[Federal Register Volume 62, Number 233 (Thursday, December 4, 1997)]
[Rules and Regulations]
[Pages 64138-64146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31612]
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DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 516, 543, 545, 552, 556, 563
[No. 97-121]
RIN 1550-AA83
Application Processing
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Final rule.
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SUMMARY: As a part of its on-going effort to review and streamline its
regulations, the Office of Thrift Supervision (OTS) is issuing a final
rule revising its comment procedures for specified applications and
notices (collectively, applications). In addition to reorganizing the
regulation, the OTS has expanded the comment period on these
applications, set forth the information that a comment should contain,
and replaced existing provisions requiring the OTS to conduct an oral
argument on applications under certain circumstances, with provisions
for informal and formal meetings. Under the final rule, the OTS will
conduct an informal meeting ordinarily upon the request of a commenter,
but also on its own initiative. Thereafter, upon the request of any
participant to an informal meeting, the OTS will conduct a formal
meeting. The OTS may also conduct a formal meeting on any application
on its own initiative.
EFFECTIVE DATE: January 1, 1998.
FOR FURTHER INFORMATION CONTACT:
Catherine Shepard, Senior Attorney, Regulations and Legislation
Division, (202) 906-7275, Kevin Corcoran, Assistant Chief Counsel,
Business Transactions Division, (202) 906-6962, Office of Chief
Counsel; or Diana L. Garmus, Director, Corporate Activities Division,
(202) 906-5683, Office of Thrift Supervision, 1700 G Street NW.,
Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
I. Background
OTS regulations governing applications for permission to organize a
federal stock or mutual savings association, to establish or relocate a
branch office of a federal savings association, and to engage in a
transaction that is subject to the Bank Merger Act require applicants
to follow the public comment and review procedures at existing
Sec. 543.2 (e) and (f).
Currently, Sec. 543.2 provides an opportunity for the public to
submit communications in favor or in protest of applications, and
permits the applicant to respond to any protest. When a protest is
timely submitted, meets specified criteria and includes a request for
oral argument, or if an applicant timely requests an oral argument, the
regulation requires the OTS to conduct an oral argument on the merits
of the application. The OTS may also hold an oral argument in the
absence of any protests, if it determines that these additional
proceedings are desirable.
On April 9, 1997, the OTS published a notice of proposed rulemaking
revising these procedures.\1\ In addition to reorganizing the
regulations, the OTS proposed to amend its existing procedures to
expand the comment period on applications, prescribe the information
that comments must contain in order to be considered when the OTS
evaluates applications, and replace existing provisions that require
the OTS to conduct an oral argument on applications under certain
circumstances, with provisions for discretionary conferences. The OTS
believed that these changes would make the application processing
procedures easier to understand and apply. Additionally, the OTS
concluded that the discretionary conference procedures would align OTS
regulations more closely with those of the other federal banking
agencies in accordance with section 303 of the Community Development
and Regulatory Improvement Act of 1994.
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\1\ 62 FR 17110 (April 9, 1997).
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II. Summary of Comments and Description of Final Rule
A. General Discussion of the Comments
The public comment period on the proposed rule closed on June 9,
1997. Eight commenters responded to the proposal: four community
advocacy groups, two trade associations, one federal savings
association, and one professional records and information management
association.
As a general matter, the four community advocacy groups opposed the
elimination of mandatory oral arguments and supported the extension of
the public comment period. Conversely, the trade associations and the
federal savings association supported the proposed conference
procedures and opposed the extension of the public comment period. The
information management association expressed unqualified support for
the proposal. Specific comments are discussed where appropriate in the
section by section analysis below.
B. Section by Section Analysis
The final rule adds new Subparts C and D to part 516. The new
subparts use plain language drafting techniques promoted by the Vice
President's National Performance Review Initiative and new guidance in
the Federal Register Document Drafting Handbook (January 1997 edition).
The primary goal of plain language drafting is to make regulations more
readily understandable. Plain language drafting emphasizes the use of
informative headings (often written as a question), non-technical
language (including the use of ``you'') and sentences in the active
voice.
Although commenters did not have the opportunity to comment on the
plain language format prior to its use in this final rule, the OTS
believes that the benefits of the format justify its use. Moreover, the
use of the plain language format has not altered the substance of the
regulation. The OTS welcomes comments on the plain language format, and
suggestions on how to improve this format. The OTS is committed to
converting more of its regulations to the plain language format in
order to reduce regulatory burden. The recently issued OTS final rule
on subsidiaries uses this plain English drafting format. See 12 CFR
Part 559 (1997).
Subpart C--Comment Procedures
Section 516.100--What Does This Subpart Do?
Section 516.100 of the final rule provides that Part 516, Subpart C
contains the procedures governing the submission of public comments on
certain types of applications or notices pending before the OTS.
Subpart C applies whenever a regulation incorporates the procedures, or
where otherwise required by the OTS. This section is based on
Sec. 516.5(a)(1) of the proposed rule.
Section 516.110--Who May Submit a Written Comment?
Section 516.110 provides that any person may submit a written
comment supporting or opposing an application. This provision is also
based on proposed Sec. 516.5(a)(1).
Section 516.120--What Information Should I Include in My Comment?
Under the existing rules, a protest is considered ``substantial''
if it is submitted in writing within the
[[Page 64139]]
comment period, and states a reason for the protest that is consistent
with one of the regulatory bases for denying an application. To be a
substantial protest, a comment must include the specific information
required at existing Sec. 543.2(e)(2) and (4). Under the current rules,
the term ``substantial'' serves a purely ministerial purpose--a means
of separating comments that contain the required information (and,
thus, may serve as the basis for a request for an oral argument) from
those that do not.\2\
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\2\ The existing oral argument procedures and the new meeting
procedures are discussed below.
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The proposed rule at Sec. 516.5(a)(3) described the information
that a comment must contain in order to be considered by the OTS. Under
the proposed rule, the comment was required to recite all relevant
facts, including any economic or financial data supporting the
commenter's position. Comments opposing an application were required to
address at least one of the bases for denial of the application as set
forth in the relevant regulations, recite relevant facts and supporting
data addressing these relevant bases, and address any adverse effects
on the commenter or community that may result from approval of the
application.
One commenter supported this proposed provision, noting that it
provides important guidance to the public. Another commenter argued
that the comment content criteria give the OTS too much discretion to
reject comments that do not meet the technical content requirements.
Commenters argued that these requirements should not be construed in an
overly burdensome way.
The OTS will review and consider all comments it receives
regardless of whether the comment meets all of the regulatory criteria.
The sole intent of the proposed content requirements was to guide
commenters in providing information that would assist the OTS in
understanding the basis for the comment. While the OTS will accept and
consider all comments, including those that do not meet all of the
content criteria, commenters are encouraged to include all relevant
information and arguments.
The OTS has revised the comment content provisions at Sec. 516.120
to emphasize that the OTS will not reject a comment that does not meet
all of the content criteria, and has made other changes to enhance the
rule's clarity. Under the final rule, a comment should recite relevant
facts, including any demographic, economic, or financial data,
supporting the commenter's position. If the commenter opposes an
application, the comment should also address at least one of the
relevant regulatory reasons for which the OTS may deny an application,
recite any relevant facts and supporting data addressing these reasons,
and address how the approval of the application could harm the
commenter or any community.
If a commenter wishes to request an informal meeting under the
revised procedures discussed in detail below, the commenter must file a
request for the meeting with the comment. To ensure that the OTS will
have sufficient notice of the questions to be discussed at the informal
meeting, requests should describe the nature of the issues or facts to
be discussed and the reasons why written submissions are insufficient
to adequately address these facts or issues. See final Sec. 516.120(b).
Section 516.130--Where Do I File My Comment?
Section 516.130 provides that public commenter must file its
comment with the OTS office(s) set forth at Sec. 516.1(c). If an
informal meeting is requested, the commenter must simultaneously send a
copy of the request to the applicant. This provision was not included
in the proposed rule, but has been added to improve the clarity of the
final rule.
Section 516.140--Where Do I File My Comment?
Under the current rules, a commenter must file a comment within 10
days of the publication of a public notice of the filing of the
application. This time period may extended to 17 days after
publication, if a request for extension is filed within the 10-day
period. Proposed Sec. 516.5(a)(2) replaced the existing 10-day comment
period with a 25-day comment period.
Three commenters supported the proposed 25-day comment period,
noting that this is a clearly defined period and gives all prospective
commenters an adequate time to submit appropriate comments. Two
commenters urged the OTS to lengthen the comment period to 30 days
arguing that a 30-day comment period is used by the Office of the
Comptroller of the Currency (OCC), the Federal Reserve Board (FRB), and
the OTS in merger and acquisition applications. Two commenters thought
that the comment period should be shorter. One argued that 15 days is
sufficient. Another argued that the OTS should provide a 17-day comment
period, at least for applications involving associations that have an
``outstanding'' or ``satisfactory'' rating under the community
Reinvestment Act (CRA) and that are eligible for expedited treatment.
The OTS is adopting the proposed 25-day comment period. The OTS
continues to believe that this expanded time period, without an
automatic extension, is more workable and less confusing. The OTS
cannot adopt a 30-day comment period without substantially revising
other application processing requirements. In accordance with section
410 of the Competitive Equality Banking Act of 1987, Sec. 516.2(c)(1)
requires the OTS to request additional information, deem an application
complete, or decline to process an application within 30 days of
receipt of an application. The OTS believes it is necessary to have at
least five days to review comments within this 30-day review period.
Under the proposed rule, the 25-day comment period would have begun
on the date that the notice of application is published, a date that
may precede the filing of the application. One commenter argued that
the comment period should start on the day the application is submitted
to the OTS. The commenter noted that this change would give community
groups access to the application for the full comment period. The OTS
agrees that commenters should have access to the application for the
full comment period. Accordingly, under the final rule at
Sec. 516.140(a), the comment period begins on the date that the
application is filed.
Under the proposed rule at Sec. 516.5(a)(2), the OTS would grant
extensions of the 25-day comment period on a case-by-case basis. The
OTS would consider a late-filed comment if the OTS determined that the
comment addressed a significant regulatory concern and, within the 25-
day comment period, the commenter demonstrated good cause why it was
unable to submit a timely comment. The length of any extension would be
determined on a case-by-case basis.
Commenters generally supported this provision. However, several
commenters urged the OTS to define good cause to include specified
circumstances, to set specific time frames for extensions and to make
other changes. One commenter objected that the unlimited discretion
accorded to the OTS under the proposed extension provision would create
procedural confusion.
The final rule continues to provide the OTS with maximum
flexibility to address the unique circumstances of each extension
request. For example, one commenter may need only an additional 24
hours to copy or mail documents. Another commenter may be
[[Page 64140]]
awaiting pertinent public data and may require a longer opportunity to
obtain and analyze the data. Accordingly, the final regulation at
Sec. 516.140 does not prescribe the duration of the extension period or
the circumstances that would constitute good cause. Rather, the OTS
will make these determinations on a case-by-case basis.
One commenter suggested that the OTS should encourage applicants
and commenters to make joint requests for extensions of the comment
period. One of the underlying purposes of the comment procedures is to
promote dialogue and collaboration among the parties. Since joint
extension requests will advance voluntary resolution of conflicts, the
OTS encourages and generally will grant all jointly filed extension
requests.
Under the existing procedures at Sec. 543.2(e)(3), applicants may
file an answer to any protest within 10 days after the last date for
filing of comments. The proposed rule eliminated this provision.
Instead, the OTS stated that it would generally provide an appropriate
opportunity to respond by forwarding the comments to the applicant and
requesting a response.
Two commenters noted that the OTS failed to set a deadline for the
applicant's response. One commenter suggested that OTS should provide
at least 10 days for response. The other suggested that the OTS adopt
the FRB practice of requiring applicants to respond within eight
business days.
It is unnecessary to establish a regulatory deadline for an
applicant's response to comments. The OTS will continue to require
applicants to respond to issues raised in comments the same way that it
resolves other issues raised in applications. The OTS will, where
appropriate, request the applicant to respond within 30 days to the
issues raised in the application. See existing Sec. 516.2(c).
Section 516.150--Will I Have Additional Opportunities to Discuss the
Applications?
Under the existing rules at Sec. 543.2(f), the OTS must conduct an
oral argument if the applicant or anyone filing a substantial protest
makes a timely request for the argument or if the OTS considers an oral
argument desirable. The proposed rule would have replaced the mandatory
oral argument provisions. Proposed Sec. 516.5(b)(1) would have required
additional proceedings only where the OTS determined that the
proceedings would assist in the disposition of the application or would
assist in the resolution of any issues raised by the application.
Rather than an oral argument, the proposed rule permitted the OTS to
arrange a conference between the applicant, commenters, and others. The
proposed rule did not prescribe procedures for the conference. Instead,
the proposed rule permitted the OTS to select the procedures
appropriate to the application on a case-by-case basis.
Three commenters supported the conference procedures contained in
the proposed rule. These commenters concluded that the conference
procedures were more efficient and flexible than the current oral
argument procedures.
Four community group commenters opposed the deletion of the
mandatory oral argument. These commenters asserted that oral arguments:
(1) Do not unduly delay the application process; (2) are conducive to
fully informed decision making by the OTS; (3) are not hard to
understand or apply; (4) ensure that consumer issues are adequately
considered; and (5) promote dialogue and exchange between the
association and commenters.\3\
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\3\ In the proposed rule, the OTS noted that the discretionary
conference procedures would be more consistent with the rules of the
other federal banking agencies. One commenter argued that this
rationale is not convincing since the other banking regulators often
have supplemental procedures for gathering information. The only
such procedure cited by the commenter, however, was the OCC's policy
of conducting expedited CRA examinations upon request. The OTS has
addressed these targeted examinations below at Section II.D.3.
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The OTS continues to believe that formal oral arguments before a
presiding officer are not necessary or productive in most cases.\4\
More often, comments can best be resolved in a less formal setting,
such as a meeting or a telephone call. Accordingly, the final rule
states that the OTS generally will conduct an informal meeting on
applications upon the request of any commenter. Additionally, if an
informal meeting fails to facilitate the resolution of issues to the
satisfaction of any participant in an informal meeting, the final rule
provides that the OTS will conduct a formal meeting before a presiding
officer upon the filing of a request. The OTS may also conduct a formal
meeting on any application on its own initiative. The new OTS informal
and formal meeting procedures are based upon the OCC's related rule
governing meetings and hearings at 12 CFR 5.11.
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\4\ Two commenters argued that the OTS's proposed deletion of
the mandatory oral hearing requirement was inconsistent with
congressional intent expressed in section 2612 of the Economic
Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). This
section specifically requires the FRB to hold a hearing where a bank
holding company seeks to acquire a thrift. EGRPRA, however, does not
provide a similar legal right when a bank holding company acquires a
commercial bank. The commenters argued that EGRPRA's retention of
hearings in thrift acquisitions reflects Congress' view that the
agency should provide hearings in all applications involving savings
associations. The OTS disagrees. The hearing requirement in section
2612 of EGRPRA, by its own terms, is limited to specified
proceedings before another regulatory agency. There is no
legislative history in EGRPRA mandating a broader application. If
Congress intended to require hearings whenever a savings association
is involved in any application proceeding before any banking
regulator, the OTS believes that Congress would have manifested this
intent more clearly.
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Thus, the final rule at Sec. 516.150 states that the OTS may
provide a commenter with additional opportunities to discuss the
application in informal or formal meetings. The new procedures are
contained in a new subpart D to part 516. The sections of this new part
are discussed below.
Subpart D--Meeting Procedures
Section 516.160--What Does This Subpart Do?
Subpart D establishes the procedures governing informal and formal
meetings. It applies whenever a regulation incorporates the procedures
in the subpart, or when otherwise required by OTS.
Section 516.170--What Procedures Govern Informal Meetings on
Applications?
Section 516.170 establishes the OTS informal meeting procedures.
Under Sec. 516.170(a), the OTS may arrange an informal meeting to
clarify and narrow the issues and to facilitate the resolution of the
issues. If a commenter has filed a written request containing the
information described at Sec. 516.120(b), the OTS will arrange a
meeting. The OTS may also arrange a meeting upon its own initiative.
The purpose of the informal meeting is to promote dialogue and to seek
to achieve the voluntary resolution of issues. The OTS will inform the
applicant and commenters requesting a meeting of its decision on a
request for a meeting, or its decision to hold a meeting on its own
initiative. See final Sec. 516.170(b).
One commenter suggested that the final rule should require the OTS
to announce its decision on the informal meeting before the expiration
of applicable approval time frames specified in Secs. 516.2 and 516.3.
The purpose of the informal meeting is to address and resolve issues
relevant to the disposition of the application. An informal meeting
would, thus, be pointless if it is held after approval time frames
lapse and the application is deemed approved. Because the announcement
of the decision on a
[[Page 64141]]
meeting obviously must precede the approval of the application, the OTS
has not added the suggested provision.\5\
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\5\ Where an application is subject to a completeness review
under Sec. 516.2(c), the OTS will generally advise applicants and
commenters of the informal meeting before deeming the application
complete.
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The OTS will invite the applicant and the commenter filing the
request to the informal meeting. The OTS may also invite any other
interested persons to attend. The OTS will inform meeting participants
of the date, time, location and format for the meeting a reasonable
time in advance of the meeting. See final Sec. 516.170(c). The OTS may
select any format for the meeting. See final Sec. 516.170(d). An
informal meeting may encompass an array of forums including, but not
limited to, an informal telephone conference call or a face-to-face
meeting.
One commenter suggested that any announcement of additional
proceedings should identify all persons invited to the conference and
the substance of the comments received. The commenter asserted that
this procedure would allow the applicant to prepare for, and to contact
appropriate persons before the conference. The OTS does not follow a
specific format for informing participants of the informal meeting.
Rather, the OTS will advise participants using an appropriate method
for the meeting. For example, if the OTS determines that an issue may
be resolved in a telephone conference, the OTS would not necessarily
issue a written notice. Instead, the OTS might place an advance
telephone call informing the participants of the date and time of the
conference call. By contrast, where another type of meeting is
selected, the notice may include some or all of the elements identified
by the commenter.
The OTS anticipates that informal meetings will be adequate to
facilitate the resolution of issues in most proceedings. However, the
OTS recognizes that it may encounter situations where formal meetings
may be necessary. Accordingly, the final rule recognizes that an
informal meeting may progress to a formal meeting before a presiding
officer under Sec. 516.180. Accordingly, within three days after the
informal hearing, any participant in the informal meeting may request
the OTS to hold a formal meeting. See final Sec. 516.170(e). The
participant making the request should describe the nature of the issues
or facts to be presented and the reasons why a formal meeting is
necessary to make an adequate presentation of the facts or issues. The
request must be filed with the OTS and copies must be sent to other
participants in the informal meeting.
Section 516.180--What Procedures Govern Formal Meetings on
Applications?
If a participant in the informal meeting files a request for a
formal meeting under Sec. 516.170(e), the OTS will grant the request.
Additionally, the OTS may hold a formal meeting on its own initiative,
if it determines that written submissions and informal meetings are
insufficient to adequately present issues or facts to the OTS, or that
a formal meeting would otherwise benefit the decisionmaking process.
The OTS may limit the issues considered at the formal meeting to issues
it deems relevant or material. See final Sec. 516.180(a).
The OTS anticipates that most formal meetings will follow an
informal meeting. Accordingly, the OTS will not grant a request for a
formal meeting, unless an informal meeting has been conducted under
Sec. 516.170. However, there may be occasions where the informal
meeting may be unnecessary. Under these or other circumstances, the OTS
may elect to use its authority to conduct a formal meeting on its own
initiative.
The OTS will announce formal meetings by issuing a Notice of Formal
Meeting. The Notice will state the subject and date of the filing, the
time and place of the formal meeting, and the issues to be addressed.
The OTS will send the Notice to the applicant and any commenter
requesting a formal meeting. The OTS may invite other interested
persons to participate in the formal meeting by sending the Notice to
such persons. See final Sec. 516.180(b).
Paragraph (c) addresses who may participate in a formal meeting. A
person receiving a Notice must notify the OTS of its intent to
participate in the formal meeting within ten days after the OTS issues
the Notice. At least five days before the formal meeting, all
participants must provide the names of their witnesses and copies of
their proposed exhibits to the OTS, the applicant and any other person
designated by the OTS.
Section 516.180 (d) and (e) govern the conduct of the formal
meeting. Under Sec. 516.180(e), the OTS will appoint a presiding
officer to conduct a formal meeting. The presiding officer is
responsible for all procedural questions not governed by Sec. 516.180.
Subject to the rulings of the presiding officer, the participants may
make opening statements and present witnesses, material and data. All
presenters of documentary material must furnish copies of the material
to the OTS and to each other participant. The OTS will arrange for a
transcript of the formal meeting. Each participant must bear the cost
of the transcript that it requests for its use. See final
Sec. 516.180(d). Section 516.180(e)(2) provides that certain rules
governing the conduct of formal meetings and presentation of evidence
do not apply to formal meetings held under Sec. 516.180.
The rule does not address such procedural issues as whether the
formal meeting will be public or private. Two commenters advocated the
addition of a provision mandating public hearings whenever a public
meeting is requested. These commenters noted that public hearings
provide opportunities for all citizens to offer their views, including
senior citizens, public housing residents and others. These commenters
also noted that this change would align OTS procedures more closely to
those of the other banking agencies.
Commenters have always had the ability to request public hearings
on issues involving the application, and the OTS has had the discretion
whether or not to hold such hearings.\6\ The ability of members of the
public to request public hearings, and the OTS's discretion to hold
public hearings, is not affected by this final rule. The final rule
would continue to permit the agency to hold a public formal meeting.
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\6\ See Op. Chief Counsel (November 24, 1993).
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Section Sec. 516.190--Will a Meeting Affect Application Processing Time
Frames?
The proposed rule at Sec. 516.5(b)(2) stated that if the OTS timely
notifies the applicant that it intends to hold a conference, the OTS
would temporarily suspend applicable time periods for automatic
approval of the application. Two commenters supported this provision.
The final rule at Sec. 516.190 adopts the proposed rule with minor
editorial changes. The final rule provides for suspension of
application processing time frames if the OTS has arranged an informal
or formal meeting. The time periods will resume when the OTS determines
that a record has been developed that sufficiently supports a
determination on the issues raised in the comments.
C. Conforming Amendments to Related Provisions
The proposed rule included conforming amendments to Secs. 543.2,
545.92, 545.95, 552.2-1, 552.2-2 and 556.5. Commenters had the
following comments on these conforming changes.
[[Page 64142]]
1. Duplicative Publication Requirements
One commenter observed that the publication of notice provisions in
proposed Secs. 543.2(d)(1), 545.92(d)(1), 552.2-1(a)(1) and 563.22(e)
are unnecessarily duplicative. The commenter urged the OTS to
consolidate these provisions into a single regulation under Part 516.
The commenter noted that this approach would streamline the OTS
regulations and more closely conform OTS regulations to the procedural
regulations of the other banking agencies.
The OTS agrees that the cited publication requirements are
unnecessarily duplicative and has consolidated Secs. 543.2(d)(1),
545.92(d)(1), 552.2-1(a)(1) and 563.22(e)(1) into a new subpart under
Part 516. New Subpart B uses the same plain language drafting
techniques as used in Subparts C and D.
The proposed rules would have required an applicant to publish the
notice of the filing of the application no earlier than three days
before and no later than the date of the filing of the application. See
proposed Secs. 543.2(d)(1), 545.92(d)(1) and 552.2-1(a)(1). Various
commenters suggested that this three-day publication requirement should
be modified to require publication as soon as possible after filing of
the application, or extended to require publication within 7, 10, or 30
days of the filing of the application.
The OTS has concluded that the proposed three day requirement may
be too onerous under certain circumstances, such as where local
newspapers are published on a weekly basis. Unfortunately, uniformity
with the other bank regulatory agencies on this issue is impossible,
since each bank regulatory agency has established different publication
requirements.\7\ Nonetheless, the OTS has decided to adopt the FRB's
practice of requiring the filing of the application within seven days
after the publication of the newspaper notice. See final Sec. 516.60.
This change does not affect the 30-day comment period. As noted above,
the final rule has been revised so that the comment period begins on
the date that the application is filed rather than the date of the
newspaper notice. See final Sec. 516.140(a).
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\7\ The OCC requires publication on the date of filing or as
soon as possible thereafter. 12 CFR 5.8(a). The FDIC generally
requires publication no earlier than 30 days before filing, and no
later than the date of filing. 12 CFR 303.6(f)(1)(ii). The FRB
generally requires filing within seven days of publication. 12 CFR
262.3(b).
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2. Posting Requirement
Section 545.95 addresses changes of permanent locations and
redesignations of home and branch offices by federal associations. The
current rule requires an applicant to post a notice of the application
for 17 days from the date of the publication of the newspaper notice--a
period that is equal to the extended comment period under current
application processing procedures. The proposal would have required the
applicant to post a notice of an application for 25 days from the date
of first publication. This time period would more closely track the 25-
day revised comment period.
One commenter argued that Sec. 545.95 unnecessarily duplicates the
Federal Deposit Insurance Act (``FDIA'') provisions on branch closures,
which require posting for 30 days and sending customer notices 90 days
before closure.\8\ See FDIA Section 42 (12 U.S.C. 1831r-1). The
purposes of the two posting requirements differ. The posting
requirement under Sec. 545.95 is intended to allow customers the
opportunity to comment on a proposed application to change an office
location or redesignate a home or branch office. The FDIA posting
requirement, on the other hand, is intended to provide notice to
customers of the proposed date of closing of a branch and to identify
where customers may obtain services following that date. Since the
purposes of the two notices differ, both requirements will continue to
be applicable. However, the OTS would not object if an institution were
to combine the two notices, provided the combined notice clearly
complies with the notification, posting and timing requirements under
Sec. 545.95 and the FDIA. Any combined posting should indicate that
consummation of the transaction is contingent on OTS review.
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\8\ This commenter also questions whether the posting
requirement has any applicability for short distance relocations.
The posting requirement at Sec. 545.95(b)(1)(ii) does not apply to
short distance relocations. See existing Sec. 545.95(c).
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3. Branching by Federal Savings Associations
The OTS policy statement on branching by federal savings
associations is found at Sec. 556.5. The OTS proposed to revise this
section to include a cross citation indicating that the procedures for
commenting on applications are set forth in Part 516 and Part 563e.
A commenter asserted that the proposed amendment was confusing and
suggested the deletion of the cross-reference to Part 563e. The OTS
modified this reference to specifically cite the applicable regulations
at 12 CFR 563e.29 (c) and (d).
D. Related Issues
1. Availability of Applications
Two commenters offered a number of suggestions designed to improve
the availability of OTS information on applications. The OTS has been
working on this issue for some time. The agency began publishing a list
of pending applications on its web site on August 12, 1997. The list is
updated daily and is available at http://www.ots.treas.gov under
``Public Information'' and ``Industry Data.'' Additionally, major new
applications are highlighted under the ``Significant New Applications''
page.
2. Publication of OTS Decisions on Applications
One commenter urged the OTS to publish its decisions on
applications. The commenter noted that this change would conform the
OTS practices to those of the FRB which publishes its decisions in the
Federal Reserve Bulletin.
While the OTS will not publish the text of its decisions, it
intends to continue its current practice of simultaneously informing
the applicant and any commenters of the disposition of an application.
In addition, the OTS intends to modify its web site to indicate whether
applications have been granted or denied. If a commenter or any other
member of the public wishes to obtain a copy of the public portion of
an OTS decision, it may do so by contacting the OTS's Information
Services Division.
3. Targeted CRA Exams
One commenter suggested that OTS should implement the OCC's policy
of conducting targeted CRA examinations when CRA issues are raised by a
commenter and the issues were not addressed in the last examination.
The OTS conducts regular CRA examinations on a set cycle. In most
cases, the OTS has a timely assessment of CRA performance available in
connection with processing an application. Where an applicant's CRA
record is not current, however, the OTS may conduct a targeted CRA
review to obtain the information necessary to access performance.
III. Executive Order 12866
The Director of the OTS has determined that this final rule does
not constitute a ``significant regulatory
[[Page 64143]]
action'' for the purposes of Executive Order 12866.
IV. Regulatory Flexibility Act Analysis
The OTS certified that the proposed rule would not have a
significant economic impact on a substantial number of small entities
under section 605(b) of the Regulatory Flexibility Act. One commenter
disagreed with this certification. The commenter argued that the
proposal would make it substantially more difficult for small
communities to comment on applications because these communities rarely
have CRA expertise.
The OTS disagrees. The final rule should make it easier for small
entities, including small communities, to comment on applications. The
final rule provides guidance as to the content of the comments to be
filed and expands the time period for the receipt of such comments.
Thus, the final rule should provide small entities with a greater
opportunity to file comments. Moreover, the rule permits commenters to
participate in informal and formal meetings with the applicant and the
OTS.
Accordingly, pursuant to section 605(b) of the Regulatory
Flexibility Act, the OTS certifies that this final rule will not have a
significant economic impact on a substantial number of small entities.
The final rule will enable the OTS to process applications received
from all applicants, including small savings associations and other
small entities, more expeditiously. It also allows all entities,
including small entities, a longer period in which to submit comments
on applications.
V. Paperwork Reduction Act of 1995
The information collection requirements contained in this rule are
found at 12 CFR 516.50-80, 516.100-190, 543.2, 545.92, 545.95, 552.2-1,
and 563.22. All of the collections of information, except those found
in Secs. 516.50-80 and Secs. 516.100-190, have been previously approved
by the Office of Management and Budget and the burden under them
remains unchanged under this rule (OMB Control Nos. 1550-0005, 1550-
0006, and 1550-0016). The requirements in new Secs. 516.50-80 and
Secs. 516.100-190 were previously found in several of the sections
mentioned above. New Secs. 516.50-80 and Secs. 516.100-190 do not add
any additional burden and the new citations will be added to the
approved packages under OMB Control Nos. 1550-0005, 1550-0006, and
1550-0016 by Paperwork Reduction Act Change Worksheet.
Respondents/recordkeepers are not required to respond to the
collections of information unless the collection displays a currently
valid OMB control number.
VI. Unfunded Mandates Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law
104-4 (Unfunded Mandates Act), requires that an agency prepare a
budgetary impact statement before promulgating a rule that includes a
federal mandate that may result in expenditure by state, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. This final rule simplifies
existing procedures and should reduce regulatory burden. The OTS has
determined that the final rule will not result in expenditures by
state, local or tribal governments or by the private sector of $100
million or more. Accordingly, this rulemaking is not subject to section
202 of the Unfunded Mandates Act.
VII. Effective Date
Section 553(d) of the Administrative Procedure Act (``APA'')
requires an agency to publish a substantive rule at least 30 days
before its effective date. Section 553(d)(1) of the APA, however,
permits an agency to waive the normal 30-day delay in effective date
for good cause or when a rule relieves a restriction.
The final rule is exempt from the 30-day delayed effective date
requirement. Initially, we note that the 30-day delayed effective date
requirement applies only to substantive rulemaking. Today's rule is
primarily a procedural rule that regulates the manner in which
applicants and commenters present their viewpoints on pending
applications to the OTS. Moreover, to the extent that the rule may have
any impact on the rights or interest of any party, the rule relieves
restrictions by streamlining the public comment process.
List of Subjects
12 CFR Part 516
Administrative practice and procedure, Reporting and recordkeeping
requirements, Savings associations.
12 CFR Part 543
Reporting and recordkeeping requirements, Savings associations.
12 CFR Part 545
Accounting, Consumer protection, Credit, Electronic funds
transfers, Investments, 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 563
Accounting, Advertising, Crime, Currency, Investments, Reporting
and recordkeeping requirements, Savings associations, Securities,
Surety bonds.
Accordingly, the Office of Thrift Supervision amends title 12,
chapter V, of the Code of Federal Regulations as set forth below:
PART 516--APPLICATION PROCESSING GUIDELINES AND PROCEDURES
1. The authority citation for part 516 is revised to read as
follows:
Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1462a, 1463, 1464, 2901
et seq.
2. Existing Secs. 516.1, 516.2 and 516.3 are redesignated as
subpart A, and the subpart heading is added to read as follows:
Subpart A--Application Processing Guidelines
Sec. 516.2 [Amended]
3. Section 516.2(c)(6) is removed and reserved.
4. Subpart B, consisting of Secs. 516.50 through 516.80, is added
to read as follows:
Subpart B--Publication Requirements
Sec.
516.50 Who must publish a public notice of an application?
516.60 When must I publish the public notice?
516.70 Where must I publish the public notice?
516.80 What language must I use in my publication?
Subpart B--Publication Requirements
Sec. 516.50 Who must publish a public notice of an application?
This subpart applies whenever an OTS regulation requires an
applicant (``you'') to follow the public notice procedures in this
subpart.
[[Page 64144]]
Sec. 516.60 When must I publish the public notice?
You must publish a public notice of the application no earlier than
seven days before and no later than the date of filing of the
application.
Sec. 516.70 Where must I publish the public notice?
You must publish the notice in a newspaper having a general
circulation in the following communities:
(a) The community in which your home office(s) are located, or if
you are filing an application for permission to organize, the community
in which your home office will be located; and
(b) If you are filing a branch application, the community to be
served by the branch office.
Sec. 516.80 What language must I use in my publication?
(a) English. You must publish the notice in a newspaper printed in
the English language.
(b) Other than English. If the OTS determines that the primary
language of a significant number of adult residents of the community is
a language other than English, the OTS may require that you
simultaneously publish additional notice(s) in the community in the
appropriate language(s).
5. Subpart C, consisting of Secs. 516.100 through 516.150, is added
to read as follows:
Subpart C--Comment Procedures
Sec.
516.100 What does this subpart do?
516.110 Who may submit a written comment?
516.120 What information should I include in my comment?
516.130 Where do I file my comment?
516.140 When do I file my comment?
516.150 Will I have additional opportunities to discuss the
application?
Subpart C--Comment Procedures
Sec. 516.100 What does this subpart do?
This subpart contains the procedures governing the submission of
public comments on certain types of applications or notices
(``applications'') pending before the OTS. It applies whenever a
regulation incorporates the procedures in this subpart, or where
otherwise required by the OTS.
Sec. 516.110 Who may submit a written comment?
Any person (``you'') may submit a written comment supporting or
opposing an application.
Sec. 516.120 What information should I include in my comment?
(a) Your comment should recite relevant facts, including any
demographic, economic, or financial data, supporting your position. If
you file a comment opposing an application, your comment should also:
(1) Address at least one of the reasons a relevant regulation lists
as to why the OTS may deny an application;
(2) Recite any relevant facts and supporting data addressing these
reasons; and
(3) Address how the approval of the application could harm you or
any community.
(b) If you wish to request an informal meeting under Sec. 516.170,
you must file a request with your comment. You should describe the
nature of the issues or facts to be discussed and the reasons why
written submissions are insufficient to adequately address these facts
or issues.
Sec. 516.130 Where do I file my comment?
You must file your comment with the OTS office(s) set forth at
Sec. 516.1(c). If you request an informal meeting under Sec. 516.170,
you must simultaneously send a copy of the request to the applicant.
Sec. 516.140 When do I file my comment?
(a) General. Except as provided in paragraph (b) of this section,
you must file a written comment with the OTS within 25 days after the
application is filed with the OTS.
(b) Late-filed comments. The OTS will consider your late-filed
comment if:
(1) Within the comment period, you demonstrate to the OTS good
cause why you could not submit a timely comment; and
(2) The OTS concludes that your comment addresses a significant
regulatory concern and will assist in disposing of the application.
Sec. 516.150 Will I have additional opportunities to discuss the
application?
The OTS may provide you with additional opportunities to discuss
the application in informal or formal meetings under subpart D of this
part.
6. Subpart D, consisting of Secs. 516.160 through 516.190, is added
to read as follows:
Subpart D--Meeting Procedures
516.160 What does this subpart do?
516.170 What procedures govern informal meetings on applications?
516.180 What procedures govern formal meetings on applications?
516.190 Will a meeting affect application processing time frames?
Subpart D--Meeting Procedures
Sec. 516.160 What does this subpart do?
This subpart contains informal and formal meeting procedures. It
applies whenever a regulation incorporates the procedures in this
subpart, or when otherwise required by the OTS.
Sec. 516.170 What procedures govern informal meetings on applications?
(a) When will the OTS arrange an informal meeting? The OTS may
arrange an informal meeting with the applicant, commenters, or any
other interested persons to clarify and narrow the issues and to
facilitate the resolution of the issues. If a commenter has filed a
written request for an informal meeting containing the information
described at Sec. 516.120(b), the OTS will arrange an informal meeting.
The OTS also may arrange an informal meeting on its own initiative.
(b) What action will the OTS take on an informal meeting request?
The OTS will inform the applicant and commenters requesting an informal
meeting of the OTS decision on a request for an informal meeting, or of
its decision to hold an informal meeting on its own initiative.
(c) How will the OTS inform the informal meeting participants of
the date, time, location and format for the informal meeting? The OTS
will invite the applicant and the commenter filing the request for the
informal meeting. The OTS may also invite any other interested persons
to attend. The OTS will inform the participants of the date, time,
location, and format for the informal meeting a reasonable time in
advance of the informal meeting.
(d) What procedures will govern the conduct of the informal
meeting? The OTS may hold informal meetings in any format, including a
telephone conference or face-to-face meeting.
(e) Will there be an additional opportunity to discuss the
application? Within three days after the informal meeting, any
participant in the informal meeting may request the OTS to hold a
formal meeting under Sec. 516.180. The participant should describe the
nature of the issues or facts to be presented and the reasons why a
formal meeting is necessary to make an adequate presentation of the
facts or issues. The participant must file the request with the OTS and
send copies of the request to other participants in the informal
meeting.
Sec. 516.180 What procedures govern formal meetings on applications?
(a) When will the OTS hold a formal meeting? The OTS will not grant
a request for a formal meeting unless an informal meeting has been
conducted under Sec. 516.170. The OTS will grant all requests for a
formal meeting filed under Sec. 516.170(e). The OTS may also
[[Page 64145]]
hold a formal meeting on its own initiative, if it determines that
written submissions and informal meetings are insufficient to
adequately present issues or facts to the OTS, or that a formal meeting
would otherwise benefit the decisionmaking process. The OTS may limit
the issues considered at the formal meeting to issues that the OTS
deems relevant or material.
(b) How will the OTS announce the formal meeting? The OTS will
issue a Notice of Formal Meeting that will state the subject and date
of the filing, the time and place of the formal meeting and the issues
to be addressed. The OTS will send the Notice to the applicant and any
person requesting a formal meeting under Sec. 516.170(e). The OTS may
also invite other interested persons to participate in the formal
meeting by sending the Notice to such persons.
(c) Who may participate in the formal meeting? A person receiving a
Notice must notify the OTS of its intent to participate within ten days
after the OTS issues the Notice. At least five days before the formal
meeting, all participants in the formal meeting must provide the names
of their witnesses and copies of proposed exhibits to the OTS, the
applicant, and any other person designated by the OTS.
(d) Will the formal meeting be transcribed? The OTS will arrange
for a transcript. Each participant must bear the cost of any copies of
the transcript it requests for its use.
(e) What procedures govern the conduct of the formal meeting? (1)
The OTS will appoint a presiding officer to conduct the formal meeting.
The presiding officer is responsible for all procedural questions not
governed by this section. Subject to the rulings of the presiding
officer, a participant may make opening statements and present
witnesses, material and data. If a participant presents documentary
material, it must furnish copies of the material to the OTS and to each
other participant. The OTS may keep the formal meeting record open for
additional information for up to 14 days following the receipt of the
transcript.
(2) The Administrative Procedure Act (5 U.S.C. 551 et seq.), the
Federal Rules of Evidence (28 U.S.C. Appendix), the Federal Rules of
Civil Procedure (28 U.S.C. Rule 1 et seq.) and the OTS Rules of
Practice and Procedure in Adjudicatory Proceedings (12 CFR part 509) do
not apply to formal meetings under this section.
Sec. 516.190 Will a meeting affect application processing time frames?
If the OTS has arranged a meeting, it will suspend applicable
application processing time frames, including the time frames for
deeming an application complete and the applicable approval time frames
specified in Sec. 516.2 or 516.3. The time period will resume when the
OTS determines that a record has been developed that sufficiently
supports a determination on the issues raised in the comments.
PART 543--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL
MUTUAL ASSOCIATIONS
7. The authority citation for part 543 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et
seq.
8. In Sec. 543.2, paragraph (c) is removed and reserved and
paragraphs (d)(1), (d)(3), (d)(4), (e), (f) and (h)(1) are revised to
read as follows:
Sec. 543.2 Application for permission to organize.
* * * * *
(d) * * *
(1) The applicant must publish a public notice of the application
to organize in accordance with the procedures specified in subpart B of
part 516 of this chapter.
* * * * *
(3) The OTS shall give notice of the application to the State
official who supervises savings associations in the State in which the
new association is to be located.
(4) Any person may inspect the application and all related
communications at the Regional Office during regular business hours,
unless such information is exempt from public disclosure.
(e) Submission of comments. Commenters may submit comments on the
application in accordance with the procedures specified in subpart C of
part 516 of this chapter.
(f) Meetings. The OTS may arrange informal or formal meetings in
accordance with the procedures specified in subpart D of part 516 of
this chapter.
* * * * *
(h) * * *
(1) Applications for permission to organize an interim Federal
savings association are not subject to paragraphs (d), (e), (f) or
(g)(2) of this section.
* * * * *
PART 545--OPERATIONS
9. The authority citation for part 545 continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.
10. In Sec. 545.92, paragraphs (d), (e) heading, (e)(2) and (f) are
revised, and paragraphs (i) and (j) are removed to read as follows:
Sec. 545.92 Branch offices.
* * * * *
(d) Processing of applications/notices. Processing of applications
and notices shall be subject to the following procedures:
(1) Publication. (i) A federal savings association must publish a
public notice of the branch application or notice in accordance with
the procedures specified in subpart B of part 516 of this chapter.
(ii) Promptly after publication of the public notice, the savings
association shall transmit copies of the public notice and publisher's
affidavit of publication to the OTS.
(iii) The application or notice and all related communications may
be inspected by any person at the Regional Office during regular
business hours, unless such information is exempt from public
disclosure.
(2) Submission of application or notice. A Federal savings
association must comply with Sec. 556.5 of this chapter and shall file
the application required under Sec. 516.3(b)(2) of this chapter or the
notice required under Sec. 516.3(a) of this chapter within three days
after the publication of the public notice under paragraph (d)(1) of
this section.
(3) Submission of comments. Commenters may submit comments on the
application or notice in accordance with the procedures specified in
subpart C of part 516 of this chapter.
(4) Meetings. The OTS may arrange informal or formal meetings in
accordance with the procedures specified in subpart D of part 516 of
this chapter.
(e) Approval of branch application.
* * * * *
(2) An application shall be deemed to be approved 30 days after
notification that the application is complete, unless the OTS suspends
the applicable processing time frames under Sec. 516.190 of this
chapter, or the OTS objects to the application on the grounds set forth
under paragraph (e)(1) of this section.
(f) Approval of branch notice. A notice filed by a Federal savings
association that qualifies for expedited treatment shall be deemed to
be approved 30 days after its filing with the OTS, unless the OTS
suspends the applicable processing time frames under Sec. 516.190 of
this chapter; the OTS objects to the application on the grounds set
forth in paragraph (e)(1) of this section; or the OTS determines to
[[Page 64146]]
process the filing as an application under Sec. 516.3(a)(3) of this
chapter. If the OTS suspends the applicable processing time frames, the
savings association may not open a branch until the OTS provides a
notification of its approval.
* * * * *
11. In Sec. 545.95, paragraph (a) and paragraph (b)(1)(ii) are
revised to read as follows:
Sec. 545.95 Change of office location and redesignation of offices.
(a) Eligibility. A Federal savings association may change the
permanent location of its home office or any approved branch office, or
redesignate a home or branch office subject to the appropriate
expedited or standard treatment procedures for establishing a branch
office set forth in Sec. 545.92 of this part.
(b) * * *
(1) * * *
(ii) The applicant shall post notice of the application for 25 days
from the date of first publication in a prominent location in the
office to be closed or redesignated.
* * * * *
PART 552--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL
STOCK ASSOCIATIONS
12. The authority citation for part 552 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.
13. Section 552.2-1 is amended by revising paragraph (a) to read as
follows:
Sec. 552.2-1 Procedure for organization of Federal stock association.
(a) Application for permission to organize. Applications for
permission to organize a Federal stock association are subject to this
section and to Sec. 543.3 of this chapter. Recommendations by employees
of the OTS regarding applications for permission to organize are
privileged, confidential, and subject to Sec. 510.5 (b) and (c) of this
chapter. The processing of an application under this section shall be
subject to the following procedures:
(1) Publication. (i) The applicant shall publish a public notice of
the application to organize in accordance with the procedures specified
in subpart B of part 516 of this chapter.
(ii) Promptly after publication of the public notice, the applicant
shall transmit copies of the public notice and publisher's affidavit of
publication to the OTS in the same manner as the original filing.
(iii) Any person may inspect the application and all related
communications at the Regional Office during regular business hours,
unless such information is exempt from public disclosure.
(2) Notification to interested parties. The OTS shall give notice
of the application to the State official who supervises savings
associations in the State in which the new association is to be
located.
(3) Submission of comments. Commenters may submit comments on the
application in accordance with the procedures specified in subpart C of
part 516 of this chapter.
(4) Meetings. The OTS may arrange informal or formal meetings in
accordance with the procedures specified in subpart D of part 516 of
this chapter.
* * * * *
14. Section 552.2-2 is amended by revising paragraph (a) to read as
follows:
Sec. 552.2-2 Procedures for organization of interim Federal stock
association.
(a) Applications for permission to organize an interim Federal
savings association are not subject to subparts B, C and D of part 516
of this chapter or Sec. 552.2-1(b)(3) of this part.
* * * * *
PART 556--STATEMENTS OF POLICY
15. 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.
16. Section 556.5 is amended by revising paragraph (c)(4) to read
as follows:
Sec. 556.5 Branching by Federal savings associations.
* * * * *
(c) * * *
(4) Comment procedures. Comments on applications for branches must
be submitted in writing and factually documented. Comment procedures
are set forth in subpart C of part 516 of this chapter, Sec. 563e.29
(c) and (d) of this chapter, the OTS Application Processing Handbook,
and other supervisory guidance issued by the OTS.
* * * * *
PART 563--OPERATIONS
17. The authority citation for part 563 continues to read as
follows:
Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468,
1817, 1828, 3806; 42 U.S.C. 4012a, 4104a, 4104b, 4106, 4128.
18. Section 563.22 is amended by revising paragraphs (e)(1), (e)(4)
and (f)(3) to read as follows:
Sec. 563.22 Merger, consolidation, purchase or sale of assets, or
assumption of liabilities.
* * * * *
(e)(1) Unless the OTS finds that it must act immediately in order
to prevent the probable default of one of the savings associations
involved, the applicant must publish a public notice of the application
in accordance with the procedures specified in subpart B of part 516 of
this chapter. In addition to initial publication, the applicant must
publish on a weekly basis during the period allowed for furnishing
reports under paragraph (e)(2) of this section.
* * * * *
(4) Commenters may submit comments on the application in accordance
with the procedures set forth in subpart C of part 516 of this chapter,
except that comments may be submitted at any time during the period
described in paragraph (e)(2) of this section. The OTS may arrange
informal or formal meetings in accordance with the procedures set forth
in subpart D of part 516 of this chapter.
* * * * *
(f) * * *
(3) The OTS suspends the applicable processing time frames under
Sec. 516.190 of this chapter;
* * * * *
Dated: November 26, 1997.
By the Office of Thrift Supervision.
Ellen Seidman,
Director.
[FR Doc. 97-31612 Filed 12-3-97; 8:45 am]
BILLING CODE 6720-01-M