Bank Enterprise Award Program

DEPARTMENT OF THE TREASURY

Community Development Financial Institutions Fund

12 CFR Part 1806

RIN 1505-AA71

Bank Enterprise Award Program

AGENCY: Community Development Financial Institutions Fund, Department

of the Treasury.

ACTION: Amendments to interim rule.

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SUMMARY: The Department of the Treasury is issuing revisions to the

interim regulations for the Bank Enterprise Award (BEA) Program

published in the Federal Register on October 19, 1995 and subsequently

amended on January 23, 1996 and February 29, 1996. The BEA Program was

authorized by the Community Development Banking and Financial

Institutions Act of 1994. The program is designed to encourage insured

depository institutions to make equity investments in or otherwise

support Community Development Financial Institutions and/or increase

lending and other services provided within distressed communities.

DATES: This interim rule is effective November 25, 1996. Comments must

be received on or before December 26, 1996.

ADDRESSES: All questions or comments concerning this interim rule

should be addressed to the Director, Community Development Financial

Institutions Fund, Department of the Treasury, 1500 Pennsylvania Ave.,

N.W., Washington, DC 20220.

FOR FURTHER INFORMATION CONTACT: Kirsten S. Moy, Director, Community

Development Financial Institutions Fund at (202) 622-8662. (This is not

a toll free number.)

SUPPLEMENTARY INFORMATION:

I. General

Executive Order (E.O.) 12866

It has been determined that this regulation is not a significant

regulatory action as defined in E.O. 12866.

Regulatory Flexibility Act

Because no notice of proposed rulemaking is required for this

interim rule, the provisions of the Regulatory Flexibility Act (5

U.S.C. 601 et seq.) do not apply. Moreover, the Department of the

Treasury finds that any economic or other consequences of this interim

rule are a direct result of the implementation of statutory provisions.

Administrative Procedures Act

Pursuant to 5 U.S.C. 553(a)(2), these amendments are not subject to

the provisions in 5 U.S.C. 553(b) concerning notice and public comment

or the delayed effective date provisions of 5 U.S.C. 553(d).

Furthermore, the Department for good cause finds that notice and public

comment prior to effect are impracticable and contrary to the public

interest. These revisions are intended to amend the interim regulations

for the BEA Program that were published in the Federal Register on

October 19, 1995 and subsequently amended on January 23, 1996 and

February 29, 1996. The purpose of the revisions is to give applicants

greater flexibility as to the type of instruments that will be

considered Equity Investments, reduce the burden associated with

reporting certain Eligible Development Activities, and permit

applicants that achieved less than 90 percent, as opposed to less than

90 percent but at least 75 percent, of their projected activities to

receive a partial, pro-rated award.

Catalog of Federal Financial Assistance Number Bank Enterprise

Award Program--21.021.

II. Background

On October 19, 1995, the Department published interim regulations

in the Federal Register for the Bank Enterprise Award Program (12 CFR

part 1806). These interim regulations were amended pursuant to

revisions published in the Federal Register on January 23, 1996 and

corrections to these revisions published in the Federal Register on

February 29, 1996. Subsequent to the publication of such interim

regulations, as amended, the Department has developed policies designed

to clarify several existing provisions in the interim regulations. The

purpose of these amendments is to give applicants greater flexibility

as to the type of instruments that will be considered Equity

Investments, reduce the burden associated with reporting certain

Eligible Development Activities, and permit applicants that achieved

less than 90 percent, as opposed to less than 90 percent but at least

75 percent, of their projected activities to receive a partial, pro-

rated award.

III. Bank Enterprise Award Program

Under the Bank Enterprise Award Program (12 CFR Part 1806), the

Department will provide awards to selected Applicants that successfully

carry out certain community development activities. The following

summarizes the amendments to the interim regulations.

Definitions

The term ``Equity Investment'' is amended in Section 1806.103(q) to

give Applicants greater flexibility as to the type of instruments that

will be considered Equity Investments. An Equity Investment shall be

considered new financial assistance provided by an Applicant or its

Subsidiary to a CDFI in the form of a stock purchase, a grant

(excluding grants used to support operating costs), a purchase of any

type of partnership interest, a loan made on such terms that it has

characteristics of equity (and is considered as such by the Fund and is

consistent with requirements of the Applicant's Appropriate Federal

Banking Agency), or any other investment deemed to be an equity

investment by the Fund.

[[Page 59828]]

Measuring Activities

Section 1806.202(a) is revised to give an Applicant the option of

reporting their activities in all categories of Qualified Activities or

providing an explanation satisfactory to the Fund for not reporting in

all categories and providing any certifications reasonably deemed

necessary by the Fund, including, without limitation, a certification

that during the Assessment Period the Applicant did not reduce its

total activity in any unreported categories. The form and content of

any certification shall be determined by the Fund.

Actual Award Amounts

Section 1806.205 is revised to permit any Applicant that achieves

less than 90 percent, as opposed to less than 90 percent but at least

75 percent, of its projected Qualified Activities to receive a partial

award based upon (among other things) the Applicant's satisfactory

explanation for its failure to substantially achieve the activities

projected in its application. Any estimated award amount will be

adjusted on a pro-rata basis to reflect the activities actually

performed.

List of Subjects in 12 CFR Part 1806

Banks, banking, Community development, Economic development, Grant

programs--community development, Housing, Savings associations, Small

businesses.

For the reasons set forth in the preamble, Part 1806 of Chapter

XVIII of Title 12 of the Code of Federal Regulations is amended as

follows:

PART 1806--BANK ENTERPRISE AWARD PROGRAM

1. The authority citation for Part 1806 continues to read as

follows:

Authority: 12 U.S.C. 4703, 4717; chapter X, Pub. L. 104-19, 109

Stat. 237 (12 U.S.C. 4703 note).

2. Section 1806.103 (q) is revised to read as follows:

Sec. 1806.103 Definitions.

* * * * *

(q) Equity Investment means new financial assistance provided by an

Applicant or its Subsidiary to a CDFI in the form of a stock purchase,

a grant (excluding grants used to support operating costs), a purchase

of any type of partnership interest, a loan made on such terms that it

has characteristics of equity (and is considered as such by the Fund

and is consistent with requirements of the Applicant's Appropriate

Federal Banking Agency), or any other investment deemed to be an equity

investment by the Fund.

* * * * *

3. Section 1806.202(a) is revised to read as follows:

Sec. 1806.202. Measuring activities.

(a) General. Qualified Activities shall be measured by comparing

the Qualified Activities carried out during the Baseline Period with

the Qualified Activities projected to be carried out during the

Assessment Period. Increases in the values of Qualified Activities

between the Baseline Period and Assessment Period will be used in

determining award amounts. Applicants shall report their activities in

all categories of Qualified Activities in which they engage for the

Baseline Period and Assessment Period or provide an explanation

satisfactory to the Fund for not reporting in all categories and

provide any certification reasonably deemed necessary by the Fund,

including, without limitation, a certification that during the

Assessment Period the Applicant did not reduce its total activity in

any unreported categories. The form and content of any certification

shall be determined by the Fund. The dates of the Baseline Period and

Assessment Period will be published in the NOFA for each funding round.

* * * * *

4. Section 1806.205(c)(1) is revised to read as follows:

Sec. 1806.205 Actual award amounts.

* * * * *

(c) Partial achievement--(1) General. If an Awardee carries out

less than 90 percent of its projected Qualified Activities, it may be

deemed to have partially achieved those activities. In such cases, the

Fund may, in its sole discretion, provide a partial award based upon

(among other things) the Awardee's satisfactory explanation for its

failure to substantially achieve the activities projected in its

application. Any estimated award amount will be adjusted on a pro-rata

basis to reflect the activities actually performed.

* * * * *

Dated: November 18, 1996.

Kirsten S. Moy,

Director, Community Development Financial Institutions Fund.

[FR Doc. 96-29993 Filed 11-22-96; 8:45 am]

BILLING CODE 4810-70-P