[Federal Register Volume 63, Number 231 (Wednesday, December 2, 1998)]
[Proposed Rules]
[Pages 66499-66500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32051]


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FEDERAL RESERVE SYSTEM

12 CFR Part 229

[Regulation CC; Docket No. R-1027]


Availability of Funds and Collection of Checks

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Board of Governors of the Federal Reserve System (the 
Board) is proposing to amend Regulation CC to allow banks that 
consummate a merger on or after July 1, 1998, and before June 1, 1999, 
greater time to implement software changes related to the merger.

DATES: Comments must be received by January 4, 1999.

ADDRESSES: Comments, which should refer to Docket No. R-1027, may be 
mailed to Ms. Jennifer Johnson, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, N.W., 
Washington, D.C. 20551. Comments addressed to Ms. Johnson may also be 
delivered to the Board's mail room between 8:45 a.m. and 5:15 p.m., and 
to the security control room at all other times. Both the mail room and 
the security control room are accessible from the courtyard entrance on 
20th Street between Constitution Avenue and C Street, N.W. Comments may 
be inspected in room MP-500, pursuant to Sec. 261.12 of the Board's 
Rules Regarding Availability of Information, between 9:00 a.m. and 5:00 
p.m., except as provided in Sec. 261.14 of those same Rules. (12 CFR 
261.12 and 261.14)

FOR FURTHER INFORMATION CONTACT: Jean Anderson, Staff Attorney, Legal 
Division (202/452-3707). For the hearing impaired only, 
Telecommunications Device for the Deaf (TDD), Diane Jenkins (202/452-
3544).

SUPPLEMENTARY INFORMATION: The Board is proposing to amend Regulation 
CC to allow banks that consummate merger transactions on or after July 
1, 1998, and before June 1, 1999, greater time to implement software 
changes related to the merger. The Board recognizes that banks are 
currently dedicating their automation resources to renovating and 
testing software and replacing noncompliant systems to address Year 
2000 and leap year computer problems. Because a large amount of banks' 
automation resources may be dedicated to these efforts, banks may be 
challenged to make and test other programming changes, including those 
that may be required to comply with Regulation CC's merger transition 
provisions, thus potentially jeopardizing the success of their Year 
2000 efforts and/or their system integration efforts due to the merger. 
Therefore, the Board is proposing to allow banks that consummate a 
merger on or after July 1, 1998, and before June 1, 1999, to be treated 
as separate banks until June 1, 2000. Beginning in June 1999, the 
normal one-year transition period will resume.
    The Board requests comment on the need for this amendment and 
whether the proposed liberalization of the regulation's merger 
transition provisions is adequate to avoid contention for programming 
and testing resources necessary to manage banks' Year 2000 readiness 
efforts that otherwise would be created by these requirements.

Initial Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires an 
agency to publish an initial regulatory flexibility analysis with any 
notice of proposed rulemaking. The initial regulatory flexibility 
analysis (5 U.S.C. 603(b)) requires an agency to describe the reasons 
why the proposed rule is being considered and a statement of the 
objectives of, and legal basis for, the proposed rule. The 
``Supplementary Information'' above, contains this information. The 
proposed rule requires no additional reporting or recordkeeping 
requirements and does not overlap with other federal rules.
    The initial regulatory flexibility analysis also requires a 
description of,

[[Page 66500]]

and where feasible, an estimate of the number of small entities to 
which the proposed rule will apply. The proposal will apply to all 
insured banks, as defined in section 3 of the Federal Deposit Insurance 
Act (12 USC 1813) as well as banks that are eligible to apply to become 
an insured bank under section 5 of that act (12 U.S.C. 1815). As of 
June 30, 1998, there were 10,712 insured banks. The proposed amendments 
are intended to provide relief to banks involved in mergers, including 
small institutions, by reducing required changes to their automation 
environment during the period surrounding the century rollover, and 
should not have a negative economic effect on small institutions.

List of Subjects in 12 CFR Part 229

    Banks, banking, Federal Reserve System, Reporting and recordkeeping 
requirements.
    For the reasons set forth in the preamble, the Board proposes to 
amend Regulation CC, 12 CFR part 229 as set forth below:

PART 229--AVAILABILITY OF FUNDS AND COLLECTION OF CHECKS 
(REGULATION CC)

    1. The authority citation for part 229 continues to read as 
follows:

    Authority: 12 U.S.C. 4001 et seq.

    2. In Sec. 229.19, paragraph (g) is redesignated as paragraph 
(g)(1), a heading is added for newly designated paragraph (g)(1), and a 
new paragraph (g)(2) would be added to read as follows:


Sec. 229.19  Miscellaneous.

* * * * *
    (g) Effect of merger transaction. (1) In general. * * *
    (2) Merger transactions on or after July 1, 1998, and before June 
1, 1999. If banks have consummated a merger transaction on or after 
July 1, 1998, and before June 1, 1999, the merged banks may be 
considered separate banks until June 1, 2000.
    3. In Sec. 229.40 the existing text is redesignated as paragraph 
(a), a heading is added for newly designated paragraph (a), and a new 
paragraph (b) would be added to read as follows:


Sec. 229.40  Effect of merger transaction.

    (a) In general. * * *
    (b) Merger transactions on or after July 1, 1998, and before June 
1, 1999. If banks have consummated a merger transaction on or after 
July 1, 1998, and before June 1, 1999, the merged banks may be 
considered separate banks until June 1, 2000.

    By order of the Board of Governors of the Federal Reserve 
System, November 25, 1998.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 98-32051 Filed 12-1-98; 8:45 am]
BILLING CODE 6210-01-P