[Federal Register Volume 65, Number 55 (Tuesday, March 21, 2000)]
[Proposed Rules]
[Pages 15111-15113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6866]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 65, No. 55 / Tuesday, March 21, 2000 / 
Proposed Rules  

[[Page 15111]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 8

[Docket No. 00-09]
RIN 1557-AB72


Assessment of Fees; National Banks; District of Columbia Banks

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Office of the Comptroller of the Currency (OCC) proposes 
to amend the assessment formula it uses to assess independent trust 
banks. A trust bank is considered independent for purposes of this 
proposal if it specializes in trust activities and is not affiliated 
with a full service national bank. Under the revised rate structure, 
all trust banks would continue to be assessed based on balance sheet 
assets. However, independent trust banks with over $1 billion in trust 
assets would pay an additional assessment to reflect the supervision 
required of these banks' off-balance sheet activities, while smaller 
independent trust banks would pay a flat fee.

DATES: Comments must be received by April 20, 2000.

ADDRESSES: Comments should be directed to, and may be inspected and 
copied at: Communications Division, Office of the Comptroller of the 
Currency, 250 E Street, SW., Washington, DC 20219, Attention: Docket 
No. 00-09. In addition, comments may be sent via facsimile at (202) 
874-5274 or via Internet at [email protected].

FOR FURTHER INFORMATION CONTACT: Mitchell E.F. Plave, Senior Attorney, 
Legislative and Regulatory Activities Division, (202) 874-5090; or 
Karen McCluskey, National Bank Examiner (Trust Banks), (202) 874-7276.

SUPPLEMENTARY INFORMATION:  

I. Background

    The OCC charters, regulates, and supervises approximately 2400 
national banks and 58 Federal branches and agencies of foreign banks in 
the United States, accounting for nearly 60 percent of the nation's 
banking assets. Its mission is to ensure a safe, sound, and competitive 
national banking system that supports the citizens, communities, and 
economy of the United States.
    The OCC funds the activities it undertakes to carry out this 
mission through assessments on national banks. The National Bank Act 
authorizes the OCC to collect assessments, fees, or other charges as 
necessary or appropriate to carry out the responsibilities of the 
Office of the Comptroller. 12 U.S.C. 482 (Supp. 1999). The statute 
requires that our charges be set to meet the Comptroller's expenses in 
carrying out authorized activities. Id. The OCC, under part 8, 
currently assesses national banks and Federal branches and agencies 
according to a formula based on factors that affect the cost of our 
supervision, including a bank's size, condition, and whether it is the 
``lead'' bank or ``non-lead'' bank among national banks in a holding 
company.\1\ The regulation also authorizes the OCC to assess a fee for 
certain special examinations and for examining the fiduciary activities 
of national banks. 12 CFR 8.6(a). In recent years, however, the OCC 
stopped separately charging national banks for the cost of examining 
and supervising fiduciary activities.
---------------------------------------------------------------------------

    \1\ A ``lead bank'' is the largest national bank controlled by a 
company, based on a comparison of the total assets held by each 
national bank controlled by that company as reported in each bank's 
most recent Consolidated Report of Condition (Including Domestic and 
Foreign Subsidiaries) (Call Report). 12 CFR 8.2(a)(6)(ii)(A).
---------------------------------------------------------------------------

    Since the OCC eliminated those separate fees, the number, size, and 
complexity of the activities of independent trust banks have increased 
and their balance sheet assets increasingly do not reflect the ongoing 
scope or complexity of their activity, nor the extent of the OCC's 
supervisory responsibilities with respect to them. For example, 
although trust assets managed by a bank are not shown on the bank's 
balance sheet, the bank's fiduciary activities are subject to extensive 
regulatory standards under 12 CFR part 9 as well as under state laws 
that are made applicable to national bank fiduciary activities by 12 
U.S.C. 92a. The OCC evaluates the bank's adherence to those standards 
as part of our supervision and examination of the bank.
    This proposal would amend the OCC's assessment regulation to revise 
the formula for independent trust banks to better align our assessment 
structure for these banks with the extent of the OCC's supervisory 
responsibilities. We invite comment on any aspect of this proposal.
    The OCC notes that, while not covered by this proposed rulemaking, 
independent credit card banks raise many of the same issues that are 
raised by independent trust banks. Accordingly, the OCC anticipates 
that it soon will be publishing a proposed rule seeking comment on 
changes to the assessment structure for independent credit card banks.

II. Discussion of the Proposal and Request for Comment

    The proposal would amend 12 CFR 8.6 by adding a new paragraph (c) 
that provides the OCC with the flexibility to increase assessments on 
independent trust banks by applying either a managed assets component 
or a flat fee, depending on the amount of assets a particular bank has 
under management. The proposal defines an ``independent trust bank'' as 
a national bank that has trust powers, does not primarily offer full 
service banking, and is not affiliated with a full service national 
bank.\2\ The managed assets component and flat fee would be assessed, 
as appropriate, on independent trust banks in addition to the 
assessment calculated on book assets under 12 CFR 8.2.
---------------------------------------------------------------------------

    \2\ See Charters, Corporate Manual, Office of the Comptroller of 
the Currency at 19-20 (1998) (describing trust banks).
---------------------------------------------------------------------------

    Banks with at least $1 billion in managed assets. Independent trust 
banks with at least $1 billion in assets under management would pay a 
managed assets component that would be calculated by multiplying the 
amount of assets under management by a factor to be supplied by the OCC 
in the annual Notice of Comptroller of the Currency Fees (Notice of 
Fees) pursuant to 12 CFR 8.8. ``Assets under management'' are those 
assets reported by national banks on Schedule A, Line 18 of the Annual 
Report of Trust Assets (FFIEC Form

[[Page 15112]]

001). This figure aggregates assets over which the bank has investment 
discretion (discretionary assets) with those that it holds without 
investment discretion (non-discretionary assets), for example, in a 
custodial capacity.\3\ We invite comment on the feasibility of 
distinguishing discretionary from non-discretionary assets for 
assessment purposes by requiring banks to report these two types of 
assets separately.
---------------------------------------------------------------------------

    \3\ The Office of Thrift Supervision (OTS) recently revised its 
trust assessment structure to distinguish ``fiduciary'' from 
``nonfiduciary'' trust assets. See Thrift Bulletin TB 48-16 (January 
18, 2000). The OCC's rules do not make this distinction, but do 
distinguish assets that are held with investment discretion from 
those that are not. See 12 CFR 9.2(i) (definition of investment 
discretion in the OCC's rules governing fiduciary activities).
---------------------------------------------------------------------------

    The OCC proposes to use a declining marginal rate to calculate the 
managed assets component, with the rates declining at $1 billion and 
again at $10 billion of assets under management. While the actual rate 
will be provided in the Notice of Fees and may change as the OCC's 
experience in supervising independent trust banks changes over time, 
the OCC anticipates that a bank, in calculating each of its semiannual 
assessments, initially will multiply the first $1 billion in assets 
under management by 0.0000150, assets under management over $1 billion 
up to $10 billion by 0.0000030, and all assets under management over 
$10 billion by 0.0000005. The bank then would add the product to the 
semiannual assessment as otherwise calculated under current Part 8.\4\
---------------------------------------------------------------------------

    \4\ This approach is similar to the approach recently adopted by 
the OTS. See Assessments and Fees, 63 FR 65663 (Nov. 30 1998) (final 
rule; codified at 12 CFR part 502). The OCC's statutory assessment 
authority is similar in certain key respects to the OTS's statutory 
assessment authority. Both agencies are authorized to fund their 
expenses through such assessments as each agency finds necessary or 
appropriate. Compare 12 U.S.C. 482 with 12 U.S.C. 1467(k) (OTS 
authority to impose fees for examinations and supervisory 
activities).
---------------------------------------------------------------------------

    Banks with under $1 billion in managed assets. The OCC incurs a 
minimum cost in supervising any independent trust bank, regardless of 
size. To reflect this, the OCC proposes to require independent trust 
banks having less than $1 billion in assets under management to pay a 
flat fee in addition to the assessment the bank would pay based on the 
bank's balance sheet assets. While the actual amount of the minimum fee 
would be stated in the Notice of Fees and would be subject to change 
depending on the OCC's experience in supervising small trust banks, the 
OCC anticipates that this fee would be approximately $12,500 per 
semiannual assessment.\5\
---------------------------------------------------------------------------

    \5\ We note that the OTS's assessment rule in 12 CFR part 502 
uses a billable hours approach to assessing thrifts with total 
assets under management of $1 billion or less. We invite comment on 
both approaches.
---------------------------------------------------------------------------

III. Comment Solicitation

    The OCC requests comment on all aspects of this proposal. In 
addition, the OCC seeks comment on the impact of this proposal on 
community banks. The OCC recognizes that community banks operate with 
more limited resources than larger institutions and may present a 
different risk profile. Thus, the OCC specifically requests comment on 
the impact of the proposal on community banks' current resources, and 
whether the goals of the proposal could be achieved, for community 
banks, through an alternative approach.
    Finally, the OCC requests comment on whether the proposal is 
written clearly and is easy to understand. On June 1, 1998, the 
President issued a Memorandum directing each agency in the Executive 
branch to write its rules in plain language. This directive applies to 
all new proposed and final rulemaking documents issued on or after 
January 1, 1999. In addition, Public Law 106-102 requires each federal 
agency to use plain language in all proposed and final rules published 
after January 1, 2000. The OCC invites comment on how to make this rule 
clearer. For example, you may wish to discuss:
    (1) Whether we have organized the material to suit your needs;
    (2) Whether the requirements of the rule are clear; or
    (3) Whether there is something else we could do to make the rule 
easier to understand.

IV. Regulatory Flexibility Act

    An agency must prepare a Regulatory Flexibility Analysis if a rule 
it proposes will have a ``significant economic impact'' on a 
``substantial number of small entities.'' 5 U.S.C. 603, 605. If, after 
an analysis of a rule, an agency determines that the rule is not 
expected to have a significant economic impact on a substantial number 
of small entities, section 605(b) provides that the head of the agency 
may so certify. The OCC has reviewed the impact this proposed rule 
would have on small independent trust banks. Based on that review, the 
OCC certifies that the proposed rule will not have a significant 
economic impact on a substantial number of small entities. The basis 
for this conclusion is that the proposed rule will apply to a very 
small portion of national banks. For purposes of this Regulatory 
Flexibility Analysis and regulation, the OCC defines ``small 
independent trust banks'' to be those banks with less than $100 million 
in total assets, including managed assets. \6\ Using this definition, 
the proposed rule will affect only seven small entities, representing 
less than 1% of all national banks. The OCC does not believe this to be 
a substantial number of small entities.
---------------------------------------------------------------------------

    \6\ The OCC is using this definition for the sole purpose of 
this preliminary regulatory flexibility analysis after consulting 
with the Small Business Administration's Office of Advocacy. The 
OTS, in its assessment regulation, also consulted with the Office of 
Advocacy and defined ``small savings associations'' as those with 
less than $100 million in total assets, including off-balance sheet 
assets. See Assessments and Fees, 63 FR 43642, 43646 (1998).
---------------------------------------------------------------------------

V. Executive Order 12866

    The OCC has determined that this proposal is not a significant 
regulatory action under Executive Order 12866.

VI. Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency 
prepare a budgetary impact statement before promulgating any rule 
likely to result in a federal mandate that may result in the 
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. The OCC has determined that the proposed rule will not result in 
expenditures by state, local, and tribal governments, or by the private 
sector, of $100 million or more in any one year. Accordingly, this 
rulemaking requires no further analysis under the Unfunded Mandates 
Act.

List of Subjects in 12 CFR Part 8

    National banks.

Authority and Issuance

    For the reasons set forth in the preamble, the OCC proposes to 
amend chapter I, Part 8 of title 12 of the Code of Federal Regulations 
as follows:

PART 8--ASSESSMENT OF FEES; NATIONAL BANKS; DISTRICT OF COLUMBIA 
BANKS

    1. The authority citation for part 8 continues to read as follows:


[[Page 15113]]


    Authority: 12 U.S.C. 93a, 481, 482, and 3102 and 3108; 15 U.S.C. 
78c and 781; and 26 D.C. Code 102.

    2. In Sec. 8.6, the section heading is revised and a new paragraph 
(c) is added to read as follows:


Sec. 8.6  Fees and assessments for examinations and investigations; 
independent trust banks.

* * * * *
    (c) Additional assessments for independent trust banks. The 
assessment of independent trust banks will include a component in 
addition to the assessment calculated according to Sec. 8.2. For 
purposes of this part, an ``independent trust bank'' is a national bank 
that has trust powers, does not primarily offer full service banking, 
and is not affiliated with a full service national bank.
    (1) Managed assets component. Independent trust banks having at 
least $1 billion in trust assets as reported on Schedule A, Line 18 of 
the Annual Report of Trust Assets (FFIEC Form 001) shall pay an 
assessment that is calculated by multiplying the amount of those trust 
assets by a rate or rates provided by the OCC in the Notice of Fees.
    (2) Flat fee. Independent trust banks having less than $1 billion 
in trust assets as reported on Schedule A, Line 18 of FFIEC Form 001 
will pay a flat fee in an amount to be provided in Notice of 
Comptroller of the Currency Fees (Notice of Fees) published as stated 
in Sec. 8.8.

    Dated: March 14, 2000.
John D. Hawke, Jr.,
Comptroller of the Currency.
[FR Doc. 00-6866 Filed 3-20-00; 8:45 am]
BILLING CODE 4810-33-P