[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33842-33843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16724]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 324
RIN 3067-AB77
Agricultural Loan Loss Amortization
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rule.
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SUMMARY: As part of the FDIC's systematic review of its regulations and
written policies under section 303(a) of the Riegle Community
Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is
removing its regulation governing agricultural loan loss amortization.
This action is needed to eliminate the regulation when it becomes
obsolete on January 1, 1999.
EFFECTIVE DATE: January 1, 1999.
FOR FURTHER INFORMATION CONTACT: Robert W. Walsh, Manager, Planning and
Program Development, (202) 898-6896, Division of Supervision; Susan van
den Toorn, Counsel, (202) 898-8707, Legal Division, FDIC, 550 17th
Street, N.W., Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: The FDIC is conducting a systematic review
of its regulations and written policies. Section 303(a) of the CDRI (12
U.S.C. 4803(a)) requires each federal banking agency to streamline and
modify its regulations and written policies in order to improve
efficiency, reduce unnecessary costs, and eliminate unwarranted
constraints on credit availability. Section 303(a) also requires each
federal banking agency to remove inconsistencies and outmoded and
duplicative requirements from its regulations and written policies.
As part of this review, the FDIC is removing 12 CFR part 324. This
action is appropriate because the regulation implemented legislation
which permitted agricultural banks to amortize qualified agricultural
loan losses incurred only between 1984 and 1991 with a resulting
amortization period not to exceed seven years. Consequently, this
regulation will become obsolete at the end of the permissible
amortization period. Therefore, the FDIC is eliminating the rule
effective January 1, 1999. The Office of the Comptroller of the
Currency (OCC), as part of its Regulation Review Program, has
previously reviewed its regulation on Agricultural Loan Loss
Amortization, 12 CFR part 35, and determined that the regulation
becomes obsolete on January 1, 1999. The OCC issued a proposed rule on
February 8, 1995 (60 FR 7467) and a final rule on May 24, 1995 (60 FR
27401) to remove its regulation on January 1, 1999. The Federal Reserve
Board (FRB) has under consideration a similar proposal with regard to
12 CFR 208.15.
Title VIII of the Competitive Equality Banking Act of 1987 (Act),
Pub. L. 100-86, 101 Stat. 635 (1987), added 12 U.S.C. 1823(j) in an
attempt to alleviate some of the financial pressures then facing
agricultural banks. In particular, 12 U.S.C. 1823(j) permits an
agricultural bank to amortize over a period not to exceed seven years:
(1) Any loss on a qualified agricultural loan that the bank would
otherwise be required to show on its annual financial statement for any
year between December 31, 1983, and January 1, 1992; and (2) any loss
resulting from the reappraisal of property that the bank owned or
acquired between January 1, 1983, and January 1, 1992, in connection
with a qualified agricultural loan. The FDIC implemented this statutory
provision by promulgating 12 CFR part 324 with a final rule published
on November 2, 1987 (52 FR 41968). Pursuant to section 1823(j)(3) of
the Act, the OCC and the FRB issued substantively similar regulations.
See, 12 CFR part 35 and 12 CFR 208.15 respectively.
Because the statute requires that a loss occur on or before
December 31, 1991, to qualify, and that the amortization period may not
exceed seven years, the program becomes obsolete on January 1,
[[Page 33843]]
1999. Reflecting this fact, the FDIC's rule requires that loans under
the program must be fully amortized by December 31, 1998. 12 CFR
324.3(b).
In light of the statutory termination of the agricultural loan loss
amortization program, the FDIC is removing 12 CFR part 324, effective
January 1, 1999, to obviate the need for any regulatory action in the
future. Prior to that date, an annotation to part 324 in title 12 of
the Code of Federal Regulations would indicate the effective date for
removal of the part.
Exemption from Public Notice and Comment
The FDIC believes that it is unnecessary to seek public comment on
this rule because the agricultural loan loss amortization program
becomes obsolete by operation of law on January 1, 1999. Accordingly,
the rule is being adopted in final, rather than proposed, form with a
protracted effective date that will coincide with cessation of the
statutory program.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (5
U.S.C. 605(b)), the FDIC hereby certifies that this regulation will not
have a significant economic impact on a substantial number of small
entities because only three institutions are affected. Accordingly, a
regulatory flexibility analysis is not required. This regulation has no
material impact on insured depository institutions and state nonmember
banks, regardless of size.
Paperwork Reduction Act
The collection of information contained in 12 CFR 324.7 has been
approved by the Office of Management and Budget (OMB) under OMB Control
Number 3064-0091. This final rule will remove as unnecessary, for the
reasons set forth in the preamble, that collection of information
effective January 1, 1999.
List of Subjects in 12 CFR Part 324
Accounting, Agriculture, Banks, Banking, State nonmember banks,
Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set out in the preamble, and under the authority of
12 U.S.C. 1823(j), chapter III of title 12 of the Code of Federal
Regulations is amended as follows:
PART 324--[REMOVED]
1. Part 324 is removed effective January 1, 1999.
By Order of the Board of Directors.
Dated at Washington, D.C., this 17th day of June, 1996.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Deputy Executive Secretary.
[FR Doc. 96-16724 Filed 6-28-96; 8:45 am]
BILLING CODE 6714-01-P