Technical Amendments to FDIC Regulations Relating to Rules of Practice and Procedure and Deposit Insurance Coverage

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 308 and 330

RIN 3064-AC30

Technical Amendments to FDIC Regulations Relating to Rules of

Practice and Procedure and Deposit Insurance Coverage

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: The FDIC is amending various sections of its Local Rules of

Practice and Procedure (Local Rules) governing administrative

enforcement proceedings. The amendments are generally technical in

nature, and are necessary to ensure that the rules are consistent with

statutory provisions and procedural changes that have occurred since

the rules were first adopted. The FDIC also is making a conforming,

technical amendment that was inadvertently omitted from recent

revisions to the FDIC's deposit insurance regulations.

EFFECTIVE DATE: November 16, 1999.

FOR FURTHER INFORMATION CONTACT: On the Part 308 amendments, Andrea

Winkler, Counsel, Legal Division (202) 898-3727; on the Part 330

amendment, Joseph A. DiNuzzo, Counsel, Legal Division (202) 898-7349,

Federal Deposit Insurance Corporation, 550 17th Street, N.W.,

Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION:

I. Part 308 Amendments

A. Background

On August 9, 1991, the federal banking agencies \1\ published one

set of final uniform rules and procedures (Uniform Rules) for formal

administrative enforcement hearings required to be conducted on the

record under the Administrative Procedure Act (APA)(5 U.S.C. 554-

557).\2\ In addition, each agency published separate ``Local Rules''

applicable to that agency to supplement the Uniform Rules in order to

address some or all of the following: formal enforcement actions not

within the scope of the Uniform Rules, informal actions which are not

subject to the APA, and procedures to supplement or facilitate the

processing of administrative enforcement actions within the FDIC and

the other agencies.

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\1\ The agencies were the FDIC, Office of the Comptroller of the

Currency, Board of Governors of the Federal Reserve System, Office

of Thrift Supervision and National Credit Union Administration.

\2\ 56 FR 37975 (1991) (amended at 61 FR 20347 (1996)). The

uniform rules, which are contained in subpart A of part 308 ((12 CFR

part 308, subpart A), are intended to standardize procedures for

actions common to at least four of the five Agencies.

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B. Summary of the Amendments

The FDIC is amending various subparts of its Local Rules as

described below.

Authority. The section listing the authority for the Uniform Rules

and Local Rules has been amended to incorporate references to the cross

guaranty provisions of the Federal Deposit Insurance Act (FDIA) (12

U.S.C. 1815(e)), which were initially omitted by technical oversight,

and to the prompt corrective action and safety and

[[Page 62097]]

soundness provisions of the FDIA (12 U.S.C. 1831o and 1831p-1), which

were enacted after the Local Rules were first promulgated.

Subpart B--General Rules of Procedure

Section 308.101. As presently written, Sec. 308.101, ``Scope of

Local Rules,'' makes clear that the rules contained in subpart A,

``Uniform Rules,'' and subpart B of the Local Rules, ``General Rules of

Procedure,'' do not apply to subparts D through P of part 308 unless

specifically provided. Since 1991, three additional subparts have been

added--subpart Q, which pertains to prompt corrective action, was added

in 1992 (57 FR 48426); subpart R, which pertains to safety and

soundness compliance plans, was added in 1995 (60 FR 35684); and

subpart S, which pertains to bank clearing agencies, was added in 1996

(61 FR 48403). Therefore, a technical amendment is made to include a

reference to those subparts to indicate that subparts A and B do not

apply to subparts D through S of part 308 unless specifically provided.

Section 308.102. Section 308.102 sets forth the authority of the

Board of Directors and Executive Secretary. Since the enactment of the

Local Rules, certain authority to act upon routine and procedural

matters in enforcement cases has been delegated by Resolution of the

Board of Directors to the Executive Secretary, Deputy Executive

Secretary and or the Assistant Executive Secretary (Operations). In

exercising such delegated authority, those persons can only act upon

the advice and recommendations of the Deputy General Counsel for

Litigation, or, in his absence, the Assistant General Counsel, Trial

Litigation Section.

The delegation resulted from the fact that there are a variety of

procedural matters that arise in enforcement cases that are of a

technical legal nature, subject to well-settled case law and that do

not involve important policy issues. Thus, the authority to issue

rulings in the context of sections 7(j), 8, 18(j), 19, 32 and 38 of the

FDIA (12 U.S.C. 1817(j), 1818, 1828(j), 1829, 1831i and 1831o

concerning denials of requests for private hearing, interlocutory

appeals; stays pending judicial review; reopenings of the record and/or

remands of the record to the administrative law judge; supplementation

of the evidence in the record; all remands from the courts of appeals

not involving substantive issues; extensions of stays of orders

terminating deposit insurance; and all matters, including final

decisions, in proceedings under section 8(g) of the FDIA (12 U.S.C.

1818(g)) have been delegated.

The authority to act on such matters was delegated in order to

allow the Board to concentrate its limited available time upon

important policy matters. A delegation, which initially was a more

limited delegation concerning interlocutory and procedural matters,

first became effective in 1992, and was later expanded in 1997, because

it worked well in allowing the FDIC to operate more efficiently.

Therefore, Sec. 308.102 has been revised to reflect the current

delegations and practice.

Subpart C--Rules of Practice Before the FDIC and Standards of

Conduct

Section 308.109. This section, which pertains to suspension and

disbarment, authorizes summary suspension from practice in a particular

FDIC matter based upon contemptuous conduct in that matter. Section

308.109(b) of the regulations provides for mandatory and automatic

suspension and disbarment of attorneys under certain circumstances and

gives the Board of Directors discretion to suspend and disbar under

other circumstances. The current rule is somewhat confusing insofar as

it provides simply that an application to be reinstated may be filed at

any time not less than one year after the applicant's most recent

application. The FDIC intends that once suspended or disbarred from

practice before the FDIC by the Board, a counsel may not make an

application for reinstatement for at least one year, and thereafter,

may make a new request for reinstatement no sooner than one year after

the counsel's most recent reinstatement application. A technical,

clarifying amendment reflecting this intent is made.

An applicant for reinstatement under either the discretionary or

mandatory suspension and disbarment provisions may, in the Board's sole

discretion, be afforded a hearing. Section 308.109(c) provides that

hearings conducted pursuant to this section shall be handled in the

same manner as other hearings under the Uniform Rules, except that in

proceedings to terminate an existing FDIC suspension or disbarment

order, the person seeking the termination shall bear the burden of

going forward with the application and with proof, and the Board of

Directors may limit any such hearings to written submissions. A

clarifying amendment is proposed to make explicit that the applicant

has the burden of proof with regard to the grounds supporting the

application.

Subpart G--Rules and Procedures Applicable to Proceedings Relating

to Cease-and-Desist Orders

Section 308.127. This section defines the scope of the Uniform and

Local Rules as they pertain to cease-and-desist proceedings under

section 8(b) of the FDIA (12 U.S.C. 1818(b)). Paragraph (a) contains a

statement regarding the applicability of those rules to temporary

cease-and-desist proceedings under section 8(c) of the FDIA (12 U.S.C.

1818(c)). Insofar as Sec. 308.131 pertains specifically to temporary

cease-and-desist orders, and paragraph (c) of that section indicates

that the Uniform Rules and subpart B of the Local Rules do not apply to

the issuance of temporary cease-and-desist orders pursuant to section

8(c) of the FDIA, that same language in Sec. 308.127(a) is redundant,

and a technical amendment deleting that phrase in Sec. 308.127(a) has

been made.

Subpart H--Rules and Procedures Applicable to Proceedings Relating

to Assessment and Collection of Civil Money Penalties for Violation

of Cease-and-Desist Orders and of Certain Federal Statutes,

Including Call Report Penalties

Section 308.132. The FDIC is making a technical correction to

Sec. 308.132(c)(3) which inadvertently refers to the Debt Collection

Act rather than the appropriate title of that law which is the Debt

Collection Improvement Act.

Subpart K--Procedures Applicable to Investigations Pursuant to

Section 10(c) of the FDIA

Section 308.145. A technical amendment is made to correct the

citation to Sec. 303.9, which is now codified at Sec. 303.272.

Section 308.148. A technical amendment is made to paragraph (b) to

correct the citation to Sec. 308.6, which is incorrectly cited as

Sec. 308.06. A similar amendment is made to paragraph (d) to correct

the citation to Sec. 308.8, which is incorrectly cited as Sec. 308.08.

Subpart L--Procedures and Standards Applicable to a Notice of

Change in Senior Executive Officer or Director Pursuant to Section

32 of the FDIA

Section 308.151. Subpart L governs proceedings for the disapproval

of candidates for senior executive officer and director. Section 2208

of the Economic Growth and Regulatory Paperwork Reduction Act of 1996

(Pub. L. 104-208) amended the circumstances that require an insured

state nonmember bank to notify the FDIC of a proposed addition or

employment of a director or senior executive officer. After 1996,

[[Page 62098]]

there is no longer a requirement that a bank which has been chartered

less than two years or which has undergone a change in control within

the preceding two years submit such a notice. Instead, the law now

requires that a bank must file a prior notice where (i) it is not in

compliance with all minimum capital requirements applicable to it as

determined by the FDIC on the basis of such institution's most recent

report of condition or report of examination or inspection; (ii) the

bank is in a troubled condition; or (iii) the FDIC determines, in

connection with the review of a plan required under section 38 of the

FDIA (12 U.S.C. 1831o) or otherwise, that such prior notice is

appropriate. Section 308.151(a) has been revised to incorporate these

statutory changes.

Sections 308.152, 308.153 and 308.155. Technical amendments to

correct grammatical errors or incorrect citations to other parts of the

regulations are made.

Subpart M--Procedures and Standards Applicable to an Application

Pursuant to Section 19 of the FDIA

Subpart M governs procedures for FDIC approval of applications

filed pursuant to section 19 of the FDIA (12 U.S.C. 1829) by persons

convicted of certain crimes who wish to participate in banking. This

subpart has been revised in order to comply with the changes to section

19 made by the Housing and Community Development Act (Pub. L. 102-550)

which added convictions for money laundering to the list of covered

crimes for which an application must be filed, and to make this subpart

consistent with current policy and practice, especially in light of the

FDIC's Statement of Policy on Section 19 of the FDI Act which became

effective December 1, 1998 (63 FR 66177 (1998)).

Sections 308.156 and 308.157. These sections pertain to the scope

of the regulation and relevant considerations for granting

applications. Section 308.156 has been amended to reflect that under

current policy and consistent with the revised regulations, an insured

depository institution may file an application on behalf of an

individual, or in certain cases, an individual may directly file an

application. Both sections have been amended to include convictions for

money laundering consistent with the statutory language of section 19.

Section 308.158. Section 308.158(a) of subpart M directs that

applications be filed with the appropriate FDIC regional office, but it

is silent as to who must file the application. Longstanding FDIC policy

has been that an application must be filed by the insured depository

institution at which the convicted individual intends to be employed or

otherwise participate, or which the individual intends to own or

control. Two recent policy changes affect filing requirements. The FDIC

has adopted an approach of granting blanket approval, and not requiring

an application, in cases in which an individual meets the criteria of

the de minimis exception set forth in the FDIC's Statement of Policy on

Section 19 of the FDI Act (63 FR 66177 (1998)). In addition, the FDIC

will consider waivers of the institution filing requirement, on a case-

by-case basis, in instances in which an individual can show substantial

good cause why an application should be granted.

Therefore, paragraph (a) has been amended to clarify that an

institution must file the application unless a waiver is granted for

substantial good cause shown which allows the individual to file, or

unless no application is required because the de minimis exception

applies. Paragraph (b) has been amended to clarify that the prohibition

pursuant to section 19 shall continue until the individual has been

reinstated by the Board of Directors or its designee for good cause

shown. In addition, a new paragraph (c) has been added to reflect the

current policy and practice regarding the filing requirements and

delegations of authority for waiver applications.

Section 308.160. This section pertains to the hearing procedure in

section 19 cases. A technical correction has been made to change the

reference to 308.06 to 308.6.

Subpart N--Rules and Procedures Applicable to Proceedings Relating

to Suspension, Removal, and Prohibition Where a Felony Is Charged

Subpart N governs proceedings for suspension, removal, and

prohibition pursuant to section 8(g) of the FDIA (12 U.S.C. 1818(g))

where a felony is charged. The changes in subpart N were made for

purposes of clarity and to reflect the amendments to section 8(g) made

by the Housing and Community Development Act of 1992 (1992

Amendments)(Pub. L. 102-550).

Section 308.161. This section sets forth the scope of the rules as

they apply to suspension, removal and prohibition proceedings. Where an

institution-affiliated party is charged in any information, indictment,

or complaint with the commission of, or participation in, a crime

involving dishonesty or breach of trust punishable by imprisonment

exceeding one year under state or federal law, section 8(g) of the FDIA

allows the FDIC to suspend that individual or to prohibit that party,

absent prior written FDIC consent, from further participation in the

conduct of the affairs of the depository institution, if his or her

continued service or participation poses a threat to the interests of

the depository institution's depositors or threatens to impair public

confidence in the depository institution. The 1992 Amendments added, as

a cause justifying suspension, an individual being charged with the

commission of a criminal violation involving money laundering (section

1956, 1957, or 1960 of Title 18) or violations of the Bank Secrecy Act

(section 5322 or 5324 of Title 31).

In addition, where a conviction or an agreement to enter a pre-

trial diversion or other similar program has been entered against an

institution-affiliated party in connection with a crime involving

dishonesty or breach of trust punishable by imprisonment exceeding one

year under state or federal law, and the conviction is not subject to

further appellate review, the FDIC may remove or prohibit the party,

absent prior FDIC consent, from further participation in the conduct of

the affairs of the depository institution, if continued service or

participation by such party poses a threat to the interests of the

depository institution's depositors or threatens to impair public

confidence in the depository institution. The 1992 Amendments added as

a mandatory cause of removal or prohibition, the entry of a judgment of

conviction or an agreement to enter a pre-trial diversion or other

similar program against such party in connection with a criminal

violation of section 1956, 1957, or 1960 of Title 18 or section 5322 or

5324 of Title 31. Amendments to this section reflect these statutory

changes.

Section 308.162. This section sets forth relevant considerations

for the issuance of a suspension, removal or prohibition. Consistent

with the statutory changes described above, whether the alleged offense

is a criminal violation of section 1956, 1957, or 1960 of Title 18 or

section 5322 or 5324 of Title 31 has been added as a factor.

Section 308.163. This section pertains to orders of removal or

prohibition. Amendments have been proposed to incorporate the 1992

Amendments which direct that an order be entered where a final judgment

of conviction is entered against the individual for a criminal

violation of section 1956, 1957, or 1960 of Title 18 or section 5322 or

5324 of Title 31.

Section 308.164. A technical amendment has been made to correct the

citation to Sec. 308.6 of the Uniform Rules.

[[Page 62099]]

Subpart P--Rules and Procedures Relating to the Recovery of

Attorney Fees and Other Expenses

Subpart P governs proceedings relating to the recovery of attorney

fees and other expenses under the Equal Access to Justice Act (EAJA) (5

U.S.C. 504). The revisions to this subpart are made to conform to

statutory changes made by the Small Business Regulatory Enforcement

Fairness Act (1996 Amendments) (Pub. L. 104-121, 110 Stat. 857 (1996)).

The EAJA allows individuals and small businesses who have been sued by

the government to recover their attorneys fees and costs if they

prevailed in the suit, unless the agency's position was substantially

justified or special circumstances make an award unjust. The 1996

Amendments added a new grounds for recovery in an adversary

adjudication arising from an agency action to enforce a party's

compliance with a statutory or regulatory requirement where the demand

by the agency is substantially in excess of the decision of the

adjudicative officer and is unreasonable when compared with such

decision under the facts or circumstances of the case. A party may seek

such an award unless the party has committed a willful violation of law

or otherwise acted in bad faith, or special circumstances make an award

unjust. Fees and expenses awarded under the foregoing grounds shall be

paid only as a consequence of appropriations paid in advance. In

addition, the 1996 Amendments added ``small entities'' to the

applicants that are eligible for an award pursuant to the new

provisions and increased the maximum amount of attorneys fees for all

EAJA actions from $75.00 per hour to $125.00 per hour.

Section 308.170. This section pertains to the filing, content, and

service of documents. Proposed amendments have been made to clarify

filing requirements and to include in this section a reference to

applications concerning excessive demands.

Section 308.171. This section pertains to responses to

applications. It has been revised to incorporate references to answers

and replies in applications involving excessive demands.

Section 308.172. This section addresses the eligibility of

applicants. It has been amended to add a small entity as defined in 5

U.S.C. 601 as an eligible applicant for awards based upon excessive

demands.

Section 308.174. This section sets the standards for awards. It has

been amended to reference applications based upon excessive awards.

Section 308.175. This section addresses the measure of awards and

has been amended to change references to the maximum amount of

attorneys fees that may be awarded in an EAJA claim from $75.00 per

hour to $125.00 per hour, and to include a statement incorporating the

1996 Amendments that fees and expenses related to defending against an

excessive demand shall be paid only as a consequence of appropriations

paid in advance.

Section 308.176. This section contains guidelines for the contents

of applications for awards. It has been amended to include requirements

relevant to an application concerning an excessive award.

Section 308.179. This section pertains to settlement. It has been

amended to indicate that while a statement of intent to negotiate a

settlement should be filed with the Executive Secretary, a copy of a

statement should also be filed with the administrative law judge. This

is to ensure that, in cases in which an answer has not yet been filed,

the administrative law judge will be aware of potential settlement. In

addition, the time within which an answer must be filed pending

settlement negotiations has been extended from 20 to 30 days. This time

frame better reflects the timetable within which settlements are able

to be approved.

II. Part 330 Amendment

Effective April 1, 1999, the FDIC revised its deposit insurance

rules on the coverage of joint accounts and payable-on-death accounts

(64 FR 15653, April 1, 1999). In amending the joint account provisions,

however, the FDIC failed to revise Sec. 330.9(a) of the FDIC's

regulations (12 CFR 330.9(a)) to indicate that joint accounts comprised

of community property funds would continue to be treated as any other

type of qualifying joint account. The final rule makes this technical,

conforming amendment to Sec. 330.9(a).

III. Exemption From Public Notice and Comment

Chapter 6 of Title 5 of the United States Code which pertains to

``The Analysis of Regulatory Functions'' does not apply to the final

rule. The revisions to part 308 and part 330 do not constitute a

``rule'' for which the FDIC is required to publish a general notice of

proposed rulemaking under section 553(b) of Title 5 of the United

States Code. This is because the final rule contains only

clarifications and technical changes intended to bring the agency's

rules of practice and procedure and deposit insurance rules into

conformity with statutory changes or current agency practices and

procedures. Thus, the FDIC has determined for good cause that public

notice and comment are unnecessary and that the rule should be

published in final form.

IV. Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5 U.S.C. 601-612) 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.

For the reasons discussed above, the FDIC is publishing this rule as a

final rule, for which no publication of a general notice of proposed

rulemaking is necessary. No regulatory flexibility analysis is

required.

V. Small Business Regulatory Enforcement Fairness Act

The Office of Management and Budget has determined that the final

rule is not a ``major rule'' within the meaning of the relevant

sections of the Small Business Regulatory Enforcement Fairness Act of

1996 (SBREFA) (5 U.S.C. 801 et seq.). As required by SBREFA, the FDIC

will file the appropriate reports with Congress and the General

Accounting Office so that the final rule may be reviewed.

VI. Paperwork Reduction Act

No collections of information pursuant to the Paperwork Reduction

Act of 1980 (44 U.S.C. 3501 et seq.) are contained in this rule.

Consequently, no information has been submitted to the Office of

Management and Budget for review.

VII. Assessment of Impact of Federal Regulation on Families

The FDIC has determined that this regulation will not affect family

well-being within the meaning of section 654 of the Treasury Department

Appropriations Act of 1999, enacted as part of the Omnibus Consolidated

and Emergency Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat.

2681).

VIII. Effective Date

The APA (5 U.S.C. 551 et seq.) provides that regulations shall

become effective thirty (30) days after their publication in the

Federal Register (5 U.S.C. 553). One exception to this requirement is

for a finding of ``good cause''(Id. at 553(d)). For the final rule, the

Board finds ``good cause'' to make the amendments effective immediately

upon publication in the Federal Register because the amendments are

[[Page 62100]]

technical and conforming to pre-existing statutory and regulatory

requirements.

IX. Authority for the Regulation

This regulation is authorized by the FDIC's general rulemaking

authority and pursuant to its fundamental responsibilities to ensure

the safety and soundness of insured depository institutions.

Specifically, 12 U.S.C. 1819(a) Tenth provides the FDIC with general

authority to issue such rules and regulations as it deems necessary to

carry out the statutory mandates of the Federal Deposit Insurance Act

and other laws that the FDIC is charged with administering or

enforcing.

List of Subjects

12 CFR Part 308

Administrative practice and procedure, Banks, banking, Claims,

Crime, Equal access to justice, Lawyers, Penalties, State nonmember

banks.

12 CFR Part 330

Bank deposit insurance, Banks, banking, Reporting and recordkeeping

requirements, Savings and loan associations, Trusts and trustees.

Adoption of Technical Amendments

For the reasons set forth in the preamble, the FDIC hereby amends

chapter III of title 12 of the Code of Federal Regulations as set forth

below:

PART 308--RULES OF PRACTICE AND PROCEDURE

1. The authority citation for part 308 is revised to read as

follows:

Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505,

1815(e), 1817, 1818, 1820, 1828, 1829, 1829b, 1831i, 1831o, 1831p-1,

1832(c), 1884(b), 1972, 3102, 3108(a), 3349, 3909, 4717; 15 U.S.C.

78 (h) and (i), 78o-4(c), 78o-5, 78q-1, 78s 78u, 78u-2, 78u-3 and

78w; 28 U.S.C. 2461 note; 31 U.S.C. 330, 5321; 42 U.S.C. 4012a; sec.

31001(s), Pub. L. 104-134, 110 Stat. 1321-358.

2. In Sec. 308.101, paragraph (b) is revised to read as follows:

Sec. 308.101 Scope of Local Rules.

* * * * *

(b) Except as otherwise specifically provided, the Uniform Rules

and subpart B of the Local Rules shall not apply to subparts D through

S of the Local Rules.

* * * * *

3. In Sec. 308.102, paragraph (b) is revised to read as follows:

Sec. 308.102 Authority of Board of Directors and Executive Secretary.

* * * * *

(b) The Executive Secretary. (1) When no administrative law judge

has jurisdiction over a proceeding, the Executive Secretary may act in

place of, and with the same authority as, an administrative law judge,

except that the Executive Secretary may not hear a case on the merits

or make a recommended decision on the merits to the Board of Directors.

(2) Pursuant to authority delegated by the Board of Directors, the

Executive Secretary, Deputy Executive Secretary or the Assistant

Executive Secretary (Operations), upon the advice and recommendation of

the Deputy General Counsel for Litigation or, in his absence, the

Assistant General Counsel, Trial Litigation Section, may issue rulings

in proceedings under sections 7(j), 8, 18(j), 19, 32 and 38 of the FDIA

(12 USC 1817(j), 1818, 1828(j), 1829, 1831i and 1831o concerning:

(i) Denials of requests for private hearing;

(ii) Interlocutory appeals;

(iii) Stays pending judicial review;

(iv) Reopenings of the record and/or remands of the record to the

ALJ;

(v) Supplementation of the evidence in the record;

(vi) All remands from the courts of appeals not involving

substantive issues;

(vii) Extensions of stays of orders terminating deposit insurance;

and

(viii) All matters, including final decisions, in proceedings under

section 8(g) of the FDIA (12 U.S.C. 1818(g)).

* * * * *

4. In Sec. 308.109, paragraphs (b)(3) and (c) are revised to read

as follows:

Sec. 308.109 Suspension and disbarment.

* * * * *

(b) * * *

(3) A suspension or disbarment under paragraph (b)(1) of this

section from practice before the FDIC shall continue until the

applicant has been reinstated by the Board of Directors for good cause

shown, provided that any person suspended or disbarred under paragraph

(b)(1) of this section shall be automatically reinstated by the

Executive Secretary, upon appropriate application, if all the grounds

for suspension or disbarment under paragraph (b)(1) of this section are

subsequently removed by a reversal of the conviction (or the passage of

time since the conviction) or termination of the underlying suspension

or disbarment. An application for reinstatement on any other grounds by

any person suspended or disbarred under paragraph (b)(1) of this

section may be filed no sooner than one year after the suspension or

disbarment, and thereafter, a new request for reinstatement may be made

no sooner than one year after the counsel's most recent reinstatement

application. An applicant for reinstatement under this provision may,

in the Board of Directors' sole discretion, be afforded a hearing.

(c) Hearings under this section. Hearings conducted under this

section shall be conducted in substantially the same manner as other

hearings under the Uniform Rules, provided that in proceedings to

terminate an existing FDIC suspension or disbarment order, the person

seeking the termination of the order shall bear the burden of going

forward with an application and with the burden of proving the grounds

supporting the application, and that the Board of Directors may, in its

sole discretion, direct that any proceeding to terminate an existing

suspension or disbarment by the FDIC be limited to written submissions.

* * * * *

Sec. 308.127 [Amended]

6. In Sec. 308.127, paragraph (a) is amended by adding a period

after ``12 U.S.C. 1818(b)'', and removing the words ``; provided that

the provisions of the Uniform Rules and subpart B of the Local Rules

shall not apply to the issuance of temporary cease-and-desist orders

pursuant to section 8(c) of the FDIA (12 U.S.C. 1818(c))''.

Sec. 308.132 [Amended]

7. In Sec. 308.132, the paragraph (c)(3) heading and introductory

text are amended by removing the words ``Debt Collection Act'' and

adding the words ``Debt Collection Improvement Act''.

Sec. 308.145 [Amended]

8. The first sentence of Sec. 308.145 is amended by removing ``

Sec. 303.9'' and adding in its place ``Sec. 303.272.''

Sec. 308.148 [Amended]

9. In Sec. 308.148, paragraph (b) is amended by removing

``Sec. 308.06'' and adding in its place ``Sec. 308.6'', and paragraph

(d) is amended by removing ``Sec. 308.08'' and adding in its place

``Sec. 308.8''.

10. Sec. 308.151 is revised to read as follows:

Sec. 308.151 Scope.

The rules and procedures set forth in this subpart shall apply to

the notice filed by a state nonmember bank pursuant to section 32 of

the FDIA (12 U.S.C. 1831i) and Sec. 303.102 of this chapter for the

consent of the FDIC to add or replace an individual on the Board of

Directors, or to employ any

[[Page 62101]]

individual as a senior executive officer, or change the

responsibilities of any individual to a position of senior executive

officer where:

(a) The bank is not in compliance with all minimum capital

requirements applicable to it as determined by the FDIC on the basis of

such institution's most recent report of condition or report of

examination or inspection;

(b) The bank is in a troubled condition as defined in

Sec. 303.101(c) of this chapter; or

(c) The FDIC determines, in connection with the review of a capital

restoration plan required under section 38(e)(2) of the FDIA (12 U.S.C.

1831o(e)(2)) or otherwise, that such prior notice is appropriate.

Sec. 308.152 [Amended]

11. In Sec. 308.152, paragraph (a) is amended by adding the word

``is'' after the word ``notice'', and paragraph (b) is amended by

removing the word ``indicated'' and adding in its place the word

``indicates''.

Sec. 308.153 [Amended]

12. In Sec. 308.153, the section heading is amended by removing

``Sec. 303.14'' and adding in its place ``Sec. 303.103(c)''.

Sec. 308.155 [Amended]

13. In Sec. 308.155, paragraph (c)(2) is amended by removing

``Sec. 308.06'' and adding in its place ``Sec. 308.6.''

Sec. 308.156 [Amended]

14. Sec. 308.156 is amended by removing the words ``and/or an

individual'' and adding in their place the words ``and a person'' and

by adding the words ``or money laundering'' after the word ``trust''.

Sec. 308.157 [Amended]

15. In Sec. 308.157, paragraph (a)(1) is amended by adding the

words ``or money laundering'' after the word ``trust''.

16. Sec. 308.158 is revised to read as follows:

Sec. 308.158 Filing papers and effective date.

(a) Filing with the regional office. Applications pursuant to

section 19 shall be filed by in the appropriate regional office. Unless

a waiver has been granted pursuant to paragraph (c) of this section,

only an insured depository institution may file an application. Persons

meeting the de minimis criteria set forth in the FDIC's Statement of

Policy on Section 19 of the FDIA (63 FR 66177 (1998)) need not file an

application.

(b) Effective date. An application pursuant to section 19 may be

made in writing at any time more than one year after the issuance of a

decision denying an application pursuant to section 19. The removal

and/or prohibition pursuant to section 19 shall continue until the

individual has been reinstated by the Board of Directors or its

designee for good cause shown.

(c) Waiver applications. If an institution does not file an

application regarding an individual, the individual may file a request

for a waiver of the institution filing requirement for section 19 of

the FDIA. Such a waiver application shall be filed with the appropriate

regional office and shall set forth substantial good cause why the

application should be granted. The Director of the Division of

Supervision and, where confirmed in writing by the director, a deputy

director or an associate director may grant or deny applications

requesting waivers of the institution filing requirement. The authority

delegated under this section shall be exercised only upon the

concurrent certification of the General Counsel or his designee that

the action to be taken is not inconsistent with section 19 of the FDIA.

Sec. 308.160 [Amended]

17. In Sec. 308.160, paragraph (c)(2) is amended by removing

``Sec. 308.06'' and adding in its place ``Sec. 308.6''.

18. Sec. 308.161 is revised to read as follows:

Sec. 308.161 Scope.

The rules and procedures set forth in this subpart shall apply to

the following:

(a) Proceedings to suspend an institution-affiliated party of an

insured state nonmember bank, or to prohibit such party from further

participation in the conduct of the affairs of the bank, if continued

service or participation by such party poses a threat to the interests

of the bank's depositors or threatens to impair public confidence in

the depository institution, where the individual is charged in any

state or federal information, indictment, or complaint, with the

commission of, or participation in:

(1) A crime involving dishonesty or breach of trust punishable by

imprisonment exceeding one year under state or federal law; or (2) A

criminal violation of section 1956, 1957, or 1960 of Title 18 or

section 5322 or 5324 of Title 31.

(b) Proceedings to remove from office or to prohibit an

institution-affiliated party from further participation in the conduct

of the affairs of the bank without the consent of the Board of

Directors or its designee where:

(1) A judgment of conviction or an agreement to enter a pre-trial

diversion or other similar program has been entered against such party

in connection with a crime described in paragraph (a)(1) of this

section that is not subject to further appellate review, if continued

service or participation by such party poses a threat to the interests

of the bank's depositors or threatens to impair public confidence in

the depository institution; or

(2) A judgment of conviction or an agreement to enter a pre-trial

diversion or other similar program has been entered against such party

in connection with a crime described in paragraph (a)(2) of this

section.

19. In Sec. 308.162, paragraph (a) is revised to read as follows:

Sec. 308.162 Relevant considerations.

(a)(1) In proceedings under Sec. 308.161 (a) and (b) for a

suspension, removal or prohibition order, the following shall be

considered:

(i) Whether the alleged offense is a crime which is punishable by

imprisonment for a term exceeding one year under state or federal law

and which involves dishonesty or breach of trust; and

(ii) Whether the alleged offense is a criminal violation of section

1956, 1957, or 1960 of Title 18 or section 5322 or 5324 of Title 31;

and

(iii) Whether continued service or participation by the

institution-affiliated party may pose a threat to the interest of the

bank's depositors, or threatens to impair public confidence in the

bank.

* * * * *

20. In Sec. 308.163, paragraph (b) is revised to read as follows:

Sec. 308.163 Notice of suspension, and orders of removal or

prohibition.

* * * * *

(b) Order of removal or prohibition. (1) The Board of Directors or

its designee may issue an order removing or prohibiting from further

participation in the conduct of the affairs of the bank an institution-

affiliated party, when a final judgment of conviction not subject to

further appellate review is entered against the individual for a crime

referred to in Sec. 308.161(a)(1) and continued service or

participation by such party poses a threat to the interests of the

bank's depositors or threatens to impair public confidence in the

depository institution.

(2) An order of removal or prohibition shall be entered if a

judgment of conviction is entered against the individual for a crime

described in Sec. 308.161(a)(ii).

[[Page 62102]]

Sec. 308.164 [Amended]

21. In Sec. 308.164, paragraph (b)(2) is amended by removing

``Sec. 308.06'' and adding in its place ``Sec. 308.6.''

22. In Sec. 308.170, paragraphs (a) and (b) are revised to read as

follows:

Sec. 308.170 Filing, content, and service of documents.

(a) Time to file. An application and any other pleading or document

related to the application shall be filed with the Executive Secretary

within 30 days after service of the final order of the Board of

Directors in disposition of the proceeding whenever:

(1) The applicant seeks an award pursuant to 5 U.S.C. 504(a)(1) as

the prevailing party in the adversary adjudication or in a discrete

significant substantive portion of the proceeding; or

(2) The applicant, in an adversary adjudication arising from an

action to enforce compliance with a statutory or regulatory

requirement, asserts pursuant to 5 U.S.C. 504(a)(4) that the demand by

the FDIC is substantially in excess of the decision of the

administrative law judge and is unreasonable when compared with such

decision under the facts and circumstances of the case.

(b) Content. The application and related documents shall conform to

the requirements of Sec. 308.10(b) and (c) of the Uniform Rules.

* * * * *

23. In Sec. 308.171, paragraph (b) is revised to read as follows:

Sec. 308.171 Responses to application.

* * * * *

(b) Reply to answer. The applicant may file a reply with regard to

an application filed pursuant to 5 U.S.C. 504 (a)(1), if the FDIC has

addressed in its answer any of the following issues: that the position

of the FDIC was substantially justified, that the applicant unduly

protracted the proceedings, or that special circumstances make an award

unjust. The applicant may file a reply with regard to an application

filed pursuant to 5 U.S.C. 504 (a)(4), if the FDIC has addressed in its

answer any of the following issues: that the applicant has committed a

willful violation of law or otherwise acted in bad faith, that the

FDIC's demand is reasonable when compared to the decision of the

administrative law judge or that special circumstances make an award

unjust. The reply shall be filed within 15 days after service of the

answer. If the reply is based on any alleged facts not already in the

record of the proceeding, the reply shall include either supporting

affidavits or a request for further proceedings under Sec. 308.180.

* * * * *

24. In Sec. 308.172, paragraph (b) is amended by adding a new

paragraph (b)(3) to read as follows:

Sec. 308.172 Eligibility of applicants.

* * * * *

(b) * * *

(3) For purposes of an application filed pursuant to 5 U.S.C.

504(a)(4), a small entity as defined in 5 U.S.C. 601.

* * * * *

25. Sec. 308.174 is revised to read as follows:

Sec. 308.174 Standards for awards.

(a) For applications filed pursuant to 5 U.S.C. 504(a)(1), a

prevailing applicant may receive an award for fees and expenses unless

the position of the FDIC during the proceeding was substantially

justified or special circumstances make the award unjust. An award will

be reduced or denied if the applicant has unduly or unreasonably

protracted the proceedings. Awards for fees and expenses incurred

before the date on which the adversary adjudication was initiated are

allowable if their incurrence was necessary to prepare for the

proceeding.

(b) For applications filed pursuant to 5 U.S.C. 504(a)(4), an

applicant may receive an award unless the demand by the FDIC was

reasonable when compared with the decision of the administrative law

judge, the applicant has committed a willful violation of law or

otherwise acted in bad faith, or special circumstances make an award

unjust.

Sec. 308.175 [Amended]

26. In Sec. 308.175, paragraph (a) is amended by removing ``$75''

and adding in its place ``$125'', and by adding at the end of the

paragraph the following sentence: ``Fees and expenses awarded under 5

U.S.C. 504(a)(4) related to defending against an excessive demand shall

be paid only as a consequence of appropriations paid in advance''.

27. In Sec. 308.176, paragraph (a) is revised to read as follows:

Sec. 308.176 Application for awards.

(a) Contents. An application for an award of fees and expenses

under this subpart shall contain:

(1) The name of the applicant and an identification of the

proceeding;

(2) For applications filed pursuant to 5 U.S.C. 504(a)(1), a

showing that the applicant has prevailed, and an identification of each

issue with regard to which the applicant believes that the position of

the FDIC in the proceeding was not substantially justified;

(3) For applications filed pursuant to 5 U.S.C. 504(a)(4), a

showing that the demand by the FDIC is substantially in excess of the

decision of the administrative law judge and is unreasonable when

compared with such decision under the facts and circumstances of the

case;

(4) A statement of the amount of fees and expenses for which an

award is sought;

(5) For applications filed pursuant to 5 U.S.C. 504(a)(4), a

statement of the amount of fees and expenses which constitute

appropriations paid in advance;

(6) If the applicant is not an individual, a statement of the

number of its employees on the date the proceeding was initiated;

(7) A description of any affiliated individuals or entities, as

defined in Sec. 308.172(c)(5), or a statement that none exist;

(8) A declaration that the applicant, together with any affiliates,

had a net worth not more than the ceiling established for it by

Sec. 308.172(b) as of the date the proceeding was initiated;

(9) For applications filed pursuant to 5 U.S.C. 504(a)(1), a

statement whether the applicant is a small entity as defined in 5

U.S.C. 601; and

(10) Any other matters that the applicant wishes the FDIC to

consider in determining whether and in what amount an award should be

made.

* * * * *

Sec. 308.179 [Amended]

28. Sec. 308.179 is amended by adding the words ``with a copy to

the administrative law judge'' after the word ``Secretary'' and by

removing ``20'' and in its place adding ``30''.

PART 330--DEPOSIT INSURANCE COVERAGE

29. The Authority citation for part 330 continues to read as

follows:

Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818(q),

1819(Tenth), 1820(f), 1821(a), 1822(c).

30. In Sec. 330.9, paragraph (a) is revised to read as follows:

Sec. 330.9 Joint ownership accounts.

(a) Separate insurance coverage. Qualifying joint accounts, whether

owned as joint tenants with the right of survivorship, as tenants in

common or as tenants by the entirety, shall be insured separately from

any individually owned (single ownership) deposit accounts maintained

by the co-owners. (Example: If A has a single ownership account and

also is a joint owner of a qualifying joint account, A's interest in

the joint account would be insured separately from his or her

[[Page 62103]]

interest in the individual account.) Qualifying joint accounts in the

names of both husband and wife which are comprised of community

property funds shall be added together and insured up to $200,000,

separately from any funds deposited into accounts bearing their

individual names.

* * * * *

By order of the Board of Directors.

Dated at Washington, D.C., this 8th day of November, 1999.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 99-29830 Filed 11-15-99; 8:45 am]

BILLING CODE 6714-01-P