76 FR 141 pgs. 43953-43957 - Continued Application of Regulations to Savings and Loan Holding Companies
Type: PRORULEVolume: 76Number: 141Pages: 43953 - 43957
Docket number: [Docket No. OP-1427]
FR document: [FR Doc. 2011-18100 Filed 7-21-11; 8:45 am]
Agency: Federal Reserve System
Official PDF Version: PDF Version
FEDERAL RESERVE SYSTEM
12 CFR Chapter II
[Docket No. OP-1427]
Continued Application of Regulations to Savings and Loan Holding Companies
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
Notice of intent and request for comment.
SUMMARY:
The Board of Governors of the Federal Reserve System ("Board") is issuing this notice of its intention to continue to enforce certain regulations previously issued by the Office of Thrift Supervision ("OTS") after assuming supervisory responsibility for savings and loan holding companies ("SLHCs") and their non-depository subsidiaries from the OTS in July 2011. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act" or "Act") transfers supervisory functions related to SLHCs and their non-depository subsidiaries to the Board on July 21, 2011 ("transfer date").
DATES:
Comments must be submitted on or before August 31, 2011.
ADDRESSES:
You may submit comments by any of the following methods:
• Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• E-mail: regs.comments@federalreserve.gov. Include docket number OP-1427 in the subject line of the message.
• FAX: 202/452-3819 or 202/452-3102.
• Mail: Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551.
All public comments are available from the Board's Web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper form in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT:
Amanda K. Allexon, Counsel, (202) 452-3818 or Kathleen O'Day, Deputy General Counsel, (202) 452-3786, Legal Division; Anna Lee Hewko, Assistant Director, (202) 530-6260, or Michael Sexton, Manager, (202) 452-3009, Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551. Telecommunications Device for the Deaf (TDD) users may contact (202-263-4869).
SUPPLEMENTARY INFORMATION:
Background
The Dodd-Frank Act was enacted on July 21, 2010. Title III of the Dodd-Frank Act transfers to the Board supervisory functions of the OTS related to SLHCs and their non-depository subsidiaries. The Act transfers supervisory functions related to Federal savings associations and state savings associations to the Office of the Comptroller of the Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC"), respectively.
With respect to the supervision of SLHCs and their non-depository subsidiaries, section 312 of the Dodd-Frank Act (12 U.S.C. 5412) provides that all functions of the OTS and the Director of the OTS (including authority to issue orders) will transfer to the Board on July 21, 2011. All rulemaking authority related to SLHCs also will transfer to the Board on that date pursuant to section 312 of the Act. Section 316 of the Dodd-Frank Act provides that all orders, resolutions, determinations, agreements, and regulations, interpretive rules, other interpretations, guidelines, and other advisory materials issued, made, prescribed, or allowed to become effective by the OTS on or before the transfer date with respect to SLHCs and their non-depository subsidiaries will remain in effect and shall be enforceable until modified, terminated, set aside, or superseded in accordance with applicable law by the Board, by any court of competent jurisdiction, or by operation of law. The Act includes parallel provisions applicable to the OCC and the FDIC with respect to Federal savings associations and state savings associations, respectively.
Given the extensive transfer of authority to multiple agencies, section 316 of the Dodd-Frank Act (12 U.S.C. 5414(c)) requires the Board, OCC, and FDIC to identify and publish in the Federal Register separate lists of the current OTS regulations that each agency will continue to enforce after the transfer date. The Board is, therefore, issuing this notice in accordance with section 316 of the Dodd-Frank Act. This notice identifies all OTS regulations applicable to SLHCs and their non-depository subsidiaries that the Board currently intends to enforce after the transfer date.
On or immediately after the transfer date, the Board intends to issue an interim final rule to effectuate the transition of OTS regulations to the Board. That rule will include technical, nomenclature, and other changes to certain OTS regulations to accommodate the transfer of supervisory authority from the OTS to the Board and address modifications made by the Dodd-Frank Act. The Board also expects to modify its own rules related to agency administration and procedure, where necessary, to account for the transfer of authority on or after the transfer date. When finalizing that rulemaking, the Board will take into consideration any comments received on this notice as well as those received on the interim final rule. In the future, the Board may propose substantive modifications to rules regarding SLHCs and their non-depository subsidiaries in order to address other modifications made by the Dodd-Frank Act and consolidate rules within the Board's regulatory structure.
Continuing Regulations
The regulations currently applicable to SLHCs and their non-depository subsidiaries are found in Chapter V of Title 12 of the Code of Federal Regulations. The following narrative provides a description of the parts of Chapter V that the Board expects to continue to enforce after July 21, 2011. Following the narrative, a chart is provided that lists each OTS part and the Board's current intention regarding enforcement of such part. The Board notes that failure to transfer an OTS regulation does not relieve any entity of the obligation to comply with all statutory requirements.
Parts 574 though 585 include many of the rules that relate to the supervision of SLHCs, including those concerning the acquisition of savings associations, mutual holding companies, permissible activities, and prohibited service by certain individuals. The Board intends to enforce the substantive provisions of parts 574 through 585 after the transfer date, including the requirements for filing applications and the factors for reviewing such applications. The Board, however, does not expect to transfer provisions in parts 574 though 585 regarding the processing of applications and notices, such as agency review periods, publication requirements, and hearing procedures (including those applicable as a result of cross-references to part 516). Instead, beginning on the transfer date, the Board anticipates adopting the application procedures currently used by bank holding companies ("BHCs") to equivalent applications and notices submitted by SLHCs. Additionally, the Board anticipates eliminating the current OTS regulations relating to control determinations and rebuttals, including the rebuttable control factors and process in § 574.4, the certification of ownership in § 574.5, and the rebuttal agreement in § 574.100. In its place, the Board expects to insert provisions equivalent to those applicable to BHCs and, beginning on the transfer date, review investments and relationships with SLHCs using the current practices and policies applicable to BHCs, including the Board's policy statement on noncontrolling equity investments issued on September 22, 2008. The Board does not anticipate revisiting OTS determinations with respect to existing investments and ownership structures. In the near future, the Board anticipates proposing rules that would update and streamline regulations related to control determinations for both BHCs and SLHCs.
The Board intends to enforce certain definitional provisions (parts 541, 561, and 583), as well as parts 533 and 563f to the extent they are directly or indirectly applicable to the supervision of SLHCs and their non-depository subsidiaries. Additionally, the Board expects to enforce certain relevant provisions of part 562 that provide regulatory reporting requirements. The Board, however, issued a notice on February 8, 2011, indicating that it is considering transitioning SLHCs to the Board's current reporting system as soon as practicable.1Currently, the Board is reviewing comments received on that notice and is considering issuing a notice of proposed rulemaking on or after the transfer date outlining a proposal on SLHC reporting that may affect part 562 and part 584.
Footnotes:
1 Notice of Intent to Require Reporting Forms for Savings and Loan Holding Companies, 76 Fed. Reg. 7091 (Feb. 8, 2011).
Current OTS rules often integrate regulatory requirements and supervision for both SLHCs and savings associations. As a result, certain regulations that only reference savings associations also may apply to SLHCs (and in particular to mutual holding companies) and their non-depository subsidiaries through cross-references. The Board, therefore, anticipates enforcing parts 546, 552, 559, 563, 563b, 563c, 563e, and 563g, and §§ 543.1(b), 544.2, 544.5, 544.8, 545.95, 545.121, and 565.4. The Board anticipates enforcing part 512 regarding investigative and formal examination proceedings because the Board does not have similar rules currently in place for BHCs.
The Board does not anticipate enforcing parts 500, 503 through 510, 513, 516, 517, and 528 after the transfer date. These parts include agency-specific administrative provisions and, as noted above, the Board anticipates modifying its own rules in this area on or after the transfer date to account for the transfer of authority.
Part 502 itemizes the current assessment fee schedule for OTS-supervised institutions. The Board does not currently charge BHCs or state member banks ("SMBs") for examinations or inspections. However, section 318 of the Dodd-Frank Act (12 U.S.C. 248) requires the Board to charge fees to offset the cost of regular or special examinations of BHCs, SLHCs and other nonbanking financial companies over $50 billion. As a result, the Board does not anticipate enforcing part 502 and, instead, plans to issue comprehensive guidance with respect to assessment fees on or after the transfer date.
Additionally, the Board does not expect to enforce parts 535, 536, 550, 551, 555, 557, 558, 560, 563d, 564, 567, 568, 569, 570, 571, 572, 573, 590, and 591. The Board believes these provisions only apply to the supervision of savings associations and are not applicable to SLHCs or their non-depository institutions.
The Board reserves the right to continue to enforce any regulation or policy of the OTS if it determines after further review that the rule or policy was applied by the OTS to SLHCs or is otherwise required by law.
The following chart summarizes which parts and sections of Chapter V the Board currently expects to continue to enforce after July 21, 2011.
| OTS Part | Subject | Continuing provisions | Basis for decision |
|---|---|---|---|
| 500 | Agency organization and function | None | Internal agency administration. |
| 502 | Assessments and fees | None | Internal agency administration and modifications required by the Dodd-Frank Act. |
| 503 | Privacy Act | None | Internal agency administration. |
| 505 | Freedom of Information Act | None | Internal agency administration. |
| 506 | Information collection requirements under the Paperwork Reduction Act | None | Internal agency administration. |
| 507 | Restrictions on post-employment activities of senior examiners | None | Internal agency administration. |
| 508 | Removals, suspensions, and prohibitions where a crime is charged or proven | None | Internal agency administration. |
| 509 | Rules of practice and procedure in adjudicatory proceedings | None | Internal agency administration. |
| 510 | Miscellaneous Organizational Regulations | None | Internal agency administration. |
| 512 | Rules for investigative proceedings and formal examination proceedings | All of part | Applies directly to SLHCs. |
| 513 | Practice before the Office | None | Internal agency administration. |
| 516 | Application processing procedures | None | Replacing with Board processes within specific regulations. |
| 517 | Contracting outreach programs | None | Internal agency administration. |
| 528 | Nondiscrimination requirements | None | Internal agency administration. |
| 533 | Disclosure and reporting of CRA-related agreements | All of part | Applies directly to SLHCs. |
| 535 | Unfair or deceptive acts or practices | None | Applies to savings associations only. |
| 536 | Consumer protection in sales of insurance | None | Applies through the savings association. |
| 541 | Definitions for regulations affecting Federal savings associations | Some of part | Relevant to SLHC provisions. |
| 543 | Federal mutual savings associations-Incorporation, organization, and conversion | Some of part (Section 543.1(b) (resulting from cross-reference in part 575)) | Applicable to SLHC as a result of a cross-reference. |
| 544 | Federal mutual savings associations-Charter and bylaws | Some of part (Sections 544.2, 544.5, and 544.8 (resulting from cross-reference in part 575)) | Applicable to SLHC as a result of a cross-reference. |
| 545 | Federal savings associations-Operations | Some of part (Sections 545.95 and 545.121 (resulting from cross-reference in part 575)) | Applicable to SLHC as a result of a cross-reference. |
| 546 | Federal mutual savings associations-Merger, dissolution, reorganization, and conversion | All of part (resulting from cross-reference in part 575) | Applicable to SLHC as a result of a cross-reference. |
| 550 | Fiduciary powers of savings associations | None of part | Applies to savings associations only. |
| 551 | Recordkeeping and confirmation requirements for securities transactions | None | Applies to savings associations only. |
| 552 | Federal stock associations-Incorporation, organization, and conversion | All of part (resulting from cross-reference in part 575 and others) | Applicable to SLHC as a result of a cross-reference. |
| 555 | Electronic operations | None | Applies to savings associations only. |
| 557 | Deposits | None | Applies to savings associations only. |
| 558 | Possession by conservators and receivers for Federal and State savings associations | None | Applies to savings associations only. |
| 559 | Subordinate organizations | All of part (resulting from cross-reference in part 575) | Applicable to SLHC as a result of a cross-reference. |
| 560 | Lending and investment | None | Applies to savings associations only. |
| 561 | Definitions for regulations affecting all savings associations | Some of part | Relevant to SLHC provisions. |
| 562 | Regulatory reporting standards | Some of part | Applies directly to SLHCs. |
| 563 | Savings Associations-Operations | All of part (resulting from cross-reference in part 575 and others) | Applicable to SLHC as a result of a cross-reference. |
| 563b | Conversions from mutual to stock form | All of part (resulting from cross-reference in part 575) | Applicable to SLHC as a result of a cross-reference. |
| 563c | Accounting requirements | All of part | Applicable to SLHC as a result of a cross-reference. |
| 563d | Securities of savings associations | None | Applies to savings associations only. |
| 563e | Community reinvestment | Some of part | Applicable to SLHC as a result of a cross-reference. |
| 563f | Management official interlocks | All of part | Applies directly to SLHCs. |
| 563g | Securities offerings | All of part (resulting from cross-reference in part 575) | Applicable to SLHC as a result of a cross-reference. |
| 564 | Appraisals | None | Applies to savings associations only. |
| 565 | Prompt corrective action | Some of part (Section 565.4 (resulting from cross-reference in part 575)) | Applicable to SLHC as a result of a cross-reference. |
| 567 | Capital | None | Applies to savings associations only. |
| 568 | Security procedures | None | Applies to savings associations only. |
| 569 | Proxies | None | Applies to savings associations only. |
| 570 | Safety and soundness guidelines and compliance procedures | None | Applies to savings associations only. |
| 571 | Fair Credit Reporting | None | Transferred to new agency.. |
| 572 | Loans in areas having special flood hazards | None of part | Applies to savings associations only. |
| 573 | Privacy of consumer financial information | None of part | Applies to savings associations only. |
| 574 | Acquisition of control of savings associations | Some of part | Applies directly to SLHCs. The Board will replace current OTS application processing procedures. The Board also will replace provisions related to control determinations and rebuttals. |
| 575 | Mutual holding companies | Some of part | Applies directly to SLHCs. The Board will replace current OTS application processing procedures. |
| 583 | Definitions for regulations affecting savings and loan holding companies | All of part | Relevant to SLHC provisions. |
| 584 | Savings and loan holding companies | All of part | Applies directly to SLHCs. The Board will replace current OTS application processing procedures. |
| 585 | Prohibited service at savings and loan holding companies | All of part | Applies directly to SLHCs. |
| 590 | Preemption of State usury laws | None | Applies to savings associations only. |
| 591 | Preemption of State due-on-sale laws | None | Applies to savings associations only |
By this notice, the Board seeks to inform interested persons, including SLHCs and their non-depository subsidiaries, of the Board's approach to enforcement of certain OTS regulations and invites comment on its intended approach in order to help identify issues and matters that may require special attention. The Board requests specific comment with respect to whether all regulations relating to the supervision of SLHCs are included in the listing above. Alternatively, does this notice indicate continued enforcement of regulatory provisions that currently do not apply to SLHCs or their non-depository subsidiaries?
By order of the Board of Governors of the Federal Reserve System, July 14, 2011.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. 2011-18100 Filed 7-21-11; 8:45 am]
BILLING CODE 6210-01-P