Agricultural Loan Loss Amortization

SUMMARY: The Office of the Comptroller of the Currency (OCC) is

removing its rule governing agricultural loan loss amortization,

effective January 1, 1999. This action is another component of the

OCC's Regulation Review Program, which is intended to update and

streamline OCC regulations and to reduce unnecessary regulatory costs

and other burdens. This action is needed to eliminate the rule when it

becomes obsolete.

EFFECTIVE DATE: January 1, 1999.

FOR FURTHER INFORMATION CONTACT: Andrew T. Gutierrez, Attorney,

Legislative and Regulatory Activities Division, Office of the

Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219,

(202) 874-5090.

SUPPLEMENTARY INFORMATION:

Background

The OCC is removing 12 CFR part 35, effective January 1, 1999, as a

component of its Regulation Review Program. The goal of the Regulation

Review Program is to review all of the OCC's rules to revise,

streamline, and simplify them, and to eliminate provisions that do not

contribute significantly to maintaining the safety and soundness of

national banks or to accomplishing the OCC's other statutory

responsibilities.

Title VIII of the Competitive Equality Banking Act of 1987, Pub. L.

100-86, 101 Stat. 635 (1987), added 12 U.S.C. 1823(j) in an attempt to

alleviate some of the financial pressures then facing agricultural

banks. In particular, 12 U.S.C. 1823(j) permits an agricultural bank to

amortize over a period not to exceed seven years: (1) any loss on a

qualified agricultural loan that the bank would otherwise be required

to show on its annual financial statement for any year between December

31, 1983, and January 1, 1992; and (2) any loss resulting from the

reappraisal of property that the bank owned or acquired between January

1, 1983, and January 1, 1992, in connection with a qualified

agricultural loan. The OCC implemented this statutory provision by

promulgating 12 CFR part 35 with a temporary rule published on November

2, 1987 (52 FR 41959), and a final rule published on July 28, 1988 (53

FR 28373).

Because the statute requires that a loss occur on or before

December 31, 1991, to qualify, and that the amortization period may not

exceed seven years, the program becomes obsolete on January 1, 1999.

Reflecting this fact, 12 CFR 35.3(b) requires that loans under the

program must be fully amortized by December 31, 1998.

On February 8, 1995, the OCC proposed to remove 12 CFR part 35,

effective January 1, 1999, in order to obviate the need for regulatory

action in the future (60 FR 7467). The OCC received two comment letters

on the proposed rule, both of which supported the proposed action.

Consequently, the OCC is issuing this final rule to remove 12 CFR part

35, effective January 1, 1999. Prior to that date, an annotation to 12

CFR part 35 will indicate the effective date for removal of the part.

Regulatory Flexibility Act

It is hereby certified that this final rule will not have a

significant economic impact on a substantial number of small entities.

Accordingly, a regulatory flexibility analysis is not required. This

final rule has no material impact on national banks, regardless of

size.

Executive Order 12866

The OCC has determined that this final rule is not a significant

regulatory action under Executive Order 12866.

Paperwork Reduction Act

The collection of information contained in 12 CFR 35.7 has been

approved by the Office of Management and Budget (OMB) under OMB Control

Number 1557-0186. This final rule will remove as unnecessary, for the

reasons set forth in the preamble, that collection of information

effective January 1, 1999.

Unfunded Mandates Act of 1995

The OCC has determined that this final rule will not result in

expenditures by state, local, and tribal governments, or by the private

sector, of more than $100 million in any one year. Accordingly, a

budgetary impact statement is not required under section 202 of the

Unfunded Mandates Act of 1995.

List of Subjects in 12 CFR Part 35

Accounting, Agriculture, National banks, Reporting and

recordkeeping requirements.

Authority and Issuance

For the reasons set out in the preamble, and under the authority of

12 U.S.C. 93a and 1823(j), chapter I of title 12 of the Code of Federal

Regulations is amended as follows:

PART 35--[REMOVED]

1. Part 35 is removed effective January 1, 1999.

Dated: May 18, 1995.

Eugene A. Ludwig,

Comptroller of the Currency.

[FR Doc. 95-12648 Filed 5-23-95; 8:45 am]

BILLING CODE 4810-33-P