[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
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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