[Federal Register Volume 79, Number 139 (Monday, July 21, 2014)]
[Proposed Rules]
[Pages 42225-42231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16976]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 348 and 390

RIN 3064-AE20


Transferred OTS Regulations and FDIC Regulations Regarding 
Management Official Interlocks

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this notice of proposed rulemaking, the Federal Deposit 
Insurance Corporation (``FDIC'') proposes to rescind and remove parts 
of our regulations, entitled ``Management Official Interlocks'' 
relating to State savings associations. This subpart was included in 
the regulations that were transferred to the FDIC from the Office of 
Thrift Supervision (``OTS'') on July 21, 2011, in connection with the 
implementation of applicable provisions of Title III of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (``Dodd-Frank Act''). 
The requirements for State savings associations in the transferred OTS 
regulations are substantively similar to those in the FDIC's 
regulations, which is also entitled ``Management Official Interlocks'' 
and is applicable for all insured depository institutions (``IDIs'') 
for which the FDIC has been designated the appropriate Federal banking 
agency.
    Upon removal of the transferred OTS regulations applicable for all 
IDIs for which the FDIC has been designated the appropriate Federal 
banking agency will be found in our regulations.

DATES: Comments must be received on or before September 19, 2014.

ADDRESSES: You may submit comments by any of the following methods:
     FDIC Web site: http://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the agency Web 
site.
     FDIC Email: [email protected]. Include RIN  3064-
AE20 on the subject line of the message.
     FDIC Mail: Robert E. Feldman, Executive Secretary, 
Attention: Comments, Federal Deposit Insurance Corporation, 550 17th 
Street NW., Washington, DC 20429.
     Hand Delivery to FDIC: 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.
    Please include your name, affiliation, address, email address, and 
telephone number(s) in your comment. Where appropriate, comments should 
include a short Executive Summary consisting of no more than five 
single-spaced pages. All statements received, including attachments and 
other supporting materials, are part of the public record and are 
subject to public disclosure. You should submit only information that 
you wish to make publicly available.

    Please note:  All comments received will be posted generally 
without change to http://www.fdic.gov/regulations/laws/federal/, 
including any personal information provided. Paper copies of public 
comments may be requested from the Public Information Center by 
telephone at 1-877-275-3342 or 1-703-562-2200.


FOR FURTHER INFORMATION CONTACT: Martha L. Ellett, Legal Division, 
(202) 898-6765; Mark Mellon, Legal Division, (202) 898-3884; Jennifer 
Maree, Legal Division, (202) 898-6543; Deborah S. Calvert, Division of 
Risk Management Supervision, (703) 254-0976.

SUPPLEMENTARY INFORMATION: 

I. Background

The Dodd-Frank Act

    The Dodd-Frank Act \1\ provided for a substantial reorganization of 
the regulation of State and Federal savings associations and their 
holding companies. Beginning July 21, 2011, the transfer date 
established by section 311 of the Dodd-Frank Act, codified at 12 U.S.C. 
5411, (``Transfer Date''), the powers, duties, and functions formerly 
performed by the OTS were respectively divided among the FDIC, as to 
State savings associations, the Office of the Comptroller of the 
Currency (``OCC''), as to Federal savings associations, and the Board 
of Governors of the Federal Reserve System (``FRB''), as to savings and 
loan holding companies. Section 316(b) of the Dodd-Frank Act, codified 
at 12 U.S.C. 5414(b), provides the manner of treatment for all orders, 
resolutions, determinations, regulations, and advisory materials that 
had been issued, made, prescribed, or allowed to become effective by 
the OTS. The section provides that if such materials were in effect on 
the day before the Transfer Date, they continue to be in effect and are 
enforceable by or against the appropriate successor agency until they 
are modified, terminated, set aside, or superseded in accordance with 
applicable law by such successor agency, by any court of competent 
jurisdiction, or by operation of law.
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    \1\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 124 Stat. 1376 (2010) (codified at 12 U.S.C. 
5301 et seq.).
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    Section 316(c) of the Dodd-Frank Act, codified at 12 U.S.C. 
5414(c), further directed the FDIC and the OCC to consult with one 
another and to publish a list of the continued OTS regulations which 
would be enforced by the FDIC and the OCC, respectively. On June 14, 
2011, the FDIC's Board of Directors approved a ``List of OTS 
Regulations to be Enforced by the OCC and the FDIC Pursuant to the 
Dodd-Frank Wall Street Reform and Consumer Protection Act.'' This list 
was published by the FDIC and the OCC as a Joint Notice in the Federal 
Register on July 6, 2011.\2\
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    \2\ 76 FR 39247 (July 6, 2011).
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    Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act, 
codified at 12 U.S.C. 5412(b)(2)(B)(i)(II), granted the OCC rulemaking 
authority relating to both State and Federal savings associations, 
nothing in the Dodd-Frank

[[Page 42226]]

Act affected the FDIC's existing authority to issue regulations under 
the Federal Deposit Insurance Act (``FDI Act'') and other laws as the 
``appropriate Federal banking agency'' or under similar statutory 
terminology. Section 312(c) of the Dodd-Frank Act amended the 
definition of ``appropriate Federal banking agency'' contained in 
section 3(q) of the FDI Act, 12 U.S.C. 1813(q), to add State savings 
associations to the list of entities for which the FDIC is designated 
as the ``appropriate Federal banking agency.'' As a result, when the 
FDIC acts as the designated ``appropriate Federal banking agency,'' or 
under similar terminology, for State savings associations, as it does 
here, the FDIC is authorized to issue, modify and rescind regulations 
involving such associations, as well as for State nonmember banks and 
insured branches of foreign banks.
    As noted, on June 14, 2011, pursuant to this authority, the FDIC's 
Board of Directors reissued and redesignated certain transferring 
regulations of the former OTS. These transferred OTS regulations were 
published as new FDIC regulations in the Federal Register on August 5, 
2011.\3\ When it republished the transferred OTS regulations as new 
FDIC regulations, the FDIC specifically noted that its staff would 
evaluate the transferred OTS rules and might later recommend 
incorporating the transferred OTS regulations into other FDIC rules, 
amending them, or rescinding them, as appropriate.
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    \3\ 76 FR 47652 (Aug. 5, 2011).
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    One of the OTS rules transferred to the FDIC governed management 
official interlocks. The OTS rule, formerly found at 12 CFR part 563f 
(``part 563f''), was transferred to the FDIC with only minor, 
nonsubstantive changes and is now found in the FDIC's rules at part 
390, subpart V, entitled ``Management Official Interlocks.'' Before the 
transfer of the OTS rules and continuing today, the FDIC's rule 
contained in part 348, also entitled ``Management Official 
Interlocks,'' prohibits a management official from serving two 
nonaffiliated depository organizations in situations where the 
management interlock likely would have an anticompetitive effect. After 
careful review and comparison of part 390, subpart V and part 348, the 
FDIC proposes to rescind part 390, subpart V, because, as discussed 
below, it is substantively redundant to existing part 348. 
Simultaneously we propose to make technical conforming edits to our 
existing rule and add an exemption to part 348 applicable to State 
savings associations which have issued stock in connection with a 
qualified stock issuance pursuant to section 10(q) of HOLA.\4\
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    \4\ Home Owners' Loan Act, Public Law 101-73; Sec.  301, 103 
Stat. 277, (1989) (codified at 12 U.S.C. 1461 et seq.)
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FDIC's Existing 12 CFR Part 348 and Former OTS's Part 563f 
(Transferred, In Part, to FDIC's Part 390, Subpart V)

    The Depository Institution Management Interlocks Act (``Interlocks 
Act'') \5\ was enacted as Title II of the Financial Institutions 
Regulatory and Interest Rate Control Act of 1978.\6\ The Interlocks Act 
generally prohibits bank management officials from serving 
simultaneously with two unaffiliated depository institutions or their 
holding companies (``depository organizations''). The purpose of the 
Interlocks Act and the rules governing management interlocks generally 
is to foster competition between unaffiliated institutions. Thus, the 
Interlocks Act seeks to prohibit interlocks that could enable two 
institutions to engage in anticompetitive behavior. The scope of the 
prohibition depends on the size and location of the organizations 
involved. For example, the Interlocks Act prohibits interlocks between 
unaffiliated depository organizations, regardless of size, if each 
organization has an office in the same community (the ``community 
prohibition''). Interlocks are also prohibited between unaffiliated 
depository organizations if each organization has total assets of $50 
million or more and has an office in the same relevant metropolitan 
statistical area (``RMSA'') (the ``RMSA prohibition''). The Interlocks 
Act also prohibits interlocks between unaffiliated depository 
organizations, regardless of location, if each organization has total 
assets exceeding specified thresholds (the ``major assets 
prohibition'').
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    \5\ 12 U.S.C. 3201 et seq.
    \6\ Public Law 95-630, 92 Stat. 3665 (Nov. 10, 1978).
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    On July 19, 1979, the FDIC, the OTS,\7\ the OCC, and the FRB 
(collectively, the ``Federal banking agencies''), published a joint 
final rule to implement the statutory mandates of the Interlocks 
Act.\8\ On August 2, 1996, in order to comply with the mandate of 
section 303(a) of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (``CDRI Act''),\9\ the Federal banking agencies 
published a joint final rule \10\ to implement revisions to the 
Management Official Interlocks regulations.
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    \7\ The joint rulemaking included the Federal Home Loan Bank 
Board, the OTS's predecessor agency.
    \8\ 44 FR 42152 (July 19, 1979).
    \9\ 12 U.S.C. 4803(a).
    \10\ 61 FR 40293 (Aug. 2, 1996).
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    Section 303(a) of the CDRI Act, requires the Federal banking 
agencies to conduct a systematic review of their regulations and 
written policies in order to streamline and modify them to improve 
efficiency, reduce unnecessary costs, and eliminate constraints on 
credit availability.\11\ Section 303(a) also instructs the Federal 
banking agencies to remove inconsistencies and outmoded and duplicative 
requirements.\12\ Finally, section 303(a) requires the Federal banking 
agencies to consult and coordinate with one another ``to make uniform 
all regulations and guidelines implementing common statutory or 
supervisory policies.'' \13\ Pursuant to the CDRI's mandate, the 
Federal banking agencies consulted and coordinated with respect to this 
rulemaking and on an interagency basis jointly issued rules that are 
substantively similar with regard to management official 
interlocks.\14\ Accordingly, the portion of the OTS regulations that 
applied to State savings associations and their affiliates, originally 
codified at 12 CFR part 563f and subsequently transferred to FDIC's 
part 390, subpart V, is substantively similar to the current FDIC 
regulations in part 348, with the following exceptions. Specifically, 
part 348 of the FDIC regulations applies to management officials of 
insured nonmember banks and their affiliates,\15\ while part 390, 
subpart V applies to management officials of State savings associations 
and their affiliates.\16\ part 390, subpart V also contains an 
exception from the prohibition against management interlocks that is 
not included in part 348. This exception, found in 390.403(i), allows a 
State savings association that has issued stock in connection with a 
qualified stock issuance pursuant to section 10(q) of HOLA to be exempt 
from the prohibition against management interlocks.\17\ By amending 
part 348 and rescinding part 390, subpart V, the FDIC will streamline 
its regulations and reduce redundancy.
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    \11\ 12 U.S.C. 4308(a)(1)(A).
    \12\ 12 U.S.C. 4308(a)(1)(B).
    \13\ 12 U.S.C. 4308(a)(3).
    \14\ 61 FR 40293 (Aug. 2, 1996).
    \15\ 12 CFR 348.1.
    \16\ 12 CFR 390.400.
    \17\ The Interlocks Act contains an additional exemption for 
interlocks as a result of an emergency acquisition of a savings 
association authorized in accordance with section 13(k) of the 
Federal Deposit Insurance Act (12 U.S.C. 1823(k)) if the FDIC has 
given its approval to the interlock. The FDIC will continue to list 
this additional exemption in its management interlocks regulation in 
part 348.

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[[Page 42227]]

    Although the former OTS rule part 563f applies to management 
officials of savings and loan holding companies, the FDIC does not 
supervise savings and loan holding companies for purposes of this rule. 
Section 312 of the Dodd-Frank Act \18\ divides and transfers the 
functions of the former OTS to the FDIC, OCC, and FRB by amending 
section 1813(q) of the FDI Act. Specifically, section 312 transfers the 
former OTS's power to regulate State savings associations to the FDIC, 
while it transfers the power to regulate savings and loan holding 
companies to the FRB.\19\ As a result, whereas the former OTS part 563f 
applied to savings associations and their affiliates as well as to 
savings and loan holding companies,\20\ upon transfer of part 563f to 
FDIC's Part 390, subpart V, only the authority over State savings 
associations and their affiliates was transferred to the FDIC for 
purposes of this rule.\21\ The FRB currently has jurisdiction over the 
regulation and supervision of management official interlocks as it 
applies to savings and loan holding companies.\22\
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    \18\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 124 Stat. 1376 (2010) (codified at 12 U.S.C. 
5412 et seq.).
    \19\ 12 U.S.C. 5412.
    \20\ 12 CFR 563f.
    \21\ 12 CFR 390.400.
    \22\ 12 CFR 212.1.
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    After careful comparison of the FDIC's part 348 with the 
transferred OTS rule in part 390, subpart V, the FDIC has concluded 
that, with the exception of the scope of the two sections and the newly 
created section 348.4(j) that carries over the qualified stock issuance 
exemption from the former OTS rule, the transferred OTS rules governing 
management official interlocks are substantively redundant. Therefore, 
based on the foregoing, the FDIC proposes to rescind and remove from 
the Code of Federal Regulations the rules located at 12 CFR part 390, 
subpart V; to make minor conforming changes to part 348 to incorporate 
State savings associations; and to insert the OTS's exemption for State 
savings associations which have issued stock in connection with a 
qualified stock issuance pursuant to section 10(q) of HOLA located in 
section 390.403(i) into a newly created section 348.4(j) in the FDIC's 
rule. If the proposal is adopted in final form, all IDIs regulated by 
the FDIC--including State savings associations--will be regulated in a 
uniform manner.

II. The Proposal

    Regarding the functions of the former OTS that were transferred to 
the FDIC, section 316(b)(3) of the Dodd-Frank Act, 12 U.S.C. 
5414(b)(3), in pertinent part, provides that the former OTS regulations 
will be enforceable by the FDIC until they are modified, terminated, 
set aside, or superseded in accordance with applicable law. After 
reviewing the rules currently found in part 390, subpart V, the FDIC, 
as the appropriate Federal banking agency for State savings 
associations, proposes to rescind part 390, subpart V in its entirety.
    The FDIC also proposes to modify the scope of part 348, section 
348.1(c), to apply to ``management officials of FDIC-supervised 
institutions and their affiliates'' to conform to and reflect the scope 
of the FDIC's current supervisory responsibilities as the appropriate 
Federal banking agency. The FDIC also proposes to add two new 
definitions into section 348.2. A newly created subsection (i) would 
define an ``FDIC-supervised institution'' as ``either an insured 
nonmember bank or a State savings association.'' A newly created 
subsection (p) would define ``State savings association'' as having 
``the same meaning as in section 3(b)(3) of the Federal Deposit 
Insurance Act, 12 U.S.C. 1813(b)(3).'' The FDIC would also make 
conforming amendments throughout the regulation to reflect the new 
scope of the regulation. These amendments would conform to and reflect 
the scope of the FDIC's current supervisory responsibilities as the 
appropriate Federal banking agency.
    Finally, the proposal would insert an exemption from part 390, 
subpart V, section 390.403(i), into a newly created subsection (j) of 
section 348.4. The exemption allows certain interlocking relationships 
for any State savings association which has issued stock in connection 
with a qualified stock issuance pursuant to section 10(q) of HOLA. 
Because the Interlocks Act provides for this statutory requirement,\23\ 
the qualified stock issuance exemption in section 390.403(i) must carry 
forward to the FDIC's rule in part 348.
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    \23\ 12 U.S.C. 3204(9).
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    If the proposal is finalized, oversight of management official 
interlocks in part 348 would apply to all FDIC-supervised institutions, 
including State savings associations and their affiliates, and part 
390, subpart V would be removed because it is largely duplicative of 
those rules found in part 348. Rescinding part 390, subpart V will 
serve to streamline the FDIC's rules and eliminate unnecessary 
regulations.

III. Request for Comments

    The FDIC invites comments on all aspects of this proposed 
rulemaking, and specifically requests comments on the following:
    (1) Are there any specific provisions of part 348 that are outdated 
or obsolete, or are behind industry standards? If so, please describe 
and recommend alternate disclosure and reporting methodology.
    (2) Are the provisions of proposed part 348 sufficient to provide 
adequate disclosure and reporting of CRA-related agreements? Are the 
provisions of proposed part 348 overly burdensome? Please substantiate 
your answer.
    (3) What impacts, positive or negative, can you foresee in the 
FDIC's proposal to rescind part 390, subpart V?
    Written comments must be received by the FDIC no later than 
September 19, 2014.

IV. Regulatory Analysis and Procedure

A. The Paperwork Reduction Act
    In accordance with the requirements of the Paperwork Reduction Act 
(``PRA'') of 1995, 44 U.S.C. 3501-3521, the FDIC may not conduct or 
sponsor, and the 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 Proposed Rule would rescind and remove from FDIC regulations 
part 390, subpart V. This rule was transferred with only nominal 
changes to the FDIC from the OTS when the OTS was abolished by Title 
III of the Dodd-Frank Act. Part 390, subpart V is largely redundant of 
the FDIC's existing part 348 regarding disclosure and reporting of CRA-
related agreements. The information collection contained in part 348 is 
cleared by OMB under the FDIC's ``Management Official Interlocks'' 
information collection (OMB No. 3064-0118). The FDIC reviewed its 
burden estimate for the collection at the time it assumed 
responsibility for supervision of State savings associations 
transferred from the OTS and obtained OMB approval to adjust the burden 
estimates as necessary.
    This Proposed Rule will not modify the FDIC's existing collection 
and does not involve any new collections of information pursuant to the 
PRA.
    Finally, the Proposed Rule would amend part 348 to include State 
savings associations and their affiliates and would amend section 348.2 
to define ``State savings association.'' These measures clarify that 
State savings associations and their affiliates, as well as insured 
nonmember banks and their

[[Page 42228]]

affiliates are subject to part 348. The Proposed Rule would also insert 
the qualified stock issuance exemption in section 390.403(i) into a 
newly created subsection (j) of section 348.4. These provisions of the 
Proposed Rule will not involve any new collection of information under 
the PRA or impact current burden estimates. Based on the foregoing, no 
information collection request has been submitted to the OMB for 
review.
B. The Regulatory Flexibility Act
    The Regulatory Flexibility Act (``RFA''),\24\ 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 the 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 $500 million).\25\ However, a regulatory 
flexibility analysis is not required if the agency 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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    \24\ 5 U.S.C. 601 et seq.
    \25\ 78 FR 37409, 37411 (June 20, 2013).
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    As discussed in this notice of proposed rulemaking, part 390, 
subpart V was transferred from OTS's part 563f, which governed 
management official interlocks. OTS's part 563f had been in effect 
since 1979, and all savings associations were required to comply with 
it. Because it is duplicative of existing part 348 of the FDIC's rules, 
the FDIC proposes rescinding and removing part 390, subpart V. As a 
result, all FDIC-supervised institutions--including State savings 
associations and their affiliates--would be required to comply with 
part 348. Because all State savings associations and their affiliates 
have been required to comply with substantially similar management 
official interlocks rules since 1979, today's Proposed Rule would have 
no significant economic impact on any State savings association.
C. Plain Language
    Section 722 of the Gramm-Leach-Bliley Act, codified at 12 U.S.C. 
4809, requires each Federal banking agency to use plain language in all 
of its proposed and final rules published after January 1, 2000. The 
FDIC invites comments on whether the Proposed Rule is clearly stated 
and effectively organized, and how the FDIC might make it easier to 
understand. For example:
     Has the FDIC organized the material to suit your needs? If 
not, how could it present the rule more clearly?
     Have we clearly stated the requirements of the rule? If 
not, how could the rule be more clearly stated?
     Does the rule contain technical 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 make the regulation easier to 
understand?
     What else could we do to make the regulation easier to 
understand?
D. The Economic Growth and Regulatory Paperwork Reduction Act
    Under section 2222 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (``EGRPRA''), the FDIC is required to review all 
of its regulations, at least once every 10 years, in order to identify 
any outdated or otherwise unnecessary regulations imposed on insured 
institutions.\26\ The FDIC completed the last comprehensive review of 
its regulations under EGRPRA in 2006 and is commencing the next 
decennial review. The action taken on this rule will be included as 
part of the EGRPRA review that is currently in progress. As part of 
that review, the FDIC invites comments concerning whether the Proposed 
Rule would impose any outdated or unnecessary regulatory requirements 
on insured depository institutions. If you provide such comments, 
please be specific and provide alternatives whenever appropriate.
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    \26\ Public Law 104-208, 110 Stat. 3009 (Sept. 30, 1996).
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List of Subjects

12 CFR Part 348

    Banks, banking; management official interlocks; savings 
associations.

12 CFR Part 390, Subpart V

    Management Official Interlocks.
Authority and Issuance
    For the reasons stated in the preamble, the Board of Directors of 
the Federal Deposit Insurance Corporation proposes to amend part 348 of 
title 12 of the Code of Federal Regulations and amend part 390, of 
title 12 of the Code of Federal Regulations by removing subpart V as 
set forth below:

0
1. Revise part 348 to read as follows:

PART 348--MANAGEMENT OFFICIAL INTERLOCKS


Sec.  348.1  Purpose and scope of this part.

    (a) Authority. This part is issued under the provisions of the 
Depository Institution Management Interlocks Act (Interlocks Act) (12 
U.S.C. 3201 et seq.), as amended.
    (b) Purpose. The purpose of the Interlocks Act and this part is to 
foster competition by generally prohibiting a management official from 
serving two nonaffiliated depository organizations in situations where 
the management interlock likely would have an anticompetitive effect.
    (c) Scope. This part applies to management officials of FDIC-
supervised institutions and their affiliates.


Sec.  348.2  Other definitions and rules of construction used in this 
part.

    For purposes of this part, the following definitions apply:
    (a) Affiliate. (1) The term affiliate has the meaning given in 
section 202 of the Interlocks Act (12 U.S.C. 3201). For purposes of 
section 202, shares held by an individual include shares held by 
members of his or her immediate family. ``Immediate family'' means 
spouse, mother, father, child, grandchild, sister, brother or any of 
their spouses, whether or not any of their shares are held in trust.
    (2) For purposes of section 202(3)(B) of the Interlocks Act (12 
U.S.C. 3201(3)(B)), an affiliate relationship involving an FDIC-
supervised institution based on common ownership does not exist if the 
FDIC determines, after giving the affected persons the opportunity to 
respond, that the asserted affiliation was established in order to 
avoid the prohibitions of the Interlocks Act and does not represent a 
true commonality of interest between the depository organizations. In 
making this determination, the FDIC considers, among other things, 
whether a person, including members of his or her immediate family 
whose shares are necessary to constitute the group, owns a nominal 
percentage of the shares of one of the organizations and the percentage 
is substantially disproportionate to that person's ownership of shares 
in the other organization.

[[Page 42229]]

    (b) Area median income means:
    (1) The median family income for the metropolitan statistical area 
(MSA), if a depository organization is located in an MSA; or
    (2) The statewide nonmetropolitan median family income, if a 
depository organization is located outside an MSA.
    (c) Community means a city, town, or village, and contiguous or 
adjacent cities, towns, or villages.
    (d) Contiguous or adjacent cities, towns, or villages means cities, 
towns, or villages whose borders touch each other or whose borders are 
within 10 road miles of each other at their closest points. The 
property line of an office located in an unincorporated city, town, or 
village is the boundary line of that city, town, or village for the 
purpose of this definition.
    (e) Depository holding company means a bank holding company or a 
savings and loan holding company (as more fully defined in section 202 
of the Interlocks Act (12 U.S.C. 3201)) having its principal office 
located in the United States.
    (f) Depository institution means a commercial bank (including a 
private bank), a savings bank, a trust company, a savings and loan 
association, a building and loan association, a homestead association, 
a cooperative bank, an industrial bank, or a credit union, chartered 
under the laws of the United States and having a principal office 
located in the United States. Additionally, a United States office, 
including a branch or agency, of a foreign commercial bank is a 
depository institution.
    (g) Depository institution affiliate means a depository institution 
that is an affiliate of a depository organization.
    (h) Depository organization means a depository institution or a 
depository holding company.
    (i) FDIC-supervised institution means either an insured state 
nonmember bank or a State savings association.
    (j) Low- and moderate-income areas means census tracts (or, if an 
area is not in a census tract, block numbering areas delineated by the 
United States Bureau of the Census) where the median family income is 
less than 100 percent of the area median income.
    (k) Management official. (1) The term management official means:
    (i) A director;
    (ii) An advisory or honorary director of a depository institution 
with total assets of $100 million or more;
    (iii) A senior executive officer as that term is defined in 12 CFR 
303.101(b).
    (iv) A branch manager;
    (v) A trustee of a depository organization under the control of 
trustees; and
    (vi) Any person who has a representative or nominee serving in any 
of the capacities in this paragraph (j)(1).
    (2) The term management official does not include:
    (i) A person whose management functions relate exclusively to the 
business of retail merchandising or manufacturing;
    (ii) A person whose management functions relate principally to the 
business outside the United States of a foreign commercial bank; or
    (iii) A person described in the provisos of section 202(4) of the 
Interlocks Act (12 U.S.C. 3201(4)) (referring to an officer of a State-
chartered savings bank, cooperative bank, or trust company that neither 
makes real estate mortgage loans nor accepts savings).
    (l) Office means a principal or branch office of a depository 
institution located in the United States. Office does not include a 
representative office of a foreign commercial bank, an electronic 
terminal, or a loan production office.
    (m) Person means a natural person, corporation, or other business 
entity.
    (n) Relevant metropolitan statistical area (RMSA) means an MSA, a 
primary MSA, or a consolidated MSA that is not comprised of designated 
Primary MSAs to the extent that these terms are defined and applied by 
the Office of Management and Budget.
    (o) Representative or nominee means a natural person who serves as 
a management official and has an obligation to act on behalf of another 
person with respect to management responsibilities. The FDIC will find 
that a person has an obligation to act on behalf of another person only 
if the first person has an agreement, express or implied, to act on 
behalf of the second person with respect to management 
responsibilities. The FDIC will determine, after giving the affected 
persons an opportunity to respond, whether a person is a representative 
or nominee.
    (p) State savings association has the same meaning as in section 
(3)(b)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(b)(3).
    (q) Total assets. (1) The term total assets includes assets 
measured on a consolidated basis and reported in the most recent fiscal 
year-end Consolidated Report of Condition and Income.
    (2) The term total assets does not include:
    (i) Assets of a diversified savings and loan holding company as 
defined by section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C. 
1467a(a)(1)(F)) other than the assets of its depository institution 
affiliate;
    (ii) Assets of a bank holding company that are exempt from the 
prohibitions of section 4 of the Bank Holding Company Act of 1956 
pursuant to an order issued under section 4(d) of that Act (12 U.S.C. 
1843(d)) other than the assets of its depository institution affiliate; 
or
    (iii) Assets of offices of a foreign commercial bank other than the 
assets of its United States branch or agency.
    (r) United States means the United States of America, any State or 
territory of the United States of America, the District of Columbia, 
Puerto Rico, Guam, American Samoa, and the Virgin Islands.


Sec.  348.3  Prohibitions.

    (a) Community. A management official of a depository organization 
may not serve at the same time as a management official of an 
unaffiliated depository organization if the depository organizations in 
question (or a depository institution affiliate thereof) have offices 
in the same community.
    (b) RMSA. A management official of a depository organization may 
not serve at the same time as a management official of an unaffiliated 
depository organization if the depository organizations in question (or 
a depository institution affiliate thereof) have offices in the same 
RMSA and each depository organization has total assets of $50 million 
or more.
    (c) Major assets. A management official of a depository 
organization with total assets exceeding $2.5 billion (or any affiliate 
of such an organization) may not serve at the same time as a management 
official of an unaffiliated depository organization with total assets 
exceeding $1.5 billion (or any affiliate of such an organization), 
regardless of the location of the two depository organizations. The 
FDIC will adjust these thresholds, as necessary, based on the year-to-
year change in the average of the Consumer Price Index for the Urban 
Wage Earners and Clerical Workers, not seasonally adjusted, with 
rounding to the nearest $100 million. The FDIC will announce the 
revised thresholds by publishing a final rule without notice and 
comment in the Federal Register.


Sec.  348.4  Interlocking relationships permitted by statute.

    The prohibitions of Sec.  348.3 do not apply in the case of any one 
or more of the following organizations or to a subsidiary thereof:
    (a) A depository organization that has been placed formally in 
liquidation, or which is in the hands of a receiver,

[[Page 42230]]

conservator, or other official exercising a similar function;
    (b) A corporation operating under section 25 or section 25A of the 
Federal Reserve Act (12 U.S.C. 601 et seq. and 12 U.S.C. 611 et seq., 
respectively) (Edge Corporations and Agreement Corporations);
    (c) A credit union being served by a management official of another 
credit union;
    (d) A depository organization that does not do business within the 
United States except as an incident to its activities outside the 
United States;
    (e) A State-chartered savings and loan guaranty corporation;
    (f) A Federal Home Loan bank or any other bank organized solely to 
serve depository institutions (a bankers' bank) or solely for the 
purpose of providing securities clearing services and services related 
thereto for depository institutions and securities companies;
    (g) A depository organization that is closed or is in danger of 
closing as determined by the appropriate Federal depository 
institutions regulatory agency and is acquired by another depository 
organization. This exemption lasts for five years, beginning on the 
date the depository organization is acquired;
    (h) A savings association whose acquisition has been authorized on 
an emergency basis in accordance with section 13(k) of the Federal 
Deposit Insurance Act (12 U.S.C. 1823(k)) with resulting dual service 
by a management official that would otherwise be prohibited under the 
Interlocks Act which may continue for up to 10 years from the date of 
the acquisition provided that the FDIC has given its approval for the 
continuation of such service;
    (i)(1) A diversified savings and loan holding company (as defined 
in section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C. 
1467a(a)(1)(F))) with respect to the service of a director of such 
company who is also a director of an unaffiliated depository 
organization if:
    (i) Both the diversified savings and loan holding company and the 
unaffiliated depository organization notify their appropriate Federal 
depository institutions regulatory agency at least 60 days before the 
dual service is proposed to begin; and
    (ii) The appropriate regulatory agency does not disapprove the dual 
service before the end of the 60-day period.
    (2) The FDIC may disapprove a notice of proposed service if it 
finds that:
    (i) The service cannot be structured or limited so as to preclude 
an anticompetitive effect in financial services in any part of the 
United States;
    (ii) The service would lead to substantial conflicts of interest or 
unsafe or unsound practices; or
    (iii) The notificant failed to furnish all the information required 
by the FDIC.
    (3) The FDIC may require that any interlock permitted under this 
paragraph (h) be terminated if a change in circumstances occurs with 
respect to one of the interlocked depository organizations that would 
have provided a basis for disapproval of the interlock during the 
notice period; and
    (j) Any FDIC-supervised institution which is a State savings 
association that has issued stock in connection with a qualified stock 
issuance pursuant to section 10(q) of the Home Owners' Loan Act, except 
that this paragraph (j) shall apply only with regard to service as a 
single management official of such State savings association or any 
subsidiary of such State savings association by a single management 
official of a savings and loan holding company which purchased the 
stock issued in connection with such qualified stock issuance, and 
shall apply only when the FDIC has determined that such service is 
consistent with the purposes of the Interlocks Act and the Home Owners' 
Loan Act.


Sec.  348.5  Small market share exemption.

    (a) Exemption. A management interlock that is prohibited by Sec.  
348.3 is permissible, if:
    (1) The interlock is not prohibited by Sec.  348.3(c); and
    (2) The depository organizations (and their depository institution 
affiliates) hold, in the aggregate, no more than 20 percent of the 
deposits in each RMSA or community in which both depository 
organizations (or their depository institution affiliates) have 
offices. The amount of deposits shall be determined by reference to the 
most recent annual Summary of Deposits published by the FDIC for the 
RMSA or community.
    (b) Confirmation and records. Each depository organization must 
maintain records sufficient to support its determination of eligibility 
for the exemption under paragraph (a) of this section, and must 
reconfirm that determination on an annual basis.


Sec.  348.6  General exemption.

    (a) Exemption. The FDIC may by agency order exempt an interlock 
from the prohibitions in Sec.  348.3 if the FDIC finds that the 
interlock would not result in a monopoly or substantial lessening of 
competition and would not present safety and soundness concerns.
    (b) Presumptions. In reviewing an application for an exemption 
under this section, the FDIC will apply a rebuttable presumption that 
an interlock will not result in a monopoly or substantial lessening of 
competition if the depository organization seeking to add a management 
official:
    (1) Primarily serves low- and moderate-income areas;
    (2) Is controlled or managed by persons who are members of a 
minority group, or women;
    (3) Is a depository institution that has been chartered for less 
than two years; or
    (4) Is deemed to be in ``troubled condition'' as defined in Sec.  
303.101(c).
    (c) Duration. Unless a shorter expiration period is provided in the 
FDIC approval, an exemption permitted by paragraph (a) of this section 
may continue so long as it does not result in a monopoly or substantial 
lessening of competition, or is unsafe or unsound. If the FDIC grants 
an interlock exemption in reliance upon a presumption under paragraph 
(b) of this section, the interlock may continue for three years, unless 
otherwise provided by the FDIC in writing.
    (d) Procedures. Procedures for applying for an exemption under this 
section are set forth in 12 CFR 303.249.


Sec.  348.7  Change in circumstances.

    (a) Termination. A management official shall terminate his or her 
service or apply for an exemption if a change in circumstances causes 
the service to become prohibited. A change in circumstances may include 
an increase in asset size of an organization, a change in the 
delineation of the RMSA or community, the establishment of an office, 
an increase in the aggregate deposits of the depository organization, 
or an acquisition, merger, consolidation, or reorganization of the 
ownership structure of a depository organization that causes a 
previously permissible interlock to become prohibited.
    (b) Transition period. A management official described in paragraph 
(a) of this section may continue to serve the FDIC-supervised 
institution involved in the interlock for 15 months following the date 
of the change in circumstances. The FDIC may shorten this period under 
appropriate circumstances.


Sec.  348.8  Enforcement.

    Except as provided in this section, the FDIC administers and 
enforces the Interlocks Act with respect to FDIC-supervised 
institutions and their affiliates and may refer any case of a 
prohibited interlocking relationship involving these entities to the 
Attorney

[[Page 42231]]

General of the United States to enforce compliance with the Interlocks 
Act and this part. If an affiliate of an FDIC-supervised institution is 
subject to the primary regulation of another federal depository 
organization supervisory agency, then the FDIC does not administer and 
enforce the Interlocks Act with respect to that affiliate.

PART 390--REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT 
SUPERVISION

Subpart V --Management Official Interlocks

0
2. The authority citation for part 390 is revised to read as follows:

    Authority: 12 U.S.C. 1819.
    Subpart A also issued under 12 U.S.C. 1820.
    Subpart B also issued under 12 U.S.C. 1818.
    Subpart C also issued under 5 U.S.C. 504; 554-557; 12 U.S.C. 
1464; 1467; 1468; 1817; 1818; 1820; 1829; 3349, 4717; 15 U.S.C. 78l; 
78o-5; 78u-2; 28 U.S.C. 2461 note; 31 U.S.C. 5321; 42 U.S.C. 4012a.
    Subpart D also issued under 12 U.S.C. 1817; 1818; 1820; 15 
U.S.C. 78l.
    Subpart E also issued under 12 U.S.C. 1813; 1831m; 15 U.S.C. 78.
    Subpart F also issued under 5 U.S.C. 552; 559; 12 U.S.C. 2901 et 
seq.
    Subpart G also issued under 12 U.S.C. 2810 et seq., 2901 et 
seq.; 15 U.S.C. 1691; 42 U.S.C. 1981, 1982, 3601-3619.
    Subpart I also issued under 12 U.S.C. 1831x.
    Subpart J also issued under 12 U.S.C. 1831p-1.
    Subpart K also issued under 12 U.S.C. 1817; 1818; 15 U.S.C. 78c; 
78l.
    Subpart L also issued under 12 U.S.C. 1831p-1.
    Subpart M also issued under 12 U.S.C. 1818.
    Subpart N also issued under 12 U.S.C. 1821.
    Subpart O also issued under 12 U.S.C. 1828.
    Subpart P also issued under 12 U.S.C. 1470; 1831e; 1831n; 1831p-
1; 3339.
    Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464.
    Subpart R also issued under 12 U.S.C. 1463; 1464; 1831m; 1831n; 
1831p-1.
    Subpart S also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 
1468a; 1817; 1820; 1828; 1831e; 1831o; 1831p-1; 1881-1884; 3207; 
3339; 15 U.S.C. 78b; 78l; 78m; 78n; 78p; 78q; 78w; 31 U.S.C. 5318; 
42 U.S.C. 4106.
    Subpart T also issued under 12 U.S.C. 1462a; 1463; 1464; 15 
U.S.C. 78c; 78l; 78m; 78n; 78w.
    Subpart U also issued under 12 U.S.C. 1462a; 1463; 1464; 15 
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w; 78d-1; 7241; 7242; 7243; 7244; 
7261; 7264; 7265.
    Subpart W also issued under 12 U.S.C. 1462a; 1463; 1464; 15 
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w.
    Subpart X also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 
1828; 3331 et seq.
    Subpart Y also issued under 12 U.S.C. 1831o.
    Subpart Z also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 
1828 (note).

0
Remove from the authority citation for part 390, the sentence ``Subpart 
V also issued under 12 U.S.C. 3201-3208.''
0
3. Subpart V--[Removed and reserved]
0
Remove and reserve Subpart V consisting of Sec. Sec.  390.400 through 
390.408.

    Dated at Washington, DC, this 15th day of July 2014.
    By order of the Board of Directors.

Federal Deposit Insurance Corporation.

Robert E. Feldman,
Executive Secretary.
[FR Doc. 2014-16976 Filed 7-18-14; 8:45 a.m.]
BILLING CODE 6714-01-P