[Federal Register Volume 59, Number 77 (Thursday, April 21, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9585]


[[Page Unknown]]

[Federal Register: April 21, 1994]


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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 500, 545, 552, 563, 563b, 574

[No. 93-192]

 

Miscellaneous Technical Amendments

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Office of Thrift Supervision (OTS) is proposing several 
technical corrections and clarifications to its regulations on home 
loans and other real estate loans, its operating subsidiary regulation, 
and its incorporation and standard conversion regulations. The OTS is 
also proposing to amend its insider transactions rule and remove or 
revise obsolete or superseded provisions concerning investment 
limitations, stock ownership and remote service units. A waiver 
provision is also being proposed.

DATES: Comments on this proposed rule must be received on or before May 
23, 1994.

ADDRESSES: Comments should be sent to: Director, Information Services 
Division, Public Affairs, Office of Thrift Supervision, 1700 G Street 
NW., Washington DC 20552. Attention Docket No. 93-192. These 
submissions may be hand delivered to 1700 G Street NW., from 9 a.m. to 
5 p.m. on business days; they may be sent by facsimile transmission to 
FAX number (202) 906-7755. Submissions must be received by 5 p.m. on 
the day they are due in order to be considered by the OTS. Late-filed, 
misaddressed, or misidentified submissions will not be considered in 
this rulemaking. Comments will be available for public inspection at 
1700 G Street, NW., from 1 to 4 p.m. on business days. Visitors will be 
escorted to and from the Public Reference Room at established 
intervals.

FOR FURTHER INFORMATION CONTACT: Mary Gottlieb, Senior Paralegal, (202) 
906-7135, or Deborah Dakin, Assistant Chief Counsel, (202) 906-6445, 
Regulations and Legislation Division, Chief Counsel's Office, Office of 
Thrift Supervision, 1700 G Street, NW., Washington DC 20552.

SUPPLEMENTARY INFORMATION: The OTS is today proposing several technical 
corrections to revise, clarify or remove obsolete or ambiguous 
regulations.

Stock Loans

    Section 205 of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 (FDICIA)\1\ amended section 7(j)(9) of the 
Federal Deposit Insurance Act and modified the reporting criteria and 
procedures of that section, thereby superseding existing Sec. 574.5(b) 
of OTS's regulations. Rather than amend Sec. 574.5(b) to conform to 
amended section 7(j)(9), the OTS has chosen to rescind the regulation 
because the statute is self-implementing and OTS finds it unnecessary 
merely to repeat the statutory language.
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    \1\Public Law 102-242, 105 Stat. 2236 (1991).
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Directors

    Through its final rule on regulatory review,\2\ the OTS lowered the 
number of directors required for a Federal savings association from 
seven to five, consistent with the required number of national bank 
directors. An additional reference in Sec. 552.3, which was overlooked 
in the earlier rulemaking, is now being changed to conform with the new 
requirement.
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    \2\58 FR 4308 (Jan. 14, 1993).
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Operating Subsidiaries

    The OTS has received questions regarding whether, under 12 CFR 
545.81(d), a Federal savings association that wants a service 
corporation it owned on November 30, 1992 (the effective date of the 
operating subsidiary regulation) to be deemed an operating subsidiary 
must file an application if the federal savings association was 
ineligible for expedited treatment on November 30, 1992, but currently 
is eligible for expedited treatment. The agency's intent was and 
continues to be to require an application only if the association is 
currently, rather than historically, ineligible for expedited 
treatment. Similarly, the ownership language in the current regulation 
has given rise to some confusion. The agency has consistently applied 
this paragraph only to service corporations that the federal savings 
association owned both on November 30, 1992 and on the date it seeks to 
have the service corporation deemed an operating subsidiary, not to 
service corporations owned by another entity on November 30, 1992.
    The OTS is therefore proposing a clarifying technical amendment 
restructuring Sec. 545.81(d). This replacement language more clearly 
sets forth the requirements that apply when a federal savings 
association that owned a service corporation on November 30, 1992, 
wishes to have that service corporation deemed an operating subsidiary.

Insider Transactions

    Pursuant to and in accordance with section 4(a) of the Home Owners' 
Loan Act and section 106(b)(2)(H)(i) of the Bank Holding Company 
Amendments Act of 1970,3 as revised by section 306(j) of the 
Federal Deposit Insurance Corporation Improvement Act of 1991 
(``FDICIA''),4 the OTS proposes to amend its regulation pertaining 
to insider transactions by incorporating by means of cross-reference 
subpart B of the Federal Reserve Board's Regulation O, 12 CFR part 215, 
subpart B, as now or hereafter in effect.
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    \3\12 U.S.C. 1972(2)(H)(i).
    \4\Public Law 102-242, 105 Stat. 2359.
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    Section 306(j) of FDICIA amended section 106 of the Bank Holding 
Company Amendments Act of 1970 to make it applicable to all savings 
banks and savings associations (as those terms are defined in section 3 
of the Federal Deposit Insurance Act5). Subpart B of Regulation O 
implements and refines the requirements of section 106 with respect to 
banks that are members of the Federal Reserve System. Because savings 
associations must also now comply with section 106, the OTS believes it 
is appropriate and consistent with the goal of regulatory uniformity to 
apply subpart B of Regulation O to savings associations as well.
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    \5\12 U.S.C. 1813.
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Investments

    Section 563.96, which restricts the amount savings associations may 
invest in savings accounts and debt securities hedged with forward 
commitments according to a complex formula set forth in the rule, is 
being removed in light of the Federal Reserve Board's (FRB) final rule 
on interbank liabilities.6 The FRB's final rule limits such 
investments to 25% of capital. Since the FRB rule applies to savings 
associations, Sec. 563.96 would be deleted as unnecessary.
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    \6\57 FR 60086 (Dec. 18, 1992).
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Loan Documentation

    The OTS is proposing to amend its interim final loan documentation 
regulation to broaden eligibility to any institution that was assigned 
a MACRO rating of 3 in its most recent report of examination and that 
has obtained written permission from its Regional Director to employ 
the exemption. The agency believes that this change is consistent with 
both encouraging lending to creditworthy borrowers and maintaining 
adequate safety and soundness safeguards.

Conversions

    A conforming amendment is being made to the OTS's standard 
conversion regulations to conform section 563b.3, restricting the 
repurchase of stock and payment of dividends, to prompt corrective 
action standards.

Remote Service Units

    Section 545.141 governs the establishment of Remote Service Units 
(RSUs)7 by federal savings associations. Technological and 
regulatory changes since the regulation was last revised in 1983 have 
made certain provisions unnecessary. First, Sec. 545.141(d), which 
addresses privacy of account data concerning an RSU account, imposes 
restrictions on federal savings associations that go further than those 
applicable to other financial institutions. The OTS believes that 
Regulation E of the Federal Reserve Board, 12 CFR part 205, which 
governs electronic funds transfers by all financial institutions, 
including savings associations, provides adequate protection for 
consumer's interests in this area. Under 12 CFR 205.7(a)(9), an 
institution must disclose to a consumer the circumstances under which 
the financial institution in the ordinary course of business will 
disclose information to third parties concerning the consumer's 
account. Second, the OTS proposes to revise Sec. 545.141(e) to reflect 
earlier revisions to 12 CFR part 568, ``Minimum Security Devices.''
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    \7\An RSU is defined as an information processing device by 
which information relating to financial services rendered to the 
public is stored and transmitted, instantaneously or otherwise, to a 
financial institution. The term RSU generally includes point of sale 
terminals, merchant-operated terminals, cash dispensing machines and 
automated teller machines.
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Waivers and Miscellaneous Changes

    The agency is adding a provision expressly setting forth its 
existing authority to waive any non-statutorily required regulation for 
good cause. This authority is separate and apart from, and is not meant 
to limit, the agency's statutorily based authority (e.g., under the 
Depository Institutions Disaster Relief Act of 1992) to waive certain 
regulations and its inherent authority to decide whether or not to take 
enforcement actions against violations of its regulations. See Heckler 
v. Chaney, 470 U.S. 821 (1985).
    Sections 545.33, 545.35 and 563.93 are being amended to correct 
internal references.

Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub. 
L. 96-354, 5 U.S.C. 601), it is certified that this technical 
regulation will not have a significant economic impact on a substantial 
number of small savings associations, small service corporations or 
other small entities. It merely revises or removes existing 
inconsistencies or obsolete regulations.

Executive Order 12866

    The Acting Director has determined that this document is not a 
``significant regulatory action'' for purposes of Executive Order 
12866.

Paperwork Reduction Act

    The recordkeeping requirement contained in this proposed rule has 
been submitted to the Office of Management and Budget in accordance 
with the Paperwork Reduction Act (44 U.S.C. 3504(h)). The recordkeeping 
requirement contained in this rule is found at 12 CFR 563.170(c). The 
likely recordkeepers will be well- or adequately-capitalized savings 
associations who received a MACRO rating of 1, 2 or 3 in their most 
recent examinations. The estimated average reduction in burden 
associated with the increase in the number of institutions eligible to 
claim the exemption is .5 hours per recordkeeper. Comments concerning 
the accuracy of this burden estimate and suggestions for reducing this 
burden should be directed to the Office of Thrift Supervision, 1700 G 
Street, NW., Washington, DC 20552 and to the Office of Management and 
Budget, Paperwork Reduction Project (1550-0011), Washington, DC 20503.

List of Subjects

12 CFR Part 500

    Organization and functions (Government agencies), Reporting and 
recordkeeping requirements.

12 CFR Part 545

    Accounting, Consumer protection, Credit, Electronic funds 
transfers, Investments, Manufactured homes, Mortgages, Reporting and 
recordkeeping requirements, Savings associations.

12 CFR Parts 552 and 563b

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 563

    Accounting, Advertising, Crime, Currency, Investments, Mortgages, 
Reporting and recordkeeping requirements, Savings associations, 
Securities, Surety bonds.

12 CFR Part 574

    Administrative practice and procedure, Holding companies, Reporting 
and recordkeeping requirements, Savings associations, Securities.

    Accordingly, the Office of Thrift Supervision hereby proposes to 
amend subchapters A, C and D, chapter V, title 12 of the Code of 
Federal Regulations as set forth below.

SUBCHAPTER A--ORGANIZATION AND PROCEDURES

PART 500--ORGANIZATION AND CHANNELLING OF FUNCTIONS

    1. The authority citation for part 500 is revised to read as 
follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464.

    1a. Section 500.30 is amended by adding a sentence at the end of 
paragraph (a) to read as follows:


Sec. 500.30  General statement concerning procedures and forms.

    (a) * * * The Director may, for good cause and to the extent 
permitted by statute, waive the applicability of any provision of this 
chapter.
* * * * *

SUBCHAPTER C--REGULATIONS FOR FEDERAL SAVINGS ASSOCIATIONS

PART 545--OPERATIONS

    2. The authority citation for part 545 continues to read as 
follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.


Sec. 545.33  [Amended]

    3. Section 545.33 is amended by removing the phrase ``this 
paragraph (e)'' in the first sentence of the introductory text to 
paragraph (c), adding in lieu thereof the phrase ``this paragraph 
(c)''.


Sec. 545.35  [Amended]

    4. Section 545.35 is amended by removing the phrase ``this 
paragraph (d)'' in the second sentence of paragraph (b), adding in lieu 
thereof the phrase ``this paragraph (b)''.
    5. Section 545.81 is amended by revising paragraph (d) heading, 
paragraph (d)(1) introductory text, and paragraph (d)(2), and by adding 
paragraph (d) introductory text to read as follows:


Sec. 545.81  Operating subsidiaries.

* * * * *
    (d) Converting service corporations to operating subsidiaries. A 
service corporation that on November 30, 1992 was owned by a Federal 
savings association and engaged in activities permissible for a Federal 
savings association to undertake directly; is owned by that Federal 
savings association; engages solely in activities that a Federal 
savings association may undertake directly; and meets the control 
criteria set forth in this section, may be deemed to be an operating 
subsidiary provided that:
    (1) If the Federal savings association is eligible for ``expedited 
treatment'' under Sec. 516.3 of this chapter, the Federal savings 
association creates and maintains appropriate internal records. The 
record shall consist of a certification by the Board of Directors of 
the association containing:
* * * * *
    (2) If the Federal savings association is not eligible for 
``expedited treatment'' under Sec. 516.3 of this chapter, the Federal 
savings association follows the application procedures set forth in 
paragraph (c)(2) of this section and receives the OTS's prior written 
approval. The corporation will be deemed to be an operating subsidiary 
on the date of the OTS's written approval.
* * * * *
    5a. Section 545.141 is amended by removing and reserving paragraph 
(d); and by revising paragraph (e) to read as follows:


Sec. 545.141  Remote Service Units (RSUs).

* * * * *
    (e) Security. A Federal savings association shall protect 
electronic data against fraudulent alterations or disclosure. All RSUs 
shall meet the minimum security devices requirements of part 568 of 
this chapter.
* * * * *

PART 552--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL 
STOCK ASSOCIATIONS

    6. The authority citation for part 552 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.


Sec. 552.3  [Amended]

    7. Section 552.3 is amended by removing the paragraph designation 
for paragraph (a) and by removing the phrase ``fewer than seven'' in 
section 7 of the federal stock charter form, and adding in lieu thereof 
the phrase ``fewer than five''.
SUBCHAPTER D--REGULATIONS APPLICABLE TO ALL SAVINGS ASSOCIATIONS

PART 563--OPERATIONS

    8. The authority citation for part 563 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468, 1817, 
1828, 3806; 42 U.S.C. 4106; Public Law 102-242, sec. 306, 105 Stat. 
2236, 2355 (1991).

    9. Section 563.43 is amended by revising the introductory text and 
by adding a new paragraph (e) to read as follows:


Sec. 563.43  Loans by savings associations to their executive officers, 
directors and principal shareholders.

    Pursuant to 12 U.S.C. 1463(a) and 1468, a savings association, its 
subsidiaries and its insiders (as defined) shall be subject to the 
restrictions contained in subparts A and B of 12 CFR part 215, the 
Federal Reserve Board's Regulation O, with the exception of 12 CFR 
215.13, in the same manner and to the same extent as if the association 
were a bank and a member bank of the Federal Reserve System, except 
that:
* * * * *
    (e) References to the Reserve Bank or the Comptroller shall be 
deemed to include the Director of the Office of Thrift Supervision.


Sec. 563.93  [Amended]

    10. Section 563.93 is amended by removing the phrase ``paragraph 
(b)(13) of this section'' in paragraph (f)(1) and adding in lieu 
thereof the phrase ``paragraph (b)(11) of this section''.


Sec. 563.96  [Removed]

    11. Section 563.96 is removed.
    12. Section 563.170 is amended by revising paragraph (c)(10)(i)(B) 
to read as follows:


Sec. 563.170  Examinations and audits; appraisals; establishment and 
maintenance of records.

* * * * *
    (c) * * *
    (10) * * *
    (i) * * *
    (B) Eligible savings association means any savings association that 
is well- or adequately-capitalized, as defined in 12 CFR part 565 and 
was either:
    (1) Assigned a CAMEL rating of 1 or 2 in its most recent report of 
examination; or
    (2) Assigned a CAMEL rating of 3 in its most recent report of 
examination and has obtained written permission from the Regional 
Director to employ this exemption.
* * * * *

PART 563b--CONVERSIONS FROM MUTUAL TO STOCK FORM

    13. The authority citation for part 563b continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a; 15 U.S.C. 
78c, 78l, 78m, 78n, 78w.


Sec. 563b.3  [Amended]

    14. Section 563b.3 is amended by removing the phrase ``ratio of 
regulatory capital (as defined in 12 CFR 567.1) to total liabilities 
below 6%'' in paragraph (g)(3)(ii), and adding in lieu thereof the 
phrase ``prompt corrective action category (as defined in 12 CFR part 
565) to below adequately capitalized''.

PART 574--ACQUISITION OF CONTROL OF SAVINGS ASSOCIATIONS

    15. The authority citation for part 574 continues to read as 
follows:

    Authority: 12 U.S.C. 1467a, 1817, 1831i.


Sec. 574.5  [Amended]

    16. Section 574.5 is amended by removing the phrase ``and other 
reports'' from the section heading; by removing paragraph (b); by 
removing the phrase ``reports and'' from paragraph (c); and by 
redesignating paragraph (c) as new paragraph (b).

    Dated: October 1, 1993.

    By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.

    Editorial note: This document was received at the Office of the 
Federal Register on April 15, 1994.

[FR Doc. 94-9585 Filed 4-20-94; 8:45 am]
BILLING CODE 6720-01-P