[Federal Register Volume 73, Number 55 (Thursday, March 20, 2008)]
[Rules and Regulations]
[Pages 14922-14924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-5724]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 32

[Docket No. OCC-2008-0005]
RIN 1557-AD08


Lending Limits

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

ACTION: Interim final rule with request for comment.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is issuing 
an interim final rule to add a provision to its part 32 lending limits 
regulation that will address temporary funding arrangements in 
emergency situations. The interim final rule will enable the OCC to 
establish a special lending limit for loans and extensions of credit 
that the OCC determines are essential to address an emergency situation 
(such as critical financial markets stability), will be of short 
duration, will be reduced in amount in a timeframe and manner 
acceptable to the OCC, and do not present unacceptable risk to the 
lending national bank. In granting approval for a special temporary 
lending limit, the OCC would impose supervisory oversight and reporting 
measures that it determines are appropriate.

DATES: Effective Date: This rule is effective on March 20, 2008. 
Comment Date: Comments must be received by April 21, 2008.

ADDRESSES: Because paper mail in the Washington, DC area and at the OCC 
is subject to delay, commenters are encouraged to submit comments by e-
mail, if possible. Please use the title ``Lending Limits'' to 
facilitate the organization and distribution of the comments. You may 
submit comments by any of the following methods:
     Federal eRulemaking Portal--``Regulations.gov'': Go to 
http://www.regulations.gov, under the ``More Search Options'' tab click 
next to the ``Advanced Docket Search'' option where indicated, select 
``Comptroller of the Currency'' from the agency drop-down menu, then 
click ``Submit.'' In the ``Docket ID'' column, select ``OCC-2008-0005'' 
to submit or view public comments and to view supporting and related 
materials for this interim final rule. The ``How to Use This Site'' 
link on the Regulations.gov home page provides information on using 
Regulations.gov, including instructions for submitting or viewing 
public comments, viewing other supporting and related materials, and 
viewing the docket after the close of the comment period.
     E-mail: [email protected].
     Mail: Office of the Comptroller of the Currency, 250 E 
Street, SW., Mail Stop 1-5, Washington, DC 20219.
     Fax: (202) 874-4448.
     Hand Delivery/Courier: 250 E Street, SW., Attn: Public 
Information Room, Mail Stop 1-5, Washington, DC 20219.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket Number OCC-2008-0005'' in your comment. In general, OCC will 
enter all comments received into the docket and publish them on the 
Regulations.gov Web site without change, including any business or 
personal information that you provide such as name and address 
information, e-mail addresses, or phone numbers. Comments received, 
including attachments and other supporting materials, are part of the 
public record and subject to public disclosure. Do not enclose any 
information in your comment or supporting materials that you consider 
confidential or inappropriate for public disclosure.
    You may review comments and other related materials that pertain to 
this interim final rule by any of the following methods:
     Viewing Comments Electronically: Go to http://www.regulations.gov, under the ``More Search Options'' tab click next 
to the ``Advanced Document Search'' option where indicated, select 
``Comptroller of the Currency'' from the agency drop-down menu, then 
click ``Submit.'' In the ``Docket ID'' column, select ``OCC-2008-0005'' 
to view public comments for this rulemaking action.
     Viewing Comments Personally: You may personally inspect 
and photocopy comments at the OCC's Public Information Room, 250 E 
Street, SW., Washington, DC. For security reasons, the OCC requires 
that visitors make an appointment to inspect comments. You may do so by 
calling (202) 874-5043. Upon arrival, visitors will be required to 
present valid government-issued photo identification and submit to 
security screening in order to inspect and photocopy comments.
     Docket: You may also view or request available background 
documents and project summaries using the methods described above.

FOR FURTHER INFORMATION CONTACT: Patrick T. Tierney, Senior Attorney, 
Legislative and Regulatory Activities Division, (202) 874-5090; Stuart 
Feldstein, Assistant Director, Legislative and Regulatory Activities 
Division, (202) 874-5090; or Steven V. Key, Special Counsel, Bank 
Activities and Structure Division, (202) 874-5300, Office of the 
Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219.

SUPPLEMENTARY INFORMATION: 

Background

    The percentage of capital and surplus that a national bank may loan 
to any one borrower is limited by 12 U.S.C. 84. Generally, section 84 
and the OCC's implementing regulations, 12 CFR part 32, permit a 
national bank to make loans in an amount up to 15 percent of its 
unimpaired capital and surplus to a single borrower. A national bank 
also may extend credit up to an additional 10 percent of unimpaired 
capital and surplus to the same borrower if the amount of the loan that 
exceeds the 15 percent limit is secured by specified types of 
collateral. Part 32 refers to these lending limits as the ``combined 
general limit.'' The statute and regulation also provide exceptions to 
the combined general limit for various types of loans and extensions of 
credit.
    12 CFR 32.3(c)(7) of the OCC's current regulations include an 
exemption from the combined general limit for loans and extensions of 
credit approved by the OCC to a ``financial institution'' when an 
emergency situation exists. For purposes of this exception, a 
``financial institution'' is defined as a commercial bank, savings 
bank, trust company, savings association, or credit union.
    Recent market conditions have highlighted that emergency situations 
may exist where temporary exemptions from the lending limits may be 
appropriate for loans and extensions of credit to other types of 
parties. National banks, in their established role as lenders and 
financial intermediaries, can be a crucial source of liquidity in such 
situations, provided the emergency funding is of limited duration, does 
not present unacceptable risk, and is subject to appropriate 
safeguards. 12 U.S.C. 84(d)(1) provides the OCC with rulemaking 
authority ``to administer and carry out the purposes'' of the lending 
limit statute, including authority ``to

[[Page 14923]]

establish limits other than those specified in this section for 
particular classes or categories of loans or extensions of credit.'' 
\1\ Accordingly, the OCC is amending part 32 to add a provision that 
creates a special lending limit for temporary funding arrangements for 
loans and extensions of credit that the OCC determines are essential to 
address emergency situations, which would include critical financial 
markets stability, subject to certain conditions, described below.
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    \1\ This authority is in addition to OCC's general rulemaking 
authority found at 12 U.S.C. 93a, upon which the OCC also relies for 
purposes of issuing the 12 CFR part 32 lending limits regulations.
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    This additional lending limit category is based upon, but more 
limited than, the OCC's existing authority under Sec.  32.3(c)(7) to 
approve and exempt from the general lending limit loans or extensions 
of credit by a national bank to a ``financial institution'' when an 
emergency situation exists.

Description of the Interim Final Rule

    The interim final rule adds a new Sec.  32.8 that permits an 
eligible bank,\2\ with the written approval of the OCC, to make loans 
and extensions of credit to one borrower subject to a special temporary 
lending limit established by the OCC, where the OCC determines that 
such loans and extensions of credit are essential to address an 
emergency situation (such as critical financial markets stability), 
will be of short duration, will be reduced in amount in a timeframe and 
manner acceptable to the OCC, and do not present unacceptable risk. In 
granting approval for such a special temporary lending limit, the OCC 
will impose supervisory oversight and reporting measures that it 
determines are appropriate to monitor compliance with the standards 
contained in new Sec.  32.8. The Sec.  32.8 special temporary lending 
limit is in addition to the amount a national bank may lend to one 
borrower under Sec.  32.3, i.e., the combined general lending limit and 
applicable exceptions.
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    \2\ For purposes of part 32, ``eligible bank'' means a national 
bank that (1) is ``well capitalized'' as defined in 12 CFR 
6.4(b)(1); and (2) has a composite rating of 1 or 2 under the 
Uniform Financial Institutions Rating System in connection with the 
bank's most recent examination or subsequent review, with at least a 
rating of 2 for asset quality and for management. See 12 CFR 
32.2(i).
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Effective Date; Solicitation of Comments

    This interim final rule will become effective immediately upon 
publication in the Federal Register. Pursuant to the Administrative 
Procedure Act (APA), at 5 U.S.C. 553(b)(B), notice and an opportunity 
for public comment are not required prior to the issuance of a final 
rule if an agency, for good cause, finds that ``notice and public 
procedure thereon are impracticable, unnecessary, or contrary to the 
public interest.'' \3\ Similarly, a final rule may be published with an 
immediate effective date if an agency finds good cause and publishes 
such with the rule. 5 U.S.C. 553(d)(3).
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    \3\ 5 U.S.C. 553(b)(B).
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    Consistent with section 553(b)(B) of the APA, the OCC finds that 
good cause exists for a finding that notice and comment is 
impracticable and contrary to the public interest. As previously 
described, temporary funding arrangements in emergency situations are 
critical to maintain the orderly functioning of markets and provide 
market liquidity. Completion of notice and comment rulemaking 
procedures prior to issuing this interim final rule would require 
delaying implementation of the final rule. In the current market 
environment, such a delay is impracticable and inconsistent with the 
public interest since it may result in undue constraint on the national 
banks' ability to perform critical lending and financial intermediary 
roles which are critical to the orderly functioning and liquidity of 
markets. Issuance of this interim final rule furthers the public 
interest because it will provide the OCC with an additional tool that 
will help ensure the safety and soundness of national banks and 
liquidity to the credit markets. For the same reasons, the OCC finds 
good cause to publish this rule with an immediate effective date. See 5 
U.S.C. 553(d)(3).
    Although notice and comment are not required prior to the effective 
date of this rule, the OCC invites comments on all aspects of this 
interim final rule and intends to revise the interim final rule if 
necessary or appropriate in light of the comments received.

Solicitation of Comments on Use of Plain Language

    The OCC also requests comment on whether the interim final rule 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 interim 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 interim final rules 
published after January 1, 2000. The OCC invites comments 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.

Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (Pub. L. 96-354, Sept. 19, 1980) 
(RFA) applies only to rule making actions for which an agency publishes 
a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b).\4\ 
Because the OCC has determined for good cause that the Administrative 
Procedure Act does not require public notice and comment on this 
interim final rule, we are not publishing a general notice of proposed 
rulemaking. Thus, the RFA does not apply to this interim final rule.
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    \4\ 5 U.S.C. 601(2).
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Executive Order 12866

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

Unfunded Mandates Reform Act of 1995 Determinations

    Section 202 of the Unfunded Mandates Reform Act of 1995 \5\ 
(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 the 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating the rule. The OCC has determined that 
this interim final rule will not result in a Federal mandate that would 
result in expenditures by state, local, and tribal governments, in the 
aggregate, or by the private sector, of $100 million or more in any one 
year. Accordingly, the OCC has not prepared a budgetary impact 
statement or specifically addressed the regulatory alternatives 
considered.
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    \5\ 2 U.S.C. 1532.
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR part 1320 Appendix A.1), we have reviewed the interim final 
rule to assess any information collections. There are no collections of 
information

[[Page 14924]]

as defined by the Paperwork Reduction Act in the interim final rule.

Lists of Subjects in 12 CFR Part 32

    Lending limits.

Authority and Issuance

0
For the reasons set forth in the preamble, part 32 of chapter I of 
title 12 of the Code of Federal Regulations is amended as follows:

PART 32--LENDING LIMITS

0
1. The authority citation for part 32 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq., 84, and 93a.


0
2. Add Sec.  32.8 to read as follows:


Sec.  32.8  Temporary funding arrangements in emergency situations.

    In addition to the amount that a national bank may lend to one 
borrower under Sec.  32.3 of this part, an eligible bank with the 
written approval of the OCC may make loans and extensions of credit to 
one borrower subject to a special temporary lending limit established 
by the OCC, where the OCC determines that such loans and extensions of 
credit are essential to address an emergency situation, such as 
critical financial markets stability, will be of short duration, will 
be reduced in amount in a timeframe and manner acceptable to the OCC, 
and do not present unacceptable risk. In granting approval for such a 
special temporary lending limit, the OCC will impose supervisory 
oversight and reporting measures that it determines are appropriate to 
monitor compliance with the foregoing standards as set forth in this 
paragraph.

    Dated: March 17, 2008.
John C. Dugan,
Comptroller of the Currency.
 [FR Doc. E8-5724 Filed 3-19-08; 8:45 am]
BILLING CODE 4810-33-P