[Federal Register Volume 79, Number 84 (Thursday, May 1, 2014)]
[Proposed Rules]
[Pages 24618-24623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-09452]
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DEPARTMENT OF TREASURY
Office of the Comptroller of the Currency
12 CFR Part 3
[Docket ID OCC-2014-0012]
RIN 1557-AD83
FEDERAL RESERVE SYSTEM
12 CFR Part 217
[Docket No. R-1488; Regulation Q]
RIN 7100 AE17
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 324
RIN 3064-AE13
Regulatory Capital Rules: Advanced Approaches Risk-Based Capital
Rule, Proposed Revisions to the Definition of Eligible Guarantee
AGENCY: Office of the Comptroller of the Currency, Treasury; the Board
of Governors of the Federal Reserve System; and the Federal Deposit
Insurance Corporation.
ACTION: Joint notice of proposed rulemaking.
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SUMMARY: The Office of the Comptroller of the Currency (OCC), the Board
of Governors of the Federal Reserve System (Board), and the Federal
Deposit Insurance Corporation (FDIC) (collectively, the agencies) are
seeking comment on a notice of proposed rulemaking (proposed rule) that
would revise the definition of eligible guarantee as incorporated into
the agencies' advanced approaches risk-based capital rule, adopted in
the agencies' July 2013 regulatory capital rule (2013 capital rule).
The agencies inadvertently limited the recognition of guarantees of
wholesale exposures under the advanced approaches risk-based capital
rule as incorporated into subpart E of the 2013 capital rule (advanced
approaches). To address this matter, the proposed rule would remove the
requirement that an eligible guarantee be made by an eligible guarantor
for purposes of calculating the risk-weighted assets of an exposure
(other than a securitization exposure) under the advanced approaches.
The proposed change to the definition of eligible guarantee would apply
to all banks, savings associations, bank holding companies, and savings
and loan holding companies that are subject to the advanced approaches.
DATES: Comments must be received no later than June 13, 2014.
ADDRESSES: Comments should be directed to:
OCC: Because paper mail in the Washington, DC area and at the OCC
is subject to delay, commenters are encouraged to submit comments by
the Federal eRulemaking Portal or email, if possible. Please use the
title ``Regulatory Capital Rules: Regulatory Capital, Proposed
Revisions to the Definition of Eligible Guarantee'' to facilitate the
organization and distribution of the comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal--``regulations.gov'': Go to
http://www.regulations.gov. Enter ``Docket ID OCC-2014-0012'' in the
Search Box and click ``Search''. Results can be filtered
[[Page 24619]]
using the filtering tools on the left side of the screen. Click on
``Comment Now'' to submit public comments.
Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
submitting public comments.
Email: [email protected].
Mail: Legislative and Regulatory Activities Division,
Office of the Comptroller of the Currency, 400 7th Street SW., Suite
3E-218, Mail Stop 9W-11, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW., Suite 3E-218,
Mail Stop 9W-11, Washington, DC 20219.
Fax: (571) 465-4326.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2014-0012'' in your comment. In general, OCC will enter
all comments received into the docket and publish them on the
Regulations.gov Web site without change, including any business or
personal information that you provide such as name and address
information, email addresses, or phone numbers. Comments received,
including attachments and other supporting materials, are part of the
public record and subject to public disclosure. Do not enclose any
information in your comment or supporting materials that you consider
confidential or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this rulemaking action by any of the following methods:
Viewing Comments Electronically: Go to http://www.regulations.gov. Enter ``Docket ID OCC-2014-0012'' in the Search
box and click ``Search''. Comments can be filtered by Agency using the
filtering tools on the left side of the screen.
Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
viewing public comments, viewing other supporting and related
materials, and viewing the docket after the close of the comment
period.
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC, 400 7th Street, SW., Washington, DC.
For security reasons, the OCC requires that visitors make an
appointment to inspect comments. You may do so by calling (202) 649-
6700. Upon arrival, visitors will be required to present valid
government-issued photo identification and to submit to security
screening in order to inspect and photocopy comments.
Docket: You may also view or request available background
documents and project summaries using the methods described above.
Board: When submitting comments, please consider submitting your
comments by email or fax because paper mail in the Washington, DC area
and at the Board may be subject to delay. You may submit comments,
identified by Docket No. R-1488, RIN 7100 AE17, 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.
Email: [email protected]. Include docket
number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Robert de V. Frierson, 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
Street NW., Washington, DC 20551) between 9:00 a.m. and 5:00 p.m. on
weekdays.
FDIC: You may submit comments, identified by RIN 3064-AE13, 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-AE13 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 7:00 a.m. and 5:00 p.m.
Public Inspection: All comments received must include the agency
name and RIN 3064-AE13 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 (877) 275-3342 or (703) 562-2200.
FOR FURTHER INFORMATION CONTACT:
OCC: Margot Schwadron, Senior Risk Expert, (202) 649-6982; or Roger
Tufts, Senior Economic Advisor, (202) 649-6981, Capital Policy; or Carl
Kaminski, Counsel, Legislative and Regulatory Activities Division,
(202) 649-5490, for persons who are deaf or hard of hearing, TTY, (202)
649-5597, Office of the Comptroller of the Currency, 400 7th Street
SW., Washington, DC 20219.
Board: Anna Lee Hewko, Deputy Associate Director, (202) 530-6260;
Constance M. Horsley, Assistant Director, (202) 452-5239; Thomas
Boemio, Manager, (202) 452-2982; Andrew Willis, Senior Financial
Analyst, (202) 912-4323; or Justyna Milewski, Financial Analyst, (202)
452-3607, Capital and Regulatory Policy, Division of Banking
Supervision and Regulation; or Benjamin McDonough, Senior Counsel,
(202) 452-2036; April C. Snyder, Senior Counsel, (202) 452-3099;
Christine Graham, Counsel, 202 452 3005; or Mark Buresh, Attorney,
(202) 452-5270, Legal Division, Board of Governors of the Federal
Reserve System, 20th and C Streets NW., Washington, DC 20551. For the
hearing impaired only, Telecommunication Device for the Deaf (TDD),
(202) 263-4869.
FDIC: Bobby R. Bean, Associate Director, [email protected]; Ryan
Billingsley, Chief, Capital Policy Section, [email protected];
Benedetto Bosco, Capital Markets Policy Analyst, [email protected],
Capital Markets Branch, Division of Risk Management Supervision,
[email protected] or (202) 898-6888; or Mark Handzlik,
Counsel, [email protected]; Michael Phillips, Counsel,
[email protected]; or Rachel Ackmann, Attorney, [email protected];
Supervision Branch, Legal Division, Federal Deposit Insurance
Corporation, 550 17th Street NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Proposed Rule
In 2013, the Office of the Comptroller of the Currency (OCC), the
Board of Governors of the Federal Reserve System (Board), and the
Federal Deposit Insurance Corporation (FDIC) (collectively, the
agencies) comprehensively revised and strengthened the capital
regulations
[[Page 24620]]
applicable to banking organizations (2013 capital rule).\1\ Among other
changes, the 2013 capital rule revised the methodologies for
calculating risk-weighted assets, including aspects of the standardized
approach for calculating risk-weighted assets established by the Basel
Committee on Banking Supervision (BCBS) through its international
framework for regulatory capital in subpart D of the 2013 capital rule
(standardized approach). The agencies amended the advanced approaches
risk-based capital rule consistent with agreements reached by the BCBS,
and incorporated the advanced approaches rule into subpart E of the
2013 capital rule (advanced approaches).\2\
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\1\ 78 FR 55340 (September 10, 2013) (FDIC) and 78 FR 62018
(October 11, 2013) (OCC and Board). On April 8, 2014, the FDIC
adopted as final the 2013 revised capital rule, with no substantive
changes.
\2\ See BCBS, ``Basel II: International Convergence of Capital
Measurement and Capital Standards: A Revised Framework'' (November
2005 and revised in June 2006), available at http://www.bis.org/publ/bcbs128.pdf. See BCBS, ``Basel III: A Global Regulatory
Framework for More Resilient Banks and Banking Systems'' (December
2010 and revised in June 2011), available at http://www.bis.org/publ/bcbs189.htm. The BCBS is a committee of banking supervisory
authorities, which was established by the central bank governors of
the G-10 countries in 1975. More information regarding the BCBS and
its membership is available at http://www.bis.org/bcbs/about.htm.
Documents issued by the BCBS are available through the Bank for
International Settlements Web site at http://www.bis.org.
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The agencies' 2013 capital rule included a definition of eligible
guarantee for purposes of both the standardized approach and the
advanced approaches and introduced the definition of ``eligible
guarantor.'' The definition included the requirement that an eligible
guarantee be provided by an eligible guarantor. An eligible guarantor
under the 2013 capital rule is a sovereign, the Bank for International
Settlements, the International Monetary Fund, the European Central
Bank, the European Commission, a Federal Home Loan Bank, the Federal
Agricultural Mortgage Corporation (Farmer Mac), a multilateral
development bank (MDB), a depository institution, a bank holding
company, a savings and loan holding company, a credit union, a foreign
bank, or a qualifying central counterparty. It may also be an entity
(other than a special purpose entity) that at the time the guarantee is
issued or anytime thereafter, has issued and has outstanding an
unsecured debt security that is investment grade; whose
creditworthiness is not positively correlated with the credit risk of
the exposures for which it has provided guarantees; and that is not an
insurance company engaged predominately in the business of providing
credit protection (such as a monoline bond insurer or re-insurer).
The agencies received comments following the release of the 2013
capital rule indicating that the revisions made to the definition of
eligible guarantee changed the recognition of these guarantees for
certain exposures under the advanced approaches wholesale framework.
For example, several advanced approaches banking organizations noted
that middle market and commercial real estate loans often involve
guarantors that do not meet the definition of eligible guarantor. The
guarantors are often related parties such as owners or sponsors that
have not issued investment grade debt securities; nevertheless,
advanced approaches banking organizations assert that such guarantees
provide valuable credit risk mitigation that should be recognized under
the advanced approaches. The agencies agree that the revisions to the
2013 capital rule inadvertently limited the recognition of guarantees
of wholesale exposures under the advanced approaches and that these
guarantees should continue to qualify as credit risk mitigants for
purposes of the advanced approaches because they provide credit
enhancement. Therefore the agencies propose to effectively revert to
the previous treatment of eligible guarantees under the 2007 advanced
approaches final rule for such exposures.\3\
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\3\ 72 FR 69288 (December 7, 2007).
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The proposed rule would modify the definition of eligible guarantee
for purposes of the advanced approaches by removing the requirement
that an eligible guarantee be provided by an eligible guarantor for
exposures that are not securitizations. The agencies would retain the
definition of eligible guarantee in the 2013 capital rule for purposes
of calculating risk-weighted assets under the standardized approach
because the standardized approach generally assigns a single risk
weight to exposures to most corporate borrowers and guarantors and does
not incorporate the definition of eligible guarantee into a risk-
sensitive methodology like the advanced approaches.
An eligible guarantee for purposes of the advanced approaches would
need to be in writing and also be either an unconditional guarantee or
a contingent obligation of the U.S. government or its agencies, the
enforceability of which is dependent upon some affirmative action on
the part of the beneficiary of the guarantee or a third party (for
example, meeting servicing requirements). The guarantee would also have
to cover all or a pro rata portion of all contractual payments of the
obligated party on the reference exposure and give the beneficiary a
direct claim against the protection provider. Additionally, the
guarantee would not be unilaterally cancelable by the protection
provider for reasons other than the breach of the contract by the
beneficiary and would have to be legally enforceable against the
protection provider in a jurisdiction where the protection provider has
sufficient assets against which a judgment may be attached and enforced
(except for a guarantee by a sovereign). The guarantee would require
the protection provider to make payment to the beneficiary on the
occurrence of a default (as defined in the guarantee) of the obligated
party on the reference exposure in a timely manner without the
beneficiary first having to take legal actions to pursue the obligor
for payment and must not increase the beneficiary's cost of credit
protection on the guarantee in response to deterioration in the credit
quality of the reference exposure. Furthermore, the guarantee would not
be provided by an affiliate of the banking organization, unless the
affiliate is an insured depository institution, foreign bank,
securities broker or dealer, or insurance company that does not control
the banking organization and is subject to consolidated supervision and
regulation comparable to that imposed on depository institutions, U.S.
securities broker-dealers, or U.S. insurance companies (as the case may
be) and for purposes of sections --.141 to --.145 and of the
standardized approach, the guarantee would have to be provided by an
eligible guarantor.
II. Regulatory Analyses
A. Paperwork Reduction Act (PRA)
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501-3521) (PRA), the agencies 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. The agencies reviewed the proposed
rule and determined that the rule does not introduce any new collection
of information pursuant to the PRA.
B. Regulatory Flexibility Act Analysis
OCC: The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA),
requires an agency, in connection with a notice of proposed rulemaking,
to prepare an Initial Regulatory Flexibility Act analysis describing
the impact of the
[[Page 24621]]
rule on small entities (defined by the Small Business Administration
for purposes of the RFA to include banking entities with total assets
of $500 million or less) or to certify that the rule will not have a
significant economic impact on a substantial number of small entities.
Using the SBA's size standards, as of December 31, 2013, the OCC
supervised 1,195 small entities.\4\
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\4\ The OCC calculated the number of small entities using the
SBA's size thresholds for commercial banks and savings institutions,
and trust companies, which are $500 million and $35.5 million,
respectively. 78 FR 37409 (June 20, 2013). Consistent with the
General Principles of Affiliation, 13 CFR 121.103(a), the OCC
counted the assets of affiliated financial institutions when
determining whether to classify a national bank or Federal savings
association as a small entity. The OCC used December 31, 2013, to
determine size because a ``financial institution's assets are
determined by averaging the assets reported on its four quarterly
financial statements for the preceding year.'' See footnote 8 of the
U.S. Small Business Administration's Table of Size Standards.
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As described in the SUPPLEMENTARY INFORMATION section of the
preamble, the proposed rule would apply only to advanced approaches
banking organizations. Advanced approaches banking organization is
defined to include a national bank or Federal savings associations that
has, or is a subsidiary of a bank holding company or savings and loan
holding company that has, total consolidated assets of $250 billion or
more, total consolidated on-balance sheet foreign exposure of $10
billion or more, or that has elected to use the advanced approaches.
After considering the SBA's size standards and General Principals of
Affiliation to identify small entities, the OCC determined that no
small national banks or Federal savings associations are advanced
approaches banking organizations. Because the proposed rule applies
only to advanced approaches banking organizations, it does not impact
any OCC-supervised small entities. Therefore, the OCC certifies that
the proposed rule will not have a significant economic impact on a
substantial number of OCC-supervised small entities.
Board: The Board is providing an initial regulatory flexibility
analysis with respect to this proposed rule. As discussed above, this
proposed rule would amend the definition of ``eligible guarantee'' in
section 2 of Regulation Q (12 CFR part 217) for the purposes of
calculating risk-weighted assets under the advanced approaches in
Regulation Q (12 CFR part 217, subpart E).
Under regulations issued by the Small Business Administration, a
small entity includes a depository institution, bank holding company,
or savings and loan holding company with total assets of $500 million
or less (a small banking organization).\5\ As of December 31, 2013,
there were approximately 627 small state member banks. As of December
31, 2013, there were approximately 3,676 small bank holding companies
and approximately 268 small savings and loan holding companies.\6\
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\5\ See 13 CFR 121.201. Effective July 22, 2013, the Small
Business Administration revised the size standards for banking
organizations to $500 million in assets from $175 million in assets.
78 FR 37409 (June 20, 2013).
\6\ Under the prior Small Business Administration threshold of
$175 million in assets, as of March 31, 2013 the Board supervised
approximately 369 small state member banks. As of December 31, 2012,
there were approximately 2,259 small bank holding companies.
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The proposed rule would apply only to advanced approaches banking
organizations, which, generally, are banking organizations with total
consolidated assets of $250 billion or more, that have total
consolidated on-balance sheet foreign exposure of $10 billion or more,
are a subsidiary of an advanced approaches depository institution, or
that elect to use the advanced approaches. Currently, no small top-tier
bank holding company, top-tier savings and loan holding company, or
state member bank is an advanced approaches banking organization, so
there would be no additional projected compliance requirements imposed
on small bank holding companies, savings and loan holding companies, or
state member banks. The Board expects that any small bank holding
companies, savings and loan holding companies, or state member banks
that would be covered by this proposed rule would rely on their parent
banking organization for compliance and would not bear additional
costs.
The Board is aware of no other Federal rules that duplicate,
overlap, or conflict with the proposed rule. The Board believes that
the proposed rule will not have a significant economic impact on small
banking organizations supervised by the Board and therefore believes
that there are no significant alternatives to the proposed rule that
would reduce the economic impact on small banking organizations
supervised by the Board.
The Board welcomes comment on all aspects of its analysis. A final
regulatory flexibility analysis will be conducted after consideration
of comments received during the public comment period.
FDIC: The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA),
requires an agency, in connection with a notice of proposed rulemaking,
to prepare an Initial Regulatory Flexibility Act analysis describing
the impact of the proposed rule on small entities (defined by the Small
Business Administration for purposes of the RFA to include banking
entities with total assets of $500 million or less) or to certify that
the proposed rule will not have a significant economic impact on a
substantial number of small entities.
Using the SBA's size standards, as of December 31, 2013, the FDIC
supervised 1,195 small entities. As described in the Supplementary
Information section of the preamble, however, the proposed rule would
apply only to advanced approaches banking organizations. Advanced
approaches banking organization is defined to include a state nonmember
bank or a State savings association that has, or is a subsidiary of a
bank holding company or savings and loan holding company that has,
total consolidated assets of $250 billion or more, total consolidated
on-balance sheet foreign exposure of $10 billion or more, or that has
elected to use the advanced approaches. As of December 31, 2013, based
on a $500 million threshold, 1 (out of 3,394) small state nonmember
banks and no (out of 303) small state savings associations were under
the advanced approaches. Therefore, the FDIC does not believe that the
proposed rule will result in a significant economic impact on a
substantial number of small entities under its supervisory
jurisdiction.
The FDIC certifies that the proposed rule would not have a
significant economic impact on a substantial number of small FDIC-
supervised institutions.
C. OCC Unfunded Mandates Reform Act of 1995 Determination
The OCC has analyzed the proposed rule under the factors in the
Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this
analysis, the OCC considered whether the proposed rule includes 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 (adjusted annually for inflation). As
detailed in the SUPPLEMENTARY INFORMATION section, the proposed rule
would revise the definition of eligible guarantee as incorporated into
the OCC's advanced approaches risk-based capital rule. In 2013, when
the Federal banking agencies revised their respective risk-based
capital requirements, they added a requirement that an eligible
guarantee be from an eligible guarantor. This proposed rule would
remove that requirement for the purposes of calculating the risk-
[[Page 24622]]
weighted asset amount for an exposure (other than for a securitization
exposure) under the OCC's advanced approaches risk-based capital rule.
For example, the OCC understands that advanced approaches banking
organizations commonly obtain guarantees from guarantors that do not
qualify as eligible guarantors for exposures in their commercial real
estate and other wholesale portfolios. Under this proposed rule, these
guarantees would continue to qualify as credit risk mitigants for
purposes of the wholesale framework in the advanced approaches risk-
based capital rule.
This proposed rule would not increase the minimum capital
requirements for any institutions subject to the OCC's risk-based
capital rules. After comparing existing capital levels with the
proposed requirements, and considering the burden and other compliance
costs associated with the proposed changes, the OCC has determined that
its proposed rule will not result in expenditures by State, local, and
Tribal governments, or by the private sector, of $100 million or more
(adjusted annually for inflation). Accordingly, the OCC is not
including a written statement to accompany this proposed rule.
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act requires the Federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The agencies have sought to present
the proposed rule in a simple and straightforward manner, and invite
comment on the use of plain language. For example:
Have the agencies organized the material to suit your
needs? If not, how could they present the proposed rule more clearly?
Are the requirements in the proposed rule clearly stated?
If not, how could the proposed 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
12 CFR Part 3
Administrative practice and procedure, Capital, National banks,
Reporting and recordkeeping requirements, Risk.
12 CFR Part 217
Administrative practice and procedure, Banks, Banking, Capital,
Federal Reserve System, Holding companies, Reporting and recordkeeping
requirements, Securities.
12 CFR Part 324
Administrative practice and procedure, Banks, banking, Capital
Adequacy, Reporting and recordkeeping requirements, Savings
associations, State non-member banks.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Chapter I
Authority and Issuance
For the reasons set forth in the preamble and under the authority
of 12 U.S.C. 93a, 1462, 1462a, 1463, 1464, 3907, 3909, 1831o, and
5412(b)(2)(B), the Office of the Comptroller of the Currency proposes
to amend part 3 of chapter I of title 12, Code of Federal Regulations
as follows:
PART 3--CAPITAL ADEQUACY STANDARDS
0
1. The authority citation for part 3 continues to read as follows:
Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818,
1828(n), 1828 note, 1831n note, 1835, 3907, 3909, and 5412(b)(2)(B).
0
2. In Sec. 3.2, revise the definition of ``eligible guarantee'' to
read as follows:
Sec. 3.2 Definitions.
* * * * *
Eligible guarantee means a guarantee that:
(1) Is written;
(2) Is either:
(i) Unconditional, or
(ii) A contingent obligation of the U.S. government or its
agencies, the enforceability of which is dependent upon some
affirmative action on the part of the beneficiary of the guarantee or a
third party (for example, meeting servicing requirements);
(3) Covers all or a pro rata portion of all contractual payments of
the obligated party on the reference exposure;
(4) Gives the beneficiary a direct claim against the protection
provider;
(5) Is not unilaterally cancelable by the protection provider for
reasons other than the breach of the contract by the beneficiary;
(6) Except for a guarantee by a sovereign, is legally enforceable
against the protection provider in a jurisdiction where the protection
provider has sufficient assets against which a judgment may be attached
and enforced;
(7) Requires the protection provider to make payment to the
beneficiary on the occurrence of a default (as defined in the
guarantee) of the obligated party on the reference exposure in a timely
manner without the beneficiary first having to take legal actions to
pursue the obligor for payment;
(8) Does not increase the beneficiary's cost of credit protection
on the guarantee in response to deterioration in the credit quality of
the reference exposure;
(9) Is not provided by an affiliate of the national bank or Federal
savings association, unless the affiliate is an insured depository
institution, foreign bank, securities broker or dealer, or insurance
company that:
(i) Does not control the national bank or Federal savings
association; and
(ii) Is subject to consolidated supervision and regulation
comparable to that imposed on depository institutions, U.S. securities
broker-dealers, or U.S. insurance companies (as the case may be); and
(10) For purposes of Sec. Sec. 3.141 to 3.145 and of subpart D of
this part, is provided by an eligible guarantor.
* * * * *
Board of Governors of the Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the preamble, part 217 of chapter II
of title 12 of the Code of Federal Regulations is proposed to be
amended as follows:
PART 217--CAPITAL ADEQUACY OF BANK HOLDING COMPANIES, SAVINGS AND
LOAN HOLDING COMPANIES, AND STATE MEMBER BANKS (REGULATION Q)
0
3. The authority citation for part 217 continues to read as follows:
Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1462a, 1467a,
1818, 1828, 1831n, 1831o, 1831p-l, 1831w, 1835, 1844(b), 1851, 3904,
3906-3909, 4808, 5365, 5368, 5371.
0
4. The heading of part 217 is revised to read as set forth above.
0
5. In Sec. 217.2, revise the definition of ``eligible guarantee'' to
read as follows:
Sec. 217.2 Definitions.
* * * * *
[[Page 24623]]
Eligible guarantee means a guarantee that:
(1) Is written;
(2) Is either:
(i) Unconditional, or
(ii) A contingent obligation of the U.S. government or its
agencies, the enforceability of which is dependent upon some
affirmative action on the part of the beneficiary of the guarantee or a
third party (for example, meeting servicing requirements);
(3) Covers all or a pro rata portion of all contractual payments of
the obligated party on the reference exposure;
(4) Gives the beneficiary a direct claim against the protection
provider;
(5) Is not unilaterally cancelable by the protection provider for
reasons other than the breach of the contract by the beneficiary;
(6) Except for a guarantee by a sovereign, is legally enforceable
against the protection provider in a jurisdiction where the protection
provider has sufficient assets against which a judgment may be attached
and enforced;
(7) Requires the protection provider to make payment to the
beneficiary on the occurrence of a default (as defined in the
guarantee) of the obligated party on the reference exposure in a timely
manner without the beneficiary first having to take legal actions to
pursue the obligor for payment;
(8) Does not increase the beneficiary's cost of credit protection
on the guarantee in response to deterioration in the credit quality of
the reference exposure;
(9) Is not provided by an affiliate of the Board-regulated
institution, unless the affiliate is an insured depository institution,
foreign bank, securities broker or dealer, or insurance company that:
(i) Does not control the Board-regulated institution; and
(ii) Is subject to consolidated supervision and regulation
comparable to that imposed on depository institutions, U.S. securities
broker-dealers, or U.S. insurance companies (as the case may be); and
(10) For purposes of Sec. Sec. 217.141 to 217.145 and for purposes
of subpart D of this part, is provided by an eligible guarantor.
* * * * *
Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the preamble, part 324 of chapter III
of title 12 of the Code of Federal Regulations is proposed to be
amended as follows:
PART 324--CAPITAL ADEQUACY OF FDIC-SUPERVISED INSTITUTIONS
0
6. The authority citation for part 324 continues to read as follows:
Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b),
1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n),
1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102-233,
105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242,
105 Stat. 2236, 2355, as amended by Pub. L. 103-325, 108 Stat. 2160,
2233 (12 U.S.C. 1828 note); Pub. L. 102-242, 105 Stat. 2236, 2386,
as amended by Pub. L. 102-550, 106 Stat. 3672, 4089 (12 U.S.C. 1828
note); Pub. L. 111-203, 124 Stat. 1376, 1887 (15 U.S.C. 78o-7 note).
0
7. In Sec. 324.2, revise the definition of ``eligible guarantee'' to
read as follows:
Sec. 324.2 Definitions.
* * * * *
Eligible guarantee means a guarantee that:
(1) Is written;
(2) Is either:
(i) Unconditional, or
(ii) A contingent obligation of the U.S. government or its
agencies, the enforceability of which is dependent upon some
affirmative action on the part of the beneficiary of the guarantee or a
third party (for example, meeting servicing requirements);
(3) Covers all or a pro rata portion of all contractual payments of
the obligated party on the reference exposure;
(4) Gives the beneficiary a direct claim against the protection
provider;
(5) Is not unilaterally cancelable by the protection provider for
reasons other than the breach of the contract by the beneficiary;
(6) Except for a guarantee by a sovereign, is legally enforceable
against the protection provider in a jurisdiction where the protection
provider has sufficient assets against which a judgment may be attached
and enforced;
(7) Requires the protection provider to make payment to the
beneficiary on the occurrence of a default (as defined in the
guarantee) of the obligated party on the reference exposure in a timely
manner without the beneficiary first having to take legal actions to
pursue the obligor for payment;
(8) Does not increase the beneficiary's cost of credit protection
on the guarantee in response to deterioration in the credit quality of
the reference exposure;
(9) Is not provided by an affiliate of the FDIC-supervised
institution, unless the affiliate is an insured depository institution,
foreign bank, securities broker or dealer, or insurance company that:
(i) Does not control the FDIC-supervised institution; and
(ii) Is subject to consolidated supervision and regulation
comparable to that imposed on depository institutions, U.S. securities
broker-dealers, or U.S. insurance companies (as the case may be); and
(10) For purposes of Sec. Sec. 324.141 to 324.145 and of subpart D
of this part, is provided by an eligible guarantor.
* * * * *
Dated: April 8, 2014.
Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, April 11, 2014.
Robert deV. Frierson,
Secretary of the Board.
Dated at Washington, DC, this 8th day of April, 2014.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2014-09452 Filed 4-30-14; 8:45 am]
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