[Federal Register Volume 77, Number 250 (Monday, December 31, 2012)]
[Rules and Regulations]
[Pages 76841-76842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31267]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 32

[Docket ID OCC-2012-0007]
RIN 1557-AD59


Lending Limits

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

ACTION: Final rule.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
amending its lending limits rule to extend the rule's temporary 
exception for credit exposures arising from a derivative transaction or 
securities financing transaction from January 1, 2013 to July 1, 2013.

DATES: This final rule is effective December 31, 2012. The effective 
date of amendatory instruction 3a of the interim final rule published 
on June 21, 2012, 77 FR 37277, is delayed from January 1, 2013 to July 
1, 2013.

FOR FURTHER INFORMATION CONTACT: Jonathan Fink, Assistant Director, 
Bank Activities and Structure Division, (202) 649-5593; Heidi M. 
Thomas, Special Counsel, Legislative and Regulatory Activities 
Division, (202) 649-5490; or Kurt Wilhelm, Director for Financial 
Markets, (202) 649-6437, Office of the Comptroller of the Currency, 
Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Description of Final Rule

    Section 5200 of the Revised Statutes, 12 U.S.C. 84, provides that 
the total loans and extensions of credit by a national bank to a person 
outstanding at one time shall not exceed 15 percent of the unimpaired 
capital and unimpaired surplus of the bank if the loan or extension of 
credit is not fully secured, plus an additional 10 percent of 
unimpaired capital and unimpaired surplus if the loan is fully secured. 
Section 5(u)(1) of the Home Owners' Loan Act (HOLA), 12 U.S.C. 
1464(u)(1), provides that section 5200 of the Revised Statutes ``shall 
apply to savings associations in the same manner and to the same extent 
as it applies to national banks.'' In addition, section 5(u)(2) of 
HOLA, 12 U.S.C. 1464(u)(2), includes exceptions to the lending limits 
for certain loans made by savings associations. These HOLA provisions 
apply to both Federal and state-chartered savings associations.
    Section 610 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act \1\ (Dodd-Frank Act) amended section 5200 of the Revised 
Statutes to provide that the definition of ``loans and extensions of 
credit'' includes any credit exposure to a person arising from a 
derivative transaction, repurchase agreement, reverse repurchase 
agreement, securities lending transaction, or securities borrowing 
transaction between a national bank and that person. This amendment was 
effective July 21, 2012. By virtue of section 5(u)(1) of the HOLA, this 
new definition of ``loans and extensions of credit'' applies to all 
savings associations as well as to national banks.
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    \1\ Public Law 111-203, 124 Stat. 1376 (2010).
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    On June 21, 2012, the OCC published in the Federal Register an 
interim final rule that, among other things, amended the OCC's lending 
limits regulation, 12 CFR part 32, by implementing section 610 of the 
Dodd-Frank Act.\2\ Specifically, the interim final rule amended part 32 
to provide national banks and savings associations with different 
options for measuring the appropriate credit exposures of derivatives 
transactions and securities financing transactions, including an 
internal model option. The interim final rule was effective on July 21, 
2012. Because the OCC recognized that national banks and savings 
associations would need additional time to comply with these new 
provisions, the interim final rule provided at 12 CFR 32.1(d) that the 
requirements of part 32 only apply to a credit exposure arising from a 
derivative transaction or securities financing transaction on or after 
January 1, 2013.\3\
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    \2\ 77 FR 37265 (June 21, 2012).
    \3\ The interim final rule also removed from the lending limits 
rule the securities reverse repurchase provision, redesignated as 
Sec.  32.2(q)(1)(vii), on January 1, 2013 to correspond to the 
expiration of the exception for the section 610-related provisions. 
This final rule changes the date of this removal to July 1, 2013 as 
a conforming change.
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    Based on the public comments received on the interim final rule, 
the OCC concludes that institutions that wish to use an internal model 
method to determine credit exposure for derivative transactions and 
securities financing transactions may not have sufficient time to 
develop a model, receive approval for its use, and implement the model 
before the January 1, 2013 expiration of the temporary exception. 
Moreover, for many institutions with large portfolios, the other non-
model methods to measure credit exposure provided by the rule often 
would not be optimal. For the foregoing reasons, the OCC is extending 
this exception to July 1, 2013,\4\ in advance of finalizing the interim 
final rule. As indicated in the preamble to the interim final rule, 
notwithstanding this extension, the OCC retains full authority to 
address credit exposures that present undue concentrations on a case-
by-case basis through our existing safety and soundness authorities.
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    \4\ The OCC issued OCC Bulletin 2012-36 on November 16, 2012, to 
provide notice prior to finalizing the interim final rule of its 
intention to extend the exception to April 1, 2013 so that national 
banks and savings associations could adjust their preparations for 
compliance accordingly. Since then, the OCC has determined that it 
is more appropriate to extend the exception to July 1, 2013.
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II. Notice and Comment

    This final rule is effective on December 31, 2012. Pursuant to the 
Administrative Procedure Act (APA), at 5 U.S.C. 553(b)(B), notice and 
comment are not required prior to the issuance of a final rule if an 
agency, for good cause, finds that ``notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest.''
    This final rule extends the temporary exception from the lending 
limits rules for extensions of credit arising from derivative 
transactions or securities financing transactions from January 1, 2013 
to July 1, 2013 in order to provide national banks and savings 
associations with additional time to comply with these provisions. The 
rule makes no substantive changes to the lending limits rule. 
Furthermore, on November 16, 2012, the OCC announced its intention to 
extend this temporary exception,\5\ thereby giving notice to

[[Page 76842]]

interested parties that the January 1, 2013 date would likely be 
extended. For these reasons, the OCC finds that prior notice and 
comment are unnecessary.
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    \5\ See OCC Bulletin 2012-36.
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III. Effective Date

    This interim final rule is effective on December 31, 2012. A final 
rule may be effective without 30 days advance publication in the 
Federal Register if an agency finds good cause and publishes such with 
the final rule.\6\ The purpose of a delayed effective date is to permit 
regulated entities to adjust their behavior before the final rule takes 
effect. As described above, national banks and savings associations are 
currently excepted from the lending limits rules for extensions of 
credit arising from derivative transactions or securities financing 
transactions until January 1, 2013. This final rule extends this 
exception through July 1, 2013 in order to provide national banks and 
savings associations with additional time to comply with these 
provisions. The rule makes no substantive changes to the lending limits 
rule. Because the current exception will expire less than 30 days from 
the date of this rule's publication, it is necessary to make this rule 
effective immediately. Not doing so would result in national banks and 
savings associations having to comply with these provisions for a 
limited amount of time before the July 1, 2013 exception is effective. 
For these reasons, the OCC finds good cause to dispense with a delayed 
effective date.
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    \6\ 5 U.S.C. 553(d)(3).
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IV. Regulatory Analysis

Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (RFA),\7\ 5 U.S.C. 603, 
an agency must prepare a regulatory flexibility analysis for all 
proposed and final rules that describe the impact of the rule on small 
entities, unless the head of an agency certifies that the rule will not 
have ``a significant economic impact on a substantial number of small 
entities.'' However, the RFA applies only to rules for which an agency 
publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 
553(b).\8\ Pursuant to the APA at 5 U.S.C. 553(b)(B), general notice 
and an opportunity for public comment are not required prior to the 
issuance of a final rule when an agency, for good cause, finds that 
``notice and public procedure thereon are impracticable, unnecessary, 
or contrary to the public interest.'' For the reasons discussed above, 
the OCC did not publish a notice of proposed rulemaking. Therefore, the 
RFA does not apply to this final rule.
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    \7\ Public Law 96-354, Sept. 19, 1980.
    \8\ 5 U.S.C. 603(a), 604(a).
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Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency 
prepare a budgetary impact statement before promulgating any rule 
likely to result in a Federal mandate that may result in the 
expenditure by state, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. If a 
budgetary impact statement is required, Sec.  205 of the Unfunded 
Mandates Act also requires an agency to identify and consider a 
reasonable number of regulatory alternatives before promulgating a 
rule. The OCC has determined that there is no Federal mandate imposed 
by this rulemaking 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. Accordingly, final rule is not 
subject to Sec.  202 of the Unfunded Mandates Act.

Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
(PRA) of 1995 (44 U.S.C. 3501-3521), the OCC may not conduct or 
sponsor, and a respondent is not required to respond to, an information 
collection unless it displays a currently valid Office of Management 
and Budget (OMB) control number. This rule amends rules, which contain 
information collection requirements under the PRA, that have been 
previously approved by OMB under OMB Control No. 1557-0221. The 
amendments in this final rule do not introduce any new collections of 
information into the rules, nor do they amend the rules in a way that 
modifies the collection of information that OMB has previously approved 
for part 32. Therefore, no Paperwork Reduction Act submission to OMB is 
required.

List of Subjects in 12 CFR Part 32

    National banks, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, 12 CFR part 32 is 
amended as follows:

PART 32--LENDING LIMITS

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

    Authority: 12 U.S.C. 1 et seq., 84, 93a, 1462a, 1463, 1464(u), 
and 5412(b)(2)(B).


Sec.  32.1  [Amended]

0
2. Section 32.1(d) is amended by removing ``January 1, 2013'' and 
adding in its place ``July 1, 2013''.

    Dated: December 21, 2012.
Thomas J. Curry,
Comptroller of the Currency.
[FR Doc. 2012-31267 Filed 12-26-12; 11:15 am]
BILLING CODE 4810-33-P