[Federal Register Volume 59, Number 205 (Tuesday, October 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26150]


[[Page Unknown]]

[Federal Register: October 25, 1994]


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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 500, 506, 508, 545, 552, 558, 563, 564, 574, 590

[No. 94-166]

 

Miscellaneous Technical Amendments

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Thrift Supervision (OTS) is adopting several 
technical corrections and clarifications to its regulations on home 
loans and other real estate loans, hearings, operating subsidiaries, 
appraisals, interest rate risk management procedures, and its 
incorporation and standard conversion regulations. The OTS is also 
amending its insider transactions rule and removing or revising 
obsolete or superseded provisions concerning investment limitations, 
stock ownership, conservatorships, and remote service units. Finally, 
the agency is adding a waiver provision affecting regulations that are 
not statutorily mandated.

EFFECTIVE DATE: January 1, 1995.

FOR FURTHER INFORMATION CONTACT: Elissa Schwartz, Senior Paralegal, 
(202) 906-7908, 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: On April 21, 1994, the Office of Thrift 
Supervision (OTS) proposed several technical corrections to revise, 
clarify, or remove obsolete or ambiguous regulations.\1\
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    \1\59 FR 18979 (April 21, 1994).
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    The agency received three comments in response to the proposal. Two 
comments were submitted by trade associations and one comment was 
submitted by a private law firm. All of the commenters supported the 
proposal.

I. Amendments Described in April 21 Proposal

    Today, the OTS is adopting the amendments in the proposal, as 
described below.

Stock Loans

    Section 205 of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 (FDICIA)\2\ amended section 7(j)(9) of the 
Federal Deposit Insurance Act and modified the reporting criteria and 
procedures of that section, thereby superseding existing section 
574.5(b) of OTS's regulations. Rather than amend section 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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    \2\Pub. L. 102-242, 105 Stat. 2236 (1991).
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Directors

    Through its final rule on regulatory review,\3\ 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 section 552.3, which was 
overlooked in the earlier rulemaking, is now being changed to conform 
with the new requirement.
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    \3\58 FR 4308 (Jan. 14, 1993).
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Operating Subsidiaries

    The OTS is adding a clarifying technical amendment restructuring 
section 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 1970,4 as revised by section 306(j) of the 
Federal Deposit Insurance Corporation Improvement Act of 1991 
(FDICIA),5 the OTS is amending 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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    \4\12 U.S.C. 1972(2)(H)(i).
    \5\Pub. L. 102-242, 105 Stat. 2359.
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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, section 563.96 is deleted as unnecessary.
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    \6\57 FR 60086 (Dec. 18, 1992).
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Loan Documentation

    The OTS is amending its interim final loan documentation regulation 
to broaden eligibility to any institution that was assigned a CAMEL 
rating of 3 in its most recent report of examination and that has 
obtained written permission from its Regional Director to employ the 
exemption.

Remote Service Units

    Section 545.141(d), which addresses privacy of account data 
concerning an RSU account, is deleted because 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 
consumers' interests in this area. Second, the OTS is revising section 
545.141(e) to reflect earlier revisions to 12 CFR Part 568, ``Minimum 
Security Devices.''

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 revised to correct 
internal references.

II. Technical Amendment to Service Corporation Rules

    One of the commenters suggested an additional amendment that OTS 
believes has merit. As required by section 18(m) of the Federal Deposit 
Insurance Act,\7\ the OTS's service corporation regulation, 12 CFR 
545.74, requires a Federal savings association to give the OTS and the 
Federal Deposit Insurance Corporation (FDIC) 30 days prior notice 
before either establishing a new service corporation or engaging in a 
new activity through an existing service corporation.\8\ That same 
statutory provision exempts Federal savings banks chartered before 
October 15, 1982. An earlier regulatory amendment inadvertently removed 
the reference to this exemption.\9\ The OTS is taking this opportunity 
to reinstate the regulatory exemption as it was adopted in April, 
1992.\10\
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    \7\12 U.S.C. 1828(m).
    \8\12 CFR 545.74(b)(2).
    \9\Operating Subsidiaries and Service Corporations Final Rule, 
57 FR 48949 (October 29, 1992).
    \10\Applications Restructuring Final Rule, 57 FR 14340 (April 
20, 1992).
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III. Additional Technical Amendments

    In addition to the amendments set forth in the proposal, several 
technical revisions are being made to other OTS regulations. The agency 
finds good cause pursuant to 5 U.S.C. 553 to adopt these amendments 
without public notice and comment because of their purely technical and 
clarifying nature. First, erroneous cross-references and obsolete 
titles have been removed from the service corporation regulations. 
Further erroneous cross-references have been corrected in (1) the 
hearing rules at section 508.13, (2) section 564.4 of the appraisal 
rule, and (3) the interest rate risk management procedures at section 
563.176. Third, the agency's regulations setting forth procedures to be 
followed in taking possession of a savings association that has been 
placed into conservatorship or receivership have been modified. Fourth, 
the authority citation for part 590 is being corrected. Lastly, a 
codification correction is being made to the standard conversion 
regulations, in addition to the proposed amendment to those 
regulations.

IV. 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.

V. Executive Order 12866

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

VI. Paperwork Reduction Act

    The recordkeeping requirement contained in this final rule has been 
submitted to and approved by the Office of Management and Budget in 
accordance with the requirements of the Paperwork Reduction Act (44 
U.S.C. 3504(h)) under Control No. 1550-0083. 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 CAMEL rating of 1, 2 or 3 in their most 
recent examinations.
    Comments concerning the collection of information under this final 
rule should be directed to the Office of Management and Budget, 
Paperwork Reduction Project (1550-0083), Washington, DC 20503, with 
copies to the Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552.

List of Subjects

12 CFR Part 500

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

12 CFR Part 506

    Reporting and recordkeeping requirements.

12 CFR Part 508

    Administrative practice and procedure, Crime, Savings associations.

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

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 558

    Savings associations.

12 CFR Part 563

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

12 CFR Part 564

    Appraisals, Mortgages, Real estate appraisal, Reporting and 
recordkeeping requirements, Savings associations.

12 CFR Part 574

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

12 CFR Part 590

    Banks, banking, Loan programs--housing and community development, 
Manufactured homes, Mortgages, Savings associations.

    Accordingly, the Office of Thrift Supervision hereby amends 
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 CHANNELING OF FUNCTIONS

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

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

    2. Section 500.30 is amended by adding a sixth 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.
* * * * *

PART 506--INFORMATION COLLECTION REQUIREMENTS UNDER THE PAPERWORK 
REDUCTION ACT

    3. The authority citation for part 506 continues to read as 
follows:

    Authority: 44 U.S.C. 3501 et seq.

    4. Section 506.1 is amended by adding in numerical order one new 
entry to the table in paragraph (b) to read as follows:


Sec. 506.1  OMB control numbers assigned pursuant to the Paperwork 
Reduction Act.

* * * * *
    (b) Display. 

                                                                        
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                                                             Current OMB
   12 CFR part or section where identified and described     control No.
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                                  *****                                 
563.170(c).................................................    1550-0083
                                                                        
                                 *****                                  
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PART 508--REMOVALS, SUSPENSIONS, AND PROHIBITIONS WHERE A CRIME IS 
CHARGED OR PROVEN

    5. The authority citation for part 508 is revised to read as 
follows:

    Authority: 12 U.S.C. 1464, 1818.


Sec. 508.13   [Amended]

    6. Section 508.13 is amended by removing the phrase ``Sec. 509.39 
of this subchapter'' in paragraph (b), and by adding in lieu thereof 
the phrase ``Sec. 509.38 of this subchapter''.

SUBCHAPTER C--REGULATIONS FOR FEDERAL SAVINGS ASSOCIATIONS

PART 545--OPERATIONS

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

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


Sec. 545.33   [Amended]

    8. 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]

    9. 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)''.


Sec. 545.74   [Amended]

    10. Section 545.74 is amended by removing the phrase ``The 
association'' in paragraph (b)(2) and by adding in lieu thereof the 
phrase ``Except as provided in 12 U.S.C. 1828(m)(5), every Federal 
savings association''; by removing the phrase ``section 302(d)'' in 
paragraph (c)(5)(v) and by adding in lieu thereof the phrase ``section 
301(d)''; and by removing the phrase ``District Director'' in paragraph 
(d)(1)(iv) and by adding in lieu thereof the word ``Office''.
    11. Section 545.81 is amended by revising the heading of paragraph 
(d), by revising paragraphs (d)(1) introductory text and (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.
* * * * *
    12. 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

    13. 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]

    14. 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, adding in lieu thereof the 
phrase ``fewer than five''.

PART 558--POSSESSION BY CONSERVATORS AND RECEIVERS FOR FEDERAL AND 
STATE SAVINGS ASSOCIATIONS

    15. The authority citation for part 558 continues to read as 
follows:

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

    16. Section 558.1 is amended by removing the word ``and'' found 
between the words ``association'' and ``in'' in paragraph (a); and by 
revising paragraph (b)(6) to read as follows:


Sec. 558.1   Procedure upon taking possession.

* * * * *
    (b) * * *
    (6) Post a notice on the door of the principal and other offices of 
the savings association in the form prescribed by the Director of the 
OTS.
* * * * *
    17. Section 558.2 is revised to read as follows:


Sec. 558.2   Notice of appointment.

    If the Director of the OTS appoints a conservator or receiver under 
this part, notice of the appointment shall be filed immediately for 
publication in the Federal Register.
SUBCHAPTER D--REGULATIONS APPLICABLE TO ALL SAVINGS ASSOCIATIONS

PART 563--OPERATIONS

    18. The authority citation for part 563 is revised to read as 
follows:
    Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
1817, 1828, 3806; 42 U.S.C. 4106.
    19. Section 563.43 is amended by revising the introductory text, by 
removing the word ``and'' at the end of paragraph (c), by removing the 
period at the end of paragraph (d) and adding in lieu thereof ``; and'' 
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 12 CFR Part 215, subparts A and B of 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]

    20. 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]

    21. Section 563.96 is removed.
    22. 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.
* * * * *


Sec. 563.176  [Amended]

    23. Section 563.176 is amended by removing paragraph (e).

PART 564--APPRAISALS

    24. The authority citation for part 564 continues to read as 
follows:

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


Sec. 564.8  [Amended]

    25. Section 564.8 is amended by removing the phrase 
``Sec. 564.4(a)(2) through (a)(14)'' in the introductory text of 
paragraph (d), and by adding in lieu thereof the phrase ``Sec. 564.4(b) 
through (d)''.

PART 574--ACQUISITION OF CONTROL OF SAVINGS ASSOCIATIONS

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

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


Sec. 574.5  [Amended]

    27. 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).
SUBCHAPTER G--REGULATIONS FOR FEDERALLY-RELATED MORTGAGE LOANS

PART 590--PREEMPTION OF STATE USURY LAWS

    28. The authority citation for part 590 is revised to read as 
follows:

    Authority: 12 U.S.C. 1735f-7a.

    Dated: September 9, 1994.

    By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 94-26150 Filed 10-24-94; 8:45 am]
BILLING CODE 6720-01-P