[Federal Register Volume 76, Number 241 (Thursday, December 15, 2011)]
[Proposed Rules]
[Pages 78086-78090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31883]



[[Page 78085]]

Vol. 76

Thursday,

No. 241

December 15, 2011

Part II





Federal Deposit Insurance Corporation





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12 CFR Part 362





Permissible Investments for Federal and State Savings Associations: 
Corporate Debt Securities; Guidance on Due Diligence Requirements for 
Savings Associations in Determining Whether a Corporate Debt Security 
Is Eligible for Investment; Proposed Rules

  Federal Register / Vol. 76, No. 241 / Thursday, December 15, 2011 / 
Proposed Rules  

[[Page 78086]]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 362

RIN 3064-AD88


Permissible Investments for Federal and State Savings 
Associations: Corporate Debt Securities

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is seeking public comment to amend the FDIC's 
regulations in accordance with the requirements of Federal Deposit 
Insurance Act (FDI Act). Specifically, to prohibit any insured savings 
association from acquiring and retaining a corporate debt security 
unless it determines, prior to acquiring such security and periodically 
thereafter, that the issuer has adequate capacity to meet all financial 
commitments under the security for the projected life of the 
investment. For purposes of the Proposed Rule, an issuer would satisfy 
this requirement if, based on the assessment of the savings 
association, the issuer presents a low risk of default and is likely to 
make full and timely repayment of principal and interest. As proposed, 
this standard is consistent with alternative creditworthiness standards 
proposed by other Federal agencies under the Dodd-Frank Act and 
existing guidance regarding securities investments and credit 
classifications of banks and savings associations. In connection with 
this NPR, the FDIC is also seeking public comment on proposed guidance, 
published elsewhere in today's Federal Register, that sets forth 
supervisory expectations for savings associations conducting due 
diligence to determine whether a corporate debt security is eligible 
for investment under this proposed rule.

DATES: Comments must be received by February 13, 2012.

ADDRESSES: You may submit comments, identified by RIN [3064-AD88], by 
any of the following methods:
     Agency Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow instructions for submitting comments on 
the Agency Web site.
     Email: [email protected]. Include the RIN [3064-AD88] on 
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: Comments may be hand delivered to the 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.
    Public Inspection: All comments received must include the agency 
name and RIN [3064-AD88] for this rulemaking. All comments received 
will be posted without change to http://www.fdic.gov/regulations/laws/federal/propose.html, including any personal information provided. 
Paper copies of public comments may be ordered from the FDIC Public 
Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, 
VA 22226 by telephone at 1 (877) 275-3342 or 1 (703) 562-2200.

FOR FURTHER INFORMATION CONTACT: Kyle Hadley, Chief, Examination 
Support Section, (202) 898-6532, Division of Risk Management 
Supervision; Eric Reither, Capital Markets Specialist, (202) 898-3707, 
Division of Risk Management Supervision; Mark Handzlik, Counsel, Bank 
Activities Section, (202) 898-3990; Michael Phillips, Counsel, Bank 
Activities Section, (202) 898-3581; or Rachel Jones, Honors Attorney, 
Legal Division, (202) 898-6858.

SUPPLEMENTARY INFORMATION: 

I. Background

    Under Section 28(d)(1) of the FDI Act, Federal and state savings 
associations generally are prohibited from acquiring or retaining, 
either directly or through a financial subsidiary, a corporate debt 
security that is not ``of investment grade.'' \1\ Section 28(d)(4) 
defines investment grade as follows: ``Any corporate debt security is 
not of `investment grade' unless that security, when acquired by the 
savings association or subsidiary, was rated in one of the four highest 
ratings categories by at least one nationally recognized statistical 
rating organization'' (each, an ``NRSRO'').\2\
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    \1\ Section 28(d)(1) of the FDI Act, 12 U.S.C. 1831e(d)(1). 
Regulations governing permissible investment activities for federal 
savings associations are found in 12 CFR part 160, and regulations 
governing permissible investment activities for state savings 
associations are found in 12 CFR 390.260-262.
    \2\ Id. Under Section 28(d)(2), the investment-grade requirement 
does not apply to a corporate debt security acquired or retained by 
a ``qualified affiliate'' of a savings association, defined as, (i) 
In the case of a stock savings association, an affiliate other than 
a subsidiary or an insured depository institution; and (ii) in the 
case of a mutual savings association, a subsidiary other than an 
insured depository institution, so long as all of the savings 
association's investments in and extensions of credit to the 
subsidiary are deducted from the capital of the savings association.
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    Consistent with the requirements of Section 28(d), Sec.  
362.11(b)(1) of the FDIC's regulations generally prohibits a state 
savings association from acquiring or retaining a corporate debt 
security that is not of investment grade.\3\ Under 12 CFR 362.10(b), 
the term ``corporate debt securities that are not of investment grade'' 
is defined, in a manner consistent with Section 28(d), as, ``any 
corporate security that when acquired was not rated among the four 
highest rating categories by at least one nationally recognized 
statistical rating organization.'' \4\
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    \3\ 12 CFR 362.11(b).
    \4\ Id. at Sec.  362.10(b). Under section 28(d)(4)(C) of the FDI 
Act, however, this term does not include any obligation issued or 
guaranteed by a corporation that may be held by a federal savings 
association without limitation as a percentage of assets under 
section 5(c)(1)(D), (E), or (F) of the Home Owners Loan Act 
(``HOLA'').
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    The FDIC currently may require a state savings association to take 
corrective measures in the event a corporate debt security experiences 
a downgrade (to non-investment grade status) following acquisition. For 
example, a savings association may be required to reduce the level of 
non-investment grade corporate debt security investments as a 
percentage of tier 1 or total capital, write-down the value of the 
security to reflect an impairment, or divest the security. The FDIC 
addresses nonconforming investments on a case-by-case basis through the 
examination process, and in view of the risk profile of the savings 
association and size and composition of its investment portfolio.
    Section 939(a)(2) of the Dodd-Frank Act amends Section 28(d) by (a) 
removing references to NRSRO credit ratings, including the investment-
grade standard under paragraph (1) and the definition of ``investment 
grade'' under paragraph (4); and (b) inserting in paragraph (1) a 
reference to ``standards of creditworthiness established by the 
[FDIC]''. Section 939(a) is effective on July 21, 2012, and, therefore, 
as of this date federal and state savings associations will be 
permitted to invest only in corporate debt securities that satisfy 
creditworthiness standards established by the FDIC.\5\
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    \5\ See section 939(g) of the Dodd-Frank Act.
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II. Description of the Proposed Rule and Consistency With Other Federal 
Regulations

    In accordance with the requirements of Section 939(a), the Proposed 
Rule would amend Sec. Sec.  362.09, 362.10, and 362.11(b)(1) of the 
FDIC's regulations. Section 362.10 would be amended by deleting the 
definition of corporate debt securities not of investment grade. 
Section 362.11(b)(1) would be amended by replacing the investment-grade 
standard, applicable to permissible

[[Page 78087]]

corporate debt securities investments of a state savings association, 
with a requirement, applicable to federal and state savings 
associations, that prior to acquiring a corporate debt security, and 
periodically thereafter, the savings association must determine that 
the issuer has adequate capacity to meet all financial commitments 
under the security for the projected life of the investment. For 
purposes of the Proposed Rule, an issuer would satisfy this requirement 
if the savings association appropriately determines that the obligor 
presents low default risk and is likely to make timely payments of 
principal and interest. The FDIC notes that, in addition to the 
requirements of the Proposed Rule, any savings association investment 
in a corporate debt security must be conducted in a manner that is 
consistent with safety and soundness principles.
    In determining whether an issuer has an adequate financial capacity 
to satisfy all financial commitments under a security for the projected 
life of the investment, the FDIC would expect savings associations to 
consider a number of factors commensurate with the risk profile and 
nature of the issuer. Although savings associations would be permitted 
to consider an external credit assessment for purposes of such 
determination, they must supplement any external credit assessment with 
due diligence processes and analyses that are appropriate for the size 
and complexity of the investment.
    If promulgated in final form, the Proposed Rule would be effective 
on July 21, 2012, in accordance with the requirements of section 939(g) 
of the Dodd-Frank Act. The Proposed Rule would not grandfather any 
corporate debt securities acquired before the effective date and, 
therefore, federal and state savings associations would be permitted to 
retain only those securities for which the savings association 
determines that (as of the effective date and periodically thereafter) 
the issuer has adequate capacity to satisfy all financial commitments 
under the security for the expected life of the investment. This 
proposed treatment for previously acquired securities is consistent 
with the requirements of Section 28(d) and the Proposed Rule, which 
prohibit a savings association from acquiring or retaining any 
corporate debt security that does not satisfy the creditworthiness 
standard described in this proposal. Accordingly, savings associations 
will be required to periodically review and update the analysis 
required to make such determination.
    The FDIC is not revising its current supervisory practice with 
respect to nonconforming corporate debt securities investments. That 
is, if a security acquired in compliance with the Proposed Rule 
experiences credit impairment or other deterioration following its 
acquisition, the appropriate federal regulator may require a state 
savings association to take corrective measures on a case-by-case 
basis.
    In addition to the revisions described above, the Proposed Rule 
would make conforming, technical amendments to Sec.  362.9 of the 
FDIC's regulations to expand the scope of the rule to federal savings 
associations \6\ and reflect the abolishment of the Office of Thrift 
Supervision under section 313 of the Dodd-Frank Act.
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    \6\ Currently, Sec.  362.11(b) applies only to insured state 
savings associations.
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    In connection with this NPR, the FDIC is seeking public comment on 
proposed guidance, published elsewhere in today's Federal Register, 
that sets forth supervisory expectations for due diligence conducted by 
a savings association in determining whether a corporate debt security 
is eligible for investment under this proposal. The proposed guidance 
describes the factors savings associations should consider in 
evaluating the creditworthiness of an issuer and, in particular, 
determining whether the issuer has adequate capacity to satisfy all 
financial commitments under the security for the expected life of the 
investment. The FDIC encourages commenters to review and comment on the 
proposed guidance in connection with their review of the Proposed Rule.

Consideration of Potential Alternative Creditworthiness Standards

    In developing the Proposed Rule, the FDIC considered various 
alternatives to the proposed creditworthiness standard, that is, that 
the issuer has adequate capacity to satisfy all financial commitments 
under the security for the expected life of the investment. One option 
for assessing the creditworthiness of a corporate debt security would 
be to differentiate the credit risk of the security based on financial 
and economic measures appropriate to the issuer. For example, the FDIC 
could require the savings association to demonstrate that the issuer 
satisfies certain metrics based on balance sheet or cash flow ratios 
such as current assets to current liabilities, debt to equity, or some 
form of debt service to cash flow ratio. Alternatively, for publicly 
traded issuers, the FDIC could require the savings association to 
demonstrate that the issuer satisfies certain market-based measures, 
such as credit spreads, market-implied risk, and measures of capital 
adequacy and liquidity.
    The Proposed Rule would require a savings association to determine 
that the issuer has adequate capacity to satisfy all financial 
commitments under the security for the projected life of the 
investment. The FDIC believes that the proposed standard provides a 
flexible, straightforward measure of creditworthiness that is generally 
consistent with existing policy \7\ and supervisory guidance for 
classifying exposures as substandard, doubtful, or loss.\8\ Although 
the alternatives present certain advantages, including the potential 
for identical or similar creditworthiness assessments across 
institutions, the FDIC believes the Proposed Rule would foster prudent 
risk management; be transparent, replicable, and well-defined; allow 
different savings associations to make a similar creditworthiness 
assessment with respect to the same credit exposure; allow for 
supervisory review; differentiate among investments in the same asset 
class with different credit risk; and provide for the timely and 
accurate measurement of negative and positive changes in investment 
quality. In addition, as described below, the FDIC believes that the 
Proposed Rule is consistent with the requirements of section 939A 
(``Section 939A'') of the Dodd-Frank Act, which requires the federal 
agencies, to the extent feasible, to establish uniform standards of 
creditworthiness. Section 939A also directs the agencies to consider 
the differences among their regulated entities and the purposes of 
which these entities would rely on such standards.
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    \7\ See Supervisory Policy Statement on Investment Securities 
and End-User Derivatives (April 23, 1998).
    \8\ See Uniform Agreement on the Classification of Assets and 
Appraisal of Securities Held by Banks and Thrifts (June 15, 2004).
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Consistency With Other Federal Regulations

    As discussed above, in accordance with the requirements of Section 
939A, the FDIC reviewed standards of creditworthiness proposed by other 
federal agencies to ensure, to the extent feasible, that the FDIC 
adopts a consistent creditworthiness standard. The FDIC reviewed 
proposed rules from the Department of Treasury (``Treasury''), the 
Securities and Exchange Commission (``SEC''), and the Commodity Futures 
Trading Commission (``CFTC'').

[[Page 78088]]

    On September 27, 2011, the Treasury issued a proposed rule that 
would implement Section 939A with respect to its liquid capital rule, 
which prescribes the minimum capital requirements for registered 
government securities brokers and dealers.\9\ Currently, if a 
government securities broker or dealer invests in commercial paper, the 
investment could qualify for a more favorable haircut if the issuer is 
rated by at least two NRSROs in one of the three highest categories. As 
a substitute standard of creditworthiness, the Treasury is proposing 
that commercial paper with a ``minimal amount of credit risk,'' as 
determined by the broker or dealer, receive the favorable haircut. 
Similarly, under the FDIC's Proposed Rule, instead of relying solely on 
an NRSRO credit rating, a savings association would be required to 
determine the credit risk of a corporate debt security by considering 
various factors. Additionally, the Treasury would require security 
brokers and dealers to establish and maintain written policies and 
procedures on how they assess credit risk. The Treasury would not 
mandate any particular evaluation criteria, but would provide 
recommendations. For example, the Treasury recommends considering the 
following factors: Credit spreads, liquidity, securities-related 
research, internal or external credit risk assessments (which includes 
rating agencies), default statistics, inclusion on an index, price and/
or yield, and factors specific to the commercial paper market (e.g., 
general liquidity conditions). Also similar to the FDIC's Proposed 
Rule, brokers and dealers would be required to periodically review 
their creditworthiness determination. The frequency of the review would 
depend on the characteristics of the underlying commercial paper 
instrument.
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    \9\ 76 FR 59592 (September 27, 2011).
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    On March 9, 2011, the SEC published a notice of proposed rulemaking 
to implement Section 939A with respect to Rule 5b-3. SEC Rule 5b-3 
permits funds under the Investment Company Act to treat certain 
repurchase agreements as an acquisition of the securities 
collateralizing the repurchase agreement instead of an interest in the 
counterparty.\10\ A repurchase agreement may qualify for the favorable 
treatment only if, in part, the underlying collateral is comprised of 
securities that are rated investment grade by at least two NRSROs at 
the time the repurchase agreement is entered into. This provision 
ensures that the collateral can be easily liquidated in the event of 
default. In accordance with Section 939A, the SEC proposed to define a 
security as fully collateralized if, in part, the collateral (1) Is 
issued by an issuer that has the highest capacity to meet its financial 
obligations; and (2) is sufficiently liquid that the securities can be 
sold at approximately their carrying value in the ordinary course of 
business within seven calendar days. Similar to the FDIC's proposal, 
the responsibility for making the creditworthiness determination is 
placed with the regulated institution. However, in contrast to the 
FDIC's Proposed Rule, the SEC proposed rules would require that funds 
determine the issuer has the highest capacity to meet its financial 
obligations.\11\
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    \10\ 76 FR 12896 (March 9, 2011).
    \11\ As discussed previously in Section II, the FDIC's Proposed 
Rule only requires an adequate capacity to meet its financial 
commitments.
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    On May 12, 2011, the CFTC published a notice of proposed rulemaking 
to implement Section 939A with respect to regulations governing capital 
requirements for over-the-counter (``OTC'') derivatives.\12\ The new 
statutory framework provided under the Commodity Exchange Act, added by 
the Dodd-Frank Act, requires the CFTC to adopt capital requirements for 
certain swap dealers and major swap participants. The proposed 
regulation would require swap dealers and major swap participants to 
calculate current and potential future exposure to counterparties in 
determining their capital requirements. This exposure would be subject 
to a credit-risk factor of 50 percent regardless of the counterparty's 
credit rating. The swap dealer or major swap participant would be able 
to apply to the CFTC for approval to assign internal ratings to 
counterparties. If the internal credit-risk management system of the 
swap dealer or major swap participant is strong, the CFTC may approve 
the application to use internal ratings. The swap dealer and major swap 
participants would have to regularly update the internal rating, 
similar to the FDIC's Proposed Rule.
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    \12\ 76 FR 27802 (May 12, 2011).
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IV. Request for Comment

    The FDIC seeks comment on all aspects of this NPR and the proposed 
creditworthiness standard for permissible corporate debt securities 
investments of federal and state savings associations. In addition, the 
FDIC strongly encourages commenters to provide comment on the proposed 
guidance, published elsewhere in today's Federal Register, released in 
connection with this NPR. Specifically, the FDIC seeks comment on the 
specific questions set forth below.
    1. Does the proposed creditworthiness standard for corporate debt 
securities investments of federal and state savings associations 
satisfy the following criteria?
     Fosters prudent risk management;
     Is transparent, replicable, and well defined;
     Allows different banks or savings associations to assign 
the same or similar assessment of credit quality to the same or similar 
credit exposures;
     Allows for supervisory review;
     Differentiates among investments in the same asset class 
with different credit risk; and
     Provides for the timely and accurate measurement of 
negative and positive changes in investment quality, to the extent 
practicable?
    2. Would the proposed creditworthiness standard for corporate debt 
securities investments of federal and state savings associations avoid 
concerns regarding regulatory arbitrage and oversimplified measures; 
dampen systemic risk; appropriately consider market complexities; 
identify appropriate time horizons; and, allow for accurate and timely 
reassessments? What changes could the FDIC make to the Proposed Rule to 
more appropriately address these objectives?
    3. Does the proposed revised definition strike an appropriate 
balance between the measurement of credit risk and the implementation 
burden in considering alternative measures of creditworthiness? Are 
there other alternatives that strike a more appropriate balance between 
these objectives?

V. Regulatory Analyses

A. Paperwork Reduction Act (PRA)

    No new collection of information pursuant to the PRA (44 U.S.C. 
3501 et seq.) is contained in this NPR.

B. Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (RFA) generally requires that, in 
connection with a notice of proposed rulemaking, an agency prepare and 
make available for public comment an initial regulatory flexibility 
analysis that describes the impact of a proposed rule on small entities 
(defined in regulations promulgated by the Small Business 
Administration to include banking organizations with total assets of 
less than or equal to $175 million).\13\ However, a regulatory 
flexibility analysis is not required if the agency

[[Page 78089]]

certifies that the rule will not have a significant economic impact on 
a substantial number of small entities, and publishes its certification 
and a short explanatory statement in the Federal Register together with 
the rule. For the reasons provided below, the FDIC certifies that the 
Proposed Rule, if adopted in final form, would not have a significant 
economic impact on a substantial number of small entities. Accordingly, 
a regulatory flexibility analysis is not required.
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    \13\ 5 U.S.C. 601 et seq.
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    As discussed in this NPR, Section 28(d) of the FDI Act, as amended 
by Section 939(a) of the Dodd-Frank Act, prohibits federal and state 
savings associations from acquiring or retaining a corporate debt 
security that does not meet FDIC's standards of creditworthiness. In 
accordance with the requirements of amended Section 28(d), this NPR 
proposes that savings associations cannot invest in a corporate debt 
security unless the savings association determines that the issuer has 
adequate capacity to meet all financial commitments under the security 
for the projected life of the investment. Consequently, this Proposed 
Rule only impacts savings associations that hold corporate debt 
security investments.
    In determining whether this Proposed Rule would have a significant 
economic impact on a substantial number of small savings associations, 
the FDIC reviewed June 2011 Thrift Financial Report (TFR) data to 
evaluate the number of savings associations with corporate debt 
securities. There are 708 insured state and federal savings 
associations. Of these 708 insured savings associations, 204 reported 
investments in the Other Investment Securities line of their TFR.\14\ 
Even assuming the entire amount listed in the Other Investment 
Securities line of the TFR represents investment in corporate debt 
securities, Other Investment Securities represents only 2.40 percent of 
the aggregate total assets of the 708 applicable savings associations.
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    \14\ This line item is where the dollar exposure to corporate 
debt securities, along with other forms of investment, should be 
slotted according to the TFR instructions. This line may also 
include investments in instruments other than corporate debt 
securities, this limited granularity does not permit a precise 
understanding of the exposure to corporate debt securities.
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    Moreover, only savings associations with total assets of $175 
million or less apply for purposes of the RFA analysis. When applying 
this additional size criterion, only 61 institutions list Other 
Investment Securities in their TFR. For these smaller savings 
institutions, the total amount listed as investment in Other Investment 
Securities represents only .45 percent of the total assets. And only 
seven of these smaller thrifts have concentrations in Other Investment 
Securities that exceeds 50 percent of their tier 1 capital. Due to the 
small investment in corporate debt securities on small savings 
associations' balance sheets and due to the existing need to do due 
diligence relating to any investment in order to assure that a savings 
association is operating in a safe and sound manner, the additional 
compliance burden would not result in a significant economic impact on 
a substantial number of small savings associations.
Plain Language
    Section 722 of the Gramm-Leach-Bliley Act required the agencies to 
use plain language in all proposed and final rules published after 
January 1, 2000. The agencies invite comment on how to make this 
Proposed Rule easier to understand. For example:
     Have the agencies organized the material to suit your 
needs? If not, how could they present the rule more clearly?
     Are the requirements in the rule clearly stated? If not, 
how could the rule be more clearly stated?
     Do the regulations contain technical 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 regulation easier to 
understand? If so, what changes would achieve that?
     Is this section format adequate? If not, which of the 
sections should be changed and how?
     What other changes can the agencies incorporate to make 
the regulation easier to understand?

List of Subjects in 12 CFR Part 362

    Administrative practice and procedure, Authority delegations 
(Government agencies), Bank deposit insurance, Banks, banking, 
Investments, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation proposes to amend part 362 of chapter III of 
Title 12, Code of Federal Regulations as follows:

PART 362--ACTIVITIES OF INSURED STATE BANKS AND INSURED SAVINGS 
ASSOCIATIONS

    1. The authority citation for part 362 continues to read as 
follows:

    Authority: 12 U.S.C. 1816, 1818, 1819(a) (Tenth), 1828(j), 
1828(m), 1828a, 1831a, 1831e, 1831w, 1843(l).

    2. Amend Sec.  362.9, by revising paragraph (a) to read as follows:


Sec.  362.9  Purpose and scope.

    (a) This subpart, along with the notice and application procedures 
in subpart H of part 303 of this chapter, implements the provisions of 
section 28(a) of the Federal Deposit Insurance Act (12 U.S.C. 1831e(a)) 
that restrict and prohibit insured state savings associations and their 
service corporations from engaging in activities and investments of a 
type that are not permissible for a Federal savings association and 
their service corporations. This subpart also implements the provision 
of section 28(d) of the Federal Deposit Insurance Act (12 U.S.C. 
1831e(d)) that restricts state and federal savings associations from 
investing in certain corporate debt securities. The term ``activity 
permissible for a Federal savings association'' means any activity 
authorized for a Federal savings association under any statute 
including the Home Owners' Loan Act (HOLA) (12 U.S.C. 1464 et seq.), as 
well as activities recognized as permissible for a Federal savings 
association in regulations issued by the Office of the Comptroller of 
the Currency (OCC) or in bulletins, orders or written interpretations 
issued by the OCC, or by the former Office of Thrift Supervision until 
modified, terminated, set aside, or superseded by the OCC.
* * * * *


Sec.  362.10  [Amended]

    3. Amend Sec.  362.10 by removing paragraph (b) and redesignating 
paragraphs (c), (d), and (e) as paragraphs (b), (c), and (d).
    4. Amend Sec.  362.11 by revising the section heading and the last 
sentence of paragraph (b)(1) to read as follows:


Sec.  362.11  Activities of insured savings associations.

* * * * *
    (b) * * *
    (1) * * * After July 21, 2012, an insured savings association 
directly or through a subsidiary (other than, in the case of a mutual 
savings association, a subsidiary that is a qualified affiliate), shall 
not acquire or retain a corporate debt security unless the savings 
association, prior to acquiring the security and periodically 
thereafter, determines that the issuer of the security has adequate 
capacity to meet all financial commitments under the

[[Page 78090]]

security for the projected life of the investment.
* * * * *

    Dated at Washington, DC, this 7th day of December 2011.
    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2011-31883 Filed 12-13-11; 11:15 am]
BILLING CODE 6714-01-P