[Federal Register Volume 64, Number 58 (Friday, March 26, 1999)]
[Rules and Regulations]
[Pages 14577-14578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7408]


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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: Final rule.

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SUMMARY: The Board of Governors of the Federal Reserve System (the 
Board) recognizes that banks are currently dedicating their automation 
resources to addressing Year 2000 and leap year computer problems and 
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, without jeopardizing their Year 2000 or other 
programming efforts. Therefore, the Board is amending Regulation CC to 
allow banks that consummate a merger on or after July 1, 1998, and 
before March 1, 2000, greater time to implement software changes 
related to the merger.

EFFECTIVE DATE: April 1, 1999.

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: On December 2, 1998, the Board proposed 
amending 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. (63 FR 
66499). The proposal did not affect applications under the Bank Merger 
Act or the Bank Holding Company Act. The Board proposed this amendment 
because it recognizes that banks are currently dedicating their 
automation resources to addressing Year 2000 and leap year computer 
problems and may be challenged to make and test other programming 
changes, including those that may be required to comply with Regulation 
CC, without jeopardizing their Year 2000 or other programming efforts.
    The Board received 15 comments on the proposed rule from the 
following types of institutions:

Banks/thrifts--3
Trade associations--3
Federal Reserve Banks--3
Clearinghouses--3
Bank holding companies--3

All of the commenters generally supported the Board's proposal and 
viewed it as aiding banks' efforts to focus programming resources on 
renovating and testing software systems to address Year 2000 rollover 
and leap year computer problems. Nine commenters urged the Board, 
however, to lengthen the proposed extension of the transition period, 
and generally recommended that a more liberal transition period be 
applicable to banks that consummate mergers in 2000.
    These commenters stated that adopting an extension into the Year 
2000 would enable banks to delay merger programming work so that they 
may focus greater resources on addressing the Year 2000 computer 
problem. In particular, it would enable merged banks that were Year 
2000 compliant as separate entities to delay merging their systems 
until after key Year 2000 events (the century rollover and leap year), 
which would enable them to avoid reprogramming and retesting already 
Year 2000 compliant systems prior to spring 2000. Finally, one 
commenter noted that extending the period into the Year 2000 would help 
ensure that banks have sufficient resources to address unanticipated 
Year 2000 problems that may arise at the turn of the century.
    For these reasons, the Board has decided to further extend the 
transition period. The final rule allows banks that consummate a merger 
on or after July 1, 1998, and before March 1, 2000, to be treated as 
separate banks until March 1, 2001. Beginning in March 2000, banks that 
merge will be subject to the normal one-year transition period.

Final Regulatory Flexibility Analysis

    Two of the three requirements of a final regulatory flexibility 
analysis (5 U.S.C. 604), (1) a succinct statement of the need for and 
the objectives of the rule and (2) a summary of the issues raised by 
the public comments, the agency's assessment of the issues, and a 
statement of the changes made in the final rule in response to the 
comments, are discussed above. The third requirement of a final 
regulatory flexibility analysis is a description of significant 
alternatives to the rule that would minimize the rule's economic impact 
on small entities and reasons why the alternatives were rejected.
    The final rule will apply to all depository institutions regardless 
of size. The 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. Because the amendments should not have a negative 
economic effect on small institutions there were no significant 
alternatives that would have minimized the economic impact on those 
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 March 
1, 2000. If banks have consummated a merger transaction on or after 
July 1, 1998, and before March 1, 2000, the merged banks may be 
considered separate banks until March 1, 2001.
    3. Section 229.40 is redesignated as Sec. 299.40 (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 March 
1, 2000. If banks have consummated a merger transaction on or after 
July 1, 1998, and

[[Page 14578]]

before March 1, 2000, the merged banks may be considered separate banks 
until March 1, 2001.

    By order of the Board of Governors of the Federal Reserve 
System, March 22, 1999.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 99-7408 Filed 3-25-99; 8:45 am]
BILLING CODE 6210-01-P