[Federal Register Volume 75, Number 121 (Thursday, June 24, 2010)]
[Proposed Rules]
[Pages 36016-36022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-15119]



[[Page 36016]]

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 25

[Docket ID OCC-2010-0010]
RIN 1557-AD34

FEDERAL RESERVE SYSTEM

12 CFR Part 228

[Docket No. R-1387]
RIN 7100-AD50

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 345

RIN 3064-AD60

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563e

[Docket ID OTS-2010-0017]
RIN 1550-AC42


Community Reinvestment Act Regulations

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, 
Treasury (OTS).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The OCC, the Board, the FDIC, and the OTS (collectively, ``the 
agencies'') are issuing this proposed rule to revise provisions of our 
rules implementing the Community Reinvestment Act (CRA). The agencies 
propose to revise the term ``community development'' to include loans, 
investments, and services by financial institutions that support, 
enable, or facilitate projects or activities that meet the criteria 
described in Section 2301(c)(3) of the Housing and Economic Recovery 
Act of 2008 (HERA) and are conducted in designated target areas 
identified in plans approved by the United States Department of Housing 
and Urban Development (HUD) under the Neighborhood Stabilization 
Program, established pursuant to the HERA and the American Recovery and 
Reinvestment Act of 2009. The proposed rule would provide favorable CRA 
consideration to such activities that, pursuant to the requirements of 
the program, benefit low-, moderate-, and middle-income individuals and 
geographies in designated target areas. Such consideration would 
include covered activities within an institution's assessment area(s) 
and outside of its assessment area(s), as long as the institution has 
adequately addressed the community development needs of its assessment 
area(s). As proposed, favorable consideration under the new rule would 
only be available until no later than two years after the last date 
appropriated funds for the program are required to be spent by the 
grantees. The agencies will provide reasonable advance notice to 
institutions in the Federal Register regarding termination of the rule 
once a date certain has been identified.

DATES: Comments must be received by: July 26, 2010.

ADDRESSES: Comments should be directed to:
Because paper mail in the Washington, DC area and at the agencies is 
subject to delay, commenters are encouraged to submit comments by the 
Federal eRulemaking Portal or e-mail, if possible. Please use the title 
``Community Reinvestment Act Regulation'' to facilitate the 
organization and distribution of the comments.
    OCC: You may submit comments by any of the following methods:
     Federal eRulemaking Portal--``regulations.gov'': Go to 
http://www.regulations.gov. Select ``Document Type'' of ``Proposed 
Rules,'' and in ``Enter Keyword or ID Box,'' enter Docket ID ``OCC-
2010-0010,'' and click ``Search.'' On ``View By Relevance'' tab at 
bottom of screen, in the ``Agency'' column, locate the proposed rule 
for OCC, in the ``Action'' column, click on ``Submit a Comment'' or 
``Open Docket Folder'' to submit or view public comments and to view 
supporting and related materials for this rulemaking action.
     Click on the ``Help'' tab on the Regulations.gov home page 
to get 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 2-3, Washington, DC 20219.
     Fax: (202) 874-5274.
     Hand Delivery/Courier: 250 E Street, SW., Mail Stop 2-3, 
Washington, DC 20219.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2010-0010'' 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 proposed rule by any of the following methods:
     Viewing Comments Electronically: Go to http://www.regulations.gov. Select ``Document Type'' of ``Public 
Submissions,'' in ``Enter Keyword or ID Box,'' enter Docket ID ``OCC-
2010-0010,'' and click ``Search.'' Comments will be listed under ``View 
By Relevance'' tab at bottom of screen. If comments from more than one 
agency are listed, the ``Agency'' column will indicate which comments 
were received by the OCC.
     Viewing Comments Personally: You may personally inspect 
and photocopy comments at the OCC, 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-
4700. Upon arrival, visitors will be required to present valid 
government-issued photo identification and to 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.
    Board: You may submit comments, identified by Docket No. R-1387, by 
any of the following methods:
     Agency Web site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/Regs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include docket 
number in the subject line of the message.
     Fax: 202/452-3819 or 202/452-3102.
     Mail: Jennifer J. Johnson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and

[[Page 36017]]

Constitution Avenue, NW., Washington, DC 20551.
    All public comments are available from the Board's Web site at 
http://www.federalreserve.gov/generalinfo/foia/Regs.cfm as submitted, 
unless modified for technical reasons. Accordingly, your comments will 
not be edited to remove any identifying or contact information. Public 
comments may also be viewed electronically or in paper in Room MP-500 
of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. 
and 5 p.m. on weekdays.
    FDIC: You may submit comments, identified by RIN 3064-AD60 by any 
of the following methods:
     Agency Web site: http://www.fdic.gov/regulations/laws/federal.html. Follow instructions for submitting comments on the Agency 
Web site.
     E-mail: [email protected]. Include the RIN number in the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
     Hand Delivery/Courier: Guard station at the rear of the 
550 17th Street Building (located on F Street) on business days between 
7 a.m. and 5 p.m.
    Instructions: All submissions received must include the agency name 
and RIN number. All comments received will be posted without change to 
http://www.fdic.gov/regulations/laws/federal.html, including any 
personal information provided.
    OTS: You may submit comments identified by OTS-2010-0017, by any of 
the following methods:
     Federal eRulemaking Portal-``Regulations.gov'': Go to 
http://www.regulations.gov, and follow the instructions for submitting 
or viewing public comments.
     Mail: Regulation Comments, Chief Counsel's Office, Office 
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, 
Attention: OTS-2010-0017.
     Fax: (202) 906-6518.
     Hand Delivery/Courier: Guard's Desk, East Lobby Entrance, 
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention: 
Regulation Comments, Chief Counsel's Office, Attention: OTS-2010-0017.
     Instructions: All submissions received must include the 
agency name and docket number for this proposed rulemaking. All 
comments received will be entered into the docket and posted on 
Regulations.gov without change, including any personal information 
provided. Comments including attachments and other supporting materials 
received 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.
     Viewing Comments Electronically: Go to http://www.regulations.gov and follow the instructions for reading comments.
     Viewing Comments On-Site: You may inspect comments at the 
Public Reading Room, 1700 G Street, NW., by appointment. To make an 
appointment for access, call (202) 906-5922, send an e-mail to 
public.info@ots.treas.gov">public.info@ots.treas.gov, or send a facsimile transmission to (202) 
906-6518. (Prior notice identifying the materials you will be 
requesting will assist us in serving you.) We schedule appointments on 
business days between 10 a.m. and 4 p.m. In most cases, appointments 
will be available the next business day following the date we receive a 
request.

FOR FURTHER INFORMATION CONTACT: OCC: Michael S. Bylsma, Director, or 
Margaret Hesse, Special Counsel, Community and Consumer Law Division, 
(202) 874-5750; Greg Nagel or Brian Borkowicz, National Bank Examiner, 
Compliance Policy, (202) 874-4428, Office of the Comptroller of the 
Currency, 250 E Street, SW., Washington, DC 20219.
    Board: Paul J. Robin, Manager, Reserve Bank Oversight and Policy, 
(202) 452-3140; or Jamie Z. Goodson, Attorney, (202) 452-3667; Division 
of Consumer and Community Affairs, Board of Governors of the Federal 
Reserve System, 20th Street and Constitution Avenue, NW., Washington, 
DC 20551.
    FDIC: Janet Gordon, Senior Policy Analyst, Division of Supervision 
and Consumer Protection, (202) 898-3850 or Richard Schwartz, Counsel, 
Legal Division, (202) 898-7424; Federal Deposit Insurance Corporation, 
550 17th Street, NW., Washington, DC 20429.
    OTS: Stephanie M. Caputo, Senior Compliance Program Analyst, 
Compliance and Consumer Protection, (202) 906-6549; or Richard Bennett, 
Senior Compliance Counsel, Regulations and Legislation Division, (202) 
906-7409; Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552.

SUPPLEMENTARY INFORMATION:

Background

    The Community Reinvestment Act (CRA) requires the Federal banking 
and thrift regulatory agencies to assess the record of each insured 
depository institution in meeting the credit needs of its entire 
community, including low- and moderate-income neighborhoods, consistent 
with the safe and sound operation of the institution, and to take that 
record into account when the agency evaluates an application by the 
institution for a deposit facility.\1\ The agencies have promulgated 
substantially similar regulations to implement the requirements of the 
CRA.\2\
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    \1\ 12 U.S.C. 2903.
    \2\ See 12 CFR parts 25, 228, 345, and 563e.
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Regulatory Revision

    Today, there is a pressing need to provide housing-related 
assistance to stabilize communities affected by high levels of 
foreclosures. High levels of foreclosures have devastated communities 
and are projected to continue into 2012 and beyond with damaging 
spillover effects for low- and moderate-income census tracts, as well 
as middle-income census tracts affected by high levels of loan 
delinquencies and foreclosures. Among the many consequences of high 
levels of foreclosures are growing inventories of vacant foreclosed 
properties and institution ``other real estate owned'' (OREO) 
properties, depreciating home values, declining property tax bases, and 
destabilization of communities directly affected by high levels of 
foreclosures and of adjacent and surrounding neighborhoods.

Neighborhood Stabilization Program (NSP)

    Congress recognized the need to provide emergency assistance to 
address these problems with the establishment of the Neighborhood 
Stabilization Program (NSP) through Division B, Title III, of the 
Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289 
(2008). Under HERA, emergency funds (``NSP1''), totaling nearly $4 
billion, for the redevelopment of abandoned and foreclosed properties 
were distributed to States and localities with the greatest need for 
such funds according to a formula based on the number and percentage of 
home foreclosures, the number and percentage of homes financed by a 
subprime mortgage-related loan, and the number and percentage of homes 
in default or delinquency in each State or unit of general local 
government. Under NSP1, each of the 50 States and Puerto Rico received 
a minimum award of $19.6 million and 254 local areas received

[[Page 36018]]

grants totaling $1.86 billion ranging from $2.0 million to $62.2 
million.\3\
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    \3\ See Neighborhood Stabilization Grants, http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/nsp1.cfm.
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    Using similar criteria, the American Recovery and Reinvestment Act 
of 2009 (ARRA), Public Law 111-5 (2009), provided supplementary NSP 
funding (``NSP2'') to be awarded as grants, through a competitive 
bidding process, to State and local governments as well as to non-
profit organizations and consortia of non-profit entities. On January 
14, 2010, HUD awarded a combined total of nearly $2 billion in NSP2 
grants.\4\ To receive NSP funding, each grantee was required to submit 
an action plan or application, including any amendments thereto, to HUD 
according to specific alternative requirements set out by HUD in 2008 
and 2009.\5\
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    \4\ See Neighborhood Stabilization Program 2, http://
www.hud.gov/offices/cpd/communitydevelopment/programs/
neighborhoodspg/arrafactsheet.cfm.
    \5\ 74 FR 21377 (May 7, 2009); 73 FR 58330 (Oct. 6, 2008).
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    Section 2301(c)(3) of HERA establishes five activities that are 
``eligible uses'' of NSP funds (for purposes of this proposed rule, 
designated as ``NSP-eligible activities''). NSP-eligible activities are 
projects or activities that use the NSP funds to: (1) Establish 
financing mechanisms for purchase and redevelopment of foreclosed upon 
homes and residential properties, including such mechanisms as soft-
seconds, loan loss reserves, and shared equity loans for low- and 
moderate-income homebuyers; (2) purchase and rehabilitate homes and 
residential properties that have been abandoned or foreclosed upon, in 
order to sell, rent, or redevelop such homes and properties; (3) 
establish and operate land banks for homes and residential properties 
that have been foreclosed upon; (4) demolish blighted structures; and 
(5) redevelop demolished or vacant properties.\6\ In addition, Section 
2301(f)(3)(A) of HERA provides that all NSP funds must be used with 
respect to individuals and families whose income does not exceed 120 
percent of the area median income and not less than 25% of funds must 
be used for the purchase and redevelopment of abandoned or foreclosed 
homes and residential properties that will be used to house individuals 
and families whose incomes do not exceed 50 percent of area median 
income.
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    \6\ NSP2 funds for redevelopment of demolished or vacant 
properties may only be used for housing.
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Revision of ``Community Development'' under CRA

    The definition of ``community development'' is a key definition in 
the agencies' CRA regulations. Financial institutions receive positive 
consideration in their CRA examinations for community development 
loans, qualified investments, and community development services, all 
of which must have a primary purpose of ``community development.''
    The agencies are proposing to revise the interagency CRA 
regulations by adding to the definition of ``community development'' 
loans, investments, and services that support, enable, or facilitate 
NSP-eligible activities in designated target areas identified in plans 
approved by HUD under the NSP. For example, under the proposed revised 
definition of ``community development,'' a financial institution would 
receive favorable CRA consideration for a donation of OREO properties 
to non-profit housing organizations in eligible middle-income, as well 
as low- and moderate-income, geographies. In addition, institutions 
would receive favorable CRA consideration if they provide financing for 
the purchase and rehabilitation of foreclosed, abandoned, or vacant 
properties. Other examples of activities that would receive favorable 
CRA consideration under the proposal include loans, investments, and 
services that support the redevelopment of demolished or vacant 
properties in such areas, consistent with eligible uses for NSP funds.
    Allowing institutions to receive CRA consideration for NSP-eligible 
activities in NSP-targeted areas creates an opportunity to leverage 
government funding targeted to areas with high foreclosure or vacancy 
rates. HUD approves NSP action plans and applications, including 
amendments thereto (hereinafter referred to as ``NSP plans'' or 
``plans''), for all NSP grantees. These public documents must designate 
``areas of greatest need'' for targeting NSP-eligible activities, 
consistent with statutory criteria. Therefore, the agencies propose to 
provide institutions CRA consideration for supporting NSP-eligible 
activities, subject to the requirements in Section 2301(c)(3) and the 
limitations set forth in Section 2301(d)(1)-(3) of HERA, in the 
geographies identified under these HUD-approved NSP plans. The vast 
majority of NSP-targeted areas will be listed on a database located on 
HUD's Web site at: http://www.hud.gov/nspmaps. However, there may be a 
few NSP-targeted geographies in HUD-approved State NSP1 plans that are 
not identified in the HUD census tract database. Information about 
these targeted areas may be found in the individual plans.
    Although the CRA rules expressly encourage activities that benefit 
low- or moderate-income individuals or geographies, the agencies have 
created limited exceptions to cover certain exigencies that may include 
middle-income individuals and geographies.\7\ The agencies believe that 
the purposes of CRA can be served by providing CRA incentives to 
institutions to engage in community development loans, investments and 
services that meet the narrowly tailored requirements of the NSP. 
First, HUD has stated that its funding of these programs was designed 
to satisfy Congressional intent that the funds have maximum impact and 
be targeted to States and local communities with the greatest needs.\8\ 
In addition, while, by its statutory terms, the NSP may include some 
middle-income individuals, the program must use 25 percent of its funds 
on low-income individuals and may, in some cases, cover higher 
percentages of low- and moderate-income individuals.
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    \7\ 70 FR 44256 (Aug. 2, 2005), and 71 FR 18614 (Apr. 12, 2006).
    \8\ See HUD, NSP Frequently Asked Questions, http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/pdf/nsp_faq_formula_allocation.pdf.
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    Under the current CRA rules, an institution is evaluated primarily 
on how it helps meet the credit and community development needs of its 
CRA assessment area(s). However, the agencies note that many foreclosed 
properties owned by an institution may be located in areas that are 
outside of the institution's CRA assessment area(s). Restricting CRA 
consideration of NSP-eligible activities to an institution's assessment 
area(s) may not fully help to promote Congress's objectives for the 
NSP. Therefore, the proposed rule provides that an institution that has 
adequately addressed the community development needs of its assessment 
area(s) may receive favorable consideration for NSP-eligible activities 
under this provision that are outside of its assessment area(s).
    There is precedent for allowing greater flexibility concerning the 
CRA focus on assessment area(s) in certain temporary and exigent 
circumstances. For example, in 2006, the agencies issued a supervisory 
policy statement providing that an institution would receive favorable 
CRA consideration for engaging in activities that helped

[[Page 36019]]

revitalize or stabilize areas affected by Hurricanes Katrina and Rita, 
even if such areas were not in the institution's assessment area(s), 
provided the institution had adequately met the CRA-related needs of 
its assessment area(s).
    Finally, the agencies intend for this proposed rule to be generally 
tied to the duration of the NSP. The NSP does not have a ``sunset'' 
date. Under NSP1, grantees must expend NSP funds within four years of 
the date the grant is awarded. Under NSP2, grantees have three years 
from that date to fully spend the grant, and HUD was required to 
obligate all funds appropriated for NSP2 in February 2010. As noted 
above, the NSP does not have a termination date and Congress could 
appropriate additional funds for the program. Therefore, a specific 
termination date for the regulatory provision has not been chosen. 
Instead, the proposed rule provides that NSP-eligible activities would 
receive favorable consideration under the new rule if conducted no 
later than two years after the last date appropriated funds for the 
program are required to be spent by the grantees. The agencies will 
provide reasonable advance notice to institutions in the Federal 
Register regarding termination of the rule once a date certain has been 
identified.
    The proposed rule imposes no new requirements on institutions. It 
simply expands the categories of activities that qualify for CRA 
considerations as ``community development.'' No institution will be 
required to provide loans, investments, or services pursuant to the 
proposed expanded definition. In addition, any community development 
loans that are made by large institutions under the proposed new 
provision would be covered under existing loan reporting requirements. 
As such, no new reporting requirements and negligible, if any, 
administrative costs will result from the proposed rule. The agencies 
anticipate that the proposal, if finalized, would provide an incentive 
for institutions to engage in activities that stabilize foreclosure 
affected communities approved for NSP projects and, thus, will create 
an opportunity to leverage government funded projects with 
complementary private financing in areas targeted for assistance. The 
likely benefits of the proposed rule are of uncertain magnitude, 
however, because they cannot be quantified at this time.

Request for Comments

    The agencies request comment on all aspects of the proposed rule, 
and particularly seek comment on:
     Whether the agencies should specify a date certain for the 
rule to ``sunset'' and, if so, what that date should be;
     Whether CRA consideration should be limited to those NSP-
eligible activities reflected in HUD-approved NSP plans or to 
activities undertaken by financial institutions that support activities 
that have been funded by the NSP;
     Recognition of NSP-eligible activities outside of an 
institution's assessment area(s);
     The potential costs and benefits of the proposed rule if 
adopted; and
     Whether and the extent to which the proposed rule if 
adopted will affect an institution's decisions about the amount and 
type of community development loans, investments, and services it will 
provide or the geographies it will target in doing so.
    In addition, smaller financial institutions are invited to comment 
on whether any aspects of the proposed rule should be modified to 
address any implementation issues unique to their lines of business or 
to provide additional flexibility.

Regulatory Analysis

Request for Comments Regarding the Use of ``Plain Language''

    Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, sec. 
722, 133 Stat. 1338, 1471 (Nov. 12, 1999), requires the OCC, Board, 
FDIC, and OTS to use plain language in all proposed and final rules 
published after January 1, 2000. Therefore, these agencies specifically 
invite your comments on how to make this proposed rule easier to 
understand. For example,
     Have we organized the material to suit your needs? If not, 
how could this material be better organized?
     Are the requirements clearly stated? If not, how could the 
regulations be more clearly stated?
     Do the regulations contain language or jargon that is not 
clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulations easier to 
understand? If so, what changes to the format would make them easier to 
understand?
     What else could we do to make the regulations easier to 
understand?

Regulatory Analysis

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Ch. 3506; 5 CFR 1320 Appendix A.1), each agency reviewed its proposed 
rule and determined that there are no collections of information. The 
proposed rule would expand the types of activities that qualify for CRA 
consideration, if an institution chooses to engage in them, but it 
would not impose any new requirements, including paperwork 
requirements. The overall cost of this proposed rule is expected to 
negligible, at most. The amendments could have a negligible effect on 
burden estimates for existing information collections, including 
recordkeeping requirements for community development loans.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires agencies 
that are issuing a proposed rule to prepare and make available for 
public comment an initial regulatory flexibility analysis that 
describes the impact of the proposed rule on small entities.\9\ The RFA 
provides that agencies are not required to prepare and publish an 
initial regulatory flexibility act analysis if the agencies certify 
that the proposed rule will not, if promulgated, have a significant 
economic impact on a substantial number of small entities.\10\ The 
Small Business Administration (SBA) has defined ``small entities'' for 
banking purposes as a bank or savings association with $175 million or 
less in assets.\11\ 13 CFR 121.201. Each agency has reviewed the impact 
of this proposed rule on the small entities subject to its regulation 
and supervision and certifies that it will not have a significant 
economic impact on a substantial number of the small entities that it 
regulates and supervises.
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    \9\ See 5 U.S.C. 603(a).
    \10\ See 5 U.S.C. 605(b).
    \11\ A financial institution's assets are determined by 
averaging the assets reported on its four immediately preceding full 
quarterly financial statements.
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    OCC: The OCC has reviewed the proposed amendments to Part 25. The 
proposed rule would expand the definition of the term ``community 
development,'' which is applied in the CRA regulations' performance 
tests. However, the proposed rule does not impose new requirements on 
small entities because the CRA performance test for small entities (as 
defined above) does not require community development activities. 
Rather, the proposed rule reduces burden by expanding the types of 
community development activities for which institutions may receive CRA 
consideration. Only 617 national banks are small entities based on the 
SBA's general principles of affiliation (13 CFR 121.103(a)) and the 
size threshold for

[[Page 36020]]

commercial banks and trust companies. The OCC reviewed national banks 
with assets of less than $175 million that are evaluated under the 
lending, investment, and service tests, which are normally applicable 
to large banks, the community development test, which is applicable to 
wholesale and limited purpose banks, and the community development 
performance factor applicable to intermediate small banks. As of March 
31, 2010, only 17 of the 617 national banks that are small entities 
would be required to engage in community development activities under 
these examination types. The rest would be evaluated under the small 
bank examination procedures, which do not require consideration of 
community development activities. Therefore, the OCC has determined 
that the proposal does not affect a substantial number of small 
entities.
    OTS: The OTS has reviewed the proposed amendments to Part 563e. The 
proposed rule would expand the definition of the term ``community 
development,'' which is applied in the CRA regulations' performance 
tests. However, the proposed rule does not impose new requirements on 
small entities because the CRA performance test for small entities (as 
defined above) does not include evaluation of community development 
activities. Rather, the proposed rule reduces burden by expanding the 
types of community development activities for which institutions may 
receive CRA consideration. The Small Business Administration (SBA) has 
defined ``small entities'' for banking purposes as a savings 
association with $175 million or less in assets. See 13 CFR 121.201. As 
of March 31, 2010, only 369 OTS-regulated thrifts are small entities 
with assets of $175 million or less. However, also as of that date, 
only two of those small savings associations are wholesale or limited 
purpose savings associations whose community development activities 
would be evaluated as part of the CRA examination process. Therefore, 
the OTS has determined that the proposal does not affect a substantial 
number of small entities.
    FDIC: The FDIC has reviewed the proposed amendments to Part 345. 
The proposal does not impose new requirements on small entities because 
the CRA performance test for small entities (as defined above) does not 
require community development activities. Rather, the proposed rule 
reduces burden by expanding the types of community development 
activities for which institutions may receive CRA consideration. As of 
March 31, 2010, FDIC regulated entities under the SBA's size criteria, 
with assets of less than $175 million, totaled 2,872. However, also as 
of that date, only 3 of those banks that are small entities would be 
required to engage in community development activities under the 
examination types that include such consideration. Therefore, the FDIC 
has determined that the proposal does not affect a substantial number 
of small entities.
    Board: In accordance with Section 3(a) of the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq., the Board has reviewed the 
proposed amendments to Regulation BB. A final regulatory flexibility 
analysis will be conducted after consideration of comments received 
during the public comment period. The Small Business Administration 
(SBA) has defined ``small entities'' for banking purposes as a banking 
organization with $175 million or less in assets. See 13 CFR 121.201. 
The Board invites comment on the effect of the proposed rule on small 
entities.
    1. Description of rule. The proposed rule expands the definition of 
the term ``community development,'' which is applied in the CRA 
regulations' performance tests. However, it does not impose new 
requirements on small entities because the CRA performance test for 
small entities does not require community development activities. 
Rather, the proposed rule expands the types of community development 
activities for which institutions may receive CRA consideration.
    2. Reasons for agency action and statement of the objectives/legal 
basis for the proposal. As explained above in the supplementary 
information, the Board believes that it is desirable to expand CRA 
eligibility to include NSP-eligible activities and areas in order 
provide financial institutions incentives to leverage NSP funding by 
providing loans, investments, and services in areas with high 
foreclosure or vacancy rates. The legal basis of the proposed rule is 
in CRA Section 806, 12 U.S.C. 2905.
    3. Small entities affected by proposal. As of December 2009, the 
Board supervised 403 banking organizations that meet the definition of 
small entities, all of which are subject to the proposed rule.
    4. Other Federal rules. The Board is not aware of any other Federal 
rules which may duplicate, overlap or conflict with the proposed rule.
    5. Significant alternatives to the proposed revisions. Given that 
the proposed rule does not require institutions to fund NSP-eligible 
activities and reduces burdens and restrictions on CRA funding in 
general, the Board does not believe any other alternatives would 
accomplish the stated objectives while minimizing burden of the 
proposed rule. The Board welcomes comment on any significant 
alternatives that would minimize the impact of the proposal on small 
entities.

OCC Executive Order 12866 Consideration

    Pursuant to Executive Order 12866, OMB's Office of Information and 
Regulatory Affairs (OIRA) has designated the proposed rule to be 
significant. It has not yet been determined whether the proposal would 
have an annual effect on the economy of $100 million or more. OCC 
solicits comment on the likely increase in lending and costs incurred 
by banks as a result of this proposed rule. For the final rule, OCC 
will conduct additional analysis based on information provided by 
commenters or otherwise obtained during the comment period.

OTS Executive Order 12866 Consideration

    Pursuant to Executive Order 12866, OMB's Office of Information and 
Regulatory Affairs (OIRA) has designated the proposed rule to be 
significant. It has not yet been determined whether the proposal would 
have an annual effect on the economy of $100 million or more. OTS 
solicits comment on the likely increase in lending and costs incurred 
by savings associations as a result of this proposed rule. For the 
final rule, OTS will conduct additional analysis based on information 
provided by commenters or otherwise obtained during the comment period.

OCC and OTS Unfunded Mandates Reform Act of 1995 Determination

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act) (2 U.S.C. 1532) requires that covered agencies prepare a 
budgetary impact statement before promulgating a rule that includes any 
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 
covered agencies to identify and consider a reasonable number of 
regulatory alternatives before promulgating a rule. The OCC and the OTS 
have determined that this 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,

[[Page 36021]]

neither agency has prepared a budgetary impact statement or 
specifically addressed the regulatory alternatives considered.

The Treasury and General Government Appropriations Act, 1999--
Assessment of Impact of Federal Regulation on Families

    The FDIC has determined that this proposed rule will not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, enacted as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act of 1999, 
Public Law 105-277 (5 U.S.C. 601 note).

OCC and OTS Executive Order 13132 Determination

    The OCC and the OTS have each determined that its portion of this 
proposed rule does not have any Federalism implications, as required by 
Executive Order 13132.

List of Subjects

12 CFR Part 25

    Community development, Credit, Investments, National banks, 
Reporting and recordkeeping requirements.

12 CFR Part 228

    Banks, banking, Community development, Credit, Investments, 
Reporting and recordkeeping requirements.

12 CFR Part 345

    Banks, banking, Community development, Credit, Investments, 
Reporting and recordkeeping requirements.

12 CFR Part 563e

    Community development, Credit, Investments, Reporting and 
recordkeeping requirements, Savings associations.

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons discussed in the joint preamble, the Office of the 
Comptroller of the Currency proposes to amend part 25 of chapter I of 
title 12 of the Code of Federal Regulations as follows:

PART 25--COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT 
PRODUCTION REGULATIONS

    1. The authority citation for part 25 continues to read as follows:

    Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215, 
215a, 481, 1814, 1816, 1828(c), 1835a, 2901 through 2907, and 3101 
through 3111.

    2. In Sec.  25.12:
    a. Republish the introductory text of paragraph (g):
    b. Remove the word ``or'' at the end of paragraph (g)(3);
    c. Remove the period at the end of paragraph (g)(4)(iii)(B) and add 
in its place ``; or''; and
    d. Add a new paragraph (g)(5).
    The republication and addition read as follows:


Sec.  25.12  Definitions.

* * * * *
    (g) Community development means:
* * * * *
    (5) Loans, investments, and services that--
    (i) Support, enable or facilitate projects or activities that meet 
the criteria described in Section 2301(c)(3) of the Housing and 
Economic Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 
2654, and are conducted in designated target areas identified in plans 
approved by the United States Department of Housing and Urban 
Development in accordance with the Neighborhood Stabilization Program 
(NSP) established by the HERA and the American Recovery and 
Reinvestment Act of 2009, Public Law 111-5, 123 Stat. 115;
    (ii) Are provided no later than two years after the last date funds 
appropriated for the NSP are required to be spent by grantees; and
    (iii) Benefit low-, moderate-, and middle-income individuals and 
geographies in the bank's assessment area(s) or areas outside the 
bank's assessment area(s) provided the bank has adequately addressed 
the community development needs of its assessment area(s).
* * * * *

Federal Reserve System

12 CFR Chapter II

Authority and Issuance

    For the reasons set forth in the joint preamble, the Board of 
Governors of the Federal Reserve System proposes to amend part 228 of 
chapter II of title 12 of the Code of Federal Regulations as follows:

PART 228--COMMUNITY REINVESTMENT (REGULATION BB)

    3. The authority citation for part 228 continues to read as 
follows:

    Authority: 12 U.S.C. 321, 325, 1828(c), 1842, 1843, 1844, and 
2901 et seq.

    4. In Sec.  228.12:
    a. Republish the introductory text of paragraph (g):
    b. Remove the word ``or'' at the end of paragraph (g)(3);
    c. Remove the period at the end of paragraph (g)(4)(iii)(B) and add 
in its place ``; or''; and
    d. Add a new paragraph (g)(5).
    The republication and addition read as follows:


Sec.  228.12  Definitions.

* * * * *
    (g) Community development means:
* * * * *
    (5) Loans, investments, and services that--
    (i) Support, enable or facilitate projects or activities that meet 
the criteria described in Section 2301(c)(3) of the Housing and 
Economic Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 
2654, and are conducted in designated target areas identified in plans 
approved by the United States Department of Housing and Urban 
Development in accordance with the Neighborhood Stabilization Program 
(NSP) established by the HERA and the American Recovery and 
Reinvestment Act of 2009, Public Law 111-5, 123 Stat. 115;
    (ii) Are provided no later than two years after the last date funds 
appropriated for the NSP are required to be spent by grantees; and
    (iii) Benefit low-, moderate-, and middle-income individuals and 
geographies in the bank's assessment area(s) or areas outside the 
bank's assessment area(s) provided the bank has adequately addressed 
the community development needs of its assessment area(s).
* * * * *

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

    For the reasons set forth in the joint preamble, the Board of 
Directors of the Federal Deposit Insurance Corporation proposes to 
amend part 345 of chapter III of title 12 of the Code of Federal 
Regulations as follows:

PART 345--COMMUNITY REINVESTMENT

    5. The authority citation for part 345 continues to read as 
follows:


[[Page 36022]]


    Authority: 12 U.S.C. 1814-1817, 1819-1920, 1828, 1831u and 2901-
2907, 3103-3104, and 3108(a).

    6. In Sec.  345.12:
    a. Republish the introductory text of paragraph (g):
    b. Remove the word ``or'' at the end of paragraph (g)(3);
    c. Remove the period at the end of paragraph (g)(4)(iii)(B) and add 
in its place ``; or''; and
    d. Add a new paragraph (g)(5).
    The republication and addition read as follows:


Sec.  345.12  Definitions.

* * * * *
    (g) Community development means:
* * * * *
    (5) Loans, investments, and services that--
    (i) Support, enable or facilitate projects or activities that meet 
the criteria described in Section 2301(c)(3) of the Housing and 
Economic Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 
2654, and are conducted in designated target areas identified in plans 
approved by the United States Department of Housing and Urban 
Development in accordance with the Neighborhood Stabilization Program 
(NSP) established by the HERA and the American Recovery and 
Reinvestment Act of 2009, Public Law 111-5, 123 Stat. 115;
    (ii) Are provided no later than two years after the last date funds 
appropriated for the NSP are required to be spent by grantees; and
    (iii) Benefit low-, moderate-, and middle-income individuals and 
geographies in the bank's assessment area(s) or areas outside the 
bank's assessment area(s) provided the bank has adequately addressed 
the community development needs of its assessment area(s).
* * * * *

Office of Thrift Supervision

12 CFR Chapter V

    For the reasons set forth in the joint preamble, the Office of 
Thrift Supervision proposes to amend part 563e of chapter V of title 12 
of the Code of Federal Regulations as follows:

PART 563e--COMMUNITY REINVESTMENT

    7. The authority citation for part 563e continues to read as 
follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1814, 1816, 
1828(c), and 2901 through 2907.

    8. In Sec.  563e.12:
    a. Republish the introductory text of paragraph (g):
    b. Remove the word ``or'' at the end of paragraph (g)(3);
    c. Remove the period at the end of paragraph (g)(4)(iii)(B) and add 
in its place ``; or''; and
    d. Add a new paragraph (g)(5).
    The republication and addition read as follows:


Sec.  563e.12  Definitions.

* * * * *
    (g) Community development means:
* * * * *
    (5) Loans, investments, and services that--
    (i) Support, enable or facilitate projects or activities that meet 
the criteria described in Section 2301(c)(3) of the Housing and 
Economic Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 
2654, and are conducted in designated target areas identified in plans 
approved by the United States Department of Housing and Urban 
Development in accordance with the Neighborhood Stabilization Program 
(NSP) established by the HERA and the American Recovery and 
Reinvestment Act of 2009, Public Law 111-5, 123 Stat. 115;
    (ii) Are provided no later than two years after the last date funds 
appropriated for the NSP are required to be spent by grantees; and
    (iii) Benefit low-, moderate-, and middle-income individuals and 
geographies in the savings association's assessment area(s) or areas 
outside the savings association's assessment area(s) provided the 
savings association has adequately addressed the community development 
needs of its assessment area(s).
* * * * *

    Dated: June 16, 2010.
John C. Dugan,
Comptroller of the Currency.
    By order of the Board of Governors of the Federal Reserve 
System, acting through the Secretary of the Board under delegated 
authority.

    Dated: June 15, 2010.
Jennifer J. Johnson,
Secretary of the Board.
    Dated at Washington, DC, this 16th day of June 2010.
Valerie J. Best,
Assistant Executive Secretary, Federal Deposit Insurance Corporation.
    Dated: May 26, 2010.

    By the Office of Thrift Supervision.

John E. Bowman,
Acting Director.
[FR Doc. 2010-15119 Filed 6-23-10; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P