged to the allowance account shall be furnished for each period for 
which an income statement is filed.
    12. Other assets. (a) Disclose separately on the balance sheet or in 
a note thereto any of the following assets or any other asset the amount 
of which exceeds 30 percent of stockholders' equity. The remaining 
assets may be shown as one amount.
    (i) Accrued interest receivable. State separately those amounts 
relating to loans and those amounts relating to investments.
    (ii) Excess of cost over assets acquired (net of amortization).
    (b) State in a note (i) amounts representing investments in 
affiliates and investments in other persons which are accounted for by 
the equity method, and (ii) indebtedness of affiliates and other 
persons, the investments in which are accounted for by the equity 
method. State the basis of determining the amounts reported under 
paragraph (b)(i).
    13. Total assets.

                  Liabilities, and Stockholders' Equity

    14. Deposits. (a) Disclose separately on the balance sheet or in a 
note the amounts in the following categories of interest-bearing and 
noninterest-bearing deposits: (i) NOW account and MMDA deposits, (ii) 
savings deposits, and (iii) time deposits.
    (b) Include under the savings-deposits category interest-bearing 
deposits without specified maturity or contractual provisions requiring 
advance notice of intention to withdraw funds. Include deposits for 
which a State savings association may require at its option written 
notice of intended withdrawal not less than 14 days in advance.
    (c) Include under the time-deposits category deposits subject to 
provisions specifying maturity or other withdrawal conditions such as 
time certificates of deposits, open account time deposits, and deposits 
accumulated for the payment of personal loans.
    (d) Include accrued interest or dividends, if appropriate.
    15. Short-term borrowings. (a) State separately, here or in a note, 
the amounts payable for (i) Federal funds purchased and securities sold 
under agreements to repurchase, (ii) commercial paper, and (iii) other 
short-term borrowings.
    (b) Federal funds purchased and sales of securities under repurchase 
agreements shall be reported gross and not netted against sales of 
Federal funds and purchase of securities under resale agreements.
    (c) Include as securities sold under agreements to repurchase all 
transactions of this type regardless of (i) whether they are called 
simultaneous purchases and sales, buy-backs, turnarounds, overnight 
transactions, delayed deliveries, or other terms signifying the same 
substantive transaction, and (ii) whether the transactions are with the 
same

[[Page 454]]

or different institutions, if the purpose of the transactions is to 
repurchase identical or similar securities.
    (d) The amount and terms (including commitment fees and the 
conditions under which lines may be withdrawn) of unused lines of credit 
for short-term financing shall be disclosed, if significant, in the 
notes to the financial statements. The amount of these lines of credit 
which support a commercial paper borrowing arrangement or similar 
arrangements shall be separately identified.
    16. Advance payments by borrowers for taxes and insurance.
    17. Other liabilities. Disclose separately on the balance sheet or 
in a note any of the following liabilities or any other items which are 
individually in excess of 30 percent of stockholders' equity (except 
that amounts in excess of 5 percent of stockholders' equity should be 
disclosed with respect to item (d)). The remaining items may be shown as 
one amount.
    (a) Income taxes payable.
    (b) Deferred income taxes.
    (c) Indebtedness to affiliate and other persons the investment in 
which is accounted for by the equity method.
    (d) Indebtedness to directors, executive officers, and principal 
holders of equity securities of the registrant or any of its significant 
subsidiaries. (The guidance in balance sheet caption ``8(j)'' shall be 
used to identify related parties for purposes of this disclosure.)
    18. Bonds, mortgages, and similar debt. (a) Include bonds, Federal 
Home Loan Bank advances, capital notes, debentures, mortgages, and 
similar debt.
    (b) For each issue or type of obligation state in a note:
    (i) The general character of each type of debt, including: (A) The 
rate of interest, (B) the date of maturity, or, if maturing serially, a 
brief indication of the serial maturities, such as ``maturing serially 
from 1980 to 1990,'' (C) if the payment of principal or interest is 
contingent, an appropriate indication of such contingency, (D) a brief 
indication of priority, and (E) if convertible, the basis. For amounts 
owed to related parties see 17 CFR 210.4-08(k).
    (ii) The amount and terms (including commitment fees and the 
conditions under which commitments may be withdrawn) of unused 
commitments for long-term financing arrangements that, if used, would be 
disclosed under this caption shall be disclosed in the notes to the 
financial statements, if significant.
    (c) State in the notes with appropriate explanations (i) the title 
and amount of each issue of debt of a subsidiary included in item (a) of 
paragraph 18 which has not been assumed or guaranteed by the State 
savings association, and (ii) any liens on premises of a subsidiary or 
its consolidated subsidiaries which have not been assumed by the 
subsidiary or its consolidated subsidiaries.
    19. Deferred credits. State separately those items which exceed 30 
percent of stockholders' equity.
    20. Commitments and contingent liabilities. Total commitments to 
fund loans should be disclosed. The dollar amounts and terms of other 
than floating market-rate commitments should also be disclosed.
    21. Minority interest in consolidated subsidiaries.
    22. Preferred stock subject to mandatory redemption requirements or 
the redemption of which is outside the control of the issuer. (a) 
Include under this caption amounts applicable to any class of stock 
which has any of the following characteristics: (i) It is redeemable at 
a fixed or determinable price on a fixed or determinable date or dates, 
whether by operation of a sinking fund or otherwise; (ii) it is 
redeemable at the option of the holder; or (iii) it has conditions for 
redemption which are not solely within the control of the issuer, such 
as stock which must be redeemed out of future earnings. Amounts 
attributable to preferred stock which is not redeemable or is redeemable 
solely at the option of the issuer shall be included under caption 23 
unless it meets one or more of the above criteria.
    (b) State on the face of the balance sheet the title, carrying 
amount, and redemption amount of each issue. (If there is more than one 
issue, these amounts may be aggregated on the face of the balance sheet 
and details concerning each issue may be presented in the note required 
by item (c) of paragraph 22.) Show also the dollar amount of any shares 
subscribed for but unissued, and show the deduction of subscriptions 
receivable therefrom. If the carrying value is different from the 
redemption amount, describe the accounting treatment for such difference 
in the note required by item (c) of paragraph 22. Also state in this 
note or on the face of the balance sheet, for each issue, the number of 
shares authorized and the number of shares issued or outstanding, as 
appropriate. (See 17 CFR 210.4-07.)
    (c) State in a separate note captioned ``Redeemable Preferred 
Stock'' (i) a general description of each issue, including its 
redemption features (e.g., sinking fund, at option of holders, out of 
future earnings) and the rights, if any, of holders in the event of 
default, including the effect, if any, on junior securities in the event 
a required dividend, sinking fund, or other redemption payment(s) is not 
made, (ii) the combined aggregate amount of redemption requirements for 
all issues each year for the five years following the date of the latest 
balance sheet, and (iii) the changes in each issue for each period for 
which an income statement is required to be presented. (See also 17 CFR 
210.4-08(d).)

[[Page 455]]

    (d) Securities reported under this caption are not to be included 
under a general heading ``stockholders' equity'' or combined in a total 
with items described in captions 23, 24 or 25, which follow.
    23. Preferred stock which is not redeemable or is redeemed solely at 
the option of the issuer. State on the face of the balance sheet, or, if 
more than one issue is outstanding, state in a note, the title of each 
issue and the dollar amount thereof. Show also the dollar amount of any 
shares subscribed for but unissued, and show the deduction of 
subscriptions receivable. State on the face of the balance sheet or in a 
note, for each issue, the number of shares authorized and the number of 
shares issued or outstanding, as appropriate. (See 17 CFR 210.4-07.) 
Show in a note or separate statement the changes in each class of 
preferred shares reported under this caption for each period for which 
an income statement is required to be presented. (See also 17 CFR 210.4-
08(d).)
    24. Common stock. For each class of common shares state, on the face 
of the balance sheet, the number of shares issued or outstanding, as 
appropriate (see 17 CFR 210.4-07), and the dollar amount thereof. If 
convertible, this fact should be indicated on the face of the balance 
sheet. For each class of common stock state, on the face of the balance 
sheet or in a note, the title of the issue, the number of shares 
authorized, and, if convertible, the basis for conversion (see also 17 
CFR 210.4-08(d).) Show also the dollar amount of any common stock 
subscribed for but unissued, and show the deduction of subscriptions 
receivable. Show in a note or statement the changes in each class of 
common stock for each period for which an income statement is required 
to be presented.
    25. Other stockholders' equity. (a) Separate captions shall be shown 
on the face of the balance sheet for (i) additional paid-in capital, 
(ii) other additional capital, and (iii) retained earnings, both (A) 
restricted and (B) unrestricted. (See 17 CFR 210.4-08(e).) Additional 
paid-in capital and other additional capital may be combined with the 
stock caption to which it applies, if appropriate. State whether or not 
the State savings association is in compliance with the Federal 
regulatory capital requirements (and state requirements where 
applicable). Also include the dollar amount of those regulatory capital 
requirements and the amount by which the State savings association 
exceeds or fails to meet those requirements.
    (b) For a period of at least 10 years subsequent to the effective 
date of a quasi-reorganization, any description of retained earnings 
shall indicate the point in time from which the new retained earnings 
dates, and for a period of at least three years shall indicate, on the 
face of the balance sheet, the total amount of the deficit eliminated.
    (c) Changes in stockholders' equity shall be disclosed in accordance 
with the requirements of 17 CFR 210.3-04.
    26. Total liabilities and stockholders' equity.

                          II. Income Statement

    Income statements shall comply with the following provisions:
    1. Interest and fees on loans. (a) Include interest, service 
charges, and fees which are related to or are an adjustment of the loan 
interest yield.
    (b) Current amortization of premiums on mortgages or other loans 
shall be deducted from interest on loans, and current accretion of 
discount on such items shall be added to interest on loans.
    (c) Discounts and other deferred amounts which are related to or are 
an adjustment of the loan interest yield shall be amortized into income 
using the interest (level yield) method.
    2. Interest and dividends on investment securities. Include 
accretion of discount on securities and deduct amortization of premiums 
on securities.
    3. Trading account interest. Include interest from securities 
carried in a dealer trading account or accounts that are held 
principally for resale to customers.
    4. Other interest income. Include interest on short-term investments 
(Federal funds sold and securities purchased under agreements to resell) 
and interest on bank deposits.
    5. Total interest income.
    6. Interest on deposits. Include interest on all deposits. On the 
income statement or in a note, state separately, in the same categories 
as those specified for deposits at balance sheet caption 14(a), the 
interest on those deposits. Early withdrawal penalties should be netted 
against interest on deposits and, if material, disclosed on the income 
statement.
    7. Interest on short-term borrowings. Include interest on borrowed 
funds, including Federal funds purchased, securities sold under 
agreements to repurchase, commercial paper, and other short-term 
borrowings.
    8. Interest on long-term borrowings. Include interest on bonds, 
capital notes, debentures, mortgages on State savings association 
premises, capitalized leases, and similar debt.
    9. Total interest expense.
    10. Net interest income.
    11. Provision for loan losses.
    12. Net interest income after provision for loan losses.
    13. Other income. Disclose separately any of the following amounts, 
or any other item of other income, which exceeds 1 percent of the 
aggregate of total interest income and other income. The remaining 
amount may be shown as one amount, except for investment securities 
gains or losses which shall be shown separately regardless of size.

[[Page 456]]

    (a) Commissions and fees from fiduciary activities.
    (b) Fees for other services to customers.
    (c) Commissions, fees, and markups on securities underwriting and 
other securities activities.
    (d) Profit or loss on transactions in investment securities.
    (e) Equity in earnings of unconsolidated subsidiaries and 50-
percent- or less-owned persons.
    (f) Gains or losses on disposition of investments in securities of 
subsidiaries and 50-percent- or less-owned persons.
    (g) Profit or loss from real estate operations.
    (h) Other fees related to loan originations or commitments not 
included in income statement caption 1.
    The remaining other income may be shown in one amount.
    (i) Investment securities gains or losses. The method followed in 
determining the cost of investments sold (e.g., ``average cost,'' 
``first-in, first-out,'' or ``identified certificate'') and related 
income taxes shall be disclosed.
    14. Other expenses. Disclose separately any of the following 
amounts, or any other item of other expense, which exceeds 1 percent of 
the aggregate of total interest income and other income. The remaining 
amounts may be shown as one amount.
    (a) Salaries and employee benefits.
    (b) Net occupancy expense of premises.
    (c) Net cost of operations of other real estate (including 
provisions for real estate losses, rental income, and gains and losses 
on sales of real estate).
    (d) Minority interest in income of consolidated subsidiaries.
    (e) Goodwill amortization.
    15. Other income and expenses. State separately material events or 
transactions that are unusual in nature or occur infrequently, but not 
both, and therefore do not meet both criteria for classification as an 
extraordinary item. Examples of items which would be reported separately 
are gain or loss from the sale of premises and equipment, provision for 
loss on real estate owned, or provision for gain or loss on the sale of 
loans.
    16. Income or losses before income tax expense.
    17. Income tax expense. The information required by 17 CFR 210.4-
08(h) should be disclosed.
    18. Income or loss before extraordinary items effects of changes in 
accounting principles.
    19. Extraordinary items, less applicable tax.
    20. Cumulative effects of changes in accounting principles.
    21. Net income or loss.
    22. Earnings-per-share data.
    23. Conversion footnote. If the State savings association is an 
applicant for conversion from a mutual to a stock association or has 
converted within the last three years, describe in a note the general 
terms of the conversion and restrictions on the operations of the State 
savings association imposed by the conversion. Also, state the amount of 
net proceeds received from the conversion and costs associated with the 
conversion.
    24. Mergers and acquisitions. For the period in which a business 
combination occurs and is accounted for by the purchase method of 
accounting, in addition to those disclosures required by Accounting 
Principles Board Opinion No. 16, the State savings association shall 
make those disclosures as noted below for all combinations involving 
significant acquisitions. (A significant acquisition is defined for this 
purpose to be one in which the assets of the acquired State savings 
association, or group of State savings associations, exceed 10 percent 
of the assets of the consolidated State savings association at the end 
of the most recent period being reported upon).
    (a) Amounts and descriptions of discounts and premiums related to 
recording the aggregate interest-bearing assets and liabilities at their 
fair market value. The disclosure should also include the methods of 
amortization or accretion and the estimated remaining lives.
    (b) The net effect on net income before taxes of the amortization 
and accretion of discounts, premiums, and intangible assets related to 
the purchase accounting transaction(s). For subsequent periods, the 
State savings association shall disclose the remaining total unamortized 
or unaccreted amounts of discounts, premiums, and intangible assets as 
of the date of the most recent balance sheet presented. In addition, the 
State savings association shall disclose the net effect on net income 
before taxes of the amortization and accretion of discounts, premiums, 
and intangible assets related to prior business combinations accounted 
for by the purchase method of accounting. Such disclosures need not be 
made if the total amounts of discounts, premiums, or intangible assets 
do not exceed 30 percent of stockholders' equity as of the date of the 
most recent balance sheet presented.

                      III. Statement of Cash Flows

    The amounts shown in this statement should be those items which 
materially enhance the reader's understanding of the State savings 
association's business. For example, gains from sales of loans should be 
segregated from sales of mortgage-backed securities and other 
securities, if material, proceeds from principal repayments and 
maturities from loans and mortgage-backed securities should be 
segregated from proceeds from sales of loans and mortgage-backed 
securities, purchases of loans, mortgage-backed securities and other 
securities should be segregated, if material. Additional guidance may be 
found in the FASB's Statement

[[Page 457]]

of Financial Accounting Standards No. 95 Statement of Cash Flows.

                   IV. Schedules Required To Be Filed

    The following schedules, which should be examined by an independent 
accountant, shall be filed unless the required information is not 
applicable or is presented in the related financial statements:
    (1) Schedule I--Indebtedness of and to related parties--Not Current. 
For each period for which an income statement is required, the following 
schedule should be filed in support of the amounts required to be 
reported by balance sheet items 8(j) and 17(c) unless such aggregate 
amount does not exceed 5 percent of stockholders' equity at either the 
beginning or the end of the period:

                               Indebtedness of and to Related Parties--Not Current
----------------------------------------------------------------------------------------------------------------
                                                Indebtedness of--
-----------------------------------------------------------------------------------------------------------------
  Name of person \1\    Balance at beginning      Additions \2\          Deductions \3\        Balance at end
----------------------------------------------------------------------------------------------------------------
                A                      B                       C                     D                      E
----------------------------------------------------------------------------------------------------------------
\1\ The persons named shall be grouped as in the related schedule required for investments in related parties.
  The information called for shall be shown separately for any persons whose investments were shown separately
  in such related schedule.
\2\ For each person named in column A, explain in a note the nature and purpose of any increase during the
  period that is in excess of 10 percent of the related balance at either the beginning or end of the period.
\3\ If deduction was other than a receipt or disbursement of cash, explain.


                               Indebtedness of and to Related Parties--Not Current
----------------------------------------------------------------------------------------------------------------
                                                Indebtedness to--
-----------------------------------------------------------------------------------------------------------------
  Name of person \1\    Balance at beginning      Additions \2\          Deductions \3\        Balance at end
----------------------------------------------------------------------------------------------------------------
                A                      F                      G                      H                      I
----------------------------------------------------------------------------------------------------------------
\1\ The persons named shall be grouped as in the related schedule required for investments in related parties.
  The information called for shall be shown separately for any persons whose investments were shown separately
  in such related schedule.
\2\ For each person named in column A, explain in a note the nature and purpose of any increase during the
  period that is in excess of 10 percent of the related balance at either the beginning or end of the period.
\3\ If deduction was other than a receipt or disbursement of cash, explain.

    (2) Schedule II--Guarantees of securities of other issuers. The 
following schedule should be filed as of the date of the most recently 
audited balance sheet with respect to any guarantees of securities of 
other issuers by the person for which the statements are being filed:

              Guarantees of Securities of Other Issuers \4\
------------------------------------------------------------------------
 Col. A. Name of
    issuer of       Col. B. Title of                     Col. D. Amount
    securities       issue of each      Col. C. Total    owned by person
  guaranteed by         class of           amount        or persons for
 person for which      securities      guaranteed and    which statement
   statement is        guaranteed      outstanding \5\      is filed
      filed
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 \4\ Indicate in a note to the most recent schedule being filed for a
  particular person or group any significant changes since the date of
  the related balance sheet. If this schedule is filed in support of
  consolidated or combined statements, there shall be set forth
  guarantees by any person included in the consolidation or combination,
  except that such guarantees of securities which are included in the
  consolidated or combined balance sheet need not be set forth.
\5\ Indicate any amounts included in column C which are included also in
  column D or E.


              Guarantees of Securities of Other Issuers \4\
------------------------------------------------------------------------
                                                         Col. G. Nature
                                                         of any default
                                                           by issue of
 Col. A. Name of                                           securities
    issuer of      Col. E. Amount in                      guaranteed in
    securities        treasury of      Col. F. Nature      principal,
  guaranteed by        issuer of      of guarantee \6\      interest,
 person for which      securities                        sinking fund or
   statement is        guaranteed                          redemption
      filed                                              provisions, or
                                                           payment of
                                                          dividends \7\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 \4\ Indicate in a note to the most recent schedule being filed for a
  particular person or group any significant changes since the date of
  the related balance sheet. If this schedule is filed in support of
  consolidated or combined statements, there shall be set forth
  guarantees by any person included in the consolidation or combination,
  except that such guarantees of securities which are included in the
  consolidated or combined balance sheet need not be set forth.
\6\ There need be made only a brief statement of the nature of the
  guarantee, such as ``Guarantee of principal and interest,'' or
  ``Guarantee of dividends.'' If the guarantee is of interest or
  dividends, state the annual aggregate amount of interest or dividends
  so guaranteed.
\7\ Only a brief statement as to any such defaults need be made.


[[Page 458]]

    (3) Schedule III--Condensed financial information. The following 
schedule shall be filed as of the dates and for the periods specified in 
the schedule.

                     Condensed Financial Information

    [Parent only]
    [The State savings association may determine disclosure based on 
information provided in footnotes below]
    (a) Provide condensed financial information as to financial 
position, changes in financial position, and results of operations of 
the State savings association as of the same dates and for the same 
periods for which audited consolidated financial statements are 
required. The financial information required need not be presented in 
greater detail than is required for condensed statement by 17 CFR 
210.10-01(a) (2), (3), (4). Detailed footnote disclosure which would 
normally be included with complete financial statements may be omitted 
with the exception of disclosure regarding material contingencies, long-
term obligations, and guarantees. Description of significant provisions 
of the state savings association's long-term obligations, mandatory 
dividend, or redemption requirements of redeemable stocks, and 
guarantees of the State savings association shall be provided along with 
a 5-year schedule of maturities of debt. If the material contingencies, 
long-term obligations, redeemable stock requirements, and guarantees of 
the State savings association have been separately disclosed in the 
consolidated statements, they need not be repeated in this schedule.
    (b) Disclose separately the amount of cash dividends paid to the 
State savings association for each of the last three fiscal years by 
consolidated subsidiaries, unconsolidated subsidiaries, and 50-percent- 
or less-owned persons accounted for by the equity method, respectively.

Subparts U-V [Reserved]



                     Subpart W_Securities Offerings



Sec.390.410  Definitions.

    (a) For purposes of this subpart, the following definitions apply:
    (1) Accredited investor means the same as in Commission Rule 501(a) 
(17 CFR 230.501(a)) under the Securities Act, and includes any State 
savings association.
    (2) Commission means the Securities and Exchange Commission.
    (3) Dividend or interest reinvestment plan means a plan which is 
offered solely to existing security holders of the State savings 
association which allows such persons to reinvest dividends or interest 
paid to them on securities issued by the State savings association, and 
which also may allow additional cash amounts to be contributed by the 
participants in the plan, provided that the securities to be issued are 
newly issued, or are purchased for the account of plan participants, at 
prices not in excess of current market prices at the time of purchase, 
or at prices not in excess of an amount determined in accordance with a 
pricing formula specified in the plan and based upon average or current 
market prices at the time of purchase.
    (4) Employee benefit plan means any purchase, savings, option, 
rights, bonus, ownership, appreciation, profit sharing, thrift, 
incentive, pension or similar plan solely for officers, directors or 
employees.
    (5) Exchange Act means the Securities Exchange Act of 1934 (15 
U.S.C. 78a-78jj).
    (6) Filing date means the date on which a document is actually 
received during business hours, 9 a.m. to 5 p.m. Eastern Standard Time, 
by the FDIC, 550 17th Street, NW., Washington, DC 20429. However if the 
last date on which a document can be accepted falls on a Saturday, 
Sunday, or holiday, such document may be filed on the next business day.
    (7) Issuer means a State savings association which issues or 
proposes to issue any security.
    (8) Offer; Sale or sell. For purposes of this subpart, the term 
offer, offer to sell, or offer for sale shall include every attempt or 
offer to dispose of, or solicitation of an offer to buy, a security or 
interest in a security, for value. However, these terms shall not 
include preliminary negotiations or agreements between an issuer and any 
underwriter or among underwriters who are or are to be in privity of 
contract with the issuer. Sale and sell includes every contract to sell 
or otherwise dispose of a security or interest in a security for value. 
Every offer or sale of a warrant or right to purchase or subscribe to 
another security of the same or another issuer, as well as every sale or 
offer of a security which gives the holder a present or future right or 
privilege to

[[Page 459]]

convert the security into another security of the same or another 
issuer, includes an offer and sale of the other security only at the 
time of the offer or sale of the warrant or right or convertible 
security; but neither the exercise of the right to purchase or subscribe 
or to convert nor the issuance of securities pursuant thereto is an 
offer or sale.
    (9) Person means the same as in 12 CFR 192.25, and includes a State 
savings association.
    (10) Purchase and buy mean the same as in 12 CFR 192.25.
    (11) State savings association means the same as in section 3(b) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(b)), and includes a 
state-chartered savings association in organization which is granted 
conditional approval of insurance of accounts by the Federal Deposit 
Insurance Corporation. In addition, for purposes of Sec.390.411, State 
savings association includes any underwriter participating in the 
distribution of securities of a State savings association.
    (12) Securities Act means the Securities Act of 1933 (15 U.S.C. 77a-
77aa).
    (13) Security means any non-withdrawable account, note, stock, 
treasury stock, bond, debenture, evidence of indebtedness, certificate 
of interest or participation in any profit-sharing agreement, 
collateral-trust certificate, preorganization or subscription, 
transferable share, investment contract, voting trust certificate or, in 
general, any interest or instrument commonly known as a security, or any 
certificate of interest or participation in, temporary or interim 
certificate for, receipt for, guarantee of, or warrant or right to 
subscribe to or purchase any of the foregoing, except that a security 
shall not include an account insured, in whole or in part, by the 
Federal Deposit Insurance Corporation.
    (14) Underwriter means any person who has purchased from an issuer 
with a view to, or offers or sells for an issuer in connection with, the 
distribution of any security, or participates or has a participation in 
the direct or indirect underwriting of any such undertaking; but such 
term shall not include a person whose interest is limited to a 
commission from an underwriter or dealer not in excess of the usual and 
customary distributors' or sellers' commission and such term shall also 
not include any person who has continually held the securities being 
transferred for a period of two (2) consecutive years provided that the 
securities sold in any one (1) transaction shall be less than ten 
percent (10%) of the issued and outstanding securities of the same 
class. The following shall apply for the purpose of determining the 
period securities have been held:
    (i) Stock dividends, splits and recapitalizations. Securities 
acquired from the issuer as a dividend or pursuant to a stock split, 
reverse split or recapitalization shall be deemed to have been acquired 
at the same time as the securities on which the dividend or, if more 
than one, the initial dividend was paid, the securities involved in the 
split or reverse split, or the securities surrendered in connection with 
the recapitalization.
    (ii) Conversions. If the securities sold were acquired from the 
issuer for consideration consisting solely of other securities of the 
same issuer surrendered for conversion, the securities so acquired shall 
be deemed to have been acquired at the same time as the securities 
surrendered for conversion.
    (iii) Contingent issuance of securities. Securities acquired as a 
contingent payment of the purchase price of an equity interest in a 
business, or the assets of a business, sold to the issuer or an 
affiliate of the issuer shall be deemed to have been acquired at the 
time of such sale if the issuer was then committed to issue the 
securities subject only to conditions other than the payment of further 
consideration for such securities. An agreement entered into in 
connection with any such purchase to remain in the employment of, or not 
to compete with, the issuer or affiliate or the rendering of services 
pursuant to such agreement shall not be deemed to be the payment of 
further consideration for such securities.
    (iv) Pledged securities. Securities which are bona fide pledged by 
any person other than the issuer when sold by the pledgee, or by a 
purchaser, after a default in the obligation secured by the pledge, 
shall be deemed to have been acquired when they were acquired by

[[Page 460]]

the pledgor, except that if the securities were pledged without recourse 
they shall be deemed to have been acquired by the pledgee at the time of 
the pledge or by the purchaser at the time of purchase.
    (v) Gifts of securities. Securities acquired from any person, other 
than the issuer, by gift shall be deemed to have been acquired by the 
donee when they were acquired by the donor.
    (vi) Trusts. Securities acquired from the settler of a trust by the 
trust or acquired from the trust by the beneficiaries thereof shall be 
deemed to have been acquired when they were acquired by the settler.
    (vii) Estates. Securities held by the estate of a deceased person or 
acquired from such an estate by the beneficiaries thereof shall be 
deemed to have been acquired when they were acquired by the deceased 
person, except that no holding period is required if the estate is not 
an affiliate of the issuer or if the securities are sold by a 
beneficiary of the estate who is not such an affiliate.
    (viii) Exchange transactions. A person receiving securities in a 
transaction involving an exchange of the securities of one issuer for 
securities of another issuer shall be deemed to have acquired the 
securities received when such person acquired the securities exchanged.
    (b) A term not defined in this subpart but defined elsewhere in this 
part, when used in subpart, shall have the meanings given elsewhere in 
this part, unless the context otherwise requires.
    (c) When used in the rules, regulations, or forms of the Commission 
referred to in this subpart, the term Commission shall be deemed to 
refer to the FDIC, the term registrant shall be deemed to refer to an 
issuer defined in this subpart, and the term registration statement or 
prospectus shall be deemed to refer to an offering circular filed under 
this subpart, unless the context otherwise requires.



Sec.390.411  Offering circular requirement.

    (a) General. No State savings association shall offer or sell, 
directly or indirectly, any security issued by it unless:
    (1) The offer or sale is accompanied or preceded by an offering 
circular which includes the information required by this subpart and 
which has been filed and declared effective pursuant to this subpart; or
    (2) An exemption is available under this subpart.
    (b) Communications not deemed an offer. The following communications 
shall not be deemed an offer under this subpart:
    (1) Prior to filing an offering circular, any notice of a proposed 
offering which satisfies the requirements of Commission Rule 135 (17 CFR 
230.135) under the Securities Act;
    (2) Subsequent to filing an offering circular, any notice circular, 
advertisement, letter, or other communication published or transmitted 
to any person which satisfies the requirements of Commission Rule 134 
(17 CFR 230.134) under the Securities Act; and
    (3) Oral offers of securities covered by an offering circular made 
after filing the offering circular with the FDIC.
    (c) Preliminary offering circular. Notwithstanding paragraph (a) of 
this section, a preliminary offering circular may be used for an offer 
of any security prior to the effective date of the offering circular if:
    (1) The preliminary offering circular has been filed pursuant to 
this subpart;
    (2) The preliminary offering circular includes the information 
required by this subpart, except for the omission of information 
relating to offering price, discounts or commissions, amount of 
proceeds, conversion rates, call prices, or other matters dependent on 
the offering price; and
    (3) The offering circular declared effective by the FDIC is 
furnished to the purchaser prior to, or simultaneously with, the sale of 
any such security.



Sec.390.412  Exemptions.

    The offering circular requirement of Sec.390.411 shall not apply 
to an issuer's offer or sale of securities:
    (a) [Reserved]
    (b) Exempt from registration under either section 3(a) or section 4 
of the Securities Act, but only by reason of an exemption other than 
section 3(a)(5) (for regulated State savings associations), and section 
3(a)(11) (for intrastate offerings) of the Securities Act;

[[Page 461]]

    (c) In a conversion from the mutual to the stock form of 
organization pursuant to12 CFR part 192, except for a supervisory 
conversion undertaken pursuant to subpart C of 12 CFR part 192;
    (d) In a non-public offering which satisfies the requirements of 
Sec.390.413;
    (e) That are debt securities issued in denominations of $100,000 or 
more, which are fully collateralized by cash, any security issued, or 
guaranteed as to principal and interest, by the United States, the 
Federal Home Loan Mortgage Corporation, Federal National Mortgage 
Association, Government National Mortgage Association or by interests in 
mortgage notes secured by real property;
    (f) Distributed exclusively abroad to foreign nationals: Provided, 
That--
    (1) The offering is made subject to safeguards reasonably designed 
to preclude distribution or redistribution of the securities within, or 
to nationals of, the United States; and
    (2) Such safeguards include, without limitation, measures that would 
be sufficient to ensure that registration of the securities would not be 
required if the securities were not exempt under the Securities Act; or
    (g) To its officers, directors or employees pursuant to an employee 
benefit plan or a dividend or interest reinvestment plan, and provided 
that any such plan has been approved by the majority of shareholders 
present in person or by proxy at an annual or special meeting of the 
shareholders of the State savings association.



Sec.390.413  Non-public offering.

    Offers and sales of securities by an issuer that satisfy the 
conditions of paragraph (a) or (b) of this section and the requirements 
of paragraphs (c) and (d) of this section shall be deemed to be 
transactions not involving any public offering within the meaning of 
section 4(2) of the Securities Act and Sec. Sec.390.412(b) and 
390.412(d). However, an issuer shall not be deemed to be not in 
compliance with the provisions of this subpart solely by reason of 
making an untimely filing of the notice required to be filed by 
paragraph (c) of this section so long as the notice is actually filed 
and all other conditions and requirements of this subpart are satisfied.
    (a) Regulation D. The offer and sale of all securities in the 
transaction satisfies the Commission's Regulation D (17 CFR 230.501-
230.506), except for the notice requirements of Commission Rule 503 (17 
CFR 230.503) and the limitations on resale in Commission Rule 502(d) (17 
CFR 230.502(d)).
    (b) Sales to 35 persons. The offer and sale of all securities in the 
transaction satisfies each of the following conditions:
    (1) Sales of the security are not made to more than 35 persons 
during the offering period, as determined under the integration 
provisions of Commission Rule 502(a) (17 CFR 230.502(a)). The number of 
purchasers referred to above is exclusive of any accredited investor, 
officer, director or affiliate of the issuer. For purposes of paragraph 
(b) of this section, a husband and wife (together with any custodian or 
trustee acting for the account of their minor children) are counted as 
one person and a partnership, corporation or other organization which 
was not specifically formed for the purpose of purchasing the security 
offered in reliance upon this exemption, is counted as one person.
    (2) All purchasers either have a preexisting personal or business 
relationship with the issuer or any of its officers, directors or 
controlling persons, or by reason of their business or financial 
experience or the business or financial experience of their professional 
advisors who are unaffiliated with and who are not compensated by the 
issuer or any affiliate or selling agent of the issuer, directly or 
indirectly, could reasonably be assumed to have the capacity to protect 
their own interests in connection with the transaction.
    (3) Each purchaser represents that the purchaser is purchasing for 
the purchaser's own account (or a trust account if the purchaser is a 
trustee) and not with a view to or for sale in connection with any 
distribution of the security.
    (4) The offer and sale of the security is not accomplished by the 
publication of any advertisement.

[[Page 462]]

    (c) Filing of notice of sales. Within 30 days after the first sale 
of the securities, every six months after the first sale of the 
securities and not later than 30 days after the last sale of securities 
in an offering pursuant to this subpart, the issuer, shall file with the 
FDIC a report describing the results of the sale of securities as 
required by Sec.390.421(b).
    (d) Limitation on resale. The issuer shall exercise reasonable care 
to assure that the purchasers of the securities are not underwriters 
within the meaning of Sec.390.410(a)(14), which reasonable care shall 
include, but not be limited to, the following:
    (1) Reasonable inquiry to determine if the purchaser is acquiring 
the securities for the purchaser or for other persons;
    (2) Written disclosure to each purchaser prior to the sale that the 
securities are not offered by an offering circular filed with, and 
declared effective by, the FDIC pursuant to Sec.390.411, but instead 
are being sold in reliance upon the exemption from the offering circular 
requirement provided for by this subpart; and
    (3) Placement of a legend on the certificate, or other document 
evidencing the securities, indicating that the securities have not been 
offered by an offering circular filed with, and declared effective by, 
the FDIC and that due care should be taken to ensure that the seller of 
the securities is not an underwriter within the meaning of Sec.
390.410(a)(14).



Sec.390.414  Filing and signature requirements.

    (a) Procedures. An offering circular, amendment, notice, report, or 
other document required by this subpart shall, unless otherwise 
indicated, be filed in accordance with the requirements of 12 CFR 
192.115(a), 192.150(a)(6), 192.155, 192.180(b), and Form AC, General 
Instruction B, of this subpart.
    (b) Number of copies. (1) Unless otherwise required, any filing 
under this subpart shall include nine copies of the document to be filed 
with the FDIC, as follows:
    (i) Seven copies, which shall include one manually signed copy with 
exhibits, three conformed copies with exhibits, and three conformed 
copies without exhibits, to the FDIC, ATTN: Accounting and Securities 
Disclosure Section, 550 17th Street NW, Washington, DC 20429; and
    (ii) Two copies, which shall include one manually signed copy with 
exhibits and one conformed copy, without exhibits, to the appropriate 
regional director.
    (2) Within five days after the effective date of an offering 
circular or the commencement of a public offering after the effective 
date, whichever occurs later, nine copies of the offering circular used 
shall be filed with the FDIC as follows: Seven copies to the FDIC, 550 
17th Street NW., ATTN: Accounting and Securities Disclosure Section, 
Washington, DC, and two copies to the appropriate Regional Director.
    (3) After the effective date of an offering circular, an offering 
circular which varies from the form previously filed shall not be used, 
unless it includes only non-material supplemental or additional 
information and until 10 copies have been filed with the FDIC in the 
manner required.
    (c) Signature. (1) Any offering circular, amendment, or consent 
filed with the FDIC pursuant to this subpart shall include an attached 
manually signed signature page which authorizes the filing and has been 
signed by:
    (i) The issuer, by its duly authorized representative;
    (ii) The issuer's principal executive officer;
    (iii) The issuer's principal financial officer;
    (iv) The issuer's principal accounting officer; and
    (v) At least a majority of the issuer's directors.
    (2) Any other document filed pursuant to this subpart shall be 
signed by a person authorized to do so.
    (3) At least one copy of every document filed pursuant to this 
subpart shall be manually signed, and every copy of a document filed 
shall:
    (i) Have the name of each person who signs typed or printed beneath 
the signature;
    (ii) State the capacity or capacities in which the signature is 
provided;

[[Page 463]]

    (iii) Provide the name of each director of the issuer, if a majority 
of directors is required to sign the document; and
    (iv) With regard to any copies not manually signed, bear typed or 
printed signatures.



Sec.390.415  Effective date.

    (a) Except as provided for in paragraph (d) of this section, an 
offering circular filed by a State savings association shall be deemed 
to be automatically declared effective by the FDIC on the twentieth day 
after filing or on such earlier date as the FDIC may determine for good 
cause shown.
    (b) If any amendment is filed prior to the effective date, the 
offering circular shall be deemed to have been filed when such amendment 
was filed.
    (c) The period until automatic effectiveness under this subpart 
shall be stated at the bottom of the facing page of the Form OC or any 
amendment.
    (d) The effectiveness will be delayed if a duly authorized 
amendment, telegram confirmed in writing, or letter states that the 
effective date is delayed until a further amendment is filed 
specifically stating that the offering circular will become effective in 
accordance with this subpart.
    (e) An amendment filed after the effective date of the offering 
circular shall become effective on such date as the FDIC may determine.
    (f) If it appears to the FDIC at any time that the offering circular 
includes any untrue statement of a material fact or omits to state any 
material fact required to be stated therein or necessary to make the 
statements therein not misleading, then the FDIC may pursue any remedy 
it is authorized to pursue under section 8 of the Federal Deposit 
Insurance Act, as amended (12 U.S.C. 1818), including, but not limited 
to, institution of cease-and-desist proceedings.



Sec.390.416  Form, content, and accounting.

    (a) Form and content. Any offering circular or amendment filed 
pursuant to this subpart shall:
    (1) Be filed under cover of Form OC, which is under 12 CFR part 192;
    (2) Comply with the requirements of Items 3 and 4 of Form OC and the 
requirements of all items of the form for registration (17 CFR part 239) 
that the issuer would be eligible to use were it required to register 
the securities under the Securities Act;
    (3) Comply with all item requirements of the Form S-1 (17 CFR part 
239) for registration under the Securities Act, if the association 
issuing the securities is not in compliance with the FDIC's regulatory 
capital requirements during the time the offering is made;
    (4) Where a form specifies that the information required by an item 
in the Commission's Regulation S-K (17 CFR part 229) should be 
furnished, include such information and all of the information required 
by Item 7 of Form PS, which is under 12 CFR part 192;
    (5) Include after the facing page of the Form OC a cross-reference 
sheet listing each item requirement of the form for registration under 
the Securities Act and indicate for each item the applicable heading or 
subheading in the offering circular under which the required information 
is disclosed;
    (6) Include in part II of the Form OC the applicable undertakings 
required by the form for registration under the Securities Act;
    (7) If the issuer has not previously been required to file reports 
pursuant to section 13(a) of the Exchange Act or Sec.390.427, include 
in part II of Form OC the following undertaking: ``The issuer hereby 
undertakes, in connection with any distribution of the offering 
circular, to have a preliminary or effective offering circular including 
the information required by this subpart distributed to all persons 
expected to be mailed confirmations of sale not less than 48 hours prior 
to the time such confirmations are expected to be mailed;''
    (8) In offerings involving the issuance of options, warrants, 
subscription rights or conversion rights within the meaning of Sec.
390.410(a)(8), include in part II of Form OC an undertaking to provide a 
copy of the issuer's most recent audited financial statements to persons 
exercising such options, warrants or rights promptly upon receiving 
written notification of the exercise thereof;

[[Page 464]]

    (9) Include as supplemental information and not as part of the Form 
OC and only with respect to de novo offerings, a copy of the application 
for insurance of accounts as submitted to the Federal Deposit Insurance 
Corporation for state-chartered savings associations; and
    (10) In addition to the information expressly required to be 
included by this subpart, there shall be 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.
    (b) Accounting requirements. To be declared effective an offering 
circular or amendment shall satisfy the accounting requirements in 
subpart T.



Sec.390.417  Use of the offering circular.

    (a) An offering circular or amendment declared effective by the FDIC 
shall not be used more than nine months after the effective date, unless 
the information contained therein is as of a date not more than 16 
months prior to such use.
    (b) An offering circular filed under Sec.390.414(b)(3) shall not 
extend the period for which an effective offering circular or amendment 
may be used under paragraph (c) of this section.
    (c) If any event arises, or change in fact occurs, after the 
effective date and such event or change in fact, individually or in the 
aggregate, results in the offering circular containing any untrue 
statement of material fact, or omitting to state a material fact 
necessary in order to make statements made in the offering circular not 
misleading under the circumstances, then no offering circular, which has 
been declared effective under this subpart, shall be used until an 
amendment reflecting such event or change in fact has been filed with, 
and declared effective by, the FDIC.



Sec.390.418  Escrow requirement.

    (a) Any funds received in an offering which is offered and sold on a 
best efforts all-or-none condition or with a minimum-maximum amount to 
be sold shall be held in an escrow or similar separate account until 
such time as all of the securities are sold with respect to a best 
efforts all-or-none offering or the stated minimum amount of securities 
are sold in a minimum-maximum offering.
    (b) If the amount of securities required to be sold under escrow 
conditions in paragraph (a) of this section are not sold within the time 
period for the offering as disclosed in the offering circular, all funds 
in the escrow account shall be promptly refunded unless the FDIC 
otherwise approves an extension of the offering period upon a showing of 
good cause and provided that the extension is consistent with the public 
interest and the protection of investors.



Sec.390.419  Unsafe or unsound practices.

    (a) No person shall directly or indirectly,
    (1) Employ any device, scheme or artifice to defraud,
    (2) Make any untrue statement of a material fact or omit to state a 
material fact necessary in order to make statements made, in light of 
the circumstances under which they were made, not misleading, or
    (3) Engage in any act, practice, or course of business which 
operates as a fraud or deceit upon any person, in connection with the 
purchase or sale of any security of a State savings association.
    (b) Violations of this subpart shall constitute an unsafe or unsound 
practice within the meaning of section 8 of the Federal Deposit 
Insurance Act, as amended, 12 U.S.C. 1818.
    (c) Nothing in this subpart shall be construed as a limitation on 
the applicability of section 10(b) of the Exchange Act (15 U.S.C. 
78j(b)) or Rule 10b-5 promulgated thereunder (17 CFR 240.10b-5).



Sec.390.420  Withdrawal or abandonment.

    (a) Any offering circular, amendment, or exhibit may be withdrawn 
prior to the effective date. A withdrawal shall be signed and state the 
grounds upon which it is made. Any document withdrawn will not be 
removed from the files of the FDIC, but will be marked ``Withdrawn upon 
the request of the issuer on (date).''
    (b) When an offering circular or amendment has been on file with the

[[Page 465]]

FDIC for a period of nine months and has not become effective, the FDIC 
may, in its discretion, determine whether the filing has been abandoned, 
after notifying the issuer that the filing is out of date and must 
either be amended to comply with the applicable requirements of this 
subpart or be withdrawn within 30 days after the date of such notice. 
When a filing is abandoned, the filing will not be removed from the 
files of the FDIC, but will be marked ``Declared abandoned by the FDIC 
on (date).''



Sec.390.421  Securities sale report.

    (a) Within 30 days after the first sale of the securities, every six 
months after such 30 day period and not later than 30 days after the 
later of the last sale of securities in an offering pursuant to Sec.
390.411 or the application of the proceeds therefrom, the issuer shall 
file with the FDIC a report describing the results of the sale of the 
securities and the application of the proceeds, which shall include all 
of the information required by Form G-12 set forth at Sec.390.429 and 
shall also include the following:
    (1) The name, address, and docket number of the issuer;
    (2) The title, number, aggregate and per-unit offering price of the 
securities sold;
    (3) The aggregate and per-unit dollar amounts of actual itemized 
expenses, discounts or commissions, and other fees;
    (4) The aggregate and per-unit dollar amounts of the net proceeds 
raised, and the use of proceeds therefrom; and
    (5) The number of purchasers of each class of securities sold and 
the number of owners of record of each class of the issuer's equity 
securities after the issuance of the securities or termination of the 
offer.
    (b) Within 30 days after the first sale of the securities, every six 
months after the first sale of the securities and not later than 30 days 
after the last sale of securities in an offering pursuant to Sec.
390.413, the issuer shall file with the FDIC a report describing the 
results of the sale of securities, which shall include all of the 
information required by Form G-12 set forth at Sec.390.429, and shall 
also include the following:
    (1) All of the information required by paragraph (a) of this 
section; and
    (2) A detailed statement of the factual and legal grounds for the 
exemption claimed.



Sec.390.422  Public disclosure and confidential treatment.

    (a) Any offering circular, amendment, exhibit, notice, or report 
filed pursuant to this subpart will be publicly available. Any other 
related documents will be treated in accordance with the provisions of 
the Freedom of Information Act (5 U.S.C. 552), the Privacy Act of 1974 
(5 U.S.C. 552a), and parts 309 and 310 of this chapter.
    (b) Any requests for confidential treatment of information in a 
document required to be filed under this subpart shall be made as 
required under Commission Rule 24b-2 (17 CFR 240.24b-2) under the 
Exchange Act.



Sec.390.423  Waiver.

    (a) The FDIC may waive any requirement of this subpart, or any 
required information:
    (1) Determined to be unnecessary by the FDIC;
    (2) In connection with a transaction approved by the FDIC for 
supervisory reasons, or
    (3) Where a provision of this subpart conflicts with a requirement 
of applicable state law.
    (b) Any condition, stipulation or provision binding any person 
acquiring a security issued by a State savings association which seeks 
to waive compliance with any provision of this subpart shall be void, 
unless approved by the FDIC.



Sec.390.424  Requests for interpretive advice or waiver.

    Any requests to the FDIC for interpretive advice or a waiver with 
respect to any provision of this subpart shall satisfy the following 
requirements:
    (a) A copy of the request, including any attachments, shall be filed 
with the FDIC;
    (b) The provisions of this subpart to which the request relates, the 
participants in the proposed transaction, and

[[Page 466]]

the reasons for the request, shall be specifically identified or 
described; and
    (c) The request shall include a legal opinion as to each legal issue 
raised and an accounting opinion as to each accounting issue raised.



Sec.390.425  Delayed or continuous offering and sale of securities.

    Any offer or sale of securities under Sec.390.411 may be made on a 
continuous or delayed basis in the future, if:
    (a) The securities would satisfy all of the eligibility requirements 
of the Commission's Rule 415, 17 CFR 230.415; and
    (b) The association issuing the securities is in compliance with the 
FDIC's regulatory capital requirements during the time the offering is 
made.



Sec.390.426  Sales of securities at an office of a State savings
association.

    Sales of securities of a State savings association or its affiliates 
at an office of a State savings association may only be made in 
accordance with the provisions of Sec.390.340.



Sec.390.427  Current and periodic reports.

    (a) Each State savings association which files an offering circular 
which becomes effective pursuant to this subpart, after such effective 
date, shall file with the FDIC periodic and current reports on Forms 8-
K, 10-Q and 10-K as may be required by section 13 of the Exchange Act 
(15 U.S.C. 78m) as if the securities sold by such offering circular were 
securities registered pursuant to section 12 of the Exchange Act (15 
U.S.C. 78l). The duty to file periodic and current reports under this 
subpart shall be automatically suspended if and so long as any issue of 
securities of the State savings association is registered pursuant to 
section 12 of the Exchange Act (15 U.S.C. 78l). The duty to file under 
this subpart shall also be automatically suspended as to any fiscal 
year, other than the fiscal year within which such offering circular 
became effective, if, at the beginning of such fiscal year, the 
securities of each class to which the offering circular relates are held 
of record by less than three hundred persons and upon the filing of a 
Form 15.
    (b) For purposes of registering securities under section 12(b) or 
12(g) of the Exchange Act, an issuer subject to the reporting 
requirements of paragraph (a) of this section may use the Commission's 
registration statement on Form 10 or Form 8-A or 8-B as applicable.



Sec.390.428  Approval of the security.

    Any securities of a State savings association which are not exempt 
under this subpart and are offered or sold pursuant to an offering 
circular which becomes effective under this subpart, are deemed to be 
approved as to form and terms for purposes of this subpart.



Sec.390.429  Form for securities sale report.

            FDIC, 550 17th Street, NW., Washington, DC 20429

                               [Form G-12]

             Securities Sale Report Pursuant to Sec.390.12

 FDIC No._______________________________________________________________
 Issuer's Name:_________________________________________________________
 Address:_______________________________________________________________

    If in organization, state the date of FDIC certification of 
insurance of accounts: __
    State the title, number, aggregate and per-unit offering price of 
the securities sold: ____
    State the aggregate and per-unit dollar amounts of actual itemized 
offering expenses, discounts, commissions, and other fees: ____
    State the aggregate and per-unit dollar amounts of the net proceeds 
raised: ____
    Describe the use of proceeds. If unknown, provide reasonable 
estimates of the dollar amount allocated to each purpose for which the 
proceeds will be used: ____
    State the number of purchasers of each class of securities sold and 
the number of owners of record of each class of the issuer's equity 
securities at the close or termination of the offering: ____
    For a non-public offering, also state the factual and legal grounds 
for the exemption claimed (attach additional pages if necessary): ____
    For a non-public offering, all offering materials used should be 
listed: ____


[[Page 467]]


 Person to Contact:_____________________________________________________
 Telephone No.:_________________________________________________________

    This issuer has duly caused this securities sale report to be signed 
on its behalf by the undersigned person.

 Date of securities sale report_________________________________________
 Issuer:________________________________________________________________
 Signature:_____________________________________________________________
 Name:__________________________________________________________________
 Title:_________________________________________________________________

    Instruction: Print the name and title of the signing representative 
under his or her signature. Ten copies of the securities sale report 
should be filed, including one copy manually signed, as required under 
12 CFR 390.414.
    Attention
    Intentional misstatements or omissions of fact constitute violations 
of Federal law (See 18 U.S.C. 1001 and Sec.390.355(b)).



Sec.390.430  Filing of copies of offering circulars in certain exempt 
offerings.

    A copy of the offering circular, or similar document, if any, used 
in connection with an offering exempt from the offering circular 
requirement of Sec.390.411 by reason of Sec.390.412(e) or Sec.
390.413 shall be mailed to the FDIC within 30 days after the first sale 
of such securities. Such copy of the offering circular, or similar 
document, is solely for the information of the FDIC and shall not be 
deemed to be ``filed'' with the FDIC pursuant to Sec.390.411. The 
mailing to the FDIC of such offering circular, or similar document, 
shall not be a pre-condition of the applicable exemption from the 
offering circular requirements of Sec.390.411.

Subpart X [Reserved]



                   Subpart Y_Prompt Corrective Action



Sec. Sec.390.450-390.455  [Reserved]



Sec.390.456  Directives to take prompt corrective action.

    (a) Notice of intent to issue a directive--(1) In general. The FDIC 
shall provide an undercapitalized, significantly undercapitalized, or 
critically undercapitalized State savings association or, where 
appropriate, any company that controls the State savings association, 
prior written notice of the FDIC's intention to issue a directive 
requiring such State savings association or company 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 State 
savings association 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 State savings 
association or any company that controls a State savings association 
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 State savings association or company 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 State savings association'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

[[Page 468]]

    (4) The date by which the State savings association or company 
subject to the directive may file with the FDIC a written response to 
the notice.
    (c) Response to notice--(1) Time for response. A State savings 
association or company may file a written response to a notice of intent 
to issue a 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 State savings association 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 State 
savings association or company 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 State 
savings association or company; or
    (3) Seek additional information or clarification of the response 
from the State savings association or company, or any other relevant 
source.
    (e) Failure to file response. Failure by a State savings association 
or company 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 State 
savings association or company that is subject to a directive under this 
subpart, 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.390.457  Procedures for reclassifying a State savings association
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.324.403(d) of this 
chapter, the FDIC may reclassify a well capitalized State savings 
association 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 State savings association is in 
unsafe or unsound condition; or
    (2) The FDIC deems the State savings association 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.324.403(d) of this chapter, the FDIC shall issue and serve on the 
State savings association a written notice of the FDIC's intention to 
reclassify the State savings association.
    (2) Contents of notice. A notice of intention to reclassify a State 
savings association based on unsafe or unsound condition shall include:
    (i) A statement of the State savings association's capital measures 
and capital levels and the category to which the State savings 
association would be reclassified;
    (ii) The reasons for reclassification of the State savings 
association;
    (iii) The date by which the State savings association 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 State savings association or other 
relevant circumstances.

[[Page 469]]

    (3) Response to notice of proposed reclassification. A State savings 
association 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 State savings association is not in 
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 State 
savings association or company regarding the reclassification.
    (4) Failure to file response. Failure by a State savings association 
to file, within the specified 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 or its designee under this section. If the State savings 
association desires to present oral testimony or witnesses at the 
hearing, the State savings association 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 FDIC allows further time at the 
request of the State savings association. 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 State savings association shall have 
the right to introduce relevant written materials and to present oral 
argument at the hearing. The State savings association 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 subpart C 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 
furnished to the State savings association 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 
State savings association and notify the State savings association of 
the FDIC's decision.
    (b) Request for rescission of reclassification. Any State savings 
association 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

[[Page 470]]

by the FDIC, the State savings association shall remain subject to the 
reclassification and to any directives issued in connection with that 
reclassification while such request is pending before the FDIC.

[76 FR 47655, Aug. 5, 2011, as amended at 83 FR 17744, Apr. 24, 2018]



Sec.390.458  Order to dismiss a director or senior executive officer.

    (a) Service of notice. When the FDIC issues and serves a directive 
on a State savings association pursuant to Sec.390.456 requiring the 
State savings association to dismiss any director or senior executive 
officer under section 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 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 should include reasons why the Respondent should be 
reinstated, and may include a request for an informal hearing before the 
FDIC or its designee 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 State savings association 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 
subpart C 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 
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 State savings association would materially strengthen the State 
savings association's ability:
    (1) To become adequately capitalized, to the extent that the 
directive was issued as a result of the State savings association's 
capital level or failure to submit or implement a capital restoration 
plan; and

[[Page 471]]

    (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 State savings association 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 State 
savings association.
    (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 has been 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.



Sec.390.459  Enforcement of directives.

    (a) Judicial remedies. Whenever a State savings association or 
company that controls a State savings association 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.
    (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 State savings association or company 
that controls a State savings association 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 
State savings association to implement a capital restoration plan 
required under section 38, or this subpart, or the failure of a company 
having control of a State savings association to fulfill a guarantee of 
a capital restoration plan made pursuant to section 38(e)(2) of the FDI 
Act shall subject the State savings association or company 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 this subpart through any other 
judicial or administrative proceeding authorized by law.

Subpart Z [Reserved]

                        PARTS 391	399 [RESERVED]

[[Page 473]]



           CHAPTER IV--EXPORT-IMPORT BANK OF THE UNITED STATES




  --------------------------------------------------------------------
Part                                                                Page
400             Employee financial disclosure and ethical 
                    conduct standards regulations...........         475
403             Classification, declassification, and 
                    safeguarding of national security 
                    information.............................         475
404             Information disclosure......................         486
405             [Reserved]

407             Regulations governing public observation of 
                    Eximbank meetings.......................         503
408             Procedures for compliance with the National 
                    Environmental Policy Act................         507
410             Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by Export-Import 
                    Bank of the United States...............         509
411             New restrictions on lobbying................         515
412             Acceptance of payment from a non-Federal 
                    source for travel expenses..............         526
414             Conference and other fees...................         528
415-499         [Reserved]

[[Page 475]]



PART 400_EMPLOYEE FINANCIAL DISCLOSURE AND ETHICAL CONDUCT STANDARDS
REGULATIONS--Table of Contents



    Authority: 5 U.S.C. 7301.

    Source: 60 FR 17628, Apr. 7, 1995, unless otherwise noted.



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.



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

[[Page 476]]

the information, the source of the information, or both, are to be held 
in confidence; or
    (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

[[Page 477]]

States and its citizens. Accordingly, security classification shall be 
applied only to protect the national security.
    (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

[[Page 478]]

the national security. Accordingly, certain information which would 
otherwise be unclassified may require classification when associated 
with other unclassified or classified information. 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

[[Page 479]]

information. If that fact must be concealed, the document will be marked 
as 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.

[[Page 480]]

    (2) New material that derives its classification under prior orders 
shall be treated as follows:
    (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.

[[Page 481]]

    (e) Transferred Information. Classified information transferred from 
one agency to another in conjunction with a transfer of functions, and 
not merely 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

[[Page 482]]

Privacy Act of 1974, in accordance with the provisions of those acts. 
(See, 12 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....................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, referred 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

[[Page 483]]

condition of access. This form shall be 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 (DSC) classified incoming 
cables are to

[[Page 484]]

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 485]]

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 486]]

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, National Security Division.

[50 FR 27215, July 2, 1985, as amended at 72 FR 66043, Nov. 27, 2007]



PART 404_INFORMATION DISCLOSURE--Table of Contents



  Subpart A_Procedures for Disclosure of Records Under the Freedom of 
                            Information Act.

Sec.
404.1 General provisions.
404.2 Definitions.
404.3 Public reference facilities.
404.4 Request requirements.
404.5 Time for processing.
404.6 Release of records under the Freedom of Information Act.
404.7 Confidential business information.
404.8 Initial determination.
404.9 Schedule of fees.
404.10 Fee waivers or reductions.
404.11 Administrative appeal.

Subpart B_Protection of Privacy and Access to Records Under the Privacy 
                               Act of 1974

404.12 General provisions.
404.13 Definitions.
404.14 Requirements of request for access.
404.15 Initial determination.
404.16 Schedule of fees.
404.17 Appeal of denials of access.
404.18 Requests for correction of records.
404.19 Request for accounting of record disclosures.
404.20 Notice of court-ordered and emergency disclosures.
404.21 Submission of social security and passport numbers.
404.22 Government contracts.
404.23 Other rights and services.

    Subpart C_Demands for Testimony of Current and Former Ex-Im Bank 
           Personnel and for Production of Ex-Im Bank Records

404.24 Exemptions: EIB-35--Office of Inspector General Investigative 
          Records.
404.25 Applicability.
404.26 Definitions.
404.27 Demand requirements.
404.28 Notification of General Counsel required.
404.29 Restrictions on testimony and production of records.
404.30 Factors General Counsel may consider in determining whether to 
          authorize testimony and/or the production of records.
404.31 Procedure for declining to testify and/or produce records.
404.32 Procedure in the event a decision concerning a demand is not made 
          prior to the time a response to the demand is required.
404.33 Procedure in the event of an adverse ruling.
404.34 Procedure for demands for testimony or production of documents 
          regarding confidential information.
404.35 Procedure for requests for Ex-Im Bank employees to provide expert 
          or opinion testimony.
404.36 No private right of action.

Subparts D-E [Reserved]

    Authority: 5 U.S.C. 552 and 552a.
    Section 404.7 also issued under E.O. 12600, 52 FR 23781, 3 CFR, 1987 
Comp., p. 235.
    Section 404.21 also issued under 5 U.S.C. 552a note.
    Subpart C also issued under 5 U.S.C. 301, 12 U.S.C. 635.

[[Page 487]]


    Source: 64 FR 14374, Mar. 25, 1999, unless otherwise noted.



  Subpart A_Procedures for Disclosure of Records Under the Freedom of 
                            Information Act.



Sec.404.1  General provisions.

    (a) Purpose. This subpart establishes policy, procedures, 
requirements, and responsibilities for administration of the Freedom of 
Information Act (FOIA), 5 U.S.C. 552, at the Export-Import Bank of the 
United States (Ex-Im Bank).
    (b) Policy. It is Ex-Im Bank's policy to honor all requests for the 
disclosure of its records, provided that disclosure would not adversely 
affect a legitimate public or private interest and would not impose an 
unreasonable burden on Ex-Im Bank. However, this subpart also recognizes 
that the soundness of many Ex-Im Bank programs depends upon the receipt 
of reliable commercial, technical, financial, and business information 
relating to applicants for Ex-Im Bank assistance and that receipt of 
such information depends on Ex-Im Bank's ability to hold such 
information in confidence. Consequently, except as provided by 
applicable law and this regulation, information provided to Ex-Im Bank 
in confidence will not be disclosed without the submitter's consent.
    (c) Scope. All record requests made to Ex-Im Bank shall be processed 
under this subpart, except that information customarily furnished to the 
public in the regular course of the performance of official duties may 
continue to be furnished to the public without complying with this 
subpart. Requests made by individuals under the Privacy Act of 1974 
which are processed under subpart B of this part also shall be processed 
under this subpart A.
    (d) Ex-Im Bank Internet site. Ex-Im Bank maintains an Internet site 
at http://www.exim.gov. The site contains information on Ex-Im Bank 
functions, activities, programs, and transactions. Web site visitors 
have access to Board of Directors and Loan Committee meeting minutes, 
country information, and Ex-Im Bank press releases, among other 
information. Ex-Im Bank encourages all prospective FOIA requesters to 
visit the site prior to submission of a FOIA request.
    (e) Delegation. Any action or determination in this subpart which is 
the responsibility of a specific Ex-Im Bank employee, may be delegated 
to a duly designated alternate.
    (f) Ex-Im Bank address. The Export-Import Bank of the United States 
is located at 811 Vermont Avenue, NW, Washington, DC 20571.



Sec.404.2  Definitions.

    For purposes of this subpart, the following definitions shall apply:
    All other requesters--Requesters other than commercial use 
requesters, educational and non-commercial scientific requesters, or 
representatives of the news media.
    Appeal--A written request to the Ex-Im Bank Assistant General 
Counsel for Administration for reversal of an adverse initial 
determination.
    Business information--Potentially confidential commercial or 
financial information that is provided to Ex-Im Bank.
    Business submitter--Any person who provides business information to 
Ex-Im Bank.
    Commercial use request--A request for a use or purpose that furthers 
the commercial, trade or profit interest of the requester.
    Direct costs--Expenditures incurred in the search, review, and 
duplication of records in response to a FOIA request.
    Educational institution--A preschool, a public or private elementary 
or secondary school, an institution of undergraduate or graduate higher 
education, or an institution of professional or vocational education.
    Final determination--The written decision by the Assistant General 
Counsel for Administration on an appeal.
    Initial determination--The initial written determination by Ex-Im 
Bank regarding disclosure of requested records.
    Non-commercial scientific institution--An institution that is 
operated for the purpose of conducting scientific research the results 
of which are not intended to promote any particular product or industry 
and that is not operated solely for purposes of furthering a business, 
trade or profit interest.

[[Page 488]]

    Person--An individual, partnership, corporation, association or 
organization other than a federal government agency.
    Record--All papers, memoranda or other documentary material, or 
copies thereof, regardless of physical form or characteristics, created 
or received by Ex-Im Bank and preserved as evidence of the activities of 
Ex-Im Bank. ``Record'' does not include publications which are available 
to the public through the Federal Register, sale or free distribution.
    Redaction--The process of removing non-disclosable material from a 
record so that the remainder may be released.
    Representative of the news media--A person actively gathering 
information on behalf of an entity organized and operated to publish or 
broadcast news to the public. Freelance journalists shall qualify as 
representatives of the news media when they can demonstrate that a 
request is reasonably likely to lead to publication.
    Request--Any record request made to Ex-Im Bank under the FOIA.
    Requester--Any person making a request.
    Review--The process of examining a record to determine whether any 
portion is required to be withheld. It includes redaction, duplication, 
and any other preparation for release. Review does not include time 
spent resolving general legal and policy issues regarding the 
application of exemptions.
    Search--The process of identifying and collecting records pursuant 
to a request.
    Trade secrets--All forms and types of financial, business, 
scientific, technical, economic or engineering information, including, 
but not limited to, patterns, plans, compilations, program devices, 
formulas, designs, prototypes, methods, techniques, processes, 
procedures, programs or codes.
    Unusual circumstances--The need to search for and collect requested 
records from facilities that are separate from Ex-Im Bank headquarters; 
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 the need for consultation with another agency a person that 
has a substantial interest in the determination of the request.
    Working days--All calendar days excluding Saturdays, Sundays, and 
Federal Government holidays.



Sec.404.3  Public reference facilities.

    Ex-Im Bank maintains a public reading room which contains the Ex-Im 
Bank records that the FOIA requires to be made available for public 
inspection and copying. The records available under this section include 
copies of records released pursuant to the FOIA that Ex-Im Bank 
determines have, or are likely to, become the subject of subsequent 
requests for substantially the same records. Requesters shall be 
responsible for the cost of duplicating such material in accordance with 
the provisions of Sec.404.9(e). Persons desiring to use the reading 
room should contact the Ex-Im Bank Freedom of Information and Privacy 
Office, either in writing at the address at Sec.404.1(f) or by 
telephone at (202) 565-3946 or (800) 565-3946, to arrange a time to 
inspect the available records.



Sec.404.4  Request requirements.

    (a) Form. Requests must be made in writing and must be signed by, or 
on behalf of, the requester. Requests should be addressed to the Freedom 
of Information and Privacy Office at the address in Sec.404.1(f) and 
should contain both the return address and telephone number of the 
requester.
    (b) Description of records requested. Each request must describe the 
records sought in sufficient detail so as to enable a professional 
employee of Ex-Im Bank familiar with the subject matter of the request 
to locate the record with a reasonable amount of effort. A request shall 
not be deemed to have been received until such time as the request 
adequately identifies the records sought. To the extent practicable, a 
description should include relevant dates, format, subject matter, and 
the name of any person to whom the record is known to relate. A general 
request for records with no accompanying date restriction, either 
express or implied, shall be deemed to be a request for records created 
within the preceding twelve months.

[[Page 489]]

    (c) Fee statement. The request must contain a statement expressing 
willingness to pay fees for the requested records or a request for a fee 
waiver (see Sec.404.10) before the request shall be deemed to have 
been received. A fee statement may specify the maximum amount a 
requester is willing to pay for processing the request.
    (1) Whenever a requester submits a FOIA request that does not 
contain a fee statement or a request for a fee waiver, Ex-Im Bank shall 
advise the requester of the requirements of this paragraph. If the 
requester fails to respond within ten working days of such notification, 
then the Freedom of Information and Privacy Office shall notify the 
requester, in writing, that Ex-Im Bank will not process the request.
    (2) A general statement by the requester expressing willingness to 
pay all applicable fees under Sec.404.9 shall be deemed an agreement 
to pay up to $50.00. If Ex-Im Bank estimates that the fees for a request 
will exceed $50.00, then Ex-Im Bank shall offer the requester the 
opportunity to agree, in writing, either to pay a greater fee or to 
modify the request as a means of limiting the cost.
    (d) Written notice of amendment. The requester should provide any 
amendment to the original request in writing to Ex-Im Bank.
    (e) Requester assistance. Ex-Im Bank shall make reasonable efforts 
to assist a requester in complying with the requirements of this 
section.



Sec.404.5  Time for processing.

    (a) General. Ex-Im Bank shall respond to requests within twenty 
working days of the date of receipt of the request unless unusual 
circumstances exist. Ex-Im Bank shall provide written notice to the 
requester whenever such unusual circumstances necessitate an extension. 
If the extension is expected to exceed ten working days, then Ex-Im Bank 
shall offer the requester the opportunity to:
    (1) Alter the request so that it may be processed within the time 
limit; or
    (2) Propose an alternative, feasible time frame for processing the 
request.
    (b) Date of receipt. A request shall be deemed to have been received 
on the date that the request is received in the Freedom of Information 
and Privacy Office, provided that the requester has met all the 
requirements of Sec.404.4. Ex-Im Bank shall notify the requester of 
the date on which a request was officially received.
    (c) Order of processing. Ex-Im Bank ordinarily shall process 
requests according to their order of receipt.
    (d) Expedited processing. A request for expedited processing must be 
included in the original request for records and may be granted at the 
discretion of Ex-Im Bank based upon the requester's demonstration of:
    (1) An imminent threat to the life or physical safety of an 
individual; or
    (2) In the case of a requester who is a representative of the news 
media, an urgency to inform the public concerning actual or alleged 
Federal Government activity. Ex-Im Bank shall provide notice of its 
determination on expedited processing to the requester. A requester may 
file an administrative appeal, as set forth at Sec.404.11, based on a 
denial of a request for expedited processing. Ex-Im Bank shall grant 
expeditious consideration to any such appeal.



Sec.404.6  Release of records under the Freedom of Information Act.

    (a) Creation of records. A reasonable request for material not in 
existence may be honored at Ex-Im Bank's discretion when tabulation or 
compilation will not significantly burden Ex-Im Bank, its programs or 
its activities.
    (b) Discretionary release. Consistent with federal government 
policy, material technically qualifying for exemption from disclosure 
under 5 U.S.C. 552(b)(5) may be made available when disclosure would not 
adversely affect legitimate public or private interests, violate law or 
impose an unreasonable burden on Ex-Im Bank. This policy does not, 
however, create any right enforceable in a court of law.
    (c) Segregable records. Whenever it is determined that a portion of 
a record is exempt from disclosure, any reasonably segregable portion of 
the record shall be provided to the requester after redaction of the 
exempt material. If segregation would render the document meaningless, 
Ex-Im Bank shall withhold the entire record.

[[Page 490]]

    (d) Date for determining responsive records. Only those records 
within Ex-Im Bank's possession and control as of the date of receipt of 
a request shall be deemed to be responsive to a request.



Sec.404.7  Confidential business information.

    (a) Scope. This section applies to all business information, as 
defined in Sec.404.2. Such information shall only be disclosed 
pursuant to a FOIA request in accordance with this section.
    (b) Submitter designation. All business submitters should designate, 
by appropriate markings, either at the time of submission or at a 
reasonable time thereafter, any portion of any submission that they 
consider to be exempt from disclosure under 5 U.S.C. 552(b)(4).
    (c) Pre-disclosure notice to the business submitter. Whenever Ex-Im 
Bank receives a FOIA request seeking disclosure of business information, 
Ex-Im Bank shall provide prompt written notice to the submitter of such 
information. This notice shall include a description or a copy of the 
records containing the business information. Such notice shall not be 
required, however, if:
    (1) Ex-Im Bank determines that the records shall not be disclosed;
    (2) The records have been published or otherwise made available to 
the public; or
    (3) disclosure of the records is required by law.
    (d) Opportunity to object to disclosure. The business submitter 
shall have ten working days from and including the date of the 
notification letter to provide Ex-Im Bank with a detailed statement of 
any objection to disclosure of the records. A submitter located outside 
the United States shall have twenty working days to object to 
disclosure. Ex-Im Bank may extend the time for objection upon timely 
request from the submitter and for good cause shown. A statement of 
objection must specify all grounds under the FOIA for withholding the 
information.
    (e) Notice to the requester. The Freedom of Information and Privacy 
Office shall notify the requester in writing whenever a business 
submitter is afforded the opportunity to object to disclosure of records 
pursuant to paragraph (c) of this section.
    (f) Disclosure of confidential business information. Ex-Im Bank 
shall consider any objections raised by the business submitter prior to 
making its disclosure decision.
    (g) Notice of intent to disclose. Whenever Ex-Im Bank determines to 
disclose business information over the objection of a business 
submitter, Ex-Im Bank shall notify the business submitter, in writing, 
of such determination, the reasons for the decision, and the expected 
disclosure date. This notification--which shall be provided at least ten 
days prior to the planned disclosure date and which shall include a copy 
or description of the records at issue--is intended to afford the 
submitter the opportunity to seek judicial review.
    (h) Notice to requester of disclosure date. If Ex-Im Bank determines 
to disclose records over a business submitter's objection, then Ex-Im 
Bank shall notify the requester of the expected disclosure date.
    (i) Appeal. Whenever Ex-Im Bank determines to disclose, pursuant to 
an administrative appeal, business information that initially was 
withheld from disclosure under 5 U.S.C. 552(b)(4), Ex-Im Bank shall 
notify the business submitter. Such notice shall be in writing and shall 
be provided ten working days prior to the proposed disclosure date. It 
shall include a copy or description of the records at issue and a 
statement of Ex-Im Bank's reasons for disclosure.
    (j) Notice of FOIA lawsuit. Ex-Im Bank shall promptly notify the 
submitter whenever a requester brings suit against Ex-Im Bank seeking to 
compel the release of business information covered by this section. Ex-
Im Bank shall promptly notify the requester when a submitter brings suit 
against Ex-Im seeking to restrict the release of business information 
that is covered by this section.
    (k) Exception. Notwithstanding the foregoing provisions of this 
part, Ex-Im Bank may, upon request or on its own initiative, publicly 
disclose the parties to transactions for which Ex-Im Bank approves 
support, the amount of such

[[Page 491]]

support, the identity of any participants involved, a general 
description of the related U.S. exports, and the country to which such 
exports are destined.



Sec.404.8  Initial determination.

    (a) Authority to grant or deny requests. The Freedom of Information 
and Privacy Office shall be responsible for search, review, and the 
initial determination.
    (b) Referrals to other government agencies. A requested record in 
Ex-Im Bank's possession that was created or classified by another 
Federal agency shall be referred to such agency for direct response to 
the requester. The Freedom of Information and Privacy Office shall 
notify the requester of any such referral, the number of documents so 
referred, and the name and address of each agency to which the request 
has been referred.
    (c) Notification of Ex-Im Bank action. The Freedom of Information 
and Privacy Office shall notify the requester in writing of its decision 
to grant or deny the request.
    (1) If the decision is made to grant a request, then Ex-Im Bank 
shall promptly disclose the requested records and shall inform the 
requester of any fee payable under Sec.404.9.
    (2) A denial is a determination to withhold any requested record in 
whole or in part, a determination that a requested record does not exist 
or cannot be located or a determination that what has been requested is 
not a record subject to the FOIA. Whenever Ex-Im Bank withholds 
information, such notice shall include:
    (i) The name, title, and signature of the person responsible for the 
determination;
    (ii) The statutory basis for non-disclosure; and
    (iii) A statement that any denial may be appealed under Sec.404.11 
and a brief description of the requirements of that section.
    (d) Material withheld. Ex-Im Bank shall make reasonable efforts to 
inform the requester of the volume of material withheld pursuant to a 
full or partial denial and the extent of any redaction. Ex-Im Bank shall 
not, however, indicate the extent of any denial when doing so could harm 
an interest protected by an applicable exemption.



Sec.404.9  Schedule of fees.

    (a) General. Ex-Im Bank shall charge fees to recover the full 
allowable direct costs it incurs in processing requests. Ex-Im Bank 
shall attempt to conduct searches in the most efficient manner to 
minimize costs for both Ex-Im Bank and the requester.
    (b) Categories of requesters. Fees shall be assessed according to 
the status of the requester. The specific schedule of fees for each 
requester category (each as defined in Sec.404.2) is prescribed as 
follows:
    (1) Commercial use requesters. Ex-Im Bank shall charge the full 
costs for search, review, and duplication.
    (2) Educational and non-commercial scientific institution 
requesters. Ex-Im Bank shall charge only for the cost of duplication in 
excess of 100 pages. No fee will be charged for search or review.
    (3) Representatives of the news media. Ex-Im Bank shall charge only 
for the cost of duplication in excess of 100 pages. No fee will be 
charged for search or review.
    (4) All other requesters. Ex-Im Bank shall charge for the cost of 
search, review, and duplication, except that 100 pages of duplication 
and two hours of professional search time shall be furnished without 
charge.
    (c) Search and review fees. Ex-Im Bank shall charge the following 
fees for search and review:
    (1) Clerical. Hourly rate--$16.00.
    (2) Professional. Hourly rate--$32.00.
    (3) Computer Searches. Hourly rate--based upon the salary of the 
employee performing the work and the cost of operating any equipment.
    (d) Administrative appeals. Ex-Im Bank shall not charge for 
administrative review of an exemption applied in an initial 
determination. Ex-Im Bank shall charge, however, for search and review 
pursuant to an administrative appeal if the appeal is based on a claim 
other than the application of an exemption in the initial determination.
    (e) Duplication. Ex-Im Bank shall charge $.10 per page for paper 
copy duplication. Ex-Im Bank shall charge the actual or estimated cost 
of copies prepared by computer, such as tape or

[[Page 492]]

printouts, or for other methods of duplication. When duplication charges 
are expected to exceed $50.00, Ex-Im Bank shall seek the requester's 
consent to be responsible for the estimated charges unless a requester 
has already expressed a willingness to pay duplication fees in excess of 
$50.00. Ex-Im Bank shall also offer the requester the opportunity to 
alter the request in order to reduce duplication costs.
    (f) Fees for searches that produce no records. Fees shall be payable 
as provided in this section even though searches and review do not 
generate any disclosable records.
    (g) Aggregating requests. A requester, or a group of requesters 
acting in concert, shall not file multiple requests, seeking portions of 
a record or similar or related records, in order to avoid payment of 
fees. Ex-Im Bank shall aggregate any such requests and charge as if the 
requests were a single request.
    (h) Special services charges. Complying with requests for special 
services such as those listed in this paragraph is entirely at the 
discretion of Ex-Im Bank. Ex-Im Bank shall recover the full costs of 
providing such services to the extent that it elects to provide them.
    (1) Certifications. Ex-Im Bank shall charge $25.00 to certify the 
authenticity of any Ex-Im Bank record or any copy of such record.
    (2) Special shipping. Ex-Im Bank may ship by special means (e.g., 
express mail) if the requester so desires, provided that the requester 
has paid or has expressly undertaken to pay all costs of such special 
services. Ex-Im Bank shall not charge for ordinary packaging and 
mailing.
    (i) Minimum fee. Ex-Im Bank shall waive a final fee of $5.00 or 
less.
    (j) Advance payment. Whenever Ex-Im Bank estimates that the fees are 
likely to exceed $250.00, Ex-Im Bank shall notify the requester of the 
likely cost and shall require an advance payment of an amount up to the 
full estimated charges.
    (k) Failure to pay fee. Ex-Im Bank shall not process a request by a 
requester who has failed to pay a fee for a previous request unless and 
until such a requester had paid the full amount owed and also has paid, 
in advance, the total estimated charges for the new request. The 
administrative time limits for the new request--set forth in Sec.
404.5--shall begin to run only after Ex-Im Bank has received the 
payments described in this section.



Sec.404.10  Fee waivers or reductions.

    (a) General. Upon request, Ex-Im Bank shall consider a discretionary 
fee waiver or reduction of the fees chargeable under Sec.404.9.
    (b) Form of request for fee waiver. Ex-Im Bank shall deny a request 
for a waiver or reduction of fees that does not clearly address each of 
the following:
    (1) The proposed use of the records and whether the requester will 
derive income or other benefit from such use;
    (2) An explanation of the reasons why the public will benefit from 
such use; and
    (3) If specialized use of the records is contemplated, a statement 
of the requester's qualifications that are relevant to the specialized 
use.
    (d) Burden of proof. In all cases, the requester has the burden of 
presenting sufficient evidence or information to justify the fee waiver 
or reduction. The requester may use the procedures set forth in Sec.
404.11 to appeal a denial of a fee waiver request.
    (e) Employee requests. Fees of less than $50.00 shall be waived in 
connection with any request by an employee, former employee, or 
applicant for employment, related to a grievance or complaint of 
discrimination against Ex-Im Bank.



Sec.404.11  Administrative appeal.

    (a) General. Whenever a request for records, a fee waiver or 
expedited processing has been denied, the requester may appeal the 
denial within thirty days of the date of Ex-Im Bank's issuance of notice 
of such action. Any denial under this subpart must be appealed according 
to this section before a requester is eligible to seek judicial review.
    (b) Form. Appeals must be made in writing and must be signed by the 
appellant. Appeals should be addressed to the Assistant General Counsel 
for Administration at the address at Sec.404.1(f). Both the envelope 
and the appeal letter

[[Page 493]]

should be clearly marked in capital letters: ``FREEDOM OF INFORMATION 
ACT APPEAL.'' Failure to properly mark or address the appeal may slow 
its processing. The letter should include:
    (1) A copy of the denied request or a description of the records 
requested;
    (2) The name and title of the Ex-Im Bank employee who denied the 
request;
    (3) The date on which the request was denied;
    (4) The Ex-Im Bank identification number assigned to the request; 
and
    (5) The return address and telephone number of the appellant.
    (c) Processing schedule. Appeals shall not be deemed to have been 
received until the Assistant General Counsel for Administration receives 
the appeal. Ex-Im Bank shall notify the requester of the date on which 
an appeal was officially received. The disposition of an appeal shall be 
made in writing within twenty working days after the date of receipt of 
an appeal. The Assistant General Counsel for Administration may extend 
the time for response an additional ten working days if unusual 
circumstances exist, provided that the Assistant General Counsel for 
Administration notifies the requester in writing.
    (d) Ex-Im Bank decision. A final determination which affirms an 
adverse initial determination shall set forth the reasons for affirming 
the denial and shall advise the requester of the right to seek judicial 
review. If the initial determination is reversed on appeal, the request 
shall be remanded to the Freedom of Information and Privacy Office to be 
processed promptly in accordance with the decision on appeal, subject to 
Sec.404.7(i).



        Subpart B_Access to Records Under the Privacy Act of 1974



Sec.404.12  General provisions.

    (a) Purpose. This subpart establishes policies, procedures, 
requirements, and responsibilities for administration of the Privacy Act 
of 1974, 5 U.S.C. 552a, at the Export-Import Bank of the United States 
(Ex-Im Bank).
    (b) Relationship to the Freedom of Information Act. The Privacy Act 
applies to records contained in a systems of records, as defined in 
Sec.404.13. If an individual submits a request for access to records 
and cites the Privacy Act, but the records sought are not contained in a 
Privacy Act system of records, then the request shall be processed only 
under subpart A of this part, Procedures for Disclosure of Records Under 
the Freedom of Information Act. All requests properly processed under 
this subpart B shall also be processed under subpart A of this part.
    (c) Appellate authority. The Ex-Im Bank Assistant General Counsel 
for Administration is the appellate authority for all Privacy Act 
requests.
    (d) Delegation. Any action or determination in this subpart which is 
the responsibility of a specific Ex-Im Bank employee may be delegated to 
a duly designated alternate.
    (e) Ex-Im Bank address. The Export-Import Bank of the United States 
is located at 811 Vermont Avenue, NW, Washington, DC 20571.



Sec.404.13  Definitions.

    For purposes of this subpart, the following definitions shall apply:
    Appeal--A written request to the Ex-Im Bank Assistant General 
Counsel for Administration for reversal of an adverse initial 
determination.
    Final determination--The written decision by the Assistant General 
Counsel for Administration on an appeal.
    Individual--A citizen of the United States or an alien lawfully 
admitted for permanent residence.
    Initial determination--The initial written determination in response 
to a Privacy Act request.
    Record--Any item, collection or grouping of information about an 
individual that is maintained within a system of records and that 
contains the individual's name or an identifying number, symbol or other 
identifying particular assigned to the individual.
    Redaction--The process of removing non-disclosable material from a 
record so that the remainder may be released.
    Request for access--A request to view a record.
    Request for accounting--A request for a list of all disclosures of a 
record.
    Request for correction--A request to modify a record.

[[Page 494]]

    Requester--An individual who makes a request under the Privacy Act.
    Review--The process of examining a record to determine whether any 
portion is required to be withheld.
    Search--The process of identifying and collecting records pursuant 
to a request.
    System of records--A group of any records under the control of an 
agency from which information is retrieved by the name of the individual 
or some identifying number, symbol or other identifying particular 
assigned to the individual.
    Working days--All calendar days excluding Saturdays, Sundays, and 
Federal Government holidays.



Sec.404.14  Requirements of request for access.

    (a) Form. Requests for access must be made in writing and must be 
signed by the requester. Requests should be addressed to the Freedom of 
Information and Privacy Office at the address in Sec.404.12(e) and 
should contain both the return address and telephone number of the 
requester.
    (b) Description of records sought. A request for access must 
describe the records sought in sufficient detail so as to enable Ex-Im 
Bank personnel to locate the system of records containing the records 
with a reasonable amount of effort. To the extent practicable, such 
description should include the nature of the record sought, the date of 
the record or the period in which the record was compiled, and the name 
or identifying number of the system of records in which the requester 
believes the record is kept. A requester may include his or her social 
security number in the request in order to facilitate the identification 
and location of the requested records.
    (c) Fee statement. The request must contain a statement expressing 
willingness to pay fees for processing the request or a request for a 
fee waiver (see Sec.404.16(d)).
    (1) Whenever a requester submits a request for access that does not 
contain a fee statement or a request for a fee waiver, Ex-Im Bank shall 
advise the requester of the requirements of this section. If the 
requester fails to respond within ten working days of such notification, 
then the Freedom of Information and Privacy Office shall notify the 
requester, in writing, that Ex-Im Bank will not process the request.
    (2) A general statement by the requester expressing willingness to 
pay all applicable fees shall be deemed an agreement to pay up to 
$25.00. If Ex-Im Bank estimates that the fees for a request will exceed 
$25.00, then Ex-Im Bank shall notify the requester. Ex-Im Bank shall 
offer the requester the opportunity to agree, in writing, either to pay 
a greater fee or to modify the request as a means of limiting the cost.
    (3) Whenever the estimated fee chargeable under this section exceeds 
$25.00, Ex-Im Bank reserves the right to require a requester to make an 
advance payment prior to processing the request.
    (4) Ex-Im Bank shall not process a request by a requester who has 
failed to pay a fee for a previous request unless and until such 
requester had paid the full amount owed and also has paid, in advance, 
the total estimated charges for the new request.
    (d) Verification of identity. An individual who submits a request 
for access must verify his or her identity. The request must include the 
requesters full name, current address, and date and place of birth. In 
addition, such requester must provide a notarized statement attesting to 
his or her identity.
    (e) Verification of guardianship. When a parent or guardian of a 
minor or the guardian of a person judicially determined to be 
incompetent submits a request for access to records that relate to the 
minor or incompetent, such parent or guardian must establish:
    (1) His or her own identity and the identity of the subject of the 
record in accordance with paragraph (d) of this section; and
    (2) Parentage or guardianship of the subject of the record, either 
by providing a copy of the subject's birth certificate showing parentage 
or by providing a court order establishing guardianship.
    (f) Written notice of amendment. The requester must provide any 
amendment to the original request in writing to Ex-Im Bank.
    (g) Requester assistance. Ex-Im Bank shall make reasonable efforts 
to assist

[[Page 495]]

a requester in complying with the requirements of this section.
    (h) Date of receipt. Requests for access shall be deemed to have 
been received on the date that the request is received by the Freedom of 
Information and Privacy Office, provided that all the requirements of 
this section have been met. Ex-Im Bank shall notify the requester of the 
date on which it officially received a request.



Sec.404.15  Initial determination.

    (a) Time for processing. The Freedom of Information and Privacy 
Office shall respond to valid requests for access within twenty working 
days of the date of receipt of the request letter. The time for response 
may be extended an additional ten working days for good cause, provided 
that the Freedom of Information and Privacy Office notifies the 
requester in writing.
    (b) Notice regarding request for access. The Freedom of Information 
and Privacy Office shall notify the requester in writing of its decision 
to grant or deny a request for access.
    (1) If the request is granted, then the notice shall either include 
the requested records, in releasable form, or shall describe the manner 
in which access to the record will be granted. The notice also shall 
inform the requester of any processing fee.
    (2) A denial is a determination to withhold any requested record in 
whole or in part or a determination that the requested record does not 
exist or cannot be located. If the request is denied, then the denial 
notice shall state:
    (i) The name, signature, and title or position of the person 
responsible for the denial;
    (ii) The reasons for the denial; and
    (iii) The procedure for appeal of the denial under Sec.404.17 and 
a brief description of the requirements of that section.
    (c) Form of record disclosure. Ex-Im Bank shall grant access to the 
requested records either by providing the requester with a copy of the 
record or, at the requester's option, by making the record available for 
inspection at a reasonable time and place. If Ex-Im Bank makes the 
record available for inspection, such inspection shall not unreasonably 
disrupt Ex-Im Bank operations. In addition, the requester must provide a 
form of official photographic identification--such as a passport, 
driver's license or identification badge--and any other form of 
identification bearing his or her name and address prior to inspection 
of the requested records. Records may be inspected by the requester in 
the presence of another individual, provided that the requester signs a 
form stating that Ex-Im Bank is authorized to disclose the record in the 
presence of both individuals.



Sec.404.16  Schedule of fees.

    (a) Search and review. Ex-Im Bank shall not charge for search and 
review.
    (b) Duplication. Ex-Im Bank shall charge $.10 per page for paper 
copy duplication. Ex-Im Bank shall charge the actual or estimated cost 
of copies prepared by computer, such as tape or printouts, or for other 
methods of reproduction or duplication.
    (c) Minimum fee. Ex-Im Bank shall waive final fees of $5.00 or less.
    (d) Fee waivers. Ex-Im Bank may waive fees whenever it is determined 
to be in the public interest. Fees of less than $50.00 shall be waived 
in connection with any request by an employee, former employee or 
applicant for employment, related to a grievance or complaint of 
discrimination against Ex-Im Bank.
    (e) Special services charges. Complying with requests for special 
services such as those listed in this paragraph is entirely at the 
discretion of Ex-Im Bank. Ex-Im Bank shall recover the full costs of 
providing such services to the extent that it elects to provide them.
    (1) Certifications. Ex-Im Bank shall charge $25.00 to certify the 
authenticity of any Ex-Im Bank record or any copy of such record.
    (2) Special shipping. Ex-Im Bank may ship by special means (e.g., 
express mail) if the requester so desires, provided that the requester 
has paid or has expressly undertaken to pay all costs of such special 
services. Ex-Im Bank shall not charge for ordinary packaging and 
mailing.



Sec.404.17  Appeal of denials of access.

    (a) Appeals to the Assistant General Counsel for Administration. 
Whenever

[[Page 496]]

Ex-Im Bank denies a request for access or for waiver or reduction of 
fees, the requester may appeal the denial to the Assistant General 
Counsel for Administration within 30 working days of the date of Ex-Im 
Bank's issuance of notice of such action. Appeals must be made in 
writing and must be signed by the appellant. Appeals should be addressed 
to the Assistant General Counsel for Administration at the address in 
Sec.404.12(e). Both the envelope and the appeal letter should be 
clearly marked in capital letters: ``PRIVACY ACT APPEAL.'' Failure to 
properly mark or address the appeal may slow its processing. An appeal 
shall not be deemed to have been received by Ex-Im Bank until the 
Assistant General Counsel for Administration receives the appeal letter. 
The letter should include:
    (1) A copy of the denied request or a description of the records 
requested;
    (2) The name and title of the Ex-Im Bank employee who denied the 
request;
    (3) The date on which the request was denied; and
    (4) The Ex-Im Bank identification number assigned to the request.
    (b) Final determination. The disposition of an access appeal shall 
be made in writing within twenty working days after the date of receipt 
of the appeal. The Assistant General Counsel for Administration may 
extend the time for response an additional ten working days for good 
cause, provided that the requester is notified in writing. A decision 
affirming the denial of a request for access shall include a brief 
statement of the reasons for affirming the denial and shall advise the 
requester of the right to seek judicial review. If the initial 
determination is reversed, then the request shall be remanded to the 
Freedom of Information and Privacy Office to be processed in accordance 
with the decision on appeal.



Sec.404.18  Requests for correction of records.

    (a) Form. Requests for correction must be made in writing and must 
be signed by the requester. Requests should be addressed to the Freedom 
of Information and Privacy Office at the address in Sec.404.12(e) and 
should contain both the return address and telephone number of the 
requester. The request must identify the particular record in question, 
state the correction sought, and set forth the justification for the 
correction. The requester also must verify his or her identity in 
accordance with the procedures set forth at Sec.404.14(d) and (e). 
Both the envelope and the request for correction itself should be 
clearly marked in capital letters: ``PRIVACY ACT CORRECTION REQUEST.''
    (b) Initial determination. The Freedom of Information and Privacy 
Office shall respond to valid correction requests within ten working 
days of receipt of the request letter. If Ex-Im Bank grants the request 
for correction, then the Freedom of Information and Privacy Office shall 
advise the requester of his or her right to obtain a copy, in releasable 
form, of the corrected record. A denial notice shall state the reasons 
for the denial and shall advise the requester of the right to appeal. 
Ex-Im Bank shall not charge for processing requests for correction.
    (c) Appeal of denial of request for correction. Whenever Ex-Im Bank 
denies a request for correction, the requester may appeal the denial to 
the Assistant General Counsel for Administration within thirty working 
days of Ex-Im Bank's issuance of notice of such action. Appeals must be 
made in writing and must be signed by the appellant. Appeals should be 
addressed to the Assistant General Counsel for Administration at the 
address set forth in Sec.404.12(e). Both the envelope and the appeal 
letter should be clearly marked in capital letters: ``PRIVACY ACT 
CORRECTION APPEAL.'' Failure to properly mark or address the appeal may 
slow its processing. An appeal shall not be deemed to have been received 
by Ex-Im Bank until the Assistant General Counsel for Administration 
receives the appeal letter. The letter must include:
    (1) A copy of the denied request or a description of the correction 
sought;
    (2) The name and title of the Ex-Im Bank employee who denied the 
request;
    (3) The date on which the request was denied;
    (4) The Ex-Im Bank identification number assigned to the request; 
and
    (5) Any information said to justify the correction.

[[Page 497]]

    (d) Final determination on correction appeal. (1) The disposition of 
an appeal shall be made in writing within twenty working days after the 
date of receipt of an appeal. The Assistant General Counsel for 
Administration may extend the time for response an additional ten 
working days for good cause, provided that the requester is notified in 
writing.
    (2) A decision affirming the denial of a request for access shall 
advise the appellant of the:
    (i) Reasons for affirming the denial;
    (ii) Right to seek judicial review; and
    (iii) Right to file a statement of disagreement, as provided in 
paragraph (e) of this section.
    (3) If the initial determination is reversed, then the request shall 
be remanded to the Freedom of Information and Privacy Office to be 
processed in accordance with the decision on appeal.
    (e) Statement of disagreement. Upon denial of a correction appeal, 
the appellant shall have the right to file a statement of disagreement 
with Ex-Im Bank, setting forth his or her reasons for disagreeing with 
the Agency's action. The statement should be addressed to the Freedom of 
Information and Privacy Office at the address in Sec.404.12(e) and 
must be received within thirty working days of Ex-Im Bank's issuance of 
the denial notice. A statement of disagreement must not exceed one typed 
page per fact disputed. Statements exceeding this limit shall be 
returned to the requester for editing. Upon receipt of a statement of 
disagreement under this section, the Freedom of Information and Privacy 
Office shall have the statement included in the system of records in 
which the disputed record is maintained and shall have the disputed 
record marked so as to indicate that a Statement of Disagreement has 
been filed. Ex-Im Bank may also append to the disputed record a written 
statement regarding Ex-Im Bank's reasons for denying the request to 
correct the record.
    (f) Notices of correction or disagreement. In any disclosure of a 
record for which Ex-Im Bank has received a statement of disagreement, 
Ex-Im Bank shall clearly note any portion of the record which is 
disputed and shall provide a copy of the statement of disagreement. Ex-
Im Bank also may provide its own statement regarding the disputed 
record. In addition, whenever Ex-Im Bank corrects a record or receives a 
statement of disagreement, Ex-Im Bank shall, as is reasonable under the 
circumstances, advise any person or agency to which it previously 
disclosed such record of the correction or statement, provided that an 
accounting of such disclosure exists.



Sec.404.19  Request for accounting of record disclosures.

    (a) Required information. With respect to each system of records 
under Ex-Im Bank control, Ex-Im Bank shall maintain an accurate 
accounting of the date, nature, and purpose of each external disclosure 
of a record and the name and address of all persons, organizations, and 
agencies to which disclosure has been made. Ex-Im Bank shall retain this 
accounting for at least five years or the life of the record, whichever 
is longer.
    (b) Form. An individual may obtain an accounting of all disclosures 
of a record, provided that such individual establishes his or her 
identity as the subject of such record in accordance with the procedures 
set forth at Sec.404.14(d) and (e). A request for an accounting must 
be made in writing and must be signed by the requester. The request 
should be addressed to the Freedom of Information and Privacy Office at 
the address in Sec.404.12(e) and should contain both the return 
address and telephone number of the requester. Both the envelope and the 
request itself should be clearly be marked in capital letters: ``PRIVACY 
ACT ACCOUNTING REQUEST.'' Failure to properly mark or address the 
request may slow its processing. The request shall not be deemed to have 
been received by Ex-Im Bank until the Freedom of Information and Privacy 
Office receives the request. The letter must clearly identify the 
particular record for which the accounting is requested.
    (c) Initial determination. The Freedom of Information and Privacy 
Office shall notify the requester whether the request will be granted or 
denied within ten working days of receipt of a valid request for an 
accounting. Ex-Im Bank

[[Page 498]]

shall not charge for processing such a request.
    (d) Exceptions. Ex-Im Bank shall not be required to provide an 
accounting to an individual when the accounting relates to a disclosure 
made:
    (1) To an employee within the agency;
    (2) Under the FOIA; or
    (3) To a law enforcement agency for an authorized law enforcement 
activity in response to a written request from such agency which 
specified the law enforcement activity for which the disclosure was 
sought.



Sec.404.20  Notice of court-ordered and emergency disclosures.

    (a) Court-ordered disclosures. When a record pertaining to an 
individual is required to be disclosed by a court order, the Assistant 
General Counsel for Administration shall make reasonable efforts to 
provide notice to the subject individual. Notice shall be given within a 
reasonable time after Ex-Im Bank's receipt of the order, except that in 
a case in which the order is not a matter of public record, notice shall 
be given only after the order becomes public. Such notice shall be 
mailed to the individual's last known address and shall contain a copy 
of the order and a description of the information disclosed.
    (b) Emergency disclosures. If a record has been disclosed by Ex-Im 
Bank under compelling circumstances affecting the health or safety of 
any person, then, within ten working days, the Assistant General Counsel 
for Administration shall notify the subject individual of the disclosure 
at his or her last known address. The notice of such disclosure shall be 
in writing and shall state the:
    (1) Nature of the information disclosed;
    (2) Person, organization or agency to which it was disclosed;
    (3) Date of disclosure; and
    (4) Compelling circumstances justifying the disclosure.



Sec.404.21  Submission of social security and passport numbers.

    (a) Policy. Ex-Im Bank recognizes the importance of assessing, to 
the extent reasonably possible, the risks associated with transactions 
supported by Ex-Im Bank. It is often difficult to assess risks related 
to individuals and non-publicly trade entities. Therefore, when an 
individual or a non-publicly traded entity applies for participation in 
an Ex-Im Bank program or is proposed as a guarantor for an Ex-Im Bank 
transaction, Ex-Im Bank may request social security and/or U.S. passport 
numbers from such individual or from the principals of such entity. Ex-
Im Bank shall not require submission of this information, and 
unwillingness or inability to provide a social security or passport 
number shall not affect Ex-Im Bank's decision on an application for Ex-
Im Bank assistance.
    (b) Use. Ex-Im Bank shall use social security and passport numbers 
to assess the creditworthiness of Ex-Im Bank program participants and as 
a mechanism for enforcing agreements with Ex-Im Bank. Such information 
shall not be disclosed, except as warranted by law and regulation.
    (c) Notice. Whenever Ex-Im Bank requests a social security or 
passport number, Ex-Im Bank shall place an appropriate Privacy Act 
notification on the form used to collect the information.



Sec.404.22  Government contracts.

    (a) Approval by Assistant General Counsel for Administration. Ex-Im 
Bank shall not contract for the operation of a system of records or for 
an activity that requires access to a system of records without the 
express, written approval of the Assistant General Counsel for 
Administration.
    (b) Contract clauses. Any contract authorized under paragraph (a) of 
this section shall contain the standard contract clauses required by the 
Federal Acquisition Regulation (48 CFR 24.104) to ensure compliance with 
the requirements imposed by the Privacy Act. The division within Ex-Im 
Bank that is responsible for technical supervision of the contract shall 
be responsible for ensuring that the contractor complies with the 
Privacy Act contract requirements.
    (c) Contractor status. Any contractor that operates an Ex-Im Bank 
system of records or engages in an activity that requires access to an 
Ex-Im Bank system of records shall be considered an

[[Page 499]]

Ex-Im Bank employee for purposes of this subpart. Ex-Im Bank shall 
supply any such contractor with a copy of the regulations in this 
subpart upon entering into a contract with Ex-Im Bank.



Sec.404.23  Other rights and services.

    Nothing in this subpart shall be construed to entitle any person to 
any service or to the disclosure of any record to which such person is 
not entitled under the Privacy Act.



    Subpart C_Demands for Testimony of Current and Former Ex-Im Bank 
           Personnel and for Production of Ex-Im Bank Records

    Source: 71 FR 14361, Mar. 22, 2006, unless otherwise noted.



Sec.404.24  Exemptions: EIB-35--Office of Inspector General Investigative Records.

    (a) Criminal Law Enforcement--(1) Exemption. Under the authority 
granted by 5 U.S.C. 552a(j)(2), Ex-Im Bank hereby exempts the system of 
records entitled ``EIB-35--Office of Inspector General Investigative 
Records'' from the provisions of 5 U.S.C. 552a(c)(3), (c)(4), (d)(1) 
through (4), (e)(1) through (3), (e)(4)(G) and (H), (e)(5), (e)(8), (f), 
and (g) because the system contains information pertaining to the 
enforcement of criminal laws. ``EIB-35--Office of Inspector General 
Investigative Records'' is maintained by the Ex-Im Bank Office of 
Inspector General (``OIG'' or ``Ex-Im Bank OIG.'')
    (2) Reasons for exemption. The reasons for asserting this exemption 
are:
    (i) Disclosure to the individual named in the record pursuant to 5 
U.S.C. 552a(c)(3), (c)(4), or (d)(1) through (4) could seriously impede 
or compromise the investigation by alerting the target(s), subjecting a 
potential witness or witnesses to intimidation or improper influence, 
and leading to destruction of evidence. Disclosure could enable suspects 
to take action to prevent detection of criminal activities, conceal 
evidence, or escape prosecution.
    (ii) Application of 5 U.S.C. 552a(e)(1) is impractical because the 
relevance of specific information might be established only after 
considerable analysis and as the investigation progresses. Effective law 
enforcement requires the OIG to keep information that may not be 
relevant to a specific OIG investigation, but which may provide leads 
for appropriate law enforcement and to establish patterns of activity 
that might relate to the jurisdiction of the OIG and/or other agencies.
    (iii) Application of 5 U.S.C. 552a(e)(2) would be counterproductive 
to the performance of a criminal investigation because it would alert 
the individual to the existence of an investigation. In any 
investigation, it is necessary to obtain evidence from a variety of 
sources other than the subject of the investigation in order to verify 
the evidence necessary for successful litigation or prosecution.
    (iv) Application of 5 U.S.C. 552a(e)(3) could discourage the free 
flow of information in a criminal law enforcement inquiry.
    (v) The requirements of 5 U.S.C. 552a(e)(4)(G) and (H) and (f) would 
be counterproductive to the performance of a criminal investigation. To 
notify an individual at the individual's request of the existence of 
records in an investigative file pertaining to such individual, or to 
grant access to an investigative file could interfere with investigative 
and enforcement proceedings, deprive co-defendants of a right to a fair 
trial or other impartial adjudication, constitute an unwarranted 
invasion of personal privacy of others, disclose the identity or 
confidential sources, reveal confidential information supplied by these 
sources and disclose investigative techniques and procedures. 
Nevertheless, Ex-Im Bank OIG has published notice of its notification, 
access, and contest procedures because access may be appropriate in some 
cases.
    (vi) Although the OIG endeavors to maintain accurate records, 
application of 5 U.S.C. 552a(e)(5) is impractical because maintaining 
only those records that are accurate, relevant, timely, and complete and 
that assure fairness

[[Page 500]]

in determination is contrary to established investigative techniques. 
Information that may initially appear inaccurate, irrelevant, untimely, 
or incomplete may, when collated and analyzed with other available 
information, become more pertinent as an investigation progresses.
    (vii) Application of 5 U.S.C. 552a(e)(8) could prematurely reveal an 
ongoing criminal investigation to the subject of the investigation.
    (viii) The provisions of subsection (g) do not apply to this system 
if an exemption otherwise applies.
    (b) Other Law Enforcement--(1) Exemption. Under the authority 
granted by 5 U.S.C. 552a(k)(2), Ex-Im Bank hereby exempts the system of 
records entitled ``EIB-35--Office of Inspector General Investigative 
Records'' from the provisions of 5 U.S.C. 552a(c)(3), (d)(1) through 
(4), (e)(1), (e)(4)(G) and (H), and (f) for the same reasons as stated 
in paragraph (a)(2) of this section, that is, because the system 
contains investigatory material compiled for law enforcement purposes 
other than material within the scope of subsection 552a(j)(2).
    (2) Reasons for exemption. The reasons for asserting this exemption 
are because the disclosure and other requirements of the Privacy Act 
could substantially compromise the efficacy and integrity of OIG 
operations. Disclosure could invade the privacy of other individuals and 
disclose their identity when they were expressly promised 
confidentiality. Disclosure could interfere with the integrity of 
information which would otherwise be subject to privileges (see, e.g., 5 
U.S.C. 552(b)(5)), and which could interfere with other important law 
enforcement concerns (see, e.g., 5 U.S.C. 552(b)(7)).
    (c) Federal Civilian or Contract Employment--(1) Exemption. Under 
the authority granted by 5 U.S.C. 552a(k)(5), Ex-Im Bank hereby exempts 
the system of records entitled ``EIB-35--Office of Inspector General 
Investigative Records'' from the provisions of 5 U.S.C. 552a(c)(3), 
(d)(1) through (4), (e)(1), (e)(4)(G) and (H), and (f) because the 
system contains investigatory material compiled for the purpose of 
determining eligibility or qualifications for federal civilian or 
contract employment.
    (2) Reasons for exemption. The reasons for asserting this exemption 
are the same as described in paragraph (a)(2) of this section.

[77 FR 41886, July 17, 2012, as amended at 77 FR 42949, July 23, 2012]



Sec.404.25  Applicability.

    This subpart applies exclusively to demands for testimony and/or 
production of records issued to Ex-Im Bank personnel, in connection with 
legal proceedings to which Ex-Im Bank is not a party, regarding 
information acquired in the course of the performance of official duties 
or due to their official status. Nothing in this subpart shall be 
construed to waive the sovereign immunity of the United States. This 
subpart shall not apply to the following:
    (a) Demands for testimony and/or production of records pursuant to a 
legal proceeding to which Ex-Im Bank is a party:
    (b) Demands for testimony and/or production of records in those 
instances in which Ex-Im Bank personnel are asked to disclose 
information wholly unrelated to their official duties; and
    (c) Congressional demands and requests for testimony or records.



Sec.404.26  Definitions.

    For purposes of this subpart, the following definitions shall 
apply--
    Demand--includes an order, subpoena, or other compulsory process 
issued by a party in litigation or a court of competent jurisdiction, 
requiring the production or release of Ex-Im Bank information or 
records, or requiring the testimony of Ex-Im Bank personnel.
    Ex-Im Bank personnel--includes any current or former officer or 
employee of Ex-Im Bank, including all individuals who have been 
appointed by, or subject to, the official supervision, jurisdiction, or 
control of any Ex-Im Bank employees. This definition encompasses all 
individuals hired through contractual agreements with Ex-Im Bank, such 
as: consultants, contractors, sub-contractors, and their employees.

[[Page 501]]

    Legal proceeding--a case or controversy pending before any federal, 
state, or local court, including a grand jury proceeding; a proceeding 
before a federal, state, or local administrative judge, board, or other 
similar body with adjudicative powers; or a legislative proceeding 
before a state or local legislative body.
    Records--all documentary materials that Ex-Im Bank creates or 
receives in connection with the transaction of official business, 
including any materials classified as ``Federal records'' under 44 
U.S.C. 3301 and its implementing regulations.
    Testimony--written or oral statements, including, but not limited 
to, depositions, answers to interrogatories, affidavits, declarations, 
and any other statements made in a legal proceeding, including any 
expert or opinion testimony.



Sec.404.27  Demand requirements.

    A party's demand for testimony and/or production of records by Ex-Im 
Bank personnel regarding information acquired in the course of their 
performance of official duties or due to their official status shall be 
set forth in, or accompanied by, a signed affidavit or other written 
statement. Such affidavit or written statement must be submitted at 
least 30 days prior to the date such testimony and/or production of 
records is requested to be taken and/or produced. A copy of the 
affidavit or written statement shall be served on the other parties to 
the legal proceeding. The affidavit or written statement must:
    (a) Be addressed to the Export-Import Bank of the United States, 
Office of the General Counsel, 811 Vermont Ave., NW., Washington, DC 
20571;
    (b) State the nature of the legal proceeding, including any docket 
number, title of the case, and the name of the administrative or 
adjudicative body before which the proceedings are to be heard;
    (c) State the nature of the testimony or records sought;
    (d) State the relevance of the information sought to the legal 
proceedings;
    (e) State why such information can only be obtained through 
testimony or production of records by Ex-Im Bank personnel; and
    (f) Comply with all procedures governing valid service of process.



Sec.404.28  Notification of General Counsel required.

    Ex-Im Bank personnel receiving a demand for testimony and/or 
production of records regarding information acquired in the course of 
their performance of official duties, or due to their official status, 
shall immediately notify the General Counsel of Ex-Im Bank (``General 
Counsel'') upon receipt of such demand. The General Counsel maintains 
the exclusive authority to waive the requirements of any or all sections 
of this subpart and reserves the right to delegate his or her authority 
under this subpart to other appropriate Ex-Im Bank personnel.



Sec.404.29  Restrictions on testimony and production of records.

    Ex-Im Bank personnel may not provide testimony and/or produce 
records regarding information acquired in the course of their 
performance of official duties, or due to their official status, in 
connection with any legal proceeding to which this subpart applies, 
without authorization by the General Counsel. Such authorization must be 
in writing, unless the General Counsel determines that circumstances 
warrant an oral authorization, and such oral authorization is 
subsequently documented.



Sec.404.30  Factors General Counsel may consider in determining
whether to authorize testimony and/or the production of records.

    In determining whether to authorize Ex-Im Bank personnel to provide 
testimony and/or produce records regarding information acquired in the 
course of their performance of official duties, or due to their official 
status, the General Counsel may consider factors including, but not 
limited to, the following:
    (a) Efficiency--the conservation of the time and resources of Ex-Im 
Bank personnel for the conduct of official business;
    (b) Undue burden--whether the demand creates an undue burden upon

[[Page 502]]

Ex-Im Bank or is otherwise inappropriate under any applicable 
administrative or court rules;
    (c) Appearance of bias--whether the testimony and/or production of 
records could result in the public perception that Ex-Im Bank is 
favoring one party over another, or advocating the position of a party 
to the proceeding;
    (d) Furtherance of agency policy--whether the testimony and/or 
production of records is consistent with the policy and mission of the 
Ex-Im Bank;
    (e) Prevention of fraud or injustice--whether the disclosure of the 
information requested is necessary to prevent the perpetration of fraud 
or injustice;
    (f) Relevance to litigation--whether the testimony and/or production 
of records sought is relevant to the subject litigation;
    (g) Necessity--whether the testimony and/or production of records, 
including a release of such in camera, is appropriate or necessary as 
determined by either the procedural rules governing the legal 
proceeding, or according to the relevant laws concerning privilege;
    (h) Availability from another source--whether the information sought 
through testimony or production of records is available from another 
source;
    (i) Violations of laws or regulations--whether the testimony and/or 
production of records would violate a statute, regulation, executive 
order, or other official directive;
    (j) Classified information--whether the testimony and/or production 
of records would improperly reveal information classified pursuant to 
applicable statute or Executive Order; and
    (k) Compromise of rights and interests--whether the testimony and/or 
production of records would compromise any of the following: law 
enforcement interests, constitutional rights, national security 
interests, foreign policy interests, or the confidentiality of 
commercial and/or financial information.



Sec.404.31  Procedure for declining to testify and/or produce records.

    Ex-Im Bank personnel receiving a demand to provide testimony and/or 
produce records regarding information acquired in the course of their 
performance of official duties, or due to their official status, and who 
have not received written authorization from the General Counsel to 
provide such information, shall:
    (a) Respectfully decline to answer or appear for examination on the 
grounds that such testimony is forbidden by this subpart;
    (b) Request the opportunity to consult with the General Counsel;
    (c) Explain that only upon consultation may they be granted approval 
to provide such testimony;
    (d) Explain that providing such testimony or records absent approval 
may subject the individual to criminal liability under 18 U.S.C. 641, as 
well as other applicable laws, and other disciplinary action; and
    (e) Request a stay of the request or demand pending a determination 
by the General Counsel.



Sec.404.32  Procedure in the event a decision concerning a demand
is not made prior to the time a response to the demand is required.

    If response to a demand is required before a determination has been 
rendered by the General Counsel, the U.S. Attorney or such other 
attorney as may be designated for the purpose will appear with the Ex-Im 
Bank personnel upon whom the demand has been made, and will furnish the 
court or other authority with a copy of the regulations contained in 
this subpart and inform the court or other authority that the demand has 
been or is being, as the case may be, referred for prompt consideration 
of the General Counsel. The court or other authority shall be requested 
respectfully to stay the demand pending determination by the General 
Counsel.



Sec.404.33  Procedure in the event of an adverse ruling.

    If the court or other authority declines to stay the effect of the 
demand in response to a request made in accordance with Sec.404.32 
pending a determination by the General Counsel, or if the court or other 
authority rules that the demand must be complied with irrespective of 
the instructions from the General Counsel not to produce the material or 
disclose the information

[[Page 503]]

sought, the Ex-Im Bank personnel upon whom the demand has been made 
shall respectfully decline to comply with the demand (United States ex 
rel. Touhy v. Ragen, 340 U.S. 462).



Sec.404.34  Procedure for demands for testimony or production 
of documents regarding confidential information.

    In addition to compliance with the requirements of this subpart, 
demands to provide testimony and/or produce records that concern 
information protected by the Privacy Act, 5 U.S.C. 552a, or any other 
authority mandating confidentiality of certain classes of records or 
information, must also satisfy the requirements for disclosure imposed 
by such authority before records may be produced or testimony given.



Sec.404.35  Procedures for requests for Ex-Im Bank employees 
to provide expert or opinion testimony.

    No Ex-Im Bank personnel may, unless specifically authorized by the 
General Counsel, testify in any legal proceeding as an expert or opinion 
witness as to any matter related to his or her duties or the functions 
of the Ex-Im Bank, including the meaning of Ex-Im Bank documents. Any 
demand for expert or opinion testimony shall comply with the policies 
and procedures outlined in this subpart.



Sec.404.36  No private right of action.

    Nothing in this subpart shall be construed as creating any right, 
substantive or procedural, enforceable at law or equity by a party 
against Ex-Im Bank or the United States.

Subparts D-E [Reserved]

                           PART 405 [RESERVED]



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. 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 and where deliberations 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 9:30 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; 72 FR 66043, Nov. 27, 2007]



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 determines that such meetings, or 
any portion thereof, or information pertaining to such meeting, or any 
portion thereof, is likely to:

[[Page 504]]

    (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 
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),

[[Page 505]]

or any combination thereof, the procedures set forth in Sec.407.4 will 
apply.

[42 FR 12417, Mar. 4, 1977, as amended at 72 FR 66043, Nov. 27, 2007]



Sec.407.3  Procedures applicable to regularly scheduled meetings.

    (a) Announcements. Regularly scheduled meetings of the Board of 
Directors will be held at 9:30 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 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; 72 FR 66043, Nov. 27, 2007]



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 
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 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 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 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.

[[Page 506]]

    (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 votes to take such action.
    (2) A separate vote of the Board of Directors 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 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 close such portion to the public under paragraph (a) 
(5), (6) or (7) of Sec.407.2, the Board of Directors, 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.

[42 FR 12417, Mar. 4, 1977, as amended at 72 FR 66043, Nov. 27, 2007]



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 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

[[Page 507]]

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 on all items on the agenda of such meeting, whichever occurs 
later.

[42 FR 12417, Mar. 4, 1977, as amended at 72 FR 66043, Nov. 27, 2007]



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 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

[[Page 508]]

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;
    (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.

[[Page 509]]



----------------------------------------------------------------------------------------------------------------
                                                                                     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.



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.

[[Page 510]]



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 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

[[Page 511]]

    (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]



Sec. Sec.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.



Sec. Sec.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.

[[Page 512]]

    (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.



Sec. Sec.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.



Sec. Sec.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

[[Page 513]]

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;
    (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.



Sec. Sec.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

[[Page 514]]

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.



Sec. Sec.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 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.

[[Page 515]]

    (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]



Sec. Sec.410.171-410.999  [Reserved]



PART 411_NEW RESTRICTIONS ON LOBBYING--Table of Contents



                            Subpart A_General

Sec.
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.

    Source: 55 FR 6737, 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),

[[Page 516]]

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 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:

[[Page 517]]

    (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 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

[[Page 518]]

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.
    (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

[[Page 519]]

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 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

[[Page 520]]

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.
    (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

[[Page 521]]

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 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

[[Page 522]]

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.





      Sec. 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 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 523]]



     Sec. Appendix B to Part 411--Disclosure Form To Report Lobbying
[GRAPHIC] [TIFF OMITTED] TC23SE91.003


[[Page 524]]


[GRAPHIC] [TIFF OMITTED] TC23SE91.004


[[Page 525]]


[GRAPHIC] [TIFF OMITTED] TC23SE91.005


[[Page 526]]





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 527]]

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 528]]

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.



PART 414_CONFERENCE AND OTHER FEES--Table of Contents



    Authority: 12 U.S.C. 635(a)(1), 5 U.S.C. 553.

    Source: 72 FR 66043, Nov. 27, 2007, unless otherwise noted.



Sec.414.1  Collection of conference and other fees.

    Ex-Im Bank may impose and collect reasonable fees to cover the costs 
of conferences and seminars sponsored by, and publications provided by 
Ex-Im Bank. Amounts received under the preceding sentence shall be 
credited to the fund which initially paid for such activities and shall 
be offset against the expenses of Ex-Im Bank for such activities.

                        PARTS 415	499 [RESERVED]



                          CHAPTER V [RESERVED]



[[Page 529]]



                              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
  List of CFR Sections Affected
  

[[Page 531]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2019)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--599)
        VI  National Capital Planning Commission (Parts 600--699)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300--
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
         X  Department of the Treasury (Parts 1000--1099)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Department of Housing and Urban Development (Parts 
                2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)

[[Page 532]]

     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   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  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600--3699)

[[Page 533]]

    XXVIII  Department of Justice (Parts 3800--3899)
      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 (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
     XXXVI  Department of Homeland Security (Parts 4600--4699)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)

[[Page 534]]

     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
    XCVIII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Parts 10000--10049)
        CI  National Mediation Board (Part 10101)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         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 Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       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)

[[Page 535]]

        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)
       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)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      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 Policy and New Uses, 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  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and Agriculture (Parts 
                3400--3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     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)

[[Page 536]]

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 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, 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)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      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  (Parts 500--599) [Reserved]
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)

[[Page 537]]

       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      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)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    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--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 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 Industry and Security, 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  National Technical Information Service, Department of 
                Commerce (Parts 1100--1199)

[[Page 538]]

      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            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) [Reserved]

                    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  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599) [Reserved]

                     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)

[[Page 539]]

        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, 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)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, 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 (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (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  Millennium Challenge Corporation (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)

[[Page 540]]

        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)

                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)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         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, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799) [Reserved]
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 541]]

                           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--899)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900--999)
        VI  Office of the Assistant Secretary, Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       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)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            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)

[[Page 542]]

        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  Employee Benefits Security 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)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 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)

[[Page 543]]

      VIII  Office of Investment Security, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      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)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       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)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army, Department 
                of Defense (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)

[[Page 544]]

        IV  Office of Career, Technical and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  (Parts 1100--1199) [Reserved]
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             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)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  National Institute of Standards and Technology, 
                Department of Commerce (Parts 400--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

[[Page 545]]

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            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 Service, Department of 
                Labor (Parts 61-1--61-999)
   62--100  [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
  103--104  [Reserved]
       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)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)

[[Page 546]]

       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
   II--III  [Reserved]
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--699)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1099)

                   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 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (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)

[[Page 547]]

         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)
        IX  Denali Commission (Parts 900--999)
         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  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Administration for Children and Families, 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 of Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Parts 2300--2399)
      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 Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        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)
        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)
         V  The First Responder Network Authority (Parts 500--599)

[[Page 548]]

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, 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  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)
        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  Broadcasting Board of Governors (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)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        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) 
                [Reserved]
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

[[Page 549]]

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (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 (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   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)

[[Page 551]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2019)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     5, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture, Department of                        2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  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
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 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 Nutrition 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
  National Institute of Food and Agriculture      7, XXXIV
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  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 of                          32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I

[[Page 552]]

Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army, Department of                               32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Career, Technical, and Adult Education, Office    34, IV
     of
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazardous Investigation       40, VI
     Board
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X, XIII
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX
     for the District of Columbia
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce, Department of                           2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II; 37, IV
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Technical Information Service          15, XI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Secretary of Commerce, Office of                15, Subtitle A
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 Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense Contract Audit Agency                     32, I
Defense, Department of                            2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII

[[Page 553]]

  Army Department                                 32, V; 33, II; 36, III; 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 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
Denali Commission                                 45, IX
Disability, National Council on                   5, C; 34, XII
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Career, Technical, and Adult Education, Office  34, IV
       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
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Policy, National Commission for        1, IV
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 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
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  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
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99
  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, 2

[[Page 554]]

  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 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
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
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                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
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
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    5, LXXX; 12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
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
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission of                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Food and Drug Administration                      21, I
Food and Nutrition 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 Services Administration                   5, LVII; 41, 105

[[Page 555]]

  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X, XIII
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 5, XXXVI; 6, I; 8, 
                                                  I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 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
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  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
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Independent Counsel, Offices of                   28, VI
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
   Secretary
[[Page 556]]

Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
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, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior, Department of                           2, XIV
  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
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Safety and Enforcement Bureau, Bureau of        30, II
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  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 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
Investment Security, Office of                    31, VIII
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 of                            2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor, Department of                              2, XXIX; 5, XLII
  Employee Benefits Security Administration       29, XXV
  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
[[Page 557]]

  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
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I, VII
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Libraries and Information Science, National       45, XVII
     Commission on
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Military Compensation and Retirement              5, XCIX
     Modernization Commission
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV, VI
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           2, XXXVI; 21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Geospatial-Intelligence Agency           32, I
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II; 37, IV
National Intelligence, Office of Director of      5, IV; 32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          5, CI; 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                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI

[[Page 558]]

National Security Council and Office of Science   47, II
     and Technology Policy
National Technical Information Service            15, XI
National Telecommunications and Information       15, XXIII; 47, III, IV, V
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Natural Resource Revenue, Office of               30, XII
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy, Department of                               32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        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                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 5, IV; 45, 
                                                  VIII
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory 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 Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Privacy and Civil Liberties Oversight Board       6, X
Procurement and Property Management, Office of    7, XXXII
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
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
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
Safety and Environmental Enforcement, Bureau of   30, II
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                5, XXXIV; 17, II

[[Page 559]]

Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 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 of                              2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Tennessee Valley Authority                        5, LXIX; 18, XIII
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury, Department of the                       2, X;5, XXI; 12, XV; 17, 
                                                  IV; 31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
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
U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs, Department of                   2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 561]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2014 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, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.govinfo.gov. For changes to this volume of the 
CFR prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 
1964-1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. 
The ``List of CFR Sections Affected 1986-2000'' is available at 
www.govinfo.gov.

                                2014	2017

                       (No regulations published)

                                  2018

12 CFR
                                                                   83 FR
                                                                    Page
Chapter III
347 Authority citation revised......................................9143
347.102 (o) revised.................................................9143
347.102 (u) and (v) revised........................................17741
347.202 (b) through (j), (k) through (o), and (p) through (y) 
        redesignated as new (c) through (k), (m) through (q), and 
        (s) through (bb); new (b), (l), and (r) added...............9143
347.209 (d) revised; Table 1 added..................................9143
347.211 (b)(1)(i) revised; interim.................................43965
347.211 Regulation at 83 FR 43965 confirmed........................67035
349.1 (e)(7) added.................................................50812
349.2 Amended......................................................50812
349.20 Revised.....................................................17741
360.5 (b) revised..................................................17741
360.9 (e)(6) revised...............................................17741
362.2 (s) and (t) revised..........................................17741
362.4 (e)(3) revised...............................................17741
362.17 (d) revised.................................................17741
363 Appendix A amended.............................................17742
364 Appendix A amended.............................................17742
365.1--365.2 (Subpart A) Appendix A amended........................17743
390 Authority citation revised.......................13849, 17743, 60337
390.101 (f) amended................................................17743
390.180--390.185, Appendix A (Subpart I) Removed...................13849
390.190 (Subpart J) Removed........................................60337
390.264 Revised....................................................17743
390.265 Appendix amended...........................................17743
390.316 (c) revised................................................17743
390.341 (a), (c)(1)(i)(G), and (d)(2)(ii) revised..................17743
390.343 (b) and (d) revised........................................17743
390.344 Amended....................................................17743
390.345 (a)(3) and (b) amended.....................................17743
390.348 (a) revised................................................17743
390.362 (a)(1)(i) and (iii) revised................................17743
390.450 Removed....................................................17744
390.451 Removed....................................................17744
390.452 Removed....................................................17744
390.453 Removed....................................................17744
390.454 Removed....................................................17744
390.455 Removed....................................................17744
390.457 (a)(1)(i)(A) and (ii) revised..............................17744
390.460--390.470 (Subpart Z) Removed...............................17744
391 Removed........................................................13843


                                  [all]