[Federal Register Volume 71, Number 250 (Friday, December 29, 2006)]
[Rules and Regulations]
[Pages 78337-78338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-22260]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 349

RIN 3064-AD14


Repeal of Reports and Public Disclosure of Indebtedness of 
Executive Officers and Principal Shareholders to a State Nonmember Bank 
and Its Correspondent Banks

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is repealing 
its regulations governing reporting on lending by a State nonmember 
bank and its correspondent banks to executive officers and principal 
shareholders. The FDIC is taking this action in accordance with the 
Financial Services Regulatory Relief Act of 2006, section 601, which 
repealed the provision under which the FDIC promulgated these 
regulations.

DATES: This rule becomes effective on December 22, 2006.

FOR FURTHER INFORMATION CONTACT: Karen Jones Currie Examination 
Specialist, FDIC, 550 17th Street, NW., Washington, DC 20429; 
telephone: (202) 898-3981; or electronic mail: [email protected]; or 
Michelle Borzillo, Counsel, FDIC, 550 17th Street, NW., Washington, DC 
20230; telephone: (202) 898-7400; facsimile: (202) 898-8815; or 
electronic mail: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    On December 28, 1983, the FDIC issued a final rule entitled 
``Reports and Public Disclosure of Indebtedness of Executive Officers 
and Principal Shareholders to a State Nonmember Bank and Its 
Correspondent Banks.'' This rule implemented section 7(k) of the 
Federal Deposit Insurance Act (``FDI Act'') and section 106(b)(2)(G) of 
the Bank Holding Company Act Amendments of 1970 (``BHCA Amendments'') 
contained in sections 428 and 429 of the Garn-St. Germain Depository 
Institutions Act of 1982 (``Garn-St. Germain Act''). It restated the 
existing statutory requirement which required insiders to report to the 
board of directors of their bank any indebtedness to the correspondent 
banks of that bank. The statute also provided that the bank or the 
agency shall make the information available, upon request, to the 
public. The appropriate Federal banking agencies were authorized to 
issue rules and regulations to require the reporting and public 
disclosure of information concerning insider indebtedness.

II. Repeal of the Reports and Public Disclosure of Indebtedness of 
Executive Officers and Principal Shareholders

    On October 13, 2006, the President signed into law Public Law No. 
109-351, the Financial Services Regulatory Relief Act of 2006 (the 
Act). Section 601 of the Act struck the following statutory provisions:
     Requirement that a bank must include a separate report 
with its quarterly Reports of Condition and Income (``Call Report'') on 
any extensions of credit the bank has made to its executive officers 
since its last Call Report (section 22(g)(9) of the Federal Reserve 
Act, codified at 12 U.S.C. 375a(9));
     Requirement that an executive officer of a bank file a 
report with the bank's board of directors whenever the executive 
officer obtains an extension of credit from another bank in an amount 
that exceeds the amount the executive officer could obtain from the 
bank (section 22(g)(6) of the Federal Reserve Act, codified at 12 
U.S.C. 375a(6));
     Requirement that an executive officer or principal 
shareholder of a bank must file an annual report with the bank's board 
of directors during any year in which the officer or shareholder has an 
outstanding extension of credit from a correspondent bank of the bank 
(section 106(b)(2)(G)(i) of the BHCA, codified at 12 U.S.C. 
1972(2)(G)(i)); and
     The authorization of the Federal banking agencies to issue 
regulations that require the reporting and public disclosure of 
information related to extensions of credit received by an executive 
officer or principal shareholder of a bank from a correspondent bank of 
the bank (section 106(b)(2)(G)(ii) of the BHCA, codified at 12 U.S.C. 
1972(2)(G)(ii)).
    Neither the repeal of Section 106 (b)(2)(G) of the BHCA Amendments 
nor part 349 changes the substantive restrictions on loans by 
depository institutions to their executive officers and principal 
shareholders or loans to executive officers and principal shareholders 
of depository institutions by their correspondent banks.
    Because the new law strikes the specific requirement underpinning 
the rule on Reports and Public Disclosure of

[[Page 78338]]

Indebtedness of Executive Officers and Principal Shareholders to a 
State Nonmember Bank and Its Correspondent Banks, and because the FDIC 
does not believe that the reports at issue contribute significantly to 
the effective monitoring of insider lending or the prevention of 
insider abuse, the FDIC is repealing its regulations at part 349.

III. Exemption From Public Comment

    The Act repeals the specific statutory requirements for these 
reports. However, the FDIC retains authority under other provisions of 
law to collect information regarding insider lending by depository 
institutions. The FDIC does not believe these reports contribute 
significantly to the effective monitoring of insider lending or the 
prevention of insider abuse. Under these circumstances, providing prior 
notice and an opportunity for public comment on whether to repeal these 
rules would serve no useful purpose. As a result, under authority at 5 
U.S.C. 553(b)(B), FDIC finds good cause to waive such procedures. 
Moreover, no Federal agency's or private sector entity's interest will 
be adversely affected by their repeal. Further, and for the same 
reason, FDIC finds good cause pursuant to 553(d)(3) to waive the 
requirement of a 30-day delay in effect for this rule. Thus, this rule 
is effective immediately.

Regulatory Flexibility Act

    As prior notice and an opportunity for public comment are not 
required under 5 U.S.C. 553 or any other law, the analytical 
requirements of the Regulatory Flexibility Act are inapplicable. Thus, 
no regulatory flexibility analysis is required and none has been 
prepared.

Paperwork Reduction Act

    At the FDIC's request, the Office of Management and Budget (OMB) 
has deleted the collection of information associated with this rule 
(formerly approved by OMB under Control No. 3064-0023, ``Reports of 
Indebtedness of Executive Officers and Principal Shareholders to 
Correspondent Banks and to Own Bank,'' collected using FFIEC form 004). 
The reduction in paperwork burden imposed on the public resulting from 
the elimination of this collection of information will be 47,998 hours 
a year. The Federal Financial Institutions Examination Council (FFIEC) 
is providing notice to all affected parties that they will no longer 
need to provide this information to the agencies.
    Also, as discussed above, section 601 of the Act eliminated the 
requirement that a bank include a separate report with its Call Report 
each quarter on any extensions of credit the bank has made to its 
executive officers since the date of its last Call Report. Accordingly, 
as of December 31, 2006, the FDIC will no longer require banks to 
provide the ``Special Report'' on loans to executive officers, which 
had been included after the final page of the Call Report forms in 
previous quarters. At the FDIC's request, OMB has approved this change 
in the Call Report. The resulting reduction in paperwork burden imposed 
on the public will be 5,247 hours a year.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) (Title II, Pub. L. 104-121) provides generally for agencies to 
report rules to Congress and the General Accounting Office (GAO) for 
review. The reporting requirement is triggered when a federal agency 
issues a final rule. The FDIC will file the appropriate reports with 
Congress and the GAO as required by SBREFA. The Office of Management 
and Budget has determined that the rule does not constitute a ``major 
rule'' as defined by SBREFA.

List of Subjects in 12 CFR Part 349

    Reports, Public disclosure, Indebtedness of principal shareholders, 
Indebtedness of executive officers, State nonmember banks, 
Correspondent banks.

0
For the reasons stated above, the Board of Directors of the Federal 
Deposit Insurance Corporation hereby amends title 12, chapter III of 
the Code of Federal Regulations under the authority of 5 U.S.C. 553 by 
removing and reserving part 349.

PART 349--[REMOVED AND RESERVED]

    Dated at Washington, DC, this 22nd day of December, 2006.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E6-22260 Filed 12-28-06; 8:45 am]
BILLING CODE 6714-01-P