[Federal Register Volume 66, Number 176 (Tuesday, September 11, 2001)]
[Rules and Regulations]
[Pages 47070-47072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22796]


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DEPARTMENT OF THE TREASURY

12 CFR Part 1510

RIN 1550-AA79


Resolution Funding Corporation Operations

AGENCY: Department of the Treasury.

ACTION: Affirmation of interim rule as final, with amendments.

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SUMMARY: The Secretary of the Treasury (Secretary) is adopting as a 
final rule, with amendments, an interim rule that amended the Treasury 
Department's regulation governing the operations of the Resolution 
Funding Corporation (Funding Corporation). The interim rule implemented 
statutory changes affecting the Funding Corporation's operations, 
eliminated obsolete regulatory provisions, and streamlined remaining 
regulatory provisions. The final rule makes two technical changes to 
the

[[Page 47071]]

interim rule to reduce the compliance burden.

EFFECTIVE DATE: The interim rule became effective on March 8, 2000. The 
amendments made by the final rule are effective on September 11, 2001.

FOR FURTHER INFORMATION CONTACT: Brandon B. Straus, Attorney-Advisor, 
Office of the Assistant General Counsel (Banking & Finance), (202) 622-
1964, or Matthew P. Green, Financial Analyst, Office of Financial 
Institutions and Government Sponsored Enterprise Policy, Department of 
the Treasury, (202) 622-2157.

SUPPLEMENTARY INFORMATION:

I. Background

    In an interim rule published in the Federal Register on March 8, 
2000 (see 65 FR 12064) and which became effective on that date, the 
Secretary amended the Treasury Department's regulation governing the 
operations of the Funding Corporation (operations regulation) in order 
to implement statutory changes affecting the Funding Corporation's 
operations, eliminate obsolete regulatory provisions, and streamline 
the regulation's remaining provisions. The Funding Corporation is a 
mixed-ownership government corporation created by Congress in 1989 as a 
mechanism for issuing debt to finance the resolution of a large number 
of insolvent savings associations. The SUPPLEMENTARY INFORMATION 
section of the interim rule provides additional background on the 
Funding Corporation and a detailed explanation of the regulatory 
amendments made by the interim rule (see 65 FR 12064-12068). The 
Secretary now is adopting the interim rule as final, with two changes 
that are discussed below.

II. Analysis of Public Comment and the Final Rule

    The Secretary received one comment on the interim rule, which was 
submitted by the Funding Corporation. The Funding Corporation supported 
the Secretary's effort to streamline and simplify the operations 
regulation. The Funding Corporation also suggested a change to the 
procedure in Sec. 1510.5(d)(1) of the interim rule governing how the 
Funding Corporation collects funds from the Federal Home Loan Banks 
(Banks) in order to make interest payments on its debt obligations 
(bonds). The Funding Corporation commented that in order to comply with 
the timing requirement in Sec. 1510.5(d)(1) for reporting actual 
quarterly net earnings to the Funding Corporation, the Banks must close 
their books and determine actual net earnings figures no later than 
four business days after the end of a quarter. The Funding Corporation 
stated that in the future, however, it may not be possible for the 
Banks to close their books within this timeframe due to the operation 
of Financial Accounting Standards Board Statement 133. Statement 133, 
which went into effect for the Banks in 2000, establishes new 
accounting and reporting standards for derivative instruments. 
Consequently, the Funding Corporation believes it may not be able to 
obtain actual net earnings figures from the Banks by the sixth business 
day prior to the interest payment due date, as required by 
Sec. 1510.5(d)(1) of the interim rule. To address this timing issue, 
the Funding Corporation recommended that the Secretary remove all the 
reporting deadlines from Sec. 1510.5(d) of the interim rule and 
establish them in a separate procedure so that the deadlines could be 
changed without the need for a regulatory amendment.
    In order to address the Funding Corporation's concern, the 
Secretary is revising the timing requirements in the interim final rule 
to allow the Banks an additional two business days to provide actual 
quarterly net earnings figures to the Funding Corporation after the end 
of each quarter. Specifically, the final rule permits the Banks to have 
up until the fourth business day prior to the interest payment due date 
to submit their actual quarterly net earnings figures to the Funding 
Corporation and for the Funding Corporation to then notify each Bank of 
the payment due from the Bank. As a result of this change, the final 
rule moves back by two business days the deadlines in Sec. 1510.5(d)(2) 
and (3) related to the Federal Savings and Loan Insurance Corporations 
(FSLIC) Resolution Fund and the Secretary of the Treasury, so that any 
payment from the FSLIC Resolution Fund to the Funding Corporation is 
due no later than noon on the third business day prior to the interest 
payment due date. Similarly, the Funding Corporation must request 
payment from the Secretary no later than the third business day prior 
to the interest payment due date.
    In the interest of reducing regulatory burden, the final rule also 
removes the requirement in Sec. 1510.5(c) that the Funding Corporation 
obtain the Secretary's approval of the quarterly reports of funding 
projections it submits to the Secretary. Approval of these reports is 
not necessary because they are provided to the Secretary solely for 
informational purposes.

III. Administrative Procedure Act

    This rule makes technical amendments to the regulation governing 
the operation of the Funding Corporation that do not affect the general 
public. For this reason, it has been determined that publishing this 
rule with notice and an opportunity for public comment is unnecessary 
pursuant to 5 U.S.C. 553(b). For the same reason, pursuant to 5 U.S.C. 
553(d), it is determined that there is good cause for the final rule to 
become effective immediately upon publication.

IV. Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required for this final 
rule, the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., do not apply.

V. Executive Order 12866

    This final rule is not a ``significant regulatory action'' for 
purposes of Executive Order 12866. Accordingly, a regulatory assessment 
is not required.

List of Subjects in 12 CFR Part 1510

    Federal home loan banks, Federal Reserve System, Resolution Funding 
Corporation, Securities.

Authority and Issuance

    For the reasons set forth in the preamble, the Secretary is 
adopting as a final rule the interim rule that amended 12 CFR part 1510 
and that was published at 65 FR 12064 on March 8, 2000, with the 
following amendments:

PART 1510--RESOLUTION FUNDING CORPORATION OPERATIONS

    1. The authority citation for part 1510 continues to read as 
follows:

    Authority: 12 U.S.C. 1441b; Sec 14(d), Pub. L. 105-216, 112 
Stat. 910.


    2. Amend Sec. 1510.5 as follows:
    a. Remove ``for approval'' from the introductory text of paragraph 
(c); and
    b. Revise paragraph (d) to read as follows:


Sec. 1510.5  How does the Funding Corporation make interest payments on 
its obligations?

* * * * *
    (d) The Funding Corporation must request funds from the Banks, the 
FSLIC Resolution Fund, and the Secretary--(1) Requests to the Banks. 
Not less than four business days prior to the interest payment due 
date, the Funding Corporation must obtain from each Bank a report of 
its actual net earnings for the prior quarter and notify each Bank in 
writing of the interest payment due date and the amount of the payment 
due

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from the Bank. To the extent funds identified in paragraph (a)(1) of 
this section are insufficient to pay the interest due, the amount of 
each Bank's payment must be 20 percent of the Bank's actual quarterly 
net earnings, taking into account any adjustment to the Bank's earnings 
for any previous quarters. The Funding Corporation must request the 
Bank to provide payment through wiring immediately available and 
finally collected funds to the Funding Corporation no later than the 
interest payment due date.
    (2) Request to the FSLIC Resolution Fund. On the day the Funding 
Corporation notifies the Banks of the payments due from them under 
paragraph (d)(1) of this section, the Funding Corporation must:
    (i) Notify the FSLIC Resolution Fund in writing of:
    (A) The interest payment due date;
    (B) The aggregate amount of the quarterly interest payment due on 
that date; and
    (C) The amount of the quarterly interest payment that will be 
funded by earnings on assets of the Funding Corporation not invested in 
the Funding Corporation Principal Fund and payments due from the Banks; 
and
    (ii) Request that the FSLIC Resolution Fund transfer to the Funding 
Corporation by noon on the third business day prior to the interest 
payment due date any funds available from the net proceeds from the 
sale of assets received from the RTC, to the extent funds identified in 
paragraphs (a)(1) and (2) of this section are insufficient to pay the 
interest due.
    (3) Request to the Secretary. No less than three business days 
prior to the interest payment due date, the Funding Corporation must 
request payment from the Secretary by providing a certification, in a 
form satisfactory to the Secretary, stating the total amounts of the 
quarterly interest payment to be paid by the Funding Corporation from 
sources other than the Secretary and the amounts necessary to make up 
the deficiency. Any amount paid by the Secretary becomes a liability of 
the Funding Corporation to be repaid to the Secretary upon the 
dissolution of the Funding Corporation, to the extent of its remaining 
assets.

    Dated: September 4, 2001.
Peter R. Fisher,
Under Secretary of the Treasury.
[FR Doc. 01-22796 Filed 9-10-01; 8:45 am]
BILLING CODE 4810-25-P