Applications, Requests, Submittals, Delegations of Authority, and Notices Required To Be Filed by Statute or Regulation; Unsafe and Unsound Banking Practices; Registration of Transfer Agents; Foreign Banks; Management Official Interlocks; Golden Parachute and Indemnification Payments

SUMMARY: The FDIC is proposing to amend its regulations governing

application, notice and request procedures and delegations of authority

by streamlining, modernizing and clarifying current policies and

practices. Specifically, the FDIC proposes to offer qualifying well-

capitalized and well-managed insured depository institutions and their

holding companies expedited review procedures for several major types

of filings, including deposit insurance, merger and branch

applications. The agency also proposes to centralize substantially all

filing procedures found throughout its rules within the regulation for

ease of reference. Furthermore, the FDIC proposes to reorganize the

requirements for each major application or notice type into a separate

regulatory subpart that will contain all information necessary to

submit a filing to the agency, as well as any relevant internal agency

delegations of authority to approve or deny submissions. In addition,

the agency is incorporating statutory changes to its application

procedures made by the Economic Growth and Regulatory Paperwork

Reduction Act of 1996. Finally, the FDIC is proposing technical

amendments to related regulations to conform these changes.

This action is being taken in accordance with section 303(a) of the

Riegle Community Development and Regulatory Improvement Act of 1994

which requires the federal banking agencies to review and streamline

their regulations and policies in order to improve efficiency, reduce

unnecessary costs, eliminate unwarranted constraints on credit

availability, and remove inconsistencies and outmoded and duplicative

requirements.

The proposal seeks to reduce burden on insured depository

institutions by imposing regulatory requirements only where needed to

address safety and soundness concerns or accomplish other statutory

responsibilities of the FDIC. The proposed rule also strives to more

closely align the FDIC's application processing regulations with those

of the other federal banking agencies.

DATES: Comments must be received by January 7, 1998.

ADDRESSES: Send written comments to Robert E. Feldman, Executive

Secretary, Attention: Comments/OES, Federal Deposit Insurance

Corporation, 550 17th Street, NW., Washington, DC 20429. Comments may

be hand-delivered to the guard station at the rear of the 17th Street

building (located on F Street), on business days between 7 a.m. and 5

p.m. (Fax number (202) 898-3838; Internet address: [email protected]).

Comments may be inspected and photocopied in the FDIC Public

Information Center, Room 100, 801 17th Street, NW., Washington, DC

20429, between 9 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Division of Supervision: Cary H.

Hiner, Associate Director, (202) 898-6814; Jesse G. Snyder, Assistant

Director, (202) 898-6915; Mark S. Schmidt, Assistant Director, (202)

898-6918. Division of Compliance and Consumer Affairs: Steven D.

Fritts, Associate Director, (202) 942-3454, and Louise N. Kotoshirodo,

Review Examiner, (202) 942-3599. Legal Division: Susan van den Toorn,

Counsel, Regulation and Legislation Section, (202) 898-8707, and Nancy

Schucker Recchia, Counsel, Regulation and Legislation Section, (202)

898-8885. For administrative enforcement issues: Grovetta N. Gardineer,

Counsel, Compliance and Enforcement Section, (202) 736-0665, and Philip

P. Houle, Counsel, Compliance and Enforcement Section, (202) 736-0758.

For foreign bank activities (Subpart J): Jamey G. Basham, Counsel,

Regulation and Legislation Section, Legal Division (202) 898-7265, and

Christie A. Sciacca, Assistant Director, Division of Supervision (202)

898-3671, Federal Deposit Insurance Corporation, 550 17th Street, NW.,

Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Background

Part 303 of the FDIC's regulations (12 CFR part 303) generally

describes the procedures to be followed by both the FDIC and applicants

with respect to applications, notices, or requests required to be filed

by statute or regulation. Additional information concerning processing

is contained in related FDIC statements of policy. Part 303 also sets

forth delegations of authority from the FDIC's Board of Directors to

the Directors of the Division of Supervision (DOS), the Division of

Compliance and Consumer Affairs (DCA), the General Counsel of the Legal

Division, the Executive Secretary, and, in some cases, their designees

to act on certain applications, notices, requests, and enforcement

matters.

The FDIC is proposing comprehensive revisions to part 303 as part

of a systematic review of its regulations and policy statements

undertaken in accordance with section 303(a) of the Riegle Community

Development and Regulatory Improvement Act of 1994 (CDRIA) (12 U.S.C.

4803(a)). Section 303(a) of CDRIA requires the FDIC, the Office of the

Comptroller of the Currency, the Board of Governors of the Federal

Reserve System, and the Office of Thrift Supervision (federal banking

agencies) to streamline and modify their regulations and written

policies in order to improve efficiency, reduce unnecessary costs, and

eliminate unwarranted constraints on credit availability. The statute

also requires each of the federal banking agencies to remove

inconsistencies and outmoded and duplicative requirements from their

regulations and written policies.

To initiate its CDRIA review, the FDIC published in the Federal

Register a notice soliciting comment on its regulations and written

policies. 60 FR 62345, December 6, 1995. In response to that request,

the FDIC received four comments regarding part 303 and one comment

concerning a related policy statement.

One commenter wrote that electronic filing of various reports and

documents has the potential to reduce burden arising from compliance

with filing requirements. In particular, the commenter noted that other

governmental agencies already have recognized the benefits of

electronic filing and that certain application procedures, such as

applications to establish or relocate an office and applications

relating to mergers are well-suited for electronic filing. The FDIC is

working the other federal banking agencies in an attempt to adopt

uniform filing forms for common applications and to have such forms

filed electronically where possible.

Another commenter suggested that with regard to applications by

insured state nonmember banks to establish a branch, move its main

office, or relocate a branch pursuant to Sec. 303.2(c), the regulations

should reduce the regulatory burden of setting up shared automated

teller machines (ATMs). Applications are no longer required for ATMs

and

[[Page 52811]]

remote service units (RSUs) as a result of section 2205 of the Economic

Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) (Pub. L.

104-208, 110 Stat. 3009), which excluded ATMs and RSUs from the

definition of a ``domestic branch'' under section 3(o) of the FDI Act

(12 U.S.C. 1831(o)). Therefore, the definition of ``branch'' in

proposed Sec. 303.41 excludes ATMs and RSUs.

With regard to section 32 notices (change in director or senior

executive officer), a commenter suggested that exceptions be carved out

for two of the three statutory triggering events. Section 32 of the

Federal Deposit Insurance Act (FDI Act) required prior notice from a

depository institution or holding company that (1) was chartered less

than two years; (2) had undergone a change in control within the

preceding two years; or (3) was not in compliance with minimum capital

requirements or was otherwise in ``troubled condition.'' Section 2209

of EGRPRA subsequently amended section 32 by eliminating the prior

notice requirement for institutions and holding companies that are

chartered for less than two years or that have undergone a change in

control within the preceding two years. However, institutions and

holding companies that are not in compliance with minimum capital

requirements or are otherwise in ``troubled condition'' remain subject

to the prior notice requirement. As a result, this comment has been

rendered moot.

One commenter questioned why current Sec. 303.2(a)(4) includes a

requirement that an application by an insured state nonmember bank to

establish a branch, move its main office or relocate a branch contain a

statement as to whether or not the site is included in or is eligible

for inclusion in the National Register of Historic Places, including

evidence that clearance has been obtained from the State Historic

Preservation Officer (SHPO). As a federal agency, the FDIC is subject

to the National Historic Preservation Act (NHPA) (16 U.S.C. 470 et

seq.) which creates a mandatory review and consultation process for

Federal undertakings that may affect properties included in or eligible

for inclusion in the National Register of Historic Places maintained by

the Secretary of the Interior. In order to comply with NHPA, the FDIC

currently requests applicants to state whether the site is included in,

or eligible for inclusion in the National Register and to provide

evidence that clearance has been obtained from the SHPO. See 12 CFR

Sec. 303.2(a)(4). However, the proposed filing procedures at

Sec. 303.42(b)(5) modify the current requirements to provide that

applicants submit a statement that clearance has been or will be

obtained from the SHPO. In addition, the FDIC is undertaking a review

of its statement of policy on the National Historic Preservation Act of

1966 as part of the CDRIA review process and is exploring the

possibility of entering into a programmatic agreement with the Advisory

Council on Historic Preservation which would greatly streamline the

historic preservation review process, especially for those applications

which do not involve a historic site. The FDIC expects to issue a

revised statement of policy on NHPA in 1998.

Finally, the comment received on the FDIC's written policies

concerned the statement of policy on Applications for Deposit

Insurance. Discussion of the comment is contained in the revised

statement of policy on Applications for Deposit Insurance published

elsewhere in today's Federal Register.

The proposed revisions to part 303 seek to reduce regulatory burden

on insured depository institutions, particularly upon state nonmember

banks supervised by the FDIC. The proposed rule also strives to more

closely align the FDIC's application processing regulations with those

of the other federal banking agencies. Furthermore, the proposal

reflects changes to the FDIC's application procedures made by EGRPRA.

II. Discussion

The proposed regulation meets the goals of section 303(a) of CDRIA

in several important ways.

New expedited processing procedures have been introduced

for six application types which represent the majority of all filings

(applications for deposit insurance, mergers, branches, consent to

exercise trust powers, retirement of capital, and certain foreign

banking activities).

During the first six months of 1997, the FDIC acted on 1615

applications, notices and requests. Approximately 1500 or 93 percent of

these filings were of the type for which expedited processing or notice

procedures would be available under this proposal. Under present

regulations, only 130 of the filings acted upon during the first six

months of 1997 actually took the form of notices with clear time frames

for regulatory action. In addition to reducing processing time for

filings submitted by well managed and well capitalized banks, the

proposed expedited procedures will add more certainty to the timing of

regulatory decision. This new approach will allow the FDIC to focus its

resources on applications that do not fall within the new expedited

review procedure and are therefore more likely to present safety and

soundness risks or raise CRA or compliance concerns.

The processing of some applications has been structured to

act like notices. For example, applications to establish a branch or to

relocate a main office or branch processed under expedited procedures

will generally be deemed approved 21 days after receipt of a

substantially complete application. Branch related applications

represented more than 50 percent of all applications acted upon by the

FDIC in the first six months of 1997.

Regulations and guidelines issued by the federal banking

agencies implementing common statutes have been made more uniform. This

is particularly true for filings regarding mergers, changes in bank

control, and changes in director or senior executive officer.

Filing contents have been clarified and streamlined

wherever practical. Examples include applications for a merger which

qualifies as a corporate reorganization, a temporary office in an

emergency or disaster situation, applications for deposit insurance for

an interim institution in connection with a related merger transaction,

and applications for continuation for deposit insurance by a state bank

withdrawing from the Federal Reserve System.

The procedural requirements for virtually all applications

and notices have been centralized in part 303. Subpart A of the

proposed regulation contains the general rules applicable to all

filings. Each subpart that follows contains all of the procedural

requirements for a particular application type. For example, subpart C

on branching contains definitions applicable to that subpart, filing

procedures, processing procedures, public notice provisions and

delegations of authority. Subpart M contains miscellaneous filings that

do not merit separate subparts. Subpart N contains all administrative

enforcement action delegations.

Delegations of authority from the FDIC's Board of

Directors to the Directors of DOS, DCA, the General Counsel of the

Legal Division, and the Executive Secretary to act on certain

applications, notices, requests, and enforcement matters have been

reviewed and updated.

Duplicative and outdated material has been deleted from

existing part 303. An example is eliminating application procedures for

the establishment or relocation of a remote service facility,

[[Page 52812]]

which is no longer required pursuant to section 2205 of EGRPRA.

Concurrently with this proposal to amend part 303, the FDIC is

publishing elsewhere in today's Federal Register two revised statements

of policy on Applications for Deposit Insurance and Bank Merger

Transactions for comment. The FDIC is also proposing elsewhere in

today's Federal Register to rescind its statements of policy on

Applications to Establish a Domestic Branch and Applications to

Relocate Main Office or Branch, and to amend its statement of policy on

Liability of Commonly Controlled Depository Institutions. The latter

policy statement is being amended to move the application procedures to

request a waiver of cross-guaranty liability from the policy statement

to proposed part 303. It is recommended that interested parties read

those policy statements in conjunction with the proposed regulatory

text of part 303 and submit combined comments to the agency, if

practicable.

In addition, the FDIC has already rescinded the following policy

statements related to part 303 as unnecessary or duplicative:

Changes in Control in Insured State Nonmember Banks (62 FR

24927, May 7, 1997)

Applications, Legal Fees, and Other Expenses (62 FR 15479,

April 1, 1997)

Eligibility to Make Application to Become an Insured Bank

Under Section 5 of the Federal Deposit Insurance Act (62 FR 15706,

April 2, 1997)

The FDIC rescinded the first two statements of policy because any

necessary substantive information contained in them has been moved to

the proposed regulation or other policy statements. The third statement

of policy was rescinded because the analysis was based on a provision

of the FDI Act that was repealed by the Federal Deposit Insurance

Corporation Improvement Act of 1991 (Pub. L. 102-242, 105 Stat. 2236).

III. Proposed Rule

The discussion below identifies and explains significant proposed

changes to part 303. The FDIC requests general comments on all aspects

of the proposed regulation as well as specific comments on certain

issues as noted throughout the preamble. To aid the reader, a

derivation table follows the preamble which relates the sections of

proposed part 303 to current part 303, as well as other sections of the

FDIC regulations which are being relocated to part 303.

A. Subpart A--Rules of General Applicability

Subpart A of part 303 clarifies and simplifies the rules generally

applicable to processing of applications, notices and requests

(filings) required by regulation or statute by reorganizing the

definitions and general rules of procedure currently found in

Sec. 303.0 and Sec. 303.6, respectively, into one subpart. Subpart A

also explains the availability of expedited processing for an

``eligible depository institution'' (defined in proposed Sec. 303.2(r))

and the criteria under which the FDIC may remove a filing from

expedited processing. Further, subpart A contains general principles

governing delegations of authority from the Board of Directors to

certain FDIC officials, most of which are currently contained in

Sec. 303.10(a) and Sec. 303.11 (a) and (b).

The availability of expedited procedures for several major types of

filings (deposit insurance, branches, and mergers) as well as some

other filings (for example, consent to exercise trust powers and

reduce/retire capital stock or capital debt instruments) will reduce

burden upon the banking industry by enabling banks and thrifts to

undertake corporate activities more quickly. Expedited processing will

also introduce more certainty into the application process for both

applicants and interested parties by establishing fixed timeframes for

decision and receipt of comment letters. Furthermore, centralizing in

one subpart general information that was previously scattered

throughout part 303 will make part 303 much easier to use for the

public, bankers, attorneys and regulators.

In addition to reorganizing existing regulatory text into one

subpart, subpart A also updates terminology, streamlines procedures,

and reflects current FDIC policies and practices.

Definitions. Subpart A alphabetizes the definitions currently set

forth in Sec. 303.0 and adds several new definitions.

New definitions of ``applicant'' and ``filing'' were added for ease

of drafting regulatory text and to add clarity and consistency.

``Applicant'' is intended to replace the terms ``insured depository

institution,'' ``state nonmember bank'' or ``individual'' where they

appear throughout part 303. The scope section of each subpart will

explain whether particular filing procedures are applicable to all

insured depository institutions or only to state nonmember banks. The

term ``filing'' is intended to provide a convenient way to collectively

refer to applications, notices, or requests, where appropriate

throughout part 303. New definitions were also added for

``application'' and ``notice'' to clarify the distinctions between

those types of filings.

A definition of ``insider'' was added to avoid duplication in

several subparts. The current definition of ``protest'' found in

Sec. 303.0(b)(30) has been replaced with three terms (``comment,''

``adverse comment,'' and ``CRA protest'') to distinguish among the

types of comments that DOS and DCA may receive in connection with a

pending filing. The term ``deputy director'' has been defined to

include deputy directors of both DOS and DCA to reflect those

positions. Also, a definition has been added for ``General Counsel'' of

the FDIC. Further, the various types of Section 8 enforcement orders

have been grouped under one category ``Section 8 orders''.

A new definition of ``eligible depository institution'' has been

added to establish criteria that institutions must meet to qualify for

expedited processing, as discussed below.

Definitions of ``Associate General Counsel for Compliance and

Enforcement,'' ``regional manager,'' and ``remote service facility''

are being removed as obsolete or no longer necessary.

Expedited processing. Subpart A sets forth the general procedures

for expedited processing, for which only an eligible depository

institution qualifies. Proposed Sec. 303.2(r) of subpart A defines the

term ``eligible depository institution'' as a depository institution

that meets the following five criteria: (1) Received an FDIC-assigned

composite Uniform Financial Institutions Rating System (UFIRS) rating

of 1 or 2 as a result of its most recent federal or state examination;

\1\ (2) received at least a satisfactory CRA rating from its primary

federal regulator at its last examination; (3) received a compliance

rating of 1 or 2 from its primary federal regulator at its last

examination; (4) is well-capitalized; and (5) is not subject to any

corrective or supervisory order or agreement. Although an institution

must have a satisfactory or better CRA rating in order to qualify for

expedited processing for any filing, the CRA performance of an

institution will serve as a basis for decision only in connection with

``applications for a deposit facility'' as required by section 2903(2)

of the Community Reinvestment Act (12 U.S.C. 2903(2)). Proposed

Sec. 303.5 sets

[[Page 52813]]

forth those relevant filings for which an institution's CRA record will

be taken into account (deposit insurance, mergers, and establishment or

relocation of a branch or main office, including the relocation of an

insured branch of a foreign bank). The FDIC believes that these five

criteria for eligibility are appropriate to ensure that only well-

capitalized, well-managed institutions that do not present any

supervisory, compliance or CRA concerns receive expedited processing.

The FDIC specifically requests comment on whether these standards for

eligibility are appropriate.

---------------------------------------------------------------------------

\1\ An FDIC-assigned composite UFIRS rating may be based on the

FDIC's own examination, or based on the review of examination

reports prepared by state banking authorities or the other federal

banking agencies.

---------------------------------------------------------------------------

It should be noted that the FDIC recently issued two proposed rules

for comment which would revise and consolidate its international

banking regulations (12 CFR part 347) and regulations governing the

activities and investments of insured state banks and savings

associations (12 CFR part 362). 62 FR 37748, July 16, 1997; 62 FR

47969, Sept. 12, 1997. These proposals also contain expedited

procedures and definitions of an ``eligible'' type of institution which

generally parallel proposed Sec. 303.2(r) of subpart A, but add two

additional criteria: (1) That the institution has been chartered and

operating for at least three years; and (2) that the institution

received a rating of 1 or 2 under the ``management'' component rating

of the UFIRS at its most recent examination. The additional criteria

may be appropriate in connection with the part 347 and 362 proposals to

the extent that the eligibility criteria govern substantive issues

beyond the question of whether an application should receive expedited

processing. The FDIC will evaluate the necessity of the additional

criteria in the context of parts 347 and 362 as it goes forward with

those rulemakings.

Under Sec. 303.11(c) of the proposed rule, expedited processing

will be automatically given to institutions meeting the definition of

an ``eligible depository institution'' (with a few exceptions where

other conditions apply) upon determination by the appropriate regional

director (DOS). Therefore, an applicant need not request expedited

processing or even identify itself as an eligible institution. A filing

may be removed from expedited processing pursuant to proposed

Sec. 303.11(c)(2) if: (1) For filings subject to public notice, an

adverse comment is received that warrants additional investigation or

review; (2) for filings subject to evaluation of CRA performance, a CRA

protest is received that warrants additional investigation or review,

or the appropriate regional director (DCA) determines that the filing

presents a significant CRA or compliance concern; (3) for any filing,

the appropriate regional director (DOS) determines that the filing

presents a significant supervisory concern, or raises a significant

legal or policy issue; or (4) for any filing, the appropriate regional

director (DOS) determines that other good cause exists for removal. If

a filing is removed from expedited processing, the applicant will be

promptly informed in writing of the reason. For filings which the

appropriate regional director has not been delegated authority to

approve, the filing will generally be removed from expedited

processing.

Computation of time. Previously, part 303 simply contained a cross-

reference to Sec. 308.12, which governs computation of time for

purposes of the FDIC's rules of administrative procedure. The proposed

rule clarifies that the FDIC uses a calendar day rule and begins

computing the relevant period on the day after an event occurs (for

example, the day after receipt of a filing or newspaper publication).

Effect of CRA performance on filings. This new section clearly

states that CRA performance will be considered in connection with

applications to establish a domestic branch or relocate a domestic

branch or main office, merger applications, and deposit insurance

applications, and clarifies that CRA applies to applications to

relocate an insured branch of a foreign bank. Although this information

is currently contained in part 345 (Community Reinvestment Act), the

FDIC believes that an explicit statement concerning the filings covered

by CRA better serves the public and the banking industry than providing

a cross-reference.

Public notice. Current Sec. 303.6(f)(4) reproduces a notice that

institutions are required to use when publishing notice of a filing in

a local newspaper. Under Sec. 303.7(c) of the proposed rule, applicants

are offered the choice of a sample notice or a list of contents which

may be used to draft a notice tailored to the needs of the institution.

This choice is designed to reduce burden on the banking industry by

providing more flexibility.

Proposed Sec. 303.7(b) adds a new provision requiring confirmation

of publication. Promptly after publication, the applicant must mail or

otherwise deliver a copy of the newspaper notice to the appropriate

regional director (DOS). This is designed to avoid possible delays in

processing if a defective notice is discovered.

Proposed Sec. 303.7(d) reduces burden by providing that an

applicant may publish a single public notice for multiple transactions

provided that the notice includes an explanation of how the

transactions are related and states the closing date of the longest

public comment period that will apply. Further, Sec. 303.7(e) of the

proposed rule states that the FDIC may accept the publication of a

single joint notice containing information required by both the FDIC

and another federal banking agency or state banking authority provided

that the notice states that comments must be submitted to both

agencies.

Public comments. Current Sec. 303.6(f)(3) permits interested

parties to comment upon a pending filing until the date of final

disposition. Proposed Sec. 303.9(a) provides that comments would be

accepted only during a defined comment period in order to add certainty

to the filing process for both the public and the applicant. Closing

the comment period on a date certain eliminates the risk of final

action being delayed due to a late comment or of final action being

taken while a comment is in the process of being transmitted to the

FDIC.

In order to provide the public with adequate time to submit

meaningful comments, proposed Sec. 303.9(b)(2) grants the appropriate

regional director (DOS) three bases upon which to extend or reopen the

public comment period: (1) If the applicant fails to file all required

information on a timely basis to permit review by the public or makes a

request for confidential treatment not granted by the FDIC that delays

the public availability of that information; (2) if any person

requesting an extension of time satisfactorily demonstrates to the FDIC

that additional time is necessary to develop factual information that

may materially affect the application; or (3) for good cause. Good

cause is currently the only basis for extension of the comment period

under Sec. 303.6(f)(3).

Further, proposed Sec. 303.9(b)(4) clarifies that the FDIC will

provide copies of all comments to the applicant and that the applicant

will be given an opportunity to respond.

Hearings and other meetings. Proposed Sec. 303.10 simplifies the

current rules concerning hearing procedures contained in Sec. 303.6

(h), (i), and (j) and updates those provisions to reflect current FDIC

practices.

Decisions on filings. Proposed Sec. 303.11 sets forth new

provisions concerning multiple transactions, abandonment of filings,

and nullification of decisions. With regard to multiple transactions,

if all related transactions have been granted expedited processing,

then the longest

[[Page 52814]]

expedited processing time will govern for all transactions. The

proposed rule also codifies current FDIC practice concerning

abandonment of filings. If an applicant does not provide additional

information requested by the FDIC within the time period specified, the

FDIC may notify the applicant that the filing has been deemed abandoned

and processing has been discontinued. The proposal also contains three

nullification provisions. The FDIC may nullify a decision on a filing

if: (1) The agency becomes aware of any material misrepresentation or

omission after rendering a decision; (2) the agency is not informed by

the applicant of a subsequent material change in circumstances prior to

rendering a decision; or (3) the decision is contrary to law,

regulation, or FDIC policy, or granted due to clerical or

administrative error, or a material mistake of law or fact. The FDIC

believes these provisions are useful additions to part 303.

Appeals and petitions for reconsideration. Current Sec. 303.6(e)

contains the FDIC's procedures governing petitions for reconsideration

of a denied filing. Proposed Sec. 303.11(f) would clarify that these

procedures cover only requests for reconsideration of filings that do

not otherwise have appeal procedures provided by other regulation or

written guidance, and that decisions to deny a hearing request are

nonappealable.

As proposed, Sec. 303.11(f)(2) provides that within 15 days of

receipt of notice from the FDIC that its filing has been denied, an

applicant may file a petition with the appropriate regional director

containing either a resolution of the board of directors of the

applicant authorizing filing, if the applicant is a corporation or

other entity, or a letter signed by the individual(s) filing the

petition, if the applicant is not a corporation or other entity. As

under the existing rule, the filing must contain substantive

information that for good cause was not previously set forth in the

filing and specific reasons why the FDIC should reconsider its prior

decision.

A regional director or deputy regional director (DOS or DCA) may

approve, but not deny, a petition for reconsideration. However, the

Director or Deputy Director (DOS or DCA) may approve or deny a

petition. If the petition is granted, the filing will be reconsidered

by the Board of Directors if the filing was originally denied by the

Board of Directors or denied by the Director, Deputy Director, or an

associate director (DOS or DCA). The Director or Deputy Director (DOS

or DCA) will reconsider the filing if the filing was originally denied

by a regional director or deputy regional director. Proposed

Sec. 303.11(f) also clarifies that a decision on a petition for

reconsideration by the Director or Deputy Director (DOS or DCA) is a

final agency decision and is not appealable to the Board of Directors.

The FDIC specifically seeks comment on its new petition for

reconsideration procedures, which are designed to provide a more

objective review. It should be noted that the FDIC has separate appeal

procedures regarding material supervisory determinations such as

examination ratings, material disputed asset classifications,

determinations regarding violations of laws and regulations, etc. which

were published in the Federal Register on March 25, 1995. 60 FR 15923.

In addition, procedures for requesting a review of assessment risk

classification and for revision of computation of quarterly assessment

payments are contained in part 327. Therefore, proposed Sec. 303.11(f)

applies only to filings as that term is defined in part 303.

General delegations of authority. Proposed Sec. 303.12 contains the

general principles governing delegations of authority from the Board of

Directors to FDIC officials. Some, but not all, of these principles are

currently contained in Secs. 303.10(a) and 303.11 (a) and (b). This

proposed section states that the Board does not delegate its authority

regarding matters covered in the FDIC's regulations unless such a

delegation is specifically made. However, in matters where the Board

has neither specifically delegated nor retained authority, FDIC

officials may take action with respect to matters which generally

involve conditions or circumstances requiring prompt action to protect

the interests of the FDIC and to achieve flexibility and expedition in

the exercise of FDIC functions under part 303. Delegations are to be

broadly construed in favor of the existence of authority in FDIC

officials who act under delegated authority, and any exercise of

delegated authority by an official is conclusive evidence of that

official's authority. The purpose of this broad construction is to

promote the efficient operation of the FDIC, to allow the public to

rely on actions of FDIC officials, and to discourage frivolous

challenges to the exercise of delegated authority.

Delegations of authority to DOS and DCA officials. Proposed

Sec. 303.13 contains delegations of authority to DOS and DCA officials

to enable them to carry out the FDIC's applications function.

Where a CRA protest is filed and remains unresolved, proposed

Sec. 303.13(a) delegates authority to the regional director or deputy

regional director (DCA) to concur that approval of any filing subject

to CRA is consistent with the purposes of CRA. Previously, receipt of a

CRA protest caused a filing to be forwarded to Washington for review.

This change in policy is expected to improve and expedite decision

making by placing it closer to the source.

For purposes of determining when to commence processing of a

filing, proposed Sec. 303.13(b) delegates authority to DOS officials to

determine whether a filing is substantially complete. This provision

also is intended to clarify that the standard to initiate the

processing period is the receipt of a substantially complete filing.

Proposed Sec. 303.13(c) contains a delegation of authority

permitting DOS officials to enter into memoranda of agreement pursuant

to regulations of the Advisory Council on Historic Preservation which

implement the National Historic Preservation Act (NHPA). This provision

is currently found in Sec. 303.8(g) of the FDIC's regulations and

facilitates the agency's ability to comply with NHPA.

B. Subpart B--Deposit Insurance

Since passage of the Federal Deposit Insurance Corporation

Improvement Act of 1991 (Pub. L. 102-242, 105 Stat. 2236), all proposed

depository institutions or existing noninsured depository institutions

that desire federal deposit insurance have been required to apply to

the FDIC. This includes all nationally chartered banks, state or

federally chartered savings associations, and state chartered banks,

including state member banks.

Subpart B reorganizes and clarifies the filing and processing

procedures for an applicant to follow in applying for deposit insurance

for a proposed or existing noninsured depository institution, for an

interim depository institution (when required), and for continuation of

deposit insurance for a state bank upon withdrawing from membership in

the Federal Reserve System. The proposal updates the regulation to

reflect current statutory requirements and current FDIC policy for

processing such applications. Subpart B also sets forth the delegations

of authority and criteria under which DOS may approve such

applications. The proposed rule should be read in conjunction with the

FDIC's revised policy statement on Applications for Deposit Insurance

found elsewhere in today's Federal Register. Substantive changes to the

regulatory text are discussed below.

[[Page 52815]]

Expedited processing. Under expedited processing, an application

for deposit insurance for a proposed depository institution which will

be a subsidiary of an ``eligible depository institution'' or an

``eligible holding company'' will be processed within 60 days of

receipt of a substantially complete application or 20 days after

publication, whichever is later. Currently, deposit insurance

applications are processed within 120 days. See FDIC Financial

Institutions Letter 26-96 dated May 6, 1996. An eligible depository

institution is defined in proposed Sec. 303.2(r). An eligible holding

company is defined in proposed Sec. 303.22(a) as a bank or thrift

holding company which has consolidated assets of $150 million or more;

has an assigned composite rating of 2 or better; and has at least 75

percent of its consolidated depository institution assets in eligible

depository institutions. If the FDIC does not act within the expedited

processing period, it does not constitute an automatic or default

approval. Public comment is invited on the definition of eligible

holding company and the time frame for processing applications for

deposit insurance under expedited review.

Public notice and comment period. Current regulations state that

notice shall be published on the date the application is mailed or

delivered to the regional director or not more than 30 days prior to

that date. Under proposed Sec. 303.23(a), notice would be published as

close as practicable to the filing date but not more than five days

before the filing date. This provides assurance that the public portion

of the application file will be available for inspection during the

comment period.

Currently, the notice informs the public that comments may be filed

with the regional director at any time before processing of the

application has been completed and that processing will not be

completed earlier than the 15th day following either the date of

publication or date of receipt of the application, whichever is later.

Proposed Sec. 303.23(a) would require that interested parties file

comments with the regional director on or before the 15th day following

the date of publication. Closing the comment period eliminates the risk

of final action being delayed due to a late comment or of final action

being taken while a comment is in the mail to the FDIC. The proposed

15-day comment period is considered adequate time for an interested

party to provide comments. Also, the regional director may extend or

reopen the comment period for good cause, such as when an interested

party cannot provide comments within the 15 days for reasons beyond the

party's control. Comment is invited on the adequacy of the 15 day

comment period, especially in light of the ability of regional

directors to extend or reopen the comment period under

Sec. 303.9(b)(2).

Application for deposit insurance for an interim depository

institution. An interim depository institution is defined in proposed

Sec. 303.24(a) as an institution formed or organized solely to

facilitate a merger transaction which will be reviewed by one of the

four federal banking agencies and that the institution will not open

for business. The filing will consist of a brief letter application and

a copy of the related merger transaction. Also, newspaper publication

requirements concerning the application for deposit insurance for an

interim is being eliminated as unnecessary since public notice would be

required for the merger transaction, which is considered to be the

primary transaction. It is anticipated that the FDIC will consult with

the federal banking agency reviewing the merger application and that

final action on the deposit insurance application will be taken within

21 days after receipt of a substantially complete application. If

additional review by the FDIC is warranted, the applicant will be so

advised in writing.

Continuation of deposit insurance upon withdrawing from membership

in the Federal Reserve System. Procedures are being simplified. Under

Sec. 303.25 of the proposal, the applicant would file a letter

application containing the information specified in the regulation,

including a new requirement that the application must contain a

statement by the bank's management that there are no current

outstanding or proposed corrective programs or supervisory agreements

with the Federal Reserve System. If such programs or agreements exist,

the application must contain a statement that the bank's board of

directors is willing to enter into a similar agreement with the FDIC

which would become effective upon the date of withdrawal from the

Federal Reserve System. The regional director would notify the

applicant in writing within 15 days of the date a substantially

complete application is received that deposit insurance will continue

upon termination of membership in the Federal Reserve System or that

additional review will be necessary. If additional review is warranted,

the regional director would inform the applicant in writing of the

reasons and inform the applicant that it will be notified in writing of

the FDIC's final decision regarding continuation of deposit insurance.

Upon further review, the regional director may approve the continuation

of deposit insurance or, if denial is deemed warranted, forward a

recommendation for action by the FDIC Board of Directors.

Other changes. Current Sec. 303.7(d)(1)(ii) lists a number of

specific criteria that must be met before delegated authority can be

exercised. The criteria relate to initial capitalization, legal fees

and other expenses, projected profitability, investment in fixed assets

and financial arrangements involving insiders, including stock

financing arrangements. These criteria, which have been updated to

reflect current policy, are discussed in the revised policy statement

on Applications for Deposit Insurance which is simply cross-referenced

in the proposed rule to avoid duplication.

Current Sec. 303.7(d)(1)(iii)(A) states that authority to approve

an application for deposit insurance may not be delegated to the

regional director or deputy regional director where a protest under the

Community Reinvestment Act (CRA) is filed. This provision is being

revised to permit approval of a CRA-protested application by the

regional director (DOS) or deputy regional director (DOS) where the

protest has been reviewed by DCA, the regional director (DCA) or deputy

regional director (DCA) concurs that approval is consistent with the

purposes of the CRA, and the applicant agrees in writing to any

conditions imposed regarding the CRA.

Section 303.7(d)(1)(iii)(B) of the current regulation states that

the authority to approve an application may not be delegated to a

regional director or deputy regional director where: (1) There is

direct or indirect financing by proposed directors, officers or 5

percent or more shareholders of more than 75 percent of the purchase

price of the stock subscribed by any one shareholder; (2) there is

aggregate financing of stock subscriptions in excess of 50 percent of

the total capital offered; or (3) warehoused or trusteed stock exceeds

10 percent of initial capital funds. This provision is being eliminated

because the revised policy statement contains a comprehensive

discussion of financing that the FDIC believes provides adequate

guidance. If proposed financing is not within the established

guidelines, the regional director will forward a recommendation to the

Director (DOS).

A new provision found at Sec. 303.26(d)(2) would permit DOS to

impose a condition which requires the maintenance of a leverage capital

ratio of at least 8 percent throughout the first three years of

operation of a depository institution while also providing an

[[Page 52816]]

adequate allowance for loan and lease losses. This clarifies the FDIC's

long-standing position that the minimum ratio of 8 percent is to be

maintained throughout the first three years of operation rather than

only requiring that the ratio be at least 8 percent at the end of the

third year of operation.

Under current Sec. 303.7(d)(2)(i), authority to approve

applications for deposit insurance by operating noninsured institutions

is delegated to the regional director (DOS) or deputy regional director

(DOS) only for those applicant institutions with total assets of less

than $250 million. There is no such restriction on the authority of the

Director or Deputy Director (DOS). Accordingly, this size limitation is

being eliminated from the proposed regulation.

Other minor changes are made within the subpart to facilitate

reorganization and clarification to produce a more concise and user-

friendly regulation.

C. Subpart C--Establishment and Relocation of Domestic Branches and

Offices

Subpart C reorganizes and clarifies the portion of part 303 that

implements section 18(d) of the FDI Act which requires insured state

nonmember banks to obtain the prior written consent of the FDIC in

order to establish a domestic branch, relocate the main office, or

relocate a branch. The most significant changes from the current

regulation are provisions implementing expedited processing for

eligible depository institutions, the addition of several new

definitions, and the exclusion of remote service units, including

automated teller machines and automated loan machines, from the

definition of a branch. As proposed, applications filed by eligible

depository institutions will be deemed approved 21 days after receipt

of a substantially complete application, or 5 days after the expiration

of the comment period, whichever is later. Additional technical

requirements regarding the expedited procedure apply to interstate

branch applications. The average processing time for branch

applications during the first six months of 1997 was 30 days. In

addition to expedited processing, the proposed subpart contains two

special provisions which provide further regulatory relief. One of

these provisions gives advance consent for the relocation of a branch

or main office in the event of a disaster or emergency and the other

provision allows the regional director to waive publication required in

the case of a redesignation of a main office and existing branch.

A section has also been added to allow the regional director (DOS)

to approve an application under this subpart that is the subject of an

unresolved CRA protest, provided the regional director (DCA) finds that

approval of the application would be consistent with the purposes of

CRA and the applicant agrees in writing to any nonstandard conditions

imposed regarding CRA. This provision is expected improve decision

making by placing it closer to the actual decision maker and avoiding

unnecessary delays. In addition, the subpart adds provisions which

implement relevant portions of the FDI Act regarding the establishment

of interstate branches and implements changes contained in section 2205

of EGRPRA.

Finally, as part of the systematic review of its written policies

pursuant to CDRIA, the FDIC is proposing elsewhere in today's Federal

Register to rescind its Statement of Policy of Applications to Relocate

a Main Office or Branch and Statement of Policy on Applications to

Establish a Domestic Branch. Both statements are considered obsolete

and unnecessary in view of the comprehensive approach taken in subpart

C.

Scope. Proposed Sec. 303.40 limits the scope of this subpart to

applications regarding the establishment of domestic branches, and the

relocation of a main office or domestic branch, including provisions

regarding interstate branching. Excluded from the scope of the subpart

are filings for the approval of the acquisition and establishment of

branches in connection with a bank merger transaction. Proposed

regulations for such filings are found in subpart D. The scope of the

subpart also does not include filings by insured branches of foreign

banks to relocate a branch or filings by state nonmember banks to

establish a foreign branch. Proposed regulations regarding foreign

banks and branches are contained in subpart J.

Interstate branching. The Riegle-Neal Interstate Banking and

Branching Efficiency Act of 1994 (Interstate Act) (Pub. L. 103-328, 108

Stat. 2338) became effective on September 29, 1994, and, among other

things, amended the FDI Act to establish a federal framework for

interstate branching effective June 1, 1997. Among the new interstate

branching authorities added by the Interstate Act are a provision

regarding the retention of branches after an interstate relocation of a

main office and a provision regarding interstate branching through de

novo branches.

Section 102(b)(3) of the Interstate Act adds a new paragraph (3) to

section 18(d) of the FDI Act that permits a state nonmember bank, after

the relocation of its main office to another state, to retain branches

in its former home state. Home state means the state by which a state

bank is chartered. This authority is, however, subject to certain

limitations. A bank relocating its main office from one state to

another may retain its branches in the original state only to the

extent that the bank would be authorized, as a bank chartered in the

new state, to establish or acquire those branches. As of June 1, 1997,

an out-of-state bank may establish branches in another state only if it

is authorized to establish such branches (i) as de novo branches under

section 18(d)(4)(A) of the FDI Act, (ii) as a result of an interstate

merger transaction under section 44 of the FDI Act, or (iii) as a

result of an emergency assisted transaction under section 13(f) or

13(k) of the FDI Act. In effect, this provision means that a state

nonmember bank can relocate its main office to another state and retain

its existing branches in the original state if it could, as a bank

chartered in the new state, establish those branches in the original

state. Therefore, if the bank were considered to be chartered in such

new state and could, with such other-state charter, establish those

branches in the original state by means of an interstate de novo branch

transaction, an interstate merger, or an emergency assisted

transaction, then it can retain those branches. Accordingly, the

proposed rule includes a requirement that an applicant seeking to

relocate its main office interstate indicate whether the applicant

intends to retain its existing home state branches.

Section 103(b) of the Interstate Act adds a new paragraph (4) to

section 18(d) of the FDI Act that permits, subject to certain

requirements and conditions, interstate branching through de novo

branches. Under this authority the FDIC may approve an application by a

state nonmember bank to establish and operate a de novo branch in a

state that is not the bank's home state and in which the bank does not

currently maintain a branch. In order to grant such approval, the FDIC

must: (i) Determine that the host state (the state in which the bank

seeks to establish a branch) has in effect a law that applies equally

to all banks and expressly permits all out-of-state banks to establish

de novo branches in such state, (ii) determine that the applicant has

complied with the host state's filing requirements and has submitted to

the host state a copy of the application it filed with the FDIC, (iii)

determine that

[[Page 52817]]

the applicant is adequately capitalized and will continue to be

adequately capitalized and adequately managed upon consummation of the

transaction, and (iv) take the applicant's CRA record into

consideration. Except for item (ii) in the foregoing listing, the FDIC

generally has the resources needed to make the determinations required.

Accordingly, among the application procedures included in this proposed

rule is the requirement that the applicant request that the host state

confirm in writing to the FDIC that the applicant has complied with the

host state's filing requirements and has submitted a copy of its

application with the FDIC to the host state supervisor.

Definitions. In Sec. 303.41 of the proposal, the FDIC has added

definitions for ``messenger service,'' ``mobile,'' ``temporary,'' and

``seasonal branches'' and, as noted above, ``de novo'' branches as well

as definitions of ``home state'' and ``host state'' . In an effort to

promote uniformity and increase the use of common terms, the

definitions used in this subpart are similar to those used by other

federal banking agencies.

With regard to the definition of ``branches,'' the proposed

regulation at Sec. 303.41(a) clarifies that remote service units,

including automated loan machines, are not branches. The exclusion of

automated teller machines and remote service units is a result of

statutory changes contained in section 2205 of EGRPRA.

The definition of ``messenger services'' in Sec. 303.41(a)(1)

provides that branch applications will be required only for those

messenger services operated by a bank or an affiliate that picks up and

delivers items relating to transactions between the bank and its

customer in which deposits are received, checks paid or money lent. A

messenger service established and operated by a non-affiliated third

party generally does not constitute a branch for purposes of this

subpart. Banks contracting with third parties for such services should

consult with the appropriate regional director (DOS) to determine if

the messenger service constitutes a branch.

Section 303.41(a)(2) defines ``mobile branch'' as a branch service

that does not have a permanent site and includes a vehicle that travels

to various public locations and enables the applicant bank to conduct

banking business with its customers. Because of the mobility inherent

in such branches, they may serve regularly scheduled locations or may

be open at irregular times and locations.

The definition of ``temporary branch'' contained in

Sec. 303.41(a)(3) clarifies that a bank may operate such a branch as a

public service such as during an emergency or disaster to provide

necessary banking services. A temporary branch can be approved for a

period not to exceed one year. Such a time period should provide

sufficient time for the applicant to restore appropriate services to

the community.

The definition of ``seasonal branch'' in Sec. 303.41(a)(4) provides

that such a branch operate at periodically recurring intervals, such as

during state fairs. This definition differs from the temporary branch

in that once an application is approved for a seasonal branch, the

applicant bank may return to that site on a recurring basis without the

need to reapply.

``Branch relocation'' is defined in Sec. 303.41(b) as a move within

the same immediate neighborhood of the existing branch that does not

substantially affect the nature of the business of the branch or the

customers of the branch. Moving a branch to another location outside

its immediate neighborhood is considered the establishment of a new

branch and the closing of an existing branch.

The proposed regulation at Sec. 303.41(c) defines a ``de novo

branch'' to mean a branch of a bank which is originally established by

the bank and which does not become a branch of such bank as a result of

the acquisition, conversion, merger, or consolidation of an insured

depository institution or a branch of an insured depository

institution.

Definitions are also proposed for ``home state'' and ``host state''

at Sec. 303.41 (d) and (e). A home state means the state by which the

bank is chartered and host state means a state, other than the home

state of the bank, in which the bank maintains, or seeks to establish

and maintain, a branch.

Filing procedures. The proposed regulation also changes various

application requirements. Changes address the timing of filing, the

submission of copies of the publication, the inclusion of the

geographic area in which a messenger service will operate, the

inclusion of the community or communities in which a mobile branch will

operate, and whether the mobile branch will serve various regularly

scheduled locations or be open at irregular times and locations.

As proposed in Sec. 303.42, an applicant must submit a letter

application on the date the notice required by proposed Sec. 303.44 is

published or within 5 days after the date of the last required

publication. Previously, applicants could file up to 30 days subsequent

to the first publication date. By filing applications 5 days after the

date of the last newspaper publication, banks are able to submit all

copies of the newspaper publications required by the proposed

regulation and the public will have the assurance that the application

will be on file during the comment period.

Proposed Sec. 303.42(b)(7) has been added to require applicants to

submit a copy of each newspaper publication in addition to providing

the date of publication and the name and address of the newspaper. In

the past, applicants have been required to immediately notify the FDIC

after the publication. Submitting a copy of the newspaper notice allows

FDIC to verify publication and the contents of the notice.

The proposed regulation at Sec. 303.42(b)(2) clarifies the filing

procedures for messenger services and mobile branches. Since messenger

services by their very nature are not serving a fixed location, the

designation of a specific site for operation is not practical. Rather

these types of branches will operate in defined geographic areas, such

as a neighborhood, city or county. By approving such applications on a

geographic area, banks will be able to operate freely without

reapplying for changes to schedules. Filings relative to mobile

branches however must disclose the community or communities to be

served and the intention to serve defined locations on a regular

schedule or to be open at varing times and locations. Knowledge of the

community or communities to be served assists the FDIC in determining

compliance with the applicable statutory and regulatory provisions

relating to branch filings. Applicants must, however, reapply when the

geographic area to be served changes.

Processing. Pursuant to proposed Sec. 303.43(a), the FDIC proposes

to expedite processing for eligible depository institutions. It is the

FDIC's intent to reduce regulatory burden for well-run, well-managed

institutions by providing expeditious approvals of routine applications

to establish a branch or to relocate the main office or branch.

Pursuant to expedited processing procedures contained in proposed

Sec. 303.11(c), an application submitted by an eligible depository

institution as defined in proposed Sec. 303.2(r) will be acknowledged

in writing by the FDIC and will receive expedited processing unless the

FDIC removes the application from expedited processing for any of the

reasons set forth in Sec. 303.11(c)(2). Section 303.43(a) provides that

the FDIC may remove an application from expedited processing at any

time before

[[Page 52818]]

the approval date and will promptly notify the applicant in writing of

the reason for such action. Absent such removal, an application

processed under expedited processing will be deemed approved on the

latest of the following: (1) The 21st day after receipt of a

substantially complete application by the FDIC, (2) the 5th day after

expiration of the comment period described in Sec. 303.44 of this

proposal, or (3) in the case of an application to establish and operate

a de novo branch in a state that is not the applicant's home state and

in which the applicant does not maintain a branch, the 5th day after

the FDIC receives from the host state confirmation that the applicant

has both complied with the filing requirements of the host state and

submitted a copy of the application with the FDIC to the host state

bank supervisor.

The automatic approval date for an application under expedited

procedures provides an applicant with a firm date by which its

application will be approved. Under the existing regulation, the FDIC

can approve applications immediately after expiration of the comment

period, but applications can also be approved much later.

For applicants not eligible for expedited processing, the FDIC will

provide the applicant with written notification of the final action

taken with regard to the particular application as soon as a decision

is rendered.

Public notice requirements. The proposed regulation at Sec. 303.44

generally would amend and clarify the publication requirements relating

to relocating a main office and establishing or relocating branch

offices. It also provides for a specific time frame in which comments

must be received.

The proposed section retains current newspaper publication

requirements contained in Sec. 303.6(f)(1)(ii) of the existing

regulation, except for relocation of branches which will now require

publication only in the community which the branch serves. A branch

relocation can only occur in the same immediate neighborhood; hence,

publication is needed in only one newspaper since it is likely that the

one newspaper will cover all of the affected community. In such cases,

the FDIC has deemed publication in the community in which the home

office is located unnecessary. Furthermore, a single publication is

consistent with the requirements of the other federal banking agencies.

Section 303.44(a) continues the existing requirement that for

applications to relocate a main office, publication must be made at

least once each week on the same day for two consecutive weeks.

Currently in Sec. 303.6, individuals may comment until processing

of the application is completed. In order to eliminate the uncertainty

regarding the close of the comment period, it is proposed that the

comment period be limited as specified in Sec. 303.44. Proposed

Sec. 303.44 provides that comments must be received by the appropriate

regional director (DOS) within 15 days of the date of the last

newspaper publication. Proposed Sec. 303.9 provides for extension or

reopening of the comment period in certain situations.

Special provisions. Section 303.45 of the proposed regulation adds

several new provisions regarding procedures for opening temporary

branches in emergency or disaster situations, re-designating a main

office, and providing for the expiration of approved applications.

The proposed regulation at Sec. 303.45(a) clarifies procedures

relating to establishing temporary branches in emergency or disaster

situations. The current regulation on branching contains no specific

guidance on this issue. The FDIC recognizes the need in limited

circumstances, such as emergency or disaster situations, where there

exists a clear public need to continue banking services, that

applicants may not be in a position to follow the normal application

procedures for relocation of a main office or branch. As a result, the

proposed regulation provides that in the case of an emergency or

disaster at a main office or branch which requires that an office be

immediately relocated to a temporary location, the applicant notify the

appropriate regional director (DOS) within 3 days of such temporary

location. In such limited cases, the FDIC will accept initial

notification by whatever means appropriate. The FDIC is making this

limited exception to allow for the public's need to have uninterrupted

access to banking services. Such prior consent to relocate the office

is appropriate because it may not always be possible for a bank to

comply with the normal application procedures for relocating a main

office or branch in such circumstances.

The proposal further provides that within 10 days of the temporary

relocation resulting from the emergency or disaster, the bank shall

submit a written filing to the appropriate regional director (DOS) that

identifies the nature of the emergency or disaster, specifies the

location of the temporary branch, and provides an estimate of the

duration the bank plans to operate the temporary branch. Finally,

depending on the particular circumstances, as part of the review

process, the appropriate regional director (DOS) may waive public

notice requirements.

Section 303.45(b) of the proposed regulation provides that in cases

where an applicant desires to designate an existing branch as its main

office and redesignate its main office as a branch, an application must

be submitted to relocate the main office and to establish or relocate a

branch, as appropriate. The appropriate regional director (DOS) may

waive the public notice requirements in instances where an application

presents no significant or novel policy, supervisory, CRA, compliance,

or legal concern. Such waiver will be granted only within the

applicant's home state.

With regard to the expiration of approvals, applications which have

been approved by the FDIC to establish branches and to relocate main

offices and branches currently have no expiration date. The FDIC

believes that approvals should not remain in effect indefinitely

because circumstances surrounding an application may change over time.

Therefore, proposed Sec. 303.45(c) provides that approval of an

application expires if a branch has not commenced business or if a

relocation has not been completed within 18 months of approval.

Delegation of authority. Section 303.46 of the proposed regulations

adds a delegation for the appropriate regional director to approve

interstate branches. Additionally, the proposed regulation provides for

a delegation to permit approval of a CRA-protested application by the

regional director (DOS) or deputy regional director (DOS) where the

protest has been reviewed by DCA, and the regional director (DCA) or

deputy regional director (DCA) concurs that approval is consistent with

the purposes of the CRA, and the applicant agrees in writing to any

conditions imposed regarding CRA.

New Sec. 303.46(c)(8) makes clear that the Board of Directors has

not delegated authority to approve a branch application by a bank which

the FDIC has determined is not reasonably helping to meet the credit

needs of the community served by the bank in a host state pursuant to

section 109 of the Riegle-Neal Interstate Banking and Branching

Efficiency Act of 1994 (12 U.S.C. 1835a).

The proposed regulation provides that appropriate regional

directors may exercise delegated authority to act on applications for

establishment of temporary branches or messenger services without a

favorable resolution of the statutory factors in section 6 of

[[Page 52819]]

the FDI Act. This delegation recognizes the limited nature of these

types of branches.

The proposed regulation eliminates an obsolete delegation of

authority relating to applications to establish and operate new

teller's windows, drive-in facilities, or any like office, as an

adjunct to the main office or branch (including offices not considered

branches under state law). Applications to establish a new teller's

window, drive-in facility, or any like offices are required when such a

facility is a branch office. If such facilities are extensions of

already approved main office and branches, no application to establish

the facility is necessary.

Other changes. Several other changes are proposed that affect the

new subpart C. These modifications involve changing the term ``move a

main office'' to ``relocate the main office,'' changing the term

``courier service'' to ``messenger service,'' and deleting provisions

relating to remote service facilities.

Public comment. In addition to seeking public comments on the above

revisions to subpart C associated with the establishment of branches

and relocation of branches and the main office, the FDIC also seeks

specific public comments on the following issues.

Comment period: Since the FDIC is proposing in Sec. 303.44(b) to

change from a comment period that was essentially open-ended in current

Sec. 303.6 to a specific time frame (i.e., 15 days), the FDIC seeks

comment on whether a 30-day comment period is more appropriate than the

proposed 15 days and if so, the reasons why 15 days would not be a

feasible period of time within which to submit comments.

Mobile branch applications: The FDIC is proposing that the

geographic location for a mobile branch be designated as to which

community or communities are to be served. The FDIC seeks comment on

whether such a designation is appropriate. The FDIC also seeks comment

on whether a new application should be required if a change is made in

the community or communities to be served.

D. Subpart D--Mergers

Subpart D covers transactions subject to FDIC approval under the

Bank Merger Act (12 U.S.C. 1828(c)). This includes mergers,

consolidations, and similar transactions involving insured depository

institutions (collectively, ``mergers''). This subpart gathers together

from various sections of part 303 the existing provisions governing

merger applications and reorganizes them to make the regulatory

requirements easier to understand. Substantive changes have been made

in processing procedures to reduce regulatory burden.

The principal changes proposed in subpart D include the addition of

an expedited processing procedure (proposed Sec. 303.64(a)); the

modification and centralization of various definitions applicable to

merger transactions, such as replacement of the term ``phantom merger''

used only by the FDIC with the more commonly-used ``interim merger''

(proposed Sec. 303.61(c)); and the addition of references to other

statutory or regulatory provisions often applicable to merger

transactions. These references, included at Sec. 303.62(b), are to the

interstate merger provisions of section 44 of the FDI Act (12 U.S.C.

1831u), applications for deposit insurance, insurance fund conversion

transactions, branch closings, prompt corrective action considerations,

and certification of assumption of deposit liabilities.

The most significant change from the existing merger approval

regulations is the proposed expedited processing procedure. This

procedure would be available for transactions to which all parties are

eligible depository institutions (as defined in proposed

Sec. 303.2(r)), and immediately following which the resulting

institution would be well-capitalized. Under expedited processing,

which is generally applicable only to merger applications that can be

approved under delegated authority, the application would be acted upon

by the latest of 45 days after the FDIC receives a substantially

complete application; 10 days after the last newspaper publication of

the notice of the proposed merger; 5 days after the FDIC receives the

Attorney General's comments on the competitive impact of the merger;

or, for an interstate merger, 5 days after the FDIC confirms that the

applicant has satisfactorily complied with the filing requirements of

the resulting institution's host state. An application that otherwise

qualifies for expedited processing may be removed from such treatment

for the reasons stated in subpart A, at proposed Sec. 303.11(c)(2).

Among the new references mentioned above, the reference to deposit

insurance applications at proposed Sec. 303.62(b)(2) clarifies that the

FDIC will not require a deposit insurance application to secure

insurance coverage for an institution resulting from a statutory merger

between a federally-chartered interim institution and an FDIC-insured

institution, even if the resulting institution will operate under the

interim federal charter. However, the FDIC will continue to require an

application for deposit insurance if the entity merging with the

interim federal institution is not insured and the parties wish the

resulting institution to be insured.2

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\2\ The Board does not believe that it is consistent with the

language or intent of the FDI Act to insure without FDIC approval an

institution resulting from a combination of institutions that

themselves have never been granted deposit insurance by the FDIC.

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In addition to reorganizing and enhancing the merger application

provisions to make them easier to use, the proposal reduces the

procedural burden on applicants. For example, in addition to

establishing an expedited processing procedure, the proposal would no

longer call for copies of the charter or articles of incorporation of

the resulting institution to be routinely submitted with a merger

application. The proposal also simplifies the application requirements

for mergers between institutions that are commonly-owned outside of a

bank holding company structure by treating such transactions as

``corporate reorganizations'' (proposed Sec. 303.61(b)).

Further, in order to add predictability to the procedure for

receiving and reviewing public comment on proposed mergers, the

proposal provides that the comment period for non-emergency

transactions will end on the 35th day after the applicant's first

newspaper publication of notice of the merger (proposed

Sec. 303.65(d)). This period provides additional time for interested

parties to respond to the final publication which occurs approximately

on the 30th day. No change is being made to the public notice

requirements for transactions determined to be an emergency requiring

expeditious action.

The proposal also relaxes the FDIC's current practice of requiring

that the first newspaper notice of the merger not be published until

after the merger application is filed with the FDIC. Under the

proposal, the applicant may publish its first notice up to 5 days

before filing with the FDIC (proposed Sec. 303.65(a)(1)).

With regard to CRA considerations, the proposal would expand the

existing delegation to permit approval of a CRA-protested application

by the regional director (DOS) or deputy regional director (DOS) where

the protest has been reviewed by DCA, the regional director (DCA) or

deputy regional director (DCA) concurs that approval is consistent with

the purposes of the CRA, and the applicant agrees in writing to any

conditions imposed regarding the CRA (proposed Sec. 303.66(b)(5)). This

would modify the existing merger regulations, which provide that

mergers

[[Page 52820]]

that are the subject of an unresolved CRA protest may be approved under

delegated authority by senior supervisory officials in Washington, but

may not be acted upon at the regional level.

The proposed rule eliminates consideration and favorable resolution

of compliance with the National Environmental Policy Act (NEPA) (42

U.S.C. 4321 et seq.) as a criteria for DOS officials to exercise

delegated authority to approve a merger transaction. This provision is

currently found in Sec. 303.7(b)(7)(ii). The FDIC has found that the

physical environment is unlikely to be affected by the FDIC's

consideration of bank merger transactions and that, typically, the

provisions of the NEPA would not be implicated. Since the FDIC is in

the process of reviewing its policy statement on NEPA, the agency

believes it is not advisable to include a reference to NEPA in the

proposed regulatory text.

The FDIC invites comment on all aspects of the proposed revisions

to the merger provisions of part 303. Comments are more specifically

invited regarding the expansion of the term ``corporate

reorganization,'' elements of the expedited processing procedures as

proposed for merger applications, and the inclusion of cross-references

to related provisions. In addition, comment is sought on the proposal

to require that comments regarding a particular merger application be

filed with the FDIC no later than the 35th day after the first

publication of notice of the merger.

E. Subpart E--Change in Bank Control

The FDIC proposes to reorganize, clarify, and simplify its

regulation implementing the Change in Bank Control Act of 1978. The

proposed changes, developed in consultation with the other federal

banking agencies, attempt to harmonize the scope and procedural

requirements of the FDIC's regulation with those of the other federal

banking agencies and to reduce unnecessary burden.

The proposal defines the previously undefined term ``acting in

concert'' to clarify the scope of the regulation. It also incorporates

the current FDIC position that the acquisition of a loan in default

that is secured by voting shares of an insured state nonmember bank is

presumed to be an acquisition of the underlying shares. Further, the

proposal lengthens the period of time for notifying the FDIC from 30 to

90 days for shares acquired in satisfaction of a debt previously

contracted in good faith or through testate or intestate succession or

a bona fide gift. In the case of shares acquired in satisfaction of a

debt previously contracted, the proposal adds language that reflects

FDIC practice of requiring the acquiror of a defaulted loan secured by

a controlling amount of a state nonmember bank's voting securities to

file a notice before the loan is acquired.

The proposal also would reduce regulatory burden on persons whose

ownership percentage increases as the result of a redemption of voting

shares by the issuing bank or the action of a third party not within

the acquiring person's control. In these situations, the proposal would

permit the person affected by the bank or third party action to file a

notice within 90 calendar days after receiving notice of the

transaction. Currently, these persons must file notice under the Change

in Bank Control Act prior to the action that increases the person's

percentage ownership, and, because these persons cannot control the

third party action that causes the increased percentage ownership, they

are often put in violation of the Change in Bank Control Act and the

FDIC's Rules and Regulations.

The FDIC also proposes to provide more flexible timing for

newspaper announcements of filings under the Change in Bank Control Act

by permitting notificants to publish the announcement as close as

practicable to filing the notice of change in control. The proposed

rule removes the requirement that the notificant have confirmation that

the FDIC has accepted the notice before publishing the announcement.

The FDIC also proposes to delete the provision governing notices

filed in contemplation of a public tender offer which permits an

acquiror to delay publication of the newspaper announcement. None of

the other federal banking agencies has such a provision.

The FDIC invites comment on all of its proposed revisions to the

regulation implementing the Change in Bank Control Act. In particular,

the FDIC requests comment on whether the definition of ``acting in

concert'' is appropriate, and whether there is reason to retain the

public tender offer provision.

F. Subpart F--Change of Director or Senior Executive Officer

Section 32 of the FDI Act (12 U.S.C. 1831i) requires certain

insured depository institutions and their depository institution

holding companies to provide at least 30 days' prior notice to the

appropriate federal banking agency before adding any individual to the

board of directors or employing any individual as a senior executive

officer. The agency may issue a notice of disapproval prior to

expiration of the 30-day period if it determines, based upon the

proposed individual's competence, experience, character or integrity,

that it would not be in the best interests of the depositors or the

public to permit the individual to be employed by, or associated with,

the institution. Section 32 permits the agency to waive the prior

notice requirement, but the agency may still disapprove an individual's

association with the institution within 30 days after granting such a

waiver.

Until recently, section 32 required prior notice from a depository

institution or holding company that was chartered less than two years;

had undergone a change in control within the preceding two years; or

was not in compliance with minimum capital requirements or was

otherwise in ``troubled condition.'' Section 2209 of EGRPRA amended

section 32 by eliminating the prior notice requirement for institutions

and holding companies that are chartered for less than two years or

that have undergone a change in control within the preceding two years.

However, institutions and holding companies that are not in compliance

with minimum capital requirements or are otherwise in ``troubled

condition'' remain subject to the prior notice requirement. In

addition, EGRPRA provides that prior notice will be required if the

agency determines, in connection with its review of a capital

restoration plan required under section 38 of the FDI Act (governing

prompt corrective action) or otherwise, that such prior notice is

appropriate. Also, the EGRPRA amendments provide the agencies with more

latitude to determine the prior notice period and allow the agencies up

to 90 days to issue a notice of disapproval.

The FDIC published an interim rule implementing section 32 as

applied to insured state nonmember banks on December 27, 1989 (54 FR

53040) and requested comments. The interim rule, which added a new

Sec. 303.14 to part 303 of the FDIC's regulations, remains in effect.

Only seven commenters responded, and the principal issues raised

concerned the definitions of ``change in control'' and ``troubled

condition.'' Objections to the definition of change in control have

been rendered moot by the EGRPRA amendments since a change of control

within the preceding two years is no longer a triggering event for a

section 32 notice. Two commenters objected to the definition of

``troubled condition.'' One objected to an insured

[[Page 52821]]

state nonmember bank being considered in troubled condition if it is

subject to a cease-and-desist order on the grounds that not all such

orders result from safety and soundness concerns and/or financial

difficulties. The other commenter objected to the fact that an insured

state nonmember bank can be designated in troubled condition based upon

a visitation, examination, or report of condition. The proposed rule

clearly indicates that only a cease and desist order or written

agreement that requires action to improve financial condition of the

bank triggers the designation of troubled condition. However, such

designation may also be made based upon an examination or report of

condition. The FDIC believes that it is appropriate to use all

information it deems reliable in making such a designation.

The proposed regulation reflects the EGRPRA amendments to section

32 and reorganizes, clarifies, and simplifies notice procedures. The

proposal also strives to harmonize the procedural requirements of the

FDIC's regulation with those of the other federal banking agencies and

to reduce any unnecessary regulatory burden.

Although the EGRPRA amendments appear to provide the agencies with

authority to increase the prior notice period to 90 days, the FDIC

proposes to retain the 30-day prior notice currently required by

Sec. 303.14. This established 30-day regulatory period has proven

sufficient to process the majority of filings, and reflects the FDIC's

time line for processing section 32 notices adopted in FDIC Financial

Institutions Letter 26-96 dated May 6, 1996. However, the agency

proposes to amend the regulation to allow the agency to take an

additional period of up to 60 days, if necessary, to issue a notice of

disapproval. It is anticipated that this additional 60-day period would

be used infrequently. In all such cases, the notificant will be advised

in writing prior to expiration of the 30-day prior notice period of the

reason the FDIC could not take action and of the projected additional

time needed.

Other than the revisions prompted by the EGRPRA amendments, there

is little substantive change to the FDIC's regulation. Current

Sec. 303.14(c)(2)(ii) provides that if a new member of a bank's board

of directors is elected at a shareholder's meeting, prior notice is

automatically waived. However, notice must be filed with the

appropriate regional director (DOS) within 48 hours after the election.

Proposed Sec. 303.103(c)(2) modifies this provision slightly to clarify

that the automatic waiver applies to new board members not proposed by

management and to state that the notice must be submitted within two

business days, rather than 48 hours. Section 308.12 of the FDIC's

regulations, which governs computation of processing time for purposes

of part 303, refers to time in increments of days and not hours. This

modification results in a more liberal computation of processing time

in that intervening Saturdays, Sundays and federal holidays are not

counted.

The FDIC invites public comment on retention of the 30-day

processing timeframe (subject to a possible 60-day extension) and the

change in the automatic waiver filing period. The agency also welcomes

suggestions for further reducing unnecessary burden on insured state

nonmember banks when reviewing changes in officers and directors,

consistent with the requirements of section 32.

G. Activities and Investments of Insured State Banks

Subpart G is reserved for filing procedures related to activities

and equity investments of insured state banks which are currently

contained in part 362 (12 CFR part 362). Part 362 implements section 24

of the FDI Act (12 U.S.C. 1831a), which was created by the Federal

Deposit Insurance Corporation Improvement Act of 1991 (Pub. L. 102-242,

105 Stat. 2236), and governs the circumstances in which insured state

banks may engage in activities which are not permissible for national

banks.

The FDIC recently issued a notice of proposed rulemaking to make

comprehensive revisions to part 362. 62 FR 47969, Sept. 12, 1997. In

connection with these revisions, the FDIC proposes to eliminate certain

application procedures which are outdated, and also to authorize

certain activities to be approved by the FDIC on an expedited basis.

The FDIC cannot determine at this time whether its 362 proposal or this

notice of proposed rulemaking to revise part 303 will be finalized

first, but it is the FDIC's intent to place the part 362 application

procedures relating to state bank activities in subpart G of part 303

at such time as both rules are final. In order to deal with this

problem, the application procedures which implement the proposed

revisions to part 362 concerning state bank activities are contained in

subpart E of the 362 proposal. If the 362 proposal is finalized before

this 303 proposal, insured state banks operating under the revised part

362 will look to subpart E of part 362 for application procedures until

such time as part 303 is finalized, at which point the FDIC will

transfer the application procedures from subpart E of part 362 to

subpart G of part 303. If the 303 proposal is finalized first, insured

state banks operating under the current version of part 362 will

continue to look to the current version of part 362 itself for

application procedures until the revisions to part 362 are finalized,

and the application procedures which are proposed as subpart E of part

362 will be finalized as subpart G of part 303. Members of the public

taking an interest in the FDIC's application procedures for the

activities of insured state banks under part 362 should review the part

362 proposal for the specifics of such application procedures.

H. Subpart H--Filings by Savings Associations

The FDIC is also reserving subpart H for filing procedures related

to activities of insured state savings associations and subsidiaries of

insured savings associations, which are currently contained in

Sec. 303.13 of part 303 (12 CFR 303.13). Section 303.13 implements

sections 28 and 18(m) of the FDI Act (12 U.S.C. 1831(e) and 12 U.S.C.

1828(m)), which were both created by the Financial Institutions Reform,

Recovery, and Enforcement Act of 1989 (Pub. L. 101-73, 103 Stat. 484).

Section 303.13 governs the circumstances in which a state savings

association may engage in activities which are not permissible for a

federal savings association, and also requires all insured savings

associations to notify the FDIC prior to establishing a subsidiary or

engaging in new activities through a subsidiary.

As part of the FDIC's recently-issued notice of proposed rulemaking

to revise part 362, discussed above, the FDIC has proposed to address

the substantive issues covered by Sec. 303.13 as subparts C and D of a

revised part 362. The proposal harmonizes, to the extent possible given

the underlying statutes, the treatment of activities of insured state

banks and the activities of insured state savings associations. In

connection with these revisions, the FDIC proposes to eliminate certain

application procedures which are outdated, and also to authorize

certain activities to be approved by the FDIC on an expedited basis.

The FDIC cannot determine at this time whether its 362 proposal or this

notice of proposed rulemaking to revise part 303 will be finalized

first, but it is the FDIC's intent to place the part 362 application

procedures relating to savings associations in subpart H of part 303 at

such time as both rules are final. In order to deal with this problem,

the application procedures which implement the proposed revisions to

[[Page 52822]]

part 362 concerning savings associations are contained in subpart F of

the 362 proposal. If the 362 proposal is finalized before this 303

proposal, existing Sec. 303.13 will be rescinded in connection with

finalizing part 362. Savings associations operating under the revised

part 362 will look to subpart F of part 362 for application procedures

until such time as part 303 is finalized, at which point the FDIC will

transfer the application procedures from subpart F of part 362 to

subpart H of part 303. If the 303 proposal is finalized first, existing

Sec. 303.13 will be preserved without substantive change on an interim

basis in connection with finalizing part 303. Savings associations

operating under Sec. 303.13 will continue to look to Sec. 303.13 for

application procedures until the revisions to part 362 are finalized.

In connection with finalizing part 362, Sec. 303.13 will be rescinded,

and the application procedures which are proposed as subpart F of part

362 will be finalized as subpart H of part 303. Members of the public

taking an interest in the FDIC's application procedures for the

activities of insured savings associations and their subsidiaries

should review the part 362 proposal for the specifics of such

application procedures.

I. Subpart I--Mutual-to-Stock Conversions

The FDIC is proposing to move the notice requirements for mutually

owned state-chartered savings banks that propose to convert to stock

form from Sec. 303.15 to a separate subpart I. These notice

requirements were adopted in final form on January 1, 1995. The

intended effect of the rules is to ensure that mutual-to-stock

conversions of FDIC regulated institutions do not raise safety and

soundness concerns, breaches of fiduciary duty, or other violations of

law. The substantive regulation regarding mutual-to-stock conversions

would remain in Sec. 333.4 of this chapter.

The FDIC also is proposing to provide for delegated authority in

its mutual-to-stock conversion regulations. Some members of the

industry have commented that the FDIC takes longer than necessary to

act on conversion transactions. At the present time, all conversion

notices are reviewed by the FDIC Board of Directors. The FDIC has

gained considerable experience in reviewing notices to convert and the

Board believes it is now appropriate to delegate authority to the

Director and the Deputy Director (DOS) to issue notices of intent not

to object. Such a delegation would apply only when the proposed

conversion is determined not to pose a risk to the converting

institution's safety and soundness, violate any law or regulation,

present a breach of fiduciary duty, or raise any unique legal or policy

issues. The Board believes that this delegation will allow the FDIC to

act more promptly on routine notices and ease regulatory burden.

No other changes in procedures are being proposed. The public is

invited to comment on any changes the FDIC could make to ease

regulatory burden while ensuring that conversions do not raise

supervisory concerns.

J. Subpart J--Foreign Bank Activities

Proposed subpart J addresses application requirements relating to

the foreign activities of insured state nonmember banks and the U.S.

activities of insured branches of foreign banks. The FDIC is proposing

to make these application requirements easier to use and more

streamlined by centralizing them in subpart J. Under the FDIC's current

rules, these application requirements are located in various

subsections of three different regulations: 12 CFR part 303, 12 CFR

part 346, and 12 CFR part 347. The FDIC also is proposing to further

streamline processing for several of these application requirements.

On July 15, 1997, the FDIC published a Notice of Proposed

Rulemaking (part 347 NPR) which requests public comment on an FDIC

proposal to revise the FDIC's rules on the foreign activities of

insured state nonmember banks and the U.S. activities of insured

branches of foreign banks. 62 FR 37748. Subpart D of the part 347 NPR

includes four proposed application procedures designed to work with the

substantive revisions made to the FDIC's international banking

regulations under the part 347 NPR.3 The FDIC cannot

determine at this time whether the part 347 NPR or this notice of

proposed rulemaking to revise part 303 (part 303 NPR) will be finalized

first. To deal with the possibility that the part 303 NPR may be

finalized before the part 347 NPR is finalized, this part 303 NPR

contains interim versions of the same application procedures contained

in subpart D of the part 347 NPR. The interim versions proposed here

are designed to work with the existing versions of the FDIC's

international banking regulations, and are different in several

respects from the application procedures contained in subpart D of the

part 347 NPR. Therefore, members of the public taking an interest in

the FDIC's application procedures for international banking issues

should review the part 347 NPR as well as this part 303 NPR.

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\3\ These are the procedures for: (1) Establishing, moving, or

closing a foreign branch of a state nonmember bank; (2) investment

by state nonmember banks in foreign organizations; (3) exemptions

from the insurance requirement for a state branch of a foreign bank;

and (4) approval for an insured state branch of a foreign bank to

conduct activities not permissible for federal branches.

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If this part 303 NPR is finalized first, the four interim

application procedures will remain in effect only until the part 347

NPR is finalized. In connection with finalizing the part 347 NPR, the

FDIC will transfer the application procedures in subpart D of the part

347 NPR to subpart J of part 303 and rescind the interim procedures. If

the part 347 NPR is finalized first, the interim procedures in this

part 303 NPR will never be finalized, and the FDIC will make necessary

technical amendments to transfer the application procedures in subpart

D of the part 347 NPR to subpart J of part 303.

This part 303 NPR also contains two application procedures which

are not of an interim nature: the procedure for moving an insured

branch of a foreign bank, and the procedure for mergers involving an

insured branch of a foreign bank. These two procedures are not impacted

by the part 347 NPR.

Interim Application Procedures

Establishing, moving, or closing a foreign branch of a state

nonmember bank. Section 18(d)(2) of the FDI Act (12 U.S.C. 1828(d)(2))

and Sec. 347.3 require an insured state nonmember bank to obtain the

FDIC's prior written consent before establishing a branch located

outside the United States, its territories, Puerto Rico, Guam, American

Samoa, the Trust Territory of the Pacific Islands, or the Virgin

Islands. Applications for these foreign branches are currently treated

under the same process applicable for domestic branches under

Sec. 303.2. The FDIC proposes to treat foreign branches separately,

since foreign branch applications are not legally required to be

subjected to analysis under the CRA or factors under section 6 of the

FDI Act, as is the case for domestic branches.

Under Sec. 303.182 as proposed, the FDIC would give its general

consent for an eligible depository institution (as defined by

Sec. 303.2(r)) to establish additional foreign branches in any

jurisdiction in which the bank already operates a branch, or to move a

branch within the jurisdiction.4 Also, an

[[Page 52823]]

eligible depository institution that operates branches in two or more

foreign jurisdictions may establish additional branches conducting

approved activities in additional foreign jurisdictions under expedited

processing procedures permitting the eligible depository institution to

establish the branch 45 days after submitting its application to the

FDIC.

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\4\ An application to establish a foreign branch is not an

``application for a deposit facility'' covered by the CRA, and the

FDIC will therefore only take the insured state nonmember bank's CRA

rating into account for purposes of determining whether the

application receives expedited processing under the general consent

and expedited processing procedures.

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The FDIC is proposing these general consent and expedited

processing procedures because an insured state nonmember bank meeting

the requirements of the provisions ordinarily should have sufficient

familiarity with the implications of foreign branching, and be of

sufficiently sound overall condition, that extensive FDIC review is not

required. The FDIC retains the option to suspend these procedures as to

any institutions for which this is not the case. For applicants seeking

to establish a branch in an additional jurisdiction, the FDIC may also

remove an applicant from expedited processing for any of the grounds

specified in Sec. 303.11(c) follows: (1) If the FDIC determines the

filing presents a significant supervisory concern; (2) raises a

significant legal or policy issue; or (3) if the FDIC determines other

good cause exists for removal. The FDIC will promptly provide the

applicant with a written explanation if the FDIC decides to remove a

filing from expedited processing.

General consent and expedited processing are also inapplicable in

any case presenting either of two special circumstances. Since the FDIC

must have access to information about a foreign branch's activities in

order to effectively supervise the institution, general consent or

expedited processing do not apply if the law or practice of the foreign

jurisdiction would limit the FDIC's access to information for

supervisory purposes. In such cases, the FDIC must have an opportunity

to fully analyze the extent of the confidentiality conferred under

foreign law and whether it would, in light of all the circumstances,

impair the FDIC's ability to carry out its responsibilities as a bank

supervisor. In addition, if the proposed foreign branch has a direct

adverse impact on a site which is on the World Heritage List

5 or the foreign jurisdiction's equivalent of the National

Register of Historic Places (National Register), the FDIC may need an

opportunity to evaluate the proposal in light of section 402 of the

National Historic Preservation Act Amendments of 1989 (NHPA Amendments

Act) (16 U.S.C. 470a-2).

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\5\ The World Heritage List was established under the terms of

The Convention Concerning the Protection of World Culture and

Natural Heritage adopted in November, 1972 at a General Conference

of the United Nations Education, Scientific and Cultural

Organization. Current versions of the list are on the Internet at

http://www.unesco.org/whc/heritage.htm, or may be obtained from the

FDIC Public Information Center, Room 100, 801 17th Street, NW,

Washington, DC 20429.

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Proposed Sec. 303.182 also requires an insured state nonmember bank

which closes a foreign branch to notify the appropriate regional

director (DOS) that it has done so. This notice stems from the current

requirement for such notice under Sec. 347.3. The FDIC has previously

determined that Congress did not intend section 42 of the FDI Act on

branch closings to apply to foreign branches. Finally, proposed

Sec. 303.182 sets out the procedures for applications which are not

eligible for the general consent or expedited processing procedures.

Acquisition of stock of foreign banks or other financial entities

by an insured state nonmember bank. Section 18(l) of the FDI Act (12

U.S.C. 1828(l)) and Sec. 347.4 require an insured state nonmember bank

to obtain the FDIC's prior written consent before acquiring an

ownership interest in a foreign bank or other financial entity. The

current application procedures are set out in Sec. 303.5(d). Since the

current substantive provisions governing foreign investment at

Sec. 347.4 provide only relatively general guidance about the conduct

of such activities, it is not possible for the FDIC to implement

general consent and expedited processing procedures on an interim

basis, and proposed Sec. 303.183 contains no substantive changes from

the current procedures. However, in connection with the FDIC's

revisions of the foreign investment rules in the part 347 NPR, the FDIC

has proposed general consent and expedited processing procedures.

Exemptions from the insurance requirement for a state branch of a

foreign bank. Section 346.6 requires an uninsured state branch of a

foreign bank to obtain the FDIC's consent if the branch proposes to

accept initial deposits of less than $100,000 and such deposits are not

otherwise exempted from the definition of retail deposit taking

activity under Sec. 346.6(a). The current application procedures are

set out in Sec. 346.6(b). These procedures need no substantive revision

at this time, because the procedures were recently reviewed and amended

by the FDIC as a result of amendments to the International Banking Act

of 1978, Pub. L. 95-369, 92 Stat. 607 (12 U.S.C. 310l et seq.) made by

the Riegle-Neal Interstate Banking and Branching Efficiency Act of

1994, Pub. L. 103-328, 108 Stat. 2338 (Interstate Act). 61 FR 5671

(Feb. 14, 1996).

Approval for an insured state branch of a foreign bank to conduct

activities not permissible for a federal branch. Section 346.101

requires an insured state branch of a foreign bank to obtain the FDIC's

permission to conduct any type of activity which is not permissible for

a federal branch of a foreign bank. The current application procedures

are set out in Sec. 346.101 itself, which was recently adopted. 59 FR

60703 (Nov. 28, 1994). Thus, proposed Sec. 303.187 does not make any

substantive changes from the current procedures on an interim basis.

Noninterim Application Procedures

Moving an insured branch of a foreign bank. Section 18(d)(1) of the

FDI Act requires any insured branch of a foreign bank which wishes to

move from one location to another to obtain the FDIC's prior written

consent. Applications for these insured branches currently are treated

under the same process applicable to domestic branches of insured state

nonmember banks under Sec. 303.2. Since the FDIC's consent to these

applications is legally subject to the same statutory considerations as

applications to establish or relocate a domestic branch or to relocate

the main office of an insured state nonmember bank, the FDIC is

proposing an application process in Sec. 303.184 which parallels

proposed subpart C. This includes expedited processing for an eligible

insured branch. Subpart J contains a proposed definition of ``eligible

insured branch'' which parallels the general Sec. 303.2(r) definition

of ``eligible depository institution,'' with appropriate changes to

take into account the different supervisory rating system and capital

requirements applicable to insured branches.

Mergers involving an insured branch of a foreign bank. An insured

branch of a foreign bank meets the definition of an insured depository

institution under section 3 of the FDI Act (12 U.S.C. 1813) and is

therefore subject to the Bank Merger Act. The FDIC's current rules and

regulations do not include a specific application process for approvals

of merger transactions involving an insured branch. In order to give

insured branches conducting merger transactions which are subject to

FDIC approval the benefit of the same streamlined application

processing proposed for domestic institutions in subpart D, proposed

Sec. 303.185 contains appropriate cross-references to subpart

[[Page 52824]]

D. Section 303.185 clarifies that an eligible insured branch as defined

in subpart J generally is eligible for the expedited processing

available to an eligible depository institution in subpart D.

Similarly, Sec. 303.185 clarifies that a transaction in which an

insured branch is merged with other branches, agencies, or subsidiaries

in the United States of the same foreign bank parent is eligible for

disposition under the enhanced delegations applicable to corporate

reorganizations.6

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\6\ If the foreign bank parent itself is not primarily engaged

in business in the United States, and is involved in some merger or

other combination outside the United States which does not result in

a corresponding merger transaction in the United States with respect

to an insured branch, section 18(c)(11) provides that no approval is

required, since no party to the transaction is primarily engaged in

business in the United States.

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Section 303.185 also incorporates a point explained in Advisory

Opinion FDIC-96-12 (May 13, 1996) concerning the treatment of an

insured branch under section 44 of the FDI Act (12 U.S.C. 1831u) as

added by section 102 of the Interstate Act. Section 44 permits the

responsible federal regulator to approve an interstate merger

transaction involving the acquisition of a branch of an insured bank

without the acquisition of the entire bank, but approval is possible

only if the state in which the branch is located expressly permits out-

of-state banks to acquire a branch of the bank without acquiring an

entire bank. In contrast, section 44 permits the responsible federal

regulator to approve an interstate merger transaction involving the

acquisition of an entire bank if the state in which the bank is located

has not adopted legislation to opt out of interstate mergers. Section

303.185 treats interstate mergers involving an insured branch under the

latter approach. Express state authority permitting out-of-state banks

to acquire a branch of the bank without acquiring the entire bank is

required only if a foreign bank has more than one insured branch in the

affected state and proposes to sell fewer than all of them to the same

acquiror. If such state authority does not exist, the FDIC requires the

foreign bank to sell all of its insured branches in that state to the

same affiliated or unaffiliated acquiror. As is explained in Advisory

Opinion FDIC-96-12, the statute and definitions used in section 44 do

not provide a conclusive answer to this issue, but the FDIC's approach

gives effect to all of the language and purposes of the Interstate Act.

K. Subpart K--Prompt Corrective Action

Section 38 of the FDI Act, which governs prompt corrective action,

restricts or prohibits certain activities based on an institution's

capital category, and requires an insured institution to submit a

capital restoration plan when it becomes undercapitalized. On September

15, 1992, the FDIC approved a final interagency rule implementing the

requirements of prompt corrective action. The final rule, which became

effective December 19, 1992, amended part 325 of the agency's

regulations by defining five capital categories for purposes of

implementing the prompt corrective action requirements. 57 FR 44900

(Sept. 29, 1992).

In conjunction with interagency action, the FDIC on January 26,

1993, approved amendments to part 303 to implement certain application

procedures relating to prompt corrective action. The application

procedures outlined in Sec. 303.5(e) relate solely to activities that

are prohibited unless prior written consent is granted by the

appropriate agency. In addition, a new Sec. 303.7(f)(1)(ix) was added

to part 303 which provides delegation of authority to act on

applications seeking prior consent to engage in certain restricted

activities which are filed pursuant to the prompt corrective action

regulations. These revisions to part 303 became effective on February

12, 1993. 58 FR 8219 (Feb. 12, 1993).

Subpart K does not substantially amend current procedures. The only

substantive change is that a new paragraph has been added as

Sec. 303.207. This new section is derived from section 38(i)(2)(G) of

the FDI Act, and relates to paying interest on new or renewed

liabilities at a rate that would increase the institution's weighted

average cost of funds to a level significantly exceeding the prevailing

rates of interest on insured deposits in the institution's normal

market area. Current Sec. 303.5(e) contains a reference to activities

listed in sections 38(i)(2) (A) through (F) of section 38, and the

addition of item G completes the list of the seven activities which are

prohibited for critically undercapitalized institutions unless prior

FDIC approval has been granted.

As part of the reorganization of part 303, delegations previously

contained in Sec. 303.7(f)(ix) have been consolidated into subpart K

and delegations previously contained in Sec. 303.9(h), regarding

directives and capital plans pursuant to section 38 of the FDI Act,

have been consolidated with enforcement related delegations in subpart

N. As subpart K applies only to the application process, it does not

affect the general prompt corrective action regulations adopted as a

part of the interagency rulemaking process.

L. Subpart L--Section 19 of the FDI Act (Consent to Service of Persons

Convicted of Certain Criminal Offenses)

Section 19 of the FDI Act prohibits any person convicted of any

crime involving dishonesty, breach of trust, or money laundering, or

who has agreed to enter into a pretrial diversion or similar program in

connection with a prosecution for any such offense, from (i) continuing

as or becoming an institution-affiliated party, (ii) owning or

controlling directly or indirectly an insured depository institution,

or (iii) otherwise participating in the conduct of the affairs of FDIC-

insured depository institutions, without the FDIC's prior written

consent.

Proposed subpart L does not substantially amend current section 19

application procedures, but rather brings together in one place

information on section 19 which was previously contained in various

sections of part 303. However, proposed Sec. 303.222 has been added to

clarify the FDIC's position that the prior consent of the FDIC is

required before a person approved under section 19 to participate in

the affairs of a particular institution may participate in the affairs

of another insured institution. Delegations of authority to act upon

applications filed pursuant to section 19 remains unchanged.

On July 24, 1997, the FDIC Board of Directors published for comment

a proposed Statement of Policy on Section 19 which contains

interpretations of the statutory language (62 FR 39840). Issues

addressed in the statement of policy include what constitutes

participation, who is a ``person'' under the statute, the meaning of

``own'' or ``control,'' procedures for filing a section 19 application,

and the standards for granting consent to a section 19 application. The

proposed rule should be read in conjunction with the proposed policy

statement for a fuller understanding of the FDIC's position on section

19.

M. Subpart M--Other Filings

This subpart contains the procedural requirements and delegations

of authority for miscellaneous filings which do not warrant treatment

as separate subparts. In many instances, there were no regulations or

guidelines established regarding procedures or content for submitting a

filing to the FDIC. In addition, it was often unclear when the filing

requirements were

[[Page 52825]]

applicable. Under proposed subpart M, all information relating to a

particular filing has been brought together in a self-contained section

under a standardized format. The FDIC believes that this will simplify

the filing process for prospective applicants by setting forth this

information in a single location.

Under the proposal, new expedited review procedures will be offered

for applications to reduce or retire capital stock or capital debt

instruments and applications to exercise trust powers. Expedited

processing for brokered deposit waivers has been retained yet modified

to parallel the requirements for an ``eligible depository institution''

in proposed Sec. 303.2(r), with the exception of the well-capitalized

criteria.

Application procedures currently found in part 359 (golden

parachutes and indemnification payments) are being moved to subpart M.

In addition, procedures for requesting a conditional waiver of cross-

guaranty liability are being moved from the FDIC's Statement of Policy

Regarding Liability of Commonly Controlled Depository Institutions to

proposed subpart M. Finally, specific procedures are being added to

address requests for relief from reimbursement under the Truth in

Lending Act and Regulation Z.

Reduce or retire capital stock or capital debt instruments. Section

303.241 reorganizes, clarifies and simplifies procedures for

applications to reduce or retire capital stock, notes or debentures

pursuant to section 18(i)(1) of the FDI Act (12 U.S.C. 1828(i)(1)).

Filing instructions are currently contained in the standard

instructions for all applications for which no form of application has

been prescribed (12 CFR 303.5(b)). Authority to approve or deny such

applications is currently delegated at Sec. 303.7(f)(1)(iii).

Under expedited processing, an application by an eligible

depository institution (as defined in proposed Sec. 303.2(r)) will be

deemed approved 20 days after receipt by the appropriate FDIC regional

director (DOS), unless the applicant is notified that the FDIC has

removed the application from expedited processing. A recent increase in

the number of applications to reduce or retire capital stock, notes or

debt indicates to the FDIC that expedited processing will simplify and

streamline the process for and be of benefit to state nonmember banks.

The 20-day automatic approval period is based upon the processing time

established in the FDIC's Application Processing Time Lines (FIL-26-96,

May 6, 1996) and is supported by the average processing time for

approval of these types of requests during 1996.

The information requested under the proposal is the basic

information that is necessary to process a request pursuant to section

18(i)(1) of the FDI Act and is included to provide guidance to

prospective applicants. The filing procedures and information requested

do not impose additional requirements upon applicants but simply

clarify existing practice.

Exercise of trust powers. Currently, Secs. 303.5(b) and 303.7(a)(2)

contain the general application procedures for the FDIC's prior

approval to exercise trust powers. Sections 333.1, 333.2 and 333.101

provide the substantive basis for requesting such applications.

The FDIC proposes to amend part 303 to create a new section

relating to trust applications that would bring together all the trust

application procedures as well as the related delegations of authority

into one centralized location. The proposal contains two exceptions to

the application requirements. The first exception allows a state

nonmember bank that received authority to exercise trust powers from

its chartering authorities prior to December 1, 1950 to exercise trust

powers without the FDIC's consent. The second exception permits an

insured depository institution to continue to conduct trust activities

pursuant to authority granted by its chartering authority following a

charter conversion or withdrawal from membership in the Federal Reserve

System.

The proposed procedures would require applicants to complete a

trust application form obtained from any FDIC regional office and

provides expedited processing for eligible depository institutions as

defined in proposed Sec. 303.2(r). Under expedited processing, an

eligible institution's trust application will be deemed approved 30

days after receipt by the appropriate FDIC regional director, unless

the applicant is advised in writing that its filing has been removed

from expedited processing. For applications not processed pursuant to

the expedited processing procedures, the FDIC will provide written

notification of the final action taken with regard to the filing.

Brokered deposit waivers. The FDIC is proposing to reorganize its

regulations regarding applications to accept brokered deposits by

adequately capitalized insured depository institutions. The application

procedures would be placed in this subpart M and the substantive rules

regarding the acceptance of brokered deposits would remain in

Sec. 337.6. Procedures would not be substantially altered.

Applicants for a brokered deposit waiver cannot meet the strict

definition of an ``eligible depository institution'' set forth in

proposed Sec. 303.2(r), regarding institutions eligible for expedited

processing. The definition in Sec. 303.2(r) requires eligible

depository institutions to be ``well capitalized.'' Well capitalized

institutions are not required to apply for a waiver prior to accepting

brokered deposits. Therefore, for the purpose of determining

eligibility for expedited processing for this subsection only, an

adequately capitalized institution which otherwise meets the standards

of Sec. 303.2(r) will be deemed to be an eligible depository

institution. Under the current regulation, any institution with a

composite rating of 1 or 2 is eligible for expedited processing. The

definition contained in Sec. 303.2(r) contains additional

qualifications for eligibility. The FDIC does not believe that there is

a compelling reason to use a substantially different definition of

eligibility for this subsection than that used for all other types of

applications for which expedited procedures are available.

In moving the application procedures to part 303, the proposal

would amend paragraph (c) of Sec. 337.6 by referring the applicant to

Sec. 303.243 for filing instructions. Paragraphs (d) and (e) of

Sec. 337.6 would be deleted because the information in those paragraphs

(involving filing procedures, delegations of authority, and expedited

processing procedures) would appear in Sec. 303.243.

Golden parachutes and severance plan payments. The FDIC is

proposing to revise its regulations regarding applications to make

excess nondiscriminatory severance plan payments and golden parachute

payments by insured depository institutions or depository institution

holding companies. The FDIC's regulations with respect to such payments

are codified at part 359. Generally, troubled depository institutions

as defined in the regulations are prohibited under part 359 from making

severance plan payments and golden parachute payments, unless the

institution obtains the consent of its primary federal regulator and,

in certain circumstances, the FDIC.

Under the proposal, the substantive rules with respect to making

such payments would remain unchanged in part 359 of the FDIC's

regulations. The only changes to part 359 would appear in Sec. 359.6,

which involves ``Filing instructions.'' First, a reference to new

Sec. 303.244 of the FDIC's regulations would be added. Second, a

sentence specifying the necessary elements of an

[[Page 52826]]

application would be deleted from Sec. 359.6. These elements and the

procedures for obtaining the consent of the FDIC would be set forth in

the new Sec. 303.244. The necessary elements would be expanded from two

items to five items in Sec. 303.244 in order to assist an applicant in

preparing a complete filing. The filing procedures and information

requested do not impose additional requirements upon applicants, but

simply clarify existing requirements.

Waiver of liability for commonly controlled depository

institutions. The application procedures for an insured depository

institution to request a waiver of liability pursuant to section 5(e)

of the FDI Act are new (12 U.S.C. 1815(e)). The FDIC Board of Directors

recently approved revisions to the Statement of Policy Regarding

Liability of Commonly Controlled Depository Institutions (62 FR 15480,

April 1, 1997), which provides guidance to the industry as to the

manner in which the FDIC will administer the provisions of section 5(e)

of the FDI Act. The statement of policy is being further revised

elsewhere in today's Federal Register to move the procedures for

requesting a conditional waiver of the cross-guaranty liability to

proposed Sec. 303.245 and to include a cross-reference to Sec. 303.245.

Insurance fund conversions. The FDIC is proposing to revise its

regulations regarding filings for insurance fund conversions at

Sec. 303.246. The proposed revisions would reformat the filing

requirements and delete references to and procedures regarding

insurance fund conversions qualifying as exceptions to the insurance

fund conversion moratorium imposed in section 5(d) of the FDI Act (12

U.S.C. 1815(d)(2)(A)(ii)). Such references and procedures are no longer

necessary because the insurance fund conversion moratorium expired in

the last quarter of l996 when the Savings Association Insurance Fund

reached its designated reserve ratio.

Conversion with diminution of capital. Section 303.247 reorganizes

and clarifies filing procedures pursuant to section 18(i)(2) of the FDI

Act (12 U.S.C. 1828(i)(2)) to convert from an insured federal

depository institution to a state nonmember bank where the capital

stock or surplus of the resulting bank will be less than the capital

stock or surplus, respectively, of the converting institution at the

time of the shareholder's meeting approving such conversion. Filing

instructions are currently contained in Sec. 303.3(c) and

Sec. 303.5(b).

The information requested of the applicant under the proposal is

the basic information that is necessary to process a request pursuant

to section 18(i)(2) of the FDI Act. The filing procedures and

information requested do not impose additional requirements upon

applicants but simply clarify existing requirements.

A delegation of authority has been added to Sec. 303.247 to allow

the Director, Deputy Director, or where confirmed in writing, an

associate director, regional director or deputy regional director (DOS)

to approve conversions with diminution of capital. Authority to deny is

delegated only to the Director and Deputy Director (DOS). At present,

there is no delegated authority.

Continue or resume status as an insured institution following

termination under section 8 of the FDI Act. Proposed Sec. 303.248

covers applications by depository institutions for permission to

continue or resume their insured status after termination of insurance

under section 8 of the FDI Act (12 U.S.C. 1818). This section covers

institutions whose deposit insurance continues in effect for any

purpose or for any length of time under the terms of an FDIC order

terminating deposit insurance. However, it does not cover any operating

non-insured depository institution which was previously insured by the

FDIC or any non-insured, non-operating depository institution whose

charter has not been surrendered or revoked. Institutions not covered

by this section would be required to file a de novo application for

FDIC insurance. The contents of the filing under this section have been

streamlined to require all relevant facts and reasons for the request

and a certified copy of the resolution authorizing the request by the

institution's board of directors.

Truth in Lending Act--Requests for relief from reimbursement and

reconsiderations of denials. Proposed Sec. 303.249 is intended to apply

to requests for relief from reimbursement involving the Truth in

Lending Act (15 U.S.C. 1601 et seq.) and Regulation Z (12 CFR 226)

(Truth in Lending cases). Currently, no specific procedures or

timeframes are provided for Truth in Lending cases in part 303.

Requests for relief from reimbursement are addressed pursuant to the

procedures in Sec. 303.6 which apply generally to applications, and

requests for reconsideration of a request for relief following denial

must be filed within 15 days under Sec. 303.6(e), which governs

petitions for reconsideration. Proposed Sec. 303.249 sets forth new

procedures specifically for Truth in Lending cases and provides that

applicants may file initial requests for relief within 60 days after

receipt of the compliance report of examination containing the request

to conduct a file search and make restitution to affected customers.

Requests for reconsideration following denial will continue to be

handled under the FDIC's general petition for reconsideration

provision, located at proposed Sec. 303.11(f), which requires filing

within 15 days of receipt of denial.

Modifications of conditions. Section 303.250 reorganizes and

clarifies the procedures for requests to modify a previously issued

FDIC approval of a filing. The instructions for these requests are

currently contained in Sec. 303.5(b). The relevant delegation of

authority to approve or to deny such filings is contained in existing

Sec. 303.7(f)(l)(iv).

The information requested of the applicant under the proposal is

the basic information that is necessary to process a request of this

nature. The filing procedures and information requested do not impose

additional requirements upon applicants, but simply clarify existing

requirements. However, a new criteria for exercise of delegated

authority by DOS officials is being added requiring Legal Division

consultation to modify conditions if Legal Division consultation was

required in connection with the original filing.

During 1995, the FDIC approved 15 requests to modify a prior

approval, with an average processing time of 11 days. During 1996, the

FDIC approved 14 such requests, with an average processing time of 15

days. Given the low volume of activity and the prompt processing of

those requests, the FDIC believes that the creation of special

expedited procedures is not warranted.

Extensions of time. Section 303.251 reorganizes and clarifies the

procedures for requests seeking an extension of time to fulfill a

condition required in an approval issued by the FDIC, or to consummate

a transaction which was the subject of an approval by the FDIC. The

instructions for these requests are currently contained in

Sec. 303.5(b). The relevant delegation of authority to approve or to

deny such filings is contained in existing Sec. 303.8(a).

The information requested of the applicant under the proposal is

the basic information that is necessary to process a request of this

nature. The filing procedures and information requested do not impose

additional requirements upon applicants, but simply clarify existing

requirements.

During 1995, the FDIC approved 31 requests for an extension of

time, with an average processing time of 10 days.

[[Page 52827]]

During 1996, the FDIC approved 31 such requests, with an average

processing time of 13 days. Given the low volume of activity and the

prompt processing of those requests, the FDIC believes that the

creation of special expedited procedures is not warranted.

N. Subpart N--Enforcement Delegations

Subpart N makes several significant changes to the FDIC's

enforcement delegations of authority, as described below.

Section 8(a) notices of intention to terminate insured status.

Under current Sec. 303.9(a), authority has been delegated to the

Director of DOS to issue notifications to primary regulator (NPRs)

under section 8(a) of the FDI Act (12 U.S.C. 1818(a)), with Legal

Division concurrence. If unsafe or unsound conditions or practices and

violations of law cited in an NPR are not corrected, a notice of

intention to terminate insured status (NIT) may be issued.

The Director of DOS, pursuant to an agreement with the Board of

Directors, has not exercised delegated authority to issue NPRs, and has

brought all such cases to the Board of Directors. Currently, when the

Board issues an NPR, it also authorizes the Executive Secretary, with

Legal Division concurrence, to issue an NIT, after being informed by

DOS that an institution has not corrected the conditions, practices

and/or violations of law cited in the NPR. Proposed Sec. 303.262 would

largely codify existing FDIC practice by delegating authority to issue

NITs, but would modify existing FDIC practice by allowing the Director

of DOS to issue NITs with Legal Division concurrence. This would speed

matters since the Executive Secretary now relies on information

received from DOS prior to issuing NITs.

Section 8(g) suspension and removal actions. Currently, authority

is delegated to the Director and Deputy Director (DOS and DCA) and,

when confirmed in writing by the Director, to an associate director, to

issue orders of suspension or prohibition to any institution-affiliated

party who is charged in any information, indictment or complaint, or

who is convicted of or enters into a pretrial diversion or similar

program, regarding any criminal offense cited in or covered by section

8(g) of the FDI Act, when such institution-affiliated party consents to

the suspension or prohibition. Proposed Sec. 303.266(b) contains a new

delegation to issue orders of prohibition or suspension under section

8(g), regardless of whether or not the institution-affiliated party

consents to the order, if the criminal offense is one for which section

8(g) mandates suspension or prohibition. The FDIC believes that such a

delegation is appropriate since no discretion to issue this type of

order is provided in the statute.

Consent section 8(q) orders terminating insured status. Section

8(q) of the FDI Act, 12 U.S.C. 1818(q), authorizes the issuance of

consent orders terminating deposit insurance of an institution whose

deposits have been assumed by another institution, whether by way of

merger, consolidation, statutory assumption, or contract. Proposed

Sec. 303.268 codifies the current delegation of authority to the

Executive Secretary of the FDIC to issue consent orders pursuant to

section 8(q) of the Act. This authority was contained in a June 13,

1989 resolution of the Board of Directors and was not previously

codified in part 303.

Civil money penalties. Proposed Sec. 303.269 clarifies the FDIC's

delegations of authority relating to the issuance of final orders to

pay civil money penalties, whether or not a notice of charges has been

issued in a case. Proposed Sec. 303.269 also authorizes the Director

(DOS) and Director (DCA) to take joint action where violations for

which civil money penalties are authorized involved both safety and

soundness and consumer compliance matters. The proposal further

delegates the authority to levy and enforce civil money penalties for

the late, inaccurate, false or misleading filing of Reports of

Condition and Income, Home Mortgage Disclosure Act Reports, CRA loan

data reports (see 12 CFR 345.42), and all other required reports.

Section 5(e) assessments of commonly-controlled institutions.

Section 5(e) of the FDI Act, 12 U.S.C. 1815(e), permits the FDIC to

recoup the amount of loss to the deposit insurance funds resulting from

the failure of affiliated institutions or assistance provided to

affiliated institutions. Proposed Sec. 303.270 sets forth the authority

to issue notices of assessment under section 5(e) of the Act, also

known as cross-guaranty assessments.. This authority was not previously

codified in 12 CFR part 303. The addition of this provision and the

delegations of authority to the Director, Deputy Director and, where

confirmed in writing, to an associate director of DOS to issue notices

of assessment of liability, reflect the actual practice of the Board of

Directors. Additionally, proposed Sec. 303.278(j) provides that the

Board expressly retains authority on whether or not to waive cross-

guaranty assessments. This provision is new and was not previously

codified in part 303.

Section 10(c) investigations. The legal authority of the General

Counsel to issue orders of investigation pursuant to section 10(c) of

the FDI Act contained in proposed Sec. 303.272(b) is being expanded to

include sections 8 through 13 of the FDI Act (12 U.S.C. 1818-1823) in

order to cover post-conservatorship or post-receivership investigations

conducted by the FDIC in connection with the possible liability of

directors, officers, and other institution-affiliated parties. The

requirement of the concurrent certification of the General Counsel for

certain orders of investigation issued by the Director and Deputy

Director of the Division of Resolutions and Receiverships is being

added to be consistent with the current requirement for orders issued

in certain specified situations by the Directors and Deputy Directors

of DOS and DCA.

Acceptance of written agreements. Proposed Sec. 303.274 continues

in effect FDIC delegations of authority on acceptance of written

agreements in lieu of orders to terminate deposit insurance and to

issue cease-and-desist orders under sections 8 (a) and (b) of the Act

(12 U.S.C. 1818 (a) and (b)). The Director (DOS) has delegated

authority to enter into written agreements relating to section 8(a) of

the Act and relating to safety and soundness matters under section 8(b)

of the Act, while the Director (DCA) has authority to enter into

written agreements under section 8(b) of the Act relating to consumer

compliance matters. Proposed Sec. 303.274(c) adds a new provision not

previously codified in part 303, giving authority to the Director and

Deputy Director (DOS) and (DCA) and, where confirmed in writing by the

appropriate Director, to an associate director, or to the appropriate

regional director or deputy regional director to enter into written

agreements with insured institutions and institution-affiliated parties

that contain conditions that must exist before the FDIC may issue a

statement of non-objection to a filing under part 303.

Termination of pending actions--general. Proposed Sec. 303.275 adds

a new paragraph (h) which clarifies the time frames in which pending

enforcement actions may be terminated or dismissed pursuant to

delegated authority. The section provides that any pending enforcement

action may be terminated or dismissed by the Director or Deputy

Director of DOS or DCA, as appropriate, before the commencement of a

hearing on the merits by an administrative law judge. Once a hearing on

the merits has begun, the pending action may be dismissed or terminated

by stipulation or consent of the affected parties no

[[Page 52828]]

later than 14 days after the administrative law judge has closed the

record of the hearing. After this time, only the FDIC Board of

Directors may terminate or dismiss an enforcement action. This

provision was not previously codified in part 303.

Standards governing modification and termination of section 8(e)

prohibition orders. The delegation of authority to the Director and

Deputy Director (DOS) and (DCA), as appropriate and if confirmed in

writing, to the associate director to modify and terminate orders of

removal or prohibition under section 8(e) of the FDI Act (12 U.S.C.

1818(e)) may be found in proposed Sec. 303.276(e). Proposed

Sec. 303.276(e) adds the standards articulated by the Board in FDIC

enforcement decisions under which a removal or prohibition order may be

modified or terminated. Those standards are as follows: (1) The

respondent has demonstrated his/her fitness to participate in any

manner in the conduct of the affairs of an insured depository

institution, (2) the respondent has shown that his/her participation

would not pose a risk to the institution's safety and soundness, and

(3) the respondent has proven that his/her participation would not

erode public confidence in the institution. Proposed Sec. 303.276(e)

also delegates authority to grant consent pursuant to section

8(e)(7)(B) of the Act for the modification of termination of

outstanding section 8(e) orders issued by another federal financial

regulator. These provisions are new and were not previously codified in

part 303.

Enforcement authority vested in General Counsel. Proposed subpart N

would vest authority in the General Counsel or, where confirmed in

writing by the General Counsel, his or her designee, to provide Legal

Division concurrence regarding all enforcement actions. This change

reflects the General Counsel's position as the head of the Legal

Division with ultimate prosecutorial authority over all enforcement

actions.

IV. Other Regulatory Changes

A. Part 337 (Unsafe and Unsound Banking Practices)

The FDIC is proposing to amend Sec. 337.6, which governs the

acceptance of brokered deposits by insured depository institutions. A

well capitalized insured depository institution may accept brokered

deposits without restriction by Sec. 337.6 while an undercapitalized

institution may not accept brokered deposits under any circumstances.

In the case of an adequately capitalized insured depository

institution, a brokered deposit can be accepted but only if the

institution has obtained a waiver from the FDIC. Under the proposal,

the procedures for obtaining a waiver would be moved from Sec. 337.6 to

12 CFR part 303. An institution seeking a waiver would be referred by

Sec. 337.6(c) to Sec. 303.243. Paragraphs (d) and (e) of Sec. 337.6

would be deleted because the information in those paragraphs (involving

filing procedures, delegations of authority and expedited processing

procedures) would appear in Sec. 303.243. Paragraph (f) would be

deleted because the 60-day transition rule prescribed by that paragraph

(for the period beginning on June 16, 1992) is obsolete.

Additionally, Sec. 337.6 would be amended to reflect certain

changes in the statutory definition of ``deposit broker.'' Prior to

these changes, the term ``deposit broker'' included ``any insured

depository institution'' that solicits deposits by offering interest

rates that significantly exceed the prevailing rates offered by other

insured depository institutions in the same market area ``having the

same type of charter.'' Through the Riegle Community Development and

Regulatory Improvement Act of 1994 (see Pub. L. 103-325, 108 Stat.

2160, Sec. 337), Congress made two changes to this statutory

definition. First, Congress changed ``any insured depository

institution'' to ``any insured depository institution that is not well

capitalized.'' The effect of this change was to relieve well

capitalized institutions of the burden of reporting deposits with high

interest rates as brokered deposits. Second, Congress removed the

phrase, ``having the same type of charter.'' The effect of this change

was to require a comparison between the interest rates of all insured

depository institutions within a market area (as opposed to insured

depository institutions with a particular type of charter). See 12

U.S.C. 1831f(g)(3). Under the proposal, the amended statutory language

would be incorporated in the FDIC's regulatory definition of ``deposit

broker'' at Sec. 337.6(a)(5)(iii).

B. Part 346 (Foreign Banks)

The FDIC is proposing to move current Sec. 303.8(f) from part 303

to part 346, without substantive change. Section 303.8(f) contains

delegations for the Division of Supervision to accept the pledge

agreements by which insured branches of foreign banks pledge assets for

the benefit of the FDIC, to be used in the event the FDIC becomes

obligated to pay the insured deposits of the insured branch. Section

303.8(f) also authorizes the General Counsel or designee to alter the

model deposit agreement used. The FDIC is proposing to move the

delegation to part 346 for ease of reference, in order to locate the

delegation with the substantive pledge requirements to which the

delegation applies. The delegation would be added as a new paragraph at

the end of Sec. 346.19 on pledge of assets.

C. Part 359 (Golden Parachute and Indemnification Payments)

The FDIC is proposing to amend 12 CFR part 359 by moving certain

information from Sec. 359.6 (``Filing instructions'') to 12 CFR part

303. The substantive rules in part 359 would remain unchanged. These

rules govern the making of excess nondiscriminatory severance plan

payments and golden parachute payments by insured depository

institutions or depository institution holding companies. Generally,

troubled depository institutions are prohibited under part 359 from

making such payments unless the institution obtains the consent of the

FDIC and/or the institution's primary federal regulator. Under the

proposal, an institution seeking the consent of the FDIC would be

referred by Sec. 359.6 to Sec. 303.244. Also, a listing of the

necessary elements of an application would be moved from Sec. 359.6 to

Sec. 303.244. These elements would be expanded in order to assist an

applicant in preparing a complete filing.

V. Regulatory Text Deleted From Proposed Part 303

Some matters currently addressed in part 303 are not being included

in the proposed revisions to part 303 because these matters will be

covered elsewhere or are no longer needed. Those items are summarized

below:

Section 303.2(c)--Special procedures for remote service facilities.

Notice procedures for remote service facilities, along with related

delegations of authority and the definition of ``remote service

facility'' have been deleted because EGRPRA excludes such facilities

from the definition of a branch.

Section 303.11(c)--Request for review. This section merely states

that an aggrieved party may request the Board of Directors to review

any action taken under authority delegated under Secs. 303.7, 303.8,

and 303.9. Numerous avenues already exist for appeal, such as those

found under proposed Sec. 303.11(f) (Appeals and petitions for

reconsideration) and part 308 (Uniform Rules of Practice and

Procedure). Broad authority to challenge delegations of authority seems

unnecessary and is not in keeping with the Board's recent

[[Page 52829]]

resolution on delegations of authority which has been codified in part

in proposed Sec. 303.12 (General rules governing delegations of

authority).

Section 303.12--OMB control number assigned pursuant to the

Paperwork Reduction Act. This section is being deleted in its entirety

because this same material also appears in Sec. 304.7, Display of

control numbers, of this chapter.

Several delegations of authority are also being eliminated:

Sections 303.7(f)(1)(vii) and 303.7(f)(2)(i)--Delegations regarding

the Depository Institutions Management Interlocks Act. These

delegations are being moved to part 348 (Management Official

Interlocks) of this chapter.

Section 303.8(b)--Disclosure laws and regulations. The delegations

related to part 335 (Securities of nonmember insured banks) are now

contained in part 335 of this chapter. The delegations to administer

part 341 (Registration of Securities Transfer Agents) are being moved

to part 341 of this chapter.

Section 303.8(c)--Security devices and procedures and bank service

arrangements. This is a delegation to administer the provisions of part

326 (Minimum Security Devices and Procedures). There are no longer any

application procedures related to part 326, so therefore no delegations

of authority are required.

Section 303.8(d)--In emergencies. This is a delegation to staff to

manage the FDIC's affairs in the event an enemy attack renders the

Board of Directors unable to perform its normal management functions.

This delegation is being transferred to an internal Board resolution.

Section 303.8(h)--Application or notices for membership or

resumption of business. This delegation permits DOS officials to

provide comments to other federal regulators on applications or notices

for membership in the Federal Reserve System, or for conversion of a

state bank to a national bank. This delegation is being deleted as

unnecessary since it is done as a matter of practice.

Section 303.8(i)--Depository Institutions Disaster Relief Act of

1992 (DIDRA). The provisions of DIDRA that were the subject of these

delegations have expired.

VI. Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA) requires an

agency to publish an initial regulatory flexibility analysis, except to

the extent provided in 5 U.S.C. 605(b), whenever the agency is required

to publish a general notice of proposed rulemaking for a proposed rule.

Pursuant to subsections 603 (b) and (c) of the RFA, the FDIC provides

the following initial regulatory flexibility analysis:

Reasons why agency action is being considered. The ``Supplementary

Information'' section above contains this information.

Statement of objectives of and legal basis for proposed rule. The

``Supplementary Information'' section above contains this information.

Description and estimate of the number of small entities to which

the proposed rule applies. The proposed rule applies generally to the

approximately 6,300 state nonmember banks for which the FDIC is the

primary federal regulator, regardless of size. As of June 26, 1997,

there were 6,265 such institutions, 4,316 of which were small entities

as defined by the RFA.7 In addition, as indicated in the

Scope paragraphs of the pertinent subparts, certain of the subparts

apply to all depository institutions insured by the FDIC, regardless of

size. As of June 26, 1997, there were 11,220 such institutions, 6,926

of which were small entities as defined by the RFA. Subpart B (Deposit

Insurance) also applies to proposed depository institutions and

operating noninsured institutions that seek to apply for FDIC deposit

insurance, regardless of size. Based upon recent experience, the FDIC

estimates that the proposed rule will affect a total of approximately

200 such entities per year, nearly all of which the FDIC would expect

to be small entities as defined by the RFA. In limited circumstances,

certain subparts apply more generally to other entities or persons, as

defined by the respective subparts, making applications to the FDIC,

regardless of size. Quantification of the number of such persons or

small entities who will be affected by the proposed rule is not

practicable. The FDIC believes that any economic impact on such small

entities will be beneficial because the proposed rule serves to reduce

regulatory burden. The FDIC invites the public to comment on this

conclusion and will carefully review all comments received prior to

issuing the final regulation.

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\7\ The RFA defines the term ``small entity'' in 5 U.S.C. 601 by

reference to definitions published by the Small Business

Administration. The Small Business Administration has defined a

``small entity'' for banking purposes as a national or commercial

bank, savings institution or credit union with less than $100

million in assets. See 13 CFR 121.201.

---------------------------------------------------------------------------

Projected reporting, recordkeeping and other compliance

requirements of the proposed rule. The proposed rule reorganizes,

clarifies and simplifies the rules applicable to the processing of

applications, notices and requests, and updates the regulation to

reflect recent statutory changes. The FDIC expects that these proposed

changes will reduce industry costs associated with regulatory filings

and will decrease processing time associated with such filings. For

example, branch applications for eligible institutions generally will

be deemed approved 21 days after filing and expedited procedures have

been introduced for certain merger and deposit insurance applications.

Consistent with statutory amendments, the proposed rule eliminates the

need for banks that have undergone a recent change in control or have

been operating less than two years to file notices to add a director or

senior executive officer, thus substantially reducing the number of

required filings. Reorganization of part 303 so that all information

relevant to the filing and processing of each particular application

type in one concise subpart also serves to lessen burden. The proposed

rule also more closely aligns the procedural requirements of the FDIC's

regulations with those of the other federal banking agencies, thus

reducing the burden which may be associated with interpreting the rules

of more than one federal banking agency.

Identification of federal rules which may duplicate, overlap or

conflict with the proposed rule. The ``Supplementary Information''

above contains this information.

Discussion of significant alternatives to proposed rule. The FDIC

believes that the proposed rule is an alternative to the existing part

303 and provides economic benefits to small entities. The proposed rule

reorganizes and consolidates the existing rule to make it easier for

affected small entities to use. The reporting requirements have been

clarified and simplified as a result of the FDIC's experience in

administering the existing part 303. By streamlining application

procedures and granting eligible depository institutions expedited

processing of certain filings, the proposed rule enables small entities

that qualify as eligible depository institutions to operate more

efficiently. By reducing the regulatory burden associated with

application procedures, the proposed rule reduces the resources small

entities will have to devote to regulatory compliance. Because the

majority of the filings required by the proposed rule are required by

statute, elimination of the rule is not a viable alternative. The FDIC

has carefully reviewed each of the existing filing and processing

procedures and, where the applicable statutes provide some

[[Page 52830]]

flexibility, the FDIC proposes to revise existing part 303 in a way it

believes best serves to reduce regulatory burden and streamline

processing without compromising the safety and soundness of the banking

industry.

The FDIC invites the public to comment on whether the proposed rule

reduces regulatory burden and to provide the FDIC with suggested

alternatives to those set forth in the proposed rule. The FDIC will

carefully review all comments received prior to issuing the final

regulation.

VII. Paperwork Reduction Act

The collections of information contained in this proposed rule and

identified below have been submitted to the Office of Management and

Budget (OMB) for review and approval in accordance with the

requirements of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C.

3501 et seq.). Comments are invited on: (a) Whether the collection of

information is necessary for the proper performance of the FDIC's

functions, including whether the information has practical utility; (b)

the accuracy of the estimates of the burden of the information

collection; (c) ways to enhance the quality, utility, and clarity of

the information to be collected; and (d) ways to minimize the burden of

the information collection on respondents, including through the use of

automated collection techniques or other forms of information

technology.

Comments should be addressed to the Office of Information and

Regulatory Affairs, Office of Management and Budget, Attention: Desk

Officer Alexander Hunt, New Executive Office Building, Room 3208,

Washington, DC 20503, with copies of such comments to Steven F. Hanft,

Assistant Executive Secretary (Regulatory Analysis), Federal Deposit

Insurance Corporation, Room F-4080, 550 17th Street NW, Washington, DC

20429. All comments should refer to ``Part 303.'' OMB is required to

make a decision concerning the collections of information contained in

the proposed regulations between 30 and 60 days after the publication

of this document in the Federal Register. Therefore, a comment to OMB

is best assured of having its full effect if OMB receives it within 30

days of this publication. This does not affect the deadline for the

public to comment to the FDIC on the proposed regulation.

Subpart C (Establishment and Relocation of Domestic Branches and

Offices)

Section 18(d)(1) of the FDI Act (12 U.S.C. 1828(d)(1)) provides

that no state nonmember insured bank shall establish and operate any

new domestic branch or move its main office or any such branch from one

location to another without the prior written consent of the FDIC after

considering the factors enumerated in section 6 of the FDI Act (12

U.S.C. 1816). Subpart C of the proposed regulation sets forth the

application requirements and procedures for insured state nonmember

banks to establish a branch, relocate a main office, and relocate a

branch subject to the approval by the FDIC. The information collected

is used by the FDIC to evaluate the statutory factors and determine

whether to grant consent. This collection of information has been

approved by OMB under clearance number 3064-0070 through May 31, 1998.

Public comment regarding this collection is being solicited because the

proposed regulation would modify the OMB-approved collection by

addressing the establishment and relocation of interstate branches and

deleting remote service facilities from the section 18(d) application

requirements.

Estimate of Annual Burden

Number of applications: 1,750.

Number of hours to prepare an application: 5.

Total annual burden hours: 8,750.

Subpart M (Other Filings); Section 303.242 (Exercise Trust Powers)

Section 333.2 of the FDIC's regulations (12 CFR 333.2) prohibits

any insured state nonmember bank from changing the general character of

its business without the prior written consent of the FDIC. The

exercise of trust powers by a bank is usually considered to be a change

in the general character of a bank's business if the bank did not

exercise those powers previously because trust powers create a new

fiduciary relationship. Therefore, unless a bank is currently

exercising trust powers, it must file a formal application to obtain

the FDIC's written consent to exercise trust powers. Section 303.242 of

the proposed regulation sets forth the application procedures relating

to the FDIC's prior approval to exercise trust powers. Each application

submitted by a bank is evaluated by the FDIC to verify the

qualifications of bank management to administer a trust department to

ensure that the bank's financial condition will not be jeopardized as a

result of trust operations. This collection of information has been

approved by OMB under clearance number 3064-0025 through December 31,

1997. Public comment is being solicited because the collection is being

modified to simplify and clarify the ``Application for Consent to

Exercise Trust Powers'' form, and to eliminate a number of items of

information required under the current form. In addition, the

collection is being modified so that an ``eligible depository

institution'' as defined in Sec. 303.2(r) of the proposal will file an

abbreviated application and will receive expedited processing by the

FDIC.

Estimate of Annual Burden

Number of applications from ``eligible depository institutions'':

31.

Average number of hours to prepare an application: 8.

Annual burden hours: 248.

Number of applications from institutions that do not qualify as

``eligible depository institutions'': 5.

Average number of hours to prepare an application: 24.

Annual burden hours: 120.

Total number of applications: 36.

Total annual burden hours: 368.

Other Collections of Information

Proposed part 303 addresses collections of information in addition

to subpart C and subpart M collections discussed above. Subpart B

(Deposit Insurance) addresses a collection approved by OMB under

clearance number 3064-0001 which expires on July 31, 2000. Subpart D

(Mergers) addresses a collection approved by OMB under clearance number

3064-0015 which expires on September 30, 1998. The merger application

collection will be the subject of an interagency solicitation of public

comment concerning the PRA aspects of a single, interagency form for

affiliated and nonaffiliated mergers. Subpart E (Change in Bank

Control) addresses a collection approved by OMB under clearance number

3064-0019 which expires on January 31, 2000. Subpart F (Change of

Director or Senior Executive Officer) addresses a collection approved

by OMB under clearance number 3064-0097 which expires on January 31,

2000. Subpart G (Activities and Investments of Insured State Banks),

addresses a collection approved by OMB under clearance number 3064-

0111, and Subpart H (Filings by Savings Associations), addresses a

collection approved under clearance number 3064-0104. Public comment

about these two collections was sought in a notice of proposed

rulemaking regarding 12 CFR part 362, ``Activities of Insured State

Banks and Insured Savings Associations.'' 62 FR 47969, Sept. 12, 1997.

Subpart I (Mutual-to-Stock Conversions) addresses a collection

approved by OMB under clearance number 3064-0117 which expires on

[[Page 52831]]

July 31, 2000. Subpart J (Foreign Bank Activities) addresses two

collections approved by OMB under clearance numbers 3064-0114 and 3064-

0125, both of which expire on July 31, 2000. Subpart K (Prompt

Corrective Action) addresses a collection approved by OMB under

clearance number 3064-0115 which expires on July 31, 1999. Subpart L

(Section 19) addresses a collection approved by OMB under clearance

number 3064-0018 which expires on July 31, 2

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