[Federal Register Volume 63, Number 227 (Wednesday, November 25, 1998)]
[Rules and Regulations]
[Pages 65043-65044]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31508]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 63, No. 227 / Wednesday, November 25, 1998 / 
Rules and Regulations  

[[Page 65043]]


-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM

12 CFR Part 265

[Docket No. R-1025]


Rules Regarding Delegation of Authority

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Board is amending its Rules Regarding Delegation of 
Authority (12 CFR Part 265) pursuant to sections 11(i) and (k) of the 
Federal Reserve Act (12 U.S.C. 248(i) and (k)). Specifically, the Board 
is revising and expanding the delegation of authority to the Director 
of Division of Consumer and Community Affairs to include: issuing 
interpretations under the Fair Credit Reporting Act, adjusting the 
dollar amount to determine coverage under the Home Ownership and Equity 
Protection Act, adjusting the depository institution exemption 
threshold under the Home Mortgage Disclosure Act, making certain 
determinations under the Community Reinvestment Act regulations, and 
holding public hearings on financial service issues in keeping with 
congressional mandates.

EFFECTIVE DATE: November 25, 1998.

FOR FURTHER INFORMATION CONTACT: Pamela Morris Blumenthal, Staff 
Attorney, Division of Consumer and Community Affairs, at (202) 452-
3667; for users of Telecommunications Device for the Deaf (TDD) only, 
contact Diane Jenkins at (202) 452-3544.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 11(k) of the Federal Reserve Act (12 U.S.C. 248(k)) 
provides that the Board may delegate any of its functions, other than 
those relating to rulemaking or pertaining principally to monetary and 
credit policies, to members or employees of the Board. Section 11(i) 
authorizes the Board to make rules and regulations necessary to enable 
the Board to perform its duties effectively.
    Several consumer protection statutes impose a number of duties on 
the Board. These include issuing interpretations and applying formulas 
for determining exemption from or application of a statutory provision. 
The Board is delegating authority for the tasks described below to the 
Director of Division of Consumer and Community Affairs (DCCA) to enable 
the Board to fulfill its responsibilities more efficiently by 
eliminating the need for Board review of certain technical matters and 
administrative duties.
    Delegation of the responsibilities described below does not relate 
to rulemaking or monetary and credit policies and is consistent with 
previous Board practices with respect to interpretations and actions 
required under consumer protection statutes.

II. Analysis of Revisions

Clarifications to Authority to Issue Examination Manuals, Forms, and 
Other Materials

    The following clarifying revisions are being made to the authority 
delegated to the DCCA Director: (1) in Sec. 265.9(a), the text has been 
clarified and the Truth in Savings Act has been added to the list of 
statutes for which the Director may issue manuals, forms, and other 
materials; (2) in Sec. 265.9(a)(1), the titles of acts encompassed in 
the statutory citations have been added; (3) a new paragraph 
265.9(a)(8) has been added to reference the provisions of the Truth in 
Savings Act; and (4) in Sec. 265.9(c)(1), (c)(4) and (c)(5), the text 
has been clarified by adding a reference to the particular section of 
the controlling regulations.

Interpretations under the Fair Credit Reporting Act

    Section 621(e) of the Fair Credit Reporting Act (FCRA; 15 U.S.C. 
1681s(e)) authorizes the Board to issue interpretations of the FCRA as 
it applies to depository institutions and their holding companies and 
affiliates. The Board is directed to consult with the other federal 
financial supervisory agencies in connection with such interpretations.
    The FCRA is part of the Consumer Credit Protection Act that 
encompasses statutes such as the Truth in Lending Act (15 U.S.C. 1601-
1667e) and the Equal Credit Opportunity Act (15 U.S.C. 1691-1691f). 
This delegation parallels authority delegated to DCCA officials to 
issue official staff interpretations of the regulations. (See 12 CFR 
part 226, App. C; 12 CFR part 202, App. D, respectively.) (Unlike TILA, 
the ECOA, and several other statutes, the FCRA does not assign the 
Board or any other agency the authority to issue implementing 
regulations.) Delegating interpretive authority enables the Board to 
provide guidance more efficiently by eliminating the need for Board 
review of minor matters and technical issues.

Annual adjustments under TILA and HMDA

    TILA requires creditors to disclose credit terms. TILA is 
implemented by the Board's Regulation Z (12 CFR Part 226). The Home 
Ownership and Equity Protection Act of 1994 (Pub. L. 103-325, 108 Stat. 
2160) amended TILA to include additional disclosure requirements and 
restrictions for home-secured loans with total points and fees 
exceeding the greater of $400 or 8 percent of the total loan amount. 
Congress directed the Board to adjust the $400 amount annually 
effective January 1 based on the annual percentage change in the 
Consumer Price Index (CPI) as reported on June 1 of the year preceding 
the adjustment. 15 U.S.C. 1602(aa)(3). Section 226.32(a)(1)(ii) of 
Regulation Z implements the statutory requirement.
    The Home Mortgage Disclosure Act (HMDA; 12 U.S.C. 2801-2810) 
requires most mortgage lenders located in metropolitan statistical 
areas to collect data about their housing-related lending activity. The 
Board's Regulation C (12 CFR Part 203) implements HMDA. Provisions of 
the Economic Growth and Regulatory Paperwork Reduction Act of 1996 
(Pub. L. 104-208, 110 Stat. 3009) amended HMDA to modify the exemption 
threshold for small depository institutions. The amendments direct the 
Board to adjust the depository institution exemption threshold annually 
based on the annual percentage change in the CPI for Urban Wage Earners 
and Clerical Workers. Section 203.3(a)(1)(ii) of Regulation C sets 
forth the formula for determining the annual adjustment.

[[Page 65044]]

    The Board is delegating implementation of these annual adjustments, 
which require application of a mathematical formula, to the Director of 
DCCA.

Community Reinvestment Act determinations

    The Community Reinvestment Act (12 U.S.C. 2901-2907) requires the 
federal financial supervisory agencies to assess how depository 
institutions are meeting the credit needs of their communities in 
connection with the examination of each institution by its regulator. 
Each agency is authorized to issue regulations implementing the act. 
Regulation BB (12 CFR part 228) sets forth the standards the Board will 
apply in evaluating a bank's performance in meeting its community's 
credit needs.
    Section 228.25 of Regulation BB permits the Board to approve or 
disapprove a bank's request to be designated as a wholesale or limited-
purpose bank, and to revoke such designation as appropriate. In 
addition, the Board may approve or disapprove a bank's strategic plan 
submitted pursuant to section 228.27. These tasks require application 
of criteria established in the regulation. The Board is delegating 
authority to make these determinations to the Director of DCCA to 
implement review of proposed strategic plans and to respond to 
designation requests without the need for Board review.

Public hearings on consumer law issues

    The Congress on occasion directs the Board to conduct public 
hearings or other proceedings regarding consumer law issues. For 
example, the Riegle Community Development and Regulatory Improvement 
Act of 1994 required the Board to hold hearings on home-equity lending 
within two years and periodically thereafter. The Board is delegating 
to the Director of DCCA the authority to arrange and conduct these 
proceedings in keeping with congressional mandates.

III. Public Comment Not Required

    The Administrative Procedures Act provides that notice and 
opportunity for public comment are not required for rules of agency 
organization, procedure, or practice. 5 U.S.C. 553(b)(3)(A). Since the 
regulatory changes described above are procedural and do not constitute 
a substantive rule subject to the requirements of section 553(b) of the 
Administrative Procedures Act, the Board, for good cause, finds that 
notice and public comment in connection with this amendment are 
unnecessary.

List of Subjects in 12 CFR Part 265

    Authority delegations (Government agencies), Banks, banking, 
Federal Reserve System.
    For the reasons set forth above, the Board amends part 265 in 
chapter II of title 12 of the Code of Federal Regulations as set forth 
below:

PART 265--RULES REGARDING DELEGATION OF AUTHORITY

    1. The authority citation for part 265 continues to read as 
follows:

    Authority: 12 U.S.C. 248(i) and (k).

    2. Section 265.9 is amended by revising paragraphs (a) introductory 
text, (a)(1), (c)(1), (c)(4), and (c)(5), and adding new paragraphs 
(a)(8) and (d) through (g). The revisions and additions read as 
follows:


Sec. 265.9  Functions delegated to the Director of Division of Consumer 
and Community Affairs.

* * * * *
    (a) Issuing examination manuals, forms, and other materials. To 
issue examination or inspection manuals; report, agreement, and 
examination forms; examination procedures, guidelines, instructions, 
and other similar materials pursuant to: section 11(a) of the Federal 
Reserve Act (12 U.S.C. 248(a)); sections 108(b), 621(c), 704(b), 
814(c), and 917(b) of the Consumer Credit Protection Act (15 U.S.C. 
1607(b), 1681s(b), 1691c(b), 1692l(c) and 1693o(b)); section 305(c) of 
the Home Mortgage Disclosure Act (12 U.S.C. 2804(c)); section 18(f)(3) 
of the Federal Trade Commission Act (15 U.S.C. 57a(f)(3)); section 
808(c) of the Civil Rights Act of 1968 (42 U.S.C. 3608(c)); section 
270(b) of the Truth in Savings Act (12 U.S.C. 4309); and section 5 of 
the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)). The foregoing 
manuals, forms, and other materials are for use within the Federal 
Reserve System in the administration of enforcement responsibilities in 
connection with:
    (1) Sections 1-200 and 501-921 of the Consumer Credit Protection 
Act (15 U.S.C. 1601-1693r), in regard to the Truth in Lending Act, the 
Consumer Leasing Act, the Equal Credit Opportunity Act, the Electronic 
Fund Transfer Act, the Fair Credit Reporting Act and the Fair Debt 
Collection Practices Act;
* * * * *
    (8) Sections 261-274 of the Truth in Savings Act (12 U.S.C. 4301-
4313).
* * * * *
    (c) Determining inconsistencies between state and federal laws. * * 
*
    (1) Sections 111, 171(a) and 186(a) of the Truth in Lending Act (15 
U.S.C. 1610(a), 1666j(a), 1667e(a)) and Sec. 226.28 of Regulation Z (12 
CFR part 226) and Sec. 213.7 of Regulation M (12 CFR part 213);
* * * * *
    (4) Section 306(a) of the Home Mortgage Disclosure Act (12 U.S.C. 
2805(a)) and Sec. 203.3 of Regulation C (12 CFR part 203); and
    (5) Section 273 of the Truth in Savings Act (12 U.S.C. 4312) and 
Sec. 230.1 of Regulation DD (12 CFR part 230).
    (d) Interpreting the Fair Credit Reporting Act. To issue 
interpretations pursuant to section 621(e) of the Fair Credit Reporting 
Act (15 U.S.C. 1681s(e));
    (e) Annual adjustments. To adjust as required by law:
    (1) The amount specified in section 103(aa)(1)(B)(ii) of the Truth 
in Lending Act and Sec. 226.32(a)(1)(ii) of Regulation Z (12 CFR part 
226), relating to mortgages bearing fees above a certain amount in 
accord with section 103(aa)(3) of that act (15 U.S.C. 1602(aa)); and
    (2) The amount specified in section 309(b)(1) of the Home Mortgage 
Disclosure Act (12 U.S.C. 2808(b)(1)) and Sec. 203.3(a)(1)(ii) of 
Regulation C (12 CFR part 203) relating to the asset threshold above 
which a depository institution must collect and report data.
    (f) Community Reinvestment Act determinations. To make 
determinations, pursuant to section 804 of the Community Reinvestment 
Act (12 U.S.C. 2903), approving or disapproving:
    (1) Strategic plans and any amendments thereto pursuant to 
Sec. 228.27(g) and (h) of Regulation BB (12 CFR part 228); and
    (2) Requests for designation as a wholesale or limited purpose bank 
or the revocation of such designation, pursuant to Sec. 228.25(b) of 
Regulation BB (12 CFR part 228).
    (g) Public hearings. To conduct hearings or other proceedings 
required by law, concerning consumer law or other matters within the 
responsibilities of the Division of Consumer and Community Affairs, in 
consultation with other interested divisions of the Board where 
appropriate.
* * * * *
    By order of the Board of Governors of the Federal Reserve 
System, November 20, 1998.
Robert deV. Frierson,
Associate Secretary of the Board.
[FR Doc. 98-31508 Filed 11-24-98; 8:45 am]
BILLING CODE 6210-01-P