[Federal Register Volume 60, Number 67 (Friday, April 7, 1995)]
[Rules and Regulations]
[Pages 17635-17636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8578]



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FEDERAL RESERVE SYSTEM

12 CFR Part 215

[Regulation O; Docket No. R-0874]


Loans to Executive Officers, Directors, and Principal 
Shareholders of Member Banks; Loans to Holding Companies and Affiliates

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board is revising Regulation O to implement a recent 
amendment to section 22(g) of the Federal Reserve Act, contained in the 
Riegle Community Development and Regulatory Improvement Act of 1994. 
The revision provides that prior approval of the board of directors is 
not required before a member bank may make a loan to an executive 
officer that is secured by a first lien on the executive officer's 
residence.

EFFECTIVE DATE: April 7, 1995.

FOR FURTHER INFORMATION CONTACT: Gordon Miller, Attorney (202/452-
2534), Legal Division, Board of Governors of the Federal Reserve 
System. For the hearing impaired only, Telecommunications Device for 
the Deaf (TDD), Dorothea Thompson (202/452-3544).

SUPPLEMENTARY INFORMATION

Background

    The Riegle Community Development and Regulatory Improvement Act of 
1994 (CDR Act), Pub. L. 103-325, 108 Stat. 2160 (1994), effective 
September 23, 1994, amended section 22(g) of the Federal Reserve Act, 
12 U.S.C. 375a, to eliminate the requirement that prior approval of the 
board of directors be granted before a member bank may make a loan to 
an executive officer of the member bank that is secured by a first lien 
on the executive officer's residence. Such loans remain subject to the 
general requirement for prior approval under section 22(h) of the 
Federal Reserve Act. See 12 U.S.C. 375b(3); 12 CFR 215.4(b). The Board 
is revising Regulation O (12 CFR Part 215), effective April 7, 1995, to 
conform to the amendment.

 Need for Final Rule Without Comment

    The elimination of the prior approval requirement for loans to an 
executive officer secured by a first lien on the executive officer's 
residence was effective immediately upon enactment of the CDR Act, and 
required no action on the part of the Board to take effect. The Board 
therefore finds that it is [[Page 17636]] necessary to revise 
Regulation O in order to eliminate a requirement that is superseded by 
the CDR Act, and to clarify that member banks may take advantage of the 
recent amendment to section 22(g) of the Federal Reserve Act.
    The Board, for good cause, finds that the notice and public comment 
procedure normally required is impractical, unnecessary, and contrary 
to the public interest under 5 U.S.C. 553(b)(B). The Board further 
finds under 5 U.S.C. 553(d)(1) that the final rule is a substantive 
rule that relieves a restriction on lending and therefore is making the 
final rule effective on April 7, 1995, without regard for the 30-day 
period provided for in 5 U.S.C. 553(d).

Final Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an 
agency to publish a final regulatory flexibility analysis at the time 
it promulgates a final rule. One of the requirements of a final 
regulatory flexibility analysis, a succinct statement of the need for, 
and objectives of, the final rule (5 U.S.C. 604(a)(1)), is contained in 
the supplementary information above. For the reasons stated above 
concerning the need for public comment, the Board has not sought public 
comment on the final rule, and the Board has not considered any 
alternatives to the final rule.

Paperwork Reduction Act
    In accordance with the Paperwork Reduction Act of 1980, 44 U.S.C. 
3507, and 5 CFR 1320.130, the Board, under authority delegated by the 
Office of Management and Budget, has reviewed its amendments to 
Regulation O. The Board has determined that its final rule imposes no 
additional reporting or recordkeeping requirements, and that there are 
no relevant federal rules that duplicate, overlap, or conflict with the 
proposed rule. The final rule will apply to all member banks, 
regardless of size. The final rule should not have a negative economic 
impact on small institutions. Instead, the rule should relieve the 
regulatory burden on all member banks.

List of Subjects in 12 CFR Part 215

    Credit, Federal Reserve System, Penalties, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, the Board is amending 12 
CFR Part 215, as set forth below:

PART 215--LOANS TO EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL 
SHAREHOLDERS OF MEMBER BANKS (REGULATION O)

    1. The authority citation for part 215 continues to read as 
follows:

    Authority: 12 U.S.C. 248(i), 375a(10), 375b(9) and (10), 
1817(k)(3) and 1972(2)(G)(ii); Pub. L. 102-242, 105 Stat. 2236.

    2. In Sec. 215.5, paragraph (c)(2) introductory text is revised to 
read as follows:


Sec. 215.5  Additional restrictions on loans to executive officers of 
member banks.

* * * * *
    (c) * * *
    (2) In any amount to finance or refinance the purchase, 
construction, maintenance, or improvement of a residence of the 
executive officer, provided:
* * * * *
    By order of the Board of Governors of the Federal Reserve 
System, April 3, 1995.
William W. Wiles,
Secretary of the Board.
[FR Doc. 95-8578 Filed 4-6-95; 8:45 am]
BILLING CODE 6210-01-P