[Federal Register Volume 60, Number 166 (Monday, August 28, 1995)]
[Proposed Rules]
[Pages 44442-44449]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21160]



 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 60, No. 166 / Monday, August 28, 1995 / 
Proposed Rules  


[[Page 44442]]


DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 500, 504, 510, 515, 529, 533, 543, 545 552, 556, 562, 
563, 563d, 563g, 567, 571, 583, and 584

[No. 95-160]
RIN 1550-AA85


Regulatory Review

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Notice of proposed rulemaking; request for comment.

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SUMMARY: Pursuant to section 303(a) of the Community Development and 
Regulatory Improvement Act of 1994 (CDRIA) and the Regulatory 
Reinvention Initiative of the Vice President's National Performance 
Review, the Office of Thrift Supervision (OTS) has reviewed chapter V 
of the Code of Federal Regulations (CFR), where OTS regulations are 
codified. OTS reviewed each regulation to determine whether it is 
necessary, imposes the least possible burden consistent with safety and 
soundness, and is written in a clear, straightforward manner.
    As a result of this review, OTS has identified a number of 
regulations that can be eliminated as duplicative or unnecessary. The 
agency is today proposing to remove those sections from its 
regulations. OTS has also identified a number of ways in which its 
regulations could be streamlined or reorganized into a more user-
friendly document. Before proposing such structural changes, however, 
the agency is today requesting comment on whether such changes would 
sufficiently improve the CFR to merit the effort to make the changes 
and the effort required from the industry to become familiar with the 
new structure.

DATES: Comments must be received on or before October 27, 1995.

ADDRESSES: Send comments to Chief, Dissemination Branch, Records 
Management and Information Policy, Office of Thrift Supervision, 1700 G 
Street NW., Washington, D.C. 20552, Attention Docket No. 95-160. These 
submissions may be hand-delivered to 1700 G Street NW., from 9:00 a.m. 
to 5:00 p.m. on business days; they may be sent by facsimile 
transmission to FAX Number (202) 906-7755. Comments will be available 
for inspection at 1700 G Street NW., from 1:00 p.m. until 4:00 p.m. on 
business days.

FOR FURTHER INFORMATION CONTACT: Therese L. Monahan, Project Manager, 
Thrift Policy (202) 906-5740; or Valerie J. Lithotomos, Counsel 
(Banking and Finance), Regulations and Legislation Division, Chief 
Counsel's Office, (202) 906-6439, Office of Thrift Supervision, 1700 G 
Street NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION:

I. Background

    Today, the OTS is publishing the first in a series of proposals to 
streamline, update, and generally improve its regulations. The OTS 
conducted a comprehensive review of its regulations in the spring of 
1995 pursuant to section 303 of CDRIA and the Administration's 
Reinvention Initiative.1 In response to the Administration's 
mandate to create grass roots partnerships and the desire to negotiate, 
not dictate rules, OTS sought specific industry comments on regulatory 
burden through town meetings and industry roundtable meetings held by 
the Acting Director and Regional Directors. In addition, OTS obtained 
further industry input from America's Community Bankers (ACB).2 
The ACB surveyed some of its members and offered a summary of survey 
findings to the OTS. ACB's survey collected industry feedback on OTS's 
regulatory structure and various communication vehicles used to 
disseminate OTS interpretations and guidance. ACB reported a generally 
favorable response to OTS's overall plan to streamline and reorganize 
its regulations in order to reduce regulatory burden.

    \1\ See the Department of Treasury's Summary Report on the 
President's Regulatory Reform Initiatives.
    \2\ America's Community Bankers is a trade association 
representing 2,000 savings associations and community financial 
institutions and related business firms.
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    OTS Staff in both the Washington and Regional Offices reviewed the 
regulations and policy statements contained in chapter V of the CFR to 
``streamline and modify those regulations and policies in order to 
improve efficiency, reduce unnecessary costs, * * * eliminate 
unwarranted constraints on credit availability [and] remove 
inconsistencies and outmoded and duplicative requirements.'' 3

    \3\ Section 303 of CDRIA, 12 U.S.C. 4803(a)(1)(A), (B).
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    Preliminary staff recommendations for improvements to the 
regulations were based on the following criteria:
     Is the regulation current?
     Can the regulation be eliminated without endangering 
safety and soundness, diminishing consumer protection, or violating 
statutory requirements?
     Is the regulation's subject matter more suited for a 
policy statement?
     Is the regulation consistent with the regulations of the 
other federal banking agencies?
     Can the regulation be understood without consulting an 
attorney?
     Is the regulation written as a stand-alone regulation, 
without confusing cross-references?
     Is the regulation required by statute?
     Are the regulations/parts/sections ordered in a logical 
fashion?
    This review identified a number of ways in which OTS's regulations 
could be improved. The agency is undertaking a five-step process to 
improve its regulations. Today's proposal reflects the first two steps 
of that process.
    First, the agency seeks public comment on a number of potential 
ways OTS could streamline and restructure its regulations to make them 
more user-friendly. These potential improvements, discussed in Section 
II of this preamble, have been suggested by OTS Washington and Regional 
staff. OTS is particularly interested in whether such reorganization 
and restructuring would make OTS's regulations easier for the public to 
use.
    Second, the proposal seeks comment on the deletion of a number of 
specific parts and sections the agency has identified as outdated or 
unnecessary. These regulations are discussed more fully in Section III 
of this preamble. The agency also seeks comment on some technical 
modifications to its regulations, including changes made to update 
cross-references and definitions.

[[Page 44443]]

    As a third step in this reinvention of regulations, the agency 
expects to issue over the next year a series of more substantive 
proposals to make more significant changes in a number of key areas of 
its regulations, including regulations governing lending, subsidiaries, 
charter and by-laws, insurance, preemption, and adjustable-rate 
mortgages. Comments received on the organizational changes proposed 
today will also be considered in each of those more substantive 
reviews.
    The fourth step in this reinvention is OTS's participation in the 
interagency review of its regulations, along with those of the other 
federal banking agencies, with a view to implementing section 303(a)(2) 
of CDRIA by making regulations and guidance implementing common 
statutory provisions and supervisory policies more uniform. This review 
is taking place under the auspices of the Federal Financial 
Institutions Examination Council.
    Finally, the agency has identified some regulations that would 
require statutory changes before the regulation could be removed or 
updated. These include removing the liquidity regulation at part 566, 
which is required by section 6 of the HOLA, removing the requirement 
that Federal savings associations maintain membership in a Federal Home 
Loan Bank, which is required by section 5(f) of the HOLA, and providing 
additional lending flexibility under the Qualified Thrift Lender test, 
which is required by section 10(m) of the HOLA. The agency has 
submitted potential legislative changes on these and other burdensome 
statutory provisions to the Congress.

II. Request for Comment on Possible Reorganization of OTS 
Regulations

    OTS's current regulatory structure has evolved over the years in 
response to sweeping statutory changes and changes in policy direction 
based on the difference in the general condition and makeup of the 
thrift industry. When chapter V of the CFR is viewed as a whole, some 
subject areas are addressed in multiple areas of the regulations. For 
example, a savings association considering whether to create a service 
corporation or an operating subsidiary would currently, at a minimum, 
look at Secs. 545.74, 545.81, 563.37, 563.41, and 571.21. An 
institution considering a merger with another depository institution 
might have to review regulations in parts 546, 552, and 563.
    Historically, OTS's predecessor agency, the Federal Home Loan Bank 
Board (FHLBB), looked at the source of statutory authority and charter 
type of affected institutions in organizing subchapters of chapter V of 
the CFR. Regulations in former subchapter B (12 CFR 520 et seq.) were 
promulgated pursuant to the FHLBB's authority under the Federal Home 
Loan Bank Act (FHLBA); regulations in subchapter C (12 CFR 540 et seq.) 
were promulgated under the FHLBB's chartering authority for federal 
savings associations under the Home Owner's Loan Act (HOLA); and 
regulations in subchapter D (12 CFR 560 et seq.) were promulgated under 
the FHLBB's authority as operating head of the Federal Savings and Loan 
Insurance Corporation (FSLIC) under title IV of the National Housing 
Act (NHA) for all FSLIC-insured institutions.
    The Financial Institutions Reform, Recovery, and Enforcement Act 
(FIRREA) created the OTS in 1989 and substantially overhauled the 
statutes governing the regulation of savings associations. Title IV of 
the NHA was repealed and some authorities under which the FHLBB had 
issued regulations pursuant to the FHLBA and title IV of the NHA were 
transferred to the HOLA, which itself was revised. The HOLA now serves 
as the primary statutory authority for OTS regulation of all savings 
associations, regardless of charter.
    In October, 1989, OTS, the Federal Deposit Insurance Corporation 
(FDIC), and the Federal Housing Finance Board divided up the 
regulations of the former FHLBB and FSLIC among themselves in 
accordance with their new statutory responsibilities. In November, 
1989, OTS published a recodification of its regulations. This 
recodification reflected some reorganization of the regulations into a 
more user-friendly format, but because of time constraints did not 
include a total structural overhaul.
    From January, 1992 until January, 1993, OTS reviewed and revised 
its regulations with a view to removing outdated and unnecessary 
regulations. It held public hearings in February, 1992 and requested 
industry comments on regulations that could be removed or modified. It 
published a notice of proposed rulemaking in September, 1992 and 
adopted a final regulation in January, 1993 that removed a number of 
obsolete or redundant regulations. The agency did not propose as part 
of that process to restructure the regulations, remove regulations that 
duplicated statutory authority, or revise regulations setting forth 
certain implied powers. At that time, the agency believed that such 
changes could result in more confusion than benefit for those subject 
to OTS regulations.4

    \4\ See 57 FR 40350 (September 3, 1992).
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    If the OTS were drafting its regulations on a totally clean slate, 
the regulations would not be organized as they are now. However, the 
cost of changing an existing and familiar structure could exceed the 
benefit derived from creating a more logical organizational structure. 
As part of the substantive review of major areas of OTS regulations 
such as lending, subsidiaries, and corporate governance, OTS is 
considering, and seeks public input on, how much restructuring related 
regulations would help CFR users. Some specific types of reorganization 
that would cut across subject areas are set forth below.
A. Should OTS Consolidate Common Definitions of General Applicability 
now in Parts 541, 561, 563, and 583 in a new Part 501?

1. Background
    Currently, several subchapters of OTS's regulations have 
definitional parts. In the 1989 recodification of OTS's regulations, 
the agency removed duplicative definitions from parts 541 (definitional 
part for subchapter C) and 561 (definitional part for subchapter D) and 
clarified that definitions in each of those parts applied to both 
subchapters unless a specific regulation provided otherwise. Subchapter 
F, the regulations for savings and loan holding companies, has its own 
definitional part, part 583, with some duplicative, some unique, and 
some slightly different definitions.
    Other parts and sections, such as part 564 (Appraisals), part 567 
(Capital), and Sec. 563.51 (Qualified Thrift Lender), contain 
definitions that generally apply only to that part or section. Recent 
OTS regulations have included definitions for new terms in the revised 
section, in part because this is the common practice at the other 
banking agencies. Some of these section- or part-specific regulations 
have themselves been cross-referenced in other sections. For example, 
the agency's transactions-with-affiliates regulation, 12 CFR 563.41, 
defines ``subsidiary'' by referring to Sec. 567.1(dd), the capital 
regulation, but defines ``savings association'' by referring to 
Sec. 583.21, the definitions used for savings and loan holding 
companies.
2. Possible Revision
    The OTS is considering consolidating all definitions used or 
referenced in more than one part or section into a new part 501. 
Definitions used only in a particular part or section would remain with 
that unit. Placing all common definitions in a new part 501 would 
significantly simplify the structure of 

[[Page 44444]]
OTS's regulations. We expect that it may save time for users searching 
for a definition and trying to determine the regulations to which the 
definition applies. It may also minimize confusion resulting from 
duplicative or conflicting definitions of the same term and reduce the 
amount of cross-referencing needed. As with any structural change, 
users might experience initial confusion until they became familiar 
with the new structure. When OTS did a similar consolidation of 
definitions on a smaller scale in 1989, however, no major problems were 
reported.

B. Should OTS Consolidate the Remaining Safety and Soundness 
Regulations in Part 545 Into Part 563?

1. Background
    In 1989, FIRREA amended both the HOLA and the Federal Deposit 
Insurance Act (FDIA) in a number of ways that subjected both federally 
and state chartered savings associations to similar requirements. 
Additional statutory changes in the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (FDICIA) have resulted in more 
similar authority and safety-and-soundness-based restrictions for state 
and federally chartered entities. Under section 28 of the FDIA, the 
type and amount of activities in which state-chartered savings 
associations may engage without specific FDIC approval are tied more 
closely to the types and levels of activities permitted for federal 
savings associations.
    As a result of these statutory changes and a general effort by OTS 
to remove duplicative regulations and apply regulations consistently to 
institutions regardless of charter type, most new safety-and-soundness-
based regulations have been placed in subchapter D, usually in part 
563. Additionally, over the years a number of regulations found in 
parts 545 and 563 have been written to include cross-references to 
regulations found in the other part. For example, definitional parts 
541 and 561 each already cross-reference their counterpart. The real 
estate regulation for federal savings associations at Sec. 545.32 
cross-references the agency's general real estate lending regulations 
at Secs. 563.35(d), 563.100, and 563.101. Similarly, the regulation on 
high loan-to-value loans by all savings associations found at 
Sec. 563.37 cross-references restrictions found in the federal savings 
association regulations at Sec. 545.38.
2. Possible Revisions
    The OTS seeks input from the industry and other users of its 
regulations on whether its regulations would be improved by 
consolidating all safety-and-soundness-based regulations into part 563. 
The purpose of this consolidation would be to simplify and streamline 
the structure of OTS regulations, not to impose additional restrictions 
on state-chartered institutions. If institutions find the current 
structure familiar and workable, such a consolidation could create an 
unnecessary burden. The agency is also concerned that such a 
consolidation could be perceived as an attempt to increase the 
regulatory burden on state-chartered associations, rather than an 
attempt to consolidate requirements applicable to savings associations 
regardless of their charters that are currently scattered in several 
subchapters of chapter V.
    As part of today's proposal, the agency is proposing to eliminate a 
number of regulations applicable to federal savings associations that 
merely cross-reference or duplicate requirements found in part 563. If 
OTS decided to consolidate the regulations further, it would first 
review the targeted regulations in part 545 to determine which safety-
and-soundness-based regulations or portions of those regulations 
originally applicable to federal savings associations were appropriate 
for all savings associations. Any remaining restrictions found to be 
unnecessary would be removed from the regulations before the 
regulations were consolidated into part 563.

C. Should OTS's Regulations Comprehensively Codify Thrift Powers or 
Should OTS Delete Regulations That Only Repeat Statutory Authority or 
set Forth an Implied Power?

1. Background
    Chapter V of the CFR, where OTS's regulations are codified, is 
inconsistent. It repeats some, but not all, statutory powers and 
restrictions and some, but not all, implied powers and restrictions on 
those powers. This has led to confusion.
    In discussing regulations with OTS field personnel, some 
institutions have indicated that they believe that chapter V of the CFR 
is a self-contained document. Others, while recognizing that Chapter V 
is not currently the sole repository of information on thrift powers, 
believe that it would be more useful if it codified all implied and 
statutory powers. Still others believe that Chapter V should be 
simplified by removing all regulations that merely repeat statutory 
authority.
    a. Statutory powers. Over the years, the OTS and its predecessor, 
the FHLBB, have generally omitted or removed regulations that do no 
more than repeat statutory language or cite statutory authority in the 
course of other regulatory burden reduction projects. The agency's view 
has been that removing duplicative language from the regulations can 
minimize necessary updating when Congress amends a statute.
    Currently, OTS has specific regulations and portions of regulations 
that repeat statutory language (e.g., Secs. 545.44 (mortgage 
transactions with the Federal Home Loan Mortgage Corporation) and 584.3 
(transactions with affiliates)). Other regulations repeat statutory 
authority in one paragraph and then set limitations on that authority 
in succeeding paragraphs (e.g., Secs. 545.39 (loans guaranteed under 
the Foreign Assistance Act) and 545.46 (commercial loans)).
    b. Implied powers. Some OTS regulations set forth an implied power 
of savings associations (a power that is incidental to the exercise of 
powers expressly set forth in statutes or regulations), such as 
Secs. 545.17 (funds transfer services) and 556.12 (deposit assurance of 
direct deposit of Social Security payments). Other implied powers of 
savings associations, and interpretations of the scope of express 
statutory powers, have not been codified as regulations. Savings 
associations must look to legal opinions or regulatory handbooks for 
information on these powers. This reflects the factually specific 
manner in which issues on implied powers are usually first presented to 
the agency. OTS's regulations have never completely reflected all of 
savings associations' implied powers or restrictions on these powers.
2. Proposed revisions
    OTS is considering which of two diametrically opposed approaches 
might result in a more useful Chapter V.
    The first alternative would be to include all statutory and implied 
powers of thrifts in OTS regulations. This would create a 
comprehensive, but significantly longer, regulatory document. A truly 
self-contained document that includes a complete recitation of both 
statutory and implied powers might be a valuable resource, but could 
become quickly outdated as statutes are amended. Given the evolving 
nature of the market for financial services, a comprehensive listing of 
implied powers in the regulations would definitely require frequent 
updating.
    The second alternative would be to eliminate all regulations that 
merely 

[[Page 44445]]
repeat statutory powers or that list implied powers. Handbooks or legal 
opinions would provide a more complete discussion. This would decrease 
total CFR pages and streamline the regulations. A variation of this 
alternative might be to increase specific citations to statutory 
authority in the regulations but remove repetitions of statutory 
language. A regulation could set forth the existence of implied powers 
and the standards used to determine those powers.
    Pending public comment on these alternatives, today's proposal 
takes a middle position. It suggests deletion of several regulations 
that merely refer to statutory authority without any additional 
regulatory interpretation. Today's proposal would not, however, remove 
those regulations that contain paragraphs setting forth both statutory 
authority and regulatory restrictions on that authority because the OTS 
seeks public input on whether this format is more helpful than 
burdensome. The proposal also neither removes the regulations listing 
certain implied powers of savings associations nor adds regulations 
setting forth other implied powers.

D. Should Policy Statements in Parts 556 and 571 Be Deleted and Recast 
Either as Regulations or Placed as Guidance Placed in the Appropriate 
Regulatory Handbook?

1. Background
    Parts 556 and 571 of the CFR contain policy statements adopted by 
OTS or its predecessor agency, the FHLBB, after notice and comment 
rulemaking. The original concept behind codifying policy statements in 
the CFR was to make these agency interpretations and guidance readily 
available to savings associations. Since 1989, however, OTS has been 
gradually eliminating policy statements from these parts and 
incorporating their substance either into regulations after notice and 
comment rulemaking or as guidance in regulatory handbooks. These 
handbooks are provided to all savings associations and are available to 
others by subscription. The handbooks compile information from various 
sources on current agency interpretations and guidance and contain more 
detail than the CFR.
2. Possible Revisions
    One alternative is to review each of the policy statements 
currently appearing in the CFR and determine, after notice and comment, 
whether it should be adopted as a regulation. Those not adopted as 
regulations would be placed as guidance in the appropriate regulatory 
handbooks. This would streamline the CFR and aid in providing a more 
concise and less confusing organizational structure.
    Another alternative would be to continue to include some policy 
statements in Chapter V of the CFR where the agency believed that this 
would be the best vehicle for acquainting savings associations and 
other CFR users of the agency's most significant interpretations. The 
agency seeks comments on what criteria would be most useful in choosing 
which policy statements to codify, if this approach were chosen.
E. What is the Best Method of Communicating Different Types of 
Information, Guidance, Policies, Restrictions, and Requirements?

1. Background
    Savings associations that look only at the CFR for information on 
OTS interpretive rules, policies, procedures, and guidance have barely 
scratched the surface of available materials. New issues arise and are 
addressed in fact-specific situations. Some are first presented by a 
request for a legal opinion, others through an on-site examination, 
others in discussions with an interagency task force. OTS also 
communicates policy positions via Regulatory Handbooks, Transmittals, 
Thrift and Regulatory Bulletins, legal opinions, Letters to Chief 
Executive Officers (CEO Letters), preambles to regulations, 
instructions to the Thrift Financial Report, press releases, and 
speeches.
    There are vast differences in the types and time sensitivity of 
information communicated. It is not likely that the agency could ever 
adopt just one form of communication. However, the agency is striving 
to keep communications as clear, simple, and timely as possible.
    Because not all methods of communication reach all of OTS's 
audiences equally, confusion has arisen in some rapidly developing 
areas. For example, OTS sent CEO Letters to savings associations 
notifying them of delays in implementation of the interest-rate risk 
component of the capital regulation while the agency developed an 
appeals process. Law firms who needed that information in preparing 
disclosure statements discussing capital requirements for those savings 
associations did not receive this information directly. Some 
discussions on the scope of regulations appear only in the preamble 
accompanying those regulations when they are published in the Federal 
Register, not in the CFR. The agency's communications on implied powers 
usually take the form of legal opinions, which are available through 
computerized legal databases that may not be regularly accessed by some 
savings associations.
    The agency has also heard complaints from some users that some of 
the more informal means of communication, such as press releases, 
speeches, and CEO letters are not indexed or numbered and are thus more 
difficult to identify and obtain after issuance.
2. Request for Comment in Developing Possible Revisions
    The agency is considering, and seeks public input on, establishing 
standards for which means of communication would be preferred for 
particular types of information. Among the criteria that could be used 
in determining the appropriate method would be: (1) The urgency of 
communicating the information; (2) the audience to be reached (both 
primary and secondary audiences); (3) whether industry or public input 
must be obtained through notice and comment rulemaking; and (4) whether 
the situation to be addressed is evolving, increasing the likelihood 
for changes in the agency's position. The agency is also considering 
whether there are more ways in which the agency can receive and make 
information available electronically.

III. Proposed Deletions and Modifications to Regulations

    Set forth below are regulations that OTS is proposing to delete 
because they are no longer useful. The OTS is also proposing to delete 
cross-references to sections that are being deleted.

A. Regulations To Be Removed or Modified Because of Obsolescence or 
Redundancy

1. Recordkeeping
    a. Statements of Condition (562.3). The OTS is proposing to remove 
the regulation requiring savings associations to publish an annual 
statement of condition in a newspaper and to make such ``counter 
statements'' available at each home and branch office. These 
requirements have proven burdensome and unnecessary. The newspaper 
publication requirement was added to parallel a statutory requirement 
that national banks publish such statements of condition. That 
requirement for national banks was repealed in 1994. The Acting 
Director of OTS waived the requirement for savings associations to make 
such publications in December, 1994.
    The agency has found that counter statements are not often used by 
savings 

[[Page 44446]]
association customers and duplicate information already available. The 
other federal banking agencies do not impose a similar requirement on 
the depository institutions they regulate. A savings association 
customer seeking such information may ask the savings association for 
it, or may obtain the information from the OTS.
    b. Filing and signature requirements (563g.5). The OTS proposes to 
decrease the required number of copies of an offering circular filed in 
connection with securities offerings under part 563g to reduce the 
regulatory burden and associated costs. The number of required copies 
of offering circulars would be reduced from 25 to 9.
2. Policy Statements (556.4, 556.6, 556.8, 556.9, 556.11, 556.14, 
556.15)
    As discussed above in Section II, the OTS is seeking comment on 
whether it should remove all of its policy statements from the CFR, 
adopting some as regulations after notice and comment and transferring 
others to guidance. As part of its review, the OTS has identified a 
number of policy statements that are either outdated, merely reflect 
current business practice, or otherwise provide no meaningful guidance 
beyond that contained in the regulations themselves. The agency is 
proposing to delete those statements. Section 556.4 (Insurance) 
duplicates sections 571.4 and 563.35. Section 556.8 (Suretyship) 
duplicates section 545.103; section 556.9 (Imposition of late charges 
and due-on-sale clauses) duplicates the contents of parts 590 and 591; 
section 556.11 (Prepayment penalty on mortgage loans) reiterates 
section 545.34(c); and section 556.14 (Chief executive officer of a 
branch office) duplicates information found in the model bylaws for 
Federal mutual associations. Section 556.6 (Savings accounts) is not 
totally consistent with Regulation DD,5 and is otherwise outdated. 
Section 556.15 (Drive-in and pedestrian facilities) contains some 
outdated provisions and otherwise merely reiterates common business 
practice.

    \5\ 12 CFR Part 230 (1995).
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3. Operational Regulations
    The OTS proposes to remove a number of obsolete or duplicative 
regulations addressing a variety of operational issues for savings 
associations.
    a. Electronic Fund Transfers (Part 533). Part 533 provides that 
electronic fund transfers by savings associations are subject to 
Regulation E, 12 CFR part 205 (1995). OTS proposes to delete this part 
in its entirety because it is unnecessary and may cause confusion. By 
its terms, Regulation E applies to consumer electronic funds transfers 
at all financial institutions, including savings associations. Other 
regulations that apply to all financial or depository institutions are 
not separately cross-referenced in OTS's regulations.
    b. Withdrawal requests (545.15). The OTS is proposing to remove 
this section because it imposes unnecessary restrictions.
    c. Issuance of mutual capital certificates (545.18); Issuance of 
net worth certificates (545.19); Borrowing, issuing obligations and 
giving security (545.20); Employment contracts (545.122); Negotiable 
order of withdrawal accounts authorized (563.8); and Form, return and 
maturity of securities (563.72). These sections are proposed for 
deletion because they either merely repeat that a savings association 
has the authority to do something that is authorized elsewhere or that 
the activity is subject to restrictions set forth in other regulations. 
Section 545.18 repeats authority found in section 5(b)(5) of the HOLA 
and refers to Sec. 563.74, which governs all mutual capital 
certificates issued by savings associations. Section 545.19 repeats 
authority found in section 13 of the FDIA. Section 545.20 repeats 
authority found in section 5(b) of the HOLA. Section 545.122 duplicates 
section 563.39. Section 563.8 repeats authority found in 12 U.S.C. 
1832. Section 563.72 merely reiterates that securities approved by OTS 
under other provisions are approved.
    d. Financial futures transactions (545.136) and Financial options 
transactions (545.137). These sections are proposed for deletion 
because they merely reiterate that federal savings associations may 
engage in these types of transactions subject to the limitations set 
forth in 12 CFR Part 563, Subpart F. The agency is separately reviewing 
Subpart F for potential future updating and revision.
    e. Limitation on transaction of business (552.2-4). This section is 
proposed for deletion because it merely reiterates that part 552 sets 
forth when companies may engage in business as a Federal stock 
association.
    f. Membership in a Federal Home Loan Bank (563.49). This section 
expired on April 19, 1995, and, thus, should be removed. Federal 
savings associations are still required to maintain FHLB membership by 
section 5(f) of the HOLA and the FHLBA.
4. Regulations on Savings and Loan Holding Companies and Affiliates
    a. Loans and other transactions with affiliates and subsidiaries 
(563.41(d)(1)). The statutory provisions limiting thrifts' full use of 
the sister bank and thrift exemption provisions of sections 23A and 23B 
of the Federal Reserve Act expired on December 31, 1994. OTS therefore 
proposes to remove this parallel regulatory provision.
    b. Transactions with affiliates (584.3). This section is proposed 
for deletion because it merely sets forth a statutory restriction 
without any regulatory interpretation or guidance.
    c. Penalty for loss of QTL status (584.6). This section is proposed 
for deletion because it duplicates the penalties stated in section 
563.52, which OTS proposes to amend to refer to the statutory 
penalties.
5. Organizational Revisions (Parts 500, 504, 515, and 529; Sections 
510.1, 510.3, 543.12, 563d.200.30, and 584.11)
    a. Simplification of Part 500. The OTS is proposing today to 
simplify part 500, which sets forth its statutory authority and 
organizational structure. The OTS proposes to delete sections 500.3, 
500.4, and 500.5 and incorporate them into the general statement of 
authority at Sec. 500.1. Because the current recitation of OTS's 
structure is out of date, the OTS proposes to delete sections 500.11 
through 500.17 and to modify section 500.10 accordingly. The OTS will 
publish a notice setting forth its current organizational structure. As 
that structure is modified in the future, revised notices will be 
published.
    b. National Security Information (Part 504). The OTS proposes to 
delete part 504 in its entirety. Part 504 was issued by the FHLBB, 
predecessor to the OTS, pursuant to the requirements of subpart E of 
Executive Order 12356, April 2, 1982 (Order). The Order applies to the 
Department of the Treasury, which has issued implementing regulations. 
These regulations apply to the OTS as a component part of the Treasury 
Department. Thus, the OTS proposes to delete this part because it is 
unnecessary.
    c. Use of Penalty Mail in the Location and Recovery of Missing 
Children (Part 515). The Department of Justice's Office of Juvenile 
Justice and Delinquency Prevention guidelines are promulgated pursuant 
to the authority of Sec. 3220(a)(1) of title 39 of the United States 
Code. Pursuant to Sec. 3220(a)(2), each ``executive department and 
independent establishment of the Government of the United States shall 
prescribe regulations under which penalty mail sent by such 

[[Page 44447]]
department or establishment may be used in conformance with the 
guidelines prescribed under paragraph (1).'' As a component of the 
Treasury Department, rather than itself an executive department or 
independent establishment, the OTS is subject to any regulations 
Treasury may adopt on this topic. Accordingly, OTS proposes to remove 
part 515.
    d. Nondiscrimination in Federally Assisted Programs (Part 529). The 
purpose of part 529 was to effectuate the provisions of title VI of the 
Civil Rights Act of 1964, which prohibits, among other things, 
discrimination in programs and activities receiving federal assistance. 
The OTS is not authorized to extend any federal financial assistance to 
any program or activity.
    This part was initially adopted by the FHLBB. The FHLBB established 
a Housing Opportunity Allowance Program in the early 1970's that 
provided federal assistance through the Federal Home Loan Banks to 
provide housing for low- and middle-income families. That program 
effectively ceased to exist in 1978. Thus, part 529 is unnecessary and 
the OTS proposes to delete it.
    e. Miscellaneous Organizational Regulations (Sections 510.1, 
510.3). Section 510.1 sets forth agency policy on ex parte 
communications in contested applications. Section 510.1 is proposed for 
deletion because it is confusing, not consistent with the 
Administrative Procedure Act (APA), and does not reflect current agency 
policy. This proposed deletion would not affect ex parte communications 
in adjudicative proceedings under the APA, which are governed by part 
509. OTS will review the procedures currently contained in Sec. 510.1 
and transfer any remaining relevant provisions to the Applications 
Processing Handbook. The OTS also proposes to delete section 510.3 
because it is unnecessary. The section simply repeats the obvious: 
organizational regulations of the OTS are to be read as a whole with 
other regulations of the agency.
    f. Bank Insurance Fund-insured Federal savings banks (543.12). This 
regulation merely repeats OTS's statutory authority under section 5(o) 
of the HOLA to issue a Federal charter to a former state-chartered 
savings bank that will maintain its deposit insurance by the Bank 
Insurance Fund. OTS proposes to delete the regulation.
    g. Delegation of authority to the Chief Counsel (563d.200-30 and 
563g.22). In order to provide greater organizational flexibility, the 
OTS has been removing specific delegations of authority from its 
regulations. Delegations of authority are now contained in Director's 
Orders and do not need to be codified in regulation. Therefore, OTS 
proposes to remove these regulations and issue the appropriate 
delegations in Director's Orders.
    h. Hearings (584.11). This regulation applies to hearings on 
applications to the OTS regarding savings and loan holding companies. 
The OTS is preparing a Thrift Bulletin setting forth the agency's 
current procedures for hearings or other appeals on all types of 
applications. Accordingly, the OTS proposes to remove Sec. 584.11.

B. Other Technical Amendments

1. Definition of Unimpaired Capital and Unimpaired Surplus (563.41 and 
563.43)
    In March, 1995, the OTS revised its definition of ``unimpaired 
capital and unimpaired surplus'' for purposes of its loans-to-one-
borrower regulation 6, 12 CFR 563.93, to follow the newly revised 
definition of ``capital and surplus'' promulgated by the Office of the 
Comptroller of the Currency (OCC) 7 for its lending limits 
regulation. Recently, the Board of Governors of the Federal Reserve 
System has proposed to adopt the OCC definition of capital and surplus 
for its insider lending regulations at Regulation O.8 To reduce 
confusion, OTS is today proposing to adopt the same definition of 
``unimpaired capital and surplus'' for transactions with affiliates and 
insider lending regulations as it adopted for the loans-to-one-borrower 
regulation. This will make these regulations consistent with the 
proposed change to the Federal Reserve Board definition.

    \6\ 60 FR 15861 (March 28, 1995), amending 12 CFR 563.93(b)(11).
    \7\ See 60 FR 8526 (February 15, 1995).
    \8\  60 FR 19869 (April 20, 1995).
---------------------------------------------------------------------------

2. Definition of Organization of Economic Cooperation and Development 
(OECD)-based country (567.1(p))
    The other federal banking agencies have proposed to modify the 
definition of ``OECD-based country'' in their capital regulations and 
guidelines to reflect a new standard for when the sovereign debt of a 
country would qualify for the lowest risk-weight category under the 
risk-based capital regulations.9 This proposed change is identical 
to that proposed by the other agencies. It would add a requirement that 
in order to qualify for the lowest risk weight category, such sovereign 
debt must not have been restructured in the previous five years. For 
purposes of this rule, an event of restructuring of external sovereign 
debt generally would include renegotiations of terms arising from the 
country's inability or unwillingness to meet its external debt service 
obligations. Renegotiations of debt in the normal course of business 
generally do not indicate transfer risk of the kind that would preclude 
an OECD-based country from qualifying for lower risk-weight treatment. 
One example of such a routine renegotiation would be a renegotiation to 
allow the borrower to take advantage of a change in market conditions, 
such as a decline in interest rates.

    \9\ For a more complete discussion of the background for this 
proposed change, see the proposed rule published by the OCC at 54 FR 
45243 (September 1, 1994).
---------------------------------------------------------------------------

IV. Executive Order 12866

    The Director of the OTS has determined that this proposed rule does 
not constitute a ``significant regulatory action'' for the purposes of 
Executive Order 12866.

V. Regulatory Flexibility Act Analysis

    Pursuant to section 605(b) of the Regulatory Flexibility Act, the 
OTS certifies that this proposal will not have a significant economic 
impact on a substantial number of small entities. The proposal does not 
impose any additional burdens or requirements upon small entities and 
lowers several paperwork and other burdens on all savings associations.

VI. Unfunded Mandates Act of 1995

    The OTS has determined that the requirements of this proposed rule 
will not result in expenditures by State, local, and tribal 
governments, or by the private sector, of more than $100 million in any 
one year. Accordingly, a budgetary impact statement is not required 
under section 202 of the Unfunded Mandates Act of 1995.

List of Subjects

12 CFR Part 500

    Organization and functions (Government agencies).

12 CFR Part 504
    Classified information.

12 CFR Part 510

    Administrative practice and procedure.

12 CFR Part 515

    Infants and children, Postal service.

12 CFR Part 529

    Administrative practice and procedure, Civil rights. 

[[Page 44448]]


12 CFR Part 533

    Consumer protection, Electronic funds transfers, Savings 
associations.

12 CFR Part 543

    Reporting and recordkeeping requirements, 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 Part 552

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 556

    Savings associations.

12 CFR Part 562

    Accounting, Reporting and recordkeeping requirements, Savings 
associations.

12 CFR Part 563

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

12 CFR Part 563d

    Authority delegations (Government agencies), Reporting and 
recordkeeping requirements, Savings associations, Securities.

12 CFR Part 563g

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 567

    Capital, Savings associations.

12 CFR Part 571

    Accounting, Conflicts of interest, Investments, Reporting and 
recordkeeping requirements, Savings associations.

12 CFR Part 583

    Holding companies, Savings associations.

12 CFR Part 584

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

    Accordingly, and under the authority of 12 U.S.C. 1462a, the Office 
of Thrift Supervision proposes to amend chapter V, title 12, 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 continues to read as 
follows:

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


Sec. 501.1  [Amended]


Secs. 500.3-500.5  [Removed]

    2. The existing text of Sec. 500.1 is designated as paragraph (a), 
the existing texts of Secs. 500.3, 500.4 and 500.5 are redesignated as 
paragraphs (b), (c) and (d), respectively, of Sec. 500.1, and 
Secs. 500.3, 500.4, and 500.5 are removed.
    3. Section 500.10 is amended by adding two new sentences at the end 
of the section to read as follows:


Sec. 500.10  The OTS or The Office.

    * * * The Director directs and carries out the mission of the OTS 
with the assistance of offices reporting directly to him. One of these 
offices oversees the direct examination and supervision of savings 
associations by regulatory staff to ensure the safety and soundness of 
the industry.


Secs. 500.11-500.17  [Removed]

    4. Sections 500.11 through 500.17 are removed.

PART 504--[REMOVED]

    5. Part 504 is removed.

PART 510--MISCELLANEOUS ORGANIZATIONAL REGULATIONS

    6. The authority citation for part 510 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 1462a, 1463, 1464.


Sec. 510.3  [Removed]

    7. Section 510.3 is removed.

PART 515--[REMOVED]

    8. Part 515 is removed.

SUBCHAPTER B--CONSUMER-RELATED REGULATIONS

PART 529--[REMOVED]

    9. Part 529 is removed.

PART 533--[REMOVED]

    10. Part 533 is removed.

PART 543--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL 
MUTUAL ASSOCIATIONS

    11. The authority citation for part 543 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et 
seq.


Secs. 543.12-543.13  [Removed]

    12. Sections 543.12 and 543.13 are removed.

PART 545--OPERATIONS

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

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


Secs. 545.15, 545.18-545.20, 545.44, 545.122, 545.136-
545.137  [Removed]

    14. Sections 545.15, 545.18 through 545.20, 545.44, 545.122, 
545.136 and 545.137 are removed.

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

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

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


Sec. 552.2-4  [Removed]

    16. Section 552.2-4 is removed.


Sec. 552.6-2  [Amended]

    17. Section 552.6-2 is amended by removing the phrase 
``Sec. 545.122 of this subchapter'' in paragraph (b), and by adding in 
lieu thereof the phrase ``Sec. 563.39 of this chapter''.

PART 556--STATEMENTS OF POLICY

    18. The authority citation for part 556 continues to read as 
follows:

    Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1464, 1701j-3; 15 U.S.C. 
1693-1693r.


Secs. 556.4, 556.6, 556.8-556.9, 556.11, 556.14-556.15  [Removed]

    19. Sections 556.4, 556.6, 556.8 through 556.9, 556.11, and 556.14 
through 556.15 are removed.

PART 562--REGULATORY REPORTING STANDARDS

    20. The authority citation for part 562 continues to read as 
follows:

    Authority: 12 U.S.C. 1463.


Sec. 562.3  [Removed]
    21. Section 562.3 is removed.

PART 563--OPERATIONS

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

 
[[Page 44449]]

    Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
1817, 1828, 3806; 42 U.S.C. 4106.


Secs. 563.8, 563.49, 563.72  [Removed]

    23. Sections 563.8, 563.49 and 563.72 are removed.
    24. Section 563.41 is amended by removing the period at the end of 
paragraph (b)(10)(iv) and adding a semicolon in its place, by adding 
paragraph (b)(11), by removing paragraph (d)(1), by redesignating 
paragraphs (d)(2) through (d)(7) as paragraphs (d)(1) through (d)(6), 
respectively, and by removing the phrase ``After January 1, 1995, any'' 
in the introductory text of newly designated paragraph (d)(1) and 
adding the word ``Any'' in its place, to read as follows:


Sec. 563.41  Loans and other transactions with affiliates and 
subsidiaries.

* * * * *
    (b) * * *
    (11) The term capital stock and surplus of the savings association 
means ``unimpaired capital and unimpaired surplus'' as defined at 
Sec. 563.93(b)(11) of this part.
* * * * *


Sec. 563.42  [Amended]

    25. Section 563.42 is amended by removing the phrase ``Sec. 563.41, 
any bank, any savings association in a structure qualifying under 
Sec. 563.41(d)(1) of this part or, after January 1, 1995,'' in 
paragraph (d)(1), and by adding in lieu thereof the phrase 
``Sec. 563.41 of this part, any bank, or''.
    26. Section 563.43 is amended by adding paragraph (f) to read as 
follows:


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

* * * * *
    (f) References to the term ``unimpaired capital and unimpaired 
surplus'' shall be deemed to refer to ``unimpaired capital and 
unimpaired surplus'' as defined at Sec. 563.93(b)(11) of this part.


Sec. 563.52  [Amended]

    27. Section 563.52 is amended by removing the phrase ``Sec. 584.6 
of this chapter'' in paragraph (b), and by adding in lieu thereof the 
phrase ``12 U.S.C. 1467a(m)''.

PART 563d--SECURITIES OF SAVINGS ASSOCIATIONS

    28. The authority citation for part 563d is revised to read as 
follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 78c(b), 78l, 
78m, 78n, 78w, 78d-1.


Sec. 563d.200-30  [Removed]

    29. Section 563d.200-30 is removed.

PART 563g--SECURITIES OFFERINGS

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

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

    31. Section 563g.5 is amended by revising paragraphs (b)(1) and 
(b)(2) to read as follows:


Sec. 563g.5  Filing and signature requirements.

* * * * *
    (b) Number of copies. (1) Unless otherwise required, any filing 
under this part shall include nine copies of the document to be filed 
with the OTS, 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 Dissemination Branch, Records 
Management and Information Policy; and
    (ii) Two copies, which shall include one manually signed copy with 
exhibits and one conformed copy, without exhibits, to the 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 OTS, as follows: seven copies to the 
Dissemination Branch, Records Management and Information Policy, and 
two copies to the Regional Director.
* * * * *


Sec. 563g.22  [Removed]

    32. Section 563g.22 is removed.

PART 567--CAPITAL

    33. The authority citation for part 567 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828 
(note).

    34. Section 567.1 is amended by revising the first two sentences of 
paragraph (p) to read as follows:


Sec. 567.1  Definitions.

* * * * *
    (p) OECD-based country. The term OECD-based country means a member 
of the grouping of countries that are full members of the Organization 
of Economic Cooperation and Development, plus countries that have 
concluded special lending arrangements with the International Monetary 
Fund (IMF) associated with the IMF's General Arrangements to Borrow, 
but excludes any OECD country which has rescheduled its external 
sovereign debt in the previous five years. These countries are 
hereinafter referred to as OECD countries. * * *
* * * * *

PART 571--STATEMENTS OF POLICY

    35. The authority citation for part 571 continues to read as 
follows:

    Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1462a, 1463, 1464.


Sec. 571.24  [Amended]

    36. Section 571.24 is amended by removing the phrase ``parts 528 
and 529'' in paragraph (a), and by adding in lieu thereof the phrase 
``part 528''.

PART 583--DEFINITIONS

    37. The authority citation for part 583 is revised to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468.


Sec. 583.17  [Amended]

    38. Section 583.17 is amended by removing the phrase ``Sec. 584.6 
of this subchapter'', and by adding in lieu thereof the phrase ``12 
U.S.C. 1467a(m)''.

PART 584--REGULATED ACTIVITIES

    39. The authority citation for part 584 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468.


Sec. 584.2a  [Amended]

    40. Section 584.2a is amended by removing the phrase ``Sec. 584.6 
of this subchapter'' in paragraph (a)(2), and by adding in lieu thereof 
the phrase ``12 U.S.C. 1467a(m)''.


Sec. 584.2-1  [Amended]

    41. Section 584.2-1 is amended by removing the phrase ``Sec. 584.3 
of this part'' where it appears in paragraphs (b)(2) and (b)(3) 
introductory text, and by adding in lieu thereof the phrase ``12 U.S.C. 
1467a(m)''.


Secs. 584.3, 584.6, 584.11  [Removed]

    42. Sections 584.3, 584.6 and 584.11 are removed.

    Dated: August 21, 1995.

    By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 95-21160 Filed 8-25-95; 8:45 am]
BILLING CODE 6720-01-P