[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Proposed Rules]
[Pages 43953-43957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-18100]


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FEDERAL RESERVE SYSTEM

12 CFR Chapter II

[Docket No. OP-1427]


Continued Application of Regulations to Savings and Loan Holding 
Companies

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice of intent and request for comment.

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SUMMARY: The Board of Governors of the Federal Reserve System 
(``Board'') is issuing this notice of its intention to continue to 
enforce certain regulations previously issued by the Office of Thrift 
Supervision (``OTS'') after assuming supervisory responsibility for 
savings and loan holding companies (``SLHCs'')

[[Page 43954]]

and their non-depository subsidiaries from the OTS in July 2011. The 
Dodd-Frank Wall Street Reform and Consumer Protection Act (the ``Dodd-
Frank Act'' or ``Act'') transfers supervisory functions related to 
SLHCs and their non-depository subsidiaries to the Board on July 21, 
2011 (``transfer date'').

DATES: Comments must be submitted on or before August 31, 2011.

ADDRESSES: You may submit comments 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/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include docket 
number OP-1427 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 Constitution Avenue, 
NW., Washington, DC 20551.
    All public comments are available from the Board's Web site at 
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.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 form 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.

FOR FURTHER INFORMATION CONTACT: Amanda K. Allexon, Counsel, (202) 452-
3818 or Kathleen O'Day, Deputy General Counsel, (202) 452-3786, Legal 
Division; Anna Lee Hewko, Assistant Director, (202) 530-6260, or 
Michael Sexton, Manager, (202) 452-3009, Division of Banking 
Supervision and Regulation, Board of Governors of the Federal Reserve 
System, 20th and C Streets, NW., Washington, DC 20551. 
Telecommunications Device for the Deaf (TDD) users may contact (202-
263-4869).

SUPPLEMENTARY INFORMATION: 

Background

    The Dodd-Frank Act was enacted on July 21, 2010. Title III of the 
Dodd-Frank Act transfers to the Board supervisory functions of the OTS 
related to SLHCs and their non-depository subsidiaries. The Act 
transfers supervisory functions related to Federal savings associations 
and state savings associations to the Office of the Comptroller of the 
Currency (``OCC'') and the Federal Deposit Insurance Corporation 
(``FDIC''), respectively.
    With respect to the supervision of SLHCs and their non-depository 
subsidiaries, section 312 of the Dodd-Frank Act (12 U.S.C. 5412) 
provides that all functions of the OTS and the Director of the OTS 
(including authority to issue orders) will transfer to the Board on 
July 21, 2011. All rulemaking authority related to SLHCs also will 
transfer to the Board on that date pursuant to section 312 of the Act. 
Section 316 of the Dodd-Frank Act provides that all orders, 
resolutions, determinations, agreements, and regulations, interpretive 
rules, other interpretations, guidelines, and other advisory materials 
issued, made, prescribed, or allowed to become effective by the OTS on 
or before the transfer date with respect to SLHCs and their non-
depository subsidiaries will remain in effect and shall be enforceable 
until modified, terminated, set aside, or superseded in accordance with 
applicable law by the Board, by any court of competent jurisdiction, or 
by operation of law. The Act includes parallel provisions applicable to 
the OCC and the FDIC with respect to Federal savings associations and 
state savings associations, respectively.
    Given the extensive transfer of authority to multiple agencies, 
section 316 of the Dodd-Frank Act (12 U.S.C. 5414(c)) requires the 
Board, OCC, and FDIC to identify and publish in the Federal Register 
separate lists of the current OTS regulations that each agency will 
continue to enforce after the transfer date. The Board is, therefore, 
issuing this notice in accordance with section 316 of the Dodd-Frank 
Act. This notice identifies all OTS regulations applicable to SLHCs and 
their non-depository subsidiaries that the Board currently intends to 
enforce after the transfer date.
    On or immediately after the transfer date, the Board intends to 
issue an interim final rule to effectuate the transition of OTS 
regulations to the Board. That rule will include technical, 
nomenclature, and other changes to certain OTS regulations to 
accommodate the transfer of supervisory authority from the OTS to the 
Board and address modifications made by the Dodd-Frank Act. The Board 
also expects to modify its own rules related to agency administration 
and procedure, where necessary, to account for the transfer of 
authority on or after the transfer date. When finalizing that 
rulemaking, the Board will take into consideration any comments 
received on this notice as well as those received on the interim final 
rule. In the future, the Board may propose substantive modifications to 
rules regarding SLHCs and their non-depository subsidiaries in order to 
address other modifications made by the Dodd-Frank Act and consolidate 
rules within the Board's regulatory structure.

Continuing Regulations

    The regulations currently applicable to SLHCs and their non-
depository subsidiaries are found in Chapter V of Title 12 of the Code 
of Federal Regulations. The following narrative provides a description 
of the parts of Chapter V that the Board expects to continue to enforce 
after July 21, 2011. Following the narrative, a chart is provided that 
lists each OTS part and the Board's current intention regarding 
enforcement of such part. The Board notes that failure to transfer an 
OTS regulation does not relieve any entity of the obligation to comply 
with all statutory requirements.
    Parts 574 though 585 include many of the rules that relate to the 
supervision of SLHCs, including those concerning the acquisition of 
savings associations, mutual holding companies, permissible activities, 
and prohibited service by certain individuals. The Board intends to 
enforce the substantive provisions of parts 574 through 585 after the 
transfer date, including the requirements for filing applications and 
the factors for reviewing such applications. The Board, however, does 
not expect to transfer provisions in parts 574 though 585 regarding the 
processing of applications and notices, such as agency review periods, 
publication requirements, and hearing procedures (including those 
applicable as a result of cross-references to part 516). Instead, 
beginning on the transfer date, the Board anticipates adopting the 
application procedures currently used by bank holding companies 
(``BHCs'') to equivalent applications and notices submitted by SLHCs. 
Additionally, the Board anticipates eliminating the current OTS 
regulations relating to control determinations and rebuttals, including 
the rebuttable control factors and process in Sec.  574.4, the 
certification of ownership in Sec.  574.5, and the rebuttal agreement 
in Sec.  574.100. In its place, the Board expects to insert provisions 
equivalent to those applicable to BHCs and, beginning on the transfer 
date, review investments and relationships with SLHCs using the current 
practices and policies applicable to BHCs, including the Board's policy 
statement on noncontrolling equity investments issued on September 22, 
2008. The

[[Page 43955]]

Board does not anticipate revisiting OTS determinations with respect to 
existing investments and ownership structures. In the near future, the 
Board anticipates proposing rules that would update and streamline 
regulations related to control determinations for both BHCs and SLHCs.
    The Board intends to enforce certain definitional provisions (parts 
541, 561, and 583), as well as parts 533 and 563f to the extent they 
are directly or indirectly applicable to the supervision of SLHCs and 
their non-depository subsidiaries. Additionally, the Board expects to 
enforce certain relevant provisions of part 562 that provide regulatory 
reporting requirements. The Board, however, issued a notice on February 
8, 2011, indicating that it is considering transitioning SLHCs to the 
Board's current reporting system as soon as practicable.\1\ Currently, 
the Board is reviewing comments received on that notice and is 
considering issuing a notice of proposed rulemaking on or after the 
transfer date outlining a proposal on SLHC reporting that may affect 
part 562 and part 584.
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    \1\ Notice of Intent to Require Reporting Forms for Savings and 
Loan Holding Companies, 76 Fed. Reg. 7091 (Feb. 8, 2011).
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    Current OTS rules often integrate regulatory requirements and 
supervision for both SLHCs and savings associations. As a result, 
certain regulations that only reference savings associations also may 
apply to SLHCs (and in particular to mutual holding companies) and 
their non-depository subsidiaries through cross-references. The Board, 
therefore, anticipates enforcing parts 546, 552, 559, 563, 563b, 563c, 
563e, and 563g, and Sec. Sec.  543.1(b), 544.2, 544.5, 544.8, 545.95, 
545.121, and 565.4. The Board anticipates enforcing part 512 regarding 
investigative and formal examination proceedings because the Board does 
not have similar rules currently in place for BHCs.
    The Board does not anticipate enforcing parts 500, 503 through 510, 
513, 516, 517, and 528 after the transfer date. These parts include 
agency-specific administrative provisions and, as noted above, the 
Board anticipates modifying its own rules in this area on or after the 
transfer date to account for the transfer of authority.
    Part 502 itemizes the current assessment fee schedule for OTS-
supervised institutions. The Board does not currently charge BHCs or 
state member banks (``SMBs'') for examinations or inspections. However, 
section 318 of the Dodd-Frank Act (12 U.S.C. 248) requires the Board to 
charge fees to offset the cost of regular or special examinations of 
BHCs, SLHCs and other nonbanking financial companies over $50 billion. 
As a result, the Board does not anticipate enforcing part 502 and, 
instead, plans to issue comprehensive guidance with respect to 
assessment fees on or after the transfer date.
    Additionally, the Board does not expect to enforce parts 535, 536, 
550, 551, 555, 557, 558, 560, 563d, 564, 567, 568, 569, 570, 571, 572, 
573, 590, and 591. The Board believes these provisions only apply to 
the supervision of savings associations and are not applicable to SLHCs 
or their non-depository institutions.
    The Board reserves the right to continue to enforce any regulation 
or policy of the OTS if it determines after further review that the 
rule or policy was applied by the OTS to SLHCs or is otherwise required 
by law.
    The following chart summarizes which parts and sections of Chapter 
V the Board currently expects to continue to enforce after July 21, 
2011.

 
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       OTS Part                   Subject                 Continuing provisions          Basis for decision
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500..................  Agency organization and        None........................  Internal agency
                        function.                                                    administration.
502..................  Assessments and fees.........  None........................  Internal agency
                                                                                     administration and
                                                                                     modifications required by
                                                                                     the Dodd-Frank Act.
503..................  Privacy Act..................  None........................  Internal agency
                                                                                     administration.
505..................  Freedom of Information Act...  None........................  Internal agency
                                                                                     administration.
506..................  Information collection         None........................  Internal agency
                        requirements under the                                       administration.
                        Paperwork Reduction Act.
507..................  Restrictions on post-          None........................  Internal agency
                        employment activities of                                     administration.
                        senior examiners.
508..................  Removals, suspensions, and     None........................  Internal agency
                        prohibitions where a crime                                   administration.
                        is charged or proven.
509..................  Rules of practice and          None........................  Internal agency
                        procedure in adjudicatory                                    administration.
                        proceedings.
510..................  Miscellaneous Organizational   None........................  Internal agency
                        Regulations.                                                 administration.
512..................  Rules for investigative        All of part.................  Applies directly to SLHCs.
                        proceedings and formal
                        examination proceedings.
513..................  Practice before the Office...  None........................  Internal agency
                                                                                     administration.
516..................  Application processing         None........................  Replacing with Board
                        procedures.                                                  processes within specific
                                                                                     regulations.
517..................  Contracting outreach programs  None........................  Internal agency
                                                                                     administration.
528..................  Nondiscrimination              None........................  Internal agency
                        requirements.                                                administration.
533..................  Disclosure and reporting of    All of part.................  Applies directly to SLHCs.
                        CRA-related agreements.
535..................  Unfair or deceptive acts or    None........................  Applies to savings
                        practices.                                                   associations only.
536..................  Consumer protection in sales   None........................  Applies through the savings
                        of insurance.                                                association.
541..................  Definitions for regulations    Some of part................  Relevant to SLHC provisions.
                        affecting Federal savings
                        associations.
543..................  Federal mutual savings         Some of part (Section         Applicable to SLHC as a
                        associations--Incorporation,   543.1(b) (resulting from      result of a cross-
                        organization, and conversion.  cross-reference in part       reference.
                                                       575)).

[[Page 43956]]

 
544..................  Federal mutual savings         Some of part (Sections        Applicable to SLHC as a
                        associations--Charter and      544.2, 544.5, and 544.8       result of a cross-
                        bylaws.                        (resulting from cross-        reference.
                                                       reference in part 575)).
545..................  Federal savings associations-- Some of part (Sections        Applicable to SLHC as a
                        Operations.                    545.95 and 545.121            result of a cross-
                                                       (resulting from cross-        reference.
                                                       reference in part 575)).
546..................  Federal mutual savings         All of part (resulting from   Applicable to SLHC as a
                        associations--Merger,          cross-reference in part       result of a cross-
                        dissolution, reorganization,   575).                         reference.
                        and conversion.
550..................  Fiduciary powers of savings    None of part................  Applies to savings
                        associations.                                                associations only.
551..................  Recordkeeping and              None........................  Applies to savings
                        confirmation requirements                                    associations only.
                        for securities transactions.
552..................  Federal stock associations--   All of part (resulting from   Applicable to SLHC as a
                        Incorporation, organization,   cross-reference in part 575   result of a cross-
                        and conversion.                and others).                  reference.
555..................  Electronic operations........  None........................  Applies to savings
                                                                                     associations only.
557..................  Deposits.....................  None........................  Applies to savings
                                                                                     associations only.
558..................  Possession by conservators     None........................  Applies to savings
                        and receivers for Federal                                    associations only.
                        and State savings
                        associations.
559..................  Subordinate organizations....  All of part (resulting from   Applicable to SLHC as a
                                                       cross-reference in part       result of a cross-
                                                       575).                         reference.
560..................  Lending and investment.......  None........................  Applies to savings
                                                                                     associations only.
561..................  Definitions for regulations    Some of part................  Relevant to SLHC provisions.
                        affecting all savings
                        associations.
562..................  Regulatory reporting           Some of part................  Applies directly to SLHCs.
                        standards.
563..................  Savings Associations--         All of part (resulting from   Applicable to SLHC as a
                        Operations.                    cross-reference in part 575   result of a cross-
                                                       and others).                  reference.
563b.................  Conversions from mutual to     All of part (resulting from   Applicable to SLHC as a
                        stock form.                    cross-reference in part       result of a cross-
                                                       575).                         reference.
563c.................  Accounting requirements......  All of part.................  Applicable to SLHC as a
                                                                                     result of a cross-
                                                                                     reference.
563d.................  Securities of savings          None........................  Applies to savings
                        associations.                                                associations only.
563e.................  Community reinvestment.......  Some of part................  Applicable to SLHC as a
                                                                                     result of a cross-
                                                                                     reference.
563f.................  Management official            All of part.................  Applies directly to SLHCs.
                        interlocks.
563g.................  Securities offerings.........  All of part (resulting from   Applicable to SLHC as a
                                                       cross-reference in part       result of a cross-
                                                       575).                         reference.
564..................  Appraisals...................  None........................  Applies to savings
                                                                                     associations only.
565..................  Prompt corrective action.....  Some of part (Section 565.4   Applicable to SLHC as a
                                                       (resulting from cross-        result of a cross-
                                                       reference in part 575)).      reference.
567..................  Capital......................  None........................  Applies to savings
                                                                                     associations only.
568..................  Security procedures..........  None........................  Applies to savings
                                                                                     associations only.
569..................  Proxies......................  None........................  Applies to savings
                                                                                     associations only.
570..................  Safety and soundness           None........................  Applies to savings
                        guidelines and compliance                                    associations only.
                        procedures.
571..................  Fair Credit Reporting........  None........................  Transferred to new agency..
572..................  Loans in areas having special  None of part................  Applies to savings
                        flood hazards.                                               associations only.
573..................  Privacy of consumer financial  None of part................  Applies to savings
                        information.                                                 associations only.
574..................  Acquisition of control of      Some of part................  Applies directly to SLHCs.
                        savings associations.                                        The Board will replace
                                                                                     current OTS application
                                                                                     processing procedures. The
                                                                                     Board also will replace
                                                                                     provisions related to
                                                                                     control determinations and
                                                                                     rebuttals.
575..................  Mutual holding companies.....  Some of part................  Applies directly to SLHCs.
                                                                                     The Board will replace
                                                                                     current OTS application
                                                                                     processing procedures.
583..................  Definitions for regulations    All of part.................  Relevant to SLHC provisions.
                        affecting savings and loan
                        holding companies.
584..................  Savings and loan holding       All of part.................  Applies directly to SLHCs.
                        companies.                                                   The Board will replace
                                                                                     current OTS application
                                                                                     processing procedures.
585..................  Prohibited service at savings  All of part.................  Applies directly to SLHCs.
                        and loan holding companies.
590..................  Preemption of State usury      None........................  Applies to savings
                        laws.                                                        associations only.
591..................  Preemption of State due-on-    None........................  Applies to savings
                        sale laws.                                                   associations only
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    By this notice, the Board seeks to inform interested persons, 
including SLHCs and their non-depository subsidiaries, of the Board's 
approach to enforcement of certain OTS regulations and invites comment 
on its intended

[[Page 43957]]

approach in order to help identify issues and matters that may require 
special attention. The Board requests specific comment with respect to 
whether all regulations relating to the supervision of SLHCs are 
included in the listing above. Alternatively, does this notice indicate 
continued enforcement of regulatory provisions that currently do not 
apply to SLHCs or their non-depository subsidiaries?

    By order of the Board of Governors of the Federal Reserve 
System, July 14, 2011.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. 2011-18100 Filed 7-21-11; 8:45 am]
BILLING CODE 6210-01-P