[Federal Register Volume 85, Number 13 (Tuesday, January 21, 2020)]
[Rules and Regulations]
[Pages 3247-3250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27577]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 390

RIN 3064-AF13


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

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (``FDIC'') is 
adopting a final rule rescinding and removing from the Code of Federal 
Regulations the regulations regarding regulatory reporting standards.

DATES: The final rule is effective on February 20, 2020.

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 final 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

    Part 390, subpart R was included in the regulations that were 
transferred from the Office of Thrift Supervision (``OTS'') to the FDIC 
on July 21, 2011, in connection with the implementation of title III of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (``Dodd-
Frank Act'').\1\ Beginning July 21, 2011, the transfer date established 
by

[[Page 3248]]

section 311 of the Dodd-Frank Act,\2\ the powers, duties, and functions 
formerly performed by the OTS were divided among the FDIC for State 
savings associations, 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 \3\ 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 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\ Public Law 111-203, 124 Stat. 1376 (2010).
    \2\ 12 U.S.C. 5411.
    \3\ 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 applicable law. The list was 
published by the FDIC and OCC as a Joint Notice in the Federal Register 
on July 6, 2011,\4\ and shortly thereafter, the FDIC published its 
transferred OTS regulations as new FDIC regulations in parts 390 and 
391. When it republished the transferred OTS regulations, the FDIC 
noted that its staff would evaluate the transferred OTS rules and might 
later recommend incorporating the transferred regulations into other 
FDIC rules, amending them, or rescinding them, as appropriate. Further, 
section 312(c)(1) of the Dodd-Frank Act \5\ amended the definition of 
``appropriate Federal banking agency'' contained in section 3(q) of the 
FDI Act,\6\ 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 ``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 State-
licensed insured branches of foreign banks.
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    \4\ 76 FR 39246 (July 6, 2011).
    \5\ 12 U.S.C. 5412(c)(1).
    \6\ 12 U.S.C. 1813(q).
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III. Proposed Rule

    On October 2, 2019, the FDIC published a notice of proposed 
rulemaking (NPR) regarding the removal of part 390, subpart R (former 
OTS part 562), which addressed regulatory reporting requirements, 
regulatory reports and audits of State savings associations.\7\ The 
former OTS rule was transferred to the FDIC with only nominal changes. 
The NPR proposed removing part 390, subpart R, because, after careful 
review and consideration, the FDIC believed it was largely unnecessary, 
redundant or duplicative given 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.
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    \7\ See 84 FR 52387 (Oct. 2, 2019). The FDIC published a SNPR in 
the Federal Register relating to the FDIC's regulatory flexibility 
analysis on October 9, 2019. See 84 FR 54045 (Oct. 9, 2019).
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IV. Comments

    The FDIC issued the NPR on October 2, 2019, with a 30-day comment 
period. On October 9, 2019, the FDIC issued a supplemental notice of 
proposed rulemaking (SNPR) which, among other things, extended the 
deadline for comments on the FDIC's regulatory flexibility analysis 
until November 8, 2019. The FDIC received no comments on the NPR or the 
SNPR, and consequently the final rule is adopted without change.

V. Explanation of the Final Rule

    As discussed in the NPR, 12 CFR part 390, subpart R, is being 
rescinded, in its entirety, because it is largely unnecessary, 
redundant or duplicative given the existence of other applicable FDIC 
regulations described in Part III above.

VI. Expected Effects

    As explained 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 other applicable FDIC regulations. This rule would eliminate 
those transferred OTS regulations.
    As of June 30, 2019, the FDIC supervises 3,424 insured depository 
institutions, of which 38 (1.1 percent) are State savings 
associations.\8\ The rule primarily would affect regulations that 
govern State savings associations.
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    \8\ Based on data from the June 30, 2019, Call Report and FFIEC 
002 Report of Assets and Liabilities of U.S. Branches and Agencies 
of Foreign Banks.
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    As explained in the NPR, the rule would remove Sec. Sec.  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 FDIC-supervised institutions.

VII. Alternatives

    The FDIC has considered alternatives to the final rule but believes 
that the amendments represent the most appropriate option for covered 
institutions. 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 amending and 
streamlining the FDIC's regulations.

VIII. Regulatory Analysis and Procedure

A. The Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (``PRA''),\9\ the FDIC may not conduct or sponsor, and the 
respondent is not

[[Page 3249]]

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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    \9\ 44 U.S.C. 3501-3521.
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    The final rule rescinds and removes from FDIC regulations part 390, 
subpart R. The final 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 final rule, an agency prepare and make available for 
public comment a final regulatory flexibility analysis that describes 
the impact of the final rule on small entities.\10\ 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 $600 million.11 12 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 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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    \10\ 5 U.S.C. 601, et seq.
    \11\ 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.
    \12\ The FDIC supplemented the RFA analysis in the NPR with an 
updated regulatory flexibility analysis to reflect changes to the 
Small Business Administration's monetary-based size standards which 
were adjusted for inflation as of August 19, 2019. See 84 FR 54045 
(Oct. 9, 2019).
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    As of June 30, 2019, the FDIC supervised 3,424 insured depository 
institutions, of which 2,665 are considered small banking organizations 
for the purposes of RFA.\13\ The final 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.\14\
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    \13\ FDIC Call Report, June 30, 2019.
    \14\ Id.
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    As explained in the NPR, the final rule would remove Sec. Sec.  
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 final 
rule would not have a significant economic impact on a substantial 
number of small entities.

C. The Congressional Review Act

    For purposes of Congressional Review Act, the OMB makes a 
determination as to whether a final rule constitutes a ``major'' 
rule.\15\ If a rule is deemed a major rule by the OMB, the 
Congressional Review Act generally provides that the rule may not take 
effect until at least 60 days following its publication.\16\
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    \15\ 5 U.S.C. 801 et seq.
    \16\ 5 U.S.C. 801(a)(3).
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    The Congressional Review Act defines a ``major rule'' as any rule 
that the Administrator of the Office of Information and Regulatory 
Affairs of the OMB finds has resulted in or is likely to result in--(A) 
an annual effect on the economy of $100,000,000 or more; (B) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies or geographic regions, or 
(C) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\17\
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    \17\ 5 U.S.C. 804(2).
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    The OMB has determined that the final rule is not a major rule for 
purposes of the Congressional Review Act and the FDIC will submit the 
final rule and other appropriate reports to Congress and the Government 
Accountability Office for review.

D. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \18\ requires each 
Federal banking agency to use plain language in all of its proposed and 
final rules published after January 1, 2000. The FDIC has sought to 
present the final rule in a simple and straightforward manner and did 
not receive any comments on the use of plain language.
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    \18\ Public Law 106-102, section 722, 113 Stat. 1338, 1471 
(1999).
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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''), 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.\19\ 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.\20\ 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 
R, this final 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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    \19\ Public Law 104-208, 110 Stat. 3900 (1996).
    \20\ 82 FR 15900 (March 31, 2017).
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F. Riegle Community Development and Regulatory Improvement Act of 1994

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (``RCDRIA''),\21\ in determining the 
effective date and administrative compliance requirements for new 
regulations that impose additional reporting, disclosure, or other 
requirements on insured depository institutions (``IDIs''), each 
Federal banking agency must 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, 
section 302(b) of RCDRIA requires new regulations and amendments to 
regulations that impose additional reporting, disclosure, or other new 
requirements on IDIs generally to take effect on the first day of a 
calendar quarter that begins on or after the date

[[Page 3250]]

on which the regulations are published in final form.\22\
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    \21\ 12 U.S.C. 4802(a).
    \22\ 12 U.S.C. 4802.
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    Because the final rule does not impose additional reporting, 
disclosure, or other requirements on IDIs, section 302 of RCDRIA does 
not apply.

List of Subjects in 12 CFR Part 390

    Regulatory reporting standards.

Authority and Issuance

    For the reasons stated in the preamble, the Federal Deposit 
Insurance Corporation amends title 12 CFR part 390 as follows:

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 O also issued under 12 U.S.C. 1828.
    Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464.
    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 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 December 12, 2019.
Annmarie H. Boyd,
Assistant Executive Secretary.
[FR Doc. 2019-27577 Filed 1-17-20; 8:45 am]
BILLING CODE 6714-01-P