Miscellaneous Technical Amendments

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 500, 506, 508, 545, 552, 558, 563, 564, 574, 590

[No. 94-166]

Miscellaneous Technical Amendments

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Thrift Supervision (OTS) is adopting several

technical corrections and clarifications to its regulations on home

loans and other real estate loans, hearings, operating subsidiaries,

appraisals, interest rate risk management procedures, and its

incorporation and standard conversion regulations. The OTS is also

amending its insider transactions rule and removing or revising

obsolete or superseded provisions concerning investment limitations,

stock ownership, conservatorships, and remote service units. Finally,

the agency is adding a waiver provision affecting regulations that are

not statutorily mandated.

EFFECTIVE DATE: January 1, 1995.

FOR FURTHER INFORMATION CONTACT: Elissa Schwartz, Senior Paralegal,

(202) 906-7908, or Deborah Dakin, Assistant Chief Counsel, (202) 906-

6445, Regulations and Legislation Division, Chief Counsel's Office,

Office of Thrift Supervision, 1700 G Street, NW., Washington DC 20552.

SUPPLEMENTARY INFORMATION: On April 21, 1994, the Office of Thrift

Supervision (OTS) proposed several technical corrections to revise,

clarify, or remove obsolete or ambiguous regulations.\1\

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\1\59 FR 18979 (April 21, 1994).

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The agency received three comments in response to the proposal. Two

comments were submitted by trade associations and one comment was

submitted by a private law firm. All of the commenters supported the

proposal.

I. Amendments Described in April 21 Proposal

Today, the OTS is adopting the amendments in the proposal, as

described below.

Stock Loans

Section 205 of the Federal Deposit Insurance Corporation

Improvement Act of 1991 (FDICIA)\2\ amended section 7(j)(9) of the

Federal Deposit Insurance Act and modified the reporting criteria and

procedures of that section, thereby superseding existing section

574.5(b) of OTS's regulations. Rather than amend section 574.5(b) to

conform to amended section 7(j)(9), the OTS has chosen to rescind the

regulation because the statute is self-implementing and OTS finds it

unnecessary merely to repeat the statutory language.

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\2\Pub. L. 102-242, 105 Stat. 2236 (1991).

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Directors

Through its final rule on regulatory review,\3\ the OTS lowered the

number of directors required for a Federal savings association from

seven to five, consistent with the required number of national bank

directors. An additional reference in section 552.3, which was

overlooked in the earlier rulemaking, is now being changed to conform

with the new requirement.

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\3\58 FR 4308 (Jan. 14, 1993).

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Operating Subsidiaries

The OTS is adding a clarifying technical amendment restructuring

section 545.81(d). This replacement language more clearly sets forth

the requirements that apply when a federal savings association that

owned a service corporation on November 30, 1992, wishes to have that

service corporation deemed an operating subsidiary.

Insider Transactions

Pursuant to and in accordance with section 4(a) of the Home Owners'

Loan Act and section 106(b)(2)(H)(i) of the Bank Holding Company

Amendments Act of 1970,4 as revised by section 306(j) of the

Federal Deposit Insurance Corporation Improvement Act of 1991

(FDICIA),5 the OTS is amending its regulation pertaining to

insider transactions by incorporating by means of cross-reference

subpart B of the Federal Reserve Board's Regulation O, 12 CFR Part 215,

subpart B, as now or hereafter in effect.

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\4\12 U.S.C. 1972(2)(H)(i).

\5\Pub. L. 102-242, 105 Stat. 2359.

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Investments

Section 563.96, which restricts the amount savings associations may

invest in savings accounts and debt securities hedged with forward

commitments according to a complex formula set forth in the rule, is

being removed in light of the Federal Reserve Board's (FRB) final rule

on interbank liabilities.6 The FRB's final rule limits such

investments to 25% of capital. Since the FRB rule applies to savings

associations, section 563.96 is deleted as unnecessary.

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\6\57 FR 60086 (Dec. 18, 1992).

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Loan Documentation

The OTS is amending its interim final loan documentation regulation

to broaden eligibility to any institution that was assigned a CAMEL

rating of 3 in its most recent report of examination and that has

obtained written permission from its Regional Director to employ the

exemption.

Remote Service Units

Section 545.141(d), which addresses privacy of account data

concerning an RSU account, is deleted because the OTS believes that

Regulation E of the Federal Reserve Board, 12 CFR Part 205, which

governs electronic funds transfers by all financial institutions,

including savings associations, provides adequate protection for

consumers' interests in this area. Second, the OTS is revising section

545.141(e) to reflect earlier revisions to 12 CFR Part 568, ``Minimum

Security Devices.''

Waivers and Miscellaneous Changes

The agency is adding a provision expressly setting forth its

existing authority to waive any non-statutorily required regulation for

good cause. This authority is separate and apart from, and is not meant

to limit, the agency's statutorily based authority (e.g., under the

Depository Institutions Disaster Relief Act of 1992) to waive certain

regulations and its inherent authority to decide whether or not to take

enforcement actions against violations of its regulations. See Heckler

v. Chaney, 470 U.S. 821 (1985).

Sections 545.33, 545.35 and 563.93 are being revised to correct

internal references.

II. Technical Amendment to Service Corporation Rules

One of the commenters suggested an additional amendment that OTS

believes has merit. As required by section 18(m) of the Federal Deposit

Insurance Act,\7\ the OTS's service corporation regulation, 12 CFR

545.74, requires a Federal savings association to give the OTS and the

Federal Deposit Insurance Corporation (FDIC) 30 days prior notice

before either establishing a new service corporation or engaging in a

new activity through an existing service corporation.\8\ That same

statutory provision exempts Federal savings banks chartered before

October 15, 1982. An earlier regulatory amendment inadvertently removed

the reference to this exemption.\9\ The OTS is taking this opportunity

to reinstate the regulatory exemption as it was adopted in April,

1992.\10\

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\7\12 U.S.C. 1828(m).

\8\12 CFR 545.74(b)(2).

\9\Operating Subsidiaries and Service Corporations Final Rule,

57 FR 48949 (October 29, 1992).

\10\Applications Restructuring Final Rule, 57 FR 14340 (April

20, 1992).

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III. Additional Technical Amendments

In addition to the amendments set forth in the proposal, several

technical revisions are being made to other OTS regulations. The agency

finds good cause pursuant to 5 U.S.C. 553 to adopt these amendments

without public notice and comment because of their purely technical and

clarifying nature. First, erroneous cross-references and obsolete

titles have been removed from the service corporation regulations.

Further erroneous cross-references have been corrected in (1) the

hearing rules at section 508.13, (2) section 564.4 of the appraisal

rule, and (3) the interest rate risk management procedures at section

563.176. Third, the agency's regulations setting forth procedures to be

followed in taking possession of a savings association that has been

placed into conservatorship or receivership have been modified. Fourth,

the authority citation for part 590 is being corrected. Lastly, a

codification correction is being made to the standard conversion

regulations, in addition to the proposed amendment to those

regulations.

IV. Regulatory Flexibility Act

Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub.

L. 96-354, 5 U.S.C. 601), it is certified that this technical

regulation will not have a significant economic impact on a substantial

number of small savings associations, small service corporations or

other small entities. It merely revises or removes existing

inconsistencies or obsolete regulations.

V. Executive Order 12866

The Acting Director has determined that this document is not a

``significant regulatory action'' for purposes of Executive Order

12866.

VI. Paperwork Reduction Act

The recordkeeping requirement contained in this final rule has been

submitted to and approved by the Office of Management and Budget in

accordance with the requirements of the Paperwork Reduction Act (44

U.S.C. 3504(h)) under Control No. 1550-0083. The recordkeeping

requirement contained in this rule is found at 12 CFR 563.170(c). The

likely recordkeepers will be well- or adequately-capitalized savings

associations who received a CAMEL rating of 1, 2 or 3 in their most

recent examinations.

Comments concerning the collection of information under this final

rule should be directed to the Office of Management and Budget,

Paperwork Reduction Project (1550-0083), Washington, DC 20503, with

copies to the Office of Thrift Supervision, 1700 G Street, NW.,

Washington, DC 20552.

List of Subjects

12 CFR Part 500

Organization and functions (Government agencies), Reporting and

recordkeeping requirements.

12 CFR Part 506

Reporting and recordkeeping requirements.

12 CFR Part 508

Administrative practice and procedure, Crime, Savings associations.

12 CFR Part 545

Accounting, Consumer protection, Credit, Electronic funds

transfers, Investments, Manufactured homes, Mortgages, Reporting and

recordkeeping requirements, Savings associations.

12 CFR Parts 552

Reporting and recordkeeping requirements, Savings associations,

Securities.

12 CFR Part 558

Savings associations.

12 CFR Part 563

Accounting, Advertising, Crime, Currency, Investments, Mortgages,

Reporting and recordkeeping requirements, Savings associations,

Securities, Surety bonds.

12 CFR Part 564

Appraisals, Mortgages, Real estate appraisal, Reporting and

recordkeeping requirements, Savings associations.

12 CFR Part 574

Administrative practice and procedure, Holding companies, Reporting

and recordkeeping requirements, Savings associations, Securities.

12 CFR Part 590

Banks, banking, Loan programs--housing and community development,

Manufactured homes, Mortgages, Savings associations.

Accordingly, the Office of Thrift Supervision hereby amends

subchapters A, C and D, chapter V, title 12 of the Code of Federal

Regulations as set forth below.

SUBCHAPTER A--ORGANIZATION AND PROCEDURES

PART 500--ORGANIZATION AND CHANNELING OF FUNCTIONS

1. The authority citation for part 500 is revised to read as

follows:

Authority: 12 U.S.C. 1462a, 1463, 1464.

2. Section 500.30 is amended by adding a sixth sentence at the end

of paragraph (a) to read as follows:

Sec. 500.30 General statement concerning procedures and forms.

(a) * * * The Director may, for good cause and to the extent

permitted by statute, waive the applicability of any provision of this

chapter.

* * * * *

PART 506--INFORMATION COLLECTION REQUIREMENTS UNDER THE PAPERWORK

REDUCTION ACT

3. The authority citation for part 506 continues to read as

follows:

Authority: 44 U.S.C. 3501 et seq.

4. Section 506.1 is amended by adding in numerical order one new

entry to the table in paragraph (b) to read as follows:

Sec. 506.1 OMB control numbers assigned pursuant to the Paperwork

Reduction Act.

* * * * *

(b) Display.

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Current OMB

12 CFR part or section where identified and described control No.

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563.170(c)................................................. 1550-0083

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PART 508--REMOVALS, SUSPENSIONS, AND PROHIBITIONS WHERE A CRIME IS

CHARGED OR PROVEN

5. The authority citation for part 508 is revised to read as

follows:

Authority: 12 U.S.C. 1464, 1818.

Sec. 508.13 [Amended]

6. Section 508.13 is amended by removing the phrase ``Sec. 509.39

of this subchapter'' in paragraph (b), and by adding in lieu thereof

the phrase ``Sec. 509.38 of this subchapter''.

SUBCHAPTER C--REGULATIONS FOR FEDERAL SAVINGS ASSOCIATIONS

PART 545--OPERATIONS

7. The authority citation for part 545 continues to read as

follows:

Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.

Sec. 545.33 [Amended]

8. Section 545.33 is amended by removing the phrase ``this

paragraph (e)'' in the first sentence of the introductory text to

paragraph (c), adding in lieu thereof the phrase ``this paragraph

(c)''.

Sec. 545.35 [Amended]

9. Section 545.35 is amended by removing the phrase ``this

paragraph (d)'' in the second sentence of paragraph (b), adding in lieu

thereof the phrase ``this paragraph (b)''.

Sec. 545.74 [Amended]

10. Section 545.74 is amended by removing the phrase ``The

association'' in paragraph (b)(2) and by adding in lieu thereof the

phrase ``Except as provided in 12 U.S.C. 1828(m)(5), every Federal

savings association''; by removing the phrase ``section 302(d)'' in

paragraph (c)(5)(v) and by adding in lieu thereof the phrase ``section

301(d)''; and by removing the phrase ``District Director'' in paragraph

(d)(1)(iv) and by adding in lieu thereof the word ``Office''.

11. Section 545.81 is amended by revising the heading of paragraph

(d), by revising paragraphs (d)(1) introductory text and (d)(2), and by

adding paragraph (d) introductory text to read as follows:

Sec. 545.81 Operating subsidiaries.

* * * * *

(d) Converting service corporations to operating subsidiaries. A

service corporation that on November 30, 1992 was owned by a Federal

savings association and engaged in activities permissible for a Federal

savings association to undertake directly; is owned by that Federal

savings association; engages solely in activities that a Federal

savings association may undertake directly; and meets the control

criteria set forth in this section, may be deemed to be an operating

subsidiary provided that:

(1) If the Federal savings association is eligible for ``expedited

treatment'' under Sec. 516.3 of this chapter, the Federal savings

association creates and maintains appropriate internal records. The

record shall consist of a certification by the Board of Directors of

the association containing:

* * * * *

(2) If the Federal savings association is not eligible for

``expedited treatment'' under Sec. 516.3 of this chapter, the Federal

savings association follows the application procedures set forth in

paragraph (c)(2) of this section and receives the OTS's prior written

approval. The corporation will be deemed to be an operating subsidiary

on the date of the OTS's written approval.

* * * * *

12. Section 545.141 is amended by removing and reserving paragraph

(d); and by revising paragraph (e) to read as follows:

Sec. 545.141 Remote Service Units (RSUs).

* * * * *

(e) Security. A Federal savings association shall protect

electronic data against fraudulent alterations or disclosure. All RSUs

shall meet the minimum security devices requirements of part 568 of

this chapter.

* * * * *

PART 552--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL

STOCK ASSOCIATIONS

13. The authority citation for part 552 continues to read as

follows:

Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.

Sec. 552.3 [Amended]

14. Section 552.3 is amended by removing the paragraph designation

for paragraph (a) and by removing the phrase ``fewer than seven'' in

section 7 of the federal stock charter form, adding in lieu thereof the

phrase ``fewer than five''.

PART 558--POSSESSION BY CONSERVATORS AND RECEIVERS FOR FEDERAL AND

STATE SAVINGS ASSOCIATIONS

15. The authority citation for part 558 continues to read as

follows:

Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.

16. Section 558.1 is amended by removing the word ``and'' found

between the words ``association'' and ``in'' in paragraph (a); and by

revising paragraph (b)(6) to read as follows:

Sec. 558.1 Procedure upon taking possession.

* * * * *

(b) * * *

(6) Post a notice on the door of the principal and other offices of

the savings association in the form prescribed by the Director of the

OTS.

* * * * *

17. Section 558.2 is revised to read as follows:

Sec. 558.2 Notice of appointment.

If the Director of the OTS appoints a conservator or receiver under

this part, notice of the appointment shall be filed immediately for

publication in the Federal Register.

SUBCHAPTER D--REGULATIONS APPLICABLE TO ALL SAVINGS ASSOCIATIONS

PART 563--OPERATIONS

18. The authority citation for part 563 is revised to read as

follows:

Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468,

1817, 1828, 3806; 42 U.S.C. 4106.

19. Section 563.43 is amended by revising the introductory text, by

removing the word ``and'' at the end of paragraph (c), by removing the

period at the end of paragraph (d) and adding in lieu thereof ``; and''

and by adding a new paragraph (e) to read as follows:

Sec. 563.43 Loans by savings associations to their executive officers,

directors and principal shareholders.

Pursuant to 12 U.S.C. 1463(a) and 1468, a savings association, its

subsidiaries and its insiders (as defined) shall be subject to the

restrictions contained in 12 CFR Part 215, subparts A and B of the

Federal Reserve Board's Regulation O, with the exception of 12 CFR

215.13, in the same manner and to the same extent as if the association

were a bank and a member bank of the Federal Reserve System, except

that:

* * * * *

(e) References to the Reserve Bank or the Comptroller shall be

deemed to include the Director of the Office of Thrift Supervision.

Sec. 563.93 [Amended]

20. Section 563.93 is amended by removing the phrase ``paragraph

(b)(13) of this section'' in paragraph (f)(1) and adding in lieu

thereof the phrase ``paragraph (b)(11) of this section''.

Sec. 563.96 [Removed]

21. Section 563.96 is removed.

22. Section 563.170 is amended by revising paragraph (c)(10)(i)(B)

to read as follows:

Sec. 563.170 Examinations and audits; appraisals; establishment and

maintenance of records.

* * * * *

(c) * * *

(10) * * *

(i) * * *

(B) Eligible savings association means any savings association that

is well- or adequately capitalized, as defined in 12 CFR Part 565 and

was either:

(1) Assigned a CAMEL rating of 1 or 2 in its most recent report of

examination; or

(2) assigned a CAMEL rating of 3 in its most recent report of

examination and has obtained written permission from the Regional

Director to employ this exemption.

* * * * *

Sec. 563.176 [Amended]

23. Section 563.176 is amended by removing paragraph (e).

PART 564--APPRAISALS

24. The authority citation for part 564 continues to read as

follows:

Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.

Sec. 564.8 [Amended]

25. Section 564.8 is amended by removing the phrase

``Sec. 564.4(a)(2) through (a)(14)'' in the introductory text of

paragraph (d), and by adding in lieu thereof the phrase ``Sec. 564.4(b)

through (d)''.

PART 574--ACQUISITION OF CONTROL OF SAVINGS ASSOCIATIONS

26. The authority citation for part 574 continues to read as

follows:

Authority: 12 U.S.C. 1467a, 1817.

Sec. 574.5 [Amended]

27. Section 574.5 is amended by removing the phrase ``and other

reports'' from the section heading; by removing paragraph (b); by

removing the phrase ``reports and'' from paragraph (c); and by

redesignating paragraph (c) as new paragraph (b).

SUBCHAPTER G--REGULATIONS FOR FEDERALLY-RELATED MORTGAGE LOANS

PART 590--PREEMPTION OF STATE USURY LAWS

28. The authority citation for part 590 is revised to read as

follows:

Authority: 12 U.S.C. 1735f-7a.

Dated: September 9, 1994.

By the Office of Thrift Supervision.

Jonathan L. Fiechter,

Acting Director.

[FR Doc. 94-26150 Filed 10-24-94; 8:45 am]

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