[Federal Register Volume 84, Number 126 (Monday, July 1, 2019)]
[Rules and Regulations]
[Pages 31171-31174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13449]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
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  Federal Register / Vol. 84, No. 126 / Monday, July 1, 2019 / Rules 
and Regulations  

[[Page 31171]]



FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 365 and 390

RIN 3064-AE22


Removal of Transferred OTS Regulations Regarding Lending and 
Investment; and Conforming Amendments to Other Regulation

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is adopting a 
final rule (final rule) to rescind and remove the ``Lending and 
Investment'' regulations because they are unnecessary, redundant, or 
duplicative of existing FDIC regulations; to amend certain sections of 
existing FDIC regulations governing real estate lending standards to 
make them applicable to all insured depository institutions for which 
the FDIC is the appropriate Federal banking agency; and to rescind and 
remove ``Registration of Residential Mortgage Loan Originators'' 
regulations because supervision and rulemaking authority in this area 
was transferred to the Consumer Financial Protection Bureau (Bureau) by 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act).

DATES: The Final Rule is effective on July 31, 2019.

FOR FURTHER INFORMATION CONTACT: Karen J. Currie, Senior Examination 
Specialist, (202) 898-3981, [email protected], Division of Risk 
Management Supervision; Cassandra Duhaney, Senior Policy Analyst, (202) 
898-6804, Division of Depositor and Consumer Protection; Rodney D. Ray, 
Counsel, Legal Division, (202) 898-3556; Linda Hubble Ku, Counsel, 
Legal Division, (202) 898-6634; or Gregory S. Feder, Counsel, Legal 
Division, (202) 898-8724.

SUPPLEMENTARY INFORMATION: 

I. Background

    Beginning July 21, 2011, the transfer date established by section 
311 of the Dodd-Frank Act,\1\ the powers, duties and functions of the 
former Office of Thrift Supervision (OTS) were divided among the FDIC 
for State savings associations and the Office of the Comptroller of the 
Currency (OCC) for Federal savings associations, and the Board of 
Governors of the Federal Reserve System (FRB) for savings and loan 
holding companies. Section 316(b) of the Dodd-Frank Act provides the 
manner of treatment of all orders, resolutions, determinations, 
regulations, and advisory materials that had been issued, made, 
prescribed, or allowed to become effective by the OTS.\2\ The section 
provides that if such regulatory issuances were in effect on the day 
before the transfer date, they continue 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\ 12 U.S.C. 5411.
    \2\ 12 U.S.C. 5414(b).
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    The Dodd-Frank Act directed the FDIC and the OCC to consult with 
one another and to publish a list of continued OTS regulations to be 
enforced by each respective agency that would continue to remain in 
effect until the appropriate Federal banking agency modified or removed 
the regulations in accordance with the applicable laws. The list was 
published by the FDIC and OCC as a Joint Rule in the Federal Register 
on July 6, 2011,\3\ and shortly thereafter, the FDIC published its 
transferred OTS regulations as new FDIC regulations in 12 CFR parts 390 
and 391.\4\ When it republished the transferred OTS regulations, the 
FDIC noted that its staff would evaluate the transferred OTS 
regulations and might later recommend incorporating the transferred OTS 
rules into other FDIC rules, amending them or rescinding them, as 
appropriate.
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    \3\ 76 FR 39246 (Jul. 6, 2011).
    \4\ 76 FR 47652 (Aug. 5, 2011).
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    Further, section 312(c) of the Dodd-Frank Act amended the 
definition of ``appropriate Federal banking agency'' contained in 
section 3(q) of the Federal Deposit Insurance Act (FDI Act) \5\ to add 
State savings associations to the list of entities for which the FDIC 
is designated the ``appropriate Federal banking agency.'' As a result, 
when the FDIC acts as the ``appropriate Federal banking agency'' for 
State savings associations, as it does today, it has the authority to 
issue, modify, and rescind regulations involving such associations as 
well as for State nonmember banks and insured U.S. branches of foreign 
banks.\6\
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    \5\ 12 U.S.C. 1813(q).
    \6\ See also 12 U.S.C. 5412(b)(2)(C)(ii) (``the Corporation 
shall succeed to all powers, authorities, rights, and duties that 
were vested in the Office of Thrift Supervision and the Director of 
the Office of Thrift Supervision on the day before the transfer date 
relating to the functions transferred under clause (i).'' [relating 
to State savings associations]).
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    Finally, the Dodd-Frank Act amended the Secure and Fair Enforcement 
for Mortgage Licensing Act of 2008 (S.A.F.E. Act),\7\ transferring the 
mortgage loan originator registration authority of the FDIC and certain 
other Federal agencies (the S.A.F.E. Act Agencies) to the Bureau.\8\ On 
December 10, 2011, the Bureau published its Regulation G \9\ which 
substantially duplicated the FDIC's S.A.F.E. Act regulation at part 
365, subpart B of the FDIC's regulations.
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    \7\ 12 U.S.C. 5101, et seq.
    \8\ See section 1100 of the Dodd-Frank Act.
    \9\ See 12 CFR part 1007.
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II. Proposed Rule

A. Removal of Part 390, Subpart P, Lending and Investment

    On February 5, 2019, the FDIC published an NPR regarding the 
removal of part 390, subpart P (formerly OTS part 560), which addressed 
lending and investments by State savings associations.\10\ The former 
OTS rule was transferred to the FDIC with only nominal changes. The NPR 
proposed removing part 390, subpart P from the Code of Federal 
Regulations (CFR) because, after careful review and consideration, the 
FDIC believed it was largely unnecessary, redundant, or duplicative of 
existing FDIC regulations.\11\
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    \10\ 84 FR 1653 (Feb. 5, 2019).
    \11\ See 84 FR 1655-58.
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B. Amendments to Part 365, Subpart A, Real Estate Lending Standards

    In the NPR, the FDIC also proposed to further effectuate the 
transfer of

[[Page 31172]]

supervisory authority for State savings associations from the former 
OTS to the FDIC by amending certain parts of part 365 of the FDIC's 
regulations to clarify that part 365, subpart A applies to all insured 
depository institutions, including State savings associations, for 
which the FDIC is the appropriate Federal banking agency.\12\
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    \12\ See id. at 1658.
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C. Removal of Part 365, Subpart B, Registration of Residential Mortgage 
Loan Originators

    Finally, the FDIC proposed to rescind subpart B of part 365, which 
relates to registration requirements for residential mortgage loan 
originators, due to the Bureau's issuance of its \13\ regulation, 
Regulation G, pursuant to the Bureau's authority under the Dodd-Frank 
Act. In light of the Bureau's action, the FDIC considered the 
provisions contained in part 365, subpart B to be unnecessary, 
redundant, or otherwise duplicative of the Bureau regulation governing 
this area.\14\
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    \13\ The S.A.F.E. Act was enacted as part of the Housing and 
Economic Recovery Act of 2008, Public Law 110-289, 122 Stat. 2654, 
sections 1501-17 (codified at 12 U.S.C. 5101-16) as amended by Title 
X of the Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376). The S.A.F.E. Act 
requires residential mortgage loan originators employed by 
depository institutions, subsidiaries that are owned and controlled 
by a depository institution and regulated by a Federal banking 
agency, institutions regulated by the National Credit Union 
Administration, and institutions regulated by the Farm Credit 
Administration to register with the Nationwide Mortgage Licensing 
System and Registry, obtain a unique identifier, and maintain such 
registration.
    \14\ See 84 FR 1658-59.
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III. Comments

    The FDIC issued the NPR with a 60-day comment period, which closed 
on April 8, 2019. The FDIC received no comments on the NPR, and 
consequently the final rule is adopted without change.

IV. Explanation of the Final Rule

    As discussed in the NPR, 12 CFR part 390, subpart P is being 
rescinded in its entirety because other existing FDIC regulations 
concerning permissible activities, safety and soundness standards, and 
real estate lending standards replicate the current requirements of 
part 390, subpart P.
    To clarify that part 365 applies to all institutions for which the 
FDIC is the appropriate Federal banking agency, the FDIC is amending 
sections 365.1 and 365.2 of part 365 to replace the phrases ``insured 
state nonmember banks (including state-licensed insured branches of 
foreign banks)'' and ``state nonmember bank'' throughout subpart A with 
the phrase ``FDIC-supervised institution.'' In addition, section 365.1 
is being revised to add the definition of the term ``FDIC-supervised 
institution'' to mean any insured depository institution for which the 
FDIC is the appropriate Federal banking agency pursuant to section 3(q) 
of the FDI Act.\15\
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    \15\ 12 U.S.C. 1813(q).
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    Finally, because the Dodd-Frank Act amended the S.A.F.E. Act, 
transferring Federal registration requirements for mortgage loan 
originators from the S.A.F.E. Act Agencies (including the FDIC) to the 
Bureau, and the Bureau has finalized its Regulation G, the FDIC is 
rescinding part 365, subpart B, in its entirety, because it is outdated 
and no longer necessary.

V. Administrative Law Matters

A. Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA),\16\ 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.
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    \16\ 44 U.S.C. 3501-3521.
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    The final rule rescinds and removes from FDIC regulations part 390, 
subpart P. With regard to part 365, subpart A, the final rule amends 
sections 365.1 and 365.2 to clarify that State savings associations as 
well as State nonmember banks and foreign banks having insured branches 
are all subject to part 365. It also rescinds and removes from the 
FDIC's regulations part 365, subpart B. The final rule will not create 
any new or revise any existing collections of information under the 
PRA. Therefore, no information collection request has been submitted to 
the OMB for review.

B. The Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), requires that, in connection 
with a final rule, an agency prepare a final regulatory flexibility 
analysis that describes the impact of the proposed rule on small 
entities.\17\ 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. The Small Business 
Administration (SBA) has defined ``small entities'' to include banking 
organizations with total assets of less than or equal to $550 
million.\18\ For the reasons provided below, the FDIC certifies that 
the rule would not have a significant economic impact on a substantial 
number of small banking organizations. Accordingly, a regulatory 
flexibility analysis is not required.
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    \17\ 5 U.S.C. 601, et seq.
    \18\ The SBA defines a small banking organization as having $550 
million or less in assets, where ``a financial institution's assets 
are determined by averaging the assets reported on its four 
quarterly financial statements for the preceding year.'' See 13 CFR 
121.201 (as amended, effective December 2, 2014). ``SBA counts the 
receipts, employees, or other measure of size of the concern whose 
size is at issue and all of its domestic and foreign affiliates. . . 
.'' See 13 CFR 121.103. Following these regulations, the FDIC uses a 
covered entity's affiliated and acquired assets, averaged over the 
preceding four quarters, to determine whether the FDIC-supervised 
institution is ``small'' for the purposes of the RFA.
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    As of December 31, 2018, the FDIC supervised 3,489 insured 
financial institutions, of which 2,674 are considered small banking 
organizations for the purposes of the RFA. The rule primarily affects 
regulations that govern State savings associations. There are 36 State 
savings associations considered to be small banking organizations for 
the purposes of the RFA.\19\
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    \19\ FDIC Call Report, December 31, 2018.
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    As explained previously, the rule would remove sections 390.260, 
390.261, 390.262, 390.263, 390.264, 390.265, 390.266, 390.267, 390.268, 
390.269, 390.270, 390.271, and 390.272 of part 390, subpart P because 
these sections are unnecessary, redundant of, or otherwise duplicative 
of other FDIC regulations for safety and soundness standards. Because 
these regulations are redundant to existing regulations, rescinding 
them would not have any substantive effects on small FDIC-supervised 
institutions.
    As explained previously, part 364 covers State savings associations 
in section 364.101 and in appendix A. Because the lending documentation 
practices and standards in part 364, appendix A are substantively 
similar to existing regulations for State savings associations found in 
section 390.271, rescinding section 390.271 and the rest of part 390, 
subpart P would not have any substantive effects on small FDIC-
supervised institutions.
    As stated previously, the rule would amend part 365, subpart A so 
that it would expressly apply to State savings associations. Because 
the real estate lending requirements in sections 365.1 and 365.2 and 
part 364, appendix A are substantively identical to currently 
applicable regulations for State savings associations found in 390.264 
and 390.265 (including the appendix to section 390.265), amending part 
365, subpart A so that it would apply to all

[[Page 31173]]

FDIC-supervised institutions would not have any substantive effects on 
small FDIC-supervised institutions.
    As explained previously, the rule would rescind part 365, subpart B 
because the authority to implement Federal registration requirements 
for mortgage loan originators has been transferred by statute to the 
Bureau. Because rulemaking authority for the S.A.F.E. Act was 
transferred to the Bureau in December 2011, the removal of the FDIC's 
S.A.F.E. Act regulations would not have any substantive effects on 
small FDIC-supervised covered institutions.
    Based on the information above, the FDIC certifies that the final 
rule would not have a significant economic impact on a substantial 
number of small entities.

C. Small Business Regulatory Enforcement Fairness Act, Congressional 
Review Act

    The OMB has determined that the Final Rule is not a ``major rule'' 
within the meaning of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (SBREFA).\20\ As required by SBREFA, the FDIC will 
submit the Final Rule and other appropriate reports to Congress and the 
Government Accountability Office for review.
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    \20\ 5 U.S.C. 801 et seq.
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D. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \21\ requires each 
Federal banking agency to use plain language in all of its proposed and 
final rules published after January 1, 2000. In the NPR, the FDIC 
invited comments on whether the NPR was clearly stated and effectively 
organized, and how the FDIC might make it easier to understand. No 
comments on this issue were received. Although the FDIC did not receive 
any comments, the FDIC sought to present the Final Rule in a simple and 
straightforward manner.
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    \21\ Public Law 106-102, section 722, 113 Stat. 1338, 1471 
(1999), codified at 12 U.S.C. 241 nt.
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E. The Economic Growth and Regulatory Paperwork Reduction Act

    Under section 2222 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (EGRPRA),\22\ 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.\23\ The FDIC, along with the other Federal banking 
agencies, submitted a Joint Report to Congress on March 21, 2017 
(EGRPRA Report), discussing how the review was conducted, what has been 
done to date to address regulatory burden, and further measures the 
agency will take to address issues that were identified. As noted in 
the EGRPRA Report, the FDIC is continuing to streamline and clarify its 
regulations through the OTS rule integration process. By removing 
outdated or unnecessary regulations, such as part 390, subpart P, and 
modifying part 365, this rule complements other actions the FDIC has 
taken, separately and with the other Federal banking agencies, to 
further the EGRPRA mandate.
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    \22\ 12 U.S.C. 3311.
    \23\ Public Law 104-208, 110 Stat. 3900 (1996).
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F. Riegle Community Development and Regulatory Improvement Act of 1994

    The Riegle Community Development and Regulatory Improvement Act of 
1994 (RCDRIA) requires that each Federal banking agency, in determining 
the effective date and administrative compliance requirements for new 
regulations that impose additional reporting, disclosure, or other 
requirements on insured depository institutions, consider, consistent 
with principles of safety and soundness and the public interest, any 
administrative burdens that such regulations would place on depository 
institutions, including small depository institutions, and customers of 
depository institutions, as well as the benefits of such regulations. 
In addition, new regulations and amendments to regulations that impose 
additional reporting, disclosures, or other new requirements on insured 
depository institutions generally must take effect on the first day of 
a calendar quarter that begins on or after the date on which the 
regulations are published in final form.\24\ The FDIC has determined 
that the final rule would not impose additional reporting, disclosure, 
or other requirements; therefore, the requirements of the RCDRIA do not 
apply.
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    \24\ 12 U.S.C. 4802.
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List of Subjects

12 CFR Part 365

    Banks, banking, Mortgages, Savings associations.

12 CFR Part 390

    Administrative practice and procedure, Advertising, Aged, Civil 
rights, Conflict of interests, Credit, Crime, Equal employment 
opportunity, Fair housing, Government employees, Individuals with 
disabilities, Reporting and recordkeeping requirements, Savings 
associations.

Authority and Issuance

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation amends 12 CFR parts 365 and 390 as follows:

PART 365--REAL ESTATE LENDING STANDARDS

Subpart A--Real Estate Lending Standards [Amended]

0
1. Revise the authority citation for part 365 to read as follows:

    Authority: 12 U.S.C. 1828(o), 5412.


0
2. Revise Sec.  365.1 to read as follows:


Sec.  365.1   Purpose and scope.

    This subpart, issued pursuant to section 304 of the Federal Deposit 
Insurance Corporation Improvement Act of 1991, 12 U.S.C. 1828(o), 
prescribes standards for real estate lending to be used by FDIC-
supervised institutions in adopting internal real estate lending 
policies. For purposes of this subpart, the term ``FDIC-supervised 
institution'' means any insured depository institution for which the 
Federal Deposit Insurance Corporation is the appropriate Federal 
banking agency pursuant to section 3(q) of the Federal Deposit 
Insurance Act, 12 U.S.C. 1813(q).

0
3. In Sec.  365.2, revise paragraphs (a), (b)(1)(iii), (b)(2)(iii) and 
(iv), and (c) to read as follows:


Sec.  365.2   Real estate lending standards.

    (a) Each FDIC-supervised institution shall adopt and maintain 
written policies that establish appropriate limits and standards for 
extensions of credit that are secured by liens on or interests in real 
estate, or that are made for the purpose of financing permanent 
improvements to real estate.
    (b)(1) * * *
    (iii) Be reviewed and approved by the FDIC-supervised institution's 
board of directors at least annually.
    (2) * * *
    (iii) Loan administration procedures for the FDIC-supervised 
institution's real estate portfolio; and
    (iv) Documentation, approval, and reporting requirements to monitor 
compliance with the FDIC-supervised institution's real estate lending 
policies.
    (c) Each FDIC-supervised institution must monitor conditions in the 
real estate market in its lending area to ensure that its real estate 
lending policies continue to be appropriate for current market 
conditions.
* * * * *

[[Page 31174]]

Subpart B--[Removed and Reserved]

0
4. Remove and reserve subpart B, consisting of Sec. Sec.  365.101 
through 365.105, and appendix A to subpart B.

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

0
5. The authority citation for part 390 continues to read as follows:

    Authority: 12 U.S.C. 1819.

Subpart P--[Removed and Reserved]

0
6. Remove and reserve Subpart P, consisting of Sec. Sec.  390.260 
through 390.272.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on June 18, 2019.
Valerie Best,
Assistant Executive Secretary.
[FR Doc. 2019-13449 Filed 6-28-19; 8:45 am]
BILLING CODE 6714-01-P