[Federal Register Volume 68, Number 174 (Tuesday, September 9, 2003)]
[Rules and Regulations]
[Pages 53024-53026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22778]


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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 545 and 550

[No. 2003-44]
RIN 1550-AB80


Federal Savings Associations--Operations, Agency Offices; 
Fiduciary Powers of Savings Associations

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Thrift Supervision (OTS) is issuing a final rule 
amending its regulation governing agency offices of federal savings 
associations to conform that regulation to recent changes to OTS's 
fiduciary activities regulations. OTS is also removing an incorrect 
parenthetical in 12 CFR 550.136, OTS's regulation governing the extent 
to which state law applies to the fiduciary activities of a federal 
savings association.

EFFECTIVE DATE: September 9, 2003.

FOR FURTHER INFORMATION CONTACT: Timothy P. Leary, Counsel (Banking & 
Finance), Regulations and Legislation Division, (202) 906-7170, Kevin 
Corcoran, Special Counsel, Business Transactions Division, (202) 906-
6962, Office of the Chief Counsel; or Judith McCormick, Trust 
Specialist, Examination Policy Division, (202) 906-5636, Office of 
Supervision, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Background and Discussion

    On December 12, 2002, OTS amended its regulations governing the 
fiduciary activities of federal savings associations, found at 12 CFR 
part 550.\1\ One of those amendments was to 12 CFR 550.70, which sets 
out when a federal savings association must obtain OTS approval or file 
a notice before exercising fiduciary powers. Under that rule, if a 
federal savings association wants to commence fiduciary activities in a 
new state that are not materially different from those that OTS has 
already approved for the association, it need not file a new fiduciary 
powers application. Rather, the association needs to file, within ten 
days after commencing the activities in the new state, a written notice 
that identifies the new state, describes the fiduciary activities the 
association is conducting in the new state, and provides sufficient 
information supporting a conclusion that those activities are 
permissible in the new state. If an association proposes to open an 
agency office in any state to perform only activities ancillary to its 
fiduciary business, or to open a new agency office in a state in which 
the association is already conducting approved fiduciary activities, no 
fiduciary application or notice is required.
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    \1\ 67 FR 76293 (December 12, 2002).
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    To minimize potential confusion about applicable procedures, OTS 
today is conforming its agency office regulation, 12 CFR 545.96, to 
reflect this change in the fiduciary activities regulations. Under 
subparagraph (a) of Sec.  545.96, a federal savings association may, 
without OTS's approval, establish and maintain agency offices that only 
service and originate (but not approve) loans and contracts, or manage 
or sell real estate owned by the federal savings association. 
Subparagraph (b) of the regulation states that, except for payment on 
savings accounts, a federal savings association may conduct activities 
not listed in subparagraph (a) at an agency office with OTS approval. 
The regulation does not currently address fiduciary activities, nor 
does it indicate how it interacts with part 550.
    In the preamble to the proposed amendments to Sec.  550.70, OTS 
explained in detail why a new fiduciary powers application was not 
necessary when a federal savings association wanted to conduct already 
approved fiduciary activities in a new state:


[[Page 53025]]


    When OTS reviews an initial application for fiduciary powers, it 
analyzes a number of factors including, among others, the federal 
savings association's financial and managerial resources, its 
history of regulatory compliance, and level of fiduciary expertise 
[citation omitted]. In light of this initial review, OTS believes 
that a new application is not always necessary to ensure safe and 
sound fiduciary operations when a federal savings association with 
existing trust powers expands its operations. * * * Application and 
notice requirements under the proposed rule would distinguish 
between new activities that materially differ from previously 
approved fiduciary activities and other types of activities. * * * 
[T]he proposed rule would require a federal savings association with 
previously approved trust powers to submit a complete trust 
application and obtain prior OTS approval before it may conduct 
fiduciary activities that are materially different from activities 
approved in the initial trust application. * * * OTS does not 
believe that a federal savings association engages in materially 
different activities when it merely expands the geographic scope of 
previously approved activities. Accordingly, the proposed rule would 
not require a new application before the federal savings association 
commences such activities.

The same reasoning applies even when the association creates a new 
agency office to conduct previously approved fiduciary activities or 
activities ancillary to its fiduciary business.
    Accordingly, OTS believes that it does not need to approve an 
agency office that a federal savings association creates to conduct 
these activities. OTS therefore is amending 12 CFR 545.96 to add 
fiduciary activities to subparagraph (a). Under the new rule, a federal 
savings association may, without OTS approval, establish and maintain 
an agency office that engages only in one or more of the following 
activities: (1) Servicing or originating (but not approving) loans and 
contracts; (2) managing or selling real estate owned by the federal 
savings association; or (3) conducting fiduciary activities or 
activities ancillary to the association's fiduciary business. Under 12 
CFR 550.70, of course, when an association establishes an agency office 
to conduct fiduciary activities in a new state, the association must 
file, within ten days after commencing those activities, a written 
notice containing the information required under 12 CFR 550.125.\2\ 
Moreover, for clarification purposes, we are amending Sec.  545.96 to 
change all references in the regulation from ``agency'' and 
``agencies'' to ``agency office'' and ``Agency offices,'' respectively.
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    \2\ Section 550.125 requires that the notice identify the new 
state, describe the fiduciary activities that the association will 
conduct in that state, and provide sufficient information supporting 
a conclusion that the activities are permissible in that state.
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    OTS is also amending 12 CFR 550.136 to remove an incorrect 
reference to state law. Section 550.136 did not appear in the proposed 
rule, published on June 11, 2002, but was adopted in response to 
comments on different language that had been proposed. It was published 
for the first time on December 12, 2002 and became effective January 1, 
2003. Since the effective date, it has come to OTS's attention that one 
of the parenthetical descriptions in that section is incorrect.
    Specifically, in the list of state laws that apply to the fiduciary 
operations of federal savings associations by virtue of 12 U.S.C. 
1464(n), OTS included a reference to ``State laws regarding * * * 
investments in state trust companies.'' Section 1464(n), however, 
contains no reference to state laws regarding thrift investments in 
state trust companies. Accordingly, we are amending Sec.  550.136(a) to 
remove the reference to state laws regarding investments in state trust 
companies.

II. Need for an Immediately Effective Final Rule

    OTS finds that there is good cause to dispense with prior notice 
and comment on this final rule and with the 30-day delay of effective 
date mandated by the Administrative Procedure Act.\3\ OTS believes that 
following those procedures in today's rulemaking would be unnecessary 
and contrary to public interest because the rule achieves regulatory 
consistency, minimizes potential confusion, and reduces regulatory 
burden. There is no reason to delay these results. Under the clarified 
rule, a federal savings association that wants to establish an agency 
office to conduct previously approved fiduciary activities, or 
activities ancillary to the association's fiduciary business, must 
follow only the procedures in 12 CFR part 550. The amendment to Sec.  
550.136 merely conforms the regulatory provisions to the parallel 
statutory provisions. These changes will not detrimentally affect 
savings associations or others.
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    \3\ 5 U.S.C. 553.
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    Section 302 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 provides that regulations that impose 
additional reporting, disclosure, or other new requirements may not 
take effect before the first day of the quarter following 
publication.\4\ This section does not apply because this final rule 
imposes no additional requirements and results in consistency between 
existing regulations.
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    \4\ Pub. L. 103-325, 12 U.S.C. 4802.
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III. Regulatory Flexibility Act

    An initial regulatory flexibility analysis under the Regulatory 
Flexibility Act (RFA) is required only when an agency must publish a 
notice of proposed rulemaking.\5\ As already noted, OTS has determined 
that publication of a notice of proposed rulemaking is not necessary 
for this final rule. Accordingly, the RFA does not require an initial 
regulatory flexibility analysis. Nevertheless, OTS has considered the 
likely impact of the rule on small entities and, pursuant to section 
605(b) of the Regulatory Flexibility Act, the OTS Director certifies 
that this regulation will not have a significant economic impact on a 
substantial number of small entities.
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    \5\ 5 U.S.C. 603.
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IV. Executive Order 12866

    OTS has determined that this final rule does not constitute a 
``significant regulatory action'' for purposes of Executive Order 
12866.

V. Unfunded Mandates Act

    OTS has determined that the final rule will not result in 
expenditures by state, local, or tribal governments or by the private 
sector of $100 million or more. Accordingly, this rulemaking is not 
subject to section 202 of the Unfunded Mandates Act.

List of Subjects

12 CFR Part 545

    Accounting, Consumer protection, Credit, Electronic funds 
transfers, Investments, Reporting and recordkeeping requirements, 
Savings associations.

12 CFR Part 550

    Savings associations, Trusts and trustees.

0
Accordingly, OTS amends chapter V, title 12, Code of Federal 
Regulations as set forth below.

PART 545--[AMENDED]

0
1. The authority citation for part 545 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.

0
2. Amend Sec.  545.96, including the section heading, as follows:
0
a. Remove the words ``agency'' and ``agencies'' and add, in their 
place, the words ``agency office'' and ``agency offices,'' 
respectively.
0
b. Revise paragraph (a) of Sec.  545.96 as follows:

[[Page 53026]]

Sec.  545.96  Agency office.

    (a) General. A Federal savings association may establish or 
maintain an agency office that engages only in one or more of the 
following activities: (1) Servicing or originating (but not approving) 
loans and contracts; (2) managing or selling real estate owned by the 
Federal savings association; or (3) conducting fiduciary activities or 
activities ancillary to the association's fiduciary business in 
compliance with subpart A of part 550 of this chapter.
* * * * *

PART 550--[AMENDED]

0
3. Amend Sec.  550.136(a) by revising the third sentence to read as 
follows:


Sec.  550.136  To what extent do State laws apply to my fiduciary 
operations?

    * * *Accordingly, Federal savings associations may exercise 
fiduciary powers as authorized under Federal law, including this part, 
without regard to State laws that purport to regulate or otherwise 
affect their fiduciary activities, except to the extent provided in 12 
U.S.C. 1464(n) (State laws regarding scope of fiduciary powers, access 
to examination reports regarding trust activities, deposits of 
securities, oaths and affidavits, and capital) or in paragraph (c) of 
this section.
* * * * *

    Dated: September 2, 2003.

    By the Office of Thrift Supervision.
James E. Gilleran,
Director.
[FR Doc. 03-22778 Filed 9-8-03; 8:45 am]
BILLING CODE 6720-01-P