[Federal Register Volume 84, Number 191 (Wednesday, October 2, 2019)]
[Proposed Rules]
[Pages 52387-52392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20610]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 390

RIN 3064-AF13


Removal of Transferred OTS Regulations Regarding Regulatory 
Reporting Requirements, Regulatory Reports and Audits of State Savings 
Associations

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this notice of proposed rulemaking (proposal or proposed 
rule), the Federal Deposit Insurance Corporation (FDIC) proposes to 
rescind and remove from the Code of Federal Regulations 12 CFR part 
390, subpart R, entitled Regulatory Reporting Standards (part 390, 
subpart R).

DATES: Comments must be received on or before November 1, 2019.

ADDRESSES: You may submit comments by any of the following methods:
     FDIC website: https://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the agency 
website.
     Email: [email protected]. Include RIN 3064-AF13 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 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.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    Please include your name, affiliation, address, email address, and 
telephone number(s) in your comment. 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 https://www.fdic.gov/regulations/laws/federal/, including any 
personal information provided.

FOR FURTHER INFORMATION CONTACT: Christine M. Bouvier, Assistant Chief 
Accountant, (202) 898-7289, [email protected], Division of Risk 
Management Supervision; Karen J. Currie, Senior Examination Specialist, 
(202) 898-3981, Division of Risk Management Supervision; David M. 
Miles, Counsel, Legal Division, (202) 898-3651.

SUPPLEMENTARY INFORMATION: 

I. Policy Objectives

    The policy objectives of the proposed rule are twofold. The first 
is to simplify the FDIC's regulations by removing unnecessary ones and 
thereby improving ease of reference and public understanding. The 
second is to promote parity between State savings associations and 
State nonmember banks by having the regulatory reporting requirements, 
regulatory reports and audits of both classes of institutions addressed 
in the same FDIC rules.

II. Background

A. The Dodd-Frank Act

    The Dodd-Frank Act, signed into law on July 21, 2010, provided for 
a substantial reorganization of the regulation of State and Federal 
savings associations and their holding companies.\1\ Beginning July 21, 
2011, the transfer date established by section 311 of the Dodd-Frank 
Act,\2\ the powers, duties, and functions formerly performed by the OTS 
were 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 \3\ provides the manner of treatment for all orders,

[[Page 52388]]

resolutions, determinations, regulations, and other advisory materials 
that have 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 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\ Pub. L. 111-203, 124 Stat. 1376 (2010).
    \2\ Codified at 12 U.S.C. 5411.
    \3\ Codified at 12 U.S.C. 5414(b).
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    Pursuant to section 316(c) of the Dodd-Frank Act,\4\ on June 14, 
2011, the FDIC's Board of Directors (Board) 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.\5\
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    \4\ Codified at 12 U.S.C. 5414(c).
    \5\ 76 FR 39246 (July 6, 2011).
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    Although section 312(b)(2)(B)(i)(II) of the Dodd-Frank Act \6\ 
granted the OCC rulemaking authority relating to both State and Federal 
savings associations, nothing in the Dodd-Frank Act affected the FDIC's 
existing authority to issue regulations under the Federal Deposit 
Insurance Act (FDI Act) \7\ and other laws as the ``appropriate Federal 
banking agency'' or under similar statutory terminology. Section 
312(c)(1) of the Dodd-Frank Act \8\ revised the definition of 
``appropriate Federal banking agency'' contained in section 3(q) of the 
FDI Act,\9\ 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 State-licensed insured 
branches of foreign banks.
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    \6\ Codified at 12 U.S.C. 5412(b)(2)(B)(i)(II).
    \7\ 12 U.S.C. 1811 et seq.
    \8\ Codified at 12 U.S.C. 5412(c)(1).
    \9\ 12 U.S.C. 1813(q).
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    As noted above, on June 14, 2011, operating pursuant to this 
authority, the Board issued a list of regulations of the former OTS 
that the FDIC would enforce with respect to State savings associations. 
On that same date, the Board reissued and redesignated certain 
regulations transferred from the former OTS. These transferred OTS 
regulations were published as new FDIC regulations in the Federal 
Register on August 5, 2011.\10\ When the FDIC republished the 
transferred OTS regulations as new FDIC regulations, it specifically 
noted that its staff would evaluate the transferred OTS rules and might 
later recommend incorporating the transferred OTS regulations into 
other FDIC regulations, amending them, or rescinding them, as 
appropriate.\11\
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    \10\ 76 FR 47652 (Aug. 5, 2011).
    \11\ See 76 FR 47653.
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B. Transferred OTS Regulations (Transferred to the FDIC's Part 390, 
Subpart R)

    A subset of the regulations transferred to the FDIC from the OTS 
concern regulatory reporting requirements, regulatory reports and 
audits of State savings associations. The OTS regulations, formerly 
found at 12 CFR part 562, now comprise 12 CFR part 390, subpart R. The 
provisions of part 390, subpart R, are discussed in Part III of this 
Supplementary Information section, below.
    The FDIC has conducted a careful review and comparison of part 390, 
subpart R, and other FDIC regulations that pertain to regulatory 
reporting requirements (12 CFR part 304, 12 CFR part 363 and its 
Appendices A and B, and 12 CFR part 364 and its Appendix A), regulatory 
reports (12 CFR part 304 and 12 CFR part 308), and audits of insured 
depository institutions (12 CFR part 363 and its Appendices A and B and 
12 CFR part 364 and its Appendix A) that already apply to State savings 
associations. As discussed in Part III of this Supplementary 
Information section, the FDIC proposes to rescind part 390, subpart R, 
because the FDIC considers it to be redundant or otherwise unnecessary 
given the applicability of these other FDIC regulations.

III. Comparison of the Transferred OTS Regulations Proposed for Removal 
With Other Applicable FDIC Regulations

A. Regulatory Reporting Requirements: State Savings Associations Must 
Maintain Business Records Supporting and Easily Reconciled to Their 
Regulatory Reports and GAAP Financial Statements and Must Use the Forms 
and Follow the Instructions of the FDIC in Preparing Regulatory Reports

1. Transferred OTS Regulation Currently at 12 CFR part 390.320
    Section 390.320 imposes two requirements upon State savings 
associations designed to help maintain the integrity, accuracy, 
reliability and uniformity of key documents used by the FDIC for 
supervisory purposes. First, section 390.320(a) requires each State 
savings association to maintain accurate and complete records of its 
business transactions that support and are readily reconcilable to the 
association's regulatory reports and to financial reports prepared in 
accordance with generally accepted accounting principles (GAAP).\12\ 
Second, section 390.320(b) instructs each State savings association to 
prepare its regulatory reports using such forms and following such 
regulatory reporting requirements as the FDIC may require by regulation 
or otherwise.\13\
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    \12\ 12 CFR 390.320(b). Subpart R defines the term ``regulatory 
report'' to mean ``any report that the FDIC prepares, or is 
submitted to, or used by the FDIC, to determine compliance with its 
rules and regulations, and to evaluate the safe and sound condition 
and operations of State savings associations. Regulatory reports are 
regulatory documents, not accounting documents.'' 12 CFR 390.321(a).
    \13\ 12 CFR 390.320(b).
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2. Other FDIC Regulations
    State savings associations are already subject to other FDIC 
regulations that achieve the purposes of section 390.320. For example, 
as recognized by section 304.3 of the FDIC's regulations, all insured 
depository institutions, including State savings associations, are 
required to file quarterly Consolidated Reports of Condition and Income 
(Call Reports). Under section 304.3(a), all insured depository 
institutions must prepare the Call Report in accordance with the 
instructions for the report (Call Report Instructions), which in turn 
require the institutions to maintain their business records in a manner 
that supports and reconciles to the contents of the Call Report.\14\ In 
addition, portions of the Call Report also are required to be prepared 
in accordance with GAAP.\15\ Furthermore, all insured depository 
institutions, including State savings associations, with total assets 
of $500 million or more at the beginning of their respective fiscal 
year (``covered institutions'') must prepare annual financial 
statements in accordance with GAAP, which must be submitted to the 
FDIC, the appropriate Federal banking

[[Page 52389]]

agency for the institution (if not the FDIC) and the appropriate State 
bank supervisor if applicable.\16\
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    \14\ See the section entitled ``Preparation of the Reports'' 
contained in the General Instructions portion of Call Report 
Instructions for the FFIEC 031, 041 and 051 Report Forms and the 
section entitled ``Preparation of Information to be Reported'' in 
the General Instructions portion of the Report of Assets and 
Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 
002 Report Form).
    \15\ 12 U.S.C. 1831(n); See the section entitled ``Applicability 
of U.S. Generally Accepted Accounting Principles to Regulatory 
Reporting Requirements'' contained in the General Instructions 
portion of Call Report Instructions for the FFIEC 031, 041 and 051 
Report Forms and the section entitled ``Accounting Basis'' in the 
General Instructions portion of the FFIEC 002 Report Form.
    \16\ 12 U.S.C. 1831(m); 12 CFR part 363.
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    In addition, all State savings associations and other FDIC-
supervised institutions are subject to 12 CFR part 364 (including its 
Appendix A).\17\ This part requires FDIC-supervised institutions to 
have internal controls and information systems that are appropriate to 
their size and the risks posed by their activities and that provide 
for, among other things: ``timely and accurate financial, operational 
and regulatory reports.'' \18\ Because accurate and complete business 
records are the very foundation of accurate regulatory and financial 
reporting, State savings associations must, therefore, maintain 
accurate and complete records of their business transactions supporting 
and readily reconcilable to the associations' regulatory and financial 
reports. In the event an FDIC-supervised institution fails to create 
and maintain the required internal controls and information systems, 
the FDIC may require the institution to submit a safety and soundness 
plan designed to correct the deficiencies and, if necessary, compel 
compliance by means of order.\19\
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    \17\ 12 CFR 364.101. Part 364 and its appendices implement 
section 39(a) of the FDI Act. 12 U.S.C. 1831p-1. Taken together, 
part 364 and Appendix A reflect the FDIC's longstanding expectations 
for all prudently managed FDIC-supervised institutions while 
generally leaving the specific methods of achieving these objectives 
to each institution.
    \18\ 12 CFR part 364, Appendix A II.
    \19\ See 12 U.S.C. 1831p-1(e); 12 CFR 308.300, et seq.; 12 CFR 
part 364, Appendix A.
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    In addition, existing FDIC regulations also require State savings 
associations and other FDIC-supervised institutions to use the forms 
and follow the instructions of the FDIC in preparing and submitting 
their regulatory reports. For example, section 304.3(a) of the FDIC's 
regulations requires all insured depository institutions, including 
State savings associations, to follow the Call Report Instructions in 
preparing their Call Reports.\20\ Moreover, it is difficult to see how 
an institution could fail to comply with relevant instructions 
governing regulatory reports and yet still file a timely, accurate and 
complete report in accordance with the explicit or implicit 
requirements of the governing statute or regulation.
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    \20\ 12 CFR 304.3(a). See 12 U.S.C. 1817(a); 12 U.S.C. 1464(v).
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B. Regulatory Reports: State Savings Associations Must Prepare 
Regulatory Reports Using GAAP and Safe & Sound Practices

1. Transferred OTS Regulation Currently at 12 CFR Part 390.321
    The transferred OTS regulation found at 12 CFR 390.321(b)(1) 
provides a framework of ``regulatory reporting requirements'' governing 
the preparation of regulatory reports by State savings associations. 
Such requirements must, at a minimum, incorporate GAAP whenever called 
for; incorporate applicable safe and sound practices specified in the 
report instructions and other FDIC publications; and incorporate such 
additional safety and soundness requirements more stringent than GAAP 
as the FDIC may prescribe.\21\ If the FDIC determines that a State 
savings association's regulatory reports for previous reporting periods 
are not in compliance, the association must correct the reports in 
accordance with the directions of the FDIC.\22\
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    \21\ 12 CFR 390.321(b)(2) has an ``exception'' making clear that 
State savings associations are not required to reflect any 
regulatory reporting requirements not consistent with GAAP in 
audited financial statements, including financial statements 
contained in securities filings submitted to the FDIC pursuant to 
the Securities Exchange Act of 1934 or subpart W and 12 CFR part 
192. See 12 CFR 390.321(b).
    \22\ See 12 CFR 390.321(b).
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2. Other FDIC Regulations

    A similar framework is embodied in other applicable FDIC 
regulations. For example, 12 CFR part 304 requires all insured 
depository institutions to prepare their Call Reports in accordance 
with the Call Report Instructions. The Call Report Instructions, 
published by the Federal Financial Institutions Examination Council 
(FFIEC), contain uniform reporting requirements that the Federal 
banking agencies, including the FDIC, have determined to be consistent 
with GAAP and other regulatory reporting requirements.\23\ In the event 
of a failure by a State savings association to follow the Call Report 
Instructions, the FDIC is empowered to take enforcement action to 
obtain specified civil money penalties for as long as the violation 
remains uncorrected.\24\ The FDIC also may be able to seek a cease-and-
desist order to prevent an impending or ongoing violation and to 
require corrective action to remedy violations in prior reporting 
periods.\25\
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    \23\ See the section entitled ``Applicability of U.S. Generally 
Accepted Accounting Principles to Regulatory Reporting 
Requirements'' contained in the General Instructions portion of Call 
Report Instructions for the FFIEC 031, 041 and 051 Report Forms and 
the section entitled ``Accounting Basis'' in the General 
Instructions portion of the FFIEC 002 Report Form.
    \24\ 12 U.S.C. 1818(i)(2); 12 CFR part 308, subpart H.
    \25\ 12 U.S.C. 1817(a), (c); 1818(b); 1464(v). Because FDIC 
statutes and regulations do not require FDIC-supervised institutions 
to deviate from GAAP in the preparation of their annual financial 
statements, there is no need to include the exception discussed in 
footnote 21, supra.
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C. Audits

1. Transferred OTS Regulation Currently at 12 CFR Part 390.322
    The transferred OTS regulation currently found at 12 CFR 390.322 
relates to audits of financial statements by qualified independent 
public accountants. This provision authorizes the FDIC, whenever needed 
for safety or soundness purposes, to require a State savings 
association to retain a qualified independent public accountant to 
conduct an independent audit of the association's financial 
statements.\26\
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    \26\ Although 12 CFR 390.322 by its terms mandates such an audit 
for a State savings association with a composite examination rating 
of 3, 4, or 5, Section 322 allows the FDIC to forego an audit if it 
would not provide further information on safety and soundness 
matters relating to the examination rating. See 12 CFR 
390.322(c)(2).
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2. Other FDIC Regulations
    Other FDIC requirements applicable to all insured depository 
institutions serve the underlying purposes of section 390.322. For 
example, as noted previously, all FDIC-supervised institutions, 
including State savings associations, are required by part 364 Appendix 
A to maintain internal controls that provide for ``timely and accurate 
financial, operational and regulatory reports'' along with an internal 
audit system that provides for adequate monitoring of the internal 
controls system.\27\ In the event an FDIC-supervised institution fails 
to create and maintain the required internal controls and information 
systems, the FDIC may require the institution to submit a safety and 
soundness plan designed to correct the deficiencies and, if necessary, 
compel compliance by means of order.\28\ The FDIC has the ability, 
pursuant to its examination and safety and soundness authority, to 
obtain records and reports from State savings associations.\29\ In

[[Page 52390]]

addition, through the safety and soundness plan, the FDIC may request 
an independent audit of a State savings association.\30\ If the State 
savings association does not provide an acceptable plan to the FDIC and 
implement it, the FDIC may be able to require such audit pursuant to a 
safety and soundness order if such measures relate to identified safety 
and soundness deficiencies.
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    \27\ 12 CFR part 364 Appendix A sections II A and B. For an 
institution whose size, complexity or scope of operations does not 
warrant a full scale internal audit function, a system of 
independent reviews of key internal controls may be used.
    \28\ See 12 U.S.C. 1831p-1(e); 12 CFR 308.300, et seq. State 
savings associations may also wish to consult the Interagency 
Statement of Policy on the Internal Audit Function and Its 
Outsourcing for additional agency recommendations and sound banking 
practices.
    \29\ See 12 U.S.C. 1464(d); 1831p-1(e).
    \30\ See 12 U.S.C. 1464(d), 1831p-1. See also 82 FR 8082, 8099 
(Jan. 23, 2017). State savings associations also may be subject to 
audit requirements under applicable state law or as required by the 
appropriate State bank supervisor.
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    In addition, insured depository institutions are required by law to 
file Call Reports that are free from false or misleading information 
and the FDIC is empowered to take enforcement action in the event that 
an institution fails to do so. In the event a State savings 
association's financial statements do not accurately reflect the 
association's financial condition or results of operations, the 
inaccuracy is likely to flow from the financial statements into the 
Call Report, in contravention of the Call Report Instructions. If a 
State savings association's Call Report contains such a material 
inaccuracy, the FDIC can require the savings association to amend its 
Call Report to correct that material inaccuracy and, depending on the 
facts and circumstances, the correction may necessitate the revision of 
the savings association's financial statements. If a savings 
association refuses to make a required amendment to its Call Report, 
the FDIC may be able to seek a cease-and-desist order to require 
corrective action to remedy violations in prior reporting periods.\31\ 
In addition, the FDIC is empowered to obtain specified civil money 
penalties for as long as the problems remain uncorrected.\32\
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    \31\ 12 U.S.C. 1817(a), (c); 1818(b); 1464(v).
    \32\ 12 U.S.C. 1818(i)(2); 12 CFR part 308, subpart H.
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    In addition, the FDIC's regulations independently impose audit 
requirements for many institutions, including several State savings 
associations. For example, 12 CFR part 363 requires covered 
institutions (those with $500 million or more in assets) each year to 
submit annual financial statements that have been prepared in 
accordance with GAAP and have been audited by an independent public 
accountant.\33\
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    \33\ 12 CFR 363.4(a). Part 363 also requires covered 
institutions to prepare a management report each year containing a 
statement of management's responsibilities for, among other things, 
preparing the institution's financial statements, establishing and 
maintaining an adequate internal control structure and procedure for 
financial reporting, and complying with certain laws and regulations 
relating to safety and soundness. 12 CFR 363.2(b)(1). The report 
must also contain management's assessment of the institution's 
compliance with those laws and regulations during the fiscal year. 
12 CFR 363.2(b)(2). For covered institutions with consolidated total 
assets of $1 billion or more, the management report must also 
include management's assessment of the effectiveness of the internal 
control structure and procedures for financial reporting. 12 CFR 
363.2(b)(3). Management's internal control assessment must be 
examined, attested to and reported on by an independent accountant. 
12 CFR 363.3(b). State savings associations may also wish to consult 
the Interagency Policy Statement on External Auditing Programs of 
Banks and Savings Associations for additional agency recommendations 
and sound banking practices.
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IV. Proposed Amendments to Part 390, Subpart R

    As discussed in Part III of this Supplementary Information, the 
FDIC's part 390 subpart R addresses regulatory reporting requirements, 
regulatory reports and audits. After reviewing the requirements in part 
390, subpart R, the FDIC, as the appropriate Federal banking agency for 
State savings associations, proposes to rescind part 390, subpart R in 
its entirety. Rescinding part 390, subpart R will serve to streamline 
the FDIC's rules and eliminate redundant, duplicate or otherwise 
unnecessary regulations in light of other FDIC regulations that 
specifically govern these matters and apply to insured depository 
institutions, including State savings associations

V. Expected Effects

    As explained in detail in Part III of this Supplementary 
Information section, certain OTS regulations transferred to the FDIC by 
the Dodd-Frank Act relating to regulatory reporting requirements, 
regulatory reports, and audits of State savings associations are 
redundant or unnecessary in light of applicable statutes and other FDIC 
regulations. This proposal would eliminate those transferred OTS 
regulations.
    As of June 30, 2019, the FDIC supervises 3,424 depository 
institutions, of which 38 (1.1%) are State savings associations.\34\ 
The proposed rule would affect regulations that govern State savings 
associations.
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    \34\ Based on data from the June 30, 2019, Call Report and FFIEC 
002 Report Form.
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    As explained previously, the proposed rule would remove sections 
390.320, 390.321 and 390.332 of part 390, subpart R because these 
sections are redundant of, or otherwise unnecessary in light of, 
applicable statutes and other FDIC regulations regarding audits, 
reporting, and safety and soundness. As a result, rescinding and 
removing these regulations will not have any substantive effects on 
State savings associations or FDIC-supervised institutions.
    The FDIC invites comments on all aspects of this analysis. In 
particular, would the proposed rule have any costs or benefits to 
covered entities that the FDIC has not identified?

VI. Alternatives

    The FDIC has considered alternatives to the proposed rule but 
believes that the proposed amendments represent the most appropriate 
option for covered entities. As discussed previously, the Dodd-Frank 
Act transferred certain powers, duties, and functions formerly 
performed by the OTS to the FDIC. The FDIC's Board reissued and 
redesignated certain transferred regulations from the OTS, but noted 
that it would evaluate them and might later incorporate them into other 
FDIC regulations, amend them, or rescind them, as appropriate. The FDIC 
has evaluated the existing regulations relating to regulatory reporting 
standards and audits of insured depository institutions, including 12 
CFR part 304; 12 CFR part 308; 12 CFR part 363 and its Appendices A and 
B; 12 CFR part 364 and its Appendix A; and 12 CFR part 390, subpart R. 
The FDIC considered the status quo alternative of retaining the current 
regulations but did not choose to do so because the underlying purposes 
of those regulations are already accomplished through substantively 
similar regulations regarding regulatory reports, regulatory reporting 
requirements, and audits. Therefore, the FDIC is proposing to amend and 
streamline the FDIC's regulations.

VII. Request for Comments

    The FDIC invites comments on all aspects of this proposed 
rulemaking. In particular, the FDIC requests comments on the following 
questions:
    1. Are the statutes and FDIC rules and regulations discussed in 
this Supplementary Information section sufficient to provide consistent 
and effective requirements relating to regulatory reporting 
requirements, regulatory reports and audits of State savings 
associations for which the FDIC is the appropriate Federal banking 
agency? Please provide examples, data, or otherwise substantiate your 
answer.
    2. What negative impacts, if any, can you foresee in the FDIC's 
proposal to rescind part 390, subpart R?
    3. Please provide any other comments you have on the proposal.
    Written comments must be received by the FDIC no later than 
November 1, 2019.

[[Page 52391]]

VIII. Regulatory Analysis and Procedure

A. The Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA),\35\ 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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    \35\ 44 U.S.C. 3501-3521.
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    The proposed rule would rescind and remove from FDIC regulations 
part 390, subpart R. The proposed rule will not create any new or 
revise any existing collections of information under the PRA. 
Therefore, no information collection request will be submitted to the 
OMB for review.

B. The Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 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.\36\ 
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.\37\ Generally, the FDIC 
considers a significant effect to be a quantified effect in excess of 5 
percent of total annual salaries and benefits per institution, or 2.5 
percent of total noninterest expenses. The FDIC believes that effects 
in excess of these thresholds typically represent significant effects 
for FDIC-supervised institutions. 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 
banking organizations. Accordingly, a regulatory flexibility analysis 
is not required.
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    \36\ 5 U.S.C. 601, et seq.
    \37\ The SBA defines a small banking organization as having $600 
million or less in assets, where an organization'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, by 84 FR 34261, effective August 19, 2019). In its 
determination, ``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 covered entity is ``small'' for the purposes 
of the RFA..
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    As of March 31, 2019,\38\ the FDIC supervised 3,465 insured 
financial institutions, of which 2,705 are considered small banking 
organizations for the purposes of RFA. The proposed rule primarily 
affects regulations that govern State savings associations. There are 
35 State savings associations considered to be small banking 
organizations for the purposes of the RFA.\39\
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    \38\ March 31, 2019, is the most recent period for which the 
FDIC's ``small entity'' designations for depository institutions are 
available.
    \39\ Based on data from the March 31, 2019, Call Report and 
FFIEC 002 Report of Assets and Liabilities of U.S. Branches and 
Agencies of Foreign Bank.
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    As explained previously, the proposed rule would remove sections 
390.320, 390.321 and 390.332 of part 390, subpart R because these 
sections are redundant or otherwise unnecessary in light of applicable 
statutes and other FDIC regulations. As a result, rescinding the 
regulations would not have any substantive effects on small FDIC-
supervised institutions.
    Based on the information above, the FDIC certifies that the 
proposed rule would not have a significant economic impact on a 
substantial number of small entities.
    4. The FDIC invites comments on all aspects of the supporting 
information provided in this RFA section. In particular, would this 
rule have any significant effects on small entities that the FDIC has 
not identified?

C. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \40\ requires each 
Federal banking agency to use plain language in all of its proposed and 
final rules published after January 1, 2000. As a Federal banking 
agency subject to the provisions of this section, the FDIC has sought 
to present the proposed rule to rescind part 390, subpart R in a simple 
and straightforward manner. The FDIC invites comments on whether the 
proposal is clearly stated and effectively organized, and how the FDIC 
might make the proposal easier to understand.
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    \40\ Pub. L. 106-102, 113 Stat. 1338, 1471 (codified at 12 
U.S.C. 4809).
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D. Riegle Community Development and Regulatory Improvement Act of 1994

    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, disclosure, 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. The FDIC invites comments that 
further will inform its consideration of RCDRIA.

E. 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.\41\ 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 that 
will be taken 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 
unnecessary regulations, such as part 390, subpart R, 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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    \41\ Pub. L. 104-208, 110 Stat. 3009 (1996).
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List of Subjects in 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.

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation proposes to amend 12 CFR 390 as follows:

[[Page 52392]]

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

0
1. Revise the authority citation for part 390 to read as follows:

    Authority: 12 U.S.C. 1819.

    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 M also issued under 12 U.S.C. 1818.
    Subpart O also issued under 12 U.S.C. 1828.
    Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464.
    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 W also issued under 12 U.S.C. 1462a; 1463; 1464; 15 
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w.
    Subpart Y also issued under 12 U.S.C. 1831o.

Subpart R--[Removed and Reserved]

0
2. Remove and reserve part 390, subpart R, consisting of Sec. Sec.  
390.320 through 390.322.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on September 17, 2019.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2019-20610 Filed 10-1-19; 8:45 am]
 BILLING CODE 6714-01-P