Statement of Policy on the Development and Review of Regulations

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Ch. III

Statement of Policy on the Development and Review of Regulations

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Revision of statement of policy.

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SUMMARY: The FDIC is revising its Statement of Policy entitled

``Development and Review of Regulations'' (Policy). The revisions

streamline the Policy and focus it more sharply on the basic principles

that underlie the Board's approach to regulation. The provisions of the

Policy that established internal procedures or merely restated the law

have been deleted. The revisions also expand the scope of the Policy to

include written statements of policy adopted by the FDIC Board of

Directors and revise its title accordingly.

EFFECTIVE DATE: May 7, 1998.

FOR FURTHER INFORMATION CONTACT:

Steven F. Hanft, Assistant Executive Secretary (202/898-3907); or Nancy

Schucker Recchia, Counsel (202/898-8885).

SUPPLEMENTARY INFORMATION: The FDIC is revising its Statement of Policy

entitled ``Development and Review of Regulations.'' The existing Policy

has stated the Board's commitment to basic principles of sound

regulation and established internal administrative procedures for FDIC

staff to follow when developing and reviewing regulations. Pursuant to

section 303(a) of the Riegle Community Development and Regulatory

Improvement Act of 1994 (CDRI), the Policy was reviewed to streamline

it and to remove inconsistencies and outmoded and duplicative

provisions. As a part of this review, the FDIC has given careful

consideration to the continuing need for this Policy and how its

content might be presented to best inform the public with respect to

the FDIC's development and review of regulations and written statements

of policy. The revised Policy's reflects the Board's continuing

commitment to improving the quality of its regulations and policies, to

minimizing regulatory burdens on the public and the banking industry,

and generally to ensuring that its regulations and policies achieve

legislative goals effectively and effectively.

The revised Policy recognizes that the Board carries out its

regulatory function through two separate processes of public notice:

the promulgation of regulations pursuant to the requirements of the

Administrative Procedure Act, and the issuance of less formal written

statements of policy. Like regulations, written statements of policy

may affect the banking industry and the public. Because the Board

believes it is important to inform all interested parties of its

approach to the development of written statements of policy, the scope

of the revised Policy has been augmented to include an explanation of

the principles by which the FDIC develops and reviews written

statements of policy, and the title of the Policy has been revised to

reflect the expanded scope.

The revisions streamline the Policy and focus it more sharply on

the following basic principles that underlie the Board's approach to

regulation:

Burdens imposed on the banking industry should be

minimized.

Regulations should be clearly and understandably written.

The public should have a meaningful opportunity to

participate in the rulemaking process.

Common statutory and supervisory mandates should be

implemented by Federal financial institutions regulator in a uniform

way.

Regulations and statements of policy should be reviewed

periodically.

The revised Policy has been streamlined to remove those provisions

that established internal procedures or merely restated the applicable

provisions of law. As part of the CDRI review, the FDIC gave careful

consideration to the most useful and efficient format for presenting

all of the information relevant to regulation and written policy

statement development and review. It was determined to separate these

fundamental guiding principles from the more technical or procedural

requirements. The guiding principles which the Board believes are

relevant to public understanding of its process are contained in the

revised Policy. The technical and procedural requirements are contained

in a newly developed handbook on Development and Review of FDIC

Regulations and Policy Statements. The handbook provides comprehensive

guidance to FDIC managers and staff involved in developing and

reviewing FDIC regulations and statements of policy and can be revised

easily to reflect changes in statutory requirements and in the FDIC's

organizational arrangements.

Text

The text of the revised statement of policy follows:

[[Page 25158]]

Development and Review of FDIC Regulations and Policies

Statement of Policy

Purpose and Scope. The Federal Deposit Insurance Corporation is

committed to continually improving the quality of its regulations and

policies, to minimizing regulatory burdens on the public and the

banking industry, and generally to ensuring that its regulations and

policies achieve legislative goals effectively and efficiently. The

purpose of this statement of policy (Policy) is to establish basic

principles which guide the FDIC's promulgation and review of

regulations and written statements of policy. The scope of this Policy

is limited to regulations and written statements of policy issued by

the Board of Directors of the FDIC.

Principles For the Development and Review of Regulations and

Statements of Policy. The following principles guide the FDIC in its

development of regulations and written policies:

Burdens imposed on the banking industry and the public

should be minimized. Before issuing a regulation or written statement

of policy the FDIC gives careful consideration to the need for such an

issuance. Frequently a regulation is required by statute.

Alternatively, the FDIC may identify a need for a supervisory tool to

implement its statutory obligations, or to clarify its policy for the

benefit of the banking industry or the public. Once the need for a

regulation or statement of policy is determined, the FDIC seeks to

minimize to the extent practicable the burdens which such issuance

imposes on the banking industry and the public. New reporting and

recordkeeping requirements imposed by a regulation are carefully

analyzed. The effect of the regulation or statement of policy on

competition within the industry is considered. Particular attention is

focused on the impact that a regulation will have on small institutions

and whether there are alternatives to accomplish the FDIC's goal which

would minimize any burden on small institutions. Prior to issuance, the

potential benefits associated with the regulation or statement of

policy are weighed against the potential costs.

Regulations and policies should be clearly and

understandably written. The Board seeks to make its regulations and

statements of policy as clear and as understandable as possible to

those persons who are affected by them. In developing or reviewing

existing regulations and statements of policy, the Board considers the

document's organizational structure as well as the specific language

used; both are important components to achieving a clear and useful

statement.

The public should have a meaningful opportunity to

participate in the rulemaking process. The Board seeks to improve its

regulations and statement of policy during the development phase.

Whether a new regulation is being promulgated or an existing one

revised, the Board gives careful consideration to the implications of

its actions as public policy. Public participation in the rulemaking

process is an opportunity for the Board to hear directly from affected

members of the public with important experience and thoughtful insights

related to the pertinent issues. A person or organization may petition

the Board for the issuance, amendment, or repeal of any regulation or

policy by submitting a written petition to the Executive Secretary of

the FDIC. The petition should include a complete and concise statement

of the petitioner's interest in the subject matter and the reasons why

the petition should be granted.

All rulemaking is carried out in accordance with the APA, by which

the Board provides the public with notices of proposed rulemaking and

opportunities to submit comments on the proposals. The Board will often

seek public comment on proposed statements of policy as well. All

comments and proposed alternatives received during the comment period

are considered prior to the issuance of a final rule or statement of

policy. The Board takes final action on proposed regulations and

policies as promptly as circumstances allow. If a significant period of

time elapses following the publication of a proposed rule or policy

without final action, the Board will consider withdrawing the proposal

or re-publishing it for comment. If the Board decides to reconsider a

proposed regulation or statement of policy that has been withdrawn, it

will begin the rulemaking or policy development process anew.

Common statutory and supervisory requirements should be

implemented by the Federal financial institutions regulators in a

uniform way. The FDIC has many statutory and supervisory requirements

that are common to the Board of Governors of the Federal Reserve

System, the Office of the Comptroller of the Currency, the Office of

Thrift Supervision, and/or the National Credit Union Administration.

The more uniform the Federal financial institutions regulators can be

in their regulations, policies and approaches to supervision, the

easier it will be for the industry and the public to comply with the

regulators' requirements. The FDIC is a member of the Federal Financial

Institutions Examination Council (FFIEC) and works with the other

federal financial institutions regulators through the FFIEC to make

uniform those regulations and policies that implement common statutory

or supervisory policies.

Regulations and statements of policy should be reviewed

periodically. To ensure that the FDIC's regulations and written

statements of policy are current, effective, efficient and continue to

meet the principles set forth in this Policy, the FDIC will

periodically undertake a review of each regulation and statement of

policy. The Executive Secretary of the FDIC will, consistent with

applicable laws and in coordination with other financial institutions

regulators, establish a schedule and procedures for the reviews.

Factors to be considered in determining whether a regulation or written

policy should be revised or eliminated include: the continued need for

the regulation or policy; opportunities to simplify or clarify the

regulation or policy; the need to eliminate duplicative and

inconsistent regulations and policies; and the extent to which

technology, economic conditions, and other factors have changed in the

area affected by the regulation or policy. The result of this review

will be a specific decision for each regulation and statement of policy

to either revise, rescind or retain the issuance in its then-current

form. The principles of regulation and statement of policy development,

as articulated at the beginning of this Policy, will apply to the

periodic reviews as well.

By order of the Board of Directors.

Dated at Washington, D.C. this 28th day of April, 1998.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 98-12059 Filed 5-6-98; 8:45 am]

BILLING CODE 6714-01-M